BCB Annual Report 2013 - bcblbd.combcblbd.com/userfiles/images/FAD/BCB Annual Report - 2013.pdf ·...

2013

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Table

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Contents

Corporate Information

Notice of the 16th Annual General Meeting

Our Credo

Our Vision

Our Mission

Corporate Footsteps

Our Strategic Priorities

BCB at a glance

Brief Profile of Directors

Message from the Chairman

CEO & Managing Director's Round Up

Report of the Board Audit Committee

Director's Report

Stakeholder's Information

Economic Impact Report

Report on Corporate Governance

Management Team

Corporate Social Responsibility (CSR)

Management Review of Business

Risk Management

Basel-II Disclosures

Product & Service Review

Business Outlook 2014

Auditor's Report

Financial Statements

Notes to the Financial Statements

Annexure

Branch Network

04

05

07

08

09

10

12

13

17

22

25

28

30

34

40

42

47

52

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59

61

75

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81

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95

121

126

LETTER OF TRANSMITTAL

To

All shareholdersBangladesh BankBangladesh Securities and Exchange Commission (BSEC)Registrar of Joint Stock Companies and Firms

Dear Sir(s),

ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2013

The undersigned on behalf of Board of Directors and Management of Bangladesh Commerce Bank Limited (BCB) is pleased to enclose a copy of the Annual Report for the year ended December 31, 2013 along with the Audited Financial Statements (Statements of Financial Position as at December 31, 2013, Statements of Comprehensive Income), Cash Flow Statement, Statement of Changes in Equity and Notes thereon of Bangladesh Commerce Bank Limited for your kind information and record.

Yours sincerely,

Mohammad Saiful Islam, FCMA

Company Secretary

BCB Annual Report 201304


Agenda :

NOTES:

1.

2.

3.

1.

2.

3.

4.

5.

6.

7.

Corporate Office: Eunoos Trade Center (Level-22)52-53, Dilkusha C/A, Dhaka-1000, Bangladesh

Notice of the 16th Annual General Meeting

Notice is hereby given that the 16th Annual General Meeting of Bangladesh Commerce Bank Limited will be held at National Sports Council Auditorium, 62/3, Purana Palton, Dhaka-1000 on Thursday, September 25, 2014 at 12:00 a.m. to transact the following business:-

To receive, consider and adopt the Audited Financial Statements for the year ended on 31st December, 2013 and Reports of the Directors and Auditor’s thereon.

To appoint Auditor(s) and to fix up their remuneration for the year 2014.

To transact any other business with the permission of the Chair.

Although as per Article 112 to 114 of the Articles of Association of the Bank 01 (One) "Ga" Group Director Mr. Rana Kaiser is to retire by rotation but on account of Order of the Status-quo passed by the Hon'ble High Court Division in respect of his Directorship in the Bank, the retirement of Mr. Rana Kaiser and election to the post is postponed. After the Status-quo order becomes inoperative the retirement of the Director by rotation and election to vacant post will be arranged.

The Register Book of shareholders of the Company shall remain closed from 07-09-2014 to 08-09-2014 (both days included) and no transfer of shares will be allowed during this period.

Proxy Form or Power of Attorney or Authorization Letter or Authorization attested by Notary Public is to be submitted to the Registered Office of the Company at least 72 hours before the time fixed for the Meeting. If Proxy Form duly filled in along with revenue stamp of Tk. 20.00 is not submitted within the stipulated time, the Proxy form will not be treated as valid.

Registration Counter on the day of Annual General Meeting will remain open from 10:00 a.m. to 12:00 a.m. Presentation of Attendance Slip is a must for registration.

Annual Report 2013 will be sent to the registered address of all respective shareholders. Anybody who has not received the notice/proxy form is requested to visit the website (www.bcblbd.com) of the Bank or contact with Board Division of the Corporate Office (Contact No. 9585701, 09613221070).

Respected Shareholders are requested to inform change of address (if any) to Board Division of the Corporate Office on or before 4th September, 2014.

Respected Shareholders are requested not to bring children or any person who is not a Shareholder in the Annual General Meeting.

By order of the Board of Directors

(Mohammad Saiful Islam)Company Secretary

Dated: August 29, 2014Dhaka

TM


CUSTOMERS

Giving value to ourcustomers is our

destiny to achieve ourgoals to grow high

STAKEHOLDERS

Our Stakeholdersprosperity rely on

our honesty, dignityand hard working

COLLEAGUES

We can challenge any sortof circumstances with our

efficient colleagues as a teamand wish to acquire arewarding place in the

banking sector

BCB Annual Report 2013 07

OUR CREDO

To become a Bank of first choice by the customers with

meaningful contributions to the society.

Our Vision


Bangladesh Commerce Bank Ltd. is committed to fulfill its customer needs and become their first choice in banking so that a sustainable growth,

reasonable return and contribution to the development of the country can be ensured with

a motivated and professional work force.



OUR CORPORATE FOOTSTEPS

08.02.1998 Board of BCBL directors been formed

01.06.1998 Incorporated as public limited company under the Companies Act, 1994, Bank Companies Act, 1991 and in accordance with the Parliamentary Act No. 12 of 1997

06.09.1999 Bank has started it's operation with 24 branches around the Country.

16.11.2002 25th Branch opened in Comilla

28.04.2011 BCB relocated its Corporate Office from Taranga Complex to 52-53, Dilkusha C/A, Eunoos Trade Center (Level-22), Dkaka-1000.

25.05.2011 BCB launched "BCB Credit Card"

27.09.2011 26th Branch opened in Mymensigh as Seedstore Bazar Branch

20.10.2011 27th Branch opened in Dhaka as Uttara Branch

30.11.2011 28th Branch opened in Feni as Feni Branch

07.12.2011 29th Branch opened in Dhaka as Bijoynagar Branch

15.12.2011 30th Branch opened in Chittagong as Muradpur Branch

28.03.2012 BCB launched Mobile Banking (Mobile Financial Services)

30.07.2012 31st Branch opened in Lakshmipur as Mandaribazar Branch

27.08.2012 32nd Branch opened in Dhaka as Bandura Branch

06.09.2012 33rd Branch opened in Jessore as Jessore Branch

17.09.2012 34th Branch opened in Dinajpur as Dinajpur Branch

14.11.2012 35th Branch opened in Paltan, Dhaka as Foreign Exchange Branch

03.12.2012 36th Branch opened in Moulvibazar as Juri Branch

17.12.2012 37th Branch opened in Dhaka as Savar Branch

24.12.2012 38th Branch opened in Barisal as Batajore Branch

30.06.2013 39th Branch opened in Dhaka as Pragati Sarani Branch

04.07.2013 40th Branch opened in Khulna as Kapilmuni Branch

05.12.2013 41th Branch opened in Barisal as Barisal Branch

15.12.2013 42th Branch opened in Dhaka as Kathgora Bazar Branch

Date Events


To maintain a healthy growth of business in all core activities with desired image.

To acquire state-of -the art technologies and adopt innovative ideas for financial inclusion.

To strengthen the risk management technique and compliance culture.

To expand the customer base and maintain an incremental deposit & reduce the non-performing assets gradually.

To develop appropriate corporate governance system and culture with best practice.

To establish relationship banking & continuous improvement of service quality.

To extend banking services to all classes of people.

To ensure environment friendly investment in line with Bangladesh Bank's "Green Banking Guideline".

To take effective measures to increase capital base and provision shortfall.

To enrich management capacity & human resources quality and develop a pro-active work force with a suitable compensation package.

To be a trend-setter in the socio-economic development of the country.

OUR STRATEGIC PRIORITIES

BCBat a glance


Bangladesh Commerce Bank Ltd. (BCB)

1st June, 1998

A public limited company incorporated in Bangladesh on June 01, 1998 under the Companies Act, 1994, the Bank Companies Act, 1991 and Parliamentary Act 12 of 1997.

Bangladesh Commerce Bank Limited is known as a commercial bank. Like all commercial banks BCBL's core business is also obtaining deposits and providing loans. It is a financial institution providing services for businesses, organizations and individuals. Services include offering different types of deposit account such as current deposit account, saving deposit account and other scheme account as well as giving loans to organizations and individuals to accelerate economic development.

BCB make its profit by taking small, short-term, relatively liquid deposits and transforming these into small, medium, larger loans for short, medium and long term maturity loans. These processes of asset transformation generate net income for BCB. BCB also earned short term profit by investing through treasury functions as well as non funded business.

However, BCB is primarily engaged in deposit and lending activities to private and corporate clients in wholesale and retail banking. Other services typically include credit card, mobile banking, custodial service and guarantees, cash management and settlement as well as trade finance.

BDT 10,000 Million

BDT 1,989 Million

BDT 100 per share

Name :

Date of Incorporation :

Our Core Business :

Authorized Capital :

Paid Up Capital :

Face Value Per Share :


Auditor : ACNABIN, Chartered Accountants.

Tax Consultant : K. M. Hasan & Co., Chartered Accountants.

Legal Adviser : Mr. Mohammad Idris Alam District & Session Judge (Rtd.)

Registration Number : C-35510(2286)/98

Bangladesh Bank License Number : BRPD(P)744(KHA)/99-2842

Registered Head Office : Eunoos Trade Center (Level-22), 52-53, Dilkusha C/A, Dhaka - 1000

PABX : 9559831

Fax : 9568218

01. KA The Government of The People's 6,750,000 33.94 675,000,000.00 Republic of Bangladesh

Sponsors as per MoA & AoA 8 0.00 800

02. KHA Three State Owned Bank ( Sonali, 2,249,982 11.32 224,998,200.00 Janata & Agrani bank ltd.)

03. GA Govt. Owned Corporate Bodies 1,024,613 5.15 102,461,300.00

Depositors and Other Private Shareholders 9,862,825 49.59 986,282,500.00

Total 19,887,428 100.00 1,988,742,800.00

Ownership Composition:

SL.No.

Name of Holders No. ofShares

Amount (Taka)% ofHoldings

Category

49.59%

33.94%

11.32%

5.15%

The Government of thePeople's Republic ofBangladesh

Three State Owned Bank

Govt. Owned CorporateBodies

Depositor & Other PrivateShareholders

Commercial Banking:

Investing in SuccessIn Commercial Banking, we know our success is attach

directly with our Clients. That's why good corporate

citizenship is all about. We believe a good bank placed at the

center of a business community as a facilitator of prosperity,

an active lender and a reliable source of business solutions.

Composition of Board and its Committees

CHAIRMANMr. Md. Yousuf Ali Howlader

COMPANY SECRETARYMr. Md. Abdul Karim

CEO & MANAGING DIRECTORMr. Abu Sadek Md. Sohel

Mr. Md. Yousuf Ali Howlader Chairman

Mr. ATM Murtozaa Reza Chowdhury ndc Member

Mr. Tapan Kumar Karmaker Member

Mr. Pradip Kumar Dutta Member

Mr. Manwar Hossain Member

Mr. Anis Ahmed Member

Mr. Abu Sadek Md. Sohel Member

Mr. Abbas Uddin Ahmed Chairman

Mr. Md. Farhad Uddin Member

Dr. Md. Zillur Rahman Member

Mr. Rana Kaiser Member

EXECUTIVE COMMITTEE

AUDIT COMMITTEE

DIRECTORS

Mr. ATM Murtozaa Reza Chowdhury ndc

Mr. Tapan Kumar KarmakerMr. Md. Farhad UddinDr. Md. Zillur RahmanMr. Pradip Kumar Dutta

Mr. Rana KaiserMr. Manwar HossainMr. Anis AhmedMr. Abbas Uddin Ahmed


Mr. Md. Yousuf Ali Howlader, son of Late Nazem Ali Howlader was born in a reputed Muslim family of the village Angaria of Rajapur thana, Jhalakathi in 01st February, 1945. He obtained M.Com. in Management from the University of Dhaka. He started his career in 1966 as Senior Officer with the then Muslim Commercial Bank Limited.

He was promoted as Deputy Managing Director in the year 1999 and posted to Sonali Bank and rendered his precious service in Sonali Bank as a successful Deputy Managing Director & Managing Director (Current Charge) till 01.08.2000. He also worked as the Managing Director of Bangladesh Shilpa Rin Sangstha & Al-Arafah Islami Bank Ltd. Besides, Mr. Md. Yousuf Ali Howlader acted as the Director of Investment Corporation of Bangladesh Ltd.

During his tenure of service in Sonali Bank as the General Manager, he was awarded 'Atish Dipankar Gold Medal 1995-97' for being the Best Banker and 'Sher-e-Bangla' award, for rendering exceptional contribution in the Banking sector in 2012.

Mr. Md. Yousuf Ali Howlader had been an examiner of the Institute of Bankers Bangladesh. He has an extensive experience of attending numerous Trainings & Seminars on various issues related to the Banking services.

He has visited Pakistan for inspecting branch of Rupali Bank, UK for Branch of Sonali Bank and USA for Treasury & Institutional Function of Standard Chartered Bank, U.S.A.

He was related with various social activities. From 1968 to 1985 he held different positions in international institution "Apex Club, Bangladesh". He was the Secretary General of "Barisal Samity" at Sylhet from 1978 to 1980.

He performed as Banking Advisor of Bangladesh Garments Manufacturers & Importer Association before he join Bangladesh Commerce Bank Limited as Director.

The Board of Directors, Bangladesh Commerce Bank Limited consists of 11 Members including the Managing Director. The brief introduction of Members of the Board of Directors is as follows:-

Mr. Md. Yousuf Ali HowladerChairman

Mr. ATM Murtozaa Reza Chowdhury ndc, son of Mr. Md. Serajul Haque Chowdhury was born in 1957 in a humble Muslim family. He is a Government nominated Director of Bangladesh Commerce Bank Limited. Mr. Chowdhury is a senior civil servant in the Government Sector and presently he is holding the position Additional Secretary in the Ministry of Commerce, Government of the People's Republic of Bangladesh. He is the casual leave substitute of the Secretary.

Mr. Chowdhury completed MA in English from the University of Chittagong. He has remarkable contribution in the socio-cultural arena.

Mr. ATM Murtozaa RezaChowdhury ndc

Director



Mr. Tapan Kumar Karmaker, son of Mr. Sukumar Karmaker was born in 1962 in a respectable family. He is a Government nominated Director of Bangladesh Commerce Bank Limited. Mr. Karmaker is a senior servant in the Government Sector. He achieved MA degree in English Literature with Honours from the University of Dhaka and also completed MBA in concentration with HRM. At present he is the Additional Secretary of Finance Division in Ministry of Finance, Government of the People's Republic of Bangladesh. He started his professional career by joining in Bangladesh Civil Service Administration Cadre in 1986 and since then he successfully performed his duties with salient reputation in a number of ministries/departments/organizations like Ministry of Land, Ministry of Foreign Affairs, Local Government Division, Bangladesh Civil Service Administration Academy, Bangladesh Public Administration Training Centre, Department of Narcotics Control, Ministry of Public Administration. He also worked in the Field Administration as Upazila Nirbahi Officer (Sub-district Executive Officer) and Additional Deputy Commissioner.

Apart from his present assignments in the Finance Division, Mr. Tapan Kumar represents Bangladesh as Alternate Director on the Board of SAARC Development Fund (SDF).

Mr. Tapan Kumar KarmakerDirector

Mr. Md. Farhad Uddin, son of Mr. Md. Afazuddin Molla was born in 1955 in a humble Muslim family. He is a Government nominated Director of Bangladesh Commerce Bank Limited. As senior civil servant in the Government Sector, at present he is the Additional Secretary of Ministry of Industry, Government of the People's Republic of Bangladesh. He holds important positions in various Government Organizations namely (I) Chairman, BFIDC, (II) DG-DMB (III) Member-BEPZA.

Mr. Md. Farhad UddinDirector

Dr. Md. Zillur Rahman, son of Late Moyez Uddin Sheikh was born in 1954. Mr. Rahman completed his B.Com (Hons) and Masters in Management from the University of Dhaka with distinction. He has completed his Ph.D. from the Institute of Bangladesh Studies under the University of Rajshahi in Credit Management. Initially he started his career in BIDS (Bangladesh Institute of Development Studies) as a Research Assistant. Later on, he worked in Bangladesh Sangsad Limited as Research Officer & Population Control and Family Planning Division as a Quality Control Officer.

Mr. Rahman started his Banking career in 80s in Bangladesh Krishi Bank and worked in various position at Bangladesh Krishi Bank. As an experienced banker, he also worked in Rupali Bank and Janata Bank as a Deputy Managing Director. Now Mr. Rahman is the Managing Director of Bangladesh Development Bank Limited. Throughout his professional career as a successful banker, Mr. Rahman conducted more than 125 (One hundred twenty five) training courses. He participated many training classes as a resources/guest speaker in different Training Institutions and Establishment of the country like BIBM, BIM, BSTD and Different Training Institutes in the Banking sector.

Mr. Rahman is a very amiable person with indomitable spirit. Besides he also engaged in many social activities.

Dr. Md. Zillur RahmanDirector



Mr. Pradip Kumar Dutta, son of Late Jitendra Kumar Dutta was born in a respectable family in Mymensingh on 26th November, 1953. He is the son of Late Jitendra Kumar Dutta and Late Amio Bala Dutta. Mr. Dutta is a Government nominated Director, as well as the Member of the Executive Committee of the Board of Directors of Bangladesh Commerce Bank Limited.

Mr. Dutta did his M.Sc in Applied Chemistry from the University of Dhaka in 1974. He started his career with Sonali Bank in 1977 as a Probationary Officer. Mr. Dutta has served in various positions in Sonali Bank including Branch Manager, General Manager's Office and Head of as many as 20 Operational Divisions of the Bank. On getting promotion as General Manager he was posted to Divisinal Officer of Bangladesh Krishi Bank and served there from 4th September 2003 to 17th March 2005. Then he again came back and joined Sonali Bank and worked there as a General Manager and Deputy Managing Director till he was promoted and posted as Managing Director of Rajshahi Krishi Unnayan Bank on 18th July, 2010 where he worked till 14th June, 2012. He has been appointed as the Managing Director and CEO of Sonali Bank Limited and working there since 17th June, 2013. In his career he gained expertise in all types of banking activities having vast practical exposure. He is widely acknowledged for his cooperative attitude and amiable deposition in the industrial Sector.

Being the Managing Director and CEO of Sonali Bank Limited. Mr. Dutta is a man of pleasing personality. During his career as a banker, he attended many trainings, seminars and workshops in home and abroad; visited Japan, UK, USA and many other countries in the world.

Presently, he is holding various positions (Ex-Officio) of the other Institutions viz -Chairman, Sonali Exchange Incorp., New York, USA; Vice-Chairman, Institute of Bankers Bangladesh (IBB); Member, Governing Board, Bangladesh Institute of Bank Management (BIBM) and Vice Chairman, Bangladesh Foreign Exchange Dealers Association (BAFEDA); Director, Sonali Bank (UK) Ltd., London, UK; Primary Dealers Bangladesh Ltd. (PDBL); Investment Corporation of Bangladesh (ICB); Sonali Investment Ltd. (SIL); Central Depository Bangladesh Ltd. (CDBL); Industrial and Infrastructure Development Finance Company Ltd. (IIDFC) and Dhaka Stock Exchange Ltd. (DSE).

Mr. Pradip Kumar DuttaDirector

Mr. Rana Kaiser, son of Mr. A.B. Siddiq was born in a respectable Muslim family in 1975. After completion of his BBA, he involved himself in number of business houses. He earned a notable fame in the business community for his remarkable progress especially as a young entrepreneur. Mr. Kaiser has completed several relevant courses in concentration with business. Other than the Director of Bangladesh Commerce Bank Limited. Mr. Kaiser is also the member of Audit Committee then the Board of Directors.

Mr. Kaiser is also engaged in various social activities such as, the Permanent Donor of the Badda Orphanage and took part in Feeding the Homeless and Flood Relief Program. Mr. Kaiser is a sportsman too. In his student life he was the member as well as the Captain of Soccer Team and 3rd Seeded Player of Tennis Team, Sandy Spring, Maryland, USA. He is also a Terry Fox Runner.

Mr. Rana Kaiser is a man of pleasing personality. As a smart, dynamic and successful businessman Mr. Kaiser enjoys high admiration from all walks of life.

Mr. Rana KaiserDirector



Mr. Anis Ahmed son of Mr. M. Ghaziul Haque was born in 1966 in a respectable Muslim family. In 1993 after completion of MBA from Arkansas State University, United States of America, he started his business career. He is considered as a young entrepreneur of the country with a very high growth potential. He is involved with different business houses and organizations.

Mr. Ahmed is the Managing Director of MGH Group. MGH Group a Singapore-headquartered conglomerate, has core business interest in Regional supply chain, International Transportation, Consumer Products Distribution, Aviation Services, Media Entertainment, Information Technology, Tea Plantation and Commercial Banking respectively. Mr. Ahmed has been selected as the Honorary Consul of Republic of South African Government to represent Bangladesh from 7th August, 2011.

Mr. Anis Ahmed is a man of amiable personality with diversified experiences & knowledge, and has deep affinity, and attachment with various socio-cultural activities.

Mr. Anis AhmedDirector

Mr. Abbas Uddin Ahmed, son of Late Mr. Badruddin Ahmed was born in 1944 in a respectable Muslim family. He is the Director as well as the member of Executive Committee of the Board of Directors of Bangladesh Commerce Bank Ltd. He is a renowned banker. He has served in very senior position in various Banks and financial institutions. He started his banking career in 1966 by joining Habib Bank Ltd. as Trainee Officer.

Mr. Abbas served as the CEO of Bank of Maldives, Republic of Maldives. He was also the Managing Director of Nepal-Bangladesh Bank Ltd., Nepal, IFIC Bank Ltd. and The City Bank Ltd. of Dhaka, Bangladesh. Besides, he is the Director of Bangladesh Industrial Finance Co. Ltd., Summit Power Limited. Mr. Abbas is the Special Director of Sunflower Life Insurance Co. Ltd.

With his sophisticated personality and amiable disposition he enjoys high admiration and esteem in all walks of life. Apart from the above, he is involved with various social activities.

Mr. Abbas Uddin AhmedDirector



Mr. Manwar Hossain is the son of Country's renowned Business philanthropy Al-haj Anwar Hossain. He is the Group Managing Director of Anwar Group. He is also the Chairman of Bangladesh Finance and Investment Co. Ltd., and Vice-Chairman of BD Finance Securities Ltd. He is also the formar Director of City Bank Limited. After completion of BBA & MBA from University of New Hampshire, USA, he joined Conglomerate - Anwar Group of Industries (AGI) in 1994. His contribution in banking and financial institution is noteworthy. He is also associated with different social and trade bodies makes him amongst the most recognized Business personality of the new generation.

Mr. Manwar HossainDirector

Mr. Abu Sadek Md. Sohel joined Bangladesh Commerce Bank Limited as CEO & Managing Director on 02-10-2013. Prior to joining this Bank, he was the Additional Managing/Deputy Managing Director of Social Islami Bank Ltd. He also was the Deputy Managing Director of Agrani Bank in 2005. On being elevated to the rank of Deputy Managing Director by the Ministry of Finance, Government of the people's Republic of Bangladesh, he was the General Manager of International Division and General Credit of Agrani Bank from June, 2002 to July, 2005. He also worked as General Manager at Bangladesh Krishi Bank from April, 2001 to May, 2002

Mr. Sohel started his banking career in 1977 as Senior Officer of Sonali Bank. In Sonali Bank, he was Branch Manager of Dilkusha Corporate Branch, Dhaka. He also held key positions of Bank's Administration, Training and many other business areas till his elevation to the rank of General Manager on 4th April, 2001.

Mr. Abu Sadek Md. Sohel was born in a respectable Muslim family in 1952 at Netrokona. Mr. Sohel did his M.Sc. in Ag. Economics in 1976. He became Diplomaed Associate of the Institute of Bankers Bangladesh in 1982. The Bangladesh Bank's Guidelines on Managing Core Risks in Banking were implemented in Agrani Bank under his personal initiative and direct supervision.

Throughout his entire banking career, he attended a plenty of training programs and workshops at home and abroad. Among copious of training programs participated by Mr. Sohel, "Credit Analysis Seminar of Bangladeshi Bankers" for 08(eight) weeks is one of notable programs at his career arranged by Citi Bank School of Banking, New York, USA. Besides, he participated in many training programs and workshops in Germany, Hong Kong, China, Thailand, India and at home.



Mr. Abu Sadek Md. SohelCEO & Managing Director

Esteemed Shareholders,

Assalamu Alaikum,

We are delighted to welcome all of you to the 16th Annual General Meeting of our Bank. Let me take this opportunity to express my deep gratitude and heartfelt thanks for your trust, confidence and support.

On behalf of the Board of directors of the Bank, I have the pleasure to present the Annual Report for the year 2013 of Bangladesh Commerce Bank Limited. As you all know, 2013 was a very crucial period in every term. Due to the political turmoil specially in the later part of the year, our national economy suffered a set -back against the back drop that world economy did not see its expected growth. Our GDP growth declined to 6.0% in FY 2013 which was 6.2% in FY 2012. World economy continues to expand at a subdued pace. Over the past two years continuous noticeable down-turn of the global economic activity slightly picked up in the second half of 2013. Most world regions are keen to see a moderate pick-up in activity but growth is constantly to the below potential.

The Government of Bangladesh and Bangladesh Bank through their fiscal and monetory polices provided supportive help of the economy. They are trying to extend social safety net in order to maintain growth momentum. Despite having a difficult time, our Bank has shown its enduring strength by dint of continuous hard work and committed dedication and devotion by the support of our team management and colleagues.

During the year 2013, the Bank mainly focused on making asset quality, strengthening financial position and budgeting expenses towards profitability by growing core customer relationship base.



The Annual Report-2013 shows that deposit was Tk. 19736.2 Million having 26.4% growth and loans and advances grew by 6.6% to Tk. 13063.7 Million from Tk. 12250.3 Million. As a result credit deposit ratio stood at 66.2% from 78.5%. Import of the Bank was Tk. 5095.4 Million, whereas export grew by 5.5% to Tk. 3225.4 Million and inward remittance was Tk. 521.9 Million registering 44.8% growth. The recovery was Tk. 1443.4 Million showing 55.4% growth over the last year 2012.

Overall, the Bank observed a steady success in restraining non-performing loans growth and curved non-performing loan percentage slightly increased to 14.7% in 2013 from 12.9% in 2012. The management undertook a number of serious initiatives to further curbing CL percentage by streamlining credit monitoring and visible recovery. In 2013, the Bank posted an operating profit of Tk. 94.0 million, but to meet up previous year tax shortfall, it had to keep provisions and the profit after tax stood at Tk. 20.0 million. The Bank, thanks to the management team and staff, ended the year with a comfortable liquidity ratio of 29.8%.

It is a granted fact that development of human resources is not an expenditure, it is an investment adding to the higher return. We have renovated the activities of the training institute of the Bank. 'Training imparts knowledge and skill' based on this motto, we are conducting training programs regularly on need basis through Learning Modular System by emphasizing upon 'Knowledge management' instead of traditional practices in order to harnessing the potentially of our employees to make them professionally fit as a means to human capital as they are the leaders, they will lead the Bank forward. With this end in view, we imparted training to 533 participants in different training programs in 2013.

Today Banking is an essential service industry in change. We are set to extend customer-friendly services with accuracy and quality of services through personalized attention and care to outperform the competitors in this sector by our team management and colleagues. Warmth thanks are due to them.

Upon the supportive guidance and advice from the members of the Board of Directors, the management maintained excellent control towards achieving its desired goal. During the year under review, the Bank opened another 4 (four) branches adding to 38 branches (total: 42 branches) at commercially and socially important locations across the country as a part of financial inclusion prescribed by Bangladesh Bank to serve more people.

Financial inclusion remained a strategic priority for the year 2013 to contribute to poverty alleviation by way of Agri credit, promoting Ekti Bari Ekti Khamar (EBEK) project. The Bank also provided financial services more than 7,000 shomity having about 50 (Fifty) thousand members of the remote areas of the country. Bangladesh Commerce Bank Ltd. has launched multipurpose service points branded as 'Touch Points' (TP) - the first TP being installed at Uttara Branch. Gradually the Bank will install several 'Touch Points' at the prime locations of Dhaka city and other locations over the country offering the services as: Cash withdrawal, cash deposit, remittance and various information about day to day banking.

All the branches of BCB have been computerized since 2002 with 'Flora Bank System'. During the year 2013, almost 50% of our branches came up under Centralized Real Time Online Banking System with M/S. ERA Info tech Ltd., Bangladesh. The Bank is set to bring the remaining branches in the arm of Real Time Online Banking System by June 2014. To meet the growing need for rendering prompt services to the customers, the Bank is trying its best to automate all sorts of transaction in the branches. All the branches are well equipped with computers and 'Online Banking Facility' through required network support to satisfy the customer's need.

Compliance of Law is not always convenient but our Bank is keen to adhere to the regulatory laws and regulations in order to respond to any changes. Our management team has taken a number of steps to adapt changes. We have intensified our efforts to control expenses and identify areas to generate revenue. We are also implementing a number of initiatives that will help us not only comply with the rules but also enhance the customers' satisfaction.



Strategic Outlook of the year 2014:

Now let me delineate the strategic outlook of the year 2014 in the following paragraphs:

At lenght I would like to express my hearty gratitude to all the members of the Board of Directors for their co-operation. I would also like to thank Bangladesh Bank and other regulatory authorities for their guidance and in valuable support. I am also grateful to the shareholders for their constant trust, condidence and co-operation.

Last but not the least, warmest thanks to all members of BCB for their excellent hard work, notable dedication and dynamic team spirit to make the Bank forge ahead.

At the end, I like to state that we believe in 'Reaching the destination needs smooth sailing'. I am confident that we will succeed to establish our goal to make our Bank - 'a first choice Bank' in the year to come.

May Allah help us with His infinite blessings and favour towards our journey to reach the destination. With best wishes to all of you.

(Md. Yousuf Ali Howlader) Chairman



Directors' Report

Respected Shareholders,Assalamu Alaikum.

It is a great honor for me to have the opportunity to lead a bank like Bangladesh Commerce Bank Ltd. With pleasure I would like to present a round-up of financial and operating performance of Bangladesh Commerce Bank Limited for the year 2013. It was a year of moderate growth for Bangladesh Commerce Bank as we have not achieved enough business performance for many reasons.

In 2013, our profit growth shows a downturn, which is mainly because of the slower loan disbursement compared to deposit growth as the economy faced negative growth in loan disbursement in the private sector.

The year manifested protracted political deadlock and stagnation in normal functionality of almost all drivers of the economy. Bangladesh economy had experienced slow growth in export and negative growth in import and for the first time in foreign remittance, erosion of confidence of investors and rise in costs of doing business. Due to the political downturn, negative growth in private sector investment, GDP of the country grew by 6.2% in FY 2012-2013 (based on 2005-06) which slightly fell from 6.3% of the previous fiscal year.

Despite the downturn in the economy, our bank's stay put in profitable trend in 2013. The Bank's profit after Tax (PAT) for year 2013 was Tk. 17.0 million. In the year 2013 our total deposit from banking operation was Tk. 19,736 million registering 26.4% growth over 2012. Total loans & advances from banking operation stood at Tk.13,064 million showing 6.6% growth over the previous year. Capital adequacy ratio as per BASEL II was 14.28% against our required CAR of 10% and whereas the industry average of CAR is 12.52%. Import was for Tk. 5095 million which declined by 6.1% due to downturn in import trend while our export secured positive growth by 5.5% over 2012 having total amount of Tk. 3,225 million. The bank has contributed to a great deal in remittance inflow as the growth in this area was 44.8%.



Directors' Report

In 2013, although we achieved total operating income of BDT 789 million only but we ended the year with strong liquidity and capital ratio of 14.28%. This is an important measure of financial strength as at December 31,2013. The Bank's deposit grew by 26.40% reflecting progress to make it a customers' oriented bank - their bank of choice.

In 2013, the Bank earned profit for an amount of BDT 81 million only before tax which is lower than that of year 2012 for insignificant business performances. Net profit attributable to shareholders reached to Tk. 17 million. return on average equity was 0.61% and Earnings Per Share (EPS) stood at BDT 0.88. In 2013, though the Bank stood at the verge of touching Tk. 20,000 million deposit milestones while at the end of the year the figure reached at Tk. 19,736 million. This was Tk. 15,611 million in the year 2012 securing a growth of 26.4% while the deposit growth in banking industry was 16.26%. In 2013, BCB's Loans & Advances reached to Tk. 13,064 million.

The Bank's total assets posted a 25.38% increase in 2013, from Tk. 19544 million to Tk. 24,504 million. A major contribution to this growth was the increase in loans & advances which jumped by 6.64% from Tk. 12,250 million to Tk. 13,064 million. Fixed assets of the Bank also increased to Tk. 183 million from Tk. 165 million. The bank also had to increase its Investment in Gov. Securities and others. The Bank's Equity is divided into two parts i.e. Tier-I and Tier-II capital. Tier-I includes Paid-up Capital, Statutory Reserve. and Retained Earnings. Tier-II includes General Provision on unclassified investments & Off -Balance Sheet items. The Authorized Capital of the Bank is Tk. 10,000 million and Paid-up Capital of the Bank is Tk. 1,989 million as on 31.12.2013. Total equity was Tk 3273 million as on 31.12.2013 securing a steady growth over previous year when the total equity was Tk 2328 million as on 31.12.2012.

In course of our operation and business expansion during 2013, we expanded our branch networks by opening 4 (four) new branches in different strategic locations. With this, our total number of branches stands at 42 (forty two) at the end of 2013 and continue looking for more locations to expand our network every day. In addition to this, ATM and bills Pay Machines were added during the year to gain operational efficiency and be more focused on customer's service. We have taken different customer centric initiatives and as part of it, Bangladesh Commerce Bank Ltd. launched multipurpose service points branded as 'Touch Points' where different direct services including cash withdrawal, deposit, remittance, banking information etc. will be provided.

With the advent of technology and mobile communication, banks are now catering banking services through mobile devices like Mobile Phone, PDA, POS terminals, PC & Thin Clients etc. to un-banked low income customers.

In 2012, the bank tied business relation with the Government's priority project "Ekti Bari Ekti Khamar". During 2013 the bank could able to provide financial services to 7,000 somity and around 5 Lac members across the country as well as the bank collected a significant amount of low cost deposit. As another initiative of financial inclusion, the bank has introduced Mobile Financial Service named "SCash". This new product is enabling the customers to avail different services like account opening, cash deposit, cash withdrawal, balance transfer, bill payment, mobile recharge etc by using mobile banking service offering by our bank.

BCB has developed effective risk management process within the organization to ensure adequacy of capital against overall risk exposure. With this, we have been able to maintain our capital adequacy ratio within the limit prescribed by Bangladesh Bank under Basel II. Also, there are sufficient measures of internal control systems embedded in our day to day operation to identify and mitigate different operational and transactional level risks. Risk Management of BCB evolves identification, measurement, monitoring and controlling risks to ensure that:

(a) The Bank's risk exposure is within the limits established by the Board of Directors. (b) The Bank's risk taking decisions are in line with the business strategy and objectives set by the Board of Directors

of the Bank as well as Bangladesh Bank guidelines. (c) The Bank's risk taking decisions are explicit and clear. (d) Sufficient capital as a buffer is available to take risk.

The risk management policy of the bank operates under the following principles:

Oversight by the Board/ Executive Committee. The Board approves policies and processes of risk management which is recommended by the top management and the Executive Committee approves the credit proposals submitted by the top management;

Audit committee of the Board reviews the internal audit reports of the bank and risk management;



Directors' Report

Bangladesh Commerce Bank is very much compliant to its corporate social responsibilities. Being socially responsible, we believe and work to add value to the society and also to contribute to improving the quality of life of our society as a whole. In 2013 our bank contributed Tk. 4.06 million in different areas for the betterment of our society. We focused and are continuing our work for development and improvement in core areas like Education, Health, Culture and Natural Resources.

I express my sincere gratitude to all stakeholders especially the Bangladesh Bank and National Board of Revenue for their support and our valuable customers for their trust with us. Also, I would like to thank our entire BCB family for their spirit, ownership, dedication and commitment to bring the success and request to continue to step forward for achieving our ultimate goal.

The bank will direct its operation to achieve long term sustainable growth. To achieve that objective, the bank will ensure proper management of its financial position, liquidity and solvency. A major project has been undertaken to up-grade Polaris Online Banking Solution software to bring it at par with International Standard. The long expected countrywide Mobile Banking project is at the verge of implementation in 2014. The Bank is reducing dependency on high cost deposits and much emphasis has been given to increase retail deposits especially CASA (Current Account & Savings Account) deposit through diversified products and services. In case of financing, we focus on providing credits to the deserving valued clients by offering competitive price. The Bank will intensify its efforts to reduce the NPL ratio, comply regulatory and internal requirements at all times and initiate more CSR activities in deserving fields like:

- Branch opening;

- Expanding mobile banking agent network;

- Introducing agent banking; and

- Establishing business relation with International Payment Gateway service provider.

While concluding, I would like to express my deep gratitude to the regulatory authorities especially Bangladesh Bank, Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange for their continuous support and cooperation. I am expressing my sincere thanks and gratitude to the members of the Board of Directors of our Bank for their policy guidelines and adequate support to the management to implement those. Thanks are due to our respected shareholders, valued customers, patrons and all other stakeholders for their trust and confidence in the Management of the Bank. Finally, thanks to my beloved colleagues of Bangladesh Commerce Bank Limited for their efforts and dedication in achieving these inspiring results.

May Allah grant us wisdom and strength.

Abu Sadek Md. SohelCEO & Managing Director



Directors' Report

II. Financial Reporting

BCBL established an Audit Committee as a sub-committee of the Board of Directors in accordance with the Bangladesh Bank's directive vide circular # 11 dated October 27, 2013. The objective of this committee is to work as a sub-committee of the Board in overseeing and monitoring overall internal control system and the financial reporting process to ensure that the financial statements reflect true and fair view of the statement of affairs of the company.

Composition of Audit Committee:

In accordance with the directives of Bangladesh Bank vide Circular # 11 dated October 27, 2013 the Audit Committee of BCBL is constituted with four members of the Board of Directors. The Company Secretary is working as Member Secretary of the committee. Following are the members of the Audit Committee:

Roles & Responsibilities:

The authority and roles and responsibilities of the Audit Committee are assigned by board in accordance with the directive of Bangladesh Bank vide circular # 11, dated October 27, 2013. Accordingly, Audit Committee is responsible to oversee the adequacy, efficiency and effectiveness of the company's internal control system, financial reporting process, internal and external audit functions and compliance with relevant laws and regulations. The prime responsibilities of the Audit Committee among others are as follows:

I. Internal Control

Evaluate compliance culture of the bank in respect of internal control and risk management.

Monitor management activities for development and maintain a suitable Management Information System (MIS).

Review existing risk management procedure to ensure an effective internal control and compliance system.

Assess whether the recommendations from internal and external auditors to mitigate the deficiencies in the internal control system have been implemented properly.

Review the effectiveness of measures taken by the management against any fraud, irregularity or deficiencies

Review whether the annual Financial Statements are prepared correctly and completely in compliance with the accounting and reporting standards to ensure true and fair view of the state of affairs of the company.

Harmonize auditor's disclosures with management policy and practices through discussion and meeting.

1. Mr. Abbas Uddin Ahmed Chairman

2. Mr. Md. Farhad Uddin Member

3. Dr. Md. Zillur Rahman Member

4. Mr. Rana Kaiser Member

5. Mr. Md. Abdul Karim Member Secretary

Report of theBoard Audit Committee


Directors' Report

III. Internal & External Audit Functions

IV. Compliance with Laws and Regulations

Committee Meetings :

As per the requirement of Bangladesh Bank guideline, Audit Committee needs to hold 3 or 4 meetings in a year and also may hold special meeting as and when required. In 2013 Audit Committee held three (3) meetings where committee reviewed different issues related to company's risk management, internal control system and periodic financial statements. Key officials as relevant to the matters discussed were present in the meeting as required by the Committee.

Committee's Report Summary:

Audit Committee has been carried out the regular functions as assigned by Board through specified roles and responsibilities. Key activities of the Committee during 2013 are outlined below:

All meeting proceedings including the discussions and recommended action items of the Audit Committee were properly documented and reported to the Board of Directors.

Review the activities, resources and structure of the Internal Audit function and ensure that no unjustified restrictions or limitations are made.

Review efficiency and effectiveness of internal audit functions.

Review management actions and remedial measures against findings and recommendations by the internal auditors.

Review findings and recommendations of external auditors and management response and necessary actions thereon.

Make recommendation to the Board regarding the appointment of the external auditors.

Reviewed and Endorsed Internal Audit Manual for BCBL;

Reviewed and discussed with the external auditor regarding draft Audit Report and corresponding Financial Statements for the year ended 31st December 2013;

Considered and recommended the annual Financial Statements for the year ended 31st December 2013 along with the Audit Report for final approval from Board;

Reviewed the audit report on BCBL Green Road branch by the internal audit department and the audit team from Bangladesh Bank. Committee discussed the audit outcomes in detailed considering the associated risk and recommended necessary actions to mitigate the risks;

Reviewed the audit report on BCBL Mouchak branch by the internal audit department and the audit team from Bangladesh Bank. Committee discussed the audit outcomes in detailed considering the associated risk and recommended necessary actions to mitigate the risks;

Reviewed the audit report on BCBL Khilgaon branch by the internal audit department and the audit team from Bangladesh Bank. Committee discussed the audit outcomes in detailed considering the associated risk and recommended necessary actions to mitigate the risks;

Reviewed the status of corrective measures taken by the management with regards to the previous recommendations of the committee relating to the deficiencies in internal control and other relevant issues; and

Reviewed the shareholding and loans and liabilities status of the directors of former Bangladesh Commerce and Investment (BCI) Ltd.

Review whether the bank operates in compliance with all relevant laws, regulations, rules and regulatory guidelines of the state and also the internal policy and procedures as approved by the management.

I.

II.

III.

IV.

V.

VI.

VII.

VIII.


Report of Audit Committee

Directors' ReportDirectors' ReportDirectors' ReportDirectors' Report

Directors' Report

Directors' Report 2013

On behalf of the Board of Directors of Bangladesh Commerce Bank Limited I would like to welcome you all to the graceful event of our 16th Annual General Meeting. Before commencing the main occasion we gathered here for which I am delighted to present Bank's 16th Annual Report to the valued stockholders and other interested groups of people and organizations.

In addition to the oversight responsibilities, the Board of Directors has to ensure that the Financial Statements of the Bank and its subsidiaries are prepared in accordance with Bangladesh Financial Reporting Standards (including Bangladesh Accounting Standards), relevant provision(s) of the Companies Act, 1994, Bank Companies Act, 1991, rules and regulations of Bangladesh Bank.

The report mainly includes Auditor's Report, Director's Report, Management Analysis, Audited Financial Statements of the bank and its subsidiary company. Apart from presenting the financial statements the board of directors like to explain and disclose certain issues which they deem relevant and important to ensure complete, true and fair presentation with the believe that the report will give a factual insight of financial performance and position of the bank.

Economical Prospects

Despite improved global financial conditions and reduced short-term risks, the world economy continues to expand at a subdued pace. After a marked downturn over the past two years, global economic activity is expected to slowly gain momentum in the second half of 2013 and in 2014 on the back of accommodative monetary policies in developed and developing economy. The short-term risks associated with the situation in the euro area, the fiscal adjustments in the United States and the economic slowdown in large developing countries have diminished, but not disappeared. Underperformance in the world economy was observed across almost all regions and major economic groups. Most developed economies continued struggling in an uphill battle against the lingering effects of the financial crisis, grappling in particular with the challenges of taking appropriate actions over fiscal and monetary policy. A number of emerging economies, which had already experienced a notable slowdown in the past two years, encountered new headwinds during the period 2013 on both international and domestic fronts. Some signs of improvements have shown up more recently; the euro area has finally come out of a protracted recession, with Gross Domestic Product (GDP) for the region as a whole returning to growth; a few large emerging economies, including China, seems to have backstopped a further slowdown and are poised to strengthen.

The economic meltdown in richest countries of world over the last two years has negatively affect the foreign trade of Bangladesh. Export growth declined to 5.99% and 11.22% in the financial year 2011-2012 and 2012-2013 and from 41.49% in the financial year 2010-2011. Import also shrank down to 5.52% and 4.03% in the financial year 2011-12 and 2012-13 which was 41.79% in 2010-11. During the 2011-12 and 2012-13 GDP growth stood at 6.52% and 6.01%. The projected GDP growth is 6.12% for the financial year 2013-14. As the political situation stabilized momentarily and stays for a while we hope that the economy will grow as projected. Bangladesh economy go through a difficult time during the financial year 2013 which caused lower growth in private sector, increasing idle money in money market, recovering the capital market meltdown, sluggish growth in import and export business etc. But in the upcoming year, country may likely to have very good business environment as the richest countries are recovering the financial crisis which will improve foreign trade business and to support foreign trade business, local investment will also increase. Due to Bangladesh Bank's time to time effective monetary policy, money market will be on stable path whereas different initiatives from Government help to bring back domestic and foreign investors to the capital market.

BCB Review

Bangladesh Commerce Bank Limited (BCBL) was established by the Parliamentary Act No. 12 of 1997, passed by the Parliament of the People's Republic of Bangladesh. Subsequently on February 08, 1998 as per clause 7(7) of Act 12 of 1997, the Government constituted the Board of Direcotrs consisting 11 Members to organize BCBL and administer the affairs of the Bank in accordance with the Act.

Bangladesh Commerce Bank Limited was incorporated on June 01, 1998 as a public limited company under the Companies Act, 1994, Bank Companies Act, 1991 and in accordance with the Parliamentary Act No. 12 of 1997. The Bank formally started operation from September 16, 1999 with the slogan of "A People's Bank with a Mission". Few days back bank changed its corporate logo and initiated a new slogan which says "Service with Trust" as the bank believe in providing high quality personalized services.


Directors' Report

Having been registered with the Registrar of Joint Stock Companies and Firms (RJSC) with the prior approval of Securities and Exchange Commission (SEC), Bangladesh Commerce Bank Limited commenced banking operation with the opening of its Principal Branch at 19, Rajuk Avenue, Motijheel C/A, the financial hub of the capital city Dhaka on September 16, 1999. By the end of the accounting year 1999, the other 23 branches in Dhaka, Chittagong, Khulna, Sylhet metropolitan area and Bogra, Naogaon, Narayangonj started functioning. At present BCBL is successfully running operation in 42 branches with its last branch opened in Kathgora Bazar, Ashulia, Dhaka. Export/Import/Foreign Exchange business is being done through our A/D Branches. We are also member of SWIFT. Import-Export, Foreign Exchange, Remittance related activities are performed with SWIFT. The bank is now using core banking solution of ERA InfoTech Limited. Bank has established its own data center which is equipped with modern machineries and equipments to provide all kind of technological support as required by the bank.

Review of Financial Reporting

The Directors are responsible for the preparation and fair presentation of financial statements in accordance with applicable financial reporting framework, laws and regulations.

Maintenance of Proper Books of Account

Proper books of account as required by the law have been kept by Bangladesh Commerce Bank Limited. The external auditor i.e. ACNABIN, Chartered Accountants also provided their opinion on the same in section ii) of "Opinion Paragraph" of their audit report. The said audit report has been mentioned in page no 81.

Application of Accounting Policies and Accounting Estimates

Appropriate accounting policies have been consistently applied in preparation of the financial statements of the Bank and that the accounting estimates are based on reasonable and prudent judgment. Estimates and underlying assumptions are reviewed on an ongoing basis and any revisions to these are recognized in the period in which the estimate is revised and if any future period affected. The significant accounting policies applied and accounting estimates used for preparation of the financial statements of the Bank have been stated in details in Page No. 95 to 102 of the FS 2013.

Preparation of Financial Statements as per BAS/ BFRS

The financial statements of the Bank as at and for the year ended 31 December 2013 have been prepared under the historical cost convention and in accordance with Bangladesh Financial Reporting Standards (BFRSs), the "First Schedule" (section 38) of the Bank Companies Act 1991, as amended by the BRPD Circular no. 14 dated 25 June 2003, other Bangladesh Bank Circulars, the Companies Act 1994, the Securities and Exchange Rules 1987, and other laws and rules applicable in Bangladesh. In case the requirement of provisions and Circulars issued by Bangladesh Bank differ with those of other regulatory authorities and accounting standards, the provisions and Circulars issued by Bangladesh Bank shall prevail.

Going concern basis

The financial statements are prepared on a going concern basis, as the directors are satisfied that the company has the resources to continue its business for the foreseeable future. In making this assessment, the directors have considered a wide range of information relating to present and future conditions. Further information relevant to the assessment is provided in the following sections of the financial statements:

Principal activities, strategic direction and challenges and uncertainties are described in the business review;

a financial summary, including a review of the statement of comprehensive income and statement of financial position, is provided in the financial results section; and

objectives, policies and processes for managing credit, liquidity and market risk, and the Company's approach to capital management and allocation, are described.

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Directors' Report

The current economic environment remains challenging. In this context, management performed the strategic review in the previous year which led to a refocus of existing business, as well as stringent cost measures. As a result of these strategic measures, and the continued development of the business operating model in order to align with the Bangladesh Bank and our strategy and market conditions, continuing operations returned to profitability. The Company has maintained a comfortable capital and liquidity position. BCBL will be able to meet its contractual liabilities.

Having considered the factors set out above, the group continues to adopt the going concern basis in preparing the annual financial statements

Adding value through technology

To provide real time banking service to customer BCB acquired Core Banking Solution from ERA InfoTech Limited. We established modern equipped Data Center and to comply Bangladesh bank IT policy bank within a very short time will establish Disaster Recovery Site. From mid 2014 the bank will introduce Debit Card to its customer. To facilitate the transaction through International Payment Gateway bank is in the process of establishing business relationship with Payza.com.As Commercial Banking continues to grow, it is important that we are able to support this expansion with our technology. BCB formed a joint venture IT Firm "Sonali Polaris Financial Technology Ltd (SPFTL)" in association with Polaris Financial Technology Ltd, India a leading global Financial Technology Company, Sonali Bank Ltd., the largest State-owned Commercial Bank in Bangladesh and Rajshahi Krishi Unnayan Bank (RAKUB) a specialized bank. This company is country's first foreign-local partnership venture in this class aiming to technology transfer and boost up country's IT strength and develop local manpower in this sector. The mother company is Polaris Lab, India which is a CMM Level-5 software company.

Financial Inclusion

BCB streamlined its operation with Government project "Ekti Bari Ekti Khamar" by working as financial partner. Bank provides financial services to more than 7000 shomity which includes around 5 million members from the deep remotest areas of the country. To provide mobile financial service to rural people bank started Mobile Financial Service named "Scash" with business partner Sundorban Courier Service and technological partner Pragati Systems Limited.

Upcoming Year Due to different socio economic condition business environment was not that much favorable during 2013 but in the upcoming year the socio economic condition will be stabilized hence the bank have to capitalize that. We have different plan to introduce new and innovative business line within 2013 to serve our customer in better and diversified ways. To broaden the business and service coverage bank will introduce agent banking service which will provide all kinds of banking service to the customers at their doorsteps in the rural and suburban areas. Bank will introduce products and service which helps to attract more customer to bank. To reach its desired goal maintaining or improving credit quality is will be one of the most important consideration for the bank. Bank has lower its NPL by restructuring the existing NPL and increasing good quality and high yielding assets. Considering the national and global economy it can be predicted that international business in 2014 will be a good opportunity to take off. All of our effort must direct towards the ultimate goal of maximizing shareholders value for what we exist and continue our business. We believe we will be able to perform by providing trustworthy service to our customers to be their choice of bank.

On behalf of the Board of Directors.

Md. Yousuf Ali HowladerChairman


Directors' Report

Stakeholder's information

Financial HighlightsFinancial Highlights - 2013

Particulars 2013 2012

(Figure in million)

1. Performance during the Year Consolidate Bank Consolidate Bank

i. Net Interest Income 347.76 334.34 414.63 406.64

ii. Non Interest Income 513.10 455.38 540.37 479.61

iii. Operating Income 860.86 789.72 955.00 886.26

iv. Operating Profit 156.51 128.50 324.66 300.46

v. Profit after Tax 20.00 17.50 112.60 101.21

2. Year End Financial Position

i. Loan 12,623.71 13,063.71 12,250.26 12,250.26

ii. Investments 4,545.48 4,735.66 2,603.39 2,796.49

iii. Deposits 19,736.16 19,736.10 15,610.99 15,610.53

iv. Shareholders' equity 3,279.13 3,273.16 2,331.81 2,328.34

v. Total Assets 24,677.44 24,504.15 20,080.87 19,544.81

3. Information Per Ordinary Share

I. Earnings per share (weighted average) 1.01 0.88 5.66 5.09

ii. Price earning ratio (times) 99.43 113.66 17.66 19.65

iii. Net asset value per share (BDT) 164.88 164.58 117.25 117.08

4. Ratios (%)

I. Capital adequacy ratio (as per Basel II) 13.68% 14.28% 10.07% 10.44%

II. Non performing loans 14.68% 14.68% 12.87% 12.87%

III. Cost to income ratio 81.82% 83.73% 66.00% 66.10%

Financial Goals and Performance (Bank)

Capital Adequacy Ratio (CAR) % 13.68% 14.28% 10.07% 10.44%

Return on average equity (ROE) % 0.61% 0.53% 4.82% 4.34%

Return on average assets (ROA) % 0.08% 0.07% 0.52% 0.52%

Cost to income ratio (%) 81.82% 83.73% 66.00% 66.10%

NPL to total loans and advance (%) 14.68% 14.68% 12.87% 12.87%

Deposits (BDT Million) 19,736.16 19,736.10 15,610.99 15,610.53

Loans and advances (BDT Million) 12,623.71 13,063.71 12,250.26 12,250.26


5 Years ProgressionA. BALANCE SHEET METRIC 2013 2012 2011 2010 2009

Authorized capital 10,000 10,000 10,000 10,000 2,000

Paid up capital 1,989 1,989 1,989 1,989 920

Shareholders' equity 3,273 2,328 2,217 2,146 1,018

Deposits 19,736 15,611 13,877 12,188 7,605

Borrowings 51 155 - 1,000 -

Loans and advances 13,064 12,250 11,334 8,266 6,256

Credit to deposit ratio (Gross) 66.19% 78.47% 81.67% 67.82% 82.26%

Credit to deposit ratio - Gross (excluding OBU loans) 66.19% 78.47% 81.67% 67.82% 82.26%

Investments 4,736 2,796 1,953 1,472 710

Fixed Assets 183 165 92 48 39

Interest bearing assets 11,145 10,697 10,337 7,198 4,771

Total assets 24,504 19,545 17,391 15,578 9,428

B. INCOME STATEMENT METRIC 2013 2012 2011 2010 2009

Net interest income (excluding Investment Income) 334 407 598 305 353

Non-interest income 85 64 55 43 22

Investment Income 274 319 115 179 72

Non Investment Income (Exchange, fees & charges) 96 96 132 91 44

Operating Revenue 790 886 900 618 491

Operating Profit (Profit before provision and tax) 129 300 499 325 288

Provision for loans, investment and other assets 47 123 275 163 136

Profit before tax 81 177 224 162 152

Profit after tax (PAT) 17 101 69 63 42

C. CAPITAL METRIC 2013 2012 2011 2010 2009

Risk weighted assets (RWA) under Basel II (Basel I for 2008) 18844 18,018 14,914 13,537 5,723

Core capital (Tier 1) 2540 1,744 1,984 1,793 1,003

Supplementary capital (Tier 2) 152 136 135 103 79

Total Capital / Regulatory capital (Tier 1 and 2) 2694 1,880 2,119 1,896 1,082

Statutory capital (Paid up capital and statutory reserve) 2182 2,168 2,132 2,087 986

Capital adequacy ratio (Regulatory capital/RWA) 14.28% 10.43% 14.21% 14.01% 18.91%[Basel II from 2009 & Basel I for 2008]-Solo Basis.

Core capital (Tier 1) to RWA 13.48% 9.68% 13.30% 13.25% 17.53%

RWA to total assets [Basel II from 2009 & Basel I for 2008] 76.90% 92.19% 85.76% 86.90% 60.70%

Figure in Million



D. CREDIT QUALITY 2013 2012 2011 2010 2009

Non performing/classified loans (NPLs) 1,918 1,553 997 1,068 1,485

Specific Provision 46 438 460 367 279

General Provision 121 107 103 89 59

NPL to total loans and advance 14.68% 12.87% 9.56% 13.18% 23.74%

E. TRDE BUSINESS METRIC 2013 2012 2011 2010 2009

Export 3225.4 3058 2219 1200 1021

Import (LC) 5095.4 5426 7389 4404 3513

Guarantee 357 387 519 101 104

Remittance 521.9 360 183 102 13

Figure in Million

F. EFFICIENCY/PRODUCTIVITY RATIOS 2013 2012 2011 2010 2009

Return on average equity (ROE) 0.61% 4.34% 3.11% 2.94% 4.13%

Return on average assets (ROA) (PAT/average assets) 0.08% 0.52% 0.40% 0.40% 0.45%

Cost to income ratio (Operating expense/Total Revenue) 81.82% 66.10% 44.60% 47.30% 41.20%

Yield on advance (average) 14.47% 15.93% 15.32% 8.01% -

Cost of deposits (average) 13.56% 9.60% 7.80% 5.58% -

Net interest margin (NII/Average interest bearing assets) 1.53% 3.80% 5.79% 4.24% 7.40%

Cash reserve ratio (daily basis) 6.31% 6.18% 6.43% 6.39% 8.96%

Statutory liquidity reserve ratio 29.80% 20.71% 19.94% 20.29% 22.56%

Operating profit per employee 0.22 0.44 0.73 0.59 0.63

Operating profit per branch 3.73 7.89 16.63 13.00 11.52





Financial Growth

Assets Shareholder's Equity Deposit

2,5002,450

1,9551,739

1,558

943

2,000

1,500

500

2009 2010 2011 2012 2013

1,000

350

300

200

250

50

100

150

2009 2010 2011 2012 2013

327

233222215

102

2009 2010 2011

1,974

1,5611,388

1,219

2,0001,8001,6001,4001,2001,000

800600400200

761

2012 2013

20132012201120102009

1,400

1,200

1,000

800

600

400

200

1,3061,225

1,133

827

626

Loans & Advances Fixed Assets Investment

201320122011

17

9

54

18

20102009

2468

101214161820

2009

500

474

280

195147

71

450400350300250200150100

50

2010 2011 2012 2013

2009 2010 2011 2012 2013

52

36

18

1010

20

30

40

50

60

1

2009

350

323306

222

120102

300

250

200

150

100

50

2010 2011 2012 2013

Import Export Inward Remittance

2009

800

510543

739

440351

700

600

500

400

300

200

100

2010 2011 2012 2013



Operating Performance

2009

35

27

32

12

18

7

30

25

20

15

10

5

2010 2011 2012 20132009

9

9

66

4

2

8

7

6

5

4

3

21

2010 2011 2012 20132009

60

33

41

60

3135

50

40

30

20

10

2010 2011 2012 2013

Net Interest Income Non-Interest Income Investment Income

2009

6.00

1.01

5.09

3.513.18

4.49

5.00

4.00

3.00

2.00

1.00

2010 2011 2012 20132009

0.60%

0.68%

0.52%

0.40%0.40%0.45%

0.50%

0.40%

0.30%

0.20%

0.10%

0.00%

2010 2011 2012 2013

Return on Assets Return on Equity Earning per Share

2009

4.50%

0.61%

4.34%

3.11%2.94%

4.13%4.00%3.50%

3.00%

2.50%

2.00%1.50%

1.00%

0.50%

0.00%

2010 2011 2012 2013

2009

12

2

10

76

4

10

8

6

4

2

2010 2011 2012 20132009

70

66

59

40

29

20

60

50

40

30

20

10

2010 2011 2012 2013

Operating Expenses Operating Prifit Net Profit after Tax

2009

50

13

30

50

3329

4540353025201510

5

2010 2011 2012 2013


Stakeholder's Informantion

Management Efficiency

25020%

18%

16%

14%

12%

10%

8%

6%

4%

2%

Mar-13

NPL Amount

Jun-13 Sep-13 Dec-13

0%

200

150

50

168

219

217

99

13.94%

17.70%17.44%

7.71%

100

35%600

500

400

300

200

100

Mar-13 Jun-13 Sep-13 Dec-13

30%

25%

20%

15%

10%

5%

0%

25.02%23.18%

19.69%

29.80%

282

371

309

377

313

324

352

552

6.35%140

120

100

80

60

40

20


6.30%

6.25%

6.20%

6.15%

6.10%

6.05%

6.00%

5.95%

6.16%

6.27%

6.08%

6.31%

89 91 98 102

99 100

111

169

16%2,500

2,000

1,500

1,000

500


14%

12%

10%

8%

6%

4%

2%

0%

194 150 152269

7.49%7.74%

10.92%

14.28%

1,77

8

1,94

4

2,02

8

1,88

5

78%2,500

2,000

1,500

1,000

500


74%

76%

72%

70%

64%

62%

60%

75.49%

1,62

0

1,22

3

1,75

0

1,88

6

1,97

4

1,25

8

1,26

3

1,30

6

71.89%

66.93%

66.19%

68%

66%

NPL Ratio Deposit Advance AD Ratio

SLR Required SLR Maintained Ratio CRR Required CRR Maintained Ratio

RWA Eligible Capital CAR


VALUE ADDED STATEMENT

2013Particulars

ConsotidateConsotidate In %In % BankBank

2012

in million BDT

Income from banking services 2,604.69 2,533.55 2,301.28 2,176.59

Less: Cost of services & supplies 2,058.25 2,032.52 1,646.30 1,562.29

Value Added by Banking Services 546.44 501.03 654.98 614.30

Non-banking income - - - -

Provision for loans & other assets 62.52 47.32 127.38 123.48

Wealth creation 483.92 453.71 527.60 490.81

Wealth distribution

Employees as salaries & allowances 389.93 372.53 82.11% 330.31 313.83 63.94%

Government as Income Tax 73.99 63.68 14.04% 84.69 75.77 15.44%

Statutory Reserve 16.24 16.24 3.58% 35.40 35.40 7.21%

Retained earnings 3.76 1.26 0.28% 77.20 65.82 13.41%


The banks' overall objective is to deliver optimum value to its customers, employees, government and the shareholders. To achieve this objective, BCBL formulates its strategy and takes necessary initiatives for effective strategy implementation. Economic Impact Report provides the value that BCBL delivered in 2013 to its employees, government and shareholders.

VALUE ADDED STATEMENT

Value Added Statement shows how much value has been created and distributed in 2013 by BCBL to its employees, government and shareholders in the form of salary & allowances, income tax and dividend respectively.



ECONOMIC VALUE ADDED STATEMENT

Economic Value Addition (EVA) indicates the true economic profit of the company. EVA finds value in amount that exceeded or fell short of the expected/required amount of return for shareholders. Shareholders are always conscious about their return on capital invested and similarly BCBL is highly concerned for creating higher value to the shareholders.

Shareholders' equity 3,279.13 3,273.16 2,331.81 2,328.34

Add: Accumulated provision for loans & 1,128.37 1,113.18 599.31 595.42advances and other assets

4407.50 4386.34 2,931.12 2,923.76

Capital Employed (Average Shareholders' equity) 2,805.47 2,800.75 2,887.26 2,875.01

Earnings

Profit after tax 20.00 17.50 112.6 101.21

Add: Provision for loans & advances and 62.52 47.32 97.38 93.48other assets during the year

Less: Written off loans during the year (3.77) (3.77) (75.8) (75.8)

Total Earning 0.14 0.14 134.18 118.89

Average cost of equity (Based on weighted averagerate of 10 years treasury bond issued by the 387.15 386.50 13.80% 13.80%Bangladesh Government) Plus 2% risk premium

Capital charge (Cost of average equity) (308.41) (325.45) 398.44 396.75

Economic Value Added 3,279.13 3,273.16 (264.26) (277.86)

ParticularsConsolidate ConsolidateBank Bank

2013 2012

in million BDT


Report onCorporate Governance

Conceptual Framework

Corporate Governance is a framework of principles, rules, processes and practices within an organization with the objective to ensure accountability, fairness and transparency in the operations and relationship among the stakeholders in terms of authority, responsibilities, rights and obligations. Corporate Governance establishes the system of reconciling the conflicting interests of stakeholders in accordance to their duties, privileges & roles and also the procedures for effective supervision, monitoring and control through internal check and balances. Good corporate governance is a must for any organization to run its' operation in sustainable manner and eventually achieve the ultimate goal or objective.

Corporate Governance practices at BCBL

The management of BCBL is committed to protect interest of all concerned stakeholders and accordingly put best effort to establish good governance and a compliance culture within the organization. As a banking company it is also directed by Bangladesh Bank with certain governance practices. BCBL has developed and established clear guidelines on the authority, roles and responsibilities of Board of Directors, different management committees and key management officials including MD &CEO. It has strong internal control system where adequate number of policies, rules, procedures, processes and guidelines are practiced and also monitored by an independent function on a continuous basis. With these BCBL has set the standard and ensured the transparency and accountability to safeguard the interest of its stakeholders.

Structure and Resposibilities of the Board

The BCBL Board of Directors consists of eleven (11) members. All the board members are highly competent in terms of academic and professional qualification and experiences. Board takes the strategic decisions and monitors the effectiveness of strategy implementation. As part of this, our Board approves the business plan & budget and review the execution on monthly basis. All significant internal policies, procedures and guidelines are approved by the Board and adopted by the management. Management carries out operations within the guidelines and limits approved by board. In addition to these, Board reviews the compliances with guidelines issued by the regulatory bodies on regular basis.

Board meetings and attendance

The Board meeting of BCBL is held on a regular basis, usually once in every month. However, emergency meetings are called as and when required. Meeting agendas are fixed and all relevant information, references and detailed working papers are communicated with the Board members well before the date of meeting. At the meeting, management presents and discusses with more insights, addresses Director's query and provides additional information as required for consideration of the matter by the Board.


Corporate Governance Report

During the year 2013, total twenty one (21) Board Meetings were held; the attendance records of those meetings are as follows:

01. KA The Government of The People's Republic of Bangladesh 6,750,000 33.94

Sponsors as per MoA & AoA 8 0.00

02. KHA Three State Owned Bank ( Sonali, Janata & Agrani bank ltd.) 2,249,982 11.32

03. GA Govt. Owned Corporate Bodies 1,024,613 5.15

Depositors and Other Private Shareholders 9,862,825 49.59

Total 19,887,428 100.00

The Directors who could not attend the meeting(s) were granted leave of absence by the Board.

Ownership Composition

As on 31 December 2013 the shareholding composition among different category is given below:

1 Mr. Md. Yousuf Ali Howlader 20 20 -

2 Mr. ATM Murtozaa Reza Chowdhury ndc 21 17 Leave granted

3 Mr. Tapan Kumar Karmaker 21 21 -

4 Mr. Pradip Kumar Dutta 20 14 Leave granted

5 Mr. Md. Farhad Uddin 20 19 Leave granted

6 Dr. Md. Zillur Rahman 21 14 Leave granted

7 Mr. Rana Kaiser 21 08 Leave granted

8 Mr. Manwar Hossain 21 12 Leave granted

9 Mr. Anis Ahmed 21 04 Leave granted

10 Mr. Abbas Uddin Ahmed 21 18 Leave granted

11 Mr. Abu Sadek Md. Sohel 05 05 -

NameTotal

MeetingHeld

No. ofMeetingAttended

No. ofMeetingAbsent

Sl

Category No. of SharesName of Holders % of HoldingSl



Directors Shareholding Status

Shareholding structure of directors as on 31st December 2013 is as follows:

Appointment of External Auditor

The Board of Directors of BCBL in its' 15th AGM appointed ACNABIN & Co. Chartered Accountants as the statutory auditors for the year 2013.

Services not Provided by External Auditors

We hereby declare that ACNABIN & Co., Chartered Accountants involved in statutory audit, was not engaged in any of the following services for BCBL during 2013:

Appraisal or valuation services or fairness opinions.

Financial information system design and implementation.

Book keeping or other services related to accounting records or financial statements.

Broker-dealer service.

Internal audit services.

No partner or employees of the ACNABIN & Co., Chartered Accountants, possesses any share of BCBL during the tenure of their audit assignment.

Name DesignationShare Held

as on31.12.2013

RemarksSl

1 Mr. Md. Yousuf Ali Howlader Chairman - Appointed on (Govt. Nominated) 09/01/2013

2 Mr. ATM Murtozaa Reza Chowdhury ndc Director - - (Govt. Nominated)

3 Mr. Tapan Kumar Karmaker Director - - (Govt. Nominated)

4 Mr. Md. Farhad Uddin Director - Appointed on (Govt. Nominated) 20/01/2013

5 Dr. Md. Zillur Rahman Director - - (Govt. Nominated)

6 Mr. Pradip Kumar Dutta Director - Released on (Govt. Nominated) 18/12/2013

7 Mr. Rana Kaiser Director 32,400 Retired & Re- elected 13AGM on 07-10-2013

8 Mr. Manwar Hossain Director 125,494 - (Representative of the City Gen. Ins. Co. Ltd.)

9 Mr. Anis Ahmed Director 1,362,139 -

10 Mr. Abbas Uddin Ahmed Director - - (Representative of the Sunflower Life Ins. Co. Ltd.)

9 Mr. Abu Sadek Md. Sohel Managing - Date of Joining Director & CEO 02/10/2013



Highlights on Central Bank Inspections

Bangladesh Bank carried out comprehensive inspection on BCBL banking operations of Principal Branch, Bangshal Branch, Agrabad Branch and Dewanhat Branch office during 2013. They submitted their detailed inspection report to BCBL and those were placed to the Audit Committee of the Board for their review and comments. All the findings of the inspections were discussed in the meetings and potential risk and mitigation plans were decided as per the recommendations of the report. The reports were finally submitted to the Board for their review and comments. The Board took the observations and instructed the management to comply with the recommendations made by Bangladesh Bank for improvement. Bangladesh Bank also conducted other relevant audits on different functions of BCBL throughout the year.

Board Committees

To ensure good corporate governance, Bangladesh Bank issued a circular (BRPD Circular No 11 dated 27 October 2013) through which it restricted banks to form more than three committees or sub-committees of the Board. In compliance with the directive BCBL has three committees namely Audit Committee, Executive Committee and Risk Management Committee as the sub-committee of Board to oversee and direct the operations, performance and strategic direction of the Bank.

Audit Committee

BCBL established an Audit Committee as a sub-committee of the Board of Directors in accordance with the Bangladesh Bank's directive vide circular # 11 dated 27 October, 2013. The Committee is constituted with four members of the Board of Directors. The Company Secretary is working as Member Secretary of the committee. The objective of this committee is to work as a sub-committee of the Board in overseeing and monitoring overall internal control system and the financial reporting process to ensure that the financial statements reflect true and fair view of the state of affairs of the company. Accordingly, Board clearly defined the roles and responsibilities of the committee to carry out its overseeing function in an effective manner.

In 2013 Audit Committee held three (3) meetings where committee reviewed different issues related to company's risk management, internal control system and periodic financial statements. Key officials as relevant to the matters discussed were present in the meeting as required by the Committee. All meeting proceedings including the discussions and recommended action items of the Audit Committee were properly documented and reported to the Board of Directors. The meeting attendance of the committee members are shown below:

1

2

3

4

Mr. Abbas Uddin Ahmed

Mr. Md. Farhad Uddin

Dr. Md. Zillur Rahman

Mr. Rana Kaiser

3

3

3

3

3

2

3

1

-

Leave granted

-

Leave granted

Composition of Audit Committee

Name of Directors Designation

Mr. Abbas Uddin Ahmed

Mr. Md. Farhad Uddin

Mr. Rana Kaiser

Dr. Md. Zillur Rahman

Chairman

Member

Member

Member

Sl#

Name Total MeetingHeld

No. of MeetingAttended

No. of MeetingAbsent



Executive Committee (EC)

Executive Committee of BCB is comprised of 6 (Six) Directors from the Board. This committee has been formed as a sub-committee of the Board entrusted with following roles and responsibilities.

Review the policies and guidelines issued by Bangladesh Bank for credit and other banking operational issues.

Ensure effective implementation of the policies and guidelines

Review, appraise and approve the credit proposals including any restructure, revision or amendment in respective credit proposal.

Ensure due diligence of the credit policy and risk management at the appraising credit proposal.

* The directorship of Mr. Pradip Kumar Dutta was expired as on 18.12.2013. * The last EC meeting conducted on 10.05.2012

During the year 2013, no EC meeting has been held because as the Board Meetings were held on regular basis.

Separation of Chairman and Chief Executive Officer Roles

In accordance with Bangladesh Bank BRPD Circular No. 11 dated 27 October 2013, there are clear divisions among the roles and responsibilities of the Chairman and Managing Director & Chief Executive Officer.

The Chairman of the Board is not engaged in any execution and as per Bangladesh Banks' guideline he ensures no participation in or interference to the administrative or operational and routine affairs of the Bank. As the Chairman he approves the board agenda and convene Board meeting supported by the Managing Director and the Company Secretary. Regular agenda items include approving credits beyond CEO's authority and aspects of the Bank's corporate strategy, financial performance, core risks and credit policy, corporate governance, CSR and organizational structure, human resources policy, customer and services strategies, procurement policy. Chairman ensures that the Board sets and implements the Bank's direction and strategy effectively.

On the other hand, Managing Director & CEO as the head of executive management team is accountable to the Board and responsible to carry out day to day business operation in compliance with relevant policies, procedures and strategies established by the Board and rules, regulations and guidelines from the Central Bank and other regulatory authorities. Managing Director is also responsible to ensure effective internal control system within the operation to safeguard the interest of all concerned stakeholders.

Responsibilities of the Chairman of the Board

To set out the following responsibilities, BRPD Circular No. 11 dated 27 October 2013 issued by Bangladesh Bank and Corporate Governance Notification issued by BSEC on 07 August 2013 has been taken into consideration.

Composition of Executive Committee

Name Designation

Mr. Md. Yousuf Ali Howlader

Mr. ATM Murtozaa Reza Chowdhury ndc

Mr. Tapan Kumar Karmaker

Mr. Pradip Kumar Dutta

Mr. Manwar Hossain

Mr. Anis Ahmed

Mr. Abu Sadek Md. Sohel

Chairman

Member

Member

Member

Member

Member

Managing Director & CEO


Our Team

CEO & Managing Director

Abu Sadek Md. Sohel

Deputy Managing Director

Dr. Muhammad Asaduzzaman

Executive Vice President

Mr. M. Ebadat HossainMr. S. M. Jahangir Akhter

Mr. Sagir Ahmed Mr. Md. Shamsuddin Ahmed

Senior Asstt. Vice President

Mrs. Qamrun Nahar Begum Mr. Md. Enamul Haque Mr. A.B.M. Ruhul Amin Mia

Senior Vice President

Mr. Md. Salim Hasan Mr. K.M Ashraf HossainMr. Md. Abul HossainMr. Md. Abdur Rahim MiahMr. Md. Afzalur RahmanMr. Md. Mukhlesur Rahman

Mr. Nazmul Karim SiddiqueMr. S.M. WaliullahMr. Md. Shafiqul IslamMr. Afzal Hossain KhanMr. Md. Mamtaz Uddin Maishan

Vice President

Mr. Md. Selim AhmedMr. Ehsan Ahmed Rouf Mr. Anis Uddin AhmadMr. S.M. Reazur RahmanMr. H.M. Abul Kalam AzadMr. Md. Kamruzzaman AkhandMr. Md. Abdul HalimMr. Dewan Mohammad Moniruzzaman

Mr. Ali Azam ChowdhuryMr. Sudatta Shebok BaruaMr. Md. Shahadat HossainMr. Sarwar Md. ShahidullahMr. Md. Mizanur Rahman ChowdhuryMr. Md. Muziburn Rahman KhanMr. Md. Abdul KarimMr. Panu Ranjan DusMr. Mohammad Saiful Islam, FCMA

Asstt. Vice President

Mr. Kabir AhmedMr. Nizamuddin AhmedMr. Abdul Munim ChowdhuryMr. Mahabub MorshedMr. Zia Uddin AhmedMr. Md. Syed SalahuddinMr. Sheikh Akhterul Habib

Mr. Md. Abu SayedMr. Kazi Md. Abul Kashem, FCMA

Mrs. Nargis FatemaMr. Md Farid HasanMr. Md. Mobaraq HossainMr. Tazul IslamMr. Md. Zillur Rahman


Management Team

Management committees of BCB

To ensure effective structure of corporate governance and to carry out daily operations to the best interest of the stakeholders BCBL has constituted different management committees apart from its functional departments.

Management Committee (MANCOM)

MANCOM has been formed under the leadership of MD & CEO besides Deputy Managing Director and all Divisional Heads are the member of the committee. It is considered the highest decision and policy making authority of the Bank which consists of the CEO and different business and support unit heads.

Scope of the Committee

Risk Management Committee

BCB has formed a separate Risk Management Committee as per Bangladesh Bank's guideline. The prime objective of this committee is to identify and mitigate the risks exposed to bank's regular operation and it's going concern. This committee has been in place with defined roles and responsibilities documented through TOR and duly approved by the Board. The responsibilities of this committee are as follows:

Develop a risk aware culture within the organization, review and approve risk management strategies, policies, guideline and framework for BCB.

Supervise and monitor the capital management functions of the bank in harmonization with capital adequacy.

Examine market conditions and take proactive measures to safeguard and mitigate risks with regards to bank's investment.

Carry out periodic stress test with a view to eliminate lapses gradually in the course of business everyday.

Ensure adequate resources, infrastructure and systems are in place so that risk management functions can be carried in an effective manner.

Set or review vision, mission and strategic planning in achieving business objectives and effective discharging of management responsibilities.

Strategic and tactical decisions relating to business, credit, operations, administration, Human Resource, internal and financial control and compliance etc.

Regular business review and analysis of financial performance of the Bank.

Review and discuss policies and procedures of the Bank and recommend necessary changes to the Board.

Review periodic employee performance appraisal and promotions.

Discuss and approve Budget before forwarding to the Board.

Acting Managing Director can preside over the MANCOM meeting in absence of MD.

Consider and propose innovative projects, products and services as well as management methodology and business strategies to the Board of Directors .

Managing Director

Deputy Managing Director

All Divisional Head (Head Office)

Board Secretary

Chairman

Member

Member

Member Secretary

Member Designation

Composition of Management Committee (MANCOM)


Management Team

Asset Liability Committee (ALCO)

ALCO has been formed with the objective to manage liquidity and related risks by setting out strategies and revamping previously taken strategies as necessary.

Scope of ALCO

Measuring overall risk appetite of the bank both in banking book and in trading book.

Measuring and monitor liquidity position of the bank in various time buckets and taking strategic and proactive actions to meet the requirements.

Monitoring the interest rate risk of the bank and taking actions to keep the interest rate gap at the desired level.

Monitoring the movement of macro variables and yield curve shift and taking strategy for short, mid and long term interest rate risk management.

Keeping the balance sheet mix at desired level for Main Operation and OBU.

Measuring and monitoring concentration risk, diversification and product profitability

Name Official Designation Committee Position

Dr. Muhammad Asaduzzaman Deputy Managing Director Chairman

Mr. M. Ebadat Hussain Executive Vice President Member

Mr. S. M. Jahangir Akhter Executive Vice President Member

Mr. K.M. Ashraf Hossain Senior Vice President Member

Mr. Md. Shafiqul Islam Senior Vice President Member

Mr. Md. Abdul Halim Vice President Member Secretary

Mr. Ehshan Ahmed Rouf Vice President Member

Mr. Md. Mizanur Rahman Chowdhury Vice President Member

Mr. Md. Abdul Karim Vice President Member

Mr. Panu Ranjan Das Vice President Member

Composition of Risk Management Committee

Mr. Abu Sadek Md. Sohel CEO & Managing Director Chairman

Dr. Muhammad Asaduzzaman Deputy Managing Director Member

Mr. Md. Salim Hasan SVP, SME Division Member

Mr. Md. Shafiqul Islam SVP, Treasury Division Member Secretary

Mr. Md. Mizanur Rahman Chowdhury VP, Credit Management Division Member

Mr. Panu Ranjan Das VP, Trade Division Member

Mr. Md. Saiful Islam VP & CFO, Financial Administration Division Member

Composition of Asset Liability Committee (ALCO)

Committee Member(s) Designation Rank


Management Team

Business & Investment Committee

BCB Business & Investment Committee has been formed with ten (10) members under the leadership of Managing Director as the Chairman of the Committee. This committee oversees the investment in capital market and meets as and when required. They continuously monitor to ensure that the investment decisions are carried out as per approved strategy and investment policy. This committee regularly monitors our 'Holding of Shares' and 'Capital Market Exposures' and ensures keeping investments within prescribed limit (currently 10% of total liabilities) stipulated by Bangladesh Bank.

Purchase Committee (PC)

The eight members Purchase Committee (PC) have been formed under the leadership of Head of Human Resources Division as the committee chairman. The committee consists of members from different Divisions including Financial Administration, Company Secretarial & Legal Affairs, Recovery Division, General Services Division and IT to monitor and ensure efficacy of spending.

Scope of PC

The main objective of this committee is to ensure optimum value for money through carrying out the Board approved procurement in compliance with the policy and guidelines. The scopes of the committee activity are as follows:

Recommends the lists of vendors for annual enlistment after thorough market survey and investigation of submitted documents and physical visit of vendors' facilities.

Endorse the list of potential bidders, opens the submitted bids/quotations, evaluates and recommends the vendors considering price and quality of the goods and services.

Ensures governance in the area of procurement through carrying out the procurements in compliance with the policies and regulatory requirements.


Dr. Muhammad Asaduzzaman Deputy Managing Director Chairman

Mr. M.A. Motalib Chowdhury CEO (CBSIL) Member

Mr. M. Ebadat Hussain EVP, Human Resources Division Member

Mr. Md. Shafiqul Islam SVP, Treasury Division Member

Mr. Md. Mizanur Rahman Chowdhury VP, Credit Management Division Member

Mr. Panu Ranjan Das VP, Trade Division Member

Ms.Rokeya Begum EO, Investment Divison Member Secretary

Composition of Business & Investment Committee


Mr. M. Ebadat Hussain EVP, Human Resources Division Chairperson

Mr. S. M. Jahangir Akhter EVP, Financial Administration Division Member

Mr. Shamsuddin Ahmed EVP, Human Resource Division Member

Mr. Md. Salim Hasan SVP, SME Division Member

Mr. K.M. Ashraf Hossain SVP, Recovery Division Member

Mr. Md. Mukhlesur Rahman SVP, General Service Division Member

Mr. Ehsan Ahmed Rouf VP, ICAD Member

Mr. Enamul Hoque SAVP, General Service Division Member Secretary

Composition of Purchase Committee


BCB believes that a company culture based on core values not only helps our business but also defines the role that we can and should play in society.

BCB has always been a dedicated corporate entity with regards to contributing towards fulfilling its social commitments. Over the years it has been relentless in its pursuit for social and economic development. Its inherent ethical standards help it to ensure sustainable growth in business and provide a platform from which it benefits its employees, environment, stakeholders, different communities and general public. Social responsibility in combination with moral ethical and international standards gives the company a pedigree that only few of its kind can share. It belongs to the very elite of the society and corporate community where it leaves a mark of positive contribution for the ultimate benefit of the nation as a whole. CSR is titled to the organization's mission as well as a guide to what the company stands for and will uphold to its consumers.

Strengthening and developing our communities is vital to helping our business prosper. Across the footprint in 2013, the bank's provided BDT 2.42 million to programs that offer services in the areas of Education, Health, Culture and Natural Resources.

Recognizing human resources as the most important asset, we have established a competitive and enabling working environment to help employees perform their best. The Bank offers a competitive pay package and bonus that are reviewed on continuous basis in line with market dynamics. It offers to its employees handsome retirement benefit.

Being a responsible corporate, BCB paid all Tax and Levies on time. Company ensures the withholding tax, Value Added Tax, from employees' salary as well as payments to customers and vendors. BCB also deposit the Customs Exercise Duty on regular basis. During the calendar year 2013 we contributed BDT 249.02 million to national exchequer by this below manner:

We identify and act upon new opportunities to apply our support and expertise to societal problems/ enhancement.

We scale our existing programs and initiatives to achieve maximum benefit.

We empower our employees and others to serve their communities.

We integrate corporate citizenship and social responsibility into every aspect of our company.

Corporate Social Responsibility (CSR)

Sl. Area1 Education 0.522 Health 0.953 Culture 0.124 Natural Disaster 0.725 Others 0.11 Total 2.42

Amount

Sl. Area1 Corporate Tax 197.402 Tax Deducted at Source 5.663 Value Added Tax 42.624 Withholding Tax 2.915 Excise Duty 0.43 Total 249.02

Amount


Banking industry had been through a challenging year in 2013 as number of banks started their journey and due to political instability country experienced sluggish growth in private sector investment. To confront those challenges bank has to take business strategy. Both global and local economic scenario had impact on those business strategy.

Global Economic outlook 2013

The world economy had a good 2013. Of course for many it was still a struggle, with the eurozone in recession for much of the year and living standards in most of the developed world still below their 2007 peak. But by the end, even the laggards had started to catch up, and for them the long nightmare of recession and its aftermath began to recede.

There are two great stories in the world economy: the structural shift from the developed world towards the emerging world; and the cyclical climb out of a nasty recession. The first continued last year, but at a slightly slower pace than before. Growth in China, at 7.5 per cent, might seem breathtakingly fast, but actually it's the slowest for 23 years. Things also slowed in India, to a little below 5 per cent, again fast by our standards, but slow when compared to the past. Africa, encouragingly, grew by more than 5 per cent.

In 2013, central banks in the U.S., Japan and Europe showered money on their economies, held interest rates low and promised to continue to do so in a bid to animate a recovery that remains tepid almost five years after the worst recession since the Great Depression. In emerging markets such as Brazil and India, domestic demand softened and exports sagged as rates were boosted to stem inflation. Despite the contrasting fortunes, the overall global economy appeared to be on a surer footing as the year ended. The International Monetary Fund forecasts that world output will grow 3.6% in 2014, compared with a 2.9% estimate for 2013.

The global economy has struggled to sustain economic momentum since the recent global recession. Emerging economies continue to expand, but growth has moderated. The debt crisis and mitigating responses across European nations continue to evolve and actions to contain debt have, in many cases, curtailed growth. In the United States (U.S.), a host of unresolved political and fiscal issues have undermined business and consumer confidence, which in turn curbed investment, employment and Gross Domestic Product (GDP) growth. This has required central bankers to maintain very aggressive monetary policies. Overall, global growth is expected to be moderate in 2013. Expectations are currently lower than they were earlier in the year due mainly to poorer than anticipated performance in the U.S. and China, the two largest economies. Nonetheless, indicators point to some strengthening in the second half of the year in these countries. The OECD's composite leading indicators for September 2013 signal improvements in growth for most advanced economies and China. The International Monetary Fund's (IMF) October 2013 forecast pegs global economic growth at 2.9% (see table), down from 3.1% in July's forecast and 3.5% in January's forecast. This latest IMF forecast places growth below that recorded in 2012 (3.2%). World GDP growth is forecast to accelerate in 2014 as issues in the U.S. are expected to be resolved and most countries within the European Union (EU) begin recovery.

Management review of Business

World 3.2 2.9 3.6

Brazil 0.9 2.5 2.5

India 3.2 3.8 5.1

Russia 3.4 1.5 3.0

Chaina 7.7 7.6 7.3

Canada 1.7 1.7 2.4

USA 2.8 1.5 2.6

Japan 2.0 2.0 1.2

Australia 3.7 2.5 2.8

European Union -0.3 0.00 1.3

United Kingdom 0.2 1.4 1.9

Euro Area -0.6 -0.4 1.0

Germany 0.9 0.4 1.4

France 0.0 0.2 1.0

Spain -1.6 -1.3 0.2

Italy -2.4 -1.8 0.7

*f=forecasted

GD

P G

row

th (

%)

2012 2013 2014f


Management Review of Bisuness

Bangladesh Economic Scenario

Bangladesh maintained on an average 6 percent GDP growth over the last one decade. The country achieved 6.71 percent growth in FY 2010 - 11, the highest growth rate achieved during recent times. According to the provisional estimate of Bangladesh Bureau of Statistics (BBS), Bangladesh attained 6.01 percent growth in 2012-13 despite slowing down of the global economy. In FY2012-2013 private sector credit growth and import growth deteriorated severely while the export and remittance is keeping our hope.

Bangladesh Economic Scenario

Bangladesh maintained on an average 6 percent GDP growth over the last one decade. The country achieved 6.71 percent growth in FY 2010 - 11, the highest growth rate achieved during recent times. According to the provisional estimate of Bangladesh Bureau of Statistics (BBS), Bangladesh attained 6.01 percent growth in 2012-13 despite slowing down of the global economy. In FY2012-2013 private sector credit growth and import growth deteriorated severely while the export and remittance is keeping our hope.

Bangladesh Banking Sector

Banking sector in Bangladesh passed somewhat a moderate year in terms of governance, profitability and soundness in 2013. Continued setback suffered by some major sectors in the economy i.e. textiles, ship-breaking, real estate and commodity trading and lackluster performance of the capital market put pressure on banks' liquidity, asset quality and profitability. Effective from December 2013, the stricter regulation from BB related to loan classification and rescheduling affected the volume of classified loans, raised the requirement of provision and thereby decreased the amount of distributable profit.

GDP Growth 6.07% 6.71% 6.32% 6.01%

Private Sector Credit Growth 24.20% 25.80% 19.70% 10.90%

Import Growth 5.4% 52.1% 2.4% 0.8%

Export Growth 4.2% 39.2% 6.2% 10.7%

Remittance Growth 11.4% 6.0% 10.2% 12.6%

Indicators FY10 FY11 FY12 FY13

Capital Adequacy Ratio 11.67% 9.31% 11.35% 10.46% 11.52%

NPL Ratio (Gross) 9.21% 7.27% 6.12% 10.03% 8.93%

ROA 1.37% 1.78% 1.54% 0.64% 0.90%

ROE 21.72% 20.97% 17.02% 8.20% 10.77%

Deposit (BDT in Crore) 278622 336845 410444 490022 572890

Advances (BDT in Crore) 214218 264182 326634 387804 428315

Investment (BDT in Crore) 49091 56405 74799 95427 134861

Weighted Avg. Deposit Rate 7.01% 6.01% 7.27% 8.15% 8.54%

Weighted Avg. Advance Rate 11.87% 11.31% 12.42% 13.75% 13.67%

Spread 4.86% 5.30% 5.15% 5.60% 5.13%

Indicators FY10FY9 FY11 FY12 FY13

5.36%2.70%

14.76%

77.17%

Demanddeposit

6.98%3.28%

13.96%

Deposit Mix 2012

75.78%

BillsPayable

Savings& SND

Deposit Mix 2013

TimeDeposit

Demanddeposit

BillsPayable

Savings& SND

TimeDeposit



Financial Results for 2013

The strategy of diversified financing, vigilant growth of loan and advance, structured risk management practices, overall monitoring of compliance of operation management, helped the bank to achieve the business target but due to the increase of fund cost and sluggish growth of credit bank could not meet the earning target.

The Company has delivered consecutive years of income and profit growth, as we remain disciplined in the execution of our strategy, with growth underpinned by the diversity of our business across clients and customers, and products.

In 2013 we delivered total operating income of BDT 789.72 million. We also ended the year with strong capital adequacy ratio of 14.28% percent. This is an important measure of financial strength at December 31, 2013. We made progress in becoming our customers' oriented bank - their bank of choice.

Deposit

The Bank mobilized a total deposit of Tk. 19,736.16 million as of December 31, 2013 as against Tk. 15, 610.99 million as of December 31, 2012 indicating an increase of 26.42% over the previous year. The competitive interest rates, deposit mobilization efforts and customers' confidence on the Bank contributed to the growth in deposits during the year. Our deposit mix for the year 2013 & 2012 compared below:

Loans and Advances

In addition to the global economic crisis in 2013, the banking sector has faced uphill challenges domestically in connection with inflation rate, export and import, increase government borrowings. Despite of this, the loans and advances portfolio stood at Tk. 13,063.71 in 2013, against Tk. 12,250.26 million over the 2012. This Loans & Advances was 6.64% per cent higher than the same was in 2012. The portfolio has been diversified from single sector to multiple sectors. Our Advance mix for the year 2013 & 2012 compared below:



1.58% 6.99%

0.78%

15.02%

18.42%

6.06%51.15%

Loans & Advance Mix 2012 Loans & Advance Mix 2013

Assets Mix 2012 Assets Mix 2013

Profit before Income Tax

The bank earned profit of Tk. 81 million before tax in 2013. Though our bank generated total operating income in 2013 almost equal to the same for 2012, higher Interest expenses and other operating cost resulted in lower profit before tax in comparison to 2012 which was Tk. 177 million., However, all others income increased considerably and eventually net profit attributable to shareholders reached to Tk. 17 million which is reduced as bank kept provision for previous year's tax. Earnings per Share (EPS) stood at Tk. .88.

Total Asset

The Bank's total assets stood at the value of Tk. 24504.15 at the end of 2013 securing an increase of 25.37% in comparison to the year 2012 which was for Tk. 19544.81 million. A major contribution to this growth was the increase in loans & advances which jumped by 6.64 % from Tk. 12250 million to Tk. 13064 million. Fixed assets of the Bank also increase to Tk. 182 million from Tk. 165 million. Bank also had to increase its Investment in Gov. Securities and others. A comperative asset mix of the bank has shown below:

21.92%

39.97% 36.50%

20.94%

41.82%

Term

35.54%

1.70%

Demand ConteniousSME & Agri Term Demand ConteniousSME & Agri

1.62%

Cash Money at Call

Loans & Advances Balance with OtherBank & Fis

Investment

Fixed Assets

Other Assets Cash Money at Call

Loans & Advances Balance with OtherBank & Fis

Investment

Fixed Assets

Other Assets

62.68%9.30%

14.31%

8.51%

1.22%3.14%

0.84%

Treasury Operation and Fund management

The objective of this operation is to maximize the liquidity and mitigating its operational, financial and reputational risk. Our focuses are collections, disbursements, concentration, investment and funding activities. Due to the dynamics of the changes of the market condition involving liquidity, Interest rate and exchange rate, fund management has become a important role in the bank. Our treasury functions take an active role in managing the bank's balance sheet capital-debt and equity the bank has risen to finance its assets.

While the bank treasury performs standard corporate treasury functions such as security issuance, cash forecasting - management and financial decision-making and insurance. They ensured the sufficient fund of the bank in normal and stress condition fulfilling all the conditions.

Total Equity

The Bank's Equity is divided into two parts i.e. Tier-I and Tier-II capital. Tier-I includes Paid-up Capital, Statutory Reserve, and Retained Earnings. Tier-II includes General Provision on unclassified investments & Off -Balance Sheet items. The Authorized Capital of the Bank is Tk. 10,000 million and paid-up capital of the Bank is Tk. 1,989 million as on 31.12.2013. Total equity was Tk 3,279 million as on 31.12.2013. Comparative position of Equity for the year 2013 & 2012 is given below:-

Tier-I capital (Core Capital) :

Capital Adequacy

Capital adequacy focuses on the total position of capital held against the requirement as per policy of Bangladesh Bank and aims at protecting depositors from potential shocks of losses that a bank might incur.

The Bank has adopted Standardized Approach (SA) for computation of capital charge for investment risk and market risk, and Basic Indicator Approach (BIA) for operational risk. Assessment of capital adequacy is carried out in conjunction with the capital adequacy reporting to Bangladesh Bank. The Bank has maintained capital adequacy ratio at 14.28% percent considered solo basis as against the minimum regulatory requirement of 10%. Tier-I capital adequacy ratio is 13.48% as against the minimum regulatory requirement of 5%. The Bank's policy is to manage and maintain strong capital Adequacy Ratio through investing high rating grade investment clients.




(Amount in million BDT)

Paid up capital 1,989 1,989

Share capital of BCI 39 39

Statutory Reserve 195 179

General Reserve 9 9

Surplus / (Deficit) in Profit & Loss Account 113 98

Right Share Application Money 914

Total 3,259 2,314


(Amount in million BDT)

General Prvision (1% of Unclassified Loan) 121 107

Revaluation Reserve for HTM Securities 10 9

General Provision (Off balance sheet) 21 20

Total 152 136

Tier-II capital (Supplementary):



Bank has established Basel-II implementation Unit. A quantitative feature of Risk Weighted Assets (RWA) and Capital Adequacy for December ended-2013 under Basel-II is furnished hereunder:

Foreign Exchange Business

Total Foreign Exchange Business handled during the year 2013 was Tk. 885 million as against which was same as the year 2012. The particulars of Foreign Exchange Business are given below:-

ParticularsSl.No.

SoloTk. (Crore)

ConsolidatedTk. (Crore)

Import 510 543 (6.08%)

Export 323 306 5.56%

Remittance 52 36 44.44%

Total 885 885

1. Capital requirement for Credit Risk:

On - Balance sheet 1488.51 1573.39

Off - Balance sheet 145.35 145.35

Capital requirement for Market Risk 129.07 129.07

Capital requirement for Operational Risk 121.45 121.45

Total RWA (Risk Weighted Asset) 1884.37 1969.26

2 Capital Adequacy Ratio (CAR) [Minimum 10% of RWA or 14.28% 13.68% Tk. 400 crore whichever is higher]

Core Capital to RWA 13.48% 12.90%

ParticularsActual as on31.12.2012

Actual as on31.12.2013

% growthover 2012


Risk is defined as a possibility of loss due to uncertainty. In simple, risk is uncertainty about the outcome or expected return. Again risk is the probability that an actual return on an investment will be lower than the expected return. It can't be mitigated entirely but it can be mitigated partially through diversification. Risk is inescapable, that's why risk must be assessed, addressed, managed and mitigated.

"Financial Risks" are uncertainties resulting in adverse/ unfavorable variation of profitability or outright losses. There is deviation in what we achieve from what we had planned or what we had expected. This unpredictability of future is due to uncertainties associated with the steps that we undertake in the process or various external factors that influence the process that are necessary to achieve our planned objective.Taking on various types of risk is integral to the banking business. Sound risk management and balancing risk-reward trade-offs are critical to a bank's success. Business and revenue growth have therefore to be weighted in the context of the risks implicit in the bank's business strategy. The identification, measurement, monitoring, and management of risks accordingly remain a key focus area for the bank.

The risk management policy of the bank operates under the following principal:

Risk Management Process

BCB's risk management process is on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Board of Directors has oversight on all the risks assumed by the bank. Specific Committees have been constituted to facilitate focused oversight of various risks. Risk Management process is consists of:

A. Identification: A bank's risks have to be identified before they can be measured and managed. Typically major risks are categorized as under:

Oversight by the Board/ Executive Committee/Board Risk Management Committee. Board approves policies and processes of risk management which is recommended by the top management and Executive Committee approves the credit proposals submitted by the top management;

Audit committee of the Board reviews the internal audit reports of the bank and risk management.

Dedicated independent Risk Management Divisions viz Credit Management Division, Credit Recovery Division, Internal Control & Audit Division, International Division, Treasury Division, Information & Communication Technology Division, and Money Laundering Risk through Chief Anti Money Laundering Compliance Officer;

Dedicated committee at management level has been set up monitor risk viz. credit risk through Credit Review Committee, operational risk through Management Committee and Internal Control & Audit Division, Market and Liquidity risk through Asset Liability Committee (ALCO) and IT risk through IT Division.

Risk Management

A. Identification.

B. Measurement,

C. Aggregation,

D. Planning and controlling,

E. Monitoring

Credit risk

Market risk

Operational risk

Liquidity risk and

Reputation risk


Risk Management

B. Measurement: The consistent assessment of the above mentioned types of risks is an essential prerequisite for successful risk management. To measure risks there are various types of tools and techniques.

C. Aggregation: When aggregating risks, it is important to take into account correlation effects which cause a bank's overall risk differing from the sum of the individual risks. This applies to risks both within a risk category as well as across different risk categories.

D. Planning and Controlling: Furthermore, risk management is the function of planning the bank's overall risk position and actively managing the risks based on these plans.

E. Monitoring: Risk monitoring is used to check whether the risks actually incurred lie within the prescribed limits, thus ensuring an institution's capacity to bear these risks.

Stress Testing

Stress testing is a simulation risk management tool, which are used to determine the reactions of different financial institutions under a set of exceptional, but plausible assumptions through a series of tests. At institutional level, stress testing techniques provide a way to quantify the impact of changes in a number of risk factors on the assets and liabilities portfolio of the institution.

Stress testing for credit risk assesses the impact of increase in the level of non-performing loans (NPLs) of the banks. This involves several shocking events. Each shocking event contains Minor, Moderate, and Major levels of shocks.

Performing loan directly downgraded to B/L: Sectoral Concentration 1: It is a measure of the concentration risk where the bank has the largest investment. It assumes that 3%, 9%, and 15% of the performing loan will be directly downgraded to B/L category in minor, moderate, and major levels of shock respectively. Capital Adequacy Ratio (CAR) of BCB will be 16.86%, 16.33%, and 15.79% in minor, moderate, and major levels of shock respectively when considering individual shock.

Performing loan directly downgraded to B/L: Sectoral Concentration 2: It is a measure of the concentration risk where the bank has the largest investment. It assumes that 3%, 9%, and 15% of the performing loan will be directly downgraded to B/L category in minor, moderate, and major levels of shock respectively. Capital Adequacy Ratio (CAR) of BCB will be 16.99%, 16.70%, and 16.42% in minor, moderate, and major levels of shock respectively when considering individual shock.

Increase in NPLs due to default of Top large loan borrowers: It represents the scenario of the bank when top large borrowers default. It assumes that 3, 7, and 10 borrowers of the bank will default in minor, moderate, and major levels of shock respectively. Capital Adequacy Ratio (CAR) of BCB will be 11.91%, 8.43%, and 6.98% in minor, moderate, and major levels of shock respectively when considering individual shock.

Negative shift of NPLs categories: It represents the shift of a loan from one NPL category to the next NPL category. It is based on the assumption of 5%, 10%, and 15% downward shift in the NPLs categories in minor, moderate, and major levels of shock respectively. Capital Adequacy Ratio (CAR) of BCB will be 16.90%, 14.70%, and 14.20% in minor, moderate, and major levels of shock respectively when considering individual shock.

Decreased in the Forced Sale Value (FSV) of the collateral: It represents the bank's condition when FSV of collateral decreases sharply. It is based on the assumption that FSV of collateral will fall by 10%, 20%, and 40% in minor, moderate, and major levels of shock respectively. Capital Adequacy Ratio (CAR) of BCB will be 16.90%, 16.67%, and 16.20% in minor, moderate, and major levels of shock respectively when considering individual shock.

Interest rate shock: It represents condition of the bank when interest rate changes significantly. It is based on the assumption that interest rate will change by 1%, 2%, and 3% in minor, moderate, and major levels of shock respectively. Capital Adequacy Ratio (CAR) of BCB will be 16.97%, 16.82%, and 16.66% in minor, moderate, and major levels of shock respectively when considering individual shock.

Foreign exchange shock: It represents condition of the bank when exchange rate changes significantly. It is based on the assumption that exchange rate will change by 5%, 10%, and 15% in minor, moderate, and major levels of shock respectively. Capital Adequacy Ratio (CAR) of BCB will be 117.13%, 17.13%, and 17.13% in minor, moderate, and major levels of shock respectively when considering individual shock.

Equity shock: It represents condition of the bank when market value of share falls sharply. It is based on the assumption that share price will change by 10%, 20%, and 40% in minor, moderate, and major levels of shock respectively. Capital Adequacy Ratio (CAR) of BCB will be 16.79%, 16.44%, and 15.75% in minor, moderate, and major levels of shock respectively when considering individual shock.


Market Discipline Disclosures on Risk Based Capital (Pillar III of Basel-II)

For the year ended 31 December 2013

Background: These disclosures under Pillar III of Basel II are made according to revised'Guidelines on Risk Based Capital Adequacy (RBCA)' for banks issued by Bangladesh Bank (Central Bank of Bangladesh) in December 2010. These quantitative and qualitative disclosures are intended to complement the Minimum Capital Requirement (MCR) under Pillar I and the Supervisory Review Process (SRP) under Pillar II of Basel II. The purpose of market discipline in the Revised Capital Adequacy Framework is to disclose relevant information on capital adequacy in relation to various risk of the bank so that stakeholders can assessthe position of a bank regarding holding of assets and to identify the risks relating to the assets, riskexposures, risk assessment processes and capital adequacy to meet probable loss of assets as well ascan make the economic decision. The disclosures under Pillar-III of the framework of the bank ason 31 December 2013 are as under:

The name of the top corporate entity in the group to which this guideline applies.

Bangladesh Commerce Bank Limited.(BCBL)

BCBL has only one subsidiary as on the reporting date namely; Bangladesh Commerce Bank Securities and Investment Limited. A brief description of the Bank and its subsidiaries are givenbelow:

Bangladesh Commerce Bank Limited.

Bangladesh Commerce Bank Limited (BCBL) was incorporated as a public limited company in Bangladesh under Companies Act, 1994. It commenced its banking business onJune 01, 1998 under the license issued by Bangladesh Bank. Presently the Bank has 42 (Forty Two) branches. The Bank has only one subsidiary namely; Bangladesh Commerce Bank Securities and Investment Limited.

Commerce Bank Securities and Investment Limited (CBSIL)

Commerce Bank Securities and Investment Limited (CBSIL) emerged as a fully owned subsidiary of Bangladesh Commerce Bank Limited (BCB) after it had obtained its certificate of incorporation on the 20th September, 2010. On the 21st April, 2011, the Stock Broker and Stock Dealer license was transferred in favour of CBSIL and after the completion of necessary formalities; the company started its formal operation on the 1st June, 2011.Commerce Bank Securities and Investment Limited having its legal status as a Public Limited Company was registered with the Registrar of Joint Stock

a. Scope of Application

b. Capital Structure

c. Capital Adequacy

d. Credit Risk

e. Equities: Disclosures for Banking Book Positions

f. Interest Rate Risk in the Banking Book (IRRBB)

g. Market Risk

h. Operational risk

Scope of Application:

Qualitative Disclosures:

a)

An outline of differencesin the basis of consolidation for accounting and regulatory purposes, with a brief description of the entities within the group

(a) that are fully consolidated; (b) that are given a deduction treatment; and (c) that are neither consolidated nor deducted (e.g. where the investmentis risk-weighted).

b)



Quantitative Disclosure :


Any restrictions or other major impediments, funds regulatory capital within the group.

Companies and Firms in Dhaka with an Authorized Capital and Paid up Capital of Tk. 100.00 crore and Tk. 20.00 crore respectively. The company is being operated in accordance with its Memorandum of Association (MA) and Articles of Association (AA), rules and regulations of Bangladesh Securities and Exchange Commission (BSEC) and Dhaka Stock Exchange (DSE) and other applicable laws and guidelines of appropriate regulatory bodies in Bangladesh.Commerce Bank Securities and Investment Limited started its journey with mission of "To provide world class investment services that adds value to all out stakeholders".

CBSIL is running their operation to be one of the top performers in the sector through achieving the following:

Sound and prudent portfolio management to earn maximum return on investment

Transparency and accountability in service delivery

Establishing and maintaining effective customer relationship

Minimizing loan defaults within the customer portfolio through optimal loan utilization

To earn high return on equity

To comply with international best practice in business dealings

c)

The aggregate amount of capital deficiencies in all subsidiaries not included in the consolidation that are deducted and the name(s) of such subsidiaries.

d)

Not applicable

There is Tk. 130.83 crore capital deficiency in the financial year 2013 in Solo basis and Tk. 128.31crore in consolidated basis.

B) Capital Structure

Summary information on the terms and conditions of the main features of all capital instruments, especially in the case of capital instruments eligible for inclusion in Tier 1 or in Tier 2.

a) Regulatory capital, as stipulated by the revised RBCA guidelines by Bangladesh Bank, is categorized into three tiers according to the order of quality of capital (Tier I, II & III).

a) Tier-I capital called 'Core Capital' comprises of highestquality of capital elements and as per the guidelines ofBangladesh Bank, Tier I capital of BCB bank consists of-

i) Paid up capital ii) Statutory Reserveiii) RetainedEarnings iv) General Reserve v) Share Capital BCI and vi) Right Share Application Money.

b) Tier-II capital called 'Supplementary Capital' representsother elements, which fall short of some of the characteristics of the core capital but contribute to theoverall strength of a bank and as per the guidelines ofBangladesh Bank, Tier II capital of BCBL consistsof

i) General provision

ii) Revaluation reserve for HTM Securities



Sl. ParticularsSolo

Tk. (in crore)ConsolidatedTk. (in crore)

c) Tier-IIIcapital called 'Additional Supplementary Capital' consists of short-term subordinated debt, whichwould be solely for the purpose of meeting a proportion of the capital requirements for market risk and BCBL had no Tier III element in its capital structure.

Bangladesh Commerce Bank Ltd's capital is segmented into Tier-I & Tier-II capital. Tier-I capital is 95.54% of total capital and comprises of 89% paid up capital & 6% statutory reserve. Tier-II capital is 5% of total capital and comprises of general provision, revaluation reserve of Securities. Tier-II capital is 5% of Tier-I capital.

Right Share Issuance of Bangladesh Commerce Bank Ltd. (BCBL)

BCBL was able to raise the paid up capital by TK 106.87 Crore through issuance of 'Right Share' in 31st December, 2010 & 91.36 crore in the name of right share application money at the end of 31st December, 2013.

Quantitative Disclosures: As on the reporting date, the Bank had a consolidated capital of BDT269.40 crore comprising Tier-I capital of BDT 254.22 Crore (including 71.28 crore adjustment) and Tier-II capital of BDT 15.18 crore (BCBL had no Tier III elements in its capital structure). Following table presents component wise details of capital as on reporting date i.e. 31 December 2013:

1. Tier-I capital

Fully Paid-up Capital 198.87 198.87

Statutory Reserve 19.48 19.48

Other Reserve 0.89 0.89

Retained Earnings 10.75 11.00

Share capital BCI 3.90 3.90

Right Share Application Money 91.36 91.36

Total Tier-I capital 325.25 325.50

Less : Other deductions from capital 71.28 71.28

Provision Shortfall 71.28 71.28

Adjusted Tier-I capital (A) 253.97 254.22

2. Tier-II capital

General Provision 12.08 12.08

Provision for Off Balance Sheet Exposure 2.09 2.09

Revaluation Reserve for HTM & HFT Securities (50%) 1.03 1.03

Non-convertible Subordinated Bond

Exchange Equalization Account

Total Tier - II capital (B) 15.20 15.20

Total Eligible Capital (A+B) 269.17 269.40




C) Capital Adequacy

C) Capital Adequacy

A Summary of discussion of the bank's approach to assess the adequacy its capital to support current and future activities

a) In terms of RBCA guidelines on Basel-II framework issued by Bangladesh Bank,the bank has adopted the standardized approach for credit risk, standardized (rulebased) approach for market risk and basic indicator approach for operational risk.As per capital adequacy guidelines, the bank is required to maintain a minimumCAR of 10.00% with regards to credit risk, market risk and operational risk.

BCBL focuses on strengthening and enhancing its risk management cultureand internal control processes rather than increasing capital to cover up weak riskmanagement and control practices. TheBank's policy is to manage and maintain strong Capital Adequacy Ratio throughinvesting on those who are high grade rated investment customer and those whoare low risk weight bearing customer. The bank is able to maintain capital adequacy ratio (CAR) at 14.28% on consolidated basis against the regulatory minimum level of 10.00%. The Bank's policy is to manage and maintain its capital with theobjective of maintaining strong capital ratio and high rating. The Bank also ensures that the capital levels comply with regulatory requirements and satisfy the externalrating agencies and other stakeholders including depositors. The whole objectiveof the capital management process in the Bank is to ensure that the Bank remainsadequately capitalized at all times.

The general qualitative disclosures:

D) Credit Risk

Definitions of past due and impaired:

a) A loan repayment that has not been made as of its due date is called pastdue/overdue. Failure o repay a loan on time could have negative implications for the customer's credit worthiness or cause the loan terms tobe permanently adjusted. In case of past due loan, the bank may charge compensation which does not come under bank's income rather the charges use forbenevolent purpose.

Sl. ParticularsSolo

Tk. (in crore)ConsolidatedTk. (in crore)

1 Capital requirement for Credit Risk:

On - Balance sheet 1488.51 1573.39

Off - Balance sheet 145.35 145.35

Capital requirement for Market Risk 129.07 129.07

Capital requirement for Operational Risk 121.45 121.45

Total RWA (Risk Weighted Asset) 1884.37 1969.26

2 Capital Adequacy Ratio (CAR) [Minimum 10% of RWA or 14.28% 13.68% Tk. 400 crore whichever is higher]

Core Capital to RWA 13.48% 12.90%



A loan is impaired when it is not likely the bank will collect the full value ofthe loan because the creditworthiness of a customer has fallen. The bank willpursue either restructuring or foreclosure as a result of the impaired status of theloan. Further, the bank must report the loan as impaired on any of itsfinancial statements and CIB of Bangladesh bank.

With a view to strengthening loan discipline and bring classification and provisioning regulation in the line with international standard, a phase wise programfor classification and provisioning was undertaken by the Bank as per BangladeshBank circulars issued from time to time. In this regard, all the loans are grouped into four categories for the purpose of classification, namely (i) ContinuousLoan, (ii) Demand Loan, (iii) Fixed Term Loan and (iv) Short-term Agricultural and Micro Loan. The above loans are classified asfollows:

Continuous & Demand Loan are classified as under:

** A Continuous, Demand or Term Investment which will remain over due for a period of 60 days or more, are treated as "Special Mention Account (SMA)". We follow the following approach for specific and general allowances and statistical method:

Risk is inherent in all aspects of a commercial operation; however for Banks and financial institutions, investment (credit) risk is an essential factor that needs to be managed. Investment (credit) risk is the possibility that a borrower or counter party will fail to meet its obligations in accordance with agreed terms. Investment (Credit) risk, therefore, arises from the bank's dealings with or lending to corporate, individuals, and other banks or financial institutions. To manage investment (credit) risk BCBL bank follows "Bangladesh bank's Circulated CREDIT RISK MANAGEMENT guidelines".

**Description of approaches followed for specific and general allowances and statistical methods:

**Discussion of the bank's investment (credit) risk management policy.

Sub-standard- if it is past due/overdue for 3 months or beyond but lessthan 6 months;

Doubtful- if it is past due/overdue for 6 months or beyond but less Than 9 months;

Bad/Loss- if it is past due/overdue for 9 months or beyond.

Fixed Term Loan (More than Tk. 10.00 Lac) is classified as:

Sub-standard- if the defaulted installment is equal to or more than the amount of installment(s) due within 3(three) months, the entire investments are classified as "Sub-standard".

Doubtful- if the defaulted installment is equal to or more than the amount of installment (s) due within 6 (six) months, the entire investments are classified as "Doubtful.

Bad/Loss- if the defaulted installment is equal to or more than the amount classified as"Bad/Loss".

✏

✏

✏

✏

✏

✏

✏

STD 5% 5% 2% 2% 0.25% 2% 1%

SMA n/a 5% 2% 2% 0.25% 2% 1%

SS 5% 20% 20% 20% 20% 20% 20%

DF 5% 50% 0% 50% 50% 50% 50%

B/L 100% 100% 100% 100% 100% 100% 100%

ParticularsOther thanHF & LP

HF LP

Classified

Unclassified

Consumer FianancingShort Term Agriculture credit and micro credit

SmallEnterpriseFinancing

Investmentsto

BHs/MBS/SDs

Allothercredit

Base for provision = Outstanding- (eligible security+ profit suspense) or 15% of outstanding whichever is higher.



b) Total Gross credit risk exposures broken down by major types of credit exposures:

Exposure Type (Funded)

Exposure Type (Non- Funded)

Solo Consolidated

Solo Consolidated

Exposure ExposureRWA RWA

Claims on Banks and NBFIs 427.88 165.68 433.37 168.42

Claims on Corporate 603.23 648.05 603.23 648.05

Claims under Credit Risk Mitigation 117.17 - 117.17 -

Claims categorized as retail portfolio & SME 363.38 272.54 363.38 272.54(excluding consumer loan)

Consumer Finance 4.05 4.05 4.05 4.05

Claims fully secured by residential property - - - -

Claims fully secured by commercial real estate 37.60 37.60 37.60 37.60

Past Due Claims (Net of Specific Provision, when applicable) 153.77 230.66 153.77 230.66

Capital Market Exposures 37.54 46.93 68.35 85.44

Unlisted Equity Investments 20.75 25.94 20.75 25.94

Investments in premises, plant and equipment and all other fixed assets 18.29 18.29 19.31 19.31

Claims on GoB& BB 50.10 - 50.10 -

Staff loan/Investment 27.17 5.43 27.17 5.43

Other assets 33.35 33.35 75.96 75.96

Total 2452.42 1488.50 2538.50 1573.39

Exposure ExposureRWA RWA

Claims on Public Sector Entities - - - -

Claims on Banks and other NBFIs: - - - -

Claims on Corporate 116.28 145.35 116.28 145.35

Claims against retail portfolio & SME (excluding consumer loan) - - - -

Total 116.28 145.35 116.28 145.35

Figure in Crore

Sl.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

Mode wise Loan Exposure

Overdrafts 134.82

General Loan 204.12

Cash Credit 384.38

Transport Loan 4.40

Loan against Trust Receipts 202.76

Payment Against documents 27.18

Consumer Credit .51

Staff Loan 27.17

Inland Bill Purchased 0.10

Foreign Bill Purchased 0.39

Other Loans 264.53

Loan BCI 56.00

Total 1306.37

Sl. Division wise Loan Exposure



c) Geographical distribution of credit exposuresFigure in Crore

1. Dhaka 769.04

2. Chittagong 346.38

3. Rajshahi 40.02

4. Khulna 80.42

5. Sylhet 14.50

Total 1306.37

Sl. Item Exposure

e) Maturity grouping wise credit ExposuresFigure in Crore

1. Repayable on Demand 54.21

2. Less than 03 months 229.94

3. More than 03 months but less than 1 year 543.26

4. More than 1 year but less than 5 years 165.16

5. More than 5 years 313.80

Total 1306.37

Sl. Industry wise Loan Exposure

d) Industry or counter party distribution of credit ExposuresFigure in Crore

1. Agriculture 10.55

2. Manufacturing Industry 308.10

3. Construction Company 37.60

4. Transportation 4.40

5. Commerce & Trade 587.13

6. Others 358.57

Total 1306.37



f) General & Specific ProvisionRequired Provision Figure in Crore

Unclassified Loans 10.98

Special Mention Accounts (SMA) 0.22

a) Sub Total 11.20

Substandard 9.12

Doubtful 0.86

Bad/Loss 107.26

b) Sub Total 117.24

Total (a+b) 128.44

**Provision for Off-balance-sheet items- 2.08

g) NPAsFigure in Crore

**Gross Non Performing Assets(NPAs) 191.83

% of Non Performing Assets (NPAs) to Outstanding Loans to Outstanding Loans & Advances 14.68%

h) Movement of Nonperforming AssetsFigure in Crore

Opening Balance 155.31

Addition during the year 180.17

Deduction during the year 143.64

Closing Balance 31.12.2013 191.83

Movement of Specific Provision of Nonperforming AssetsFigure in Crore

Opening Balance 43.82

Provisions made during the period 2.50

Write-Off .38

Write-Back of excess provisions 0.00

Closing Balance 31.12.2013 45.95

Investment of BCBL in equities is divided into twocategories: quoted equities (which are traded in the secondary market) and unquoted equities (which are nottraded in the secondary market). Since the intent of holding unquoted equities is not trading, the same are considered as banking book equity exposure.

E) Equities: Disclosures of Banking Book Positions:


The general qualitative disclosures requirement with respect to equity risk, including

Differentiation between Holdings on which capital gains are expected and those taken under other objectives including for relationship and strategic reasons;

a)

The baking book securities are shown at cost price andno revaluation reserve has been created against these equities.

Discussion of important policies covering the valuation and accounting of equity holdings in the banking book. This includes the accounting techniques and valuation methodologies used, including key assumptions and practices affecting valuation as well as significant changes in these practices.

b)

Total Market value of BCBL portfolio share is Tk.20.32 crore whereas Cost price is Tk. 37.55 crore

a) Value disclosed in the balance sheet of investments, as well as the fair value of those investments; for quoted securities,a comparison to publiclyquotedshare values where the share price is materially different from fair value.

Total cumulative realized gain is BDT 0.75 crore on trading book equitiesThe cumulative realized gains (losses) arising from sales and liquidations in the reporting (31 December 2013) period.

Capital charge on banking book equities has been BDT 15.09 crore, calculated by giving 125% risk weight

Capital requirements broken down by appropriate equity groupings, consistent with the bank's methodology as well as the aggregate amounts and the type of equity investments subject to any supervisory provision regarding regulatory capital requirements

a)

Unrealized loss on BCBL Portfolio Share as on 31st Decmber,2013 is BDT 17.21 crore on trading book equities

* Total unrealized gains (losses)

* Total latent revaluation gains (losses)

* Any amounts of the above included in Tier 2 capital.

c)

b)





Interest rate risk is the exposure of a bank's financial condition toadverse movements in profit rates. The process of Interest rate risk management by the bank involves determination of the business objectives, expectation about future macrovariables and understanding the money markets and debt market in whichit operates. Interest rate risk is the risk, which affects the Bank's financial condition dueto changes in themarket Interest rates. Changes in interest rates affect both the current earnings (earnings perspective, traditional approachto interest rate risk assessment taken by many banks) as well as the net worth of the Bank (economic value perspective). The risk from earnings perspective measured as impact on the Net Interest Income (NII). Similarly, the risk from economic value perspective can be measured asimpact on Economic Value of Equity(EVE) sincethe underlying value of the bank's assets, liabilities, and off-balance-sheet (OBS)instruments changes because the present valueof future cash flows (and in some cases, the cash flowsthemselves) change when interest rates change. An effective riskmanagement processthat maintains interest rate risk within prudent levels is essential to the safety and soundness of banks.The Bank adopted traditional Gap analysis for assessing impacton profit perspective (earnings perspective) and Duration Analysis for assessing the impact on the Economic Value of Equity (Economic Value Perspective) by applying a notional interest rate shock up from 100 bps to 300 bps under stress testpractice at the bank.

F) Interest Rate Risk in Banking Book (IRRBB)



The general qualitative disclosure requirement including the nature of IRRBB and key assumptions, including assumptions regarding loan prepayments and behavior of non maturitydeposits, and frequency of IRRBB measurement.

The risk from earnings perspective can be measured as impact in the Net Interest Income (NII) due to changes in Interest rate.CAR before-shock (%) 17.13

Impact of fluctuation in the interest rates on economic value of a financial institution is tested in the stress test. Economic value is affected both by changes in future cash flows and discount rate used for determining present value. To determine the impact of increase in interest rate risk 3 scenarios are tested, in minor level of shock of 1% increase in interest rate cause CAR to 16.97% from 17.13% and 2% increase in interest rate cause CAR to 16.82%, finally a major shock of 3% increase in interest rate cause CAR to 16.66%.

a)

Figure in Crore

Assumed Change in Interest Rate 1% 2% 3%

<12 Months 2.95 5.91 8.86

Capital After Shock 319.84 316.88 313.93

CAR after-shock (%) 16.97 16.82 16.66

Change in CAR after- shock (%) 0.16 0.31 0.47

Interest Rate Stress Minor Moderate Major

Figure in Crore

Magnitude of Shock 1% 2% 3%

Duration Gap (Year) 1.26 1.26 1.26

Fall in MVE (on balance sheet) 28.03 56.06 84.09

Revised Capital 294.76 266.73 238.69

Revised RWA 1884.40 1884.40 1884.40

Revised CAR (%) 15.64 14.15 12.67

Net Investment Income Impact (<12Month) 2.95 5.91 8.86

Interest Rate Risk- Increase in Interest Rate Minor Levelof Shock

Moderate Levelof Shock

Major Levelof Shock

*Stress Testing was conducted considering CAR of 17.13%.



Market risk is defined as the possibility of losses in on and off-balancesheet positions arising from movements in market prices. The exposure of the bank to market risk arises principally from customer-driven transactions. The market risk positions subject to this requirement are:

i) The risks pertaining to profit rate related instruments and equities in the trading book. ii) Foreign exchange risk and commodities risk throughout the bank (both in the banking and in the trading book).

Trading book comprises position in financial instruments held trading intent or in order to hedge other element of the trading book. The portfolio of investment of BCBL includes Bangladesh Government with Bangladesh Government Treasury Bond (BGIIB), Share of listed public limited companies etc. The bank has always put impetus on investment of fundsin high yield areas and also has ensured maintenance of statutory liquidity requirement as set by Bangladesh Bank. The Board of Director approves all necessary policies related to market risk and review them on regular basis.

There are several methods use to measure market risk and the bank usesthose methods which deem fit for a particular scenario. For measuringprofit risk from earnings perspective, the bank uses maturity gap analysis,Duration Gap analysis, and mark to market method and for measuringforeign exchange risk, the bank usesVaR analysis. The Bank uses standardized method for calculating capital charge against market risks forminimum capital requirement of the Bank under Basel-II.

The Treasury &Financial Administration Division manage market risk covering Liquidity, profit rate and foreign exchange risk with oversightfrom Assets Liability Management Committee (ALCO) comprising SeniorExecutives of the Bank. ALCO is chaired by the Managing Director &CEO of the Bank. ALCO meets at least once in a month

The bank has put its Asset Liability Management policy by setting variousrisk limits for effective management of market risk and ensuring that theoperations are in line with bank's expectation of return to market riskthrough proper Asset Liability Management. The policies also deal withthe reporting framework for effective monitoring of market risk.

The ALM Policy specifically deals with liquidity risk managementand profit rate risk management framework. Liquidity risk is managed throughGap & Duration analysis, based on residual maturity/behavioral patternof assets and liabilities, as prescribed by the Bangladesh Bank. The Bankhas put in place mechanism of Liquidity Contingency Plan. Prudential (Tolerance) limits are prescribed for different residual maturitytime buckets for efficient Asset Liability Management. Liquidity profile of theBank is evaluated through various liquidity ratios/indicators.

Foreign Exchange risk is the risk or chance of loss due to unexpectedmovement of market price of the currencies of different countries or theprice of the assets denominated by foreign currencies. For effective andefficient management of Foreign Exchange Risk, theBank has a well- developed and well-structured Foreign Exchange Risk Manual and an international standard Dealing Room Manual. Various limits are set tomonitor and mitigate the Foreign Exchange risk such as, Net Open Position (NOP) limits (Day limit / Overnight limit), deal-wise cut-losslimits, Stop-loss limit, Profit / Loss in respect of cross currency tradingetc. and exception reporting is regularly carried out.

The Treasury of the Bank is mainly divided into three departments namely Front Office, Mid Office and Back Office. The Front Office independently conducts the transactions and the Back Office is responsible for settlement of those transactions after verifying of the dealsand passing for those entries in the books of account. The Mid Officeplays a vital role in the process by checking the Foreign Exchange procedure perform by Front and Back Office and by reporting it directlyto the Managing Director & CEO of the Bank.

All foreign exchange transactions are revaluated at Mark to Market rate as determined by inter-bank. All nostro accounts are reconciled on monthly basis and outstanding entries are reviewed by the management for their settlement.

G) Market Risk :


Qualitative Disclosure: Views of Board of Directors on trading/ investment activities:

Method used to Measure Market risk:

Market risk Management system:

Policies & processesTo mitigate Market risk:



Figure in Crore

Interest Rate Related Instruments

Equities

Total Capital Charge

Operational Risk is defined as the risk of loss resulting from in adequate or failed internal processes, people and systems or from external events. It is inherent in all of the Bank's activities. Operational risks are monitored and, tothe extent possible, controlled and mitigated. The Bank's approach to operational risk is not designed to eliminate risk altogether but rather, to contain risks within levels deemed acceptable by senior management. All functions, whether business, control or logistics functions, must manage theoperational risks that arise from their activities. This is supported by an independent program of periodic reviews undertaken by internal audit, and by monitoring external operational risks events, which ensure that the group stays in linewhich industry best practice and takes account or lessons from publicized operational failures within the financial services industry.

The difference between standard/intended and the actual/current performance is known as the performance gap. BCBL Bank always tries tominimize the performance gap of its employees through need based training by assessing the various needs of the employees. Bank maintains a decent work environment where employees can work with dignity, can participate in thedecision making process, and receive equal treatment and opportunity that affect their performance. The bank is relentlessly pursuing its visionto transformthe human resources into human capital. The bank also encourages practicing ethical behavior by following standard code of conduct. To reduce knowledge gap and assist in the development of our personnel, user friendly Operations Manual have been developed and enclosed with functional processes for all employees who are the end users of these processes. The bank ensures timely compensation claims of the employee; preserve the employeehealth and safety rules and avoid the discriminatory activities. Strong brandimage of the bank plays an important role in employees' motivation. Duringthe year 2013, the bank significantly reviewed few existing policies for providing more benefit to employees with a view to introducing superior levelof job satisfaction. Earlier the bank formed "Female Employees' Interest Protection Cell" to ensure Equal Employment Opportunity. Competitive compensation also ensures best workplace safety for the banks' employees tokeep away from incompatible employment practices and unhealthy employee turnover. In 2013, the bank increases the overall remuneration packages tomake it very attractive to motivate and retain performers. It is the policy of thebank that various cash and non-cash benefits for the employees are reviewedtime to time based on bank's performance and rationality. Bank introduces 'Employee Turnover Risk' as a requirement of the Supervisory Review Process(SRP) under Pillar II of Basel II which becomes a constant monitoring tool tomeasure the employee turnover of the bank.

Specific Risk - Market value of investment in equities BDT 37.55 Crore. Capital Charge at 10% of market value amounting BDT 3.76 Crore .

General MarketRisk-Market value of investment in equities BDT 37.55 Crore.Capital Charge at 10% of market value amounting BDT 3.76 Crore

Foreign Exchange Position (Sum of Net Long Position BDT 7.06 Crore. Capital Charge at 10% on Sum of Net Long Position amounting BDT .76 Crore) 0.76

H) Operational Risk


a) Qualitative Disclosures:

Views of Board of Directors on system to reduce Operational Risk:

Performance gap of executives and staffs:

7.51

0.76

8.27

a)

b)

Total:



The potential external events that may pose the bank into operational risks areas follows.

The Bank has taken the following policies and processes for mitigating operational risk

External Fraud: Acts by a third party, of a type intended to defraud, misappropriate property or circumvent the law. Examples include robbery, forgery, and damage from computer hacking.

Taxation Risk: Sudden changes in tax laws and regulation that hamper the profitability of a bank.

Legal Risk: Legal risk is the risk of the Bank's losses in cases of i) incompliance of the Bank with the requirement of the legal regulations ii) making legal mistakes in carryingout activitiesiii) Imperfection of the legal system iv) Violation of legal regulations, terms and conditions of concluded agreements by the counterparties.

Damage of physical asset: Loss or damage to physical assets fromnatural disaster or other events. Example includes terrorism vandalism, earthquakes, fires, floods etc.

Business disruption and system failures: Disruption of business orsystem failures. Examples include telecommunication problems, utilityoutages etc.

Execution, delivery and process management: Failed transaction processing or process management and relation with trade counterparties and vendors. Examples include, non-client counterpartymis-performance, vendor disputes etc.

Loss prevention: We focus on employee development through training and development programs and review the performance of employees to prevent loss.

Loss control: We have in detail planning and defined process in place like back up of computer system controlling the loss.

The Bank has formed 'Risk Management Division' under 'Chief Risk Officer' to review and update operational risksalong with allothercore risks on systematic basis as essential ensuring that adequate controls exist and that therelated returns reflect these risks and the capital allocated to support them. The bank already developed the information systems/MIS inflow and data management capabilities to support the risk management functions of the bank.The Bank as taken initiatives for protecting the information from unauthorized access, modification, disclosure and destruction to protect its 'customers' interest. The Bank has already developed its own ICT policies for various operation and services, which are closely in line with the ICT Guidelines of Bangladesh Bank. Training is a key component of operational risk management. The Bank has been continuously conducting training sessions (i.e. Operational Procedure, Business Continuity Planning, Disaster Recovery Planning etc.) for relevant employees. The bank has been maintaining separate insurance coverage for its critical assets.The bank conducts routine audit (both internal and external) and internal ICT audit to allit's branches and Head Office divisions.

The Banks operating in Bangladesh have been computingthe capital requirements for operational risk under the Basic Indicator Approach (BIA).

Under BIA, the capital charge for operational risk is a fixed percentage, denoted by ? (alpha) of average positive annual gross income of the bank over the past threeyears. Figures forany year in which annualgross income is negative or zero, should be excluded from both the numerator and denominator when calculating the average.

Potential external events 1.

1.

2.

2.

3.

4.

5.

6.



The capital charge may be expressed as follows:

K = [(GI 1 + GI 2 + GI 3) × ?]/n

Where-

K = the capital charge under the Basic Indicator Approach

GI = only positive annual gross income over the previous three years (i.e., negative or zero gross income if any shall be excluded)? = 15 percentn = number of the previous three years for which gross income is positive.

Gross Income (GI) is defined as "Net Investment Income" plus "Net non- Investment Income". It is intended that this measure should:

1. be gross of any provisions;2. be gross of operating expenses, including fees paid to outsourcing service providers3. exclude realized profits/losses from the sale of securities held to maturity in the banking book; 4. exclude extraordinary or irregular items;5. Exclude income derived from insurance.

Quantitative Disclosures: Figure in Crore

Capital Charge for Operational Risk-Basic Indicator Approach:

2011 99.89

2012 71.28

2013 71.73

Year Gross Income (GI) Average Gross Income (AGI)

80.97 12.15

Capital Charge = 15% of AGI

The capital requirements for operational risk 12.15


The principal activities of the Bank is to provide all kinds of commercial banking products and services to the customers including deposits taking, cash withdrawal, extending investments to corporate organization, retail and small & medium enterprises, trade financing, project finance, working capital finance, lease and hire purchase financing, issuance of Debit Card. Its vision is to be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability.

Keeping in mind, we invested in innovative products and programs to help our customers meet their goals and to truly deliver on the following manner:

In recent years BCB diversified its business into different parts of the country. A division wise loans & advances concentration shown above.

Industrial Lease FinanceWe intend to offer "Industrial Lease Finance", a business loan to relatively small, medium and large size enterprise. The products main objective is to assist the genuine and capable entrepreneur for acquiring Capital Machinery and Equipment to undertake enterprise without equity, to encourage the new and educated young entrepreneurs to undertake productive venture and demonstrate their creativity and thereby participate in the national development, to participate in the industrial development of the country. The product caters only to the small, medium and large size industrialist to meet fixed assets (i.e. - Capital Machinery / Equipments / Vehicles / CG Conversions / Auto Mobiles / Refueling Plant / Lift / Generator / Boiler / Construction Equipment / Medical Equipments / Computer of IT Education

center etc.) purchased for expansion of business under equated monthly rental based repayment plan.

BCB Krishi & Palli LoanKeeping the view of the people-orientation and welfare objectives of the Bank, this scheme has been introduced to provide Crop loan and poverty alleviation in rural and sub-urban area. Loan is given for growing crop, fishery, poultry, purchase agricultural equipment, cottage industries, food processing, production of jute processed goods, production spices etc.

Crop loan facility up to Tk. 50000.00 without collateral security.

Loan demand, repayment time & tenor determined based on agricultural sub-sector.

Annual interest rate is only 13%.

Skilled applicant will get preference.

Product & Services Review

AgricultureConstruction

ManufacturingCommerce & Trade

1%

25% 25%

47%

3%

Others

Dhaka DivisionRajshahi Division

Chittagong DivisionKhulna Division

6.43%3.20%

1.16%

61.50%

27.70%

Sylhet Division



SME BankingThe role of Small and Medium Enterprises (SMEs) is indispensable for overall economic development of a country particularly for a developing country like Bangladesh. Bangladesh Bank has given emphasis to the development of the SME sector of the country financing through the commercial banks. BCB, since its inception, has been continuing SME financing for its development.

To provide credit facilities to the Small and Medium size Entrepreneurs (SME) located in Urban & Sub-urban areas of our country. BCBL has started SME loan. It will encourage the new and educated young entrepreneurs to undertake productive venture with creativity.

The feature of the credit contained the follows:

Industrial LoanBCBL is also providing loans for medium, small or large industries. We are working hard for the development of Industrial, Commercial, Economic, Cultural and Social sectors and thereby participate in the national development. The Bank invested around 23% of its investment portfolio in industrial sector considering Small and large size.

Consumer Credit SchemeWe consolidated Consumer and Business Banking and Consumer Finance into one Consumer Banking business. Considering Small and Medium Income group, BCB has introduce the credit scheme in order to purchase non-investment goods or services that are consumed and whose value depreciates quickly. This includes Automobiles, TV, Furniture, Refrigerator etc.

Loan limit is Tk. 50.00 thousand to Tk. 50.00 lac.

No collateral security is required for loan up to Tk. 5.00 lac.

Tenor is 1 year to 2years.

Annual Interest rate 17.50%.

Loan processing fee 0.50% or maximum 5.00 lac.

Loan is renewable and can be adjusted at once.

Age limit of the client is 20 to 55 years.

Must have a link account like Savings / Current account.

Small Business Loan

Seasonal Credit Facility

Cash Credit for Small Enterprise

The products of the SME credit contain:

Savings Bank Account:

Any matured citizen of Bangladesh can open the account at any branch of BCBL with a minimum deposit of Tk. 500.00. Savings account can be opened in favor of any Individual, Joint holder or legal entity (Institutional).

Current Deposit Account:

Any matured citizen of Bangladesh can open the account at any branch of BCBL with a minimum deposit of Tk. 1000.00.Current account can be opened in favor of any Individual, Joint holder or legal entity (Institutional)

Special Notice Deposit (SND) :

Any matured citizen of Bangladesh can open the account at any branch of BCBL with a minimum deposit of Tk. 1000.00 Special Notice Deposit account can be opened in favor of any Individual, Joint holder or legal entity (Institutional)

BCB Srijoni (A Savings account for Working Women)

Any working woman of Bangladesh can open the account at any branch of BCBL with a minimum deposit of Tk 100.00. This is interest bearing account and will be paid on half yearly basis on the daily balances without any obligation of minimum balance.

BCB Nondita (A Savings Account only for Housewives)

This is for the purpose of savings by housewives only. Any housewife of Bangladesh can open the account at any branch of BCB with a minimum deposit of Tk. 500.00. Interest will be paid half yearly on daily balances but no interest will be paid should more than two withdrawal is made in a week or the minimum balance of any particular month reaches less than Tk. 5000.00/-

BCB Students' Savings Account:

This is a savings account for the students from 11 to 17 years old which can be opened jointly with the parents only. Interest will be paid half yearly basis on daily balance.

BCB Double & Triple Deposit Scheme:

This scheme can be availed by any matured citizen of Bangladesh at any branch of BCB with minimum deposit of Tk. 10,000.00 or multiple. Deposited amount would be doubled or tripled in 07 (seven) years &12 (twelve) years respectively (or as per the timeline fixed by the bank time to time). Loan privilege can be availed to certain extent of the deposit.

BCB Monthly Profit Scheme:

Any matured citizen of Bangladesh can open the account at any branch of BCB with a minimum deposit of Tk. 1, 00,000.00 or multiple for a period of 03 (three) years or 05 (five) years and avail fixed amount of monthly profit.Loan privilege can be availed to certain extent of the deposit.

BCB Monthly Savings Scheme:

Any matured citizen of Bangladesh can open the account at any branch of BCB and can avail the scheme with minimum monthly installment Tk. 500.00 or multiple up to Tk. 50,000.00.Duration of the Scheme is 03, 05, 07 & 10 years and there is loan privilege up to certain limit of the deposited amount.

BCB Lakhpoti Scheme:

Any matured citizen of Bangladesh can open the account at any branch of BCB.Duration of the Scheme is 05 years & 10 years.Tk. 1,00,000.00 is paid on maturity against monthly Installment of certain amount.

1)

2)

3)

4)

5)

6)

7)

8)

9)

10)

DEPOSIT PRODUCTS



LOANS & ADVANCES PRODUCTS

BCB Millionaire Scheme:

Any matured citizen of Bangladesh can open the account at any branch of BCB. Duration of the Scheme is 10 (ten) years.Tk. 1,000,000.00 is paid on maturity against monthly Installment of certain amount.

BCB Marriage Savings Scheme:

Any matured citizen of Bangladesh can open the account at any branch of BCB.Duration of the Scheme is 12 (twelve) years and 18 (eighteen) years.Tk. 2,60,410.00and Tk. 5,57,860.00 is paid on after 12 & 18 years respectively maturity against monthly Installment of Tk. 1000.00.

BCB Education Savings Scheme:

Any matured citizen of Bangladesh can open the account at any branch of BCB.Duration of the Scheme is 08 (eight) years.Tk. 69,620.00 is paid on maturity against monthly Installment of certain Tk. 500.00.

BCB Agriculture & Rural Loan:

Loan facility is allowed up to Tk. 50,000.00without any security. Sectors surrounded by BCB Agriculture & Rural Loan includes Production of crops, Fisheries, Livestock & Poultry Farming, Purchase of Agricultural equipments/ machineries, Cottage Industry, Food Processing, Productions from Jute, Production of Spices est.

BCB Apiculture:

The Loan is allowed to maximum 60,000.00 for every 10 Bee Boxes with duration of maximum 12 months.Client's minimum investment will have to be 25% of the total loan amount and at least 05 Bee boxes will have to be on possession for getting the loan.

BCB Kollani (A Micro Credit Program for self-employment of Women)

This is a micro credit program for self employed women. The Loan is allowed to ranges from 100,000.00 to 5,00,000.00 where up to Tk. 1,00,000.00 is security free. The loan duration is 12 to 36 months and the customer is required to have an associated Savings / Current Account with the concerned branch.

BCB Seasonal Loan (SME):

Personal Loan is allowed to ranges from 50,000.00 to 300,000.00 where up to Tk. 3,00,000.00 is security free. The loan duration is 01 to 06 months and the customer is required to have an associated Savings / Current Account with the concerned branch.

BCB Term Loan (SME):

Term Loan is allowed to ranges from 50,000.00 to 50,00,000.00 where up to Tk. 3,00,000.00 is security free. The loan duration is 12 to 36 months and the customer is required to have an associated Savings / Current Account with the concerned branch.

BCB Cash Credit (SME):

Cash Credit is allowed to ranges from 50,000.00 to 50,00,000.00 where up to Tk. 5,00,000.00 is security free. The loan duration is maximum 12 months and the customer is required to have an associated Savings / Current Account withthe concerned branch.

BCB Teachers' Loan:

This is security free loan for teachers &allowed to maximum 10 (ten) times of the basic salary with a duration of 12 to 48 months. The teacher is required to have service history for at least 03 years and an associated Savings/ Current Account with BCB.

BCB Special Loan (For Service Holders):

This is security free loan for the service holders only and the beneficiary is allowed to get upto 12 times of the basic salary or Tk. 10,00,000.00 whichever is lower with a duration of 12 to 36 months. The service holder is required to have service history for at least 03 years and an associated Savings / Current Account with BCB.

11)

12)

13)

1)

2)

3)

4)

5)

6)

7)

8)




Business Outlook 2014The best thing we can do in this or any environment is to focus on what we can control. Our efforts are centered on our strategic priorities that shape our back-to-basics strategy.

In 2014, bank put his special drive in all aspect to reach to a certain level where it can be a reliable bank in Bangladesh.

In Bangladesh, 2014 is the year of national election and so some political unrest is not unlikely which might hamper the normal economic activities of the country. Despite of this limitation, the bank has taken short-term and mid-term strategies to achieve the desired success are as follows:

Raise Paid up Capital BDT 400 crore

New and innovative products on deposit and loans & investment to increase BDT 3500 crore and 2500 crore only respectively.

Opening of more branches at upazilas and commercially important places.

We are entering the year 2014, focusing on improving profitability by growing core customer relationships, enhancing credit quality, strengthening our balance sheet and managing expenses. We will achieve all of those goals by the plan.

Sl.No. Plans

Projected Target

2014 Growth (%)

01. Paid up Capital 400.00 101.14

02. MDR (Minimum Capital Requirement) [as per Basel- II] 400.00 -

03. Total Eligible Capital [as per Basel- II] 400.00 48.60

04. Total Deposit 3,000.00 52.01

05. Total Loans 2,500.00 91.37

06. Advance deposit ratio % 70.00 5.75

07. Classified Loans 100.00 (47.87)

08. Classified Loan Ratio % 5.00 (65.94)

09. Recovery of Classified Loans 98.00 364.68

10. Income from Non Funded Business 30.00 65.75

11. Interest Income 225.00 8.33

12. Interest Expense 184.00 5.52

13. Operating Expenses 93.00 40.65

14. Capital Expenditure (Year-wise Cumulative) 4.75 (34.30)

15. Profit before tax & provision 50.00 289.11

16. Retained Earnings 4.75 (55.81)

17. Import 2,000.00 520.08

18. Export 1,000.00 96.26

19. Remittance 60.00 14.96

20. Cost of deposit (decrease in %) 6.13 (37.13)

21. Cost of Fund (decrease in %) 6.21 (49.06)

22. Yield on Advance in % 11.25 (22.25)

23. Spread in % 5.12 8.47

24. No. of employees 1,045 44.94

25. No. of Branches 50 19.05

26. No. of Loss Incurring Branches 2 (84.62)

27. Total Assets 3,645.00 48.63


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Auditor's Report&

Audited Financial Statements ofBangladesh Commerce Bank Ltd.

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Bangladesh Commerce Bank Limited and its subsidiary ("the Group") namely Commerce Bank Securities and Investment Limited as well as the separate financial statements of Bangladesh Commerce Bank Limited ("the Bank") which comprise the consolidated balance sheet and the separate balance sheet as at 31 December 2013 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 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 separate financial statements of the Bank that are free from material misstatement whether due to fraud or error. The Bank Company Act, 1991 and the Bangladesh Bank Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Bank. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries.

Auditor's Responsibility

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

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

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

Provision for loans and advances for Tk.713,376,999 remained short in the financial statements for the year ended 31 December 2013; and

No provision was made against other assets for Tk.8,638,707 for the year ended 31 December 2013.

INDEPENDENT AUDITOR'S REPORTTO THE SHAREHOLDRS OF

BANGLADESH COMMERCE BANK LIMITED

(i)a.

b.

c.

(ii)

As disclosed in Note # 13.3.1 to the financial statements, Income Tax Assessment for the year 2005-2006, 2006-2007, 2007-2008, 2009-2010 & 2011-2012 are pending before appeal. Income tax return has been filed under section 82BB(3)/83(2) for the year 2012-2013. Income tax has been provided @ 42.5% on the net profit earned by the Bank for the year 2013. As per assessment at Deputy Commissioner of Taxes (DCT) level there exists shortfall in the provision for income tax aggregating Tk.63,896,780 against which Appeals are pending at different levels of income tax authorities.

As per section 13 (2) of Bank Company Act 1991 and BRPD Circular No. 35 dated 29 December 2010 to fulfil the Basel-II requirement, the required capital of the Bank was Tk.4,000 million against which the bank has maintained capital of Tk.2,691.69 million on 31 December 2013. Thus there remained a book shortfall of capital amounting to Tk.1,308.31 million as on the balance sheet date.

Basis for Qualified Opinion


Qualified Opinion

In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the consolidated financial statements of the Group and also the separate financial statements of the Bank give a true and fair view of the financial position of the Group and the Bank as at 31 December 2013, and of their financial performance and their cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in note # 2.1.

Except for as mentioned above, we also report on Other Legal and Regulatory Requirements

In accordance with the Companies Act 1994, the Bank Company Act, 1991 and the rules and regulations issued by Bangladesh Bank, we also report the following:

internal audit, internal control and risk management arrangements of the Group and the Bank as disclosed in note # 2.19 to the financial statements appeared to be materially adequate;

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;

(i)

(a)

(b)

(ii)

If the matters discussed in paragraph (a) above have been considered in the financial statements, the net profit after tax for the year ended 31 December 2013 would have been negative i.e; net loss to the tune of Tk.704,518,778 instead the net profit of Tk.17,496,928 and the actual capital shortfall would have been Tk.1,317.43 million instead of Tk.1,308.31 million as reported by the bank.

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;

to the extent noted during the course of our audit work performed on the basis stated under the Auditor's Responsibility section in forming the above opinion on the consolidated financial statements of the Group and the financial statements of the Bank and considering the reports of the Management to Bangladesh Bank on anti-fraud internal controls and instances of fraud and forgeries as stated under the Management's Responsibility for the Financial Statements and Internal Control:

(c)

(d)

(e)

(f)(g)

(h)

(i)

(j)

(k)

financial statements of the subsidiary, namely, Commerce Bank Securities and Investment Limited of the Bank has been audited by other auditor and has been properly reflected in the consolidated financial statements;

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

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;

the expenditure incurred was for the purposes of the Bank's business;

the consolidated financial statements of the Group and the separate financial statements of the Bank have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as with related guidance issued by Bangladesh Bank;

except for the facts as stated in Basis for Qualified Opinion paragraph (a)(i), adequate provisions have been made for advances which are, in our opinion, doubtful of recovery;

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

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

we have reviewed over 80% of the risk weighted assets and we have spent around 2,950 person hours for the audit of the books and accounts of the Bank.

Dhaka,30 March 2014

ACNABINChartered Accountants


Auditor's Report

Bangladesh Commerce Bank Limited & its Subsidiary Consolidated Balance Sheet

As at 31 December 2013

31.12.2012Taka

31.12.2013Taka

Notes

PROPERTY AND ASSETS Cash 3(a) 1,724,870,558 1,756,588,118 Cash in hand (including foreign currencies) 3.1(a) 458,057,362 400,437,055 Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies) 3.2(a) 1,266,813,196 1,356,151,063 Balance with other banks and financial institutions 4(a) 3,706,340,628 1,816,942,940

In Bangladesh 3,699,951,504 1,793,338,483 Outside Bangladesh 6,389,124 23,604,457 Money at call and short notice 5(a) 388,900,000 239,100,000 Investments 6(a) 4,545,478,974 2,603,387,934 Government 3,962,676,946 1,713,129,860 Others 582,802,028 890,258,074 Loans and Advances 7(a) 12,063,679,147 11,676,531,295 Loans, Cash Credit, Overdrafts etc. 12,058,829,147 11,671,227,073 Bills purchased and discounted 4,850,000 5,304,222 Loans & Advances of BCI 7.14 560,031,693 573,724,347 Total Loans and Advances 12,623,710,840 12,250,255,642 Fixed assets including premises, furniture and fixtures 8(a) 192,396,337 175,398,835 Other assets 9(a) 1,495,739,735 1,239,195,758 Non-banking assets 10 - - TOTAL ASSETS 24,677,437,073 20,080,869,228 LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents 11(a) 50,805,000 155,460,000 Deposits and other accounts 12(a) 19,736,163,381 15,610,992,918 Current Account and Other Accounts etc. 853,315,278 761,974,778 Savings Bank Deposits 1,396,691,167 1,242,980,289 Short Term Deposits 1,517,226,728 935,589,244 Fixed Deposits 12,659,431,640 9,877,954,807 Deposit under Different Schemes 12.1 1,917,935,552 1,518,369,188 Bills Payable 12.3 214,564,919 285,622,271 Bank Deposit 550,000,000 310,000,000 Other Deposits 12.4(a) 626,998,097 678,502,341 Deposits (BCI) 55,080,685 55,905,122 Other liabilities 13(a) 1,556,259,980 1,926,704,795 Total Liabilities 21,398,309,046 17,749,062,834 Capital/Shareholders' EquityPaid-up-Capital 14.2 1,988,742,800 1,988,742,800 Share Capital BCI Ltd. 39,000,000 39,000,000 Minority Interest 90 90 Right Share Application Money 913,578,800 - Statutory Reserve 15(a) 194,845,145 178,609,568 Other Reserve 16(a) 8,920,366 8,920,366 Revaluation Reserve for HTM Securities 17(a) 20,568,499 17,593,459 Exchange Equalization Account - - Surplus/Deficit in Profit and Loss Account 18(a) 113,472,327 98,940,110 Total Shareholders' Equity 3,279,128,026 2,331,806,393 Total Liabilities and Shareholders' Equity 24,677,437,073 20,080,869,228



Managing Director

This is the Consolidated Balance Sheet referred to in our separate report of even date.

Dhaka,30 March 2014

Director Director Chairman


31.12.2012Taka

31.12.2013Taka

Notes

OFF-BALANCE SHEET ITEMS

Contingent LiabilitiesAcceptances and Endorsements 792,496,105 802,196,848 Letter of Guarantees 19.1 357,479,616 387,162,419 Irrevocable Letter of Credit 691,220,053 714,819,019 Bills for Collection 159,635,288 110,832,029 Other contingent liability 19.2 84,373,621 84,373,621 TOTAL CONTINGENT LIABILITIES 2,085,204,684 2,099,383,936 Other commitments Documentary Credits and short term trade related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other - - Total Off-Balance Sheet items including contingent liabilities 2,085,204,684 2,099,383,936 The annexed notes form an integral part of these financial statements.



Bangladesh Commerce Bank Limited & its Subsidiary Consolidated Profit and Loss AccountFor the year ended 31 December 2013

31.12.2012Taka

31.12.2013Taka

Notes

Interest Income 20 (a) 2,091,594,245 1,760,901,743 Interest Paid on Deposits and Borrowings etc 21(a) 1,743,832,265 1,346,271,371 Net Interest Income 347,761,980 414,630,371 Income from Investments 22(a) 274,816,318 327,833,951 Commission, Exchange Earnings & Brokerage 23(a) 131,773,019 136,375,987 Other Operating Income 24(a) 106,510,070 76,163,694 513,099,406 540,373,632 Total operating income (A) 860,861,386 955,004,003 Salary and Allowances 25(a) 389,929,223 330,314,390 Rent, Taxes, Insurance, Electricity, etc. 26(a) 102,558,053 84,100,248 Legal Expenses 1,058,699 1,620,375 Postage, Stamp, Telecommunication etc. 27(a) 13,964,901 5,973,870 Stationery, Printing, Advertisement etc. 28(a) 15,370,438 10,996,183 Managing Director's salary and allowances 29 1,663,870 8,653,290 Directors' Fee 1,114,500 1,224,836 Audit & Evaluation Fee 776,250 152,875 Depreciation & Repair of Fixed Assets 30(a) 62,948,852 46,940,004 Other Expenses 31(a) 114,966,908 140,366,040 Total operating expenses (B) 704,351,694 630,342,111 Profit before Provision (C)=A-B 156,509,693 324,661,892 Provision for classified loans 13.1.1(a) 40,191,934 57,893,130 Provision for unclassified loans 13.1.2 13,946,236 3,525,427 Other provisions 8,378,260 65,957,637 Total provision (D) 62,516,430 127,376,194 Total profit/(loss) before taxes (C-D) 93,993,262 197,285,697 Provision for Taxation 73,992,816 84,687,139 Current tax 78,407,134 73,868,269 Deferred tax (4,414,318) 10,818,870 Net profit/ (loss) after Taxation 20,000,446 112,598,558 Appropriations Statutory Reserve 15 16,235,577 35,395,875 General Reserve - - Dividends etc. - - 16,235,577 35,395,875 Retained surplus 3,764,870 77,202,683 Earning Per Share (EPS) 33(a) 1.01 5.66 The annexed notes form an integral part of these financial statements.

Managing Director

This is the Consolidated Profit and Loss Account referred to in our separate report of even date.

Dhaka,30 March 2014





Managing Director


Dhaka,30 March 2014



Bangladesh Commerce Bank Limited & its Subsidiary Consolidated Cash Flow Statement

For the year ended 31 December 201331.12.2012

Taka31.12.2013

TakaCash flow from operating activities Interest receipts 2,142,076,052 1,525,340,484Interest payments (1,400,848,186) (1,197,638,753)Dividend receipts 1,672,633 3,327,843Fees and commission receipts in cash 131,773,019 140,056,213Recoveries of loans previously written off - - Cash paid to employees (388,265,353) (338,019,898)Cash paid to suppliers (14,664,947) (10,170,152)Income Taxes paid (140,346,567) (185,062,954)Receipts from other operating activities (item-wise) 106,510,070 80,874,908Payments for other operating activities (item-wise) (114,966,908) (148,249,725)Operating profit before changes in operating Assets and Liabilities 322,939,813 (129,542,034) Increase/(Decrease) in operating assets & liabilities 3,108,889,298 660,596,511Statutory Deposits (16,235,577) (35,395,875)Net Investment in trading securities - - Loan & advance to other banks - - Loan & advance to customers (373,455,199) (915,814,198)Other assets (item-wise) (256,543,977) (277,480,240)Deposits from other banks 240,000,000 (492,890,000)Deposits from customers 3,885,568,865 2,226,530,062Other liabilities account of customers (370,444,815) 155,646,762Trading liabilities - - Other liabilities (item-wise) - - Net cash flow from operating activities (A) 3,431,829,111 531,054,477Cash flow from investing activities Proceeds from sale of securities - - Payments for purchase of government securities - - Purchase of property, plant & equipment (16,997,502) (81,061,733)Purchase/sale of subsidiary - (7,500,000)Investment in Margin Loan (CBSIL) (68,458,268) (33,519,078)Investment in Shares (CBSIL) (2,924,926) (2,462,234)Net cash used in investing activities (B) (88,380,696) (124,543,045)Cash flow from financing activities Receipts from issue of debt instruments - 8,649,349Payment for redemption of debt instruments - (10,000,000)Receipts from issuing ordinary share/ rights share 913,578,800 - Dividend paid - - Net cash flow from/(used in) operating activities (C) 913,578,800 (1,350,651)Net increase/(decrease) in Cash and Cash Equivalent (A+B+C) 4,257,027,215 405,160,781 Effects of exchange rate changes on cash and cash equivalents - - Opening Cash and Cash Equivalent 5,525,760,917 5,120,600,136Cash and cash equivalents at end of year (D+E+F) (*) 9,782,788,132 5,525,760,917 Closing Cash & Cash Equivalent

A.

B.

C.

D.

E.F.G.

(*)Cash in Hand (including foreign currency) 458,057,362 400,437,055Balance with Bangladesh Bank and its Agent Banks 1,266,813,196 1,356,151,063Balance with Other Bank's and Financial Institutions 3,706,340,628 1,816,942,940Money at Call on Short Notice 388,900,000 239,100,000Prize Bond 1,581,000 1,169,400Government Securities & FDR 3,961,095,946 1,711,960,460 9,782,788,132 5,525,760,917



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Bangladesh Commerce Bank LimitedBalance Sheet


31.12.2012Taka

31.12.2013Taka

Notes

PROPERTY AND ASSETS Cash 3 1,612,355,349 1,663,431,511 Cash in hand (including foreign currencies) 3.1 345,542,153 307,280,448 Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies) 3.2 1,266,813,196 1,356,151,063 Balance with other banks and financial institutions 4 3,706,340,628 1,816,942,940

In Bangladesh 3,699,951,504 1,793,338,483 Outside Bangladesh 6,389,124 23,604,457 Money at call and short notice 5 388,900,000 239,100,000 Investments 6 4,735,655,028 2,796,488,915 Government 3,962,676,946 1,713,129,860 Others 772,978,082 1,083,359,055 Loans and Advances 7 12,503,679,147 11,676,531,295 Loans, Cash Credit, Overdrafts etc. 12,498,829,147 11,671,227,073 Bills purchased and discounted 4,850,000 5,304,222 Loans & Advances of BCI 7.14 560,031,693 573,724,347 Total Loans and Advances 13,063,710,840 12,250,255,642 Fixed assets including premises, furniture and fixtures 8 182,972,772 165,023,815 Other assets 9 814,215,479 613,564,135 Non-banking assets 10 - - TOTAL ASSETS 24,504,150,097 19,544,806,958 LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents 11 50,805,000 155,460,000 Deposits and other accounts 12 19,736,097,661 15,610,528,796 Current Account and Other Accounts etc. 853,315,278 761,974,778 Savings Bank Deposits 1,396,691,167 1,242,980,289 Short Term Deposits 1,517,226,728 935,589,244 Fixed Deposits 12,659,431,640 9,877,954,807 Deposit under Different Schemes 12.1 1,917,935,552 1,518,369,188 Bills Payable 12.3 214,564,919 285,622,271 Bank Deposit 550,000,000 310,000,000 Other Deposits 12.4 626,932,377 678,038,219 Deposits (BCI) 55,080,685 55,905,122 Other liabilities 13 1,389,007,392 1,394,571,796 Total Liabilities 21,230,990,738 17,216,465,713 Capital/Shareholders' EquityPaid-up-Capital 14.2 1,988,742,800 1,988,742,800 Share Capital BCI Ltd. 39,000,000 39,000,000 Right Share Application Money 913,578,800 - Statutory Reserve 15 194,845,145 178,609,568 Other Reserve 16 8,920,366 8,920,366 Revaluation Reserve for HTM Securities 17 20,568,499 17,593,459 Exchange Equalization Account - - Surplus/Deficit in Profit and Loss Account 18 107,503,749 95,475,052 Total Shareholders' Equity 3,273,159,358 2,328,341,245 Total Liabilities and Shareholders' Equity 24,504,150,097 19,544,806,958



Managing Director

This is the Consolidated Balance Sheet referred to in our separate report of even date.

Dhaka,30 March 2014



31.12.2012Taka

31.12.2013Taka

Notes

Contingent LiabilitiesAcceptances and Endorsements 792,496,105 802,196,848 Letter of Guarantees 19.1 357,479,616 387,162,419 Irrevocable Letter of Credit 691,220,053 714,819,019 Bills for Collection 159,635,288 110,832,029 Other contingent liability 19.2 84,373,621 84,373,621 TOTAL CONTINGENT LIABILITIES 2,085,204,684 2,099,383,936 Other commitments Documentary Credits and short term trade related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total Off-Balance Sheet items including contingent liabilities 2,085,204,684 2,099,383,936 The annexed notes form an integral part of these financial statements.



Bangladesh Commerce Bank LimitedProfit and Loss Account


2012Taka

2013Taka

Notes

Interest Income 20 2,078,172,461 1,696,977,403 Interest Paid on Deposits and Borrowings etc 21 1,743,832,265 1,290,333,871 Net Interest Income 334,340,196 406,643,531 Income from Investments 22 274,378,803 319,442,510 Commission, Exchange Earnings & Brokerage 23 95,613,958 95,767,341 Other Operating Income 24 85,384,908 64,403,335 455,377,668 479,613,186 Total operating income (A) 789,717,864 886,256,717 Salary and Allowances 25 372,532,349 313,834,824 Rent, Taxes, Insurance, Electricity, etc. 26 95,620,105 77,073,470 Legal Expenses 1,026,649 1,616,240 Postage, Stamp, Telecommunication etc. 27 13,435,616 5,555,157 Stationery, Printing, Advertisement etc. 28 14,664,947 10,170,152 Managing Director's salary and allowances 29 1,663,870 8,653,290 Directors' Fee 763,750 811,486 Audit & Evaluation Fee 690,000 82,875 Depreciation & Repair of Fixed Assets 30 60,407,188 44,277,825 Other Expenses 31 100,411,012 123,718,957 Total operating expenses (B) 661,215,486 585,794,276 Profit before Provision (C)=A-B 128,502,379 300,462,441Provision for classified loans 13.1.1 25,000,000 54,000,000 Provision for unclassified loans 13.1.2 13,946,236 3,525,427 Other provisions 8,378,260 65,957,637 Total provision (D) 47,324,496 123,483,064 Total profit/(loss) before taxes (C-D) 81,177,883 176,979,376 Provision for Taxation 63,680,955 75,767,347 Current tax 67,953,707 65,000,000 Deferred tax (4,272,752) 10,767,347 Net profit/ (loss) after Taxation 17,496,928 101,212,029 Appropriations Statutory Reserve 15 16,235,577 35,395,875 General Reserve - - Dividends etc. - - 16,235,577 35,395,875 Retained surplus 1,261,351 65,816,154 Earning Per Share (EPS) 33 0.88 5.09 The annexed notes form an integral part of these financial statements.

Managing Director


Dhaka,30 March 2014





Managing Director

The annexed note forms an integral part of these financial statements.

Dhaka,30 March 2014



Bangladesh Commerce Bank LimitedCash Flow Statement


31.12.2012Taka

31.12.2013Taka

Cash flow from operating activities Interest receipts 2,015,661,420 1,461,416,146Interest payments (1,334,459,333) (1,141,701,253)Dividend receipts 1,672,633 3,327,843Fees and commission receipts in cash 95,613,958 95,767,341Cash paid to employees (374,196,219) (322,488,114)Cash paid to suppliers (14,664,947) (10,170,152)Income Taxes paid (122,224,981) (174,073,363)Receipts from other operating activities (item-wise) 85,384,908 64,403,335Payments for other operating activities (item-wise) (100,411,012) (123,718,957)Operating profit before changes in operating Assets and Liabilities 252,376,427 (147,237,174) Increase/(Decrease) in operating assets & liabilities 3,089,662,342 660,596,511Statutory Deposits (16,235,577) (35,395,875)Loan & advance to customers (813,455,199) (915,814,198)Other assets (item-wise) (200,651,344) (277,480,240)Deposits from other banks 240,000,000 (492,890,000)Deposits from customers 3,885,568,865 2,226,530,062Other liabilities account of customers (5,564,404) 155,646,762Net cash flow from operating activities (A) 3,342,038,769 531,359,337Cash flow from investing activities Purchase of property, plant & equipment (17,948,957) (72,720,347)Purchase/sale of subsidiary - (7,500,000)Net cash used in investing activities (B) (17,948,957) (80,220,347)Cash flow from financing activities Receipts from issue of debt instruments - - Payment for redemption of debt instruments - - Receipts from issuing ordinary share/ rights share 913,578,800 - Dividend paid - - Net cash flow from/(used in) operating activities (C) 913,578,800 - Net increase/(decrease) in Cash and Cash Equivalent (A+B+C) 4,237,668,612 433,138,990 Effects of exchange rate changes on cash and cash equivalents - - Opening Cash and Cash Equivalent 5,432,604,310 4,999,465,320Cash and cash equivalents at end of year (D+E+F) (*) 32 9,670,272,922 5,432,604,310 Closing Cash & Cash Equivalent

A.

B.

C.

D.

E.F.G.

(*)

Cash in Hand (including foreign currency) 345,542,153 307,280,448Balance with Bangladesh Bank and its Agent Banks 1,266,813,196 1,356,151,063Balance with Other Bank's and Financial Institutions 3,706,340,628 1,816,942,940Money at Call on Short Notice 388,900,000 239,100,000Government Securities 3,962,676,946 1,713,129,860 9,670,272,922 5,432,604,310



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1.0

1.1

2.0

2.1

i)

ii)

iii)

Bangladesh Commerce Bank LimitedNotes to the Financial Statements

For the year ended 31 December, 2013

Legal Status and Nature of the Company

The Bangladesh Commerce Bank Limited (Reformed BCI Limited) was incorporated in Bangladesh as a Public Limited Company as on the 01 June 1998 under Companies Act 1994 and commenced commercial operation on the 16 September 1999. It has 42 branches all over Bangladesh.

The principal place of business is at the Registered Office at Eunoos Trade Center, Level –22, 52-53 Dilkusha C/A, Dhaka, Bangladesh. The principal activities carried out by the bank include all kinds of commercial banking activities/services to its customers through its branches.

Subsidiary of the Bank

Commerce Bank Securities & Investments Limited (CBSIL), is fully owned subsidiary company of Bangladesh Commerce Bank Limited incorporated as a private limited company on 20 September 2010 with the registrar of Joint Stock Companies & Firms, Dhaka vide certificate of incorporation no. C-81290/09. CBSIL started its operation from 01 June 2011. The main objective of the company for which was established are to carry out the business of full-fledged merchant banking activities like issue management, portfolio management, underwriting etc.

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION OF FINANCIAL STATEMENTS

Basis of preparation of the financial statements

The consolidated financial statements of the group (comprising the Bank and its subsidiary) financial statements of Bangladesh Commerce Bank Limited as at and for the year ended 31 December 2013 have been prepared under the historical cost convention, except for Government Securities which are stated at fair value and in accordance with Bangladesh Financial Reporting Standards (BFRSs), the First Schedule (Section 38) of the Bank Companies Act 1991, as amended by the BRPD Circular 14 dated 25 June 2003, the rules and regulations issued by Bangladesh Bank, the Companies Act 1994 and other rules and regulations are applicable in Bangladesh. In case any requirement of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank differ with those of BFRS, the requirements of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank shall prevail. Material departures from the requirements of BFRS are as follows:

Investment in shares and securities

BFRS: As per requirements of BAS 39 investment in shares and securities generally falls either under “at fair value through profit and loss account” or under “available for sale” where any change in the fair value (as measured in accordance with BFRS 13) at the year-end is taken to profit and loss account or revaluation reserve respectively.

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 has been made for any loss arising from diminution in value of investment; otherwise investments are recognized at cost.

Revaluation gains/losses on Government securities

BFRS: As per requirement of BAS 39 where securities will fall under the category of Held for Trading (HFT), any change in the fair value of held for trading assets is recognized through profit and loss account. Securities designated as Held to Maturity (HTM) are measured at amortised cost method and interest income is recognised through the profit and loss account.

Bangladesh Bank: According to DOS CIrcular 05 dated 26 May 2008 and subsquently clarification in DOS Circular 05 dated 28 January 2009, 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. Interest 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.

Provision on loans and advances/investments

BFRS: As per BAS 39 an entity should start the impairment assessment by considering whether objective evidence of impairment exists for financial assets that are individually significant. For financial assets that are not individually significant, the assessment can be performed on an individual or collective (portfolio) basis.



iv)

v)

vi)

vii)

viii)

ix)

x)

xi)

Bangladesh Bank: As per BRPD circular No.14 dated 23 September 2012, BRPD circular No. 19 dated 27 December 2012 and BRPD circular No. 05 dated 29 May 2013 a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad losses has to be provided at 20%, 50% and 100% respectively for loans and advances depending on the duration of overdue. Again as per BRPD circular no. 10 dated 18 September 2007 and BRPD circular no. 14 dated 23 September 2012, a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39.

Recognition of interest in suspense

BFRS: Loans and advances to customers are generally classified as 'loans and receivables' as per BAS 39 and interest income is recognised through effective interest rate method over the term of the loan. Once a loan is impaired, interest income is recognised in profit and loss account on the same basis based on revised carrying amount.

Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified, interest on such loans are not allowed to be recognised as income, rather the corresponding amount needs to be credited to an interest in suspense account, which is presented as liability in the balance sheet.

Other comprehensive income

BFRS: As per BAS 1 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 nor 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.

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. As such full disclosure and presentation requirements of BFRS 7 and BAS 32 cannot be made in the financial statements.

Financial guarantees

BFRS: As per BAS 39, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial 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 Circular no. 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.

Cash and cash equivalent

BFRS: Cash and cash equivalent items should be reported as cash item as per BAS 7.

Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short notice’, treasury bills, Bangladesh Bank bills and prize bond are not shown as cash and cash equivalents. Money at call and on short notice presented on the face of the balance sheet, and treasury bills, prize bonds are shown in investments.

Non-banking asset

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

Bangladesh Bank: As per BRPD Circular no. 14 dated 25 June 2003 there must exist a face item named Non-banking asset.

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, cash flow is the mixture of direct and indirect methods.

Balance with Bangladesh Bank: (Cash Reserve Requirement)

BFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per BAS 7.

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



2.2

2.3

2.4

2.5

2.6

2.7

xii)

xiii)

xiv)

Presentation of intangible asset

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

Bangladesh Bank: There is no regulation for intangible assets in BRPD Circular no. 14.

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 circular no. 14 dated 25 June 2003 off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.) must be disclosed separately on the face of the balance sheet.

Loans and advances/Investments net of provision

BFRS: Loans and advances/Investments should be presented net of provision.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 provision on loans and advances/investments are presented separately as liability and can not be netted off against loans and advances.

Consolidation Procedure

The consolidated financial statements include the financial statements of Bangladesh Commerce Bank Limited and its subsidiary Commerece Bank Seceurities & Investments Limited made up to the end of the financial year.

The consolidated financial statements have been prepared in accordance with Bangladesh Accounting Standard 27: Consolidated and Separate Financial Statements. The consolidated financial statements are prepared to a common financial year ended 31 December 2013."

Subsidiary

Subsidiary is that enterprise which is controlled by the Bank. Control exists when the Bank has the power, directly or indirectly, to govern the financial and operating policies of an enterprise from the date that control commences until the date that control ceases. The financial statements of subsidiary are included in the consolidated financial statements from the date that control effectively commences until the date that the control effectively ceases. Subsidiary companies are consolidated using the purchase method of accounting.

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 reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates is revised and in any future periods affected.

Revenue Recognition

The revenue during the period under audit is recognized satisfying the conditions as specified in Bangladesh Accounting Standards (BAS) 18 “Revenue Recognition”. Details are as under:

Interest/ income

(i) Interest is calculated on daily product on unclassified loans and advances and accounted for quarterly on accrual basis.

(ii) Interest is charged on classified loans and advances as per Bangladesh Bank BRPD circular No. 16 of 1989 and such interest was not taken into income account upon realization.

(iii) Dividend income is recognized at the time when it is realized.

(iv) Commission and discounts on bills purchased and discounted are recognized at the time of realization. "

Fees, commission and discounts income

Fees, commission and discounts on bills purchased and discounted are recognized at the time of realization.

Investment income

Interest income on investments is recognized on accrual basis. Capital gain on investments in shares is also included in investment income. Capital gain is recognized when it is realized.

Interest paid and other expenses

In terms of the provisions of BAS-1 "Presentation of Financial Statements" interest/profit and other expenses are recognized on accrual basis.

Earnings Per Share (EPS)

The Company calculates Earnings Per Share (EPS) in accordance with BAS 33 “Earnings Per Share” which has been shown on the face of Profit and Loss Account. This has been calculated by dividing the basis earnings by the number of ordinary shares outstanding during the year.

Foreign Currency Transactions

Transaction in Foreign Currencies are translated into Bangladesh Taka and recorded at the ruling Exchange rates applicable on the dates of transactions in accordance with Bangladesh Accounting Standards (BFRS/BAS) - 21 “The Effects of Changes in Foreign Exchange Rates”. As such -



2.8

2.9

2.10

2.11

2.12

2.12.1

2.12.2

2.13

2.13.1

2.13.2

(i) Assets and liabilities denominated in foreign currency are translated into Bangladesh Taka at the balance sheet date at the mid rates.

(ii) Transactions in foreign currencies are converted into Bangladesh Taka currency at the rate of exchange prevailing on the dates of such transactions and any gains or losses thereon are adjusted to renenue through foreign exchange trading account.

Reporting Period

These financial statements of the Bank and its subsidiary cover one calendar year from 1 January 2013 to 31 December 2013.

Statements of Cash Flows

Cash Flow Statement is prepared principally in accordance with BAS 7 " Statement of Cash Flows" under direct method as per the guidelines of BRPD circular no-14 dated 25 June 2003. The statement of Cash Flows shows the structure & changes in cash & cash equivalents during the year. Cash Flows during the period have been clssified as operating activities, investing activities & financing activities.

Statements of Changes in equity

The statement of changes in equity reflects information about the increase or decrease in net assets or wealth.Statement of changes in equity has been prepared in accordance with Bangladesh Accounting Standard (BAS) "Presentation of Financial Statements" and relevant guidelines of Bangladesh Bank.

Statement of Liquidity

The Liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on 31 December 2013.

Taxation

The expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity.

Current Tax

In compliance with BAS-12 " Income Taxes", provision for current income tax has been made @ 42.50% on business income,@ 20% on dividend income and @ 10% on capital gain on sale of shares, after considering some of the add backs to income and disallowances of expenditure as per Income Tax Ordinance 1984 and time to time amendment to issue different S.R.O and circular issued by the National Board of Revenue.

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 recognised 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 balance sheet date. The impact on the account of changes in the deferred tax assets and liabilities has also been recognised in the profit and loss account as per BAS-12 "Income Taxes".

Assets and basis of their valuation

Cash and cash equivalents

Cash 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 Bank management for its short-term commitments.

Loans & Advances and Provision

Interest is calculated on daily product basis but charged and accounted for quarterly on accrual basis. Interest on classified loans is kept in interest suspense account as per Bangladesh Bank guidelines and such interest is not accounted for as income until realized from borrowers. Interests are not charged on bad / loss loans as per instructions of Bangladesh Bank. Advances are stated at gross value.

Provision for loans and advances is made on the basis of year-end review by the management and on the basis of instructions contained in Bangladesh Bank BCD Circular No- 34 of 1989, BCD Circular No. 20 dated 27 December 1994, BRPD Circular No-12 dated 04 September 1995, BRPD Circular No- 16 dated 06 December 1998, BRPD Circular No-9 dated 14 May 2001, BRPD Circular No-8 of 2005, BRPD Circular No-14 dated 23 September 2012, BRPD Circular No-19 dated 27 December 2012 and BRPD Circular No-05 dated 29 May 2013 at the following rates:



2.13.3

2.13.4

2.14

2.14.1

2.15

Provision for off Balance Sheet Exposures

General provision for off balance sheet exposures has been made @ 1% on period end balance of total off balance sheet exposures as per BRPD circular No. 8 and 10 dated 07 August, 2007 and 18 September, 2007 respectively issued by Bangladesh Bank.

Investment

Values of investments have been shown as under:Treasury Bills : Face Value (Including unearned Income thereon)Prize Bond : Cost PriceShares and Debenture : Cost Price"

Fixed Assets and Depreciation

(i) Assets are stated at cost less accumulated depreciation.

(ii) Depreciation has been charged at the following rates on reducing balance method on all fixed asset other than motor vehicle, machinery and computer, which are depreciated on straight-line basis:

Intangible assets

Intangible asset is an identifiable non-monetary asset without physical substance. An intangible asset is recognised if it is probable that the future economic benefits that are attributable to the assets will flow to the entity and the cost of the asset can be measured reliably in accordance with BAS 38: "Intangible Assets".

Subsequent expenditure on intangible asset is capitalised only when it increases the future economic benefits embodied in the specific assets to which it relates. All other expenditure is expensed as incurred.

The software used by BCBL represents the value of computer application software licensed for the use of the bank. Software is carried at cost less accumulated amortisation and any impairment losses. Initial cost comprises license fees paid at the time of purchase and other directly attributable expenditure that are carried in customising the software for its intended use. Software is amortised using the straight line method over the estimated useful life of 3 (Three) years commencing from the month at which the application software is made available for use.

Reconciliation of Books of Accounts

Books of account with regard to inter bank (in Bangladesh and outside Bangladesh) are reconciled and no material difference was found which might affect the financial statement significantly.

General Provision on;

Unclassified (Including SMA) general loans and advances 1%

Unclassified (Including SMA) Small and Medium Enterprise Financing (SMEF) 0.25%

Unclassified (Including SMA) Loans to BHs/MBs/SDs against Share 2%

Unclassified (Including SMA) Loans for Housing Finance,Professionals and Small Enterprise 5%

Unclassified Consumer finance other than Loans for Housing Finance,Professionals and Small Enterprise 5%

Short term agri credit and micro credit 5%

Off-Balance Sheet Exposure 1%

Specific Provision on;

Substandard loans and advances other than Short term agri credit and micro credit 20%

Doubtful loans and advances other than Short term agri credit and micro credit 50%

Bad / loss loans and advances 100%

Doubtful Short term agri credit and micro credit 5%

Particulars Rate

Furniture 10%

Interior Decoration 20%

Machinery 20%

Vehicles 20%

Computer 30%

Name of Assets Rate of depreciation



2.16

2.17

2.18

2.19

Retirement benefits of the employees

1) Employee benefit for gratuity is expensed on payment of the benefit.

2) The Bank operates a Bangladesh Commerce Bank Ltd. Gratuity Fund, provision for which is made annually covering all its eligible employees. It is operated by a separate Board of Trustees of the Bank.

Auditors work-hour

The external auditor of the Bank ACNABIN, Chartered Accountants worked for more than of 2,950 man-hours at the Bank’s, Head Office and branches. During their audit, they audited above 80% of the Bank’s risk weighted assets as on the reporting date.

Audit Committee

Bank’s Audit Committee was reconstituted by the Board of Directors of the Bank in its 3 (three) meeting held during the year. The Audit Committee is as under:

During the year 2013, 3 (three) meeting of the Audit Committee of the Board were held in which the following issued among others was discussed:

Risk Management

The risk Management of Bangladesh Commerce Bank Limited evolves identification, measurement, monitoring and controlling risks to ensure that:

a) The Bank’s risk exposure is within the limits established by Board of Directors.

b) The Bank’s risk taking decisions are in line with the business strategy and objectives set by Board of Directors of the Bank as well as Bangladesh Bank guidelines.

c) The Bank’s risk taking decisions are explicit and clear.

d) Sufficient capital as a buffer is available to take risk.

Market Risk

Bangladesh Commerce Bank Limited is exposed to market risk in variety of ways. Market risk exposure is mainly explicit in portfolio of Bangladesh Government Treasury Bills and treasury Bonds held under HFT (held for trading) conversely, Market Risk is implicit such as interest Rate Risk due to mismatch of loans and Foreign Exchange Risk due to maturity mismatch of foreign currency positions. The portfolios are being revalued at an interval at current market price of marking to market basis. Besides, the portfolios have been synchronized in line with Bangladesh Bank guidelines of risk based Capital Adequacy (BASEL-II) for interest rat, risk and foreign exchange risk.

Interest Rate Risk

Interest Rate Risk arises when there is a mismatch between positions. The Bank’s lending, funding and investment activities give arise to Interest Rate Risk. The Bank Assess Interest Rate Risk in earning perspective which is traditional approach to Interest Rate Risk assessment and obtained by measuring the changes in the Net Interest Income (NII) on Net Interest Margin (NIM) i.e. the different between total interest income and the total interest expenses.

Foreign Exchange Risk

The Bank is also exposed to Interest Rate Risk, which arises from the maturity mismatching of foreign currency position. It also includes settlement risk. The total holding position is being revalued on marking to market on monthly basis.

Reviewing the terms of reference of the Committee as mentioned in BRPD Circular No. 11

Reviewing the comprehensive inspection report of Bangladesh Bank for the year 2008 and status of compliance thereof.

Reviewing the internal inspection report of different branches of Bangladesh Commerce Bank Limited conducted by Bank’s Audit & Inspection team from time to time.

Reviewing the HR policy, Share portfolio, Budget, Internal control, staff performance etc.

Mr. Abbas Uddin Ahmed Director Chairman BA (Hons)

Mr. Md. Farhad Uddin Director Member MSS

Mr. Rana Kaiser Director Member BBA

Mr. Dr. Md. Zillur Rahman Director Member B.com(Hons), M.com Ph.D

Name of Assets Status withthe Bank

Status withthe Committee

EducationalQualification

-

-

-

-

i.



Equity risk

Equity risk arises from movement in market value of equities held. The risks are monitored by Investment Committee under a well designed policy framework.

Credit Risk

It arises mainly form lending, trade finance, leasing and treasury businesses. This can be described as potential loss arising from the failure of a counter party to perform as per contractual agreement with the Bank. The failure may result from unwillingness of the counter party or decline in his/ her financial condition. Therefore, the Bank’s credit risk management activities have been designed to address all these issues. Steps have already been implemented of Bangladesh Bank requirements and some are in under process.

A typical Credit Risk management framework in Bangladesh Commerce Bank Limited is broadly categorized into following main component:

a)� Board’s and senior management oversight.b)� Organizational Structure.c)� Systems and Procedures for identification acceptance, measurement, monitoring and control risks.

The Bank board of Directors approved Credit Risk strategy and significant policies relating to Credit Risk. The Board of Directors of Bangladesh Commerce Bank Limited also set the parameter to maintain Bank’s overall credit exposures. The Bank also operates within a sound and well-defined criteria for new credits as well as the expansion of existing credits.

Liquidity Risk

Bangladesh Commerce Bank Limited considers Liquidity Risk a major risk for Bank. It arises when the cushion provided by the liquid assets are not sufficient enough to meet its obligation. The Board of Directors of the Bank enunciated specific polices on particular aspects of liquidity risk management such as (a) composition of Assets and Liabilities (b) diversification and stabilities of liabilities (c) access to enter-bank market. The Board of Directors of Bangladesh Commerce Bank Limited approved Liquidity Contingencies Plan in policy guideline in line with Bangladesh Bank’s Core Risk Guidelines. The Board of Directors of Bangladesh Commerce Bank Limited has also approved specific Risk Limits for proper liquidity management of the Bank.

Reputation Risk Arising from Money Laundering Incidences

Money laundering risk is defined as the loss of reputation and expenses incurred as penalty for being negligent in prevention of money laundering. The bank has already taken many steps required by Bangladesh Bank for complying with reputation risk.

Operational Risk

Internal Control and Compliance is a process to provide ‘Immunization’ and a high level of protection from errors, improper process, frauds, surprises and inability to comply with legal and regulatory requirements. The bank has already taken many steps required by Bangladesh Bank for complying with operational risk.

Risk Management of Information and Communication Technology (ICT)

The ICT Risk Management is a full blown process for the bank to ensure maintenance or recovery including uninterrupted services to customers an all adverse events such as natural disasters, technological failures, human error etc. In order to organize Network resources, the bank pursues a central policy for administrator to secure intranet and internet network access. A security policy is in place with a formal statement of the rules that people who are given access must abide by and adhere to what is laid in the policy. A disaster recovery plan covers data, hardware and software critical for business to restart in the event of a natural or human – caused disaster. The steps have been implemented.

Fraud & Forgeries

The term ‘Fraud’ commonly includes activities such as theft, corruption, conspiracy, embezzlement, money laundering, bribery & extortion. Fraud risk is one of the components of Operational risk. Operational risk focuses on the risks associated with errors or events in transaction processing or other operation. We are absolutely committed to maintain an honest, open & well intentioned atmosphere within the organization. It is, therefore, also committed to fraud prevention and fraud detection. Fraud & Forgery has emerged as one of the major threats in banking sector with regular development of avenues by the fraudsters.

In the year 2013, IC&C Division, BCBL, has started to further develop the Risk & Fraud awareness culture among the employees & reduce the likelihood of fraud occurring in the Bank. Internal Control & Compliance Division of Bangladesh Commerce Bank Limited has arranged to conduct Spot Inspection on Anti Fraud Internal Control (AFIC) systems to protect the bank from anticipated fraud & forgery in addition to regular comprehensive Audit & Inspection in the branches.

In connection with dealing the situation and ensuring safety checking measures against fraud & forgery related issues, IC&C division has developed a questionnaire/ Checklist to perform spot AFIC, which shall continue upon regular review, up-gradation & improvisation.

ii.

iii.

iv.

v.

vi.

vii.



2.20

2.21

Compliance of Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS)

The Institute of Chartered Accountants of Bangladesh (ICAB) is the sole authority for adoption of Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) in context of Bangladesh from the standards adopted by International Federation of Accountants Committee (IFAC) as International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). While preparing the financial statements, Bangladesh Commerce Bank Limited applied most of the BAS and BFRS, details of which are given below:

* Relevant disclosures are made according to the requirement of Bangladesh Bank

General

(1) Wherever considered necessary figures of previous year have been rearranged for comparison purpose.

(2) Figures appearing in these Financial Statements have been rounded off to the nearest Taka."

Presentation of Financial Statements 1 Applied

Inventories 2 Applied

Statements of Cash Flow 7 Applied

Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied

Events after the Reporting Date 10 Applied

Construction Contracts 11 N/A

Income Taxes 12 Applied

Property, Plant and Equipment 16 Applied

Lease 17 N/A

Revenue 18 Applied

Employee Benefits 19 Applied

Accounting for Government Grants and Disclosure of Government Assistance 20 N/A

The effects of Changes in Foreign Exchange Rate 21 Applied

Borrowing Cost 23 Applied

Related Party Disclosures 24 N/A

Accounting for Investments 25 Applied

Accounting and Reporting by Retirement Benefit Plans 26 Applied

Consolidated and Separate Financial Statements 27 Applied

Investment in Associates 28 N/A

Disclosures in the Financial Statements of Banks and similar Financial Institutions 30 Applied

Interest in Joint Ventures 31 N/A

Financial Instrument: Presentation 32 *

Earnings per Share 33 Applied

Interim Financial Reporting 34 Applied

Impairment of Assets 36 Applied

Provisions, Contingent Liabilities and Contingent Assets 37 Applied

Intangible Assets 38 Applied

Financial Instruments: Recognition and Measurement 39 *

Investment Property 40 N/A

Agriculture 41 N/A

Name of BAS BAS No. Status

Name of BFRS BFRS No. Status

Share-based Payment 2 N/A

Business Combinations 3 N/A

Insurance Contracts 4 N/A

Non-current assets Held for Sale and Discontinued Operations 5 Applied

Exploration for and Evaluation of Mineral Resources 6 N/A

Financial Instruments: Disclosures 7 *

Operating Segments 8 Applied



31.12.2012Taka

31.12.2013Taka

CashCash in hand (Note 3.1) 345,542,153 307,280,448Balance with Bangladesh Bank and its agent bank(s) (Note 3.2) 1,266,813,196 1,356,151,063

1,612,355,349 1,663,431,511

Consolidated CashBangladesh Commerce Bank Limited 1,612,355,349 1,663,431,511CBSIL 112,515,209 93,156,607

1,724,870,558 1,756,588,118

Cash in HandIn local currency 345,542,153 307,280,448In foreign currencies - -

345,542,153 307,280,448

Consolidated Cash in HandBangladesh Commerce Bank Limited (Note 3.1) 345,542,153 307,280,448CBSIL 112,515,209 93,156,607

458,057,362 400,437,055

Balance with Bangladesh Bank and its agent bank(s)Balance with Bangladesh BankIn local currency 1,167,787,020 825,380,491In foreign currencies 75,984,553 513,862,068

1,243,771,573 1,339,242,559

Balance with Sonali Bank in local currency (as agent of Bangladesh Bank) 23,041,623 16,908,504

1,266,813,196 1,356,151,063

Consolidated Balance with Bangladesh Bank and its agent bank(s)Bangladesh Commerce Bank Limited (Note 3.2) 1,266,813,196 1,356,151,063CBSIL - -

1,266,813,196 1,356,151,063

Statutory Deposit

As per MPD circular No- 04 dated 01 December 2010 of Bangladesh Bank (effective from 15 December 2010), all scheduled banks have to maintain a CRR of minimum 5.5 % on daily basis and 6.0 % on bi-weekly basis on weekly average demand and time liabilities of the base month which is two months back of reporting month (i.e. CRR of December 2013 was based on weekly average balance of October 2013). BCBL has been maintaing it bi-weekly basis.

Cash Reserve Ratio (CRR) : 6% of Average Demand & Time LiabilitiesRequired Reserve 1,110,524,060 801,510,000

Actual Reserve held with Bangladesh Bank 1,167,787,020 825,380,000TT in Transit - -

1,167,787,020 825,380,000

Surplus/(Deficit) 57,262,960 23,870,000

Maintained Ratio 6.31% 6.18%

Statutory Liquidity Ratio (SLR) : 19%of Average Demand & Time LiabilitiesRequired Reserve 3,516,659,540 2,538,114,000Actual Reserve held 5,515,441,024 2,766,201,000

Surplus/(Deficit) 1,998,781,484 228,087,000

Maintained Ratio 29.80% 20.71%

Average Deposit 18,508,734,400 13,358,495,250

3

3(a)

3.1

3.1(a)

3.2(a)

3.2

3.3

3.4

3.5



31.12.2012Taka

31.12.2013Taka

BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONSIn Bangladesh (Note 4.1) 3,699,951,504 1,793,338,483Outside Bangladesh (NOSTRO A/C) (Note 4.2) 6,389,124 23,604,457

3,706,340,628 1,816,942,940

CONSOLIDATED BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONSBangladesh Commerce Bank Limited (Note 4) 3,706,340,628 1,816,942,940CBSIL - -

3,706,340,628 1,816,942,940In Bangladesh

Current Deposits: 40,079,943 81,518,923

Agrani Bank Ltd. 25,087,061 9,948,357Janata Bank Ltd. 14,631,481 71,543,219Pubali Bank Limited - 2,188Islami Bank Bangladesh Limited - 3,915Bangladesh Krishi Bank 1,000 1,000Trust Bank Ltd. POS 360,401 20,244

STD Accounts: 18,621,561 41,819,560

Agrani Bank Ltd. - 9,900,642Janata Bank Ltd. 12,491,017 29,806,363Uttara Bank Limited 114,007 113,555Pubali Bank Limited 6,012,909 1,999,000Islami Bank Limited 3,628

FDR Accounts: 3,641,250,000 1,670,000,000

The City Bank Ltd. 271,250,000 -Mutual Trust Bank Ltd. - 20,000,000Hajj Finance Company Ltd. 50,000,000 -People's Leasing and Financial Services Ltd. 820,000,000 80,000,000Uttara Finance and Investment Ltd. 500,000,000 -Reliance Finane Ltd. 650,000,000 -Investment Corporation of Bangladesh - 1,000,000,000Union Capital Ltd. 200,000,000 100,000,000International Leasing & Financial Services Ltd. 700,000,000 200,000,000Industrial and Infrastructure Development Finance Company Ltd. - 20,000,000Lanka Bangla Finance Ltd. 200,000,000 200,000,000Bangladesh Finance & Investment Limited 250,000,000 50,000,000

3,699,951,504 1,793,338,483

4

4(a)

4.1

Janata Bank Limited 14,631,481 - 12,491,017 - - - 27,122,498Pubali Bank Limited - 6,012,909 - - - 6,012,909Agrani Bank Limited 25,087,061 - - - - 25,087,061Uttara Bank Limited - 114,007 - - - 114,007Bangladesh Krishi Bank 1,000 - - - - 1,000Islami Bank Ltd - 3,628 - - - 3,628Trust Bank POS 360,401 - 360,401Grand total 40,079,943 - 18,621,561 - - - 58,701,504

Name of Banks &Financial Institutions

On Demand Up to 1Month

6 Monthsto 1 year

1 to 5years

Over5 years

Total1 to 3Months

31.12.2013TakaBalance With other Bank & Financial Institutions (Current Deposits and STD Accounts) 4.1.1



31.12.2012Taka

31.12.2013Taka

31.12.2012Taka

31.12.2013Taka

Outside Bangladesh 6,389,124 23,604,457

Non Interest- bearing Accounts 6,389,124 23,604,457Interest-bearing Accounts - -

Non Interest-bearing AccountsHabib Metropolitan Bank, Pakistan 156 167Sonali Bank Ltd. Kolkata 25,941 4,133,573Mashreq Bank PSC, NY 1,807,176 9,156NIB Bank Karachi 11,246 11,535Standard Chartered Bank, Kolkata, India 4,162,471 4,269,672Sonali Bank Ltd. London 12,900 11,637Sonali Bank Ltd. London 17,160 17,432Standard Chartered Bank, Frankfurt 162,243 19,125Standard Chartered Bank, Nepal 778 2,393Standard Chartered Bank, NY 71,012 13,482,106Habib American Bank - NY 107,935 1,636,416ICICI Bank - HK - 11,245United bank of India,Kolkata 10,108 - 6,389,124 23,604,457 - -Total 6,389,124 23,604,457

Non Interest bearing A/C (Outside Bangladesh NOSTRO A/C)

Maturity grouping of foreign currency balances 6,389,124 23,604,457

On demands 6,389,124 23,604,457Upto 1 month - -1-3 month - -3-6 month - -6-9 month - -9 months to 1 year - -1 year and above - -

MONEY AT CALL AND SHORT NOTICEBanking companyICB Islamic Bank Ltd. @ 8.50% 38,900,000 39,100,000Standard Bank Ltd @ 7.00% 350,000,000 -Eastern Bank Ltd @ 9.00% - 200,000,000 - - 388,900,000 239,100,000

Balance with other Bank and financial institutions includes Taka 41,62,424 equivalent to USD 53,536 which was freezed by Standard Chartered Bank (former the American Express Bank) based on the order of the Calcutta High court against which provision is yet to be made.

4.2

4.2.1

4.2.2

4.2.3

5

Habib Metropolitan Bank, Pakistan ACU$ 2.00 77.75 155.50 2.09 79.75 166.68Sonali Bank Ltd. Kolkata ACU$ 333.64 77.75 25,940.51 51,830.08 79.75 4,133,573.27Mashreq Bank PSC, NY USD$ 23,243.42 77.75 1,807,175.91 114.81 79.75 9,156.37NIB Bank Karachi ACU$ 144.64 77.75 11,245.76 144.64 79.75 11,535.39Standard Chartered Bank, Mumbai, India ACU$ 53,536.60 77.75 4,162,470.65 53,536.60 79.75 4,269,672.34Sonali Bank Ltd. London USD$ 165.91 77.75 12,899.50 145.91 79.75 11,636.67Sonali Bank Ltd. London GBD? 135.14 126.98 17,160.47 135.14 128.99 17,431.90Standard Chartered Bank, Frankfurt EURO 1,528.76 106.13 162,243.17 181.51 105.36 19,124.76Standard Chartered Bank, Nepal ACU$ 10.00 77.75 777.50 30.00 79.75 2,392.57Standard Chartered Bank, NY USD$ 913.34 77.75 71,012.19 169,049.53 79.75 13,482,105.74Habib American Bank - NY USD$ 1,388.23 77.75 107,934.88 20,518.71 79.75 1,636,416.37ICICI Bank - HK USD$ - - - 141.00 79.75 11,245.09United bank of India, Kolkata USD$ 130.00 77.75 10,107.50 81,531.68 6,389,123.54 295,830.02 23,604,457.15

Particulars ConversionRate perUnit FC

ConversionRate perUnit FC

Amount inFC

Amount inFC

31.12.2013 31.12.2012

Amount inBDT

Amount inBDT

CurrencyName



31.12.2012Taka

31.12.2013Taka

Money at Call and Short Notice includes Taka 40000,000, which was freezed by ICB Islami Bank (former Al-Baraka Bank) since 23-01-2007. The Bangladesh Bank vide circular # BRPD(R-1)651/9(10)/2007-446 dated 02 August, 2007 has given directives for repayment of such balances which are yet to be implemented by the Bank.

CONSOLIDATED MONEY AT CALL AND SHORT NOTICE

Bangladesh Commerce Bank Limited 388,900,000 239,100,000CBSIL - - 388,900,000 239,100,000

INVESTMENTS 4,735,655,028 2,796,488,915

Government SecuritiesTreasury Bond/ Bill28-day Treasury Bill - -91-day Treasury Bill 210,385,463 22,478,095180-day Treasury Bill 54,234,768 50,916,695364-day Treasury Bill 156,213,278 31,531,7981- year Treasury Bill - -2-year Treasury Bond 228,890,213 -5-year Treasury Bond 928,833,168 1,106,303,00810-year Treasury Bond 535,887,837 431,783,99715-year Treasury Bond 71,600,897 53,852,95920-year Treasury Bond 25,050,323 15,093,908Reverse Repo with Bangladesh Bank 1,750,000,000 - 3,961,095,946 1,711,960,460Prize Bond 1,581,000 1,169,400 3,962,676,946 1,713,129,860Other Investments

Shares in quoted companies (at cost) 375,478,172 335,859,145Fixed Rate Subordinate Bond 190,000,000 100,000,000Investment in Sonali Polaris FTL 7,500,000 7,500,000Loan to CBSIL - 440,000,000Investment in Subsidiary 199,999,910 199,999,910 772,978,082 1,083,359,055 4,735,655,028 2,796,488,915Maturity Grouping of Investments

Repayable on demand 377,059,172 -With a residual maturity of:Upto 1 month - -More than 1 month but less than 3 months 264,620,231 23,647,495More than 3 months but less than 1 year 156,213,278 82,448,493More than 2 years 3,937,762,347 2,690,392,927 4,358,595,856 2,796,488,915 4,735,655,028 2,796,488,915

Cost and Market Value of Investment in Share as on 31 December 2013 as follows

5.1

66.1

6.2

6.2.1

6.2.2

5(a)

EXIM Bank Limited 62,538 31.49 1,969,323.88 806,740.20 (1,162,584)Premier Bank Limited 544,986 38.35 20,900,439.00 5,940,347.40 (14,960,092)Mercantile Bank Limited 299,868 35.68 10,699,634.07 5,007,795.60 (5,691,838)City Bank Limited 631,510 48.63 30,710,057.87 12,756,502.00 (17,953,556)

IFIC Bank Limited 197,875 58.95 11,664,610.04 6,787,112.50 (4,877,498)NCC Bank Limited 257,683 29.24 7,535,901.60 3,375,647.30 (4,160,254)Shahjalal Islami Bank Limited 413,700 29.01 12,000,366.36 6,950,160.00 (5,050,206)

South East Bank Limited 429,450 32.66 14,023,948.82 7,687,155.00 (6,336,794)National Bank Limited 89,046 39.41 3,509,460.00 1,050,742.80 (2,458,717)Standard Bank Limited 479,466 24.01 11,514,250.76 7,096,096.80 (4,418,154)United Commercial Bank Limited 103,500 55.81 5,776,503.00 2,597,850.00 (3,178,653)Social Islami Bank Limited 94,325 20.95 1,976,504.43 1,254,522.50 (721,982)International Leasing & Financial Services Ltd. 53,600 62.32 3,340,530.00 846,880.00 (2,493,650)Midas Finance Limited 93,000 157.35 14,633,979.33 3,608,400.00 (11,025,579)GSP Finance 208,150 37.35 7,774,413.68 6,556,725.00 (1,217,689)BD Building 25,100 68.50 1,719,246.85 1,696,760.00 (22,487)Eastern cables 100 22.72 2,272.10 8,380.00 6,108BD Thai 117,626 41.69 4,904,376.38 3,575,830.40 (1,328,546)Navana CNG 100 68.03 6,802.64 6,400.00 (403)

(Amount in Taka)

Particulars No. of Shares Rate Total Cost Total Market Value of Shares

Gain /(Loss)



31.12.2012Taka

31.12.2013Taka

Consolidated Investment 4,545,478,974 2,603,387,934Government SecuritiesBangladesh Commerce Bank Limited (Note: 6.1) 3,962,676,946 1,713,129,860CBSIL - - 3,962,676,946 1,713,129,860Other Investments Bangladesh Commerce Bank Limited (Note: 6.2) 772,978,082 1,083,359,055CBSIL 9,823,856 6,898,92 782,801,938 1,090,257,984Less: Inter Company Transaction (199,999,910) (199,999,910) 582,802,028 890,258,074

LOANS AND ADVANCES 12,503,679,147 11,676,531,295

As per classification into the following broad categories

Inside BangladeshOverdrafts 1,348,204,994 1,659,435,674General loans 2,041,261,151 2,450,688,757Cash Credit 3,843,785,026 3,390,195,504Transport Loan 44,082,987 77,250,412Loan against Trust Receipt 2,027,558,226 1,635,621,235Payment against Documents 271,819,885 401,782,014Consumer Credit 5,104,302 5,852,057Staff Loan 271,708,125 186,627,883Other Loans 2,645,304,451 1,863,773,537 12,498,829,147 11,671,227,073Outside Bangladesh - - 12,498,829,147 11,671,227,073Bills Purchased and DiscountedPayable in Bangladesh - - Inland Bills Purchased 1,000,000 936,000Payable outside Bangladesh - - Foreign Bills Purchased 3,850,000 4,368,222 4,850,000 5,304,222

6(a)

7

7.1

7.2

BSRM Steel 24,000 89.96 2,159,009.40 1,648,800.00 (510,209)Titas Gas 68,000 85.64 5,823,273.30 5,018,400.00 (804,873)DESCO 109,436 117.02 12,805,863.42 6,391,062.40 (6,414,801)GBB Power 103,040 40.46 4,168,695.15 3,080,896.00 (1,087,799)

SPPCL 80,000 72.93 5,834,250.82 4,928,000.00 (906,251)BEDL 52,500 37.03 1,943,859.96 1,774,500.00 (169,360)Meghna Petroliam 13,200 238.13 3,143,344.14 2,785,200.00 (358,144)MI Cement 58,800 110.57 6,501,464.04 4,598,160.00 (1,903,304)Makson Spin 200,812 58.43 11,732,909.90 3,996,158.80 (7,736,751)Tallu Spin 10,500 38.17 400,803.67 400,050.00 (754)

Bengal WTL 50,000 65.53 3,276,459.84 3,145,000.00 (131,460)Beacon Pharma 142,000 27.30 3,876,252.36 1,874,400.00 (2,001,852)Bx Pharma 17,365 59.83 1,038,954.36 819,628.00 (219,326)Monno Ceramics 4,100 29.01 118,924.60 136,940.00 18,015 GP 30,000 205.84 6,175,174.27 6,027,000.00 (148,174)BSCCL 70,050 188.64 13,214,065.38 11,775,405.00 (1,438,660)United Insurance 15,600 53.74 838,313.28 670,800.00 (167,513)City General Insurance 107,008 64.19 6,868,418.52 2,942,720.00 (3,925,699)

Janata Insurance 68,900 31.00 2,135,662.97 1,784,510.00 (351,153)

Fareast Life Insurance 11,500 125.76 1,446,184.42 1,104,000.00 (342,184)PHP Mutual Fund 600,000 7.76 4,654,440.20 3,300,000.00 (1,354,440)Trust Bank 1st Mutual Fund 54,363 9.14 496,832.81 391,413.60 (105,419)Grameens2 70,000 22.37 1,566,126.00 1,232,000.00 (334,126)United Air 2,344,977 33.96 79,637,500.11 38,457,622.80 (41,179,877)Uniquehrl 200,000 114.98 22,996,704.00 15,600,000.00 (7,396,704)Beximco 53,072 147.40 7,822,763.97 1,708,918.40 (6,113,846)BXP-PREF 1,393 100.00 139,300 Total 8,662,239 - 375,478,172 203,201,633 (172,137,239)

Particulars No. of Shares Rate Total Cost Market Valueof Shares

Gain /(Loss)

Cost and Market Value of Investment in Share as on 31 December 2013 as follows(Amount in Taka)



31.12.2012Taka

31.12.2013Taka

As per the remaining maturity grouping of loans and advances in the following order

Re-payable on demand 542,100,979 401,782,014Not more than 3 months 2,299,378,115 1,635,621,234More than 3 Months but less than 1 year 5,432,553,710 2,049,389,450More than 1 year but less than 5 years 1,651,616,833 7,415,438,596More than 5 years 2,578,029,510 17,430,000 12,503,679,147 11,519,661,294

Countrywise Classification of Loans and Advances ( including Bill purchased and discounted)

Inside Bangladesh 12,503,679,147 11,519,661,294Outside Bangladesh - - 12,503,679,147 11,519,661,294Loans and advances on the basis of significant concentration

a) Loans and advances to directors of the bankb) Loans and advances to senior executives 33,516,478 38,260,157c) Loans and advances to customer group 12,198,454,544 9,845,392,295d) Staff Loan 271,708,125 147,609,241e) Others - 1,488,399,601 12,503,679,147 11,519,661,294

Loans and advances allowed to each customer exceeding 10% of Bank's total capital fundNumber of the Clients 20 18 Detail of information on advances more than 10% of Bank's total Capital

Amount of Outstanding Loans & AdvancesAmount of Recovery - - Amount of Classified Loans & Advances - -

Classification of Loan as per geographical concentration

SegmentDhaka Division 7,690,380,398 7,354,709,838Chittagong Division 3,463,819,194 3,143,143,287Rajshahi Division 400,272,316 345,672,041Khulna Division 804,181,458 684,818,796Sylhet Division 145,025,781 148,187,332 12,503,679,147 11,676,531,294

Industrial concentration of Loans & Advances (including Bill purchased and discounted)

Agriculture 105,502,000 144,800,000Manufacturing Industries 3,081,000,000 2,839,800,000Construction Company 376,020,499 345,100,000Transportation 44,082,987 154,200,000Commerce & Trade 5,871,343,252 4,666,100,000Others 3,025,730,409 3,526,531,294Total 12,503,679,147 11,676,531,294

Loans & Advances to Executives & all other staffsLoans & Advances to Executives & all other staffs 271,708,125 186,627,883 271,708,125 186,627,883Required Provision for Loans & Advances

7.3

7.4

7.5

7.6

7.7

7.8

7.8.1

ParticularsBase forProvision Rate

2013

ProvisionBase forProvision Rate

2012

ProvisionUn-classified (including staff loan) 11,145,309,899 111,956,189 10,553,925,113 110,203,643I) Standard 10,918,984,784 109,762,746 10,524,356,492 108,725,212a) CCS 15,768,304 5% 788,415 109,541,786 5% 5,477,089b) Staff Loan 271,708,125 0% - 186,627,883 0% - c) HBL 373,217,707 2% 7,464,354 357,542,319 2% 7,150,846d) LP 161,571,257 2% 3,231,425 196,594,975 2% 3,931,900e) Small Enterprise Fin 1,457,400,966 0.25% 3,643,502 891,385,224 0.25% 2,228,463f) Loans against Share 464,692,201 2% 9,293,844 73,753,725 2% 1,475,075g) Agricultural Credit 89,873,563 5% 4,493,678 34,318,340 5% 1,715,917e) Others 8,084,752,661 1% 80,847,527 8,674,592,240 1% 86,745,922ii) SMA 226,325,115 2,193,443 29,568,621 5% 1,478,431Sub-Standard 455,757,000 20% 91,151,400 25,302,239 20% 5,060,448Doubtful 17,267,163 50% 8,633,582 198,165,396 50% 99,082,698Bad or Loss 1,072,564,600 100% 1,072,564,600 899,138,546 100% 899,138,546

Total 1,284,305,770 1,113,485,335



31.12.2012Taka

31.12.2013Taka

Provision maintained 580,316,506 545,139,328

Classification of Loan & AdvancesUn-classified (including staff loan) 11,145,450,308 10,696,947,883 i) Standard 10,918,984,784 10,666,152,390 ii) SMA 226,465,524 30,795,493Sub-Standard 483,837,822 62,596,812Doubtful 33,131,679 249,685,254Bad or Loss* 1,401,291,031 667,301,345Total 13,063,710,840 11,676,531,294

* Bad or loss loan including BCI & BCBL for the year 2013

Particulars of Loans and Advances

(1) Debts considered good in respect of which the Bank Company is fully secured; 9,648,400,000 8,211,600,000

(2) Debts considered good in against which the Banking Company holds no security otherthan the debtor's personal guarantee; 3,415,310,840 3,464,931,294

(3) Debts considered good & secured by the personal undertaking of one ormore parties in addition to the personal guarantee of the debtors;" - -

(4) Loans adversely classified; provision not maintained there against; 13,063,710,840 11,676,531,294(5) Debts due by directors or officers of the banking company of anyof these separately or jointly with any other person; 271,708,125 186,627,883

(6) Loan due from companies or firms which the directors of the bankingcompany directors, partners or managing agents or in the case haveinterest as of private companies as members; - -

(7) Maximum total amount of advances including temporary advance made atany time during the year to directors or managers or officers of the bankingcompanies or any of them either separately or jointly with any other person; - -

(8) Maximum total amount of advances including temporary advance grantedduring the year to the companies or firm in which the directors of the bankingor company have interest as directors, companies as members; - -

(9) Due from banking companies. - -

(10) Amount of classified loan on which interest has beencharged, should be mentioned as follows; - -

a) Decrease/increase in provision; 35,177,178 (18,273,291) b) Amount of loan written off; - - c) Amount realized against loan previously written off; - - d) Amount of provision kept against loan classified as 'bad/loss' on the date of preparing the balance sheet; 459,467,366 438,236,423 e) Interest creditable to the interest Suspense Accounts; 10,962,281 -

(11) Cumulative amount of the written off loan: 104,710,940 100,941,882

(12) Amount written off the current year; 3,769,058 73,888,573

(13) The amount of written of loan for which lawsuit has been filed; 121,503,823 93,574,236

Bills Purchased and Discounted 4,850,000 5,304,222

As per classification into the following broad categoriesPayable in Bangladesh 1,000,000 936,000Payable outside Bangladesh 3,850,000 4,368,222 4,850,000 5,304,222As per the remaining maturity grouping in the following orderPayable within 1 month 4,850,000 5,304,222Over 1 month but less than 3 months - - Over 3 months but less than 6 months - - 6 months or more - - 4,850,000 5,304,222Loans and Advances of BCIAs per BRPD Circular 16 dated 06 December 1998 Loans & Advances (BCI) has been classified as below:Unclassified - 342,761 I) Standard - 342,761 ii) SMA - - Substandard - - Doubtful - - Bad/loss 560,031,693 573,381,586Total 560,031,693 573,724,347

7.8.2

7.9

7.10

7.11

7.12

7.13

7.14



31.12.2012Taka

31.12.2013Taka

CONSOLIDATED LOANS AND ADVANCES

Bangladesh Commerce Bank Limited 12,498,829,147 11,671,227,073Less: Inter Company Transaction (440,000,000) - 12,058,829,147 11,671,227,073Add: Bill Purchased & Discount 4,850,000 5,304,222 12,063,679,147 11,676,531,295Fixed assets including premises, furniture & fixturesMotor Vehicles 7,011,294 10,400,482 Furniture & Fixture 22,825,701 15,131,193Machinery & Equipment 43,069,009 42,228,478Computer & Accessories 12,013,477 15,484,350Interior Decoration 71,156,368 48,599,735Hardware & Software Automation 26,896,925 33,179,577Total 182,972,772 165,023,815Details are shown in annexed - AConsolidated fixed assets including premises, furniture and fixturesBangladesh Commerce Bank Limited (Note: 8) 182,972,772 165,023,815CBSIL 9,423,565 10,375,020 192,396,337 175,398,835Other AssetsAdvance Income Tax 500,989,113 395,752,878Stock of Stationery, Stamps & Security Stationary (Note: 9.2) 11,242,376 11,095,283Advance Rent, Advertisement, etc. (Note: 9.3) 50,354,863 55,303,295Accrued Interest & Commission Receivable (Note: 9.4) 165,953,076 40,584,852Security Deposits (Note: 9.5) 1,165,498 1,035,802Suspense Accounts (Note: 9.6) 8,993,394 36,742,385Sundry Assets (Note: 9.7) 69,898,336 71,703,569Deferred Tax Assets 5,618,823 1,346,071 814,215,479 613,564,135Advance Income TaxOpening Balance 395,752,878 140,611,855Prior Year's Adjustment - - Addition during the year 105,236,235 255,141,023Closing Balance 500,989,113 395,752,878

Stock of Stationery, Stamps & Security StationeryStock of Stationery 3,929,710 3,670,937Stock of Stamp 399,470 231,510MICR Printing Stationery 4,782,554 5,022,299Stock of Security Stationery 2,130,642 2,170,537 11,242,376 11,095,283Advance Rent, Advertisement, etc.Advance Rent 50,354,863 55,303,295Advance Advertisement - - 50,354,863 55,303,295Accrued Interest & Commission ReceivableInterest Receivable 165,953,076 37,334,052Commission Receivables - 3,250,800 165,953,076 40,584,852 Commission ReceivablesRent of Property - 3,250,800Dividend - - - 3,250,800Security DepositsSecurity Deposits 1,165,498 1,035,802

Suspense AccountsSundry Debtors 8,089,577 29,584,698Advance against TA/DA & Salary 5,000 13,700Advance against Legal Expenses 38,950 10,100Advance against Pratirakha Sanchay Patra 470,661 6,989,287Advance against Business Development 55,000 97,000Advance against Commerce Bank Securities & Investment Ltd. - 47,600Advance against Revenue Stamp 2,510.00 - Advance against Ekti Bari Ekti Khamar (EBEK) 331,696.00 - 8,993,394 36,742,385

7(a)

8

8(a)

9

9.1

9.2

9.3

9.4

9.4.1

9.5

9.6



31.12.2012Taka

31.12.2013Taka

Sundry Assets

Clearing Adjustment 1,263 6,263D.D. Paid without Advice 48,250 1,478,630Prepaid insurance premium 22,072 93,179Advance income tax 148,147 32,420Cash Remittance 320,000 1,000,000BCB Credit Card 85,000 141,670Western Union Money Transfer+Money Gram 3,141,702 3,181,322ATM cash settlement 271,600 - Advance against Generator 42,000 - Excise Duty Adjustment (FDR) 379,596Sub-total (a) 4,459,629 5,933,484Blocked Assets: - - Sundry Deposits with National Bank Ltd. 3,500,000 3,500,000Deposit with National Bank Ltd. - - Advance against Building 52,200,000 53,300,000Other unidentified Assets 9,738,707 8,970,085Sub-total (b 65,438,707 65,770,085Grand-total (a+b) 69,898,336 71,703,569

Blocked Assets shown above relates to BCI period, against which court case is pending.

Deferred Tax Assets

Opening Balance 1,346,071 1,346,071Add : Addition during the year 4,272,752 - Less: Adjustment during the year - - Closing Balance 5,618,823 1,346,071

Consolidated Other Assets

Bangladesh Commerce Bank Limited (Note: 9) 814,215,479 613,564,135CBSIL 681,524,256 625,631,622.9 1,495,739,735 1,239,195,758

Non Banking Assets - -

Borrowings from Bangladesh Bank, other Banks, Financial Institutions and Agents

From Inside Bangladesh - ALS with Bangladesh Bank - 95,760,000From Inside Bangladesh - Re-finance Scheme under SME 50,805,000 59,700,000From Outside Bangladesh - - 50,805,000 155,460,000

Consolidated Borrowings from Bangladesh Bank, other Banks, FinancialInstitutions and AgentsBangladesh Commerce Bank Limited 50,805,000 155,460,000CBSIL - - 50,805,000 155,460,000

Maturity-wise borrowingsRepayable on demand 50,805,000 155,460,000Not more than 3 months - - Over 3 Months but less than 1 year - - Over 1 year but not less 5 years - - Over 5 years - - 50,805,000 155,460,000

Deposits and other AccountsDeposits (General) 19,186,097,661 15,300,528,796Current Deposits 853,315,278 761,974,778Savings Bank Deposits 1,396,691,167 1,242,980,289Short Term Deposits 1,517,226,728 935,589,244Fixed Deposits 12,659,431,640 9,877,954,807Deposits under different schemes (Note: 12.1) 1,917,935,552 1,518,369,188Bills Payable (Note: 12.3) 214,564,919 285,622,271Other Deposits (Note: 12.4) 626,932,377 678,038,219

Deposits from Bank 550,000,000 310,000,000 19,736,097,661 15,610,528,796

9.7

9.8

9.9

9(a)

10

11

11(a)

11.2

12



31.12.2012Taka

31.12.2013Taka

Consolidated Deposits and other AccountsBangladesh Commerce Bank Limited 19,736,097,661 15,610,528,796CBSIL 65,720 464,122 19,736,163,381 15,610,992,918Deposits under different schemes

Pension Saving Prokalpa (PSP) 9,201,653 355,066,497Monthly Pension Scheme 5,900,000 31,359,237Life Pension Deposit Scheme 20,380,877 63,170,474Marriage Deposit Scheme 43,166,092 36,285,036Millionaire Deposit Scheme 167,871,466 144,301,133Monthly Savings Schemes 610,380,014 290,800,275Students' Savings Schemes 1,971,335 821,021Education Deposit Scheme 17,090,157 14,523,053Lakhopoti Deposit Scheme 81,345,534 90,369,892Triple Deposit Scheme 26,402,727 19,763,101Kotipoti Deposit Scheme 75,880,892 63,175,227Double Deposit Scheme 522,291,245 408,734,243Investor Deposit Scheme 336,053,560 - 1,917,935,552 1,518,369,188

Maturity-wise Classification

Payable:On Demand 626,932,377 1,993,794,405Within 1 Month 2,977,467,035 1,246,729,246More than 1 Month but Less than 6 months 7,072,599,550 5,199,106,744More than 6 Months but Less than 1 Year 2,998,796,322 3,996,289,350More than 1 year but within 5 Years 2,998,796,322 1,384,464,753More than 5 years but within 10 Years 3,061,506,055 1,790,144,299Over 10 Years and Unclaimed - 19,736,097,661 15,610,528,796

Bills Payable

Pay Order Payable 211,861,544 283,016,549D.D. Payable 2,703,375 2,605,722 214,564,919 285,622,271

Other Deposits

Margin on Letter of Credit 44,229,795 128,675,208Margin on Letter of Guaranty 17,178,895 13,917,137Export Fund Development 2,358,183 20,341,908Clearing Adjustment 406,471 2,404,102Excess Cash Received 2,923 1,687Tax at Source (Interest) 688,076 1,828,846Tax at Source (Salary) 94,094 119,726Tax at Source (Office Rent) - 25,129Risk Fund 827,066 894,779Service charge / CIB Service Charge 61,380 11,390Margin on S/G 1,615,712 1,795,276Excise Duty 584,530 903,353Tax at Source (Buying House)/Letter of Credit 6,929,073 18,171VAT 147,156 540,700Revenue Stamp/ Stamp 22,691 7,590Legal fee 35,610 19,901Cash Incentive 234,961 203,921Export Bill 64,697,315 123,550,200Margin on FBP / Acceptance on B/B LC / Margin on LTR 305,492 65,714MICR cheque 19,000 551,429BEFTN & BACPS 1,554,781 1,958,306Foreign Currency Revaluation 74,571 - Security Deposit 29,714,328 30,496,007Interest Payable on Deposits 351,759,223 225,999,739Foreign Currency Deposit 103,391,053 123,707,998 626,932,377 678,038,219

Consolidated Other Deposits

Bangladesh Commerce Bank Limited (Note: 12.04) 626,932,377 678,038,219CBSIL 65,720 464,122 626,998,097 678,502,341

12(a)

12.1

12.2

12.3

12.4

12.4(a)



31.12.2012Taka

31.12.2013Taka

Other Liabilities

Provision for Loans and Advances (Note: 13.01) 580,316,506 545,139,328Interest Suspense Accounts (Note: 13.02) 224,058,513 195,993,881Sundry Liabilities (BCI) 1,206,422 354,561Provision for Current Income Tax (Note: 13.03) 343,355,794 397,627,068Provision for Deferred Tax (Note: 13.04) - 10,767,347Provision for Gratuity (Note: 13.05) - 63,000,000Provision for Share & Debenture Unrealized Gain / Loss (Note: 13.06) 142,569,096 109,082,559Provision for IT Assets (Note: 13.07) 416,094 - Accrued Expense Payable (Note: 13.08) 3,227,017 4,140,544Provision for Incentive Bonus (Note: 13.09) 25,666,003 30,000,000Provision for Off Balance Sheet Exposure (Note: 13.10) 20,852,047 20,281,917BCBL General Accounts (Note: 13.11) 47,339,900 18,184,592 1,389,007,392 1,394,571,796Provision for Loans and Advances

Provision for Classified Loans and Advances (Note: 13.01.1) 459,467,366 438,236,423Provision for Unclassified Loans and Advances (Note: 13.01.2) 120,849,140 106,902,904 580,316,506 545,139,328Provision for Classified Loans and Advances

Opening Balance 438,236,423 460,035,142Less: Fully Provided Bad Loan Written off (3,769,058) (75,798,719)Add : Received from Previous Written off Bad Loan -Add : Special Provision Kept for the year 25,000,000 54,000,000Less: Provision no more Required due to Recovery of Bad Loan - - Less: Interest Waiver During the Year - - Add : Net Charge in the Profit and Loss Account - - 459,467,366 438,236,423Consolidated Provision for Classified Loans and Advances

Bangladesh Commerce Bank Limited (Note: 13.01.1) 25,000,000 54,000,000CBSIL 15,191,934 3,893,130 40,191,934 57,893,130Provision for Unclassified Loans and Advances (1%)

Opening Balance 106,902,904 103,377,477Add : Transferred during the year 13,946,236 3,525,427Less: Adjustment during the year - - 120,849,140 106,902,904

Interest Suspense A/C

Opening Balance 195,993,881 202,740,483Add : Addition during the year 10,962,281 - Less: Interest Realized during the year (13,333,294) 6,746,602Less: Written off during the year (3,769,058) - 224,058,513 195,993,881Provision for Current Income Tax

Opening Balance 397,627,068 274,172,962Add : Addition during the year 67,953,707 123,454,106Less: Adjustment during the year 122,224,981 - 343,355,794 397,627,068

Income Tax Assessment for the year 2005-2006, 2006-2007, 2007-2008, 2009-2010 and 2011-2012 are pending before appeal. Income tax return has been filed under section 82BB (3)/83(2) for the year 2013-2014. Income tax has been provided @ 42.5% on the net profit earned by the Bank for the year 2012. As per assessment order at DCT level there exist shortfall in the provision for income tax against Appeals are pending at different levels of income tax Authorities. The details of income tax Assessment are as follows.

13

31-12-2004 2005-2006 - 26,010,067.00 (26,010,067) Appeal is pending at31-12-2005 2006-2007 - 33,452,050.00 (59,462,117) the tribunal and31-12-2006 2007-2008 - 51,371,498.00 (110,833,615) honorable high court.31-12-2007 2008-2009 - - (110,833,615) Setteled31-12-2008 2009-2010 - 20,662,000.00 (131,495,615) Appeal has been filed31-12-2009 2010-2011 110,635,242 110,635,242 (131,495,615) Settled31-12-2010 2011-2012 100,000,000 32,401,165.00 (63,896,780) Appeal is pending at31.12-2011 2012-2013 155,000,000 - (63,896,780) Under Assesment in31-12-2012 2013-2014 65,000,000 - (63,896,780) LTU31-12-2013 2014-2015 67,953,707 - (63,896,780)

AccountingYear Status

Shortfall/(Cumulative)

Tax Payable as perAssessment Order

Provision asper Accounts

AssessmentYear

13.1

13.1.1

13.1.1(a)

13.1.2

13.2

13.3

13.3.1



31.12.2012Taka

31.12.2013Taka

Provision for Deferred Tax Liability

Opening Balance 10,767,347 - Add : Addition during the year - 10,767,347Less: Adjustment during the year (10,767,347) - - 10,767,347Provision for Gratuity

Opening Balance 63,000,000 33,000,000Add : Addition during the year 10,000,000 30,000,000Less: Transfer to Gratuity Fund (73,000,000)Less: Adjustment during the year - - - 63,000,000Provision for Share & Debenture (unrealized Gain / Loss)*

Opening Balance 109,082,559 100,320,327Add : Addition during the year 33,486,537 8,762,232Less: Adjustment during the year - 142,569,096 109,082,559

*Bangladesh Bank Vide their letter no DOS (SR) 1153/161/2012-430 dt. 31/12/2012 & letter no DOS (SR) 1153/161/2014-002 dt. 02/01/2014approved BCBL to kept Share Provision @ 20% on their Share portfilio loss equal to five quarter for the year 2013 & 2014

Provision for IT Assets

Opening Balance - Add : Addition during the year 416,094 - Less: Adjustment during the year - 416,094 - Accred Expenses Payable

Service Charge 157,800 - Telephone Bill/Telex 95,000 27,000Courier bill 22,034 - Nursury bill 17,500 - Accrued Rent - 1,206,000Others 2,618,433 2,895,544Wasa Bill - 12,000Audit Fee/Rating fee 316,250 - 3,227,017 4,140,544Provision Incentive Bonus

Opening Balance 30,000,000 20,000,000Add : Addition during the year 20,000,000 27,195,405Less: Adjustment during the year 24,333,997 17,195,405 25,666,003 30,000,000Provision for Off Balance Sheet Exposure

Opening Balance 20,281,917 25,353,771Add : Addition during the year 570,130 - Less: Adjustment during the year 5,071,854 20,852,047 20,281,917BCBL General Account

IBTA (BCI) Cr. 678,319,275 690,221,010BCBL General Account Cr. 12,592,399,169 1,785,514,833IBTA (BCI) Dr. (687,991,266) (704,114,107)BCBL General Account Dr. (12,535,387,279) (1,753,437,145) 47,339,900 18,184,592Consolidated Other Liabilities

Bangladesh Commerce Bank Limited (Note: 13) 1,389,007,392 1,394,571,796CBSIL 607,252,588 532,132,999 1,996,259,980 1,926,704,795Less: Inter Company Transaction 440,000,000 - 1,556,259,980 1,926,704,795Capital

Authorized Capital100000000 Ordinary share of Tk. 100 each 10,000,000,000 10,000,000,000

13.4

13.5

13.6

13.7

13.8

13.9

13.10

13.11

13(a)

14

14.1



31.12.2012Taka

31.12.2013Taka

Issued, Subscribed and Paid up Capital19,887,428 Ordinary share of Tk. 100 each 1,988,742,800 1,988,742,800

Break up of Issued, Subscribed & Paid up Capital as follows

Capital Adequacy Ratio

In terms of section 13 (2) of the Bank Companies Act, 1991 and Bangladesh Bank BRPD circulars no. 35 dated 29 December 2010, required capital, available core capital and supplementary capital of the Bank for the year ended as at 31 December 2013 is shown below:

Tier – I (Core Capital) 3,252,590,860 2,310,747,786

Paid up capital 1,988,742,800 1,988,742,800Right Share Application Money 913,578,800 - Share capital of BCI 39,000,000 39,000,000Non-Repayable share premium account - - Statutory Reserve 194,845,145 178,609,568General Reserve 8,920,366 8,920,366Retained Earnings 107,503,749 95,475,051Minority interest in subsidiaries - - Non cumulative Irredeemable preference share - -

Deductions from Tier-I (Core Capital ) : 712,882,216 566,260,673

Book value of Goodwill - - Shortfall in provisions required against classified assets 712,882,216 566,260,673Shortfall in provisions required against investment in shares - - Remaining deficit on account of revaluation of investments in securities afternetting off from any other surplus on the securities. - - Reciprocal crossholdings of bank capital/subordinated debt - - Any investment exceeding the approved limit under section 26(2) of - - Bank Company Act, 1991. - - Investments in subsidiaries which are not consolidated - - Other if any - -

Total Eligible Tier-I Capital 2,539,708,644 1,744,487,113

Tier –II (Supplementary Capital) 151,985,437 135,981,550

General Provision on Unclassified Loans 120,849,140 106,902,904Revaluation Reserve for HTM Securities 10,284,249 8,796,729Assets Revaluation Reserve - - All Others Preference Share - - General Provision (Off balance sheet items) 20,852,047 20,281,917Exchange Equalization Fund - -

Total Eligible Capital (Tier-I + Tier-II) 2,691,694,080 1,880,468,663

Total Risk Weighted Assets (As per BASEL-II guideline) 18,843,700,000 18,023,600,000Required Capital 4,000,000,000 4,000,000,000

Details are shown in Annexure - D

Actual Capital Held:Core Capital 2,539,708,644 1,744,487,113Supplementary Capital 151,985,437 135,981,550 2,691,694,080 1,880,468,663

Capital Adequacy Ratio (Required 10%) 14.28% 10.43%

Core Capital to RWA 13.48% 9.68%Supplementary Capital to RWA 0.81% 0.75%

14.2

14.3

Directors 8 0.00% 800 800

KA Category - Government 6,750,000 33.94% 675,000,000 675,000,000

KHA Category - Three State Owned Bank 2,249,982 11.31% 224,998,200 225,028,200

GA Category - Autonomous/Govt owned corporate bodies 1,024,613 5.15% 102,461,300 102,461,300

Depositors and other private shareholders 9,862,825 49.59% 986,282,500 986,252,500

Total 19,887,428 100.00% 1,988,742,800 1,988,742,800

Particulars31.12.2013

Amount in Taka

31.12.2012

Amount in Taka% of TotalNo. of Shares as

on 31 Dec, 2013



31.12.2012Taka

31.12.2013Taka

Statutory Reserve

Opening Balance 178,609,568 143,213,693Less : Transferred during the year to provision for loans & advances - - Add : Transferred during the year 16,235,577 35,395,875 194,845,145 178,609,568Consolidated Statutory Reserve

Bangladesh Commerce Bank Limited 194,845,145 178,609,568CBSIL - - 194,845,145 178,609,568Other Reserve*

Opening Balance 8,920,366 3,848,512Add : Transferred during the year - 5,071,854Less: Adjustment during the year - - 8,920,366 8,920,366*Other Reserve has maintained for future Stock Dividend for the Shareholders.

Consolidated Other Reserve

Bangladesh Commerce Bank Limited 8,920,366 8,920,366CBSIL - - 8,920,366 8,920,366Revaluation Reserve for HTM Securities

Opening Balance 17,593,459 13,035,973Add : Transferred during the year 2,975,040 4,557,486Less: Adjustment during the year - 20,568,499 17,593,459 Consolidated Revaluation Reserve for HTM Securities

Bangladesh Commerce Bank Limited 20,568,499 17,593,459CBSIL - - 20,568,499 17,593,459 Profit and Loss Accounts / Retained Earnings

Opening Balance 95,475,051 29,658,897Prior year's Adjustment 10,767,347 - Profit/Loss for the year as per Profit and Loss accounts 1,261,351 65,816,154 107,503,749 95,475,051 Consolidated Profit and Loss Accounts / Retained Earnings

Bangladesh Commerce Bank Limited (Note: 18) 107,503,749 95,475,051CBSIL 5,968,578 3,465,059 113,472,327 98,940,110Contingent Liabilities and Other Commitments

Acceptances and Endorsements 792,496,105 802,196,848Letter of Guarantees (Note: 19.01) 357,479,616 387,162,419Irrevocable Letter of Credit 691,220,053 714,819,019Other contingent liability (Note: 19.02) 84,373,621 84,373,621 2,085,204,684 2,099,383,936Letter of Guarantees

Money for which the Bank is contingently liable in respect of guarantee issued favoringDirectors - - Government 357,479,616 387,162,419Bank and Other Financial Institution - - Others - - 357,479,616 387,162,419Commitments

Less than 1 Year - - Equal to or more than 1 year - - - - Other Contingent Liabilities

Companies Liabilities for L/G 9,443,000 9,443,000Companies Liabilities for L/C 3,732,320 3,732,320Bills for Collection 6,000 6,000Tax liability of BCI * 71,192,301 71,192,301 84,373,621 84,373,621 *The tax liability of BCI period relates to assessment year 1989-90, 1990-91, 1991-92, 1992-93, 1993-94, which are pending at the Supreme Court . This has been carried forward since long which is shown under contingent liability.

15

15(a)

16

16(a)

17

17(a)

18

18(a)

19

19.1

19.2



31.12.2012Taka

31.12.2013Taka

Interest Income

Interest received from Loans and Advances 1,690,987,399 1,562,157,517Interest received from Banks & Other financial Institutions 387,185,062 134,819,886 2,078,172,461 1,696,977,403 Consolidated interest Income Bangladesh Commerce Bank Limited (Note: 20) 2,078,172,461 1,696,977,403CBSIL 69,185,673 63,924,340 2,147,358,134 1,760,901,743Less: Inter Company Transaction 55,763,889 - 2,091,594,245 1,760,901,743Interest Paid on Deposits Interest Paid on Deposits 1,710,786,232 1,282,523,883Interest Paid on Borrowing 32,144,919 7,224,342Interest Paid on Foreign Bank Accounts - - Discount Paid 901,114 585,646 1,743,832,265 1,290,333,871

Consolidated interest Paid on Deposits Bangladesh Commerce Bank Limited (Note: 21) 1,743,832,265 1,290,333,871CBSIL 55,763,889 55,937,500 1,799,596,154 1,346,271,371Less: Inter Company Transaction 55,763,889 - 1,743,832,265 1,346,271,371

Income from Investment Treasury Bill 246,766,588 252,485,777Capital Gain 7,417,788 7,691,389Interest from CBSIL - 55,937,500Dividend on Share 1,672,633 3,327,843Fixed Rate Subordinate Bond 12,083,770 - Revaluation of Govt. Securities 6,438,023 - 274,378,803 319,442,510 Consolidated Income from Investment Bangladesh Commerce Bank Limited (Note: 22) 274,378,803 319,442,510CBSIL 437,515 8,391,441 274,816,318 327,833,951

Exchange, Commission and Brokerage Commission 50,212,090 45,799,760Exchange Earnings 45,401,868 49,967,581Brokerage - - 95,613,958 95,767,341

Consolidated Exchange, Commission and Brokerage Bangladesh Commerce Bank Limited (Note: 23) 95,613,958 95,767,341CBSIL 36,159,061 40,608,646 131,773,019 136,375,987

Other Operating Income Rent on Locker - - Other Receipts (Note: 24.1) 85,384,908 64,403,335 85,384,908 64,403,335Other Receipts Accounts Maintenance Charge 74,338,956 50,825,040Appraisal Fee 1,234,708 2,639,690Postage 4,304,203 4,513,313Telex, Telephone & Telegram 5,507,041 6,425,292 85,384,908 64,403,335 Consolidated Other Operating Income Bangladesh Commerce Bank Limited (Note: 24) 85,384,908 64,403,335CBSIL 21,125,162 11,760,359 106,510,070 76,163,694

20(a)

21(a)

22(a)

23(a)

24.1

24(a)



20

21

22

23

24

31.12.2012Taka

31.12.2013Taka

Salary and Allowances

Basic Salary 164,067,506 152,110,634Allowance including Gratuity 150,528,701 127,079,851Provident Fund 12,367,578 9,520,998Bonus 45,568,564 25,123,342 372,532,349 313,834,824

Consolidated Salary and Allowances

Bangladesh Commerce Bank Limited (Note: 25) 372,532,349 313,834,824CBSIL 17,396,874 16,479,566 389,929,223 330,314,390

Rent, Taxes, Insurance, Electricity, etc.

Rent 65,715,595 52,060,209Rates and Taxes 2,281,338 1,271,486Insurance 11,906,250 8,969,212Car Insurance, Tax 2,434,205 3,332,582Electricity/GAS 13,282,716 11,439,980 95,620,105 77,073,470

Consolidated Rent, Taxes, Insurance, Electricity, etc.


Postage, Telegram, Telephone

Telephone 4,211,534 3,377,782Postage, Telegram & connectivity 9,224,082 2,175,664Cartage - 1,712 13,435,616 5,555,157

Consolidated Postage, Telegram, Telephone

Bangladesh Commerce Bank Limited (Note: 27) 13,435,616 5,555,157CBSIL 529,285 418,713 13,964,901 5,973,870

Stationery, Printing & Advertisement

Printing Stationery 5,988,776 2,756,661 Other Stationery 3,917,804 3,208,783 Security Stationery 600,158 1,409,192 Publicity and Advertisement 4,158,210 2,795,516 14,664,947 10,170,152

Consolidated Stationery, Printing & Advertisement

Bangladesh Commerce Bank Limited (Note: 28) 14,664,947 10,170,152CBSIL 705,491.00 826,031 15,370,438 10,996,183

Managing Director's salary and allowances

Basic 890,322 3,686,129House Rent 148,387 1,535,887House Maintenance / Furnishing 148,387 - Special Allowances - 921,532Bonus 180,000 1,000,000Leave Fare Assistance 296,774 1,509,742 1,663,870 8,653,290

Depreciation and Repair of Fixed Assets

Depreciation of Fixed Assets 54,448,972 40,128,380Repairs and Maintenance 5,958,215 4,149,445 60,407,188 44,277,825

25

25(a)

26

26(a)

27

27(a)

28

28(a)

29

30



31.12.2012Taka

31.12.2013Taka

30(a)

31

31(a)

32

33

33(a)

Consolidated Depreciation and Repair of Fixed Assets


Other Expenditure

Business Development 2,358,451 1,692,184BB Clearing Charges 3,155 4,878Service charge 3,815,380 - Commission paid to SEC / IPO issue charges 1,000 615,000Computer Accessories 1,576,155 1,348,517Conveyance 2,510,996 2,188,224Credit Rating Fee 172,500 - Maintenance Charge (ATM) 4,720,869 2,305,241CSR / Donation / Subscription / Newspaper 6,040,369 3,845,002Provision for CL - 2,200,000Entertainment 4,464,965 3,283,601Excise Duty 432,350 333,250Exchange Loss 14,823,793 24,950,748Foreign Bank Charge/Commission 78,138 608,178Fuel 4,407,315 3,313,667Honorarium 40,500 - Laundry 152,615 96,685Internet Bill 1,952,570 8,276,293Loss on Revaluation on Investment 3,436,194 45,647,664Loss on Purchase on Share 338,302 4,010,098Managers' meeting /Conference 739,259 385,520Manual preparation 350 34,155Medical charge 43,435 94,039Office Maintenance / Table Desk Stationeries 2,509,487 2,184,270Miscellaneous 5,940,271 5,667,013Photocopy/Fax/E-mail 563,914 493,397Provision on Loss on Share 26,094,501 - Recruitment Expenses 77,962.00 642,043Service charges on Elite force 6,490,795 2,204,699Service on VAT 482,220 156,141SWIFT Charges 2,347,999 2,334,296Training 1,079,280 1,893,048Travelling & Daily Allowances 2,272,221 2,500,416Uniform 443,700 410,691 100,411,012 123,718,957

Consolidated Other Expenditure

Bangladesh Commerce Bank Limited (Note: 31) 100,411,012 123,718,957CBSIL 14,555,896 16,647,083 114,966,908 140,366,040 Closing Cash and Cash Equivalent

Cash in hand (including foreign currencies) 345,542,153 307,280,448Balance with Bangladesh Bank & Sonali Bank (Including foreign currencies) 1,266,813,196 1,356,151,063Balance with Other Bank & Financial Institutions 3,706,340,628 1,816,942,940Money at Call and short notice 388,900,000 239,100,000Investment Government 3,962,676,946 1,713,129,860 9,670,272,922 5,432,604,310

Earnings Per Share (EPS)

Net Profit after Tax 17,496,928 101,212,029 Number of Ordinary Share 19,887,428 19,887,428 Earnings Per Share 0.88 5.09

Consolidated Earnings Per Share (EPS)

Net Profit after Tax 20,000,446 112,598,558Number of Ordinary Share 19,887,428 19,887,428Consolidated Earnings Per Share (EPS) 1.01 5.66



31.12.2012Taka

31.12.2013Taka

Net Asset Value Per Share (NAV)

a) Capital / Share holders' Equity for the year* 3,273,159,358 2,108,438,281b) Number of Outstanding Share 19,887,428 19,887,428Net Asset Value Per Share (NAV) ( a÷b) 164.58 106.02

*Capital / Share holders' equity for the year including Right Application Money Taka. 913,578,800.00

Net Operating Cash Flow Per Share

a) Net Cash flows from Operating Activities 3,342,038,769 513,359,337b) Number of Outstanding Share 19,887,428 19,887,428Net Operating Cash Flow Per Share (NAV)( a÷b) 168.05 25.81

Risk factors and risk management

Implementations of other Core Risk Management Guidelines are being followed. Credit Risk Grading is done for all commercial exposure. Bank's Asset Liability Committee is entrusted with the responsibility of managing short-term & long-term liquidity. ALM Guidelines & ICT Guidelines have also been implemented in accordance with the Guidelines issued by Bangladesh Bank & it has been approved by the Board of Directors. The Bank has established its KYC & operation control procedure for the prevention of Money Laundering. The Bank has strengthened the Internal Control and Audit Division(IC&AD) to ensure comprehensive audit thereof. As regards ICT Risk Management physical security of Hardware & Software are under process & will be strengthened soon.

34

35

36

Managing DirectorDhaka,30 March 2014 Director Director Chairman



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(Am

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in T

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Annexure

Sl # Group / Client NameOutstanding (Taka in crore)

Funded TotalNon-Funded

Bangladesh Commerce Bank LimitedDetails of Large Loan


Annexure-B

1 Marine Vegetable Oils 46.30 - 46.30

2 Dhaka Trading House 35.86 - 35.86

3 Abul Khair Group 24.05 - 24.05

4 Mr. Anwar Mia 12.53 - 12.53

5 M/s Akter Enterprise 17.20 - 17.20

6 M/S Lithun Fabrics 31.82 - 31.82

7 M/s Suruj Mia Spinning Mills Ltd 28.47 - 28.47

8 Toy Woods (BD) Co. Ltd. 21.32 21.32

9 S B Group 29.90 - 29.90

10 M/s Islam Brothers (Aman Group) 25.58 9.54 35.12

11 F.R. Jute Balars 27.04 - 27.04

12 Nurun-Nabi & Alied Concern 41.47 - 41.47

13 Sharmin Jute Balars 22.67 22.67

14 Hobigonj Agro Ltd. 15.39 15.39

15 Kazi Sharif Ahmed 9.98 9.98

Total 389.58 9.54 399.12


Annexure

01 Paid up Capital 1,988,742,800 1,988,742,800

02 Right Application Money 913,578,800 -

03 Total Capital 2,691,694,080 1,880,468,663

04 Surplus/(Deficit) Capital (1,308,305,920) (2,119,531,337)

05 Total Assets 24,504,150,097 19,544,806,958

06 Total Deposits 19,736,097,661 15,610,528,796

07 Total Loans and Advances 13,063,710,840 12,250,255,642

08 Total Contingent Liabilities and Commitments 2,085,204,684 2,099,383,936

09 Advances Deposits Ratio % 66.19 78.47

10 Classified Loans to Advance Ratio ( %) 14.68 12.87

11 Profit After Tax and Provision 17,496,928 101,212,029

12 Classified Advance 1,918,260,532 1,552,964,997

13 Provision kept against Classified Advance 459,467,366 438,236,423

14 Surplus/(Deficit) Provision (712,882,216) (568,346,007)

15 Cost of Fund (%) 12.19% 12.02%

16 Interest Earning Assets 11,145,450,308 10,697,290,645

17 Non interest earning Assets 8,623,044,760 6,051,027,398

18 Return on Investment (ROI)% 5.79 11.42

19 Return on Assets (ROA)% 0.07 0.52

20 Income from Investment 274,378,803 319,442,510

21 Earnings Per Share 0.88 5.09

22 Profit Per Share 0.88 5.09

23 Price - Earnings Ratio (Times) 114 20

Sl # Particulars 2013 2012

(Amount in Taka)

Bangladesh Commerce Bank LimitedHIGHLIGHTS OF THE OVERALL ACTIVITIES OF THE BANK

Annexure-C


Annexure

A. Eligible Capital:

1. Tier-1 (Core Capital) 2,539,708,644

2. Tier-2 (Supplementary Capital) 151,985,437

3. Tier-3 (eligible for market risk only) -

4. Total Eligible Capital (1+2+3) 2,691,694,080

B. Total Risk Weighted Assets (RWA): 18,843,700,000

C. Capital Adequacy Ratio (CAR) (A4/B)*100 14.28%

D. Core Capital to RWA (A1/B)*100 13.48%

E. Supplementary Capital to RWA (A2/B)*100 0.81%

F. Minimum Capital Requirement (MCR) 4,000,000,000

Particulars Amount (Tk.)

Bangladesh Commerce Bank LimitedMinimum Capital Requirement (MCR) as per BASEL-II

Under Risk Based Capital AdequacyAs on 31 December 2013

A. Credit Risk: 1633.85

On-Balance sheet 1488.5

Off- Balance sheet 145.35

B. Market Risk 129.07

C. Operational Risk 121.45

Total: RWA (A+B+C) 1,884.37

Sl # ParticularsAmount (Tk.)

(in crore)

Risk Weighted Assets (RWA)As on 31 December 2013

Annexure-D


Annexure

01. a) Name of the Directors and their interest in the Bank

02. Signaficant contracts where Bank is a party and where in Directors have interest : NIL

03. Shares issued to directors & executive without consideration or exercisable at discount : NIL

04. Related party transactions : NIL

05. Lending policies to related parties : NIL

06. Loan and Advances to Directors and their related concern : NIL

07. Business other than banking business with any related concern of the Directors as per Section 18(2) of Bank Companies Act, 1991 : NIL

08. Investment in the securities of Directors and their related concern : NIL

01. Mr. Md. Yousuf Ali Howlader (Govt. Nominated) Chairman - -

02. Mr. ATM Murtozaa Reza Chowdhury ndc (Govt. Nominated) Director - -

03. Mr. Tapan Kumar Karmaker (Govt. Nominated) Director - -

04. Mr. Md. Farhad Uddin (Govt. Nominated) Director - -

05. Dr. Md. Zillur Rahman (Govt. Nominated) Director - -

06. Mr. Pradip Kumar Dutta (Govt. Nominated) Director - -

07. Mr. Rana Kaiser Director 0.16 0.16

08. Mr. Manwar Hossain Director 0.63 0.63

09. Mr. Anis Ahmed Director 6.85 6.85

10. Mr. Abbas Uddin Ahmed Director 4.38 1.27

Sl.No.

Name of Directors Designation % of Interest31-12-2013

% of Interest31-12-2012

a) Name of the Directors and their interest in different entitles

01. Mr. Md. Yousuf Ali Howlader Chairman Govt. Nominated Govt. Nominated

02. Mr. ATM Murtozaa Reza Chowdhury ndc Director Govt. Nominated Govt. Nominated

03. Mr. Tapan Kumar Karmaker Director Govt. Nominated Govt. Nominated

04. Mr. Md. Farhad Uddin Director Govt. Nominated Govt. Nominated

05. Dr. Md. Zillur Rahman Director Govt. Nominated MD, BDBL

06. Mr. Pradip Kumar Dutta Director Govt. Nominated MD, Sonali Bank Ltd.

07. Mr. Rana Kaiser Director Financial Institutions Proprietor Integrity Business Company

08. Mr. Manwar Hossain Director Anwar Group of MD, Anwar Group Industries

09. Mr. Anis Ahmed Director MGH Group MD, MGH Group

10. Mr. Abbas Uddin Ahmed Director Representative of Special Director Sunflower Life Insurance Co. Ltd.

Sl.No.

Name of Directors Designation Entitles wherethey have Interest

Position

Annexure-E


Annexure

Principal Branch19, Rajuk AvenueTaranga Complex (Gr. Floor)Motijheel C/A, Dhaka-1000Phone:09613222001, 9561551, 9559831Fax: 9553832E-mail: [email protected]

Dilkusha Branch16, Boliadi Mansion (1st Floor)Dilkusha C/A, Dhaka-1000Phone:09613225001, 9571375, 7171263E-mail: [email protected]

Bangshal Branch124, Shahid Syed Nazrul Islam Sharani(North South Road), Dhaka-1100Phone:09613221501, 9566140, 7166654E-mail: [email protected]

Moulvi Bazar Branch77/6, Moulvi Bazar, Dhaka-1100Phone:09613222096,7311051E-mail: [email protected]

Dholaikhal Branch23, Goal Ghat Lane (1st Floor)Dholaikhal, Sutrapur, DhakaPhone: 09613221196,7118665, 7165912E-mail: [email protected]

Banglabazar Branch52, North Brook Hall RoadBanglabazar, DhakaPhone:09613221301,7121878, 7122227E-mail: [email protected]

Branch Network of BCB

01.

02.

03.

04.

05.

06.

Zigatola Branch25/1, Zigatola, Dhaka-1209Phone: 09613221601,8622154E-mail: [email protected]

Green Road BranchHossain Tower, 75 Green RoadFarmgate, DhakaPhone:09613221401, 8126886, 8154664E-mail: [email protected]

Mouchak Branch93/1, New Circular Road, Dhaka-1217Phone:09613223001, 8321072E-mail: [email protected]

Mirpur BranchPlot-28, (1st & 2nd Floor)Road No-Avenue-4MirpurSection-1, DhakaPhone: 09613222101,8020115E-mail: [email protected]

Gulshan BranchPladium Market, CEN(c)-1Gulshan, Circle-02, A-2Road# 95, Dhaka-1212Phone:09613227001, 8881044, 8881045E-mail: [email protected]

Khilgaon Branch290/3, Block-AKhilgaonRailgateNahar Tower (2nd Floor), Dhaka-1219Phone:09613222501,7215803E-mail: [email protected]

07.

08.

09.

10.

11.

12.

60

2009 2010 2011 2012 2013

40

20

0

25 25

38 4230

We are connected through 44 branches (42 branches as on December, 2013) with the customer



Dhamrai BranchKayetpara, Dhamrai Bazar, DhakaPhone: 06222 88139E-mail: [email protected]

Tanbazar Branch18, R. K. Mitra Road, Islam Super MarketNarayangonj-1400Phone: 09613229001, 7640321, 7644750E-mail: [email protected]

Agrabad Branch56, Agrabad C/A, JibanBimaBhabanChittagongPhone:09613226001,031 724879, 031 726007E-mail: [email protected]

Jubilee Road BranchImam gazzali market(1st Floor)30, Jubilee Road, Chittagong-4000Phone: 031 627837E-mail: [email protected]

Khatungonj BranchSW Tower, 304, KhatungonjChittagong-4000Phone: 031 6188211E-mail: [email protected]

Chaktai Branch68, Rajakhali Road, New ChaktaiBakolia, Chittagong-4000Phone: 031 634612E-mail: [email protected]

Dewanhat Branch1128, Sheikh Mujib Road.Ahmed Mension, ChittagongPhone: 031 728145,2513622.E-mail: [email protected]

Khulna Branch141, Sir Iqbal Road, KhulnaPhone: 041 732595, 041 2830144E-mail: [email protected]

Doulatpur Branch727 Jessore RoadPhone: 041 762589E-mail: [email protected]

Sylhet BranchGalleria Shopping & Apartment Complex(2nd Floor), Jallarpar Road, SylhetPhone: 0821 723210E-mail: [email protected]

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

Bogra Branch99/1-B, Borogola, Bogra-5800Phone: 09613228001,051 65441, 051 65710E-mail: [email protected]

Naogaon BranchKader Manson (Ist floor)Naogaon main Road, NaogaonPhone:09613221801,0741 63222,07418118E-mail: [email protected]

Comilla Branch35/32 Zila School RoadKandirpar, ComillaPhone: 081 69902, 081 69951E-mail: [email protected]

Seedstore Bazar Branch Hobir Bari, Seedstore BazarValuka, MymensinghCell: 09613222701,01811408256E-mail: [email protected]

Uttara Branch House-37, Sector-07SonargaonJanapath RoadUttara, Dhaka-1230Phone:09613222801,8921555E-mail: [email protected]

Feni Branch Haji AbulKashem Super MarketKamlapatti, House# 463Word# 17, Feni SadarPhone: 09613222901,0331 69011, 0331 69012Cell: 018 1208 5199, 018 1238 4767E-mail: [email protected]

Bijoynagar Branch Al-Raji Complex, House# 166/167, Word# 36Shahid Syed Nazrul Islam SmaraniBijoynagar, Dhaka.Cell:09613223101, 017 1147 9695E-mail: [email protected]

Muradpur Branch House# 73/74, Word# 7CDA Avenue, Muradpur, Chittagong.Phone:09613223096,031-655982,656154E-mail: [email protected]

Mandari Bazar Branch Babosayee Samitee market (1st Floor)Lakshmipur Sadar, Lakshmipur.Cell: 017 6653 8764, 017 5559 2396E-mail: [email protected]

23.

24.

25.

26.

27.

28.

29.

30.

31.


Bandura Branch Puraton BanduraNawabgonj, Dhaka.Cell:09613223301,01755592397E-mail: [email protected]

Jessore Branch Mohsin Super Market10 R. N. Road, Jessore.Phone:09613223501,042171180E-mail: [email protected]

Dinajpur Branch SM Tower (2nd Floor)Bahadur Bazar, Dinajpur.Phone:09613223401,053166555,053166556E-mail: [email protected]

Foreign Exchange Branch Surma Tower (Level-2)59/2 PuranaPaltan, Dhaka-1000.Phone:9573467,9573468E-mail: [email protected]

Juri Branch HaziImzad Ali MarketVobanigonj Bazar, JuriMoulvibazar.Phone:09613223701,01712620827,0862757192E-mail: [email protected]

Batajor Branch Batajor BazarBatajor, Gournadi, Barishal.Phone:09613223901,01755618793E-mail: [email protected]

Savar Branch 63/14 Bazar RoadIslam Plaza, Savar, Dhaka.Phone:09613223801,7742150,7742151E-mail: [email protected]

32.

33.

34.

35.

36.

37.

38.

Pragati Sarani Branch (NEW) KA/218, Kuril Chourasta,Zakir Complex (Ist floor), Dhaka.Phone:09613224096,09613224097E-mail: [email protected]

Kopil Muni Branch (New) SorojinibanijjobeponiMarket(Ist floor),Kopil muni SohachoriViddaMondir,P/O-Kopil Muni. P/S- Paikgacha, Khulna.Phone: 9613224101,01755653280-1E-mail: [email protected]

Barishal BranchElahi Tower, Holding No: 523Bazar Road, Barisal Sadar, BarishalPhone: 09613224201,0431-2176433Fax-0431-61616E-Mail: [email protected]

Kathgora Bazar BranchHaziNujomuddin Super MarketKathgora Bazar, Post: Jirabo, Union: AshuliaWard No: , PS: Ashulia, DhakaPhone: 09613220000,7792634Fax-02-7792632E-mail: [email protected]

Meraj Nagar BranchMerajnagar Supper Market(2nd floor),Shaympur,Kadomtoli,Dhaka-1362.Phone: [email protected]

Kangshanagar BazarKangshanagar Bazar, BurichangComilla-3520Phone: 01712620827E-mail: [email protected]

39.

40.

41.

42.

43.

44.

Proposed Branches

1. Shibchor Branch, Madaripur

2. Kaliakoir Branch, Gajipur

3. Sonargaon Branch, Narayangonj

4. Bolla Branch, Tangail

PROXY FORM

I/We ............................................................................. of ................................................................................

...................................................................................................................................................................................

................................................. being a Shareholder of Bangladesh Commerce Bank Limited do hereby

appoint Mr./Mrs./Miss .............................................................. of ............................................................................

...................................................................................................................................................................................

as my/our proxy to attend and vote for me/us on my/our behalf at the 16th Annual General Meeting of the Company to be held on Thursday, 25 September, 2014 at 12.00 am at National Sports Council Auditorium, (NSC Tower) 62/3, Purana Palton, Dhaka. and at any adjournment thereof.

As witness my/our hands this.......................................... day of ................................. 2014.

I/We hereby record my/our attendance at the 16th Annual General Meeting of the Company to be held on Thursday, 25 September, 2014 at 12.00 am at National Sports Council Auditorium, (NSC Tower), 62/3, Purana Palton, Dhaka.

Folio No: ............................................................................................

No. of Shares: .................................................................................

Name of the Member/proxy: ...........................................................

Signature........................................................................................

Date:..............................................................................................

Note: Please present this slip at the Reception Desk. Non Shareholder & Children will not be allowed at the meeting.

(Signature of the proxy)

Folio No:..................................................

No. of Shares:...........................................

Date:........................................................

(Signature of the Shareholder)

Folio No:..................................................

No. of Shares:...........................................

Date:........................................................

Note: The proxy form should reach the Registered Office of the Company not less than 72 hours before thetime fixed for the meeting.

Signature Verified

Authorized SignatoryBangladesh Commerce Bank Limited

ATTENDANCE SLIP

AffixRevenue

Stampof Tk. 20.00

Corporate Office: Eunoos Trade Center (Level-22), 52-53, Dilkusha C/ADhaka-1000, Bangladesh, PABX : 9559831, 9571581, Fax : 88-02-9568218E-mail : [email protected], Web : www.bcblbd.com, SWIFT : BCBLBDDH

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