Independent Auditors’ Report Audited Financial Statements · statements of the Bank based on our...
Transcript of Independent Auditors’ Report Audited Financial Statements · statements of the Bank based on our...
Annual Report 2014 169
Independent Auditors’ Report&
Audited Financial Statementsof
Islami Bank Bangladesh Limitedand its Subsidiaries
Annual Report 2014170
Independent Auditors’ ReportTo the Shareholders of Islami Bank Bangladesh Limited
We have audited the accompanying consolidated financial statements of Islami Bank Bangladesh Limited and its subsidiaries (the “Group”) as well as the separate financial statements of Islami Bank Bangladesh Limited (the “Bank”), which comprise the consolidated and separate balance sheets as at 31 December 2014, and the consolidated and separate profit and loss accounts, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements and Internal Controls
Management is responsible for the preparation of consolidated financial statements of the Group and also separate financial statements of the Bank that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in note 2.1 and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements of the Group and also the separate financial statements of the Bank that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 as amended and the Bangladesh Bank regulations require the management to ensure effective internal audit, internal control and risk management functions of the Bank. The management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements of the Group and the separate financial statements of the Bank based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements of the Group and the separate financial statements of the Bank are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements of the Group and separate financial statements of the Bank. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements of the Group and the separate financial statements of the Bank, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements of the Group and the separate financial statements of the Bank that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements of the Group and also the separate financial statements of the Bank.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group and also the separate financial statements of the Bank give a true and fair view of the consolidated financial position of the Group and the separate financial position of the Bank as at 31 December 2014, and of its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in note 2.1.
Report on Other Legal and Regulatory Requirements
In accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Bank Company Act 1991 as amended and the rules and regulations issued by Bangladesh Bank, we also report the following:
Annual Report 2014 171
(a) we have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;
(b) to the extent noted during the course of our audit work performed on the basis stated under the Auditors’ Responsibility section in forming the above opinion on the consolidated financial statements of the Group and the separate financial statements of the Bank and considering the reports of the management to the Bangladesh Bank on anti-fraud internal controls and instances of fraud and forgeries as stated under the Management’s Responsibility for the Financial Statements and Internal Control:
i) internal audit, internal control and risk management arrangements of the Group and the Bank as disclosed in note 3.31 appeared to be adequate;
ii) nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Bank and its related entities other than matters disclosed in note 3.31.8;
(c) financial statements of subsidiary companies of the Bank namely Islami Bank Securities Limited have been audited by Howladar Yunus & Co., Chartered Accountants and Islami Bank Capital Management Limited have been audited by Hussain Farhad & Co., Chartered Accountants and have been properly reflected in the consolidated financial statements;
(d) in our opinion, proper books of accounts as required by law have been kept by Islami Bank Bangladesh Limited so far as it appeared from our examination of those books and proper returns adequate for the purpose of our audit have been received from 225 branches not visited by us;
(e) the consolidated balance sheet and consolidated profit and loss account of the Group and the separate balance sheet and separate profit and loss account of the Bank dealt with by the report are in agreement with the books of account;
(f) the expenditure incurred was for the purposes of the Bank’s business;
(g) the consolidated financial statements of the Group and the separate financial statements of the Bank have been drawn up in conformity with prevailing rules, regulations and Bangladesh Financial Reporting Standards as explained in note 2.1 as well as with related guidance, circulars issued by Bangladesh Bank and decision taken in tripartite meeting amongst Inspection Team of Bangladesh Bank, External Auditors and the Management of Islami Bank Bangladesh Limited held on 03 March 2015;
(h) adequate provisions have been made for the investments, other assets and off-Balance Sheet items which are, in our opinion, doubtful of recovery;
(i) the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements;
(j) the information and explanation required by us have been received and found satisfactory;
(k) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 9,000 person hours for the audit of the books and accounts of the Bank.
Aziz Halim Khair ChoudhuryChartered Accountants
Syful Shamsul Alam & Co.Chartered Accountants
Howladar Yunus & Co.Chartered Accountants
Date: 21 March, 2015Place: Dhaka
Annual Report 2014172
Islami Bank Bangladesh Limited and its SubsidiariesConsolidated Balance Sheet
As at 31 December 2014
Particulars Notes31.12.2014 31.12.2013
Taka TakaProperty and AssetsCash in hand 7(a) 46,219,359,839 44,291,523,619 Cash in hand (including foreign currency) 7(a)(i) 7,696,844,962 8,180,346,965 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency) 7(a)(ii) 38,522,514,877 36,111,176,654 Balance with other banks & financial institutions 8(a) 23,615,218,198 12,700,116,779 In Bangladesh 8(a)(i) 21,205,895,651 7,950,737,265 Outside Bangladesh 8(a)(ii) 2,409,322,547 4,749,379,514 Placement with banks & other financial institutions 9.0 2,000,000,000 -
Investments in shares & securities 10(a) 99,677,400,553 66,098,953,627
Government 10(a)(i) 97,435,777,770 63,698,877,770 Others 10(a)(ii) 2,241,622,783 2,400,075,857 Investments 460,385,467,466 402,994,804,977
General investments etc. 11.1(a) 433,004,101,205 375,000,298,497 Bills purchased & discounted 11.2(a) 27,381,366,261 27,994,506,480 Fixed assets including premises 12(a) 15,930,479,589 15,738,858,683 Other assets 13(a) 3,751,558,076 4,545,107,670 Non - banking assets - - Total property and assets 651,579,483,721 546,369,365,355
Liabilities and Capital
Liabilities
Placement from banks & other financial institutions 46 (a) 7,657,500,743 -
Deposits & other accounts 14(a) 559,713,580,029 472,121,971,348
Mudaraba savings deposits 183,125,942,453 155,191,605,056 Mudaraba term deposits 169,288,934,029 130,523,371,328 Other mudaraba deposits 149,300,904,194 130,276,510,230 Al- wadeeah current and other deposit accounts 54,347,905,252 52,000,826,777 Bills payable 3,649,894,101 4,129,657,957 Mudaraba perpetual bond 15.0 3,000,000,000 3,000,000,000 Other liabilities 16(a) 34,220,763,730 27,289,134,160 Deferred tax liabilities 17(a) 403,081,867 194,189,314
Total liabilities 604,994,926,369 502,605,294,822
Capital/shareholders’ equity 46,584,557,352 43,764,070,533 Paid - up capital 18.0 16,099,906,680 14,636,278,800 Statutory reserve 20.0 16,099,906,680 14,638,613,627 Other reserves 21.0 11,998,012,969 11,851,258,703 Retained earnings 39(a) 2,386,670,563 2,637,858,071 Non-controlling interest 39(b) 60,460 61,332
Total liabilities & shareholders’ equity 651,579,483,721 546,369,365,355
Annual Report 2014 173
Islami Bank Bangladesh Limited and its SubsidiariesConsolidated Balance Sheet
As at 31 December 2014
Particulars Notes31.12.2014 31.12.2013
Taka TakaOff-balance sheet items
Contingent liabilities
Acceptances & endorsements - -
Letters of guarantee 22.0 8,839,985,590 7,354,594,651
Irrevocable letters of credit (including back to back bills) 99,102,373,685 83,946,725,635 Bills for collection 4,853,286,313 22,390,676,317 Other contingent liabilities 23,581,701 23,581,701 Total 112,819,227,289 113,715,578,304
Other commitments
Documentary credits, short term and trade related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance, revolving and underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total - -
Total off-balance sheet items including contingent liabilities 112,819,227,289 113,715,578,304
The annexed notes form an integral part of these financial statements.
Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Director Director
Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Managing Director
This is the consolidated balance sheet referred to in our separate report of even date.
Aziz Halim Khair Choudhury Syful Shamsul Alam & Co Howladar Yunus & Co. Chartered Accountants Chartered Accountants Chartered Accountants
Dhaka21 March 2015
Annual Report 2014174
Islami Bank Bangladesh Limited and its SubsidiariesConsolidated Profit & Loss Account
For the year ended 31 December 2014Particulars Notes 2014 2013
Taka TakaOperating incomeInvestment income 23(a) 49,109,956,379 48,145,464,380 Profit paid on mudaraba deposits 24(a) (30,592,937,508) (30,900,279,562)Net investment income 18,517,018,871 17,245,184,818 Income from investments in shares & securities 25(a) 1,847,241,058 2,112,029,193 Commission, exchange & brokerage income 26(a) 5,883,332,280 4,978,658,614 Other operating income 27(a) 1,223,373,942 985,819,291 Total operating income 27,470,966,151 25,321,691,916 Operating expensesSalary & allowances 28(a) 8,197,568,114 7,552,761,347 Rent, taxes, insurances, electricity etc. 29(a) 1,000,045,580 825,130,483 Legal expenses 30(a) 16,206,043 35,285,323 Postage, stamps and telecommunication etc. 31(a) 47,306,134 44,536,896 Stationery, printing and advertisement etc. 32(a) 317,612,092 330,098,889 Chief executive’s salary & fees 33.0 8,400,000 7,323,548 Directors’ fees & expenses 34(a) 13,183,767 11,875,334 Shari’ah supervisory committee’s fees & expenses 35.0 2,562,124 1,401,423 Auditors’ fees 36(a) 2,344,118 2,168,000 Charges on investment losses - - Depreciation and repair to bank’s assets 37(a) 866,506,137 729,987,642 Zakat expenses 425,985,241 385,750,934 Other expenses 38(a) 1,205,550,108 1,138,621,359 Total operating expenses 12,103,269,458 11,064,941,178 Profit/ (loss) before provision 15,367,696,693 14,256,750,738 Provision for investments & off- balance sheet exposures 16.1.4 4,670,784,729 3,015,633,502 Provision for diminution in value of investments in shares 16.2(a) 36,184,361 45,627,899 Other provisions 16.4 117,049,502 13,201,000 Total provision 4,824,018,592 3,074,462,401 Total profit/(loss) before taxes 10,543,678,101 11,182,288,337 Provision for taxation for the periodCurrent tax 16.7(a) 6,367,368,688 6,195,969,079 Deferred tax 17(b) 208,892,553 (44,439,537)Net profit/ (loss) after tax 3,967,416,860 5,030,758,795 Net profit after tax attributable to: 3,967,416,860 5,030,758,795 Equity holders of IBBL 3,967,415,282 5,030,757,057 Non-controlling interest 39(b) 1,578 1,738 Retained earnings from previous year 2,637,858,071 3,073,402,299 Add: Net profit after tax (attributable to equity holders of IBBL) 3,967,415,282 5,030,757,057 Profit available for appropriation 6,605,273,353 8,104,159,356
Appropriation: 6,605,273,353 8,104,159,356 Statutory reserve 20.0 1,461,293,053 2,214,951,285 General reserve 122,779,553 123,940,000 Dividend 2,634,530,184 3,127,410,000 Retained earnings 39(a) 2,386,670,563 2,637,858,071 Consolidated earnings per share 41(a) 2.46 3.12
The annexed notes form an integral part of these financial statements.
Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the consolidated profit & Loss account referred to in our separate report of even date.
Aziz Halim Khair Choudhury Syful Shamsul Alam & Co Howladar Yunus & Co. Chartered Accountants Chartered Accountants Chartered AccountantsDhaka21 March 2015
Annual Report 2014 175
Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the consolidated cash flow statement referred to in our separate report of even date.
Aziz Halim Khair Choudhury Syful Shamsul Alam & Co Howladar Yunus & Co. Chartered Accountants Chartered Accountants Chartered AccountantsDhaka21 March 2015
Islami Bank Bangladesh Limited and its SubsidiariesConsolidated Cash Flow Statement
For the year ended 31 December 2014
Particulars Note 2014 2013Taka Taka
Cash flows from operating activitiesInvestment income 49,004,594,914 49,302,935,930 Profit paid on mudaraba deposits (31,722,869,528) (30,718,018,746)Income/ dividend receipt from investments in shares & securities 1,870,699,544 2,112,029,193 Fees & commission receipt in cash 5,883,332,280 4,978,658,614 Recovery from written off investments 39,350,296 43,918,185 Payments to employees (8,100,074,962) (7,130,884,895)Cash payments to suppliers (326,348,124) (306,150,694)Income tax paid (5,648,297,930) (5,763,293,016)Receipts from other operating activities 1,213,407,361 985,205,915 Payments for other operating activities (2,594,835,403) (2,977,864,593)(i) Operating profit before changes in operating assets 9,618,958,448 10,526,535,893
Changes in operating assets and liabilities Increase/(decrease) of statutory deposits - - (Increase)/decrease of net trading securities - - (Increase)/decrease of placement to other banks - - (Increase)-decrease of investments to customers (57,190,662,489) (30,274,082,090)(Increase)/decrease of other assets 1,013,868,776 (1,475,585,020)Increase/(decrease) of placement from other banks 7,657,500,743 -Increase/(decrease) of deposits from other banks (193,547,298) (1,023,989)Increase/(decrease) of deposits received from customers 86,764,748,509 52,892,382,596 Increase/(decrease) of other liabilities account of customers - -Increase/(decrease) of trading liabilities - - Increase/(decrease) of other liabilities 2,872,167,220 2,132,072,253 (ii) Cash flows from operating assets and liabilities 40,924,075,461 23,273,763,750
Net cash flows from operating activities (A)=(i+ii) 50,543,033,909 33,800,299,643 Cash flows from investing activitiesProceeds from sale of securities 1,175,692,382 836,868,609 Payment for purchase of securities/BGIIB (34,768,348,787) (41,393,061,898)Placement to Islamic Refinance Fund Account (2,000,000,000) - Payment for purchase of securities/membership - - Purchase/sale of property, plants & equipments (941,612,274) (1,555,262,018)Purchase/sale of subsidiaries - - Net cash flows from investing activities (B) (36,534,268,679) (42,111,455,307)
Cash flows from financing activitiesReceipts from issue of debt instruments - - Payment for redemption of debt instruments - - Receipts from issuing ordinary share/ rights share - - Dividend paid in Cash (1,170,902,304) (1,000,771,200)Net cash flows from financing activities (C) (1,170,902,304) (1,000,771,200)
Net increase/(decrease) in cash (A+B+C) 12,837,862,926 (9,311,926,864)Add/(less): effects of exchange rate changes on cash & cash equivalent 5,074,713 4,621,542 Add: cash & cash equivalents at beginning of the year 56,991,640,398 66,298,945,720 Cash & cash equivalents at the end of the year 44(a) 69,834,578,037 56,991,640,398 The annexed notes form an integral part of these financial statements.
Annual Report 2014176
Isla
mi B
ank
Bang
lade
sh L
imite
d an
d its
Sub
sidi
arie
sCo
nsol
idat
ed S
tate
men
t of C
hang
es in
Equ
ityFo
r the
year
end
ed 3
1 De
cem
ber 2
014
(Am
ount
in Ta
ka)
Parti
cula
rsPa
id-u
p ca
pita
lSh
are
prem
ium
Stat
utor
y re
serv
e
Gene
ral/
othe
r re
serv
es *
Asse
ts
reva
luat
ion
rese
rve
Reva
luat
ion
rese
rve
of
secu
ritie
s
Reta
ined
ea
rnin
gs
Non-
cont
rolli
ng
inte
rest
Tota
l
12
34
56
78
910
(2+3
+4+5
+6+7
+8+9
)
Balan
ce as
at 0
1 Jan
uary
2014
14,63
6,278
,800
1,98
9,633
14
,638,6
13,62
7 28
7,697
,750
11,49
8,971
,320
62,60
0,000
2,
637,8
58,07
1 61
,332
43,76
4,070
,533
Chan
ges i
n acc
ount
ing po
licy r
esta
ted b
alanc
e -
- -
- -
- -
- Su
rplus
/ (de
ficit)
on ac
coun
t of r
evalu
ation
of pr
oper
ties
- -
- -
- -
- -
Surp
lus/ (
defic
it) on
acco
unt o
f rev
aluat
ion of
inve
stm
ents
(sha
res
& se
curit
ies)
- -
- -
- 18
,900,0
00
- -
18,90
0,000
Curre
ncy t
rans
lation
diffe
renc
es -
- -
5,07
4,713
-
- -
5,07
4,713
Ne
t gain
and l
osse
s not
reco
gnize
d in t
he in
com
e sta
tem
ent
- -
- -
- -
- -
- Ne
t pro
fit fo
r the
perio
d -
- -
- -
- 3,
967,4
15,28
2 1,
578
3,96
7,416
,860
Tran
sfer t
o res
erve
- -
1,46
1,293
,053
122,7
79,55
3 -
- (1
,584,0
72,60
6) -
- Di
viden
d:
-
- -
- -
- -
B
onus
shar
es 1,
463,6
27,88
0 -
- -
- -
(1,46
3,627
,880)
- -
C
ash d
ivide
nd -
- -
- -
- (1
,170,9
02,30
4)(2
,450)
(1,17
0,904
,754)
Issue
of sh
are c
apita
l -
- -
- -
- -
- -
Tota
l sha
reho
lders
’ equ
ity as
on 31
Dec
embe
r 201
4 16
,099,9
06,68
0 1,
989,6
33
16,09
9,906
,680
415,5
52,01
6 11
,498,9
71,32
0 81
,500,0
00
2,386
,670,5
6360
,460
46,58
4,557
,352
Add:
Muda
raba
perp
etua
l bon
d -
- -
- -
- -
3,00
0,000
,000
Add:
Gene
ral p
rovis
ion fo
r unc
lassifi
ed in
vest
men
ts an
d off-
balan
ce
shee
t ite
ms
- -
- 4,
753,6
80,00
0 -
- -
- 4,
753,6
80,00
0
Adjus
tmen
t for
curre
ncy t
rans
lation
diffe
renc
es -
- -
(6,39
2,484
) -
- -
(6,39
2,484
)Le
ss: 5
0.00%
of as
sets
reva
luatio
n res
erve
- -
- -
(5,74
9,485
,660)
- -
- (5
,749,4
85,66
0)Le
ss: 5
0.00%
of re
valua
tion r
eser
ve of
secu
rities
- -
- -
- (4
0,750
,000)
- -
(40,7
50,00
0)To
tal e
quity
as on
31 D
ecem
ber 2
014
16,09
9,906
,680
1,98
9,633
16
,099,9
06,68
0 5,1
62,83
9,532
5,
749,4
85,66
0 40
,750,0
00
2,386
,670,5
6360
,460
48,54
1,609
,208
*Not
e : G
ener
al / o
ther
rese
rves
01.0
1.20
1401
.01.
2013
Gene
ral r
eser
ve 25
4,379
,979
130,4
39,97
9 Di
viden
d equ
aliza
tion a
ccou
nt 32
,000,0
00
32,00
0,000
Cu
rrenc
y tra
nslat
ion di
ffere
nces
1,31
7,771
(3
,303,7
71)
Tota
l 28
7,697
,750
159,1
36,20
8
Annual Report 2014 177
Isla
mi B
ank
Bang
lade
sh L
imite
d an
d its
Sub
sidi
arie
sCo
nsol
idat
ed S
tate
men
t of C
hang
es in
Equ
ityFo
r the
year
end
ed 3
1 De
cem
ber 2
013
(Am
ount
in Ta
ka)
Parti
cula
rsPa
id-u
p ca
pita
lSh
are
prem
ium
Stat
utor
y re
serv
e
Gene
ral/
othe
r re
serv
es *
Asse
ts
reva
luat
ion
rese
rve
Reva
luat
ion
rese
rve
of
secu
ritie
s
Reta
ined
ea
rnin
gs
Non-
cont
rolli
ng
inte
rest
Tota
l
12
34
56
78
910
(2+3
+4+5
+6+7
+8+9
)
Balan
ce as
at 0
1 Jan
uary
2013
12,50
9,640
,000
1,98
9,633
12
,423,6
62,34
2 15
9,136
,208
11,49
8,971
,320
34,70
0,000
3,
073,4
02,29
9 59
,594
39,70
1,561
,396
Chan
ges i
n ac
coun
ting
polic
y res
tate
d ba
lanc
e -
- -
- -
- -
- -
Surp
lus/
(defi
cit)
on a
ccou
nt o
f rev
alua
tion
of p
rope
rties
- -
- -
- -
- -
- Su
rplu
s/ (d
efici
t) on
acc
ount
of r
eval
uatio
n of
inve
stm
ents
(sha
res
& se
curit
ies)
- -
- -
- 2
7,90
0,00
0 -
- 2
7,90
0,00
0
Curre
ncy t
rans
latio
n di
ffere
nces
- -
- 4
,621
,542
-
- -
4,6
21,5
42
Net g
ain
and
loss
es n
ot re
cogn
ized
in th
e in
com
e st
atem
ent
- -
- -
- -
- -
- Ne
t pro
fit fo
r the
per
iod
- -
- -
- -
5,0
30,7
57,0
57
1,7
38
5,0
30,7
58,7
95
Tran
sfer
to re
serv
e -
- 2
,214
,951
,285
1
23,9
40,0
00
- -
(2,3
38,8
91,2
85)
- -
Divi
dend
: -
- -
- -
- -
B
onus
shar
es 2
,126
,638
,800
-
- -
- -
(2,1
26,6
38,8
00)
- -
C
ash
divi
dend
- -
- -
- -
(1,0
00,7
71,2
00)
- (1
,000
,771
,200
)Is
sue
of sh
are
capi
tal
- -
- -
- -
- -
- To
tal s
hare
hold
ers’
equi
ty a
s on
31 D
ecem
ber 2
013
14,
636,
278,
800
1,9
89,6
33
14,
638,
613,
627
287
,697
,750
1
1,49
8,97
1,32
0 6
2,60
0,00
0 2
,637
,858
,071
6
1,33
2 4
3,76
4,07
0,53
3 Ad
d: M
udar
aba
perp
etua
l bon
d -
- -
- -
- -
- 3
,000
,000
,000
Ad
d: G
ener
al p
rovi
sion
for u
ncla
ssifi
ed in
vest
men
ts a
nd o
ff- b
alan
ce
shee
t ite
ms
- -
- 4
,508
,800
,000
-
- -
- 4
,508
,800
,000
Adju
stm
ent f
or c
urre
ncy t
rans
latio
n di
ffere
nces
(1,3
17,7
71)
- (1
,317
,771
)Le
ss: 5
0.00
% of
ass
ets r
eval
uatio
n re
serv
e -
- -
- (5
,749
,485
,660
) -
- -
(5,7
49,4
85,6
60)
Less
: 50.
00%
of re
valu
atio
n re
serv
e of
secu
ritie
s -
- -
- -
(31,
300,
000)
(31,
300,
000)
Tota
l equ
ity a
s on
31 D
ecem
ber 2
013
14,
636,
278,
800
1,9
89,6
33
14,
638,
613,
627
4,79
5,17
9,97
9 5
,749
,485
,660
3
1,30
0,00
0 2
,637
,858
,071
6
1,33
2 4
5,49
0,76
7,10
2
Pr
of. N
RM B
orha
n Ud
din
Ph.D
M
d. A
bdus
Sal
am F
CA, F
CS
Barr
iste
r Moh
amm
ed B
elay
et H
ossa
in
Moh
amm
ad A
bdul
Man
nan
Di
rect
or
Dire
ctor
Di
rect
or
Man
agin
g Di
rect
orTh
is is
the
cons
olid
ated
sta
tem
ent o
f cha
nges
in e
quity
refe
rred
to in
our
sep
arat
e re
port
of e
ven
date
.
Az
iz H
alim
Kha
ir Ch
oudh
ury
Syfu
l Sha
msu
l Ala
m &
Co
How
lada
r Yun
us &
Co.
Ch
arte
red
Acco
unta
nts
Char
tere
d Ac
coun
tant
s Ch
arte
red
Acco
unta
nts
Dhak
a21
Mar
ch 2
015
Annual Report 2014178
Islami Bank Bangladesh LimitedBalance Sheet
As at 31 December 2014
Particulars Notes31.12.2014 31.12.2013
Taka TakaProperty and AssetsCash in hand 7.0 46,219,359,426 44,291,514,939 Cash in hand (including foreign currency) 7.1 7,696,844,549 8,180,338,285 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency) 7.2 38,522,514,877 36,111,176,654
Balance with other banks & financial institutions 8.0 20,199,350,245 12,327,320,344 In Bangladesh 8(i) 17,790,027,698 7,577,940,830 Outside Bangladesh 8(ii) 2,409,322,547 4,749,379,514
Placement with banks & other financial institutions 9.0 2,000,000,000 -
Investments in shares & securities 10.0 100,856,528,896 67,211,398,968 Government 10.1 97,435,777,770 63,698,877,770 Others 10.2 3,420,751,126 3,512,521,198
Investments 11.0 463,475,467,466 403,194,804,977 General investments etc. 11.1 436,094,101,205 375,200,298,497 Bills purchased & discounted 11.2 27,381,366,261 27,994,506,480 Fixed assets including premises 12.0 15,926,361,916 15,732,808,589 Other assets 13.0 3,744,970,802 4,471,783,137 Non - banking assets - - Total property and assets 652,422,038,751 547,229,630,954
Liabilities and Capital
LiabilitiesPlacement from banks & other financial institutions 46.0 7,657,500,743 -
Deposits & other accounts 14.0 560,696,300,836 473,140,955,031 Mudaraba savings deposits 14.1 183,128,708,639 156,072,977,380 Mudaraba term deposits 170,175,086,856 131,412,377,473 Other mudaraba deposits 14.2 149,346,325,824 129,401,794,243 Al- wadeeah current and other deposit accounts 14.3 54,396,285,416 52,124,147,978 Bills payable 14.4 3,649,894,101 4,129,657,957 Mudaraba perpetual bond 15.0 3,000,000,000 3,000,000,000 Other liabilities 16.0 34,052,027,094 27,133,860,568 Deferred tax liabilities 17.0 403,397,747 194,134,041 Total liabilities 605,809,226,420 503,468,949,640
Capital/ shareholders’ equity 46,612,812,331 43,760,681,314 Paid - up capital 18.0 16,099,906,680 14,636,278,800 Statutory reserve 20.0 16,099,906,680 14,638,613,627 Other reserves 21.0 11,998,012,969 11,851,258,703 Retained Earnings 39.0 2,414,986,002 2,634,530,184 Total liabilities & shareholders’ equity 652,422,038,751 547,229,630,954
Annual Report 2014 179
Islami Bank Bangladesh LimitedBalance Sheet
As at 31 December 2014
Particulars Notes31.12.2014 31.12.2013
Taka TakaOff-balance sheet itemsContingent liabilitiesAcceptances & endorsements - - Letters of guarantee 22.0 8,839,985,590 7,354,594,651 Irrevocable letters of credit (including back to back bills) 99,102,373,685 83,946,725,635 Bills for collection 4,853,286,313 22,390,676,317 Other contingent liabilities 23,581,701 23,581,701 Total 112,819,227,289 113,715,578,304
Other commitments
Documentary credits, short term and trade related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance, revolving and underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total - -
Total off-balance sheet items including contingent liabilities 112,819,227,289 113,715,578,304
The annexed notes form an integral part of these financial statements.
Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the balence sheet referred to in our separate report of even date.
Aziz Halim Khair Choudhury Syful Shamsul Alam & Co Howladar Yunus & Co. Chartered Accountants Chartered Accountants Chartered AccountantsDhaka21 March 2015
Annual Report 2014180
Islami Bank Bangladesh LimitedProfit & Loss Account
For the year ended 31 December 2014
Particulars Notes2014 2013Taka Taka
Operating incomeInvestment income 23.0 49,109,956,379 48,145,464,380 Profit paid on mudaraba deposits 24.0 (30,650,270,621) (30,975,185,536)Net investment income 18,459,685,758 17,170,278,844 Income from investments in shares & securities 25.0 1,900,248,402 2,047,514,660 Commission, exchange & brokerage income 26.0 5,870,373,508 4,969,126,047 Other operating income 27.0 1,166,448,971 931,638,616 Total operating income 27,396,756,639 25,118,558,167 Operating expensesSalary & allowances 28.0 8,183,199,841 7,538,859,361 Rent, taxes, insurances, electricity etc. 29.0 996,139,867 822,139,328 Legal expenses 30.0 16,206,043 35,067,030 Postage, stamps and telecommunication etc. 31.0 47,130,710 44,343,667 Stationery, printing and advertisement etc. 32.0 317,409,591 329,947,366 Chief executive’s salary & fees 33.0 8,400,000 7,323,548 Directors’ fees & expenses 34.0 12,787,017 11,587,834 Shari’ah supervisory committee’s fees & expenses 35.0 2,562,124 1,401,423 Auditors’ fees 36.0 2,229,118 2,070,000 Charges on investment losses - - Depreciation and repair to bank’s assets 37.0 862,001,406 725,713,644 Zakat expenses 425,985,241 385,750,934 Other expenses 38.0 1,200,083,831 1,134,942,662 Total operating expenses 12,074,134,789 11,039,146,797 Profit/ (loss) before provision 15,322,621,850 14,079,411,370 Provision for investments & off- balance sheet exposures 16.1.4 4,670,784,729 3,015,633,502 Provision for diminution in value of investments in shares 16.2 3,074,883 423,778 Other provisions 16.4 117,049,502 13,201,000 Total provision 4,790,909,114 3,029,258,280 Total profit/(loss) before taxes 10,531,712,736 11,050,153,090 Provision for taxation for the periodCurrent tax 16.7.1 6,323,390,422 6,145,665,449 Deferred tax expense/(income) 17.0 209,263,706 (44,096,951)Net profit/ (loss) after tax 3,999,058,608 4,948,584,592 Retained earnings from previous year 2,634,530,184 3,152,246,877 Add: Net profit after tax 3,999,058,608 4,948,584,592 Profit available for appropriation 6,633,588,792 8,100,831,469 Appropriation: 6,633,588,792 8,100,831,469 Statutory reserve 20.0 1,461,293,053 2,214,951,285 General reserve 122,779,553 123,940,000 Dividend 2,634,530,184 3,127,410,000 Retained earnings 39.0 2,414,986,002 2,634,530,184 Earnings per share (EPS) 41.0 2.48 3.07
The annexed notes form an integral part of these financial statements.
Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the profit & loss account referred to in our separate report of even date.
Aziz Halim Khair Choudhury Syful Shamsul Alam & Co Howladar Yunus & Co. Chartered Accountants Chartered Accountants Chartered AccountantsDhaka21 March 2015
Annual Report 2014 181
Islami Bank Bangladesh LimitedCash Flow Statement
For the year ended 31 December 2014
Particulars Note2014 2013Taka Taka
Cash flows from operating activitiesInvestment income 49,004,594,914 49,302,935,930 Profit paid on mudaraba deposits (31,780,202,641) (30,792,924,720)Income/ dividend receipt from investments in shares & securities 1,713,711,788 2,047,514,660 Fees & commission receipt in cash 5,870,373,508 4,969,126,047 Recovery from written off investments 39,350,296 43,918,185 Payments to employees (8,085,706,689) (7,116,982,909)Cash payments to suppliers (326,145,623) (305,999,171)Income tax paid (5,597,112,182) (5,731,916,584)Receipts from other operating activities 1,166,448,971 931,638,616 Payments for other operating activities (2,583,191,009) (2,969,365,539)(i) Operating profit before changes in operating assets 9,422,121,333 10,377,944,515
Changes in operating assets and liabilities
Increase/(decrease) of statutory deposits - - (Increase)/decrease of net trading securities - - (Increase)/decrease of placement to other banks - - (Increase)/decrease of investments to customers (60,280,662,489) (30,274,082,090)(Increase)/decrease of other assets 1,025,213,295 (1,496,849,260)Increase/(decrease) of placement from other banks 7,657,500,743 -Increase/(decrease) of deposits from other banks (193,547,298) (1,023,989)Increase/(decrease) of deposits received from customers 87,748,893,103 53,897,836,775 Increase/(decrease) of other liabilities account of customers - - Increase/(decrease) of trading liabilities - - Increase/(decrease) of other liabilities 2,153,192,172 2,017,256,323 (ii) Cash flows from operating assets and liabilities 38,110,589,526 24,143,137,759 Net cash flows from operating activities (A)=(i+ii) 47,532,710,859 34,521,082,274
Cash flows from investing activities
Proceeds from sale of securities - - Payment for purchase of securities/BGIIB (33,626,229,928) (40,173,425,198)Placement to Islamic Refinance Fund Account (2,000,000,000) - Payment for purchase of securities/membership - - Purchase/sale of property, plants & equipments (940,778,952) (1,555,029,989)Purchase/sale of subsidiaries - - Net cash flows from investing activities (B) (36,567,008,880) (41,728,455,187)
Cash flows from financing activities
Receipts from issue of debt instruments - - Payment for redemption of debt instruments - - Receipts from issuing ordinary share/ rights share - - Dividend paid in Cash (1,170,902,304) (1,000,771,200)Net cash flows from financing activities (C) (1,170,902,304) (1,000,771,200)
Net increase/(decrease) in cash (A+B+C) 9,794,799,675 (8,208,144,113)Add/(Less): effects of exchange rate changes on cash & cash equivalent 5,074,713 4,621,542 Add: cash & cash equivalents at beginning of the year 56,618,835,283 64,822,357,854 Cash & cash equivalents at the end of the year 44.0 66,418,709,671 56,618,835,283
The annexed notes form an integral part of these financial statements.
Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the cash flow statement referred to in our separate report of even date.
Aziz Halim Khair Choudhury Syful Shamsul Alam & Co Howladar Yunus & Co. Chartered Accountants Chartered Accountants Chartered AccountantsDhaka21 March 2015
Annual Report 2014182
Isla
mi B
ank
Bang
lade
sh L
imite
dSt
atem
ent o
f Cha
nges
in E
quity
For t
he ye
ar e
nded
31
Dece
mbe
r 201
4
(Am
ount
in Ta
ka)
Parti
cula
rsPa
id-u
p ca
pita
lSh
are
prem
ium
Stat
utor
y re
serv
e
Gene
ral/
othe
r re
serv
es *
Asse
ts
reva
luat
ion
rese
rve
Reva
luat
ion
rese
rve
of
secu
ritie
s
Reta
ined
ea
rnin
gsTo
tal
12
34
56
78
9 (2
+3+
4+5+
6+7+
8)
Bala
nce
as a
t 01
Jan
uary
201
414
,636
,278
,800
1,
989,
633
14,6
38,6
13,6
27
287
,697
,750
11
,498
,971
,320
6
2,60
0,00
0 2
,634
,530
,184
4
3,76
0,68
1,31
4 Ch
ange
s in
acco
untin
g po
licy r
esta
ted
bala
nce
Surp
lus/
(defi
cit)
on a
ccou
nt o
f rev
alua
tion
of p
rope
rties
- -
- -
- -
- Su
rplu
s/ (d
efici
t) on
acc
ount
of r
eval
uatio
n of
inve
stm
ents
(sha
res
& se
curit
ies)
- -
- -
- 1
8,90
0,00
0 -
18,
900,
000
Curre
ncy t
rans
latio
n di
ffere
nces
- -
- 5
,074
,713
-
- -
5,0
74,7
13
Net g
ain
and
loss
es n
ot re
cogn
ized
in th
e in
com
e st
atem
ent
- -
- -
- -
- -
Net p
rofit
for t
he p
erio
d -
- -
- -
3,9
99,0
58,6
08
3,9
99,0
58,6
08
Tran
sfer
to re
serv
e -
- 1
,461
,293
,053
1
22,7
79,5
53
- -
(1,5
84,0
72,6
06)
- Di
vide
nd:
-
Bon
us sh
ares
1,4
63,6
27,8
80
- -
- -
- (1
,463
,627
,880
) -
C
ash
divi
dend
- -
- -
- -
(1,1
70,9
02,3
04)
(1,1
70,9
02,3
04)
Issu
e of
shar
e ca
pita
l -
- -
- -
- -
-
Tota
l sha
reho
lder
s’ eq
uity
as o
n 31
Dec
embe
r 201
416
,099
,906
,680
1,
989,
633
16,0
99,9
06,6
80
415
,552
,016
11
,498
,971
,320
8
1,50
0,00
0 2
,414
,986
,002
4
6,61
2,81
2,33
1
Add:
Mud
arab
a pe
rpet
ual b
ond
- -
- -
- -
- 3
,000
,000
,000
Ad
d: G
ener
al p
rovi
sion
for u
ncla
ssifi
ed in
vest
men
ts a
nd o
ff-
bala
nce
shee
t ite
ms
- -
- 4
,753
,680
,000
-
- -
4,7
53,6
80,0
00
Adju
stm
ent f
or c
urre
ncy t
rans
latio
n di
ffere
nces
- -
- (6
,392
,484
) -
- -
(6,3
92,4
84)
Less
: 50.
00%
of a
sset
s rev
alua
tion
rese
rve
- -
- -
(5,7
49,4
85,6
60)
- -
(5,7
49,4
85,6
60)
Less
: 50.
00%
of re
valu
atio
n re
serv
e of
secu
ritie
s -
- -
- -
(40,
750,
000)
- (4
0,75
0,00
0)
Tota
l equ
ity a
s on
31 D
ecem
ber 2
014
16,0
99,9
06,6
80
1,98
9,63
3 16
,099
,906
,680
5
,162
,839
,532
5,7
49,4
85,6
60
40,
750,
000
2,4
14,9
86,0
02
48,
569,
864,
187
*Not
e : G
ener
al /
othe
r res
erve
s01
.01.
2014
01.0
1.20
13Ge
nera
l res
erve
254
,379
,979
1
30,4
39,9
79
Rese
rve
rela
ted
to D
TA o
n pr
ovis
ion
for B
L -
- Di
vide
nd e
qual
izatio
n ac
coun
t 3
2,00
0,00
0 3
2,00
0,00
0 Cu
rrenc
y tra
nsla
tion
diffe
renc
es 1
,317
,771
(3
,303
,771
)To
tal
287
,697
,750
1
59,1
36,2
08
Annual Report 2014 183
Isla
mi B
ank
Bang
lade
sh L
imite
dSt
atem
ent o
f Cha
nges
in E
quity
For t
he ye
ar e
nded
31
Dece
mbe
r 201
3
(Am
ount
in Ta
ka)
Parti
cula
rsPa
id-u
p ca
pita
lSh
are
prem
ium
Stat
utor
y re
serv
e
Gene
ral/
othe
r re
serv
es *
Asse
ts
reva
luat
ion
rese
rve
Reva
luat
ion
rese
rve
of
secu
ritie
s
Reta
ined
ea
rnin
gsTo
tal
12
34
56
78
9 (2
+3+
4+5+
6+7+
8)
Bal
ance
as a
t 01
Jan
uary
201
3 12
,509
,640
,000
1,
989,
633
12,4
23,6
62,3
42
159
,136
,208
11
,498
,971
,320
3
4,70
0,00
0 3
,152
,246
,877
3
9,78
0,34
6,38
0 Ch
ange
s in
acco
untin
g po
licy r
esta
ted
bala
nce
- -
Surp
lus/
(defi
cit)
on a
ccou
nt o
f rev
alua
tion
of p
rope
rties
- -
- -
- -
- Su
rplu
s/ (d
efici
t) on
acc
ount
of r
eval
uatio
n of
inve
stm
ents
(sha
res
& se
curit
ies)
- -
- -
- 2
7,90
0,00
0 -
27,
900,
000
Curre
ncy t
rans
latio
n di
ffere
nces
- -
- 4
,621
,542
-
- -
4,6
21,5
42
Net g
ain
and
loss
es n
ot re
cogn
ized
in th
e in
com
e st
atem
ent
- -
- -
- -
- -
Net p
rofit
for t
he p
erio
d -
- -
- -
4,9
48,5
84,5
92
4,9
48,5
84,5
92
Tran
sfer
to re
serv
e -
- 2
,214
,951
,285
1
23,9
40,0
00
- -
(2,3
38,8
91,2
85)
- Di
vide
nd:
-
Bon
us sh
ares
2,1
26,6
38,8
00
- -
- -
- (2
,126
,638
,800
) -
C
ash
divi
dend
- -
- -
- -
(1,0
00,7
71,2
00)
(1,0
00,7
71,2
00)
Issu
e of
shar
e ca
pita
l -
- -
- -
- -
- To
tal s
hare
hold
ers’
equi
ty a
s on
31 D
ecem
ber 2
013
14,6
36,2
78,8
00
1,98
9,63
3 14
,638
,613
,627
2
87,6
97,7
50
11,4
98,9
71,3
20
62,
600,
000
2,6
34,5
30,1
84
43,
760,
681,
314
Add:
Mud
arab
a pe
rpet
ual b
ond
- -
- -
- -
- 3
,000
,000
,000
Ad
d: G
ener
al p
rovi
sion
for u
ncla
ssifi
ed in
vest
men
ts a
nd o
ff-
bala
nce
shee
t ite
ms
- -
- 4
,508
,800
,000
-
- -
4,5
08,8
00,0
00
Adju
stm
ent f
or c
urre
ncy t
rans
latio
n di
ffere
nces
(1,3
17,7
71)
(1,3
17,7
71)
Less
: 50.
00%
of a
sset
s rev
alua
tion
rese
rve
- -
- -
(5,7
49,4
85,6
60)
- -
(5,7
49,4
85,6
60)
Less
: 50.
00%
of re
valu
atio
n re
serv
e of
secu
ritie
s -
- -
- -
(31,
300,
000)
- (3
1,30
0,00
0) To
tal e
quity
as o
n 31
Dec
embe
r 201
3 14
,636
,278
,800
1,
989,
633
14,6
38,6
13,6
27
4,7
95,1
79,9
79
5,7
49,4
85,6
60
31,
300,
000
2,6
34,5
30,1
84
45,
487,
377,
883
Pr
of. N
RM B
orha
n Ud
din
Ph.D
M
d. A
bdus
Sal
am F
CA, F
CS
Barr
iste
r Moh
amm
ed B
elay
et H
ossa
in
Moh
amm
ad A
bdul
Man
nan
Di
rect
or
Dire
ctor
Di
rect
or
Man
agin
g Di
rect
orTh
is is
the
stat
emen
t of c
hang
es in
equ
ity re
ferr
ed to
in o
ur s
epar
ate
repo
rt o
f eve
n da
te.
Az
iz H
alim
Kha
ir Ch
oudh
ury
Syfu
l Sha
msu
l Ala
m &
Co
How
lada
r Yun
us &
Co.
Ch
arte
red
Acco
unta
nts
Char
tere
d Ac
coun
tant
s Ch
arte
red
Acco
unta
nts
Dhak
a21
Mar
ch 2
015
Annual Report 2014184
Isla
mi B
ank
Bang
lade
sh L
imite
dLi
quid
ity S
tate
men
tAs
sets
& li
abili
ties a
naly
sis
As a
t 31
Dece
mbe
r 201
4Am
ount
in Ta
kaPa
rticu
lars
Up to
1 M
onth
1 - 3
Mon
ths
3 - 1
2 M
onth
s1
- 5 ye
ars
Mor
e th
an 5
year
sTo
tal 3
1.12
.201
4To
tal 3
1.12
.201
31
23
45
67=
(2 +
3 +
4 +
5
+ 6)
8
ASSE
TSCa
sh in
han
d 1
0,37
5,90
4,07
9 -
- -
35,
843,
455,
347
46,
219,
359,
426
44,
291,
514,
939
Bala
nce
with
oth
er b
anks
& fi
nanc
ial i
nstit
utio
ns (N
ote-
8.2)
10,
994,
350,
245
9,0
25,0
00,0
00
180
,000
,000
-
- 2
0,19
9,35
0,24
5 1
2,32
7,32
0,34
4 Pl
acem
ent w
ith B
anks
& o
ther
Fin
anci
al In
stitu
tions
- 2
,000
,000
,000
-
- -
2,0
00,0
00,0
00
- In
vest
men
ts (i
n sh
ares
& se
curit
ies)
(Not
e-10
.4)
19,
355,
655,
126
35,
460,
000,
000
42,
618,
000,
000
300
,000
,000
3
,122
,873
,770
10
0,85
6,52
8,89
6 6
7,21
1,39
8,96
8 Ge
nera
l inv
estm
ents
etc
. (N
ote-
11.1
.1)
63,
378,
766,
515
79,
432,
061,
802
107,
961,
949,
441
96,
501,
760,
873
88,
819,
562,
574
436,
094,
101,
205
375,
200,
298,
497
Bills
pur
chas
ed &
dis
coun
ted
(Not
e-11
.2.1
) 7
,108
,296
,384
9
,544
,931
,260
1
0,72
8,13
8,61
7 -
- 2
7,38
1,36
6,26
1 2
7,99
4,50
6,48
0 Fi
xed
asse
ts in
clud
ing
prem
ises
(lan
d &
build
ing)
, fur
nitu
re a
nd fi
xtur
es
(Not
e-12
.3)
- -
744
,614
,312
2
,632
,757
,271
1
2,54
8,99
0,33
3 1
5,92
6,36
1,91
6 1
5,73
2,80
8,58
9
Othe
r ass
ets (
Note
-13.
1) 3
09,6
53,2
48
1,6
77,8
39,6
26
919
,707
,427
5
60,2
04,1
50
277
,566
,351
3
,744
,970
,802
4
,471
,783
,137
No
n - b
anki
ng a
sset
s -
- -
- -
- -
Tota
l ass
ets
111
,522
,625
,597
137
,139
,832
,688
16
3,15
2,40
9,79
8 9
9,99
4,72
2,29
4 14
0,61
2,44
8,37
5 6
52,4
22,0
38,7
51
547
,229
,630
,954
LI
ABIL
ITIE
SPl
acem
ent f
rom
ban
ks &
oth
er fi
nanc
ial i
nstit
utio
ns4,
254,
533,
600
869,
506,
935
2,53
3,46
0,20
8 -
- 7,
657,
500,
743
- De
posi
ts (
Note
-14.
6) 9
2,71
6,05
8,87
8 10
8,99
1,48
4,44
5 15
4,55
2,46
3,75
1 9
5,99
7,64
1,17
6 10
8,43
8,65
2,58
6 56
0,69
6,30
0,83
6 47
3,14
0,95
5,03
1 Ot
her a
ccou
nts
- -
- -
- -
- Pr
ovis
ion
& ot
her l
iabi
litie
s (N
ote-
16.9
) 2
,952
,471
,399
1
2,82
1,71
0,54
2 3
,899
,744
,057
1
,811
,279
,527
12
,566
,821
,569
34,0
52,0
27,0
94 2
7,13
3,86
0,56
8 De
ferre
d ta
x lia
bilit
y/ (a
sset
s) -
- -
- 4
03,3
97,7
47
403
,397
,747
1
94,1
34,0
41
Mud
arab
a pe
rpet
ual b
ond
- -
- -
3,0
00,0
00,0
00
3,0
00,0
00,0
00
3,0
00,0
00,0
00
Tota
l lia
bilit
ies
99,9
23,0
63,8
7712
2,68
2,70
1,92
216
0,98
5,66
8,01
6 9
7,80
8,92
0,70
3 12
4,40
8,87
1,90
260
5,80
9,22
6,42
0 5
03,4
68,9
49,6
40
Net l
iqui
dity
gap
11,5
99,5
61,7
2014
,457
,130
,767
2,16
6,74
1,78
2 2
,185
,801
,591
16
,203
,576
,473
46,
612,
812,
331
43,
760,
681,
314
Pr
of. N
RM B
orha
n Ud
din
Ph.D
M
d. A
bdus
Sal
am F
CA, F
CS
Barr
iste
r Moh
amm
ed B
elay
et H
ossa
in
Moh
amm
ad A
bdul
Man
nan
Di
rect
or
Dire
ctor
Di
rect
or
Man
agin
g Di
rect
orTh
is is
the
liqui
dity
sta
tem
ent r
efer
red
to in
our
sep
arat
e re
port
of e
ven
date
.
Az
iz H
alim
Kha
ir Ch
oudh
ury
Syfu
l Sha
msu
l Ala
m &
Co
How
lada
r Yun
us &
Co.
Ch
arte
red
Acco
unta
nts
Char
tere
d Ac
coun
tant
s Ch
arte
red
Acco
unta
nts
Dhak
a21
Mar
ch 2
015
Annual Report 2014 185
Islami Bank Bangladesh Limited and its SubsidiariesNotes to the consolidated financial statements
For the year ended 31 December 2014
1.0 The Bank and its activities
1.1 Islami Bank Bangladesh Limited (hereinafter referred to as “the Bank” or “IBBL”) was established as a Public Limited Banking Company in Bangladesh in 1983 as the first Shari’ah based Scheduled Commercial Bank in the South East Asia. Naturally, its modus operandi is substantially different from those of other conventional Commercial Banks. The Bank conducts its business on the Shari’ah principles of Mudaraba, Musharaka, Bai-Murabaha, Bai-Muajjal, Hire Purchase under Shirkatul Melk, Bai-Salam and Bai-as-Sarf etc. There is a Shari’ah Supervisory Committee in the Bank which ensures that the activities of the Bank are being conducted on the precepts of Islam.
The shares of the Bank are listed with both Dhaka Stock Exchange (DSE) Limited and Chittagong Stock Exchange (CSE) Limited. The Bank carries out its business activities through its Head Office in Dhaka, 14 Zonal Offices, 294 branches including 53 Authorised Dealer (AD) branches and 3 Off-shore Banking Units (OBUs) in Bangladesh. The Principal place of business is the Registered Office of the Bank situated at Islami Bank Tower, 40, Dilkusha Commercial Area, Dhaka-1000, Bangladesh.
These financial statements as at and for the year ended 31 December 2014 include the consolidated and separate financial statements of the Bank. The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries (mentioned in Note - 1.4, together referred to as “the Companies”).
1.2 Nature of business/principal activities of the Bank
1.2.1 Commercial banking services
All kinds of commercial banking services are provided by the Bank to the customers following the principles of Islamic Shari’ah, the provisions of the Bank Company Act, 1991 as amended, Bangladesh Bank’s directives and directives of other regulatory authorities.
1.2.2 ISlAMIC MICRo-FInAnCe
Islamic micro-finance represents micro-finance and the Islamic finance industry. Under Islamic micro-finance, major focus is given on improvement of living standard of poor people. The projects are closely monitored so that the members are really benefited. IBBL provides this services under the umbrella of Rural Development Scheme (RDS) and Urban Poor Development Scheme (UPDS).
1.2.3 Mobile financial services -”mCash”
IBBL has launched mobile financial services on 27 December 2012 under the name “Islami Bank mCash” as per Bangladesh Bank approval (reference no. DCMPS/PSD/37/(W)/2012-321 dated 14 June 2012). Islami Bank mCash offers different services through Mobile phone that include deposit and withdrawal of cash money, fund transfer from one account to another, receiving remittance from abroad, knowing account balance and mini-statement, giving and receiving salary, mobile recharge and payment of utility bill, merchant bill payment etc.
1.3 Off-shore banking unit (OBU)
Bangladesh Bank has approved the operation of Off-Shore Banking Unit (OBU) of Islami Bank Bangladesh Limited located at Head Office Complex Branch- Dhaka, Uttara Branch- Dhaka and Agrabad Branch- Chittagong through letter no. BRPD (P-3)744(111)/2010-1032 dated 28 March, 2010. The Bank commenced the operation of its Off-shore Banking Unit from 08.02.2011 at Head Office Complex Branch, Dhaka, and from 27.09.2011 at Agrabad Branch, Chittagong. Operations of OBU located at Uttara Branch, Dhaka has not yet been started. Due to having different functional currency (Note 2.3), the operation of OBU has been considered as “foreign operation” for reporting purposes and relevant financial reporting standards have been applied accordingly (Note 3.2.2). The financial statements of the OBU are included in the separate financial statements of the Bank and eventually in the consolidated financial statements. The sole financial statements of OBU are shown both in the currency in which it operates (i.e. USD) and in the presentation currency of the Bank (i.e. BDT) in Annexure - E.
Annual Report 2014186
1.4 Subsidiaries of the Bank
1.4.1 Islami Bank Securities Limited (IBSL)
As per Bangladesh Securities and Exchange Commission’s (BSEC) Letter No. SEC/Reg/CSE/MB/ 2009/444 dated 20.12.2009 and approval of Bangladesh Bank through Letter No. BRPD (R-1)717/2010-47 dated 07.02.2010; IBBL established a subsidiary Company named “Islami Bank Securities Limited” to operate stock broker and stock dealer activities.
The share capital of Islami Bank Securities Ltd. is Tk. 2,700,000,000/- divided into 2,700,000 shares of Tk.1,000/ each out of which share capital of IBBL is Tk.2,699,946,000/- divided into 2,699,946 shares of Tk.1,000/- each which represent 99.998% of total share of the subsidiary Company.
IBSL was incorporated on 22.03.2010 and date of commencement of business was 23.05.2010. Required capital was transferred to IBSL on 25.05.2010 which is operating business under the license issued by the Bangladesh Securities & Exchange Commission (BSEC). As a stock broker, IBSL acts as an agent in the purchase and sale of Shari’ah approved listed securities and realizes commission on transactions in accordance with approved commission schedule.
1.4.2 Islami Bank Capital Management Limited (IBCML)
As per Bangladesh Bank BRPD Circular No. 12 dated 14.10.2009 and approval of Bangladesh Bank through Letter No. BRPD (R-1)717/2010-47 dated 07.02.2010, IBBL established another subsidiary Company named “Islami Bank Capital Management Limited” to operate portfolio management, underwriting, issue management etc. IBCML was incorporated on 01.04.2010 and required capital was transferred on 06.07.2010.
The share capital of Islami Bank Capital Management Ltd. is Tk.300,000,000/- divided into 300,000 shares of Tk.1,000/ each out of which share capital of IBBL is Tk.299,993,000/- divided into 299,993 shares of Tk.1,000/- each which represent 99.998% of total share of the subsidiary Company. Permission of Bangladesh Securities and Exchange Commission (BSEC) is yet to be received for the core operation of IBCML.
1.4.3 IBBL Exchange Singapore Pte. Ltd.
IBBL Exchange Singapore Pte. Ltd. has been incorporated in Singapore, as a subsidiary of Islami Bank Bangladesh Limited for remittance services and things incidental thereto under the Companies Act, CAP. 50 of the Republic of Singapore. Till 31 December 2014, no share capital of the subsidiary has been paid by its parent company i.e. Islami Bank Bangladesh Limited. Therefore, the financial statements of IBBL Exchange Singapore Pte. Ltd has not been consolidated with that of the parent i.e. IBBL.
2.0 Basis of preparation
2.1 Statement of compliance
The Bank and its subsidiaries are being operated in strict compliance with the rules of Islamic Shari’ah. The consolidated and separate financial statements of the Bank have been prepared basically as per provisions of the “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009 with reference to the provisions of the Bank Company Act, 1991 as amended and by Bangladesh Bank BRPD Circular No.14 dated 25.06.2003 & Bangladesh Bank’s other circulars/instructions and in accordance with International Financial Reporting Standards (IFRSs) adopted as Bangladesh Financial Reporting Standards (BFRSs) by the Institute of Chartered Accountants of Bangladesh (ICAB); the Companies Act, 1994; the Securities and Exchange Rules, 1987; Dhaka and Chittagong Stock Exchanges’ Listing Regulations and other laws and rules applicable in Bangladesh and Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), as a member of that organization.
In case the requirements of guidelines and circulars issued by Bangladesh Bank differ with those of other regulatory authorities and financial reporting standards, the guidelines and circulars issued by Bangladesh Bank prevails. As such the Bank has departed from those requirements of BFRSs in order to comply with the rules and regulations of Bangladesh Bank which are disclosed below:
Annual Report 2014 187
i) Provision on investments and off-balance sheet exposures
BFRS: As per BAS 39 “Financial Instruments: Recognition and Measurement” an entity should start the impairment assessment by considering whether objective evidence of impairment exists for financial assets that are individually significant. For financial assets that are not individually significant, the assessment can be performed on an individual or collective (portfolio) basis.
Bangladesh Bank: As per BRPD circular No.14 dated 23 September 2012, BRPD circular No. 19 dated 27 December 2012, BRPD circular No. 05 dated 29 May 2013 and BRPD circular No. 16 dated 18 November 2014 a general provision at 0.25% to 5% under different categories of unclassified investments (good/standard investments) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard, doubtful and bad & loss investments have to be provided at 20%, 50% and 100% respectively (except short-term agricultural and micro-credits where 5% for sub-standard and doubtful investments and 100% for bad & loss investments) depending on the duration of overdue. Again as per BRPD Circular No.14 dated 23 September 2012 and BRPD Circular No.19 dated 27 December 2012, a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by “BAS 39 “Financial Instruments: Recognition and Measurement”.
ii) Recognition of investment income in suspense
BFRS: Investment to customers are generally classified as ‘loans and receivables’ as per BAS 39 “Financial Instruments: Recognition and Measurement” and investment income is recognised through effective interest rate method over the term of the investment. Once an investment is impaired, investment income is recognised in profit and loss account on the same basis based on revised carrying amount.
Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once an investment is classified, investment income on such investment are not allowed to be recognised as income, rather the corresponding amount needs to be credited to an investment income in suspense account, which is presented as liability in the balance sheet.
iii) Investment in shares and securities
BFRS: As per requirements of BAS 39 “Financial Instruments: Recognition and Measurement” investment in shares and securities generally falls either under “at fair value through profit and loss account” or under “available for sale” where any change in the fair value (as measured in accordance with BFRS 13) at the year-end is taken to profit and loss account or revaluation reserve respectively.
Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment; otherwise investments are recognised at cost.
iv) Revaluation gains/losses on Government securities
BFRS: As per requirement of BAS 39 “Financial Instruments: Recognition and Measurement” where securities will fall under the category of Held for Trading (HFT), any change in the fair value of held for trading assets is recognised through profit and loss account. Securities designated as Held to Maturity (HTM) is measured at amortised cost method and interest income is recognised through the profit and loss account.
Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognised in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Profit on HFT securities including amortisation of discount are recognised in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortised at the year end and gains or losses on amortisation are recognised in other reserve as a part of equity.
v) Other comprehensive income
BFRS: As per BAS 1 “Presentation of Financial Statements” Other Comprehensive Income (OCI) is a component of financial statements or the elements of OCI are to be included in a single Other Comprehensive Income statement.
Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income are the elements of Other Comprehensive Income allowed to be included in a single Other Comprehensive Income (OCI) Statement. As such the Bank does not prepare the other comprehensive income statement. However, elements of OCI, if any, are shown in the statements of changes in equity.
Annual Report 2014188
vi) Financial instruments - presentation and disclosure
In several cases Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in BAS 39 “Financial Instruments: Recognition and Measurement”. As such full disclosure and presentation requirements of BFRS 7 “Financial Instruments: Disclosures” and BAS 32 “Financial Instruments: Presentation” cannot be made in the financial statements.
vii) Financial guarantees
BFRS: As per BAS 39 “Financial Instruments: Recognition and Measurement”, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are recognised initially at their fair value, and the initial fair value is amortised over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are included within other liabilities. Bangladesh Bank: As per BRPD 14 dated 25 June 2003, financial guarantees such as letter of credit, letter of guarantee will be treated as off-balance sheet items. No liability is recognised for the guarantee except the cash margin.
viii) Balance with Bangladesh Bank: (Cash Reserve Requirement)
BFRS: Balance with Bangladesh Bank that are required to be kept as part of cash reserve requirement, should be treated as other asset as it is not available for use in day to day operations as per BAS 7 “Statement of Cash Flows”.
Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.
ix) Cash flow statement
BFRS: The Cash flow statement can be prepared using either the direct method or the indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently.
Bangladesh Bank: As per BRPD 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009, cash flow statement is to be prepared following a mixture of direct and indirect methods.
x) Non-banking asset
BFRS: No indication of Non-banking asset is found in any BFRS.
Bangladesh Bank: As per BRPD 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009, there must exist a face item named Non-banking asset.
xi) Presentation of intangible asset
BFRS: An intangible asset must be identified and recognised, and the disclosure must be given as per BAS 38 “Intangible Assets”.
Bangladesh Bank: There is no regulation for intangible assets in BRPD 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009.
xii) Off-balance sheet items
BFRS: There is no concept of off-balance sheet items in any BFRS; hence there is no requirement for disclosure of off-balance sheet items on the face of the balance sheet.
Bangladesh Bank: As per BRPD 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009, off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.) must be disclosed separately on the face of the balance sheet.
Annual Report 2014 189
xiii) Investments net off provision
BFRS: Investments should be presented net off provision.
Bangladesh Bank: As per BRPD 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009, provision on investments are presented separately as liability and can not be netted off against investments.
xiv) Revenue
As per BAS 18 “Revenue”, revenue should be recognized on accrual basis but due to the unique nature of Islamic Banks, income from investment under Mudaraba, Musharaka, Bai-Salam, Bai-as-Sarf and Ujarah modes is accounted for on realization basis as per AAOIFI and Bangladesh Bank guidelines.
[Note 4 includes Compliance with Financial Reporting Standards as applicable in Bangladesh]
2.1.1 Authorization of the financial statements for issue
The consolidated financial statements and the separate financial statements of the Bank have been authorized for issue by the Board of Directors on 21 March, 2015.
2.1.2 Changes in accounting standards
No new International Financial Reporting Standards (IFRSs) have been adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) as Bangladesh Financial Reporting Standards (BFRSs) during the year that are effective for the first time for the financial year 2014 that have a significant impact on the Companies and accordingly no new accounting standards have been applied in preparing these financial statements.
2.1.3 Prior period adjustments
Prior period adjustments, if any, to be recognized retrospectively as per BAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”. Accordingly during the year an adjustment was made regarding the elimination on consolidation of the amount of placement to AD Branches by Off-shore Banking Unit (OBU) shown in the head titled “Mudaraba/Mudaraba Documentary Bills” under investments. OBU started this type of placement from the year 2013 which was kept in a head titled “Cover Fund MDB Investment Account” under other liabilities at AD Branches. As per BFRS 10 “Consolidated Financial Statements”, all intra-company balances should be eliminated on consolidation. Since, this type of transaction and related balances arose only in the year 2013, the adjustment was made retrospectively from the year 2013 and corrected in current year.
Due to the above prior period adjustments, investment and other liabilities have been adjusted by Tk.3,609,750,453 and Tk.3,585,147,117 respectively for the year 2013. Net profit after tax has been adjusted by Tk.24,603,336 and accordingly general reserve has been adjusted by the same amount of that year. The effect in Earnings per Share (EPS) was of Tk.0.015 per share (restated) due to the above adjustments.
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following material items:
- Land is recognized at cost at the time of acquisition and subsequently measured at fair value following revaluation model as per BAS 16 “Property Plant & Equipment”.
- Investments in quoted shares are revalued at the year end at market price as per Bangladesh Bank circular.
2.3 Functional and presentation currency
The consolidated and separate financial statements of the Bank are presented in Bangladeshi Taka (Taka/Tk./BDT) which is the functional currency of the Bank and its subsidiaries except Off-shore Banking Unit (OBU) where the functional currency is US Dollar (USD).
All financial information presented in Taka has been rounded to the nearest integer, except otherwise indicated.
Annual Report 2014190
2.4 Use of estimates and judgments
The preparation of the consolidated and separate financial statements of the Bank in conformity with BFRSs require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively i.e. in the period in which the estimate is revised and in any future period affected.
Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized and presented in the consolidated and separate financial statements of the Bank are included in following notes/statements:
a) Note 16.7 Current tax liabilities
b) Note 17.0 Deferred tax liabilities
c) Note 37.0 Depreciation
d) Note 16.1-16.4 Provisions for investments, diminution in value of investment in shares and other assets
e) Note 21.2 Asset revaluation reserve
f) Liquidity statement Assets & liabilities analysis
2.5 Cash flow statement
Cash Flow Statement is prepared in accordance with BAS 7 “Statement of Cash Flows”, and as per “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009 and BRPD Circular No.14 dated 25.06.2003. The Statement shows the structure of changes in cash and cash equivalents during the financial year.
2.6 Statement of changes in equity
Statement of Changes in Equity has been prepared in accordance with BAS 1 “Presentation of Financial Statements”, and as per “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009 and BRPD Circular No.14 dated 25.06.2003.
2.7 Liquidity statement
Liquidity Statement has been prepared in accordance with the residual/remaining maturity of Assets and Liabilities as on 31 December 2014 and as per “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009 and BRPD Circular No.14 dated 25.06.2003 as per the following basis:
i) Balance with other banks and financial institutions, etc are on the basis of their respective maturity term;
ii) Investments in shares & securities are on the basis of their respective maturity;
iii) General investments are on the basis of their recovery/repayment schedule;
iv) Fixed assets are on the basis of their useful lives;
v) Other assets are on the basis of their realization/amortization;
vi) Deposits and other accounts are on the basis of their maturity and payments;
vii) Provisions and other liabilities are on the basis of their adjustment/settlement;
viii) Due to perpetual in nature/maturity, Mudaraba perpetual bond (MPB) is reported under maturity more than 5 (five) years.
2.8 Reporting period
These financial statements of the Bank and its subsidiaries cover one calendar year from 01 January 2014 to 31 December 2014.
Annual Report 2014 191
3.0 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in the consolidated and separate financial statements of the Bank (together referred to as ‘financial statements’) except provision for investment which have been changed due to new circular issued by Bangladesh Bank (Note 3.16.1).
Certain comparative amounts in the financial statements have reclassified and rearranged to conform to the current year’s presentation.
3.1 Basis of consolidation
3.1.1 Subsidiaries
Subsidiaries are investees controlled by the Parent. The Parent ‘controls’ an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
3.1.2 Transactions eliminated on consolidation
Inter-company balances and transactions, and any unrealized income and expenses (except for foreign currency transaction gains and losses) arising from inter-company transactions are eliminated in preparing consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. The investments in shares of subsidiaries held by the Bank in the separate financial statements are eliminated against the corresponding share capital of subsidiaries in the consolidated financial statements.
3.2 Foreign currency
3.2.1 Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies (Bangladeshi Taka in case of IBBL Main Operations and US Dollar in case of OBU) at the spot exchange rates ruling at the date of transactions as per BAS 21 “The Effects of Changes in Foreign Exchange Rates”. Monetary assets and liabilities held in US Dollar at the reporting date are retranslated into the functional currency in BDT at the weighted average revaluation rate of inter-bank market as determined by Bangladesh Bank. Monetary assets and liabilities denominated in other foreign currencies at the reporting date are first translated into US Dollar at buying rates of New York closing of the previous day and then retranslated from US Dollar into the functional currencies in the same manner specified above.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction.
Foreign exchange differences (rates at which transactions were initially recorded and the rate prevailing on the reporting date/date of settlements) of the monetary items are recognized in the profit and loss.
3.2.2 Foreign operations
The assets and liabilities of foreign operations (Note - 1.3) are translated to Bangladeshi Taka at spot exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated at spot exchange rates at the date of transactions as long as practicable otherwise average rate of exchange has been used. Foreign currency differences arising on translation are recognized in other comprehensive income and presented directly in the foreign currency translation reserve (translation reserve) in equity. If the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, then foreign currency differences arising on the item form part of the net investment in the foreign operation and are recognized in other comprehensive income and accumulated in the translation reserve within equity.
Annual Report 2014192
3.3 Revenue
3.3.1 Investment income
Income from general investments is accounted for on accrual basis except for investments under Musharaka, Mudaraba, Bai-Salam, Bai-as-Sarf and Ujarah (Khidmah Card) modes of Investment where the investment income is accounted for on realization basis. The Bank does not charge any rent during the gestation period of investment against Hire Purchase under Shirkatul Melk (HPSM) mode of investment but it fixes the sale price of the assets at a higher level in such a way to cover its expected rate of return. Such income is recognized on realization basis.
Profit/Rent/Compensation accrued on Classified Investments are suspended and accounted for as per circulars issued by Bangladesh Bank in this regard from time to time. At the time of recovery or regularization of those investments the related income which was suspended and shown as a liability is taken as investment income as per circulars issued by Bangladesh Bank. As a result, all the transferred amount to investment income from suspense during the year has already beed included in the investment income of the Bank
Profit on deposits with other banks & financial statements is accounted for on accrual basis.
3.3.1.1 Sharing of investment income
In case of investment, Mudaraba fund gets preference over cost free fund. The investment income earned through deployment of Mudaraba Fund is shared by the Bank and the Mudaraba depositors at the pre-agreed ratio.
3.3.2 Income from investment in Bangladesh Government Islamic Investment Bond (BGIIB) & Islamic Inter-bank Fund Market (IIFM)
Profit from investment in Bangladesh Government Islamic Investment Bond (BGIIB) & Islamic Inter-bank Fund Market (IIFM) is accounted for on accrual basis.
3.3.3 Fees, commission and exchange income
Fees, Commission and Exchange Income on services provided by the Bank are recognized as and when the related services are rendered. Commission charged to customers on letter of credit and letter of guarantee are credited to Income at the time of effecting the transactions.
3.3.4 Dividend income
Dividend income from investments is accounted for when the right to receive income is established.
3.4 Income tax expenses
Income tax expenses comprise current and deferred taxes. Income taxes are recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
3.4.1 Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date and any adjustment to the tax payable in respect of previous years. Provision for current income tax has been made on taxable income of the Bank as per following rates:
Type of income 2014 2013
Business income 42.50% 42.50%
Dividend income 20.00% 20.00%
Annual Report 2014 193
3.4.2 Deferred tax
Deferred tax is recognized in compliance with BAS 12 “Income Taxes” and BRPD Circular no. 11 dated 12 December 2011, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the date of balance sheet. Deferred tax assets and liabilities are offset as there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the deductible temporary difference can be utilized. Deferred tax assets are reviewed at each date of balance sheet and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
3.5 Zakat
Zakat is paid by the Bank at the rate of 2.58% (instead of 2.50% as the Bank maintains its financial statements following Gregorian Year) and calculated on the closing balances of Share Premium, Statutory Reserve, General Reserve and Dividend Equalization Accounts as per guidelines of Shari’ah Supervisory Committee and Bangladesh Bank guidelines.
Zakat is charged in the Profit & Loss Account of the Bank as per “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009.
Zakat on Paid up Capital and Deposits is not paid by the Bank, since it is the responsibility of the Shareholders and Depositors respectively.
3.5.1 Management and other expenses
Expenses incurred by the Bank are recognized on accrual basis.
3.6 Cash and cash equivalents
Cash and cash equivalents include notes and coins in hand, balances held with Bangladesh Bank and its agent bank and highly liquid financial assets that are subject to an insignificant risk of changes in their fair value.
3.7 Investments
Investments are stated in the Balance Sheet net off profit receivable and unearned income.
Profit Receivable – the amount of unexpired portion of profit charged on murabaha investment at the time of sale of good/ services to customer/ client.
Unearned Income- the amount of unrealized portion of profit/ value addition of fixed assets under Hire Purchase Under Shirkatul Melk (HPSM) investment for gestation period.
However, provision for investments are not net-off with investments.
3.8 Investment in shares and securities
Investment in shares and securities (other than government treasury securities) are initially measured at fair value (which is actually the cost) and subsequently accounted for depending on their classification as either held to maturity, fair value through profit or loss, or available for sale.
Investment in Bangladesh Government Islamic Investment Bond (BGIIB) is measured both initially and subsequently at cost, which is also the fair value.
IBBL can not invest in interest-based government securities like T-bond, T-bill etc. So the instructions and circulars related to accounting for those instruments are not applicable for the Bank.
Annual Report 2014194
3.8.1 Held to Maturity (HTM)
Held-to-maturity investments are non-derivative assets with fixed or determinable payments and fixed maturity that the entity has the positive intent and ability to hold to maturity, and which are not designated as at fair value through profit or loss or as available for sale. These are measured at amortized cost at each year end by taking into account any discount or premium on acquisition. Any increase or decrease in value of such investments is recognized in equity.
3.8.2 Held for Trading (HFT)/Fair value through profit or loss (FVTPL)
Some investment in shares and securities are designated at fair value, with fair value changes recognized immediately in profit or loss.
3.8.3 Available-for-sale (AFS)
Available-for-sale investments are non-derivative investments that are designated as available-for-sale or are not classified as another category of financial assets. Available-for-sale investments comprise generally equity securities. Unquoted equity securities whose fair value cannot reliably be measured are carried at cost. All other available-for-sale investments are carried at fair value and changes recognized in equity (Note 3.18.6).
Dividend income is recognized in profit or loss when the right to receive income is established. Other fair value changes, other than impairment losses are presented as reserve in equity.
3.8.4 Derivative investments
The Bank has no investment in any derivative instrument.
3.9 Investment in subsidiaries
Investments in subsidiaries are accounted for under cost method of accounting in the Bank’s Financial Statements in accordance with BFRS 10”Consolidated Financial Statements”.
3.10 Fixed assets
3.10.1 Recognition and measurement
Items of fixed assets excluding land and building are measured at cost less accumulated depreciation and accumulated impairment losses. Land and building is recognized at cost at the time of acquisition and subsequently measured at revalued amounts which is the fair value at the time of revaluation done by independent valuer and any surplus on revaluation is shown as equity component until the disposal of asset, as per BAS 16 “Property, Plant & Equipment” and Bangladesh Bank BCD Circular Letter No. 12 & 18 dated 20 April 1993 & 15 June 1993 respectively and BRPD Circular No.10 dated 25 November 2002 & BRPD Circular No.09 dated 31 December 2008. Deficit arising on subsequent revaluation is adjusted against the balance in the Revaluation reserve account. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from their fair value.
Cost includes expenditures that are directly attributable to the acquisition of assets. The cost of self-constructed assets includes the following:
- the cost of materials and direct labour;
- any other cost directly attributable to bringing the asset to a working condition for the intended use;
- when the Companies have an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and
- capitalized borrowing costs.
Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.
Any gain or loss on disposal of an item of fixed assets (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss.
Annual Report 2014 195
3.10.2 Subsequent costs
Subsequent costs is capitalized only when it is probable that the future economic benefits associated with the costs will flow to the entity. Ongoing repairs and maintenance is expensed as incurred.
3.10.3 Depreciation
Items of fixed assets are depreciated from the date that they are installed and are ready for use, and in respect of internally constructed assets, from the date that the asset is completed and ready for use.
Depreciation is calculated to write-off the cost/revalued amount of items of fixed assets less their estimated residual values using either of straight-line method (SLM) or reducing balance method (RBM) over their estimated useful lives and recognized in profit and loss. Land is not depreciated.
The estimated rate of depreciation for the current and comparative years of fixed assets are as follows:
Items Method Rates
Building Reducing balance 2.50%
Furniture and fixtures -Do- 10.00%
Mechanical appliances -Do- 20.00%
Books -Do- 30.00%
Motor vehicles Straight-line 20.00%
Computers -Do- 25.00%
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
3.10.4 Intangible assets
An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the assets can be measured reliably. Intangible assets is amortized using the straight line method over the estimated useful life of 4 (four) years.
3.10.5 Capital work in progress
Fixed assets that is being under construction/acquisition is accounted for as capital work in progress until construction/acquisition is completed and measured at cost. The work in progress is transferred to cost of that fixed assets when the construction is completed and it becomes available for use.
3.10.6 Derecognition
An item of fixed assets is derecognized upon disposal or when no economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.
3.11 Lease payments
Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.
3.12 Other assets
Other assets include all other financial assets, other income receivable, advance against expenses etc.
Annual Report 2014196
3.13 Non-banking assets
Non-banking assets are acquired on account of the failure of a client to repay the investment in time after receiving the decree from the court regarding the right and title of the mortgaged property.
3.14 Impairment of non-financial assets
The carrying amounts of the non-financial assets, other than investment property and deferred tax assets, if any are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable amount. All intangible assets having infinite useful life, if any are tested for impairment at least annually.
3.15 Deposits and other accounts
Deposit and other accounts include Al Wadeeah current deposit as well as savings, term and other Mudaraba deposits. Deposits by customers and banks are recognized when the Bank enters into contractual agreements with the counterparties. These items are brought to Financial Statements at the gross value of the outstanding balance.
3.15.1 Profit paid on deposits
As per Mudaraba principle, agreement between the Mudaraba depositors and the Bank, the Mudaraba depositors are entitled to get minimum 65% of the investment income earned through deployment of Mudaraba Fund as per weightage assigned to each type of Mudaraba deposit. In the year 2014, IBBL paid 71.48% of Investment Income earned through deployment of Mudaraba Fund. In some Mudaraba Deposits, additional rate was allowed over the rate derived as per weightage. Mudaraba Depositors do not share any income derived from various banking services where the their fund is not involved and any income derived from Investing Bank’s Equity and other Cost Free Fund. Al-Wadeeah Depositors do not share any income of the Bank.
Profit is paid/provided to Mudaraba Deposit accounts at provisional rate on half-yearly/yearly/anniversary basis considering overall projected growth, performance and profitability of the Bank during the year. Final Rates of profit of any accounting year are declared after finalization of Shari’ah Inspection report and certifying the Investment Income of the Bank by the statutory auditors.
3.16 Provisions
Provision is recognized if, as a result of a past event, the Companies has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits would be required to settle the obligation, in accordance with the BAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.
3.16.1 Provision for investments and off-balance sheet exposures
Provision for Investment for the year 2014 and 2013 is made as per instruction of Bangladesh Bank through BRPD Circular No.14 dated 23 September 2012 and BRPD Circular No.19 dated 27 December 2012. However, for calculation of provision for the year 2013, the amendments made by BRPD Circular No.05 dated 29 May 2013, BRPD Circular No.06 dated 29 May 2013, BRPD Circular No.14 dated 18 December 2013 and BRPD Circular No.15 dated 23 December 2013 has been considered and for the year 2014, the amendments made by BRPD Circular No.16 dated 18 November 2014 has been considered. Investments have not been classified against which order staying classification has been issued by the Hon’ble High Court.
Provision for off-balance sheet exposures for the year 2014 and 2013 is also made as per latest instruction of Bangladesh Bank through BRPD Circular No.14 dated 23 September 2012 and BRPD Circular No.19 dated 27 December 2012.
Annual Report 2014 197
The rates of provision for the year 2014 and 2013 are given below:
Particulars
2014 2013
Classification/Percentage (%) of provision requirement
UC SMA SS DF BL UC SMA SS DF BL
Small and Medium Enterprise (SME) Financing 0.25% 0.25% 20% 50% 100% 0.25% 0.25% 20% 50% 100%
Consumer Investment for House Building & Professional 2% 2% 20% 50% 100% 2% 2% 20% 50% 100%
Other than House Building & Professional 5% 5% 20% 50% 100% 5% 5% 20% 50% 100%
All Other (Except Short-term Agricultural and Micro-Credits) 1% 1% 20% 50% 100% 1% 1% 20% 50% 100%
Short-term Agricultural and Micro-Credits 2.50% 5% 100% 5% 100%
Investment to Stock Dealers & Stock Broker 2% 20% 50% 100% 2% 20% 50% 100%
Off Balance Sheet exposures 1% 1%
3.16.2 Provision for other assets
Provision for other assets is made as per instruction of Bangladesh Bank through BRPD circular No.14 dated 25.06.2001.
3.16.3 Provision for nostro accounts
Provision for nostro accounts is to be made on the unreconciled debit balance of nostro account over more than 3 months as on the reporting date in accordance with the guideline of Foreign Exchange Policy Department of Bangladesh Bank, FEPD Circular no. FEPD (FEMO) / 01/2005-677 dated 13 September 2005. There was no unreconciled entries outstanding for more than 3 months and accordingly no provision has been made in this regard.
3.17 Employee benefits
3.17.1 The Bank provides various long-term and short-term benefits to the employees under different schemes.
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plan are recognized as personnel expense in profit or loss in the periods during which related services are rendered by employees. The Bank maintains one funded defined contribution plan for its employees - Provident fund.
3.17.1.1 Provident fund
The Provident Fund is for the regular and confirmed employees who works for a minimum period of 5(five) years at IBBL and it came into force with effect from 1st day of March 1986. The fund receives contributions @ 10% of the basic pay both from employees and employer.
3.17.2 Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Bank’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. The Bank has two funded defined benefit plans - Gratuity fund and Superannuation fund.
Annual Report 2014198
3.17.2.1 Gratuity fund
The Gratuity Fund for the regular and confirmed employees of IBBL was established on 1st day of March 1986. The employees who serve at least 7 (seven) years at IBBL are normally entitled to get gratuity equivalent to 1(one) month’s basic pay. Employees served for minimum 12 years get 1.5 (one and a half) months’ basic pay and employees served for 20 years get 2 (two) months’ basic pay. Adequate contributions have been made as per the recommendation of actuarial valuation report and our analysis during the year. Actuarial valuation of the gratuity fund was conducted up to the year 2014 by professional actuary which shows sufficient amount of surplus fund available at the valuation date.
3.17.2.2 Superannuation fund
The Fund came into force with effect from the 19 June, 2008. It was established for financial help to the members of the IBBL Employees’ Superannuation Fund and their families in case of retirement, death, physical disability of employee while in service or of any incidence of like nature acceptable to the Board of Trustees and retirement from the service. During the year 2014, Tk.20.00 million has been provided by the Bank to the Fund. Actuarial valuation of the superannuation fund was conducted up to the year 2014 by professional actuary which shows sufficient amount of surplus fund available at the valuation date.
3.17.3 Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Companies has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
3.17.4 Other employee benefits
Other employee benefits include which are not included in short-term employee benefits, post-employment benefits and other termination benefits.
3.17.4.1 Benevolent fund
The Benevolent Fund for the regular and confirmed employees of the Bank was established in the year 1986. This Fund is mainly used for payment of scholarship to the meritorious students among the children of IBBL’s officers and sub-staff, to allow short term quard/grant to meet some unexpected and specific needs of the staff of IBBL like accident, clinical treatment, marriage ceremony of the employees and their dependents etc. The Bank contributed Tk.10.00 million to the fund during the year 2014 .
3.17.5 Workers’ Profit Participation Fund (WPPF)
As per Bangladesh Labour Act, 2006 as amended in 2013 all companies fall within the scope of WPPF (which includes Bank) are required to provide 5% of its profit before charging such expense to their eligible employees within the stipulated time. The Bank obtained opinion from its legal advisor regarding this issue which stated that the Bank is not required to make provision for WPPF as the provision of Bangladesh Labour Act 2006 as amended contradicts with that of the Bank Company Act 1991. As such the Bank did not make any provision during the year for WPPF.
3.18 Share capital and reserves
3.18.1 Capital
3.18.1.1 Authorized Capital
Authorized Capital is the maximum amount of share capital that the Bank is authorized to raise as per its Memorandum and Articles of Association.
Annual Report 2014 199
3.18.2 Share Premium
Share premium arose from sale of some un-subscribed Right Share for the year 1996 at above the par value and can be utilized as per section 57 of the Companies Act, 1994.
3.18.3 Statutory reserve
As per section 24 of the Bank Company Act, 1991 as amended, at least 20% or more of the net profit before tax is transferred to statutory reserve every year until the balance of the reserve equates with the paid-up capital.
3.18.4 Assets revaluation reserve
This represents the difference between the book value and the re-valued amount of premises (Land and Building) of the Bank as assessed by professional valuers in the year 2000, 2002, 2003, 2004, 2005, 2006, 2009 and 2012 as per guideline issued by Bangladesh Bank, which was reviewed by the statutory auditors. This reserve is not distributable. However, to calculate Capital Adequacy Ratio (CAR), 50% of the same is considered as a component of supplementary capital as per Bangladesh Bank BRPD Circular No. 24 dated 03 August 2010.
3.18.5 Revaluation reserve of securities
Investment in shares of Bangladesh Shipping Corporation is held for fulfillment of Statutory Liquidity Reserve (SLR) as per Bangladesh Bank Letter No. BCD (P)744(23)(II)/1030 dated 08.11.1983, BRPD Circular No.15 dated 31.10.2005, DOS Circular Letter No.10 dated 11.09.2006, BRPD Circular No.03 dated 12.03.2008 and DOS Circular Letter No.05 dated 26.05.2008. The shares have been revalued as on 30.12.2014 on the basis of closing market price of Dhaka Stock Exchange Limited (DSE). The surplus is credited to Revaluation Reserve on securities account (Note - 3.8.3) and 50% of the same has been taken as a component of Supplementary Capital as per Bangladesh Bank BRPD Circular No. 24 dated 03 August 2010. and shown in the Statement of Changes in Equity as per Bangladesh Bank guidelines. However, deficit arising on such revaluation is debited to Revaluation reserve on securities account.
3.18.6 non-controlling interest
Non-controlling interest is the portion of the profit or loss and net assets of the subsidiaries of IBBL (Islami Bank Securities Limited & Islami Bank Capital Management Limited) that is not owned by the Parent (IBBL). Non-controlling interest belongs to other investors and is reported on the consolidated balance sheet of the parent Company (IBBL) to reflect the claim on assets belonging to other, non-controlling shareholders. Also, non-controlling interest is reported on the consolidated profit and loss account as a share of profit belonging to non-controlling shareholders.
3.19 Subordinated debt-Mudaraba Perpetual Bond (MPB)
Mudaraba Perpetual Bond (MPB) was issued by the Bank under the mudaraba principles of Islamic Shari’ah as per approval of Bangladesh Bank Letter No. BRPD (P-1)661/14(a)/2006-1437 dated 07.05.2006 and Bangladesh Securities and Exchange Commission Letter No. SEC/CI/CPLC-118/2006/385 & SEC/CI/RPO-01/2007/386 both dated 10.06.2007. The Investment Corporation of Bangladesh (ICB) is the Trustee of the MPB. The MPB is listed with Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd. and trading of the same started from 25 November 2007. It is treated as a component of Supplementary Capital as Subordinated Debt. The instrument having face value of Tk.1,000 each is subordinated to the claims of other creditors and depositors. In the case of liquidation the subordinated debt holders would be paid just before paying to the shareholders assuming there are assets to distribute after all other liabilities and debts have been paid. The Mudaraba Perpetual Bond (MPB) is perpetual in nature i.e.infinite maturity. Profit paid against Mudaraba Perpetual Bond is at the final profit rate of 8 (eight) years Mudaraba Savings Bond and an additional amount equivalent to 10.00% of the rate of dividend declared for the respective year.
3.20 Other liabilities
Other liabilities comprise items such as provision for investment, provision for taxes, profit/rent suspense, accrued expenses, etc. Other liabilities are recognized in the balance sheet as per guidelines of Bangladesh Bank, Bangladesh Financial Reporting Standards (BFRS) etc.
Annual Report 2014200
3.21 Contingent liabilities
Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or
Any present obligation that arises from past events but is not recognized because, it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, is considered as contingent liability.
Contingent liabilities are not recognized but disclosed in the financial statements unless possibility of an outflow of resources embodying economic benefits is reliably estimated. Contingent assets are not recognized in the financial statements as this may result in the recognition of income which may never be realized.
3.22 Off-balance sheet items
Off-balance sheet items are disclosed under Contingent liabilities & other commitments and required provision on Off-balance sheet exposures have been made in accordance with Bangladesh Bank guidelines (Note 3.16.1).
3.23 Earnings per share (EPS)
The Bank presents basic and diluted (when dilution is applicable) earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank with the weighted average number of ordinary shares outstanding during the period, adjusted for the effect of change in number of shares for bonus issue, share split and reverse split. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during the relevant periods. Hence no Diluted EPS has been calculated. Consolidated basic EPS has also been calculated and presented in the same manner.
3.24 Segment reporting
An operating segment is a component of the Bank that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Bank’s other components. All operating segments’ operating results are reviewed regularly by the Bank’s Management (as being the chief operating decision maker) to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.
Segment results that are reported to the Management include items directly attributable to a segment as well as the items that can be allocated on a reasonable basis. Segments which are reportable is analyzed at the end of the financial year. Comparative information is provided for newly reportable segments but no current year information is provided for segments which are non-reportable in current year even it was reportable in previous year as per BFRS 8 “Operating Segments”.
Details about segment reporting has been given at Annexure - D
3.25 Off-setting
The value of any asset or liability as shown in the balance sheet is not off-set by way of deduction from another liability or assets unless there exist legal right thereof. Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under BFRS, or for gains or losses arising from a similar transactions.
3.26 Materiality and aggregation
Each material class of similar items is presented separately in the financial statements. Items of dissimilar nature or function are presented separately unless they are immaterial as permitted by BAS 1 “Presentation of Financial Statements”.
Annual Report 2014 201
3.27 Inter-branch transactions
Transactions with regard to inter-branches and units are reconciled regularly and efforts are taken to minimize the unreconciled entries at the end of the year.
3.28 Revenue, gains, expenses & losses prohibited by Shari’ah
Doubtful income which is prohibited by Shari’ah due to lapses in compliance of Shari’ah principles for investment as per Shari’ah Supervisory Committee report is included in the investment income of the Bank and appropriate amount of corporate tax is paid on it accordingly on these whole amount whether realized or not. It is not distributed to either depositors or shareholders of the Bank rather the amount net of corporate tax is transferred to an account titled “Doubtful income account’ under other liabilities of the Bank. Only realized amount of doubtful income (on which corporate tax has already been paid due to inclusion in investment income) is then expended for charitable purposes.
Bank charges compensation on overdue investments under Bai-modes. The total amount of compensation is not included in investment income rather kept separately under other liabilities. However, tax on these amount duly considered. Realized amount of compensation (on which corporate tax has already been paid due to inclusion in investment income) are expended for charitable purposes.
Interest received from the balances held with foreign banks and from foreign currency clearing account with Bangladesh Bank are not credited to income, since it is not permissible as per Shari’ah. These are expended for charitable purposes after payment of corporate income tax thereon.
3.28.1 Doubtful income account
Doubtful income was temporarily used to create provision as per decision of Shari’ah Supervisory Committee till 2013. And realized amount were transferred/utilized for charitable purposes. However, from the year 2014 the Bank has decided to introduce a separate account after payment of corporate income tax whether realized or not. Accordingly, from this year, net of corporate tax amount of doubtful income has been transferred to “doubtful income account” as a charge in profit & loss account under other provisions (Note 16.3.2).
3.29 Dividend payments
Final dividend is recognized when it is approved by the shareholders in Annual General Meeting (AGM). The proposed dividend for the year 2014, therefore, has not been recognized as a liability however disclosed in the balance sheet in accordance with BAS 10 “Events after the Reporting Period”. Dividend payable to the Bank’s shareholders is recognized as a liability and deducted from the shareholders’ equity in the period in which the shareholders’ right to receive the dividend is established.
3.30 Events after the reporting period
All material events after the reporting period that provide additional information about the Companies’/Bank’s position at the balance sheet date are reflected in the financial statements as per BAS 10 “Events after the Reporting Period”. Events after the reporting period that are not adjusting events are disclosed in the notes when material (Note - 39).
Annual Report 2014202
3.31 Risk management
The Bank Company Act, 1991 as amended and the Bangladesh Bank Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Bank. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries.
Department of Off-site Supervision (DOS) of Bangladesh Bank issued Circular No.-02 dated 15 February 2012 on Risk Management Guidelines for Banks and instructed all scheduled banks operating in Bangladesh to follow this Guidelines for managing various risks which have been complied by the Bank.
In addition, the Bank is also following relevant Bangladesh Bank guidelines on risk based capital adequacy, supervisory review process, stress testing and managing the banking risks in other core risk areas.
The risk of a bank is defined as the possibility of losses, financial or otherwise. The Risk Management of the Bank covers 6 (six) Core Risk Areas of Banking industry i.e. Investment (Credit) Risk , Foreign Exchange Risk, Asset-Liability Management, Prevention of Money Laundering, Internal Control & Compliance Risk and Information & Communication Technology Risk. The risk management procedures in the core risk areas have been devised in line with the core risk management guidelines of Bangladesh Bank. All the Risk Management Guidelines are periodically reviewed by the Bank and Bangladesh Bank periodically inspects the implementation status of these guidelines and as per the reports of Bangladesh Bank, IBBL is well compliant in Core Risk Management activities.
In line with instruction of Bangladesh Bank, IBBL formed a Risk Management Wing (RMW) to formulate risk assessment and management policies, methodologies, guidelines and procedures for risk identification, risk measurement, risk monitoring, deciding acceptable level of risk and risk controlling. Risk management function involves identification, assessing, taking mitigating steps, preparing Risk Management Paper (RMP), conducting monthly risk management meeting, stress testing and reporting the competent authority from time to time. It also reports to Bangladesh Bank on quarterly basis along with the RMP, minutes of the monthly meeting and all other required supporting papers. Moreover, in compliance with the “Bank Company Act 1991 as amended”, Section 15 (Kha) and BRPD Circular No. 11 dated 27 October, 2013 of Bangladesh Bank, the Bank has constituted a Risk Management Committee comprising of 5 (five) directors from the Board to formulate risk management policies, procedures and oversee the risk management activities of the Bank.
The prime objective of the Risk Management is that the Bank takes well calculative Business Risk Policy for safeguarding the Bank’s capital, its financial resources and profitability from various risks. In this context, the Bank implemented all the guidelines of Bangladesh Bank as under:
3.31.1 Internal Control and Compliance
Operational loss may arise from errors and frauds due to lack of internal control and compliance. With a view to overcome such lapses and verification of asset quality, ensure quality of customer service, overall security arrangement, operational efficiency and compliance of regulatory issues as guided through different circulars, manuals from Head Office and other regulatory bodies. Bank organizes its management through Internal Control & Compliance Wing (ICCW) which consists of three Divisions namely (1) Audit & Inspection Division, (2) Compliance Division and (3) Monitoring Division.
(1) Audit & Inspection Division
Internal Audit & Inspection Division undertakes periodical and special audit of the Branches, Divisions and Departments of Head Office to review operational effectiveness and internal & external compliance requirements. The Bank has introduced Risk Based Internal Audit and grading of the branches. The Audit Committee of the Board subsequently reviews the lapses identified by Audit and Inspection Division. The Audit Committee also reviews Bangladesh Bank Inspection Reports and other issues indicated in the guidelines prescribed by Bangladesh Bank. Necessary steps/measures are taken on the basis of observations & suggestions of the Committee.
The Audit & Inspection Division conducts investigations against complaints received from customers, anonymous persons, management & others and submits the reports to the competent authority. Periodical Inspection reports of Zonal Heads, Shari’ah Inspections & Branch Manager’s self Audit are also reviewed by the Division regularly and necessary guidances and suggestions are given with continuous follow-up thereagainst.
Annual Report 2014 203
(2) Compliance Division
The Compliance Division handles the ‘regulatory issues of Bangladesh Bank as well as other regulatory bodies’ and submits ‘status report on regulatory compliance’ quarterly to the Audit Committee as per BRPD Circular No.12 dated 23.12.2002.
The Compliance Division ensures that the Bank complies with all regulatory requirements while conducting its day to day business. The Compliance Division maintains liaison with the regulatory bodies for any regulatory changes and notify the same to all concerned.
(3) Monitoring Division
This Division performs the following:
i) Assesses the risk of the functional areas of the Branches described in the Departmental Control Function Checklist (DCFCL) and determines the frequency of Audit/Inspection of the branches based on the gravity of risks involved.
ii) Monitors the Internal Control Functions through the Quarterly Operations Report (QOR) and other mechanisms.
iii) Checks the completion/execution of Investment Documentation.
3.31.2 Foreign exchange Risk Management
Foreign Exchange Risk is the current or prospective risk to earnings and capital arising from adverse movements in currency exchange rates. The Bank is exposed to profit rate risk and settlement risk on account of its foreign exchange business. Foreign Exchange business includes trading of foreign currencies relating to import, export, remittances and other ancillary services. IBBL is dealing with a substantial volume of foreign trade and remittance business of the country which exposes the Bank to foreign exchange risk. IBBL has adopted foreign exchange risk manual through which the foreign exchange operations are dealt with.
Foreign Exchange risks are measured and monitored by the Treasury Division. Treasury Division consists of separate Front Office, Back Office and Mid Office. The Treasury Front Office (Dealing Room) independently performs the deals and the Treasury Back Office is responsible for verification of the deals and passing of their entries in the books of account.
The Foreign Exchange Risk is minimized through proper market analysis, real time pricing of Foreign Exchange, fixation of different market related limits (daylight, overnight, stop loss and management action trigger) and counter parties credit limits set by the management and ensure adherence to the limits by the Treasury Front Office. All Foreign Exchange transactions are revalued at weighted average exchange rate as provided by Bangladesh Bank at the end of each month. All Nostro Accounts are reconciled regularly and outstanding entries are reviewed by the management for its settlement/recompilation. The open position maintained by the bank at the end of the day remains within the stipulated limit prescribed by the Bangladesh Bank.
3.31.3 Investment (Credit) Risk Management
Investment (Credit) risk is one of the major risks faced by the Bank. This can be described as potential loss arising from the failure of counter party to perform as per contractual agreement with the Bank. The failure may result from unwillingness or inability of the counter party in discharging his / her financial obligation. Therefore, Bank’s Investment (Credit) risk management activities have been designed to address all these issues. IBBL has designed its own operational manuals for each modes and products. It has also designed its own investment risk management guideline which is compatible with the regulatory guideline and islamic modes of finance. There is a dedicated committee namely “Investment Risk Management Committee” which periodically reviews the operational manuals and risk management guidelines and ensures compliance of the same.
3.31.4 Asset liability Management
The Asset Liability Committee (ALCO) of the Bank monitors balance sheet risk, liquidity risks, investment deposit ratio (IDR), deposit mix, investment mix, gap analysis etc. under the leadership of MD & CEO of the Bank. Asset Liability Committee (ALCO) reviews liquidity requirement of the Bank, the maturity of assets and liabilities, deposit and investment pricing strategy, sensitivity of assets and liabilities, management indicators/ratios and the liquidity contingency plan. The primary objective of the ALCO is to monitor and avert significant volatility in Net Investment Income (NII), investment value and exchange earnings.
Annual Report 2014204
3.31.5 Prevention of Money laundering
Money Laundering risk is defined as the loss of reputation and expenses incurred as penalty for being negligent in prevention of money laundering. For mitigating the risks, the Bank has formed 05(five) members Central Compliance Unit (CCU) under the leadership of the Chief Anti Money Laundering Compliance Officer (CAMLCO) at Head Office. Anti Money Laundering Compliance Units are also functioning at Zonal Offices and Branches, where the transactions of the accounts are independently reviewed to verify Suspicious Transaction Reports (STRs). A Manual for prevention of money laundering was developed and approved by the Board of Directors. IBBL has introduced (a) Uniform Account Opening Form (AOF), (b) Know Your Customer (KYC) Profile and (c) Transaction Profile (TP) in the Bank as per instructions of Bangladesh Bank. IBBL had already issued 6 (six) instruction circulars and 11 (eleven) circular letters providing necessary instructions for Prevention of Money Laundering activities and also for combating of Financial Terrorism.
Moreover, IBBL had conducted a good number of training sessions/workshops to create awareness and development of the skill of the officials for identifying suspicious transactions. IBBL introduced a Policy Guideline to combat terrorist financing in the light of Anti Terrorism Act (Amendment) Act, 2012 coupled with the Money Laundering Prevention Act- 2012 approved by the Board of Directors of the Bank.
IBBL has exclusively completed the KYC procedures of Legacy Accounts (accounts opened before 30 April 2002). To establish fruitful Anti Money Laundering drive at branch level, IBBL introduced AML Rating systems such as excellent/good/satisfactory/marginal through self Assessment Report & Independent Testing Procedure as per instruction of Bangladesh Bank.
3.31.6 Information and Communication Technology Risk Management
The Bank has adequately addressed Information and Communication Technology (ICT) Risk Management. It is an in-depth exercise and continual process. The (ICT) Risk Management exercise mainly includes minimizing financial and image loss to the institution in all events such as natural disasters, technological failures, human errors etc. The Bank uses own developed Core Banking Software to perform all types of transactions including local/ online/ internet in a secured way. To take care of its core banking system, a separate security module has been incorporated in the software which manages different roles/privileges for different users. All financial transactions can be tracked for future audit purposes.
The Bank uses Central Data Centre to replicate transactions in branches in case of data failure or inconsistencies. Data travelling through network uses encryption and decryption mechanism.
In line with the Bangladesh Bank directives, the Bank has approved its own ICT policies for its operations and services. Under these policy guidelines, a security policy has also been worked out. To abide by and adhere to what is laid down in the policy; the implementation has been made through Active Directory Services (ADS), Password Policy, Kerberos Policy, Audit Policy, Group Policy, User Rights, Permission Policy etc. In order to secure network resources from public network, the Bank has introduced Virtual Private Network (VPN), Access Control List (ACL), IP filtering and TCP/UDP service blocking through router and firewall devices. It has already centralized the administrative control to access the network, mailing system and internet. IBBL has introduced Business Continuity Plan (BCP) for its entire network and trained the officials to cope up with any contingencies.
3.31.7 Internal audit
Internal Audit is used as an important element to ensure good governance of IBBL. Internal Audit activity of IBBL is effective and it provides senior management with a number of important services. These include detecting and preventing fraud, testing internal control, and monitoring compliance with own policies & procedures, applicable rules & regulations, instructions/ guidelines of regulatory authority etc.
During the year 2014, Audit Division of Internal Control & Compliance Wing conducted inspection on most of the Branches/ Divisions of Head Office of the Bank and submitted reports presenting the findings of the audits/ inspections. Necessary control measures and corrective actions have been taken on the suggestions or observations made in these reports. The reports or key points of the reports have also been discussed in the meetings of the Audit Committee of the Board and necessary steps have been taken according to the decision of the said Committee for correct functioning of Internal Controls & Compliance.
Annual Report 2014 205
3.31.8 Fraud and forgeries
Fraud means wrongful or criminal deception intended to result in financial or personal gain. It will never be possible to eliminate all frauds and no system is completely fraud proof, since many fraudsters are able to bypass control systems put in place. IBBL continuously pays attention to implement and improve the anti-fraud internal controls for prevention of fraud and forgery. IBBL assesses /evaluates the effectiveness of its Anti-Fraud Internal Control measures on quarterly basis as per the items/ areas mentioned in the prescribed checklist of Bangladesh Bank. During the year 2014, 5 (five) incidents of fraud at 4 (four) different branches have been detected by the Bank and it has duly been reported to Bangladesh Bank. The Bank has already made adequate provision in this regard.
3.32 Credit rating report
Credit Rating Information and Services Ltd. CRISL was engaged by the Bank for the purpose of rating the Bank since 2002 as per Bangladesh Bank BRPD Circular No.06 dated 5 July 2006. CRISL assigned AA+ rating in the long term (indicates high safety and high credit quality) and ST-1 in the short term (highest certainty of timely repayment) to IBBL based on the financials up to 31 December 2013.
3.33 Regulatory and legal compliance
Among others, the Bank complied with the requirements of the following circular, rules and regulations:
a) The Bank Company Act, 1991 as amended
b) The Companies Act, 1994
c) BRPD Circular No. 14 dated 25.06.2003 and “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009
d) Other circulars, rules and regulations issued by Bangladesh Bank from time to time
e) The Securities and Exchange Rules, 1987
f) The Securities and Exchange Ordinance, 1969
g) The Securities and Exchange Commission Act, 1993
h) Income Tax Ordinance, 1984
i) VAT Act, 1991
j) Standards issued by AAOIFI
k) The Stamp Act-1899
l) The Customs Act-1969
m) The Money Laundering Prevention Act, 2012
n) The Anti Terrorism (Amendment) Act, 2013 etc.
Annual Report 2014206
4.0 Compliance with Financial Reporting Standards as applicable in Bangladesh
The Companies/Bank complied, as per Para 12 of Securities & Exchange Rule 1987, with the following Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs) as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) in preparing the financial statements of IBBL subject to departure described in note - 2.1, where we have followed Bangladesh Bank guidelines:
Sl. No. BFRS No. BFRS Title Compliance Status
1 1 First-time adoption of International Financial Reporting Standards Not Applicable
2 2 Share-based Payment Not Applicable
3 3 Business Combinations Not Applicable
4 4 Insurance Contracts Not Applicable
5 5 Non-current Assets Held for Sale and Discontinued Operations Not Applicable
6 6 Exploration for and Evaluation of Mineral Resources Not Applicable
7 7 Financial Instruments: Disclosures Complied
8 8 Operating Segments Complied
9 10 Consolidated Financial Statements Complied
10 11 Joint Arrangements Not Applicable
11 12 Disclosure of Interests in other Entities Complied
12 13 Fair Value Measurement Complied
Annual Report 2014 207
Compliance with Bangladesh Accounting Standards as applicable in Bangladesh (Contd…)
Sl. No. BAS No.
BAS Title Compliance Status
1 1 Presentation of Financial Statements Complied
2 2 Inventories Not Applicable
3 7 Statement of Cash Flows Complied
4 8 Accounting Policies, Changes in Accounting Estimates and Errors Complied
5 10 Events after the Reporting Period Complied
6 11 Construction Contracts Not Applicable
7 12 Income Taxes Complied
8 16 Property, Plant & Equipment Complied
9 17 Leases Complied
10 18 Revenue Complied
11 19 Employee Benefits Complied
12 20 Accounting for Government Grants and Disclosure of Government Assistance
Not Applicable
13 21 The Effects of Changes in Foreign Exchange Rates Complied
14 23 Borrowing Costs Not Applicable
15 24 Related Party Disclosures Complied
16 26 Accounting and Reporting by Retirement Benefit Plans Not Applicable
17 27 Separate Financial Statements Complied
18 28 Investments in Associates and Joint Ventures Not Applicable
19 29 Financial Reporting in Hyperinflationary Economics Adopted and effective on or after 01 January 2015 but not applicable for the Bank
20 31 Interest in Joint Ventures Not Applicable (Replaced with IFRS/BFRS 11)
21 32 Financial Instruments: Presentation Complied
22 33 Earnings per Share Complied
23 34 Interim Financial Reporting * Complied
24 36 Impairment of Assets Complied
25 37 Provisions, Contingent Liabilities and Contingent Assets Complied
26 38 Intangible Assets Complied
27 39 Financial Instruments: Recognition and Measurement Complied
28 40 Investment Property Not Applicable
29 41 Agriculture Not Applicable
(*) Complied while the quarterly and half-yearly interim financial reports were prepared during the year as per regulations of Bangladesh Securities and Exchange Commission (BSEC).
Annual Report 2014208
5.0 Audit committee
As per Bangladesh Bank BRPD circular No.11 dated 27 October 2013, the Audit Committee was formed by the Board of Directors of the Bank consisting of the Board Members. As at 31 December 2014 the following directors were the members of the Audit Committee:
Sl. No.
Name of the Member Status with the Bank
Status with the Committee
Educational Qualification
1 Prof. NRM Borhan Uddin, Ph.D. Independent Director
Chairman B.Com (Hon’s), M.Com (Management) C.U. MBA, M.S, Ph.D (USA) in Management
2 Janab Md. Abdus Salam, FCA, FCS Independent Director
Member B.Com (Hon’s), M.Com (Accounting) D.U, FCA, FCS
3 Dr. Areef Suleman Director Member Masters in Economics, Masters in Business Leadership & Ph.D. in Economics.
4 Janab Barrister Mohammed Belayet Hossain
Independent Director
Member L.L.B. (Hons), L.L.M, PGDL (UK), Barrister-at-law
Audit Committee of the Board met in 24 occasions in the year 2014. They met in 04 occasions regarding finalization of financial statements for the year 2014 with the Senior Management of the Bank and external auditors in which among others, the following issues were discussed:
(i) The Committee examined the financial statements of 2014 of the Bank to see whether all the disclosures and information have been incorporated in the financial statements & whether the Bank followed Bangladesh Financial Reporting Standards (BFRSs) and other procedures in preparing financial statements.
(ii) In finalizing the financial statements for the year 2014, several alternatives and various pertinent issues, such as impact of doubtful income, dividend, compensation, profit paid on deposits (PPD), Capital Adequacy Ratio (CAR) & Risk Weighted Assets (RWA) etc. were considered by the Audit Committee.
(iii) The Committee discussed the management letter issued by the external auditors and details Inspection Report submitted by Bangladesh Bank, compliance status of those reports, internal check & control systems and provided appropriate guidelines to the Management for overall improvement of the Management and Accounting system and minimization of various types of risks.
(iv) Like previous years, the Committee also exchanged views with the statutory auditors and management of the Bank before finalization of the financial statements of the Bank.
6.0 Related party disclosures
As per BAS 24 “Related Party Disclosures”, a related party is a person or entity that is related to the entity (i.e. IBBL) that is preparing its financial statements. Related party transaction is a transfer of resources, services, or obligations between a reporting entity and a related party, regardless of whether a price is charged as per BAS 24.
Related Parties include the Bank’s Directors, key management personnel, associates, companies under common directorship etc. as per BAS 24 “Related Party Disclosures”. All transactions involving related parties arising in the normal course of business are conducted at arm’s length at normal commercial rates on the same terms and conditions as third party transactions using valuation modes, as admissible.
6.1 Lending policy for transactions with Bank related person/related parties
Transactions with Bank related person/related parties including Directors are made as per rules and regulations of the Bank Company Act 1991 as amended and as per circulars issued by Bangladesh Bank time to time including the following general rules:
i) Terms & conditions for financial transaction with bank related person/related parties will not be easier than other persons i.e. other Investment clients.
ii) Prior approval from the majority of Board of Directors shall be required for all financial transactions with bank related person/related parties.
iii) The Bank shall not allow funded facilities exceeding 10% of Tier -1 capital to the Bank related persons/related parties; real investment facilities shall be considered deducting encashable securities from funded investment.
Annual Report 2014 209
6.2 Name of the Directors along with all related Firms/ Companies/ Institutions/Parties as at 31 December 2014:
Sl. No Name of the Directors Status with the Bank
Name of the related Firms/ Companies/ Institutions/ Parties etc. Remarks
1 Janab Abu Nasser Muhammad Abduz Zaher, Representative of the Ibn Sina Trust,
Chairman The Ibn Sina Trust, The IBN Sina Pharmaceutical Ind. Ltd. andManarat Trust.
2 Janab Yousif Abdullah Al-RajhiVice – Chairman
Vice-Chairman
Not applicable Foreign Director
3 Engr. Mustafa Anwar, Representative of the Public Institution for Social Security, Kuwait.
Vice-Chairman
Birds Group
4 Janab Abdullah Abdul Aziz-Al-Rajhi Director Not applicable Foreign Director
5 Dr. Areef Suleman Representative of of Islamic Development Bank, K.S.A.
Director Islamic Development Bank, K.S.A. Foreign Director
6 Janab Mohammed Abdullah Al Jalahma, Representative of Kuwait Awqaf Public Foundation, Kuwait.
Director Kuwait Awqaf Public Foundation, Kuwait
Foreign Director
7 Janab Salahuddin Ahmed Representative of Kuwait Finance House, Kuwait.
Director Kuwait Finance House, Kuwait. Foreign Director
8 Dr. Abdulhameed Fouad Al-Khateeb, Representative of Arabsas Travel & Tourist Agency, KSA.
Director Arabsas Travel & Tourist Agency, KSA. Foreign Director
9 Engr. Md. Eskander Ali Khan Representative of Al-Rajhi Co. for Industry & Trade, K.S.A.
Director KEARI Limited,
10 Janab Md. Abul Hossain Representative of Investment Corporation of Bangladesh.
Director Investment Corporation of Bangladesh (ICB).
11 Janab Md. Abdus Salam, FCA, FCS Director Not applicable Independent Director
12 Janab Humayun Bokhteyar, FCA. Director Not applicable Independent Director
13 Prof. NRM Borhan Uddin Ph.D Director Not applicable Independent Director
14 Prof. Dr. A.K.M Sadrul Islam Director The Ibn Sina Trust. Independent Director
15 Barrister Mohammed Belayet Hossain Director Jurists Consortium Independent Director
16 Janab Mohammad Abdul Mannan Ex-Officio Director
Not applicable Managing Director
Annual Report 2014210
6.3 Related party balances and transactions
6.3.1 Related party balances
a) Nature and type of balances and transactions of related parties (Directors) of the Bank are as follows:
Amount in Taka
SL. No.
Name of the Account/Firm/
Trust etc.
Name of the Director Relationship of the
Director with the Firm/Trust etc.
Purpose Classified Position
Outstanding balance
as on 01.01.2013
Disbursement/charged during
the year
Realised during the
year
Outstanding balance
as on 31.12.2014
1 2 3 4 5 6 7 8 9 10=7+8-9
1 Fouad Al-Khateeb Hospital
Prof. Abu Nasser Muhammad Abduz Zaher (Chairman)
Director HPSM (Project)
Un Classified
17,774,009 1,453,443 3,401,000 15,826,452
2 Ibn Sina Trust Prof. Abu Nasser Muhammad Abduz Zaher (Chairman) and Prof. Dr. A.K.M Sadrul Islam (Independent Director).
Member of Board of Trustee
Purchase of House, BMRE &
Import of Machinery
- do- 417,145,385 45,468,344 98,811,472 363,802,257
3 Ibn Sina Pharmaceutical Ind. Ltd.
Prof. Abu Nasser Muhammad Abduz Zaher (Chairman), Prof. Dr. A.K.M Sadrul Islam (Independent Director) and Md. Abdus Salam, (Independent Director)
Director Bank Guarantee
- do- 244,036 - - 244,036
4 Mrs. Shahanara Begum
Engr. Md. Eskander Ali Khan (Director)
Husband Housing - do- 1,643,834 142,683 366,600.00 1,419,917
5 Mohammad Abdul Mannan
Jb. Mohammad Abdul Mannan Managing Director & Ex - Officio Director
Himself Housing - do- 4,297,265 494,593 852,000.00 3,939,858
6 Barrister Mohammed Belayet Hossain
Independent Director Himself Purchase of Commercial
Flat
- do- 3,163,520 185,446 234,640.00 3,114,326
Total 444,268,049 47,744,509 103,665,712 388,346,846
(b) Other type of balances of related parties of the Bank are as follows:
SL. No.
Name of the related parties Nature of relationship
Nature of transactions Closing balance (Taka)
31.12.2014 31.12.2013
1 Islami Bank Securities Limited (IBSL) Parent- subsidiary Investment in Share capital by IBBL 2,699,946,000 2,699,946,000
Bank balance 39,970,915 112,512,177
MTDR balance 886,152,827 889,006,145
Quard balance 90,000,000 200,000,000
Profit receivable 11,218,112 15,075,838
Mudaraba investment 3,000,000,000 -
Accounts payable 7,023,067 93,055,051
Office rent payable 67,689 -
2 Islami Bank Capital Management Limited
Parent- subsidiary Investment in Share capital by IBBL 299,993,000 299,993,000
Bank balance 45,421,630 3,813,310
Dividend payable 104,997,550 -
Annual Report 2014 211
6.3.2 Related party transactions
Nature and type of related party transactions of the Bank during the year 2014 are as follows:
SL. No.
Name of the related party
Nature of relationship Nature of transaction 2014 (Taka)
1 Islami Bank Securities Limited (IBSL)
Parent- subsidiary Deposit to Savings account maintained with IBBL 3,630,708,197
Withdraw from Savings account maintained with IBBL
3,630,323,619
Deposit to Current account maintained with IBBL 621,004,225
Withdraw from Current account maintained with IBBL
692,190,267
Bank charge paid to IBBL 3,829
Payment against office rent 406,134
Profit against MTDR 57,286,496
Profit against SND 5,297
Profit withdrawn against MTDR 57,950,000
Quard availed from IBBL 210,000,000
Payment against Quard 320,000,000
2 Chief Executive Officer Key management personnel
Short-term employee benefits (Salary and allowance)
1,887,852
3 Islami Bank Capital Management Limited
Parent- subsidiary Payment of interim dividend to IBBL 104,997,550
Profit against SND 41,320
4 Directors of the Bank Director Fees , TA/DA/hotel fare and other expenses 12,787,017
6.4 other related party disclosures
1. There was no contracts of significance wherein a director has interests subsisted at any time during the year or at the end of the year.
2. Investment to related parties is effected as per requirement of section 27 of Bank Company Act, 1991 as amended.
3. Share issued to Directors and Executives without consideration or exercisable at discount is Nil.
4. Other disclosures are not applicable as required by BRPD Circular No. 14 dated 25 June, 2003 and BRPD Circular No. 15 dated 09 November, 2009.
Annual Report 2014212
31.12.2014 31.12.2013Taka Taka
7.0 Cash in hand Cash in hand (including foreign currency) (Note. 7.1) 7,696,844,549 8,180,338,285 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency) (Note. 7.2)
38,522,514,877 36,111,176,654
Total 46,219,359,426 44,291,514,939 7.1 Cash in hand (including foreign currency)
In local currency 7,647,881,565 8,155,182,740 In foreign currency 48,962,984 25,155,545 Total 7,696,844,549 8,180,338,285
7.2 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency)Balance with Bangladesh Bank (a)In local currency 35,871,455,347 32,900,993,908 In foreign currency 664,220,218 1,129,186,220 Sub-total 36,535,675,565 34,030,180,128 Balance with Sonali Bank Ltd. (as agent of Bangladesh Bank) (b)In local currency 1,986,839,312 2,080,996,526 In foreign currency - - Sub-total 1,986,839,312 2,080,996,526 Total (a+b) 38,522,514,877 36,111,176,654
7.3 Cash Reserve Requirement (CRR) & Statutory Liquidity Ratio (SLR)Cash Reserve Requirement (CRR) and Statutory Liquidity Ratio (SLR) have been calculated and maintained in accordance with the Section 25 & 33 of the Bank Company Act, 1991 as amended and the Instruction of Bangladesh Bank Order 1972, Article 36, clause (1).
7.3.1 Cash Reserve Requirement (CRR) The Cash Reserve Requirement (CRR) of the Bank was 6.00% of average total demand and time liabilities on bi-weekly basis with a provision of minimum 5.5% on daily basis from 15.12.2010 as per Bangladesh Bank MPD Circular No.4 dated 01 December 2010 and DOS Circular No.-01 dated on 19.01.2014. The requirement has been revised at 6.50% of average total demand and time liabilities on bi-weekly basis with a provision of minimum 6.00% on daily basis from 24.06.2014 as per Bangladesh Bank MPD Circular No.01 dated 23 June 2014. The cash reserve maintained by the Bank was in excess of the statutory requirement throughout the year.Position of Cash Reserve Requirement (CRR) Required CRR (6.50% of average total time and demand liabilities) 35,830,701,560 27,255,981,640 Actual reserve held with Bangladesh Bank in local currency (Note 7.2) * 35,843,455,347 32,872,993,908 Excess/(shortfall) 12,753,787 5,617,012,268 * Lien against TT discounting facilities of Tk. 2,80,00,000/- has not been considered as CRR.
7.3.2 Statutory Liquidity Ratio (SLR) The requirement of Statutory Liquidity Ratio (SLR) of the Bank was 11.50% including CRR from 15.12.2010 to 31.01.2014 as per Bangladesh Bank MPD Circular No.05 dated 01 December 2010. The required SLR has been revised at minimum 5.50% on daily basis excluding CRR wherein the excess CRR amount shall be included while calculating SLR from 01.02.2014 as per DOS Circular No. 01 dated 19 January 2014. The reserve maintained by the Bank was in excess of the statutory requirement throughout the year.
Position of Statutory Liquidity Ratio (SLR) *Required Reserve (5.50% of average total time and demand liabilities) 30,318,285,930 52,240,631,470 Actual reserve maintained (Note 7.3.2.1) 109,115,937,648 106,816,928,719 Excess/(shortfall) 78,797,651,718 54,576,297,249 * Position of SLR as on 31.12.2013 includes CRR.
7.3.2.1 Components of Statutory Liquidity Ratio (SLR)Cash in hand including foreign currency (Note- 7.1) 7,696,844,549 8,180,338,285 Excess CRR amount (Note-7.3.1) 12,753,787 - Balance with Sonali Bank as Agent Bank of BB (Note-7.2.b) 1,986,839,312 34,953,990,434 Balance with Islamic Refinance Fund A/c (Note-9) 2,000,000,000 - Unencumbered approved securities :Bangladesh Shipping Corporation (Note -10) 101,500,000 82,600,000 Bangladesh Government Islamic Investment Bond (Note -10) 97,318,000,000 63,600,000,000 Total 109,115,937,648 106,816,928,719
Annual Report 2014 213
31.12.2014 31.12.2013Taka Taka
7(a) Consolidated cash in handi) Cash in hand (including foreign currency)Islami Bank Bangladesh Limited 7,696,844,549 8,180,338,285 Islami Bank Securities Limited 19 4,660 Islami Bank Capital Management Limited 394 4,020 Sub total 7,696,844,962 8,180,346,965 ii) Balance with Bangladesh Bank & its agent bank(s) (including foreign currency)Islami Bank Bangladesh Limited 38,522,514,877 36,111,176,654 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Sub total (ii) 38,522,514,877 36,111,176,654 Total (i+ii) 46,219,359,839 44,291,523,619
8.0 Balance with other banks & financial institutions
i) In BangladeshIn current account 619,469,727 1,484,506,514 OBU’s balance with treasury division, IBBL (Note-2.0 _OBU) 69,601,591 - In Mudaraba savings & MTDR account with other islamic banks / financial institutions
17,170,557,971 6,093,434,316
Sub total 17,859,629,289 7,577,940,830 Less: OBU’s balance with treasury division, IBBL 69,601,591 - Sub total (i) 17,790,027,698 7,577,940,830 ii) Outside Bangladesh (Note 8.1)In current account 2,409,322,547 4,749,379,514 In Mudaraba savings & MTDR account with other islamic banks / financial institutions
- -
Sub total (ii) 2,409,322,547 4,749,379,514 Grand total (i+ii) 20,199,350,245 12,327,320,344
8.1 Currency-wise amount and exchange rate of Balance with other banks & financial institutions outside Bangladesh
Foreign currency Amount in F.C Exchange rate 31.12.2014 31.12.2013US Dollar 14,847,644.74 77.9494 1,157,364,999 3,667,751,841 Great Britain Pound 2,165,952.18 120.915 1 261,896,324 97,715,292 Saudi Riyal 431,860.35 20.767 1 8,968,487 6,555,633 EURO 6,364,386.90 94.7007 602,711,894 263,884,950 YEN 3,059,162.00 0.6459 1,975,913 97,780,935 Canadian Dollar 188,754.49 66.9323 12,633,772 2,916,579 Swiss Franc 204,228.27 78.7288 16,078,647 3,527,540 Singapore Dollar 5,277,143.41 58.8831 310,734,563 314,374,989 Australian Dollar 7,308.53 63.3807 463,220 127,780,133 ACU Dollar 351,912.53 77.9494 27,431,371 164,181,379 AED 427,079.67 21.2217 9,063,357 2,910,244 Total 2,409,322,547 4,749,379,514
8.2 Maturity - wise classification Balance with other banks & financial institutions
Repayable on demand
4,194,350,245 6,307,320,344
With a residual maturity ofUp to 1 Month 6,800,000,000 - Over 1 month but not more than 3 months 9,025,000,000 6,020,000,000 Over 3 months but not more than 1 year 180,000,000 - Over 1 year but not more than 5 years - - More than 5 years - - Total 20,199,350,245 12,327,320,344
Annual Report 2014214
31.12.2014 31.12.2013Taka Taka
8(a) Consolidated Balance with other banks & financial institutions
i) In BangladeshIslami Bank Bangladesh Limited 17,790,027,698 7,577,940,830 Islami Bank Securities Limited 3,982,477,266 1,082,818,348 Islami Bank Capital Management Limited 413,070,405 388,364,770 Inter-company balances (979,679,718) (1,098,386,683)Sub-total (i) 21,205,895,651 7,950,737,265 ii) Outside BangladeshIslami Bank Bangladesh Limited 2,409,322,547 4,749,379,514 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Sub-total (ii) 2,409,322,547 4,749,379,514 Total (i+ii) 23,615,218,198 12,700,116,779
9.0 Placement with banks & other financial institutions
Placement to OBU by Treasury Division, IBBL (Note-6.0 _OBU) 7,606,631,085 16,213,482,904 Placement to AD Branches for MDB in FC by OBU (Note-3.0 _OBU) 2,859,555,231 3,609,750,453 Placement to Islamic Refinance Fund Account (*) 2,000,000,000 -
12,466,186,316 19,823,233,357 Less: Placement to OBU by Treasury Division, IBBL 7,606,631,085 16,213,482,904 Less: Placement to AD Branches for MDB in FC by OBU 2,859,555,231 3,609,750,453 Total 2,000,000,000 -
(*) The fund is placed to Bangladesh Bank for Re-finance Scheme as per Bangladesh Bank BRPD Circular No. 13 dated 18 September 2014.
10.0 Investments in shares & securities
Particulars No. of shareBook value as
at 31 Dec. 2014 (Taka)
Book value as at 31 Dec. 2013 (Taka) Remarks
10.1 Government Bangladesh Shipping Corporation 200,000 101,500,000 82,600,000 QuotedKarmasangsthan Bank 100,000 10,000,000 10,000,000 Un-QuotedCentral Depository Bangladesh Ltd. 2,284,721 6,277,770 6,277,770 Un-QuotedBangladesh Government Islamic Investment Bond (Islamic Bond) 34 97,318,000,000 63,600,000,000 Un-QuotedTotal government (10.1) 2,584,755 97,435,777,770 63,698,877,770
10.2 Other than Government i) Subsidiary companiesIslami Bank Securities Limited 2,699,946 2,699,946,000 2,699,946,000 Un-QuotedIslami Bank Capital Management Limited 299,993 299,993,000 299,993,000 Un-QuotedSub total (i) 2,999,939 2,999,939,000 2,999,939,000 ii) OthersBangladesh Aroma Tea Ltd. 1,570 157,000 157,000 De-listedInvestment in Financial Institutions & Investors Portfolio Management Co. Ltd. 500,000 5,000,000 5,000,000 Un-QuotedMudaraba Subordinated Debt of First Security Islami Bank Ltd. 800 400,000,000 500,000,000 Un-QuotedAl- Arafah Islami Bank Ltd. 25,500 385,139 - QuotedExim Bank Ltd. 21,635 241,263 - QuotedIbn Sina Pharmaceutical Ltd 3,500 365,806 918,984 Quoted
Annual Report 2014 215
Particulars No. of shareBook value as
at 31 Dec. 2014 (Taka)
Book value as at 31 Dec. 2013 (Taka) Remarks
Shahjalal Islami Bank Ltd. 17,028 193,512 - Quoted
United Airways (BD) Ltd. 61,600 766,413 62,359 Quoted
Fareast Islami Life Insurance Co. Ltd 20,000 2,033,763 690,156 Quoted
Power Grid Company of Bangladesh Ltd. 4,000 161,302 422,512 Quoted
Takaful Islami Insurance Ltd. 24,000 716,641 417,491 Quoted
Apex Tannery Ltd. 250 35,407 - Quoted
Prime Textile Ltd. 10,000 189,272 - Quoted
Summit Power Ltd 2,000 76,190 - Quoted
Confidence Cement 15,000 1,973,817 - Quoted
Premier Cement Mills Limited 25,000 2,440,893 - Quoted
Apex Foods Ltd. 1,000 99,518 - Quoted
Meghna Petroleum Ltd. 13,450 3,423,868 - Quoted
Tallu Spinning Ltd. 55,000 1,906,378 - Quoted
Meghna Cement Ltd. 500 62,155 - Quoted
Social Islami Bank Limited. 20,000 275,859 - Quoted
AMCL(Pran) 550 108,733 - Quoted
Rangpur Foundry 2,000 199,197 - Quoted
Khulna power Company Ltd. - - 701,946 Quoted
ICB Islamic Mutual Fund - - 391,928 Quoted
BEXIMCO - - 340,350 Quoted
Square Textile - - 1,098,139 Quoted
Titas Gas Company Ltd - - 2,381,332 Quoted
Sub total (ii ) 824,383 420,812,126 512,582,198
Sub total Other than Government (i+ii) 3,824,322 3,420,751,126 3,512,521,198
Total (10.1+10.2) 6,409,077 100,856,528,896 67,211,398,968
10.3 Revaluation of shares & securities
All Shares and Securities are shown at cost price other than the Shares of Bangladesh Shipping Corporation which have been recognized at closing market price as on 30.12.2014 of Dhaka Stock Exchange Ltd. (DSE) as per BRPD Circular No.14 dated 25.06.2003 and DOS Circular No. - 05 dated 26 May 2008. 100% provision was made against probable losses in shares of Bangladesh Aroma Tea Ltd. and adequate provision have been kept for diminution in value of investment in shares for all quoted shares. Changes in revaluation of shares of BSC has been shown as revaluation reserve of securities. Provision for diminution in value of investment in shares is not netted off with investment in shares and securities rather shown under other liabilities.
31.12.2014 Taka 31.12.2013 Taka
10.4 Maturity grouping of investments in shares & securitiesRepayable on demand - - With a residual maturity of Up to 1 Month 19,355,655,126 7,870,025,198 Over 1 month but not more than 3 months 35,460,000,000 3,110,000,000 Over 3 months but not more than 1 year 42,618,000,000 32,230,000,000 Over 1 year but not more than 5 years 300,000,000 20,980,000,000 More than 5 years 3,122,873,770 3,021,373,770 Total 100,856,528,896 67,211,398,968
Annual Report 2014216
31.12.2014 31.12.2013Taka Taka
10(a) Consolidated investments in shares & securities
i) GovernmentIslami Bank Bangladesh Limited 97,435,777,770 63,698,877,770 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Sub total (i) 97,435,777,770 63,698,877,770
ii) OthersIslami Bank Bangladesh Limited 3,420,751,126 3,512,521,198 Islami Bank Securities Limited 1,820,810,657 1,887,493,659 Islami Bank Capital Management Limited - - Inter-company balances (2,999,939,000) (2,999,939,000)
Sub total (ii) 2,241,622,783 2,400,075,857 Total (i+ii) 99,677,400,553 66,098,953,627
11.0 Investments
General investments etc. (Note-11.1) 436,094,101,205 375,200,298,497 Bills purchased & discounted (Note-11.2) 27,381,366,261 27,994,506,480 Total 463,475,467,466 403,194,804,977
11.1 General investments etc.
i) In BangladeshBai - Murabaha 253,916,688,852 223,243,721,234 Bai - Muajjal 29,797,755,704 24,052,604,799 Hire Purchase under Shirkatul Melk 103,940,758,328 95,481,083,230 Bai-Murabaha Import Bills 5,861,479,708 3,864,715,763 Baim- FC Bills 9,498,987,204 7,627,708,774 Musharaka 484,381,392 427,678,772 Mudaraba investment 3,000,010,000 - Bai - Salam 4,807,597,612 4,200,400,363 Murabaha Foreign Currency Investment 6,952,880,221 2,632,516,647 Quard 15,478,085,584 13,669,868,915 Investment in Khidmah Card (KC) 16,994,600 - Sub total (i) 433,755,619,205 375,200,298,497
ii) Out side BangladeshBai - Murabaha - - Bai - Muajjal - - Hire Purchase under Shirkatul Melk - - Musharaka - - Overseas Investment 2,338,482,000 - Bai - Salam - - Quard - - Others - - Sub total (ii) 2,338,482,000 -
Grand total (i+ii) 436,094,101,205 375,200,298,497
Annual Report 2014 217
31.12.2014 31.12.2013Taka Taka
11.1.1 Maturity-wise classification
Repayable on demand - - With a residual maturity of Up to 1 Month 63,378,766,515 54,528,901,100 Over 1 month but not more than 3 months 79,432,061,802 74,363,159,919 Over 3 months but not more than 1 year 107,961,949,441 95,467,827,785 Over 1 year but not more than 5 years 96,501,760,873 76,143,857,496 More than 5 years 88,819,562,574 74,696,552,197 Total 436,094,101,205 375,200,298,497
11.1(a) Consolidated general investments
Islami Bank Bangladesh Limited 436,094,101,205 375,200,298,497 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Inter-company balances (3,090,000,000) (200,000,000)Total 433,004,101,205 375,000,298,497
11.2 Bills purchased & discounted
i) In BangladeshMusharaka Doc. Bill (MDB) 9,640,143,708 9,912,995,710 ii) Outside Bangladesh Mudarba Doc Bill (UPAS)-OBU 12,317,356,285 12,603,732,451 Bai- As- Sarf (FDB) 2,564,171,038 1,980,004,979 MDB in FC 2,859,695,230 3,497,773,340 Sub-total (ii) 17,741,222,553 18,081,510,770 Total (i+ii) 27,381,366,261 27,994,506,480
11.2.1 Maturity-wise classification of bills purchased & discounted
Payable within 1 month 7,108,296,384 7,266,972,145 Over 1 month but less than 3 months 9,544,931,260 9,757,999,083 Over 3 months but less than 6 months 6,197,718,873 6,336,068,163 6 months or more 4,530,419,744 4,633,467,089 Total 27,381,366,261 27,994,506,480
11.2(a) Consolidated bills purchased & discounted
Islami Bank Bangladesh Limited 27,381,366,261 27,994,506,480 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Total 27,381,366,261 27,994,506,480
11.3 Geographical location wise classification of investments
Within Bangladesh In rural areas 23,737,344,960 57,950,730,825 In urban areas 437,399,640,506 345,244,074,152 Sub total 461,136,985,466 403,194,804,977 Outside Bangladesh 2,338,482,000 - Total 463,475,467,466 403,194,804,977
Annual Report 2014218
31.12.2014 31.12.2013Taka Taka
11.4 Division wise classification of investments (*)
Name of the divisionDhaka division 272,135,187,835 235,306,564,951 Chittagong division 92,698,693,385 82,622,005,208 Khulna division 29,491,568,454 27,662,709,769 Rajshahi division 40,518,230,905 33,602,056,279 Barisal division 6,194,634,336 4,963,015,576 Sylhet division 9,364,320,744 8,298,812,931 Rangpur division 13,072,831,807 10,739,640,263 Total 463,475,467,466 403,194,804,977 (*) Division wise classification was made on the basis of the location of the respective branch not on the basis of where the client’s business actually located.
11.5 Investment on the basis of significant concentration including bills purchased and discounted
Investment to directors 388,103,000 444,024,039 Investment to chief executive & other senior executives 932,323,000 709,713,000 Sector wise other investments:Trade & commerce 129,544,045,291 125,788,547,816 Real estate 37,680,385,849 27,126,960,967 Transport 6,435,450,233 6,679,236,366 Agriculture (including fertilizer & agriculture implements) 11,131,087,642 20,384,772,976 Industrial investment (Note-11.5.1) 247,350,986,911 193,549,881,241 Others 30,013,085,540 28,511,668,572 Total 463,475,467,466 403,194,804,977
11.5.1 Classification of industrial investments
Textile- spinning, weaving & dyeing 87,159,601,548 65,376,404,677 Steel, re-rolling & engineering 17,068,455,427 29,987,979,981 Agro-based industry 49,839,002,427 19,794,827,022 Garments & garments accessories 20,675,772,163 12,795,660,097 Food & beverage 3,760,121,383 8,813,035,537 Cements industry 3,598,514,014 2,109,608,059 Pharmaceuticals 2,885,125,681 2,405,347,507 Poultry, poultry feed & hatchery 822,844,373 946,366,232 Sanitary wares 49,095,993 295,739,448 Chemicals, toiletries & petroleum 7,812,668,913 8,497,580,126 Printing & packaging 1,086,738,101 3,470,009,518 Power (electricity) 5,056,579,437 4,514,955,566 Ceramic & bricks 2,566,593,448 2,898,246,586 Health care ( hospital & others) 1,280,794,799 2,149,039,985 Plastic industries 573,062,291 1,951,880,354 Petrol pump & CNG filling station 468,972,758 1,104,093,937 Information technology 394,475,062 492,899,079 Hotel & restaurant 62,263,592 788,638,527 Other industries 42,190,305,501 25,157,569,003 Total 247,350,986,911 193,549,881,241
Annual Report 2014 219
31.12.2014 31.12.2013Taka Taka
11.6 Details of investment to customers group (10.00% of regulatory equity and above)
Number of clients with amount of sanctioned limit of investments exceeding 10.00% of total regulatory equity of the Bank & classified amount thereon are given below:
Number of clients 15 15
Amount of investments 122,271,000,000 119,260,000,000
Classified amount thereon Nil Nil
Measures taken for recovery Not Applicable Not Applicable
Total regulatory capital of the Bank was Tk. 48,569.86 million as at 31 December 2014 (Tk. 45,487.38 million as on 31 December 2013).
(Taka in million)
Sl. No. Name of clients Sanctioned limitOutstanding as on 31.12.2014
31.12.2013Funded Non-funded Total
1 Noman Group 18,275.00 13,507.00 4,367.00 17,874.00 19,333.00 2 S. Alam Group 16,825.00 14,378.00 2,168.00 16,546.00 14,372.00 3 Aman Group 8,672.00 6,594.00 3,359.00 9,953.00 5,529.00 4 Farzana Group 12,000.00 5,755.00 4,016.00 9,771.00 9,083.00 5 Badsha Group 7,537.00 4,020.00 4,060.00 8,080.00 5,786.00 6 MSA Group 8,456.00 5,715.00 1,987.00 7,702.00 7,088.00 7 Delta Group 5,948.00 4,968.00 1,919.00 6,887.00 5,593.00 8 Nur-e-Madina Group 5,348.00 5,223.00 1,458.00 6,681.00 7,515.00 9 Patromax Refinery 4,550.00 3,135.00 3,156.00 6,291.00 6,120.00
10 Ananda Group 7,099.00 6,168.00 13.00 6,181.00 5,711.00 11 Mosharraf Group 6,767.00 4,947.00 1,094.00 6,041.00 7,195.00 12 Nassa Group 7,850.00 3,570.00 2,127.00 5,697.00 6,331.00 13 BRB Group 8,121.00 3,243.00 2,376.00 5,619.00 5,806.00 14 Abul Khair Group 7,181.00 2,534.00 2,237.00 4,771.00 8,134.00 15 Abdul Monem Group 6,291.00 4,177.00 - 4,177.00 5,664.00
Total 87,934.00 34,337.00 122,271.00 119,260.00
31.12.2014 31.12.201311.7 Classification status - wise investments Taka Taka
Unclassified :i) Unclassified including staff investment 424,231,589,013 371,539,189,061 ii) Special mention account (SMA) 16,436,640,275 16,713,715,269
Total unclassified (i+ii) 440,668,229,288 388,252,904,330 Classified :
iii) Substandard 2,235,222,352 1,707,265,721 iv) Doubtful 1,513,000,505 653,099,020 v) Bad and Loss 19,059,015,321 12,581,535,906
Total classified (iii+iv+v) 22,807,238,178 14,941,900,647 Grand total ( i to v) 463,475,467,466 403,194,804,977
11.8 Pledged collaterals against investments
Land & building 656,240,012,983 526,482,176,344 MTDR, securities, etc. 34,816,740,707 16,942,474,643 Share certificates 56,140,000 140,992,500 Total 691,112,893,690 543,565,643,487
Annual Report 2014220
31.12.2014 31.12.2013Taka Taka
11.9 Particulars of investments
i) Investments considered good in respect of which the bank is fully secured 442,129,601,677 389,317,407,158 ii) Investments considered good in respect of which the Bank holds debtors’ personal
security 16,994,600 -
iii) Investments considered good and secured by personal security of one or more persons in addition to personal security of debtors
21,328,871,189 13,877,397,819
iv) Investments considered bad or doubtful not provided for - - Total 463,475,467,466 403,194,804,977
v) Investments due by directors or employees of the bank or any of them either severally or jointly with any other persons
12,086,232,123 9,087,895,956
vi) Investments due by directors or employees of the bank are interested as directors, partners, managing agents or in the case of private companies as members
379,628,709 434,919,394
vii) Total amount of investments, including temporary investments, made any time during the year to directors or employees of the bank or any of them either severally or jointly with any other persons
3,756,720,608 3,577,165,708
viii) Total amount of investments, including temporary investments granted during the year to the Companies or firms in which the directors of the bank are interested as directors, partners, managing agents or, in the case of private companies as members
- -
ix) Investments due from other banks - - x) Classified investments:
a) Classified investments on which profit has not been charged 19,059,015,321 12,581,535,906 b) Provision for classified investments 13,354,720,000 9,037,800,000 c) Provision kept against investments classified as bad & loss 12,997,864,539 8,794,188,000 d) Amount credited to profit/ rent /compensation suspense account 4,637,284,546 2,483,769,765
xi) Particulars of written off investmentsa) Cumulative amount of investment written off since inception to 31st December last year 5,318,286,468 5,148,936,721 b) Amount of investment written off during this year (*) 259,980,017 169,349,747 c) Total amount written Off (a + b) 5,578,266,485 5,318,286,468 d) Amount recovered against written off investment up to this year (**) 1,322,391,025 1,283,040,729 e) Amount waived against written off investment up to this year 939,801,797 913,271,547 f) Amount of investment written off against which suit has been filed to recover the same 3,316,073,663 3,121,974,192
(*) Out of the total amount of investment written-off during the year of 2014, Tk.72,44,117/- was written-off from profit/rent suspense and Tk.11,16,09,013/- was from compensation suspense .(**) During the year of 2014, Tk.39,350,296/- (2013 Tk. 43,918,185/-) was recovered from the clients in cash.
12.0 Fixed assets (Annexure-A)12.1 Tangible assets
Land 7,593,266,550 7,592,598,419 Building 6,317,393,834 6,234,391,377 Construction/ capital work-in-process 197,106,998 103,812,967 Furniture and fixtures 811,688,722 719,377,288 Mechanical appliances 3,098,463,563 2,721,050,008 Motor vehicles 599,438,630 525,169,792 ATM 632,874,804 482,830,169 Books 5,875,956 4,773,584 Total cost of tangible assets including revaluation 19,256,109,057 18,384,003,604 Less: Accumulated depreciation 3,607,189,972 2,934,615,074 Net book value of tangible assets at the end of the year 15,648,919,085 15,449,388,530
Annual Report 2014 221
31.12.2014 31.12.2013Taka Taka
12.2 Intangible assets Computer software 386,329,162 309,480,952 Total cost of intangible assets 386,329,162 309,480,952 Less: Accumulated amortization 108,886,331 26,060,893 Net book value of intangible assets at the end of the year 277,442,831 283,420,059 Total net book value at the end of the year (12.1+12.2) 15,926,361,916 15,732,808,589
12.3 Maturity-wise classificationRepayable on demand - - With a residual maturity of Up to 1 MonthOver 1 month but not more than 3 months - - Over 3 months but not more than 1 year 744,614,312 736,244,555 Over 1 year but not more than 5 years 2,632,757,271 1,120,024,635 More than 5 years 12,548,990,333 13,876,539,399 Total 15,926,361,916 15,732,808,589
12.4 Revaluation of land & building
As per Bangladesh Bank BCD Circular Letter No. 12 & 18 dated April 20, 1993; June 15, 1993; BRPD Circular No.10 dated November 25, 2002; circular No. 09 dated 31 December 2008 and circular No. 24 dated 03 August 2010, the Bank revalued its land and building by the professional valuers for the year 2000, 2002, 2003, 2004, 2005, 2006, 2009 & 2012 respectively which was reviewed by the statutory auditors.
12(a) Consolidated fixed assets (Annexure-B)
12(a).1 Tangible assets Islami Bank Bangladesh Limited 15,648,919,085 15,449,388,530 Islami Bank Securities Limited 3,757,475 5,326,024 Islami Bank Capital Management Limited - - Sub-total 15,652,676,560 15,454,714,554
12(a).2 Intangible assets Islami Bank Bangladesh Limited 277,442,831 283,420,059 Islami Bank Securities Limited 360,198 724,070 Islami Bank Capital Management Limited - - Sub-total 277,803,029 284,144,129
Total (12.a.1+12.a.2) 15,930,479,589 15,738,858,683 13.0 Other assets
i) Income generating other assets - - ii)Non-income generating other assetsStock of stationery in hand 119,939,381 95,667,966 Stamps in hand 12,550,769 9,147,405 Advance rent paid 525,644,682 544,345,583 Security deposits paid account 18,351,705 14,091,298 Suspense 501,345,335 1,739,115,350 Advance against expenses 15,430,338 12,988,634 Pre-paid expense-OBU 26,680,339 - Accrued income 2,009,498,611 1,822,961,997 IB General account (Note - 13.3) 119,780,146 - F.C. clearing adjustment 358,648,429 180,027,615 mCash System A/c 6,800,258 23,136,480 Receivables from Seylon Bank PLC * 30,300,809 30,300,809 Sub-total (ii) 3,744,970,802 4,471,783,137 Total (i+ii) 3,744,970,802 4,471,783,137 *100% provision was made against probable losses for Receivables from Seylon Bank PLC
Annual Report 2014222
31.12.2014 31.12.2013Taka Taka
13.1 Maturity-wise classification
Repayable on demand - - With a residual maturity of Up to 1 Month 309,653,248 311,682,569 Over 1 month but not more than 3 months 1,677,839,626 2,391,104,960 Over 3 months but not more than 1 year 919,707,427 925,734,755 Over 1 year but not more than 5 years 560,204,150 563,875,463 More than 5 years 277,566,351 279,385,390 Total 3,744,970,802 4,471,783,137
13.2 Classification status of other assets
Unclassified 3,657,138,574 4,359,009,787 Doubtful - 6,185,928 Bad/ Loss 87,832,228 106,587,422 Total 3,744,970,802 4,471,783,137
13.3 IB General account
13.3.1 Un-reconciled entries of Inter branch transactions in Bangladesh
Age Number Amount in Taka Amount in TakaUpto 3 months (*) 13 119,780,146 - Over 3 months but not more than 6 months - - - Total 13 119,780,146 - (*) All the outstanding entries in the above mentioned IB General Account have been fully adjusted within 8 March 2015.
13.3.2 Un-reconciled entries of inter branch transactions outside Bangladesh
Age Number Amount in Taka Amount in TakaUpto 3 months - - - Over 3 months but not more than 6 months - - - Total - - -
13(a) Consolidated other assets
Islami Bank Bangladesh Limited 3,744,970,802 4,471,783,137 Islami Bank Securities Limited 72,078,330 49,515,699 Islami Bank Capital Management Limited 50,724,606 38,884,672 Inter-company balances (116,215,662) (15,075,838)Total 3,751,558,076 4,545,107,670
14.0 Deposits & other accountsMudaraba savings deposits (Note-14.1) 183,128,708,639 156,072,977,380 Mudaraba term deposits 170,175,086,856 131,412,377,473 Other mudaraba deposits (Note-14.2) 149,346,325,824 129,401,794,243 Al- wadeeah current and other deposit accounts (Note-14.3) 54,396,285,416 52,124,147,978 Bills payable (Note-14.4) 3,649,894,101 4,129,657,957 Total 560,696,300,836 473,140,955,031
14.1 Mudaraba savings deposits
Mudaraba Savings Deposits 177,206,503,531 151,518,685,457 Mudaraba Savings Deposits (RDS) 4,455,720,616 3,670,537,107 Mudaraba Savings Deposit (RDS-RIP) 448,754 4,764,099 Mudaraba School Student Savings 651,387,313 329,734,176 Mudaraba Farmers Savings A/C 814,648,425 549,256,541 Total 183,128,708,639 156,072,977,380
Annual Report 2014 223
31.12.2014 31.12.2013Taka Taka
14.2 Other mudaraba deposits
Mudaraba Special Notice Deposits 6,071,880,203 5,916,386,559
Mudaraba Hajj Deposits 1,850,748,069 1,528,653,665
Mudaraba Savings Bond 16,820,776,032 15,826,157,593
Mudaraba NRB Savings Bond 858,190,578 725,923,015
Mudaraba Special Savings (Pension) Deposits 93,252,815,277 82,700,530,973
Mudaraba Monthly Profit Deposit Scheme 21,789,339,383 18,988,275,561
Mudaraba Muhor Savings 429,546,767 381,733,723
Mudaraba Waqf Cash Deposit 533,005,487 436,010,591
Mudaraba Upahar Deposit Scheme 12,686,900 11,404,500
Mudaraba FC Deposit 7,725,100,106 2,886,251,563
Mudaraba FC Deposit ERQ 2,237,022 466,500
Total 149,346,325,824 129,401,794,243
14.3 Al Wadeeah current & other deposits accounts
Al Wadeeah Current Deposits 26,276,899,883 24,472,256,739
Convertible Taka Account 151,708 151,708
Non Resident Investors Taka Account 310,807,655 48,860,474
Non Resident FC of Exchange House / Banks 122,651,435 849,140,151
Non Resident FC of Exchange House / Banks-OBU (Note-2.0 _OBU) 69,601,591 -
Non Resident Taka Account 2,135,452,545 1,836,556,742
Foreign Currency Deposit 227,322,404 200,312,993
Foreign Currency Deposit ERQ 753,219,113 479,242,042
Other FC Deposit 37,832,780 39,649,561
Foreign Currency: Security Deposit 108,181,538 90,197,035
Foreign Currency Held against Back to Back L/C 3,797,545,715 3,201,204,154
Foreign Currency held against Cash L/C 474,533,179 527,160,494
Foreign Demand Draft /TT Payable 631,415,387 1,172,175,682
Foreign Currency Deposit against Foreign Bank Guarantee 31,131,042 31,051,406
Profit Payable 10,163,838,731 11,293,770,751
Remittance Card Account 1,473,936 2,338,109
Sundry Deposits (Note-14.3.1) 9,282,404,631 7,855,092,506
FC Deposit of EPZ Enterprises 8,042,291 1,752,237
Mobile Wallet A/C 33,381,443 23,235,194
Sub total 54,465,887,007 52,124,147,978
Less: Non Resident FC of Exchange House / Banks-OBU 69,601,591 -
Total 54,396,285,416 52,124,147,978
Annual Report 2014224
31.12.2014 31.12.2013Taka Taka
14.3.1 Break-up of sundry deposits
Sundry creditors 896,843,941 185,866,407
Supervision charge 48,673,117 44,608,406
Security deposit L/G 1,814,160 1,814,160
Security money payable 115,811,065 148,276,146
Security money locker 14,662,095 11,074,697
Marginal deposit 670,929,112 651,756,174
Bank guarantee 7,970,052 2,915,986
Excise duty - 18,026,590
Closed account profit 297,584,883 239,950,693
Sundry deposit others 118,757,267 314,166,544
Govt. tax & VAT 23,066,578 53,058,084
Security Deposit - Investment 17,343,383 8,257,544
Security Deposit - L/C (Wes) 7,582,244 5,371,000
Security Deposit - Foreign L/C General 6,219,958,060 5,274,879,206
Security Deposit - Back to Back L/C (Inland) - 2,050,000
Security Deposit - Bank Guarantee 691,224,104 543,205,590
Security Deposits - Foreign Bill Negotiation( FBN)/ MDB 210,422 210,422
Security Deposit - IBP 145,486 145,486
Security Deposit - Inland L/C 48,831,511 56,388,464
RDS (RIP) 86,519,838 277,965,238
Other earnings (Note-14.3.1.1) 14,477,313 15,105,669
Total 9,282,404,631 7,855,092,506
14.3.1.1 Break-up of other earnings
Opening balance 15,105,669 14,662,181
Received from B. Bank FC clearing A/c 1,994,335 3,960,862
Received from foreign correspondents/banks 252,006 149,552
Total receipt during the year 2,246,341 4,110,414
Total available balance 17,352,010 18,772,595
Less:
Income tax provision @ 42.50% 954,697 1,746,926
Transferred/ paid for charitable activities 1,920,000 1,920,000
Closing balance 14,477,313 15,105,669
Annual Report 2014 225
31.12.2014 31.12.2013Taka Taka
14.4 Bills payable
P.O. payable 2,916,986,417 2,946,159,689 T.T. payable 18,540,133 27,292,942 D.D. payable 318,699,302 594,694,593 FC bills payable 5,181,274 5,181,274 BEFTN payable 66,657,641 84,460,023 Spot cash payable 323,829,334 471,869,436 Total 3,649,894,101 4,129,657,957
14.5 Maturity wise classification of deposits (other than inter-Bank deposit)
Re-payable on demand 12,674,499,013 10,675,633,571 With a residual maturity ofRe- payable within 1 month 79,719,294,943 67,146,952,355 Over 1 month but not more than 3 months 108,991,484,445 87,591,231,914 Over 3 months but within 6 months 85,303,560,053 71,850,536,143 Over 6 months but not more than 1 year 69,248,903,698 64,223,868,355 Over 1 year but not more than 5 years 95,997,641,176 91,796,376,897 Over 5 years but within 10 years 108,432,499,867 79,323,858,649 Unclaimed Deposits for 10 years or more 6,152,719 16,684,927 Sub-total 560,374,035,914 472,625,142,811
14.6 Maturity grouping of Inter- bank deposits are as under
Re-payable on demand - - With a residual maturity ofRe- payable within 1 month 322,264,922 515,812,220 Over 1 month but within 6 months - - Over 6 months but not more than 1 year - - Over 1 year but not more than 5 years - - Over 5 years but within 10 years - - Sub-total 322,264,922 515,812,220 Total (14.5+14.6) 560,696,300,836 473,140,955,031
14.7 Other banks’ deposits with IBBL
Al Wadeeah Current Deposits 144,716,985 311,608,209
Mudaraba Special Notice Deposits 129,129,207 143,019,736
Mudaraba Savings Account 48,418,730 61,184,275
Total 322,264,922 515,812,220
14.8 Sector wise break up of deposits and other accounts
Government 204,387,000 205,578,000
Other banks’ deposit 322,264,922 515,812,220
Other public 576,694,000 753,318,000
Foreign currency 13,919,212,012 9,478,603,808
Private 545,673,742,902 462,187,642,993
Total 560,696,300,836 473,140,955,031
Annual Report 2014226
31.12.2014 31.12.2013
Taka Taka
14(a) Consolidated deposits & other accounts
Islami Bank Bangladesh Limited 560,696,300,836 473,140,955,031 Islami Bank Securities Limited 1,153,956 1,423,787 Islami Bank Capital Management Limited - - Inter-company balances (983,874,763) (1,020,407,470)Total 559,713,580,029 472,121,971,348
15.0 Mudaraba Perpetual Bond (Note - 3.19) 3,000,000,000 3,000,000,000
15.1 Security pledged against Mudaraba Perpetual Bond (MPB) 4,489,100,000 4,489,100,000
16.0 Other liabilities
Provision for classified & unclassified investments and off- balance sheet items (Note- 16.1)
18,108,400,000 13,546,600,000
Provision for diminution in value of investments in shares (Note - 16.2) 3,498,661 423,778 Other provisions (Note - 16.3) 194,527,027 109,681,000 Compensation account (Note-16.5) 171,936,390 - Profit/ rent /compensation suspense (Note - 16.6) 4,637,284,546 2,483,769,765 Current tax (Note-16.7) 8,104,445,048 7,050,182,433 Zakat payable 1,490,415,591 1,115,146,578 Dividend payable - 9,790,440 Foreign correspondents charges 2,433,269 484,485 Incentive bonus payable 1,185,893,152 1,080,000,000 Payable against expenditure 85,384,738 391,192,037 Clearing adjustment 36,341,416 64,782,783 Transfer delivery adjustment 157,569 65,773 Substitute cash assistance - 650 BEFTN adjustment 808,378 14,905,662 Payable to Benevolent Fund & SAF 30,000,000 30,000,000 Deffered/Unearned Airtime Commission 183,800 - F.C. Payable A/c IBBL Travel Card 266,176 - F.C. Payable A/c IBBL Hajj Card 51,333 - IB General account (Note - 16.8) - 1,236,835,184Total 34,052,027,094 27,133,860,568
16.1. Provision for investments including bad & doubtful investments
General provision Unclassified investments excluding OBU 3,307,926,000 3,041,538,171 Unclassified investments -OBU 123,193,000 162,134,829 Special mention account 194,361,000 167,927,000 Sub-total (Note-16.1.1) 3,625,480,000 3,371,600,000 Off-balance sheet items (Note-16.1.2) 1,128,200,000 1,137,200,000 Sub-total (General provision) 4,753,680,000 4,508,800,000 Specific provision (Note-16.1.3)Substandard 101,045,936 130,347,000 Doubtful 255,809,525 113,265,000 Bad and loss 12,997,864,539 8,794,188,000 Sub-total (Specific provision) 13,354,720,000 9,037,800,000 Total provision held at the end of the year 18,108,400,000 13,546,600,000
Annual Report 2014 227
31.12.2014 31.12.2013
Taka Taka16.1.1 General provision on unclassified investment including OBU
Provision held at the beginning of the year 3,371,600,000 3,935,900,000 Provision made/ (no longer required) during the year 253,880,000 (564,300,000)Total provision held at the end of the year 3,625,480,000 3,371,600,000
16.1.2 General provision on off-balance sheet items
Provision held at the beginning of the year 1,137,200,000 1,100,450,000 Provision made/ (no longer required) during the year (9,000,000) 36,750,000 Total provision held at the end of the year (*) 1,128,200,000 1,137,200,000 Sub-total (16.1.1+16.1.2) 4,753,680,000 4,508,800,000
16.1.3 Provision for classified investmentsProvision held at the beginning of the year 9,037,800,000 6,054,350,000 Fully provided investment written off/waived/transferred (Note-16.1.3.1) (148,335,025) (603,651,687)Recoveries of amounts previously written off 39,350,296 43,918,185 Provision made during the year 4,425,904,729 3,543,183,502 Provision no longer required - - Net charge to profit & loss account for classified investment 4,425,904,729 3,543,183,502 Total provision held at the end of the year 13,354,720,000 9,037,800,000 Total provision for investments (16.1.1+16.1.3) 16,980,200,000 12,409,400,000 Total provision (16.1.1+16.1.2+16.1.3) 18,108,400,000 13,546,600,000
16.1.3.1 Breakup of fully provided investment written off/waived/transferredTransferred to compensation and doubtful income realised account - (372,776,167)Due to waiver during the year - (130,491,017)Due to written-off during the year (148,335,025) (100,384,503)Total (148,335,025) (603,651,687)
16.1.4 Provision made for investments & off- balance sheet items for the year 2014 2013
Provision for classified investments 4,425,904,729 3,543,183,502 General provision for unclassified investment including OBU 253,880,000 (564,300,000)General provision for off-balance sheet items (9,000,000) 36,750,000 Total 4,670,784,729 3,015,633,502
16.1.5 Total Provision Requirement and maintained for investments including off balance sheet items at the end of year 2014
Particulars of Investment Required Provision for 2014
Maintained Provision for 2014
General provision on unclassified investment including OBU 3,625,411,712 3,625,480,000 Provision for classified investments 9,390,919,650 9,391,020,000 Provision for investments considering qualitative judgement 3,963,700,000 3,963,700,000 Total provision for investment 16,980,031,362 16,980,200,000 General provision on off-balance sheet items 1,128,192,273 1,128,200,000 Total provision for investment including off balance sheet items at the end of the year
18,108,223,635 18,108,400,000
Provision surplus/(deficit) for the year 2014 176,365
16.2 Provision for diminution in value of investments in shares31.12.2014
Taka31.12.2013
Taka
Opening balance 423,778 - Add: Provision made during the year 3,074,883 423,778 Closing balance (Note-16.2.1) 3,498,661 423,778
Annual Report 2014228
31.12.2014 31.12.2013
Taka Taka16.2.1 Provision for diminution in value of investments in shares
i) Dealing securities
Quoted 3,341,661 266,778
Un-quoted - -
Sub-total (i) 3,341,661 266,778
ii) Investment securities
Quoted - -
Un-quoted 157,000 157,000
Sub-total (ii) 157,000 157,000
Total (i+ii) 3,498,661 423,778
16.2(a) Consolidated provision for diminution in value of investments in shares made during the year
Islami Bank Bangladesh Limited 3,074,883 423,778
Islami Bank Securities Limited 33,109,478 45,204,121
Islami Bank Capital Management Limited - -
Total 36,184,361 45,627,899
16.3 Other provisions
Provision for other assets (Note-16.3.1) 123,369,900 109,681,000
Provision for doubtful income account (Note-16.3.2) 71,157,127 -
Total 194,527,027 109,681,000
16.3.1 Provision for other assets
Opening balance 109,681,000 96,550,000
Less: Transfer for settlement - 70,000
Add: Provision made during the year 13,688,900 13,201,000
Closing balance 123,369,900 109,681,000
16.3.2 Provision for doubtful income account
Opening balance - - Add: Provision made during the year 103,360,602 - Less: Expended for charitable purposes 32,203,475 - Closing balance 71,157,127 -
16.4 Other provisions for the year
Provision for other assets 13,688,900 13,201,000 Provision for doubtful income account 103,360,602 - Total 117,049,502 13,201,000
Adequate provision for the investments, off-balance sheet items and other assets have been made as per the relevant circulars issued by Bangladesh Bank as well as decision taken in tripartite meeting amongst Inspection Team of Bangladesh Bank, External Auditors and the Management of Islami Bank Bangladesh Limited and subsequent communications to the Bank. However, out of cases under writ petitions provisions have been made against cases as per the instruction of Bangladesh Bank and accrued profit on investments under writ petitions cases have been credited to profit/rent suspense accounts instead of investment income on prudence basis.
Annual Report 2014 229
31.12.2014 31.12.2013
Taka Taka
16.5 Compensation account
Opening balance - - Addition during the year 769,375,628 - Total 769,375,628 - Less: Income tax provision @ 42.50% 326,984,642 - Less: expended for charitable activities 270,454,596 - Closing balance 171,936,390 -
16.6 Profit/rent/compensation suspense
Profit/rent suspense (Note-16.6.1) 1,717,660,073 563,405,586
Compensation suspense (Note-16.6.2) 2,919,624,473 1,920,364,179
Total 4,637,284,546 2,483,769,765
16.6.1 Profit/ rent suspense
Balance at the beginning of the year 563,405,586 499,628,822 Amount transferred to suspense account during the year 2,884,720,516 1,092,592,585 Amount transferred to investment income during the year (1,723,221,912) (886,661,150)Amount written-off during the year (7,244,117) (142,154,671)Amount waived during the year - - Balance at the end of the year 1,717,660,073 563,405,586
16.6.2 Compensation suspense
Balance at the beginning of the year 1,920,364,179 1,115,334,219 Amount transferred to suspense account during the year 1,635,324,839 1,507,028,245 Amount transferred to compensation income during the year (387,287,567) (571,507,268)Amount written-off during the year (111,609,013) (130,491,017)Amount waived during the year (137,167,965) - Balance at the end of the year 2,919,624,473 1,920,364,179
16.7 Current tax liability
Balance of provision on 01 January 10,062,355,707 8,887,170,146
Add: Provision made during the year ( Note 16.7.1) 6,323,390,422 6,145,665,449
Add: Other provision made during the year 327,984,375 134,676,797
Less: Settlement for previous year 5,100,387,470 5,105,156,685
Total (a) 11,613,343,034 10,062,355,707
Advance tax
Balance of advance tax on 01 January 3,012,173,274 2,385,413,375
Add: Payment made during the year 5,597,112,182 5,731,916,584
Less: Settlement for previous year 5,100,387,470 5,105,156,685
Total ( b) 3,508,897,986 3,012,173,274
Net balance as at 31 December (a-b) 8,104,445,048 7,050,182,433
Annual Report 2014230
31.12.2014 31.12.2013
Taka Taka16.7.1 Provision for current tax made during the year
Income tax @ 42.50% on taxable profit (A) 6,300,768,396 6,277,417,613
Add: Income tax @ 20% on dividend income 22,622,026 2,924,633
Add: Excess profit tax -
Less: Provision already kept - 134,676,797
Estimated provision required as at 31 December, (i) 6,323,390,422 6,145,665,449
Provision held
Balance at 1st January 10,062,355,707 8,887,170,146
Less: Tax for previous year 5,100,387,470 5,105,156,685
Actual provision for tax held (ii) 4,961,968,237 3,782,013,461
Estimated provision needs to be made (i-ii) 1,361,422,185 2,363,651,988
Provision actually made during the year 6,323,390,422 6,145,665,449
Computation of taxable profit
Profit before tax 10,531,712,736 11,050,153,090
Less: Dividend income 113,110,128 14,623,166
Profit before tax (excluding dividend income) 10,418,602,608 11,035,529,924
Add : Inadmissible expenditure 5,712,242,877 4,771,131,634
Less : Further allowable expenditure 1,305,508,083 1,060,870,511
Estimated taxable profit for the year (A) 14,825,337,402 14,745,791,047
Provision for tax for the year ended on 31.12.2014 has been made as per Income Tax Ordinance, 1984 applying prevailing rates applicable on the net profit. Income tax assessments have been completed by the Deputy Commissioner of Taxes up to the accounting year 2010 and income tax return has been submitted for the year 2013. The Bank filled appeals/ writ petitions against tax assessment orders of different levels of tax authorities to the appropriate tax authorities and High Court on different disputed issues. Adequate provisions for those assessment years have been made in the books of accounts.
16.7.2 Reconciliation of effective tax rate
Particulars2014 2013
% Taka % Taka
Profit before income tax as per profit and loss account
10,531,712,736 11,050,153,090
Income Tax using the domestic corporate tax rate
42.50% 4,475,977,913 42.50% 4,696,315,063
Factors affecting the tax charge for current year:
Non deductible expenses 23.05% 2,427,703,223 18.35% 2,038,187,362
Tax exempt income -5.27% (554,840,935) -5.30% (585,546,764)
Tax savings from reduced tax rates from dividend
-0.24% (25,449,779) -0.03% (3,290,212)
Total income tax expenses 60.04% 6,323,390,422 55.62% 6,145,665,449
Annual Report 2014 231
31.12.2014 31.12.2013
Taka Taka16.7(a) Consolidated current tax liability
Islami Bank Bangladesh Limited 6,323,390,422 6,145,665,449 Islami Bank Securities Limited 25,368,838 33,362,272 Islami Bank Capital Management Limited 18,609,428 16,941,358 Total 6,367,368,688 6,195,969,079
16.8 IB General account
Un-reconciled entries of inter branch transactions in Bangladesh Maturity Number Amount in Taka Amount in TakaUpto 3 months (*) - - 1,236,835,184Over 3 months but not more than 6 months - - - More than 6 months - - - Total (i+ii+iii) - - 1,236,835,184(*) All the outstanding entries in the above mentioned IB General Account have been fully adjusted within 24.02.2014.
16.9 Maturity-wise classification of other liabilities
Repayable on demand - - With a residual maturity of Up to 1 Month 2,952,471,399 1,960,889,341 Over 1 month but not more than 3 months 12,821,710,542 1,209,892,426 Over 3 months but not more than 1 year 3,899,744,057 2,590,022,229 Over 1 year but not more than 5 years 1,811,279,527 8,508,634,995 More than 5 years 12,566,821,569 12,864,421,577 Total 34,052,027,094 27,133,860,568
16(a) Consolidated other liabilities
Islami Bank Bangladesh Limited 34,052,027,094 27,133,860,568 Islami Bank Securities Limited 3,214,833,187 400,594,220 Islami Bank Capital Management Limited 155,924,066 47,734,423 Inter-company balances (3,202,020,617) (293,055,051)Total 34,220,763,730 27,289,134,160
17.0 Deferred tax (assets)/ liabilities
Deferred tax assets and liabilities have been recognised and measured in accordance with the provision of Bangladesh Accounting Standards (BAS) 12 “Income Taxes” and BRPD circular No. 11 dated 12 December 2011. Calculation of deferred tax has been made on all temporary differences between the tax base and carrying amounts for financial reporting purpose. Deferred tax assets and liabilities are attributable to the following:
i) Deferred tax on fixed assets
Carrying amount 4,180,620,405 4,001,520,552 Tax Base 3,231,449,236 3,218,534,573 Temporary timing difference 949,171,169 782,985,979 Deferred tax (asset)/liability @ 42.50% 403,397,747 332,769,041 Opening balance 332,769,041 238,230,992 Deferred tax (income)/expenses 70,628,706 94,538,049
Annual Report 2014232
31.12.2014 31.12.2013
Taka Taka
ii) Deferred tax on provision for gratuity
Carrying amount - -
Tax Base - 326,200,000
Temporary timing difference - (326,200,000)
Deferred tax (asset)/liability @ 42.50% - (138,635,000)
Opening balance (138,635,000) -
Deferred tax (income)/expenses 138,635,000 (138,635,000)
Net deferred tax (income)/expenses (i+ii) 209,263,706 (44,096,951)
Net deferred tax (assets)/liabilities (i+ii) 403,397,747 194,134,041
17(a) Consolidated Deferred tax (assets)/liabilities
Islami Bank Bangladesh Limited 403,397,747 194,134,041
Islami Bank Securities Limited (315,880) 55,273
Islami Bank Capital Management Limited - -
Total 403,081,867 194,189,314
17(b) Consolidated deferred tax (income)/expenses
Islami Bank Bangladesh Limited 209,263,706 (44,096,951)
Islami Bank Securities Limited (371,153) (342,586)
Islami Bank Capital Management Limited - -
Total 208,892,553 (44,439,537)
18.0 Share capital
18.1 Authorized capital
The authorized capital of the Bank is Tk.20,000,000,000 divided into 2,000,000,000 ordinary shares of Tk.10 each.
18.2 Paid up capital
The shareholders of the bank in their 31st Annual General Meeting held on May 31, 2014 approved 10% Stock Dividend (Bonus Share) for the year 2013, thus Paid-up Capital of the Bank has increased from Tk.14,636.28 million to Tk.16,099.91 million at the end of the year 2014; as detailed below:
31.12.2014 Taka146,36,27,880 ordinary shares of Tk.10 each 14,636,278,800 14,63,62,778 Ordinary Shares of Tk.10 each issued as Bonus Share 1,463,627,880 Total 16,099,906,680
18.2.1 The Paid-up Capital of the Bank is Tk.1609,99,06,680 divided into 160,99,90,668 ordinary shares of Tk.10 each fully subscribed by:
Particulars No. of Shares as on 31 Dec, 2014 % of Total
31.12.2014 31.12.2013
Amount in Taka Amount in Taka
(i) Sponsors/ promoters 939,778,646 58.3717% 9,397,786,460 8,613,115,660
(ii) General public 670,191,705 41.6270% 6,701,917,050 6,022,978,440
(iii) Government of the People’s Republic of Bangladesh* 20,317 0.0013% 203,170 184,700
Total 1,609,990,668 100.000% 16,099,906,680 14,636,278,800
* The shares have already been sold by the Government of Bangladesh but no transfer has yet been made in share register of the Bank.
Annual Report 2014 233
18.2.2 Break up of share holding and percentage thereof as on 31.12.2014
Holdings No. of Shareholders
Total Holdings/ No. of Shares Percentage (%)
Less than 500 Shares 35,874 5,211,980 0.32%500 to 5,000 Shares 18,510 32,322,349 2.01%5,001 to 10,000 Shares 2,654 18,847,539 1.17%10,001 to 20,000 Shares 1,691 24,013,505 1.49%20,001 to 30,000 Shares 644 15,691,283 0.98%30,001 to 40,000 Shares 315 10,837,851 0.67%40,001 to 50,000 Shares 221 9,874,581 0.61%50,001 to 100,000 Shares 398 27,967,216 1.74%100,001 to 1,000,000 Shares 452 131,233,400 8.15%Over 1,000,000 Shares 98 1,333,990,964 82.86%Total 60,857 1,609,990,668 100.00%
19.0 Capital adequacy as per Basel - II as on 31 December 2014 (Consolidated)
The Calculation of Capital Adequacy of the Bank has been done as per the revised guidelines on Risk Based Capital Adequacy (RBCA) for Banks (Revised Regulatory Framework in line with Basel-II) issued by Bangladesh Bank vide BRPD Circular No. 09 dated 03.08.2010 and BRPD Circular No. 35 dated 29.12.2010. Detail calculation of Capital Adequacy as per Basel-II as on December 31, 2014 is given below:
(Amount in million Taka)
Particulars 31.12.2014 (Consolidated)
31.12.2014(Solo)
31.12.2013 (Consolidated)
A. Regulatory capital1. Tier-1 (Core capital) (Note-19.1) 34,997.69 35,025.95 32,201.18 2. Tier-2 (Supplementary capital) (Note-19.2) 13,543.92 13,543.92 13,289.59 3. Tier-3 (Additional supplementary capital) (Note-19.3) - - - A. Total regulatory capital (1+2+3) 48,541.61 48,569.86 45,490.77 B. Total Risk Weighted Assets (RWA) (Note-19.4) 378,467.30 378,742.72 318,913.69 C. Capital Adequacy Ratio (CAR) (as against required above 10.00% )
12.83% 12.83% 14.26%
D. Core capital to RWA (as against required minimum 5.00%) 9.25% 9.25% 10.10%E. Supplementary capital to RWA 3.58% 3.58% 4.17%F. Minimum Capital Requirement (MCR) 37,846.73 37,874.27 31,891.37 G. Surplus capital (A-F) 10,694.88 10,695.59 13,599.40
19.1 Tier-1 (Core capital)
1.1 Fully paid-up capital/capital deposited with BB 16,099.91 16,099.91 14,636.28
1.2 Statutory reserve 16,099.91 16,099.91 14,638.61
1.3 Non-repayable share premium account 1.99 1.99 1.99
1.4 General reserve 377.16 377.16 254.38
1.5 Retained earnings 2,386.67 2,414.99 2,637.86
1.6 Non-controlling interest in subsidiaries 0.06 - 0.06
1.7 Non-cumulative irredeemable preferences shares - - -
1.8 Dividend equalization account 32.00 32.00 32.00
1.9 Sub-total: (1.1 to 1.8) 34,997.69 35,025.95 32,201.18
Annual Report 2014234
(Amount in million Taka)31.12.2014 31.12.2014 31.12.2013
(Consolidated) (Solo) (Consolidated)Deductions from Tier-1 (Core capital)1.10 Book value of goodwill - - - 1.11 Shortfall in provisions required against classified
assets - - -
1.12 Shortfall in provisions required against investment in shares
- - -
1.13 Remaining deficit on account of revaluation of investment in securities after netting off from any other surplus on the securities.
- - -
1.14 Reciprocal crossholdings of bank capital /subordinated debt
- - -
1.15 Any investment exceeding the approved limit - - - 1.16 Investment in subsidiaries which are not
consolidated - - -
1.17 Others (Specify) - - - 1.18 Sub total (1.10 to 1.17) - - - 1.19 Total eligible tier-1 capital (1.9-1.18) 34,997.69 35,025.95 32,201.18
19.2 Tier-2 (Supplementary capital)2.1 General provision (unclassified investment and off
balance sheet exposure) 4,753.68 4,753.68 4,508.80
2.2 Assets revaluation reserves up to 50% 5,749.49 5,749.49 5,749.49 2.3 Revaluation reserves of securities up to 50% 40.75 40.75 31.30 2.4 Revaluation reserves for equity instruments up to 10% - - - 2.5 All other preference shares - - - 2.6 Perpetual subordinated debt (Mudaraba Perpetual Bond) 3,000.00 3,000.00 3,000.00 2.7 Others (if any item approved by Bangladesh Bank) - - - 2.8 Sub-total (2.1 to 2.7) 13,543.92 13,543.92 13,289.59 2.9 Deductions, if any - - - 2.10 Total Eligible Tier-2 Capital (2.8 - 2.9) 13,543.92 13,543.92 13,289.59
19.3 Tier-3 (Additional supplementary capital)
3.1 Short-term subordinated debt - - - 4. Total supplementary capital (2.10+3) 13,543.92 13,543.92 13,289.59 5. Total regulatory capital (1.19+4) 48,541.61 48,569.86 45,490.77
19.4 Risk Weighted Assets (RWA) for 1. Investment (credit) risk 336,165.95 336,701.42 287,207.41 (i) On-balance sheet 313,692.19 314,227.66 270,318.56 (ii) Off-balance sheet 22,473.76 22,473.76 16,888.85 2. Market Risk 6,394.91 6,394.91 744.20 3.Operational risk 35,906.44 35,646.39 30,962.08 Total Risk Weighted Assets (1+2+3) 378,467.30 378,742.72 318,913.69
31.12.2014 31.12.2013
Taka Taka
20.0 Statutory reserveOpening balance 14,638,613,627 12,423,662,342 Add: Addition made this year 1,461,293,053 2,214,951,285 Closing balance 16,099,906,680 14,638,613,627
At least 20% of net profit before tax is transferred to statutory reserve account each year until the cumulative balance equal to the amount of paid up capital account as per Section 24 of the Bank Company Act 1991 as amended. During the year 2014 the Amount required to be equal to the amount of paid up capital was transferred to statutory reserve.
Annual Report 2014 235
31.12.2014 31.12.2013Taka Taka
21.0 Others reservesGeneral reserve (Note-21.1) 377,159,532 254,379,979 Assets revaluation reserve (Note-21.2) 11,498,971,320 11,498,971,320 Revaluation reserve of securities (Note-21.3) 81,500,000 62,600,000 Translation reserve (Note-21.4) 6,392,484 1,317,771 Share premium 1,989,633 1,989,633 Dividend equalization account 32,000,000 32,000,000 Total 11,998,012,969 11,851,258,703
21.1 General reserveOpening balance 254,379,979 130,439,979 Add: Addition/(adjustment) made this year 122,779,553 123,940,000 Closing balance 377,159,532 254,379,979
21.2 Assets revaluation reserve Opening balance 11,498,971,320 11,498,971,320 Add: Addition/(adjustment) made this year - - Closing balance 11,498,971,320 11,498,971,320
21.3 Revaluation reserve of securitiesOpening balance 62,600,000 34,700,000 Add: Addition/(adjustment) made this year 18,900,000 27,900,000 Closing balance 81,500,000 62,600,000
21.4 Translation reserveOpening balance 1,317,771 (3,303,771)Add: Addition/ (adjustment) made this year 5,074,713 4,621,542 Closing balance 6,392,484 1,317,771
22.0 Letter of guarantee(a) Claim against the bank which is not acknowledged as debt - -(b) Money for which the bank is contingently liable in respect of guarantees issued favouring : i) Directors - - ii) Government 210,589,850 771,904,461 iii) Bank and other financial institutions 500,000 457,275 iv) Others 8,628,895,740 6,582,232,915 Total 8,839,985,590 7,354,594,651
2014Taka
2013Taka
23.0 Investment incomeIncome from general investment (Note-23.1) 48,521,667,089 47,083,761,335 Profit on deposits with other banks & financial institutions (Note-23.2) 588,289,290 1,061,703,045 Total 49,109,956,379 48,145,464,380
23.1 Income from general investment (*)
Bai Murabaha 29,474,302,572 28,494,774,596 Musharaka /Musharaka Documentary Bills 1,463,048,565 2,013,000,424 Bai Muajjal 4,477,450,761 3,235,748,522 Hire Purchase under Shirkatul Melk 11,755,116,774 11,621,383,638 Bai Salam 312,385,391 306,181,459 Bai -As- Sarf (FDB /FCD), IBP, MFCI and UPAS 285,866,022 221,367,054 Investment income: Off-shore Banking Unit (OBU) 753,497,004 450,098,863 Compensation income (*) - 741,206,779 Sub total 48,521,667,089 47,083,761,335
(*) This amount includes any amount transferred from profit/rent/compensation suspense due to recovery or regularization of investment (i.e. due to declassification of investment) during the year. Amount transferred from profit/rent suspense is included in the “Investment income under respective mode of investment” and amount transferred from compensation suspense is included under “Compensation income”.
Annual Report 2014236
2014 2013Taka Taka
23.2 Profit on deposits with other banks & financial institutionsIn Bangladesh 588,289,290 1,061,703,045Outside Bangladesh - - Sub total 588,289,290 1,061,703,045 Grand total (23.1+23.2) 49,109,956,379 48,145,464,380
23.3 Investment income derived from the fund deployed by
Mudaraba deposits 42,524,199,777 42,360,516,514Other deposits/fund 6,585,756,602 5,784,947,866 Total 49,109,956,379 48,145,464,380
23(a) Consolidated investment income
Islami Bank Bangladesh Limited 49,109,956,379 48,145,464,380 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Total 49,109,956,379 48,145,464,380
24.0 Profit paid on mudaraba deposits Profit paid on Mudaraba Savings Deposit 6,753,174,438 6,548,541,394 Profit paid on Mudaraba Term Deposit Account 11,963,579,333 10,933,682,496 Profit paid on other Mudaraba Deposits 11,424,508,214 12,018,664,519 Profit paid on Placement (*) 173,608,636 1,090,297,127 Profit paid on Mudaraba Perpetual Bond (MPB) 335,400,000 384,000,000 Total 30,650,270,621 30,975,185,536
* Profit paid on placement includes Tk 11,17,73,018 for 2014 (in 2013 Tk Nil) against profit paid on placement of off-shore Banking Units (OBUs).
24(a) Consolidated profit paid on mudaraba deposits
Islami Bank Bangladesh Limited 30,650,270,621 30,975,185,536 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Inter-company transactions (57,333,113) (74,905,974)Total 30,592,937,508 30,900,279,562
25.0 Income from investments in shares & securities
i. Inside Bangladesh Bangladesh Government Islamic Investment Bond (BGIIB) 1,784,915,681 2,032,412,208 Bangladesh Shipping Corporation (BSC) 2,000,000 - Central Depository Bangladesh Ltd. (CDBL) 5,711,802 14,623,166 Income on Share Securities Trading 2,222,593 479,286 Islami Bank Capital Management Limited 104,997,550 - Other Banks/companies 400,776 - Sub total (i) 1,900,248,402 2,047,514,660 ii. Outside Bangladesh - - Sub total (ii) - - Grand total (i+ii) 1,900,248,402 2,047,514,660
25(a) Consolidated income from investments in shares & securities
Islami Bank Bangladesh Limited 1,900,248,402 2,047,514,660 Islami Bank Securities Limited 51,990,206 64,514,533 Islami Bank Capital Management Limited - - Inter-company transactions (104,997,550) - Total 1,847,241,058 2,112,029,193
Annual Report 2014 237
2014 2013Taka Taka
26.0 Commission, exchange & brokerage incomeCommission income 3,477,847,228 3,062,812,206 Exchange income (Note 26.1) 2,392,526,280 1,906,313,841Total 5,870,373,508 4,969,126,047
26.1 Exchange incomeGross exchange gain 2,392,526,280 1,906,313,841 Less: exchange loss - - Net exchange gain 2,392,526,280 1,906,313,841
26(a) Consolidated commission, exchange & brokerage incomeIslami Bank Bangladesh Limited 5,870,373,508 4,969,126,047 Islami Bank Securities Limited 12,958,772 9,532,567 Islami Bank Capital Management Limited
- -
Total 5,883,332,280 4,978,658,614 27.0 Other operating income
Rent on locker 11,817,153 9,996,314Telephone/ trunk call charge recovered 647,733 2,199,495 P&T charge recovered - 4,134,575Income from ATM 47,806,594 - E & TA fees recovered 1,195,640 984,515 Income from SWIFT 139,851,387 115,959,435 Account maintenance charges realised 703,099,468 676,603,675 Service charges recovered 37,111,895 29,097,431 Service charges recovered: OBU 13,871,627 8,223,565 Income from Mobile Wallet 4,095,642 1,280,876 Rent on premises realised 2,538,886 2,260,944 Sale proceeds of tender schedule 2,999,500 1,381,000 Profit on sale of bank’s car 21,249,366 3,055,859 MICR cheque charge realised 26,932,254 5,249,147 Others 153,231,826 71,211,785 Total 1,166,448,971 931,638,616
27(a) Consolidated other operating incomeIslami Bank Bangladesh Limited 1,166,448,971 931,638,616 Islami Bank Securities Limited 61,594,225 83,296,318 Islami Bank Capital Management Limited 52,663,859 45,790,331 Inter Company Transactions (57,333,113) (74,905,974)Total 1,223,373,942 985,819,291
28.0 Salary & allowances (*)Basic pay 3,437,505,591 3,141,844,803 Allowances 2,396,531,797 2,231,927,682 Bonus 1,634,071,311 1,543,127,817 Contribution to provident fund 289,091,142 265,759,059 Contribution to Gratuity (**) 396,000,000 326,200,000 Contribution to benevolent fund 10,000,000 10,000,000 Contribution to superannuation fund (**) 20,000,000 20,000,000 Total 8,183,199,841 7,538,859,361
(*) The above salary & allowances includes Tk.36,11,290/- for 2014 (in 2013 Tk.30,70,104/-) against salary and allowances of Off-shore Banking Units (OBUs).(**) As per latest Actuarial valuation report, there was no shortfall in the fund to meet-up the related liability up to 31 December 2014.
Annual Report 2014238
2014 2013Taka Taka
28(a) Consolidated salary & allowances Islami Bank Bangladesh Limited 8,183,199,841 7,538,859,361 Islami Bank Securities Limited 14,368,273 13,901,986 Islami Bank Capital Management Limited - - Total 8,197,568,114 7,552,761,347
29.0 Rent, taxes, insurances, electricity etc.
Rent, rates and taxes 362,139,320 288,073,881 Insurance 343,706,938 296,574,014 Electricity and lighting 290,293,609 237,491,433 Total 996,139,867 822,139,328
29(a) Consolidated rent, taxes, insurances, electricity etc.
Islami Bank Bangladesh Limited 996,139,867 822,139,328 Islami Bank Securities Limited 3,905,713 2,491,390 Islami Bank Capital Management Limited - 499,765 Total 1,000,045,580 825,130,483
30.0 Legal expensesLegal charges 16,206,043 35,067,030
30(a) Consolidated legal expenses
Islami Bank Bangladesh Limited 16,206,043 35,067,030 Islami Bank Securities Limited - 218,293 Islami Bank Capital Management Limited - - Total 16,206,043 35,285,323
31.0 Postage, stamps, telecommunications etc.Telephone (*) 38,613,447 35,162,708 Postage 387,577 - Fax & internet 8,072,366 9,176,881 Stamps charges 57,320 4,078 Total 47,130,710 44,343,667
(*) Telephone expenses includes Tk.3,010/- for 2014 (in 2013 Tk.Nil ) against Telephone bill of Off-shore Banking Units (OBUs).
31(a) Consolidated postage, stamps, telecommunications etc.
Islami Bank Bangladesh Limited 47,130,710 44,343,667 Islami Bank Securities Limited 175,424 193,229 Islami Bank Capital Management Limited
- -
Total 47,306,134 44,536,896 32.0 Stationery, printing and advertisement etc.
Paper & table stationery 27,516,110 24,559,569 Printing and stationery (registers and forms)
125,352,068 125,226,110
Advertisement & publicity 164,541,413 180,161,687 Total 317,409,591 329,947,366
32(a) Consolidated stationery, printing and advertisement etc.
Islami Bank Bangladesh Limited 317,409,591 329,947,366 Islami Bank Securities Limited 202,501 151,523 Islami Bank Capital Management Limited - - Total 317,612,092 330,098,889
Annual Report 2014 239
2014 2013Taka Taka
33.0 Chief executive’s salary & fees
Basic pay 4,800,000 4,112,903 House rent allowance 480,000 480,000 Medical allowance 1,200,000 810,645 Utilities 120,000 120,000 Festival bonus 800,000 800,000 Incentive bonus 1,000,000 1,000,000 Total 8,400,000 7,323,548
34.0 Directors’ fees and expenses
Directors’ fees for attending board/ executive committee/ other committees meeting 2,431,100 3,554,150TA/DA/hotel fare for local & foreign directors 8,973,833 7,040,132 Others 1,382,084 993,552 Total 12,787,017 11,587,834
34.1 Rate of fees for attending board/ executive committee/ other committees meeting
For board meeting 5,000 5,000 For executive committee/ other committees meeting 4,000 4,000
34(a) Consolidated directors’ fees and expensesIslami Bank Bangladesh Limited 12,787,017 11,587,834 Islami Bank Securities Limited 396,750 287,500 Islami Bank Capital Management Limited - - Total 13,183,767 11,875,334
35.0 Shari’ah supervisory committee’s fees & expenses
Shari’ah supervisory members’ fees for attending meeting 727,800 276,000 TA/DA./hotel fare 1,566,024 944,508 Others 268,300 180,915 Total 2,562,124 1,401,423
35.1 Rate of fees for attending shariah supervisory meeting
For shariah supervisory meeting 5,000 5,000For sub-committee meeting 4,000 4,000
36.0 Auditors’ feesAuditors’ fees 2,229,118 2,070,000
36(a) Consolidated auditors’ feesIslami Bank Bangladesh Limited 2,229,118 2,070,000 Islami Bank Securities Limited 92,000 75,000 Islami Bank Capital Management Limited 23,000 23,000 Total 2,344,118 2,168,000
37.0 Depreciation/amortization and repair to bank's assetsi) Depreciation/amortizationPremises (building) 140,627,745 139,324,573 Furniture & fixtures 48,274,318 44,271,448 Mechanical appliances 360,487,678 313,530,783 Motor vehicles 57,513,847 61,064,705 Books 644,035 473,073 ATM 77,925,469 61,535,459 Amortization: Intangible assets 82,825,438 26,060,893 Sub total (i) 768,298,530 646,260,934 ii) Repair of bank's properties/assets 93,702,876 79,452,710 Grand total (i+ii) 862,001,406 725,713,644
Annual Report 2014240
2014 2013Taka Taka
37(a) Consolidated depreciation and repair to bank’s assetsIslami Bank Bangladesh Limited 862,001,406 725,713,644 Islami Bank Securities Limited 4,504,731 4,273,998 Islami Bank Capital Management Limited - - Total 866,506,137 729,987,642
38.0 Other expensesTA/ DA 133,384,530 109,070,556 Repairs to rented premises 6,363,602 6,979,119 Motor car running & maintenance 73,004,044 65,024,893 Periodicals & newspapers 9,983,541 9,909,093 Entertainment Expenses 44,048,136 42,579,158 Reimbursement expense-conveyance 82,598,993 78,905,070 Overtime 55,815,459 48,979,743 Training expenses 40,623,027 33,938,451 Meeting expenses 9,015,645 18,998,913 Bank charges (*) 10,222,740 17,913,449 Uniforms 12,710,324 10,559,151 Conveyance 10,968,375 10,278,692 Honorarium & cash award 18,361,924 21,477,061 Membership fees 5,487,280 3,758,982 Staff welfare 5,756,822 8,682,680 Evening banking allowance 2,592,127 2,470,570 Computer expenses 33,277,076 29,345,864 Wages 41,198,959 32,319,829 Discomfort allowance 17,413,263 14,201,904 Air condition maintenance 1,693,426 1,776,900 WASA / gas expenses 12,328,537 10,357,130 Washing charges 11,257,944 10,225,912 Transportation charges 4,144,936 3,468,423 ATM charges - 14,135,578 Reuters charges 6,260,715 6,525,363 Business development expenses 279,848,759 294,259,895 Photocopy expenses 16,817,513 15,504,196 Upkeep of office premises 18,478,138 15,988,657 Clearing house expenses 314,002 612,779 Bonus share issue expenses 4,599,355 5,403,049 Rating expenses 460,000 460,000 Band width charges 86,915,306 99,239,987 Other regulatory fees and expenses 5,000 177,212 MPB expenses 1,500,000 1,558,800 Recruitment expenses 5,468,222 2,594,456 Professional fees 2,053,424 2,039,500 Loss on sale of bank’s fixed asset 176,461 538,244 Khidmah card expenses 425,064 7,708,857 Mobile wallet expense 10,732,857 1,418,944 BACH Expense 333,529 198,056 Other RDS expenses (Note-38.1) 67,540,903 52,351,857 NPS network transactions charges 113,670 -VISA expenses 13,723,464 - Maintenance of software 23,754,600 - Others 18,312,139 23,005,689 Total 1,200,083,831 1,134,942,662 (*) Bank charges include Tk.14,332/- for 2014 (in 2013 Tk.60,84,364/- ) against Bank charges of Off-shore Banking Units (OBUs).
Annual Report 2014 241
2014 2013Taka Taka
38.1 Other RDS expenses
Risk allowance 37,147,498 28,556,603 By-cycle allowance 9,455,726 7,699,714 Motor cycle allowance 8,104,908 6,230,532 Field allowance 4,052,454 3,115,266 TA/ DA 1,350,818 1,038,422 Fuel 2,026,227 1,557,633 Stationary 3,377,045 2,596,055 Repairing 2,026,227 1,557,632 Total 67,540,903 52,351,857
38.2 Motor car running and maintenance
As on 31.12.2014 the Bank had 255 (Two hundred fifty five) Motor Vehicles (Cars -206, Jeeps -10, Pickup-36 and Microbuses -3). The Motor Vehicles are used for carrying cash, development works and for other important works of the Bank. Some vehicles are attached with the senior executives of the Bank as per transport policy of the Bank. A sum of Tk.73,004,044/- was incurred during the year ended on 31.12.2014 as against Tk.65,024,893/- incurred during the year 2013 for repairs, maintenance, purchase of fuel & lubricants and insurance etc. for the motor vehicles of the Bank.
38.3 VAT related to expenditures
All the expenditures reported in this Financial Statements are inclusive of VAT except for specific items which are exempted from VAT by appropriate authority.
38(a) Consolidated other expenses
Islami Bank Bangladesh Limited 1,200,083,831 1,134,942,662 Islami Bank Securities Limited 4,787,146 3,588,086 Islami Bank Capital Management Limited 679,131 90,611 Total 1,205,550,108 1,138,621,359
39.0 Retained earnings: movement of surplus in profit & loss account
Retained earnings as on 1 January 2,634,530,184 3,152,246,877 Add: Net profit after tax 3,999,058,608 4,948,584,592 Sub-total 6,633,588,792 8,100,831,469 Less: Transfer to statutory reserve 1,461,293,053 2,214,951,285 Transfer to/(from) general reserve 122,779,553 123,940,000 Dividend paid (Bonus share & cash dividend) 2,634,530,184 3,127,410,000 Sub-total 4,218,602,790 5,466,301,285 Balance of retained earnings as at 31 December 2,414,986,002 2,634,530,184
39(a) Consolidated retained earnings
Retained earnings as on 1 January 2,637,858,071 3,073,402,299 Add: Net profit attributable to equity holders of IBBL 3,967,415,282 5,030,757,057 Sub-total 6,605,273,353 8,104,159,356 Less: Transfer to statutory reserve 1,461,293,053 2,214,951,285 Transfer to/(from) general reserve 122,779,553 123,940,000 Dividend paid (Bonus share & cash dividend) 2,634,530,184 3,127,410,000 Sub-total 4,218,602,790 5,466,301,285 Balance of retained earnings as at 31 December 2,386,670,563 2,637,858,071
Annual Report 2014242
39(b) Non-controlling interest Amount in Taka
Particulars As on 01.01.2014Share of profit or (loss) for the year
2014As on 31.12.2014 As on 31.12.2013
Islami Bank Securities Limited 52,476 800 53,276 52,476 Less: Dividend - -Sub-total 53,276 52,476Islami Bank Capital Management Limited 8,856 778 9,634 8,856 Less: Dividend 2,450 -Sub-total 7,184 8,856Total 61,332 1,578 60,460 61,332
The share capital of Islami Bank Securities Ltd. is Tk.2,700,000,000/- divided into 2,700,000 shares of Tk.1,000/ each out of which share capital of minority is Tk.54,000/- divided into 54 shares of Tk.1,000/- each which represent 0.0020% of total share of the subsidiary Company.The share capital of Islami Bank Capital Management Ltd. is Tk.300,000,000/- divided into 300,000 shares of Tk.1,000/ each out of which share capital of minority is Tk.7,000/- divided into 7 shares of Tk.1,000/- each which represent 0.0023% of total share of the subsidiary Company.
40.0 Events after reporting periodThe Board of Directors of the Bank in its 217th meeting held on 21 March 2015 recommended 15% Cash Dividend for the year 2014 subject to approval of the shareholders in the ensuing 32nd Annual General Meeting to be held on 13 June 2015.
2014Taka
2013 Taka
41.0 Earnings per share (EPS)a) Attributable profit for the year 3,999,058,608 4,948,584,592 b) Weighted average number of ordinary share during the year 1,609,990,668 1,609,990,668 Basic earnings per share (EPS) (a ÷ b) 2.48 3.07 Previous year’s figures have been adjusted due to issuance of 14,63,62,788 bonus shares during the year 2014 against 10% Stock Dividend of 2013 as per guidelines of BAS 33, “Earnings per share”. Diluted earnings per share is not applicable since there is no possibility of dilution of shares during the year.
41(a) Consolidated earnings per share Consolidated profit after tax 3,967,416,860 5,030,758,795 Less: Profit attributable to non-controlling interest 1,578 1,738 Attributable profit for distribution to shareholders of IBBL 3,967,415,282 5,030,757,057 Weighted average number of ordinary share during the year 1,609,990,668 1,609,990,668 Consolidated basic earnings per share 2.46 3.12
42.0 Net asset value per share (NAV)a) Capital/shareholders’ equity for the year 46,612,812,331 43,760,681,314 b) Weighted average number of ordinary share during the year 1,609,990,668 1,609,990,668 Net asset value per share (NAV) (a ÷ b) 28.95 27.18
Net asset value per share (NAV) has been disclosed as per the Bangladesh Securities and Exchange Commission’s Notification No.SEC/CMRRCD/2009-193/Admin/03-31 dated June 1, 2009. Previous year’s number of ordinary shares has been adjusted to confirm current year’s presentation due to issuance of 14,63,62,788 bonus shares during the year 2014 against stock dividend of 2013.
43.0 Net operating cash flow per share (NOCFPS)a) Net cash flows from operating activities 47,532,710,859 34,521,082,274 b) Weighted average number of ordinary share during the year 1,609,990,668 1,609,990,668 Net operating cash flow per share (NOCFPS) (a ÷ b) 29.52 21.44 Net operating cash flow per share (NOCFPS) has been disclosed as per the Bangladesh Securities and Exchange Commission’s Notification No.SEC/CMRRCD/2009-193/Admin/03-31 dated June 1, 2009. Previous year’s number of ordinary shares has been adjusted to confirm current year’s presentation due to issuance of 14,63,62,788 bonus shares during the year 2014 against 10% stock dividend of 2013.
Annual Report 2014 243
31.12.2014 31.12.2013Taka Taka
44.0 Reconciliation of cash and cash equivalent at the end of the yearCash in hand 7,696,844,549 8,180,338,285 Balance with Bangladesh Bank and its agent banks (Sonali Bank Ltd.) 38,522,514,877 36,111,176,654 Balance with other banks and financial institutions 20,199,350,245 12,327,320,344 Total 66,418,709,671 56,618,835,283
44(a) Reconciliation of consolidated cash and cash equivalent at the end of the yearCash in hand 7,696,844,962 8,180,346,965 Balance with Bangladesh Bank and its agent banks (Sonali Bank Ltd.) 38,522,514,877 36,111,176,654 Balance with other banks and financial institutions 23,615,218,198 12,700,116,779 Total 69,834,578,037 56,991,640,398
45.0 Operating lease payments disclosure 2014Taka (in million)
2013Taka (in million)
Non-cancellable operating lease rentals for the Bank are payable as follows:Less than 1 year 406 350 Between 1 and 5 years 2,300 2,515 More than 5 years 4,740 8,750 Total 7,446 11,615
31.12.2014(Taka) 31.12.2013 (Taka)46.0 Placement from banks & other financial institutions
Borrowing from Abroad-OBU 6,098,512,743 -Borrowing from the other Banks in Bangladesh-OBU 1,558,988,000 -Borrowing from Treasury Division, IBBL-OBU (Note-6.0_OBU) 7,606,631,085 16,213,482,904Fund obtained by AD branches from OBU for MDB in FC (Note-3.0_OBU) 2,859,555,231 3,497,773,330Sub total 18,123,687,059 19,711,256,234Less: Borrowing from Treasury Division, IBBL-OBU 7,606,631,085 16,213,482,904Less: Fund obtained by AD branches from OBU for MDB in FC 2,859,555,231 3,497,773,330Sub total 10,466,186,316 19,711,256,234Total 7,657,500,743 -
Fund obtained from OBU for investment in MDB in FC by AD branches is shown under “Cover fund MDB investment” under other liabilities at AD branches whereas Fund provided to AD branches for MDB in FC is shown under “ Placement with banks & other financial institutions” in the assets side at OBU’s balance sheet. As the items are intra-units balance, the amount was fully eliminated while preparing the financial statement of the Bank as a whole.
46(a) Consolidated placement from banks & other financial institutionsIslami Bank Bangladesh Limited 7,657,500,743 -Islami Bank Securities Limited - -Islami Bank Capital Management Limited - -Total 7,657,500,743 -
47.0 Currency wise exposuresCurrency wise exposures are shown at Annexure-C.
Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing Director
Date : Dhaka21 March 2015
Annual Report 2014244
Isla
mi B
ank
Bang
lade
sh L
imite
dFi
xed
Asse
ts S
ched
ule
As a
t 31
Dece
mbe
r 201
4
(Am
ount
in Ta
ka)
Parti
cula
rs
Cost
Depr
ecia
tion/
Amor
tizat
ion
Writ
ten
down
valu
e
Bala
nce
as a
t 01
.01.
2014
Addi
tion
durin
g th
e ye
ar
Sale
/
adju
stm
ent
durin
g th
e ye
ar
Tota
l as a
t 31
.12.
2014
Char
ged
upto
01
.01.
2014
Char
ged
durin
g th
e ye
ar
Adju
stm
ent
durin
g th
e ye
ar
Tota
l as a
t 31
.12.
2014
as a
t 31
.12.
2014
as a
t 31
.12.
2013
12
34
5 (2
+ 3
- 4)
67
89
(6+
7 - 8
)10
(5 -
9)11
A. Ta
ngib
le A
sset
s
i) Pr
emis
es
Land
7,5
92,5
98,4
19
668
,131
-
7,5
93,2
66,5
50
- -
- -
7,5
93,2
66,5
50
7,5
92,5
98,4
18
Build
ing
6,2
34,3
91,3
77
83,
002,
457
- 6
,317
,393
,834
6
74,1
08,5
20
140
,627
,745
-
814
,736
,265
5
,502
,657
,569
5
,560
,282
,857
Cons
truct
ion/
capi
tal w
ork
in p
roce
ss 1
03,8
12,9
67
93,
294,
031
- 1
97,1
06,9
98
- -
- -
197
,106
,998
1
03,8
12,9
67
Sub
tota
l (i)
13,
930,
802,
763
176
,964
,619
-
14,1
07,7
67,3
82
674
,108
,520
1
40,6
27,7
45
- 8
14,7
36,2
65
13,2
93,0
31,1
16
13,2
56,6
94,2
42
ii) O
ther
fixe
d as
sets
Furn
iture
and
fixt
ures
719
,377
,288
9
3,88
6,18
4 1
,574
,750
8
11,6
88,7
22
285
,489
,775
4
8,27
4,31
8 6
11,1
22
333
,152
,971
4
78,5
35,7
51
433
,887
,513
Mec
hani
cal a
pplia
nces
2,7
21,0
50,0
08
382
,712
,680
5
,299
,125
3
,098
,463
,563
1,
478,
796,
723
360
,487
,678
2
,467
,124
1,
836,
817,
277
1,2
61,6
46,2
86
1,2
42,2
53,2
85
Mot
or ve
hicl
es 5
25,1
69,7
92
89,
248,
048
14,
979,
210
599
,438
,630
3
73,9
35,6
83
57,
513,
847
9,7
67,8
68
421
,681
,662
1
77,7
56,9
69
151
,234
,110
Book
s 4
,773
,584
1
,108
,372
6
,000
5
,875
,956
3
,342
,856
6
44,0
35
4,0
80
3,9
82,8
11
1,8
93,1
45
1,4
30,7
28
ATM
482
,830
,169
1
50,1
02,6
35
58,
000
632
,874
,804
1
18,9
41,5
17
77,
925,
469
48,
000
196
,818
,986
4
36,0
55,8
18
363
,888
,652
Sub
Tota
l (ii)
4,4
53,2
00,8
41
717
,057
,919
2
1,91
7,08
5 5
,148
,341
,675
2,
260,
506,
554
544
,845
,347
12
,898
,194
2,
792,
453,
707
2,3
55,8
87,9
69
2,1
92,6
94,2
88
Tota
l (i+
ii) 1
8,38
4,00
3,60
4 8
94,0
22,5
38
21,
917,
085
19,
256,
109,
057
2,93
4,61
5,07
4 6
85,4
73,0
92
12,8
98,1
94
3,60
7,18
9,97
2 1
5,64
8,91
9,08
5 15
,449
,388
,530
B. In
tang
ible
asse
ts 3
09,4
80,9
52
76,
848,
210
- 3
86,3
29,1
62
26,
060,
893
82,
825,
438
- 1
08,8
86,3
31
277
,442
,831
2
83,4
20,0
59
Tota
l (A+
B) 1
8,69
3,48
4,55
6 9
70,8
70,7
48
21,
917,
085
19,
642,
438,
219
2,96
0,67
5,96
7 7
68,2
98,5
30
12,8
98,1
94
3,71
6,07
6,30
3 1
5,92
6,36
1,91
6 15
,732
,808
,589
Anne
xure
- A
Annual Report 2014 245
Islam
i Ban
k Ban
glad
esh
Lim
ited
Cons
olid
ated
Fixe
d As
sets
Sch
edul
eAs
at 3
1 De
cem
ber 2
014
(Am
ount
in Ta
ka)
Parti
cular
s
Cost
Depr
eciat
ion/A
morti
zatio
nW
ritte
n dow
n valu
e
Balan
ce as
at
01.0
1.20
14Ad
dition
durin
g th
e yea
r
Sale
/ ad
justm
ent
durin
g the
year
Tota
l as a
t 31
.12.
2014
Char
ged u
pto
01.0
1.20
14Ch
arge
d dur
ing
the y
ear
Adjus
tmen
t du
ring t
he
year
Tota
l as a
t 31
.12.
2014
as at
31.1
2.20
14as
at 31
.12.
2013
12
34
5 (2
+ 3
- 4)
67
89
(6+
7 - 8
)10
(5 -
9)11
A. Ta
ngib
le As
sets
i) Pr
emise
s
Land
7,59
2,598
,419
668
,131
- 7
,593,2
66,55
0 -
- -
- 7
,593,2
66,55
0 7
,592,5
98,41
8
Build
ing
6,23
4,391
,377
83,0
02,45
7 -
6,31
7,393
,834
674
,108,5
20
140
,627,7
45
- 8
14,73
6,265
5
,502,6
57,56
9 5
,560,2
82,85
7
Cons
tructi
on/c
apita
l wor
k in p
roce
ss 1
03,81
2,967
9
3,294
,031
- 1
97,10
6,998
-
- -
- 1
97,10
6,998
1
03,81
2,967
Sub t
otal
(i) 13
,930,8
02,76
3 17
6,964
,619
- 14
,107,7
67,38
2 67
4,108
,520
140,6
27,74
5 -
814,7
36,26
5 13
,293,0
31,11
6 13
,256,6
94,24
2
ii) O
ther
fixe
d ass
ets
Furn
iture
and
fixtu
res
721
,573,0
47
93,9
21,22
8 1
,574,7
50
813
,919,5
25
286
,274,3
62
48,4
65,38
8 6
11,12
2 3
34,12
8,628
4
79,79
0,897
4
35,29
8,685
Mec
hani
cal a
pplia
nces
2,72
5,837
,619
383
,311,0
84
5,29
9,125
3
,103,8
49,57
8 1
,481,7
87,04
8 3
61,53
8,852
2
,467,1
24
1,84
0,858
,776
1,26
2,990
,802
1,24
4,050
,572
Mot
or ve
hicle
s 5
30,78
5,792
8
9,428
,067
14,9
79,21
0 6
05,23
4,649
3
77,43
4,117
5
8,653
,619
9,76
7,868
4
26,31
9,868
1
78,91
4,782
1
53,35
1,675
Book
s 4
,773,5
84
1,10
8,372
6
,000
5,87
5,956
3
,342,8
56
644
,035
4,08
0 3
,982,8
11
1,89
3,145
1
,430,7
28
ATM
482
,830,1
69
150
,102,6
35
58,0
00
632
,874,8
04
118
,941,5
17
77,9
25,46
9 4
8,000
1
96,81
8,986
4
36,05
5,818
3
63,88
8,652
Sub T
otal
(ii)
4,46
5,800
,211
717,8
71,38
6 21
,917,0
85
5,16
1,754
,512
2,26
7,779
,900
547,2
27,36
3 12
,898,1
94
2,80
2,109
,069
2,35
9,645
,444
2,19
8,020
,312
Tota
l (i+i
i) 18
,396,6
02,97
4 89
4,836
,005
21,91
7,085
19
,269,5
21,89
4 2,
941,8
88,42
0 68
7,855
,108
12,89
8,194
3,
616,8
45,33
4 15
,652,6
76,56
0 15
,454,7
14,55
4
B. In
tang
ible A
sset
s 31
1,002
,860
76,86
8,065
-
387,8
70,92
5 26
,858,7
31
83,20
9,165
-
110,0
67,89
6 27
7,803
,029
284,1
44,12
9
Tota
l (A+
B) 18
,707,6
05,83
4 97
1,704
,070
21,91
7,085
19
,657,3
92,81
9 2,
968,7
47,15
1 77
1,064
,273
12,89
8,194
3,
726,9
13,23
0 15
,930,4
79,58
9 15
,738,8
58,68
3
Anne
xure
-B
Annual Report 2014246
Isla
mi B
ank
Bang
lade
sh L
imite
dCu
rrenc
y wis
e Ex
posu
res
As a
t 31
Dece
mbe
r 201
4
(Amo
unt i
n Tak
a)
ASSE
TSTa
kaEq
uivale
nt Ta
ka of
US
Dolla
rEq
uivale
nt Ta
ka of
GBP
Equiv
alent
Taka
of EU
ROEq
uivale
nt Ta
ka of
Oth
er
Curre
ncy
Tota
l Tak
a
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
12
34
56
78
910
1112
13
Cash
in ha
nd 7,
647,8
81,56
5 8,
155,1
82,74
0 48
,722,8
03
24,34
6,613
41
,111
58,91
6 10
9,379
47
4,284
89
,691
275,7
32
7,69
6,844
,549
8,18
0,338
,285
Balan
ce w
ith B
angla
desh
Ban
k & it
s ag
ent b
ank
37,85
8,294
,659
34,98
1,990
,434
617,7
69,12
5 1,
089,0
58,04
3 11
,307,8
16
10,98
1,155
34
,948,9
37
28,92
4,578
19
4,340
22
2,444
38
,522,5
14,87
7 36
,111,1
76,65
4
Balan
ce w
ith ba
nks &
othe
r fin
ancia
l ins
titut
ions
17,79
0,027
,698
7,57
7,940
,830
1,15
7,364
,999
3,66
7,751
,841
261,8
96,32
4 97
,715,2
92
602,7
11,89
4 26
3,884
,950
387,3
49,33
0 72
0,027
,431
20,19
9,350
,245
12,32
7,320
,344
Plac
emen
t with
othe
r ban
ks &
fina
ncial
ins
titut
ions
2,000
,000,0
00
- -
- -
- -
- -
- 2,
000,0
00,00
0 -
Inves
tmen
ts (in
shar
es &
secu
rities
) 10
0,856
,528,8
96
67,21
1,398
,968
- -
- -
- -
- -
100,8
56,52
8,896
67
,211,3
98,96
8
Inves
tmen
ts
426,8
33,51
2,348
38
2,430
,515,9
05
36,64
1,955
,118
20,76
4,289
,072
- -
- -
- -
463,4
75,46
7,466
40
3,194
,804,9
77
Fixed
asse
ts in
cludin
g pre
mise
s 15
,926,3
61,91
6 15
,732,8
08,58
9 -
- -
- -
- -
- 15
,926,3
61,91
6 15
,732,8
08,58
9
Othe
r ass
ets
3,38
6,322
,373
4,29
1,755
,522
358,6
48,42
9 17
9,188
,902
- 6,
029
- 83
2,684
-
- 3,
744,9
70,80
2 4,
471,7
83,13
7
Non b
ankin
g ass
ets
- -
- -
- -
- -
- -
- -
Total
asse
ts 61
2,298
,929,4
55
520,3
81,59
2,988
38
,824,4
60,47
4 25
,724,6
34,47
1 27
3,245
,251
108,7
61,39
2 63
7,770
,210
294,1
16,49
6 38
7,633
,361
720,5
25,60
7 65
2,422
,038,7
51
547,2
29,63
0,954
LIABI
LITIE
STa
kaEq
uivale
nt Ta
ka of
US
Dolla
rEq
uivale
nt Ta
ka of
GBP
Equiv
alent
Taka
of EU
ROEq
uivale
nt Ta
ka of
Oth
er
Curre
ncy
Tota
l Tak
a
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Plac
emen
t fro
m B
angla
desh
Ban
k, ot
her
bank
s, fin
ancia
l inst
itutio
ns an
d age
nts
- -
7,657
,500,7
43 -
- -
- -
- -
7,657
,500,7
43 -
Depo
sits
543,1
27,19
4,723
45
9,532
,693,2
56
13,53
5,339
,386
9,22
9,002
,810
27,86
1,803
18
,116,2
54
355,5
00,05
5 23
1,152
,643
510,7
68
332,1
11
557,0
46,40
6,735
46
9,011
,297,0
74
Bills
paya
ble 3,
644,7
12,82
7 4,
129,6
57,95
7 5,
181,2
74
- -
- -
- -
- 3,
649,8
94,10
1 4,
129,6
57,95
7
Othe
r liab
ilities
34,45
5,424
,841
27,32
7,994
,609
- -
- -
- -
- -
34,45
5,424
,841
27,32
7,994
,609
Muda
raba
Per
petu
al Bo
nd 3,
000,0
00,00
0 3,
000,0
00,00
0 -
- -
- -
- -
- 3,
000,0
00,00
0 3,
000,0
00,00
0
Tota
l liab
ilities
584,2
27,33
2,391
493,9
90,34
5,822
21
,198,0
21,40
3 9,
229,0
02,81
0 27
,861,8
03
18,11
6,254
35
5,500
,055
231,1
52,64
3 51
0,768
33
2,111
60
5,809
,226,4
20
503,4
68,94
9,640
Net p
ositi
on28
,071,5
97,06
4 26
,391,2
47,16
6 1,7
626,4
39,07
1 16
,495,6
31,66
1 24
5,383
,448
90,64
5,138
28
2,270
,155
62,96
3,853
38
7,122
,593
720,1
93,49
6 46
,612,8
12,33
1 43
,760,6
81,31
4
Anne
xure
- C
Annual Report 2014 247
Islam
i Ban
k Ba
ngla
desh
Lim
ited
Cons
olid
ated
segm
ent r
epor
ting
For t
he ye
ar en
ded
31 D
ecem
ber
2014
A. S
egm
enta
l ope
ratin
g pr
ofit a
nd lo
ss(A
moun
t in T
aka)
Parti
cular
sHe
ad O
ffice
Co
ntro
lled
Bran
chs
Dhak
a Cen
tral
Zone
Dhak
a Sou
th
Zone
Dhak
a Nor
th
Zone
Khu
lna Z
one
Com
illa Z
one
Rajsh
ahi Z
one
Chitt
agon
g So
uth
Zone
No
akha
li Zon
e Co
mm
onCo
nsol
idat
ed
Inve
stm
ent i
ncom
e 7
,864,3
41,58
2 8
,164,2
72,64
3 3
,357,0
34,25
1 5
,207,6
71,64
2 2
,214,6
98,26
4 1
,381,1
98,67
9 3
,955,2
41,97
3 5
,048,3
51,98
7 1
,153,1
83,87
6 1
2,611
,202,5
40
50,9
57,19
7,437
Profi
t paid
on
mud
arab
a dep
osits
(1,88
7,603
,968)
(2,63
5,463
,005)
(2,28
8,508
,458)
(3,18
2,566
,357)
(2,04
9,353
,121)
(2,26
5,280
,882)
(1,50
4,269
,560)
(2,80
2,332
,105)
(2,21
0,472
,418)
(9,76
7,087
,634)
(30,5
92,93
7,508
)
Profi
t rec
eived
/(paid
) on
IB G
ener
al Ac
coun
t (2
,995,6
01,68
2) (2
,048,3
41,65
7) 1
,128,3
94,25
1 1
,133,5
24,68
7 1
,301,8
84,65
9 2
,568,2
62,46
8 (4
28,02
1,357
) 4
31,02
3,876
2
,445,3
21,54
7 (3
,536,4
46,79
2) -
Net i
nves
tmen
t inc
ome
2,9
81,1
35,9
32
3,4
80,4
67,9
81
2,1
96,9
20,0
44
3,1
58,6
29,9
72
1,4
67,2
29,8
02
1,6
84,1
80,2
65
2,0
22,9
51,0
56
2,6
77,0
43,7
58
1,3
88,0
33,0
05
(692
,331
,886
) 2
0,36
4,25
9,92
9
Com
miss
ion,
exch
ange
& o
ther
inco
me
1,18
3,114
,261
888
,332,4
65
381
,240,6
43
591
,274,6
28
381
,142,5
43
137
,224,2
65
274
,092,9
73
321
,443,8
79
139
,913,7
91
2,80
8,926
,774
7,10
6,706
,222
Tota
l ope
ratin
g in
com
e 4
,164
,250
,193
4
,368
,800
,446
2
,578
,160
,687
3
,749
,904
,600
1
,848
,372
,345
1
,821
,404
,530
2
,297
,044
,029
2
,998
,487
,637
1
,527
,946
,796
2
,116
,594
,888
2
7,47
0,96
6,15
1
Tota
l ope
ratin
g ex
pens
es (5
38,79
4,877
) (6
95,39
8,051
) (7
80,20
2,766
) (7
92,73
4,809
) (7
70,34
4,629
) (5
11,30
7,729
) (5
56,63
8,624
) (5
36,19
8,974
) (4
43,39
3,362
) (6
,478,2
55,63
7) (1
2,103
,269,4
58)
Oper
atin
g Pr
ofit
3,6
25,4
55,3
16
3,6
73,4
02,3
95
1,7
97,9
57,9
21
2,9
57,1
69,7
91
1,0
78,0
27,7
16
1,3
10,0
96,8
01
1,7
40,4
05,4
05
2,4
62,2
88,6
63
1,0
84,5
53,4
34
(4,3
61,6
60,7
49)
15,
367,
696,
693
Ther
e are
16
oper
atin
g se
gmen
ts in
cludi
ng su
bsid
iaries
as o
n 31
Dec
embe
r 201
4. O
ut o
f whi
ch o
nly 9
are r
epor
tabl
e as p
er B
FRS
8 “O
pera
ting
Segm
ents
”. He
nce o
ther
non
-repo
rtabl
e seg
men
ts h
ave b
een
show
n as
und
er ‘C
omm
on’.
For t
he ye
ar en
ded
31 D
ecem
ber
2013
Amou
nt in
Taka
Parti
cular
sHe
ad O
ffice
Co
ntro
lled
Bran
chs
Dhak
a Cen
tral
Zone
Dhak
a Sou
th
Zone
Dhak
a Nor
th
Zone
Khul
na Z
one
Com
illa Z
one
Rajsh
ahi Z
one
Chitt
agon
g So
uth
Zone
No
akha
li Zon
e Co
mm
onCo
nsol
idat
ed
Inve
stm
ent i
ncom
e 8
,850,0
61,23
1 8
,467,8
33,46
8 3
,300,2
24,63
5 4
,289,5
68,26
4 2
,562,1
32,95
3 1
,132,5
39,64
2 3
,624,8
21,35
4 5
,049,0
03,65
4 1
,035,4
62,68
1 1
1,945
,845,6
91
50,2
57,49
3,573
Profi
t paid
on
mud
arab
a dep
osits
(2,21
3,780
,129)
(2,68
7,852
,731)
(2,19
5,387
,404)
(3,15
2,415
,866)
(1,92
4,440
,219)
(2,08
3,358
,988)
(1,90
5,284
,361)
(2,67
5,451
,636)
(2,18
7,881
,603)
(9,87
4,426
,625)
(30,9
00,27
9,562
)
Profi
t rec
eived
/(paid
) on
IB G
ener
al Ac
coun
t (3
,981,7
03,95
2) (2
,673,9
36,84
2) 6
87,17
2,364
1
,520,5
94,62
7 7
62,88
1,352
2
,438,6
51,34
7 (6
33,70
3,542
) 1
0,434
,682
2,46
3,431
,534
(593
,821,5
70)
-
Net i
nves
tmen
t inc
ome
2,6
54,5
77,1
50
3,1
06,0
43,8
95
1,7
92,0
09,5
95
2,6
57,7
47,0
25
1,4
00,5
74,0
86
1,4
87,8
32,0
01
1,0
85,8
33,4
51
2,3
83,9
86,7
00
1,3
11,0
12,6
12
1,4
77,5
97,4
96
19,
357,
214,
011
Com
miss
ion,
exch
ange
& o
ther
inco
me
1,16
5,664
,361
740
,691,3
52
335
,132,6
21
512
,551,3
52
263
,271,6
52
114
,687,6
52
217
,713,5
64
342
,758,6
51
115
,364,3
67
2,15
6,642
,333
5,96
4,477
,905
Tota
l ope
ratin
g in
com
e 3
,820
,241
,511
3
,846
,735
,247
2
,127
,142
,216
3
,170
,298
,377
1
,663
,845
,738
1
,602
,519
,653
1
,303
,547
,015
2
,726
,745
,351
1
,426
,376
,979
3
,634
,239
,829
2
5,32
1,69
1,91
6
Tota
l ope
ratin
g ex
pens
es (5
32,12
8,438
) (6
49,05
3,469
) (6
95,17
5,209
) (7
07,69
6,301
) (7
07,10
6,124
) (4
45,71
9,291
) (4
26,62
4,352
) (4
59,78
6,061
) (3
91,66
5,388
) (6
,049,9
86,54
5) (1
1,064
,941,1
78)
Oper
atin
g Pr
ofit
3,2
88,1
13,0
73
3,1
97,6
81,7
78
1,4
31,9
67,0
07
2,4
62,6
02,0
76
956
,739
,614
1
,156
,800
,362
8
76,9
22,6
63
2,2
66,9
59,2
90
1,0
34,7
11,5
91
(2,4
15,7
46,7
16)
14,
256,
750,
738
B. S
egm
enta
l ass
ets a
nd li
abili
ties
The n
eces
sary
info
rmat
ion
rega
rdin
g as
sets
and
liabi
lities
of o
pera
ting
segm
ents
(exc
ept s
ubsid
iaries
) are
not
sepa
rabl
e and
indi
vidua
lly id
entifi
able
for t
his p
urpo
se. F
or th
is re
ason
the a
sset
s and
liabi
lities
of t
he re
spec
tive s
egm
ents
hav
e not
be
en p
rese
nted
her
e.
Anne
xure
-D
Annual Report 2014248
Islami Bank Bangladesh Limited (Off-Shore Banking Unit)Balance Sheet
As at 31 December 2014
Particulars Notes31.12.2014 31.12.2013
USD BD.Taka USD BD.Taka Property and assetsCash in hand - - - - Cash in hand (including foreign currency) - - - - Balance with Bangladesh Bank & its agent bank(s) (including foreign currency) - - - - Balance with other banks & financial institutions 892,907.33 69,601,591 - - In Bangladesh 2.0 892,907.33 69,601,591 - - Outside Bangladesh - - - - Placement with banks & other financial institutions 3.0 36,684,763 2,859,555,231 46,427,658.56 3,609,750,453 Investments in shares & securities - - - - Government - - - - Others - - - - Investments 158,017,332.85 12,317,356,285 162,105,883.62 12,603,732,451 General investments etc. - - - - Bills purchased & discounted 4.0 158,017,332.85 12,317,356,285 162,105,883.62 12,603,732,451 Fixed assets - - - - Other assets 5.0 342,277.67 26,680,339 - - Non - banking assets - - - - Total property and assets 195,937,280.41 15,273,193,446 208,533,542.18 16,213,482,904 Liabilities and CapitalLiabilitiesPlacement from banks & other financial institutions 6.0 195,821,030.41 15,264,131,828 208,533,542.18 16,213,482,904 Deposits & other accounts - - - - Mudaraba Savings Deposits - - - - Mudaraba Term Deposits - - - - Other Mudaraba Deposits - - - - Al- Wadeeah Current and other deposit accounts - - - - Bills payable - - - - Other liabilities 7.0 116,250.00 9,061,618 - - Deferred tax liabilities /(assets) - - - - Total liabilities 195,937,280.41 15,273,193,446 208,533,542.18 16,213,482,904 Capital/ share-holders’ equity - - - - Paid - up capital - - - - Statutory reserve - - - - Other /translation reserves 8.0 - 6,392,485 - 1,317,771 Retained earnings 17.0 - (6,392,485) - (1,317,771)Total liabilities & shareholders’ equity 195,937,280.41 15,273,193,446 208,533,542.18 16,213,482,904 Off-balance sheet items - - - - Contingent liabilitiesAcceptances & endorsements - - - - Letters of guarantee - - - - Irrevocable letters of credit (including back to back bills) - - - - Bills for collection - - - - Other contingent liabilities - - - - Total - - - - Other commitmentsDocumentary credits, short term and trade related transactions - - - - Forward assets purchased and forward deposits placed - - - - Undrawn note issuance, revolving and underwriting facilities - - - - Undrawn formal standby facilities, credit lines and other commitments - - - - Total - - - - Total off-balance sheet items including contingent liabilities - - - - The annexed notes form an integral part of these financial statements.
Annexure - E
Annual Report 2014 249
Islami Bank Bangladesh Limited (Off-Shore Banking Unit)Profit & Loss Account
For the year ended 31 December 2014
Particulars Notes31.12.2014 31.12.2013
USD Taka BD.Taka BD.Taka Operating incomeInvestment income 9.0 9,757,668.45 753,497,004 5,805,716.31 450,098,863 Profit paid on mudaraba deposits 10.0 (1,444,438.12) (111,773,018) - - Net investment income 8,313,230.33 641,723,986 5,805,716.31 450,098,863
Income from investments in shares & securities - - - - Commission, exchange & brokerage income - - - - Other operating income 11.0 179,765.00 13,871,627 106,200.00 8,223,565 Total operating income 8,492,995.33 655,595,613 5,911,916.31 458,322,428
Operating expenses
Salary & allowances 12.0 46,786.43 3,611,290 39,565.18 3,070,104 Rent, taxes, insurances, electricity etc. - - - - Legal expenses - - - - Postage, stamps and telecommunication etc. 13.0 38.86 3,010 - - Stationery, printing and advertisement etc. - - - - Chief executive’s salary & fees - - - - Directors’ fees & expenses - - - - Shari’ah supervisory committee’s fees & expenses - - - - Auditors’ fees - - - - Charges on investment losses - - - - Depreciation and repair to bank’s assets - - - - Zakat expenses - - - - Other expenses 14.0 185.00 14,332 78,322.44 6,084,364 Total operating expenses 47,010.29 3,628,632 117,887.62 9,154,468 Profit/ (loss) before provision 8,445,985.04 651,966,981 5,794,028.69 449,167,960
Provision for investments & off- balance sheet items 15.0 - - - - Provision for diminution in value of investments in shares - - - - Other provisions - - - - Total provision - - - - Total profit/(loss) before taxes 8,445,985.04 651,966,981 5,794,028.69 449,167,960
Provision for taxation for the periodCurrent tax 16.0 - - - - Deferred tax 16.0 - - - - Net profit/ (loss) after tax 8,445,985.04 651,966,981 5,794,028.69 449,167,960 Retained earnings from previous year - - - - Less: Interim dividend paid - - - - Add: Net profit after tax 8,445,985.04 651,966,981 5,794,028.69 449,167,960 Profit available for appropriation 8,445,985.04 651,966,981 5,794,028.69 449,167,960 Less: Appropriation - - - - Statutory reserve - - - - General reserve - - - - Transferred to main operation 17.0 8,445,985.04 658,359,466 5,794,028.69 450,485,731 Retained earnings - (6,392,485) - (1,317,771)
The annexed notes form an integral part of these financial statements.
Annual Report 2014250
Islami Bank Bangladesh Limited (Off-Shore Banking Unit)Cash Flow Statement
For the year ended 31 December 2014
Particulars31.12.2014 31.12.2013
USD BD.Taka USD BD.Taka Cash flows from operating activitiesInvestment income 9,757,668.45 753,497,004 5,805,716.31 450,098,863 Profit paid on mudaraba deposits (1,670,465.79) (129,391,739) - - Income/ dividend receipt from investments in shares & securities - - Fees & commission receipt in cash - - - - Recovery from written off investments - - - - Payments to employees (46,786.43) (3,611,290) (39,565.18) (3,070,104)Cash payments to suppliers - - - - Income tax paid - - - - Receipts from other operating activities 179,765.00 13,871,627 106,200.00 8,223,565 Payments for other operating activities (223.86) (17,342) (78,322.44) (6,084,364) i) Operating profit before changes in operating assets & liabilities 8,219,957.37 634,348,260 5,794,028.69 449,167,960 Changes in operating assets and liabilities Increase/decrease of statutory deposits - - - - Increase/decrease of net trading securities - - - - Increase/decrease of placement to other banks 9,742,896.00 750,195,222 (46,427,658.56) (3,609,750,453)Increase/decrease of investments to customers 4,088,550.77 286,376,166 (37,637,578.88) (2,664,950,764)Increase/decrease of other assets - - - - Increase/decrease of deposits from other banks - - - - Increase/decrease of deposits received from customers - - - - Increase/decrease of other liabilities account of customers - - - - Increase/decrease of trading liabilities - - - - Increase/decrease of other liabilities - - - - (ii) Cash flows from operating assets and liabilities 13,831,446.77 1,036,571,388 (84,065,237.44) (6,274,701,217)Net cash flows from operating activities (A)=(i+ii) 22,051,404.14 1,670,919,648 (78,271,208.75) (5,825,533,257)Cash flows from investing activitiesProceeds from sale of securities - - - - Payment for purchase of securities/membership - - - - Purchase/sale of property, plants & equipments - - - - Purchase/sale of subsidiaries - - - - Net cash flows from investing activities (B) - - - - Cash flows from financing activitiesReceipts from issue of debt instruments - - - - Payment for redemption of debt instruments - - - - Fund obtained from banks & other financial institutions (12,712,511.77) (949,351,076) 84,065,237.44 6,274,701,217 Profit transferred to main operation (8,445,985.04) (658,359,466) (5,794,028.69) (450,485,731)Net cash flows from financing activities (C) (21,158,496.81) (1,607,710,542) 78,271,208.75 5,824,215,486
Net increase/(decrease) in cash (A+B+C) 892,907.33 63,209,106 - (1,317,771)
Add/(less) effects of exchange rate changes on cash & cash equivalent
- 6,392,485 - 1,317,771
Add:cash & cash equivalents at beginning of the year - - - - Cash & cash equivalents at the end of the year 892,907.33 69,601,591 - -
Annual Report 2014 251
Islami Bank Bangladesh Limited (Off-Shore Banking Unit)Notes to the financial statements
For the year ended 31 December 2014
1.0 Status of the Company
Off-shore Banking Units (OBU) of Islami Bank Bangladesh Ltd. governed under the rules and guidelines of Bangladesh Bank. The Bank obtained permission from Bangladesh Bank for operating of Off-shore Banking Units located at Head Office Complex Branch, Dhaka, Agrabad Branch, Chittagong and Uttara Branch, Dhaka vide Bangladesh Bank letter no. BRPD (P-3)744 (111)/2010-1032 dated 28 March 2010. The Bank has Commenced the operation of its Off-shore Banking Units from 08.02.2011 at Head Office Complex Branch, Dhaka and from 27.09.2011 at Agrabad Branch, Chittagong.
1.1 Principal activities
The principal activities of the OBU are to provide mudaraba investment against payment of import bills under UPAS (Usance Payment at Sight) to its customers of Off-shore Banking Units in Bangladesh.
1.2 Significant accounting policies and basis of preparation of financial statements
1.2.1 Basis of accounting
The Off-shore Banking Units maintain its accounting records in USD from which accounts are prepared according to the Bank Company Act, 1991 as amended up to 2013, Bangladesh Financial Reporting Standards (BFRSs) and other applicable directives issued by Bangladesh Bank. All the financial statements relating the OBU has already been accounted for in the separate financial statements of the Bank (considering necessary adjustments relating to intra-units transactions and balances). Along with that, this financial statements relating to OBU only is prepared and disclosed in compliance with the requirements of Bangladesh Bank.
1.2.2 Use of estimates and judgments
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the report amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The figures (Taka) appearing in these Financial Statements have been rounded off to the nearest integer.
1.2.3 Foreign currency transactions
a. Foreign currency transactions
Foreign currency transactions are converted in to equivalent Taka using the ruling exchange rates on the dates of respective transactions as per BAS-21 “The Effects of changes in Foreign Exchange Rates”. Foreign currency balances held in US Dollars are converted into Taka at weighted average rate of inter-bank market as determined by Bangladesh Bank on the closing date of every month.
b. Transaction gains and losses
The resulting exchange transaction gains and losses are included in the profit and loss account.
1.2.4 Translation reserve
The activities of OBU is considered as foreign operation due to it’s different functional currency other than the non-OBU operation of the Bank. As per BAS/IAS - 21, items of balance sheet of OBU has been translated to presentation currency using closing rate and items of income and expenditure has been translated to presentation currency using spot rate prevailing on the date of actual transaction, otherwise average rate has been used. Due to the above translation using two rates the arising differences have been kept as translation reserve.
1.2.5 Retained earnings/Net profit transferred to main operation
As on 31 December the net income in USD/foreign currency of OBU is transferred to main operation of the Bank at exchange rate prevailing on that date.
Annual Report 2014252
1.2.6 Cash flow statementCash flow statement has been prepared as per BRPD Circular No. 14, dated June 25, 2003 issued by the Banking Regulation and Policy Department of Bangladesh Bank.
1.2.7 Reporting period The financial statements cover from 01 January 2014 to 31 December 2014.
1.3 Assets and basis of their valuation
1.3.1 Cash and cash equivalentsCash and cash equivalents include notes and coins on hand, unrestricted balances held with Bangladesh Bank and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used by the unit’s management for its short-term commitments.
1.3.2 InvestmentsInvestment of OBU are stated in the balance sheet on net basis. Profit is calculated on daily product basis but charged and account for on realisation/cash basis.
1.4 Allocation of common expensesEstablishment expenses in the nature of rent, rates, taxes, management expenses, printing and stationery, electricity, postage, stamps, telecommunication and audit fees etc. have not been separately accounted for in the financial statements, but staff costs ( salaries and allowances) are separately accounted for OBU.
1.5 Profit paid on Mudaraba Deposit/placement
OBU obtains fund under placement form abroad (different foreign Banks) and OBUs of different Banks in Bangladesh (BD) based on Mudaraba Agreement and pays proportionate amount of investment income earned through deploying these fund as profit. In some cases OBU pays profit at provisional rate in advance which is shown as “ Prepaid profit on placement” under other assets.
1.6 Placement from banks & other financial institutions
Off-shore Banking Units (OBUs) of IBBL obtains fund under placement from its Head Office (Treasury Division), abroad (different foreign Banks) and OBUs of different Banks in Bangladesh (BD) as per Bangladesh Bank Letter No BCD(P)744(27/1416, dated 17 December 1985.
31.12.2014 31.12.2013
USD BD.Taka USD BD.Taka
2.0 Balance with other banks & financial institutions
In Bangladesh (balance with treasury division) 892,907.33 69,601,591 - -
Outside Bangladesh - - - -
Total 892,907.33 69,601,591 - -
3.0 Placement with banks & other financial institutions
Fund provided to AD Branches for MDB in FC* 36,684,762.56 2,859,555,231 46,427,658.56 3,609,750,453
* This amount has been provided to AD branches to finance investment in MDB in FC as per the requirement of the AD branches as per Bangladesh Bank FE Circular No. - 03 dated 04 February 2013.
4.0 Investments 158,017,332.85 12,317,356,285 124,468,304.74 9,938,781,687
4.1 Bills purchased & discounted
Mudaraba Documentary Import Bills (MDIB-UPAS)* 158,017,332.85 12,317,356,285 162,105,883.62 12,603,732,451
Total 158,017,332.85 12,317,356,285 162,105,883.62 12,603,732,451
OBU allows the facilities as per Bangladesh Bank BRPD circular no 28, dated 05 September-2010
5.0 Other assets
Prepaid profit on placement 342,277.67 26,680,339 - -
Total 342,277.67 26,680,339 - -
Annual Report 2014 253
31.12.2014 31.12.2013
USD BD.Taka USD BD.Taka
6.0 Placement from banks & other financial institutionsIslami Bank Bangladesh Ltd.-main operation (Treasury Division)
97,584,215.98 7,606,631,085 208,533,542.18 16,213,482,904
Banks (in BD) 20,000,000.00 1,558,988,000 Banks (abroad) 78,236,814.43 6,098,512,743 - - Total 195,821,030.41 15,264,131,828 208,533,542.18 16,213,482,904
7.0 Other liabilitiesProfit payable 116,250.00 9,061,618 - - Total 116,250.00 9,061,618 - -
8.0 Translation reserveBalance as on 1 January - 1,317,771 - (3,303,771)Addition/(adjustment) during the year - 5,074,714 - 4,621,542 Balance as at 31 December - 6,392,485 - 1,317,771
9.0 Investment incomeMudaraba documentary import bills (UPAS) 8,177,416.22 631,589,277 5,621,443.36 435,870,767 Mudaraba documentary bills (MDB in FC) 1,580,252.23 121,907,727 184,272.95 14,228,096 Total 9,757,668.45 753,497,004 5,805,716.31 450,098,863
10.0 Profit paid on mudaraba depositsProfit paid on Placement from Banks (abroad) 1,214,438.12 93,890,518 - - Profit paid on Placement from Banks (in BD) 230,000.00 17,882,500 - - Total 1,444,438.12 111,773,018 - -
11.0 Other Income Service charge realized (MDIB-UPAS) 178,100.00 13,742,126 106,200.00 8,223,565 Service charge realized (Placement to AD Branches) 1,665.00 129,501 - - Total 179,765.00 13,871,627 106,200.00 8,223,565
12.0 Salary & allowances :Basic pay 19,882.79 1,534,687 16,813.98 1,304,700 Allowances 15,173.01 1,171,154 12,662.81 982,584 Bonus 9,742.35 751,980 8,406.99 652,350 Contribution to Provident Fund 1,988.28 153,469 1,681.40 130,470 Total 46,786.43 3,611,290 39,565.18 3,070,104
13.0 Postage, stamps and telecommunication etc.Telephone Bill 38.86 3,010 - -
14.0 Other expensesBank Charges 185.00 14,332 78,322.44 6,084,364.00
15.0 Provision for investmentProvision for investment have not been separately accounted for in the financial statements of OBU. These are accounted for directly in the main financial statements of the Bank.
16.0 Provision for taxProvision for current and deferred tax have not been separately accounted for in the financial statements of OBU. These are accounted for directly in the main financial statements of the Bank.
17.0 Retained earningsRetained earnings as on 1 January - (1,317,771) - -Addition during the year 8,445,985.04 651,966,981 5,794,028.69 449,167,960Effect of translation reserve - 1,317,771 - -Transferred to main operation 8,445,985.04 658,359,466 5,794,028.69 450,485,731Balance as at 31 December - (6,392,485) - (1,317,771)
Annual Report 2014254
Islami Bank Securities Limited
• Report of the Directors• Auditors’ Report• Audited Financial Statements
Annual Report 2014 255
Report of the DirectorsPrincipal Activities
The principal activities of the company are to open beneficiary owner (BO) account under full DP of CDBL, provide Demate & Remate under full DP of CDBL, provide trading facility under brokerage license, provide investment facility under Musharaka Mode and maintain own portfolio under dealer account.
Directors
The following Directors have held the office of the Company as on the reporting date:
1. Engr. Md. Eskander Ali Khan, Chairman (Appointed 29 March, 2010)2. Professor NRM Borhan Uddin, Ph.D.
Vice Chairman (Appointed 07 February, 2013)3. Salahuddin Ahmed (Appointed 22 June, 2013)4. Humayun Bokhteyar FCA (Appointed 22 June, 2013)5. Mohd. Shamsul Haque (Appointed 29 March, 2010)6. Md. Nurul Islam (Appointed 29 March, 2010)7. Muhammad Abul Bashar (Appointed 06 September, 2011)8. Md. Kabir Hossain (Appointed 27 May, 2014)
Auditors
Howladar Yunus & Co. Chartered Accountants were appointed as auditors of the Company.
Statement of directors’ responsibilities
The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations prevailed in the country.
Statement of disclosure to auditors
So far as the directors are aware, there is no relevant audit information of which the company’s auditors are unaware. Additionally, the directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditors are aware of that information.
Status of the Company
ISLAMI BANK SECURITIES LIMITED was incorporated on the 22 March 2010 under the Companies Act, 1994 as a public limited company. It is a subsidiary company of Islami Bank Bangladesh Limited (IBBL) that holds all the shares of the company except 54 (Fifty four) shares being held by six individual shareholders. The registered office of the company is situated at 20, Dilkusha, C/A in Dhaka, Bangladesh.On behalf of the Board
Engr. Md. Eskander Ali KhanChairman
Annual Report 2014256
Independent Auditors’ Report To the Shareholders of Islami Bank Securities Limited
We have audited the accompanying Financial Statements of Islami Bank Securities Limited, which comprise the statement of financial position as at December 31 2014, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depended on the auditor’s judgment, including the risks assessment of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of Islami Bank Securities Limited as at December 31 2014, and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS), Companies Act, 1994 and other applicable laws and regulations.
Report on Other Legal and Regulatory Requirements
We also report that:
(a) we have obtained all the material information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;
(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books;
(c) the Company’s financial position and financial performance dealt with by the report are in agreement with the books of account; and
(d) the expenditure incurred was for the purposes of the Company’s business.
Chartered AccountantsDated: Dhaka
March 9, 2015
Annual Report 2014 257
ISLAMI BANK SECURITIES LIMITEDStatement of Financial Position
as at 31 December 2014
NotesAmount in Taka
31.12.2014 31.12.2013Assets
Non-current assets 309,483,348 311,696,284 Property, plant and equipment 3 3,757,475 5,326,024 Intangible assets 4 360,198 724,070 Investment in TREC (Membership) 5 304,453,399 304,453,399 Preliminary expenses 6 108,025 216,050 Deferred revenue expenses 7 488,371 976,741 Deferred tax assets 8 315,880 - Current assets 5,570,316,477 2,714,186,176 Cash and cash equivalents 9 346,324,458 193,816,863 Investment in securities 10 1,516,357,258 1,583,040,260 Accounts receivables 11 5,446,630 8,390,347 Advances, deposits and prepayments 12 54,024,522 23,651,723 Investment in MTDR 13 3,636,152,827 889,006,145 Other assets 14 12,010,782 16,280,838 Total assets 5,879,799,825 3,025,882,460
Equity and liabilities
Equity 2,663,812,682 2,623,809,180 Paid up capital 15 2,700,000,000 2,700,000,000 Retained earnings (36,187,318) (76,190,820)
Non-current liabilities 3,000,000,000 55,273 Deferred tax liability 16 - 55,273 Investment from IBBL 17 3,000,000,000 -
Current liabilities 215,987,143 402,018,007 Accounts payables 18 61,158,839 161,216,909 Provision for income tax 19 61,664,633 37,356,636 Accrued expenses 20 1,705,188 1,672,379 Quard against MTDR 21 90,000,000 200,000,000 Other current liabilities 22 1,458,483 1,772,083 Total equity and liabilities 5,879,799,825 3,025,882,460
The annexed notes form an integral part of these Financial Statements
A.K.M. Payer Ahammed Mohd. Shamsul Haque Engr. Md. Eskander Ali Khan Chief Executive Officer Director Chairman
As per our annexed report of even date
Howladar Yunus & Co. Dated: Dhaka
Chartered Accountants 09 March, 2015
Annual Report 2014258
ISLAMI BANK SECURITIES LIMITEDStatement of Comprehensive Income for the year ended 31 December 2014
NotesAmount in Taka
2014 2013
Operating incomeInvestment income 23 111,256,118 145,870,272 Brokerage commissions 24 12,958,772 9,532,567 Other operating income 25 2,328,313 1,940,579 Total operating income 126,543,203 157,343,418
Operating expensesSalary and allowances 26 14,368,273 13,901,986 Rent, tax, insurance and electricity 27 3,905,713 2,491,390 BO accounts maintenance expenses 1,570,000 1,283,600 Brokerage expenses 28 708,703 498,773 Postage, stamps and communications 29 198,669 204,782 Stationery, printing and advertisements 30 202,501 151,523 Directors’ fees and expenses 31 396,750 287,500 Repair and maintenances 32 1,142,593 958,550 Legal fees - 142,500 CDS charges 962,971 793,581 Depreciation 33 2,382,016 2,352,384 Amortization 34 980,122 963,064 License expenses 35 160,000 60,600 Other expenses 36 1,362,226 1,015,772 Auditor’s fees 92,000 75,000 Total operating expenses 28,432,537 25,181,005 Operating profit 98,110,666 132,162,413 Provision for unrealized gain/(loss) 37 (33,109,478) (45,204,121)Profit before tax 65,001,187 86,958,292 Less: Tax expensesCurrent tax 25,368,838 33,362,272 Deferred tax (371,153) (342,586)
24,997,685 33,019,686 Net profit after tax 40,003,502 53,938,606
Other comprehensive income - - Total comprehensive income for the year 40,003,502 53,938,606
The annexed notes form an integral part of these Financial Statements
A.K.M. Payer Ahammed Mohd. Shamsul Haque Engr. Md. Eskander Ali Khan Chief Executive Officer Director Chairman
As per our annexed report of even date
Howladar Yunus & Co. Dated: DhakaChartered Accountants 09 March, 2015
Annual Report 2014 259
ISLAMI BANK SECURITIES LIMITED Statement of Cash Flows
for the year ended 31 December 2014
Amount in Taka2014 2013
A. Cash flows from operating activities:
Net profit after tax 40,003,502 53,938,606 Adjustment for non-cash items: Depreciation 2,382,016 2,352,384 Amortization 980,122 963,064 Provision for unrealized gain/(loss) 33,109,478 45,204,121
36,471,617 48,519,569 Cash flow before working capital changes 76,475,119 102,458,175 Changes in working capital:Increase/(decrease) in accounts payable (100,058,070) 23,906,652 Increase/ (decrease) in provision for income tax 24,307,997 528,921 Increase /(decrease) in provision for expenses 32,809 1,228,197 Increase/ (decrease) in other current liabilities (313,600) 225,749 Increase/ (decrease) in deferred tax liabilities (55,273) (342,586)Decrease/ (increase) in other assets 4,270,056 1,321,117 Decrease /(increase) in deferred tax assets (315,880) - Decrease/ (increase) in advance, deposit & prepayments (30,372,799) (4,452,457)Decrease/ (increase) in accounts receivable 2,943,717 23,340,762
(99,561,043) 45,756,355 Net cash flows from operating activities (23,085,924) 148,214,530 B. Cash flows from investing activities:Acquisition of fixed assets (813,467) (160,029)Acquisition of intangible assets (19,855) (72,000)Investments in securities (1,142,118,859) (1,219,636,700)Sale of investment in securities 1,175,692,382 836,868,609 Investments in MTDR (2,747,146,682) (67,676,666)Net cash used in investment activities (2,714,406,481) (450,676,786)C. Cash flows from financing activities:Investment from IBBL 3,000,000,000 - Quard against MTDR (110,000,000) 200,000,000 Net cash flows from financing activities 2,890,000,000 200,000,000 Net increase/(decrease) in cash & cash equivalents 152,507,595 (102,462,256)Add: Cash & cash equivalents at the beginning of the year 193,816,863 296,279,119 Cash and cash equivalents at the end of the year 346,324,458 193,816,863
The annexed notes form an integral part of these Financial Statements.
A.K.M. Payer Ahammed Mohd. Shamsul Haque Engr. Md. Eskander Ali Khan Chief Executive Officer Director Chairman
Annual Report 2014260
ISLAMI BANK SECURITIES LIMITEDStatement of Changes in Equity
for the year ended 31 December 2014
Amount in Taka
Particulars Paid-up Capital RetainedEarnings Total Equity
Opening balance as at 01 January 2013 2,700,000,000 (130,129,426) 2,569,870,574
Total comprehensive income for the year - 53,938,606 53,938,606
Balance as at 31 December 2013 2,700,000,000 (76,190,820) 2,623,809,180
Opening balance as at 01 January 2014 2,700,000,000 (76,190,820) 2,623,809,180
Total comprehensive income for the year - 40,003,502 40,003,502
Balance as at 31 December 2014 2,700,000,000 (36,187,318) 2,663,812,682
A.K.M. Payer Ahammed Mohd. Shamsul Haque Engr. Md. Eskander Ali Khan
Chief Executive Officer Director Chairman
Annual Report 2014 261
ISLAMI BANK SECURITIES LIMITEDNotes to the Financial Statements
as at and for the year ended 31 December 2014
1.0 Status of the company
ISLAMI BANK SECURITIES LIMITED was incorporated on the March 22, 2010 under the Companies Act, 1994 as a public limited company. It is a subsidiary company of Islami Bank Bangladesh Limited (IBBL) that holds all the shares of the company except 54 (fifty four) shares being held by six individual shareholders. The registered office of the company is situated at 20, Dilkusha C/A, in Dhaka, Bangladesh.
1.1 Nature of business
The main objective of the company is to carry on the business of a stock broker and stock dealer that is to buy, sell and deal in shares, stocks, debenture, bonds and other securities, as well as to carry on any business as permissible for a broker and dealer duly licensed by the Bangladesh Securities and Exchange Commission (BSEC).
2.0 Significant accounting policies and basis of preparation of financial statements
2.1 Statement of compliance
The financial statements have been prepared and presented in accordance with
a) Bangladesh Financial Reporting Standards (BFRS)
b) The Companies act, 1994
c) Securities and Exchange Commission (Stock-Dealer, Stock Broker and Authorized Representative) Rules, 2000
d) Other relevant laws and regulations applicable in Bangladesh
2.2 Basis of preparation
The financial statements have been prepared on a going concern basis following accrual basis of accounting except for statement of cash flows in accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Listing Rules of Dhaka and Chittagong Stock Exchanges and Bangladesh Financial Reporting Standards and other applicable laws and regulations.
2.3 Basis of measurement
The financial statements have been prepared based on historical cost convention basis. The accounting policies, unless otherwise stated, have been constantly applied by the Company and are consistent with those of the previous year.
2.4 Going concern
The Company has adequate resources to continue in operation for foreseeable future. For this reasons the directors continue to adopt going concern basis in preparing the financial statements. The current credit facilities and adequate resources of the Company provide sufficient funds to meet the present requirements of its existing businesses and operations.
2.5 Components of financial statements
The financial statements referred to here comprise:
a. Statement of Financial Position
b. Statement of Comprehensive Income
c. Statement of Cash Flows
d. Statement of Changes in Equity and
e. Notes to the Financial Statements
2.6 Statement of cash flows
Statement of cash flows is prepared in accordance with the Bangladesh Accounting Standard-7 “Statement of Cash Flows” under indirect method.
2.7 Reporting period
These financial statements cover one calendar year from 1 January 2014 to 31 December 2014.
Annual Report 2014262
2.8 Property, plant and equipment
All Property, Plant and Equipment are stated at cost less accumulated depreciation as per BAS-16 “Property, Plant and Equipment”. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes.
The company recognizes the cost of purchasing new assets or cost of replacing new assets in the carrying amount of an item of property, plant and equipment when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the company and the cost of the item can be measured reliably. Expenditure incurred after the assets have been put into operation, such as repair and maintenance is normally charged off as revenue expenditure in the period in which it is incurred.
2.8.1 Depreciation policy
Depreciation is charged at the following rates on a straight line method on motor vehicles and computers and other assets are depreciated on reducing balance method according to their respective percentage given below. Depreciation is charged from the date of acquisition of particular assets and up to the date of disposal.
Items Rate Method
Mechanical appliances 20-25% Reducing balance
Furniture and fixtures 10-20% Reducing balance
Computers 25% Straight line
Motor vehicles 20% Straight line
2.9 Intangible assets and amortization of intangible assets
Intangible assets acquired separately are measured on initial recognition at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any. Amortization is calculated using the straight line method to write down the cost of intangible assets to their residual values over their estimated useful lives based on the management best estimates. Subsequent expenditure on software assets is capitalized only when it increases the future economic benefits in the specifications to which it relates. All other expenditure is expensed as incurred.
Software
Acquired software licenses are capitalized on the basis of costs incurred to acquire and bring the specific software to use. These costs are amortized over their estimated useful lives of four years.
2.10 Investment in TREC (Membership)
Investment in Stock Exchanges for TREC (Membership) are stated at cost. The cost of acquisition of a TREC (Membership) comprises its purchase price and any directly attributable cost of completing compliance requirements relevant to it inclusive of stamp duty and non-refundable taxes, etc. As per the Demutualization Act, 2013 Membership renamed as Trading Right Entitlement Certificate (TREC) and we have been allotted 7,215,106 and 4,287,330 no. of ordinary shares of Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited (CSE) respectively.
2.11 Preliminary and deferred revenue expenses
All the preliminary and deferred revenue expenses have been recognized as assets and as per Board’s decision all these assets will be amortized over the period of 5 (five) years or at a rate of 20% commencing from the year 2011. All these assets are stated in financial position at cost less accumulated amortization.
2.12 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and cash at bank, which are held and available for use by the company without any restriction and are readily convertible to a known amount of cash and that are subject to an insignificant risk of change in value.
2.13 Investment in securities
Investment in securities means purchase of shares of quoted/listed companies in DSE and CSE through stock dealer account. Investment is made in shariah complied securities. Investment in securities is categorized as held for trading as per BAS 39 and valued at market value on the last date of reporting period and relevant unrealized gain /(loss) is recognized in income statement as per directive # SEC/CMRRCD/2009-193/166 dated January 12, 2015,as per directive # SEC/CMRRCD/2009-193/154 dated December 09, 2013 and as per directive # SEC/CMRRCD/2009-193/144 dated 27 February 2013 respectively of Bangladesh Securities and Exchange Commission.
Annual Report 2014 263
2.14 Advance, deposits and prepayments
Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments or charges to other account heads. Deposits are measured at payment value. Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to income statement.
2.15 Advance income tax
The amount of advance income tax are (a) Payment made through challan under section 64 and (b) Tax deduction at source (TDS). TDS mainly deduction of tax at sources (i) By bank on profits arisen from bank deposits (SND and MTDR) (ii) By Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited on trading turnover and (iii) against dividend income received from securities owned by the company under portfolio investment.
2.16 Deferred taxation
Deferred tax liabilities are the amount of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the reporting date. The impact on the account of changes in the deferred tax assets and liabilities have also been recognized in the statement of comprehensive income as per BAS-12 “Income Taxes”.
2.17 Provision for income tax
Provision for current income tax has been made in compliance with relevant provisions of income tax law.
2.18 Share Capital
Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.
2.19 Investment from IBBL
Investment has taken from its parent company ,Islami Bank Bangladesh Limited under mudaraba mode for investment in stocks, investment in placement share and investment in margin account etc.
2.20 Revenue recognition
Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the company in accordance with the Bangladesh Accounting Standard (BAS) 18 “Revenue Recognition”:
2.21 Dividend income
All dividends received or receivable against the investment in securities held both under dealer account and Musharaka Investment have been considered as dividend income in statement of comprehensive income. Dividend income is recognized on accrual basis.
2.22 Capital gains from direct investment
The difference between cost price and net sales price of the securities is considered as capital gain from direct investment.
2.22.1 Musharaka investment and income
Musharaka investment means the margins (Investment facilities) provided to eligible clients under brokerage operation in Musharaka principle/ mode of finance. As per Musharaka principle, profits arisen through capital gain and dividend from this investment are shared between company and client as per agreed ratio and loss is shared as per equity participation ratio. Investment is valued at market value on the last date of reporting period and relevant unrealized gain (Loss) is recognized in income statements as per directive # SEC/CMRRCD/2009-193/166 dated January 12, 2015, as per directive # SEC/CMRRCD/2009-193/154 dated December 09, 2013 and as per directive # SEC/CMRRCD/2009-193/144 dated 27 February 2013 respectively of Bangladesh Securities and Exchange Commission.
2.23 Brokerage commission
Brokerage commission is recognized as income when selling or buying order executed.
2.24 Provisions
All provision is recognized on the financial statement date if, as a result of past events, the company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Annual Report 2014264
2.25 Event after the reporting period
As per BAS - 10 “Events after the Reporting period”, events after the reporting period are those events, favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue. Two types of events can be identified:
i) those that provide evidence of conditions that existed at the end of the reporting period (Adjusting events after the reporting period) and
ii) those that are indicative of conditions that arose after the reporting period (Non- adjusting events after the reporting period).
There was no material events which have occurred after the reporting period which could affect the values stated in the financial statements.
2.26 Related party transaction
As per BAS 24 “Related Party Disclosures”, a related party is a person or entity that is related to the entity (i.e. IBSL) that is preparing its financial statements. Related party transaction is a transfer of resources, services, or obligations between a reporting entity and a related party, regardless of whether a price is charged as per BAS 24.
Related Parties include the Company’s Directors, key management personnel, associates, companies under common directorship etc. as per BAS 24 “Related Party Disclosures”. All transactions involving related parties arising in the normal course of business are conducted as arm’s length transactions. Details are given in Note.38
2.27 Authorization of the financial statements for issue
The financial statements of the company have been authorized for issue by the Board of Directors on 09 March 2015.
2.28 General
a)The financial statements are presented in Bangladeshi Taka (BDT) currency, which is the company’s functional currency.
b) The figures appearing in these financial statements are expressed in Taka currency and rounded off to the nearest Taka unless otherwise stated.
c) Previous year’s figures have been rearranged, where necessary, to conform to current year’s presentation.
Annual Report 2014 265
Amount in Taka
31.12.2014 31.12.2013
3 Property, plant and equipment
Cost
Opening balance at cost 12,599,370 12,439,341
Add: Assets purchased during the year 813,467 160,029
Less: Sale/Adjustment during the year - -
Closing value at cost (a) 13,412,837 12,599,370
Accumulated depreciation
Opening balance 7,273,346 4,920,962
Add: Depreciation charged during the year 33 2,382,016 2,352,384
Less: Adjustment during the year - -
Closing balance of depreciation (b) 9,655,362 7,273,346
Written down value (a - b) 3,757,475 5,326,024
Details are given in Annexure -A
4 Intangible assets
Cost
Opening balance at cost 1,521,908 1,449,908
Add: Assets purchased during the year 19,855 72,000
Less: Sale/Adjustment during the year - -
Closing value at cost (a) 1,541,763 1,521,908
Accumulated amortization
Opening balance 797,838 431,169
Add: Amortized during the year 34 383,727 366,669
Less: Adjustment during the year - -
Closing balance of Amortization (b) 1,181,565 797,838
Written down value (a - b) 360,198 724,070
Details are given in Annexure -B
5 Investment in TREC (Membership)
DSE 24,453,399 24,453,399
CSE 280,000,000 280,000,000
304,453,399 304,453,399
This represents the acquisition cost of DSE and CSE memberships paid by Islami Bank Securities Limited. According to Exchanges Demutualization Act 2013 and Bangladesh Securities and Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange Ltd. (DSE) has allotted total 7,215,105 ordinary Shares at a face value of Taka 10.00 each against acquisition cost of Taka 24,453,399 while Chittagong Stock Exchange Ltd. (CSE) allotted total 4,287,330 ordinary shares at face value of Taka 10.00 each against acquisition cost of Taka 280,000,000. Out of the shares allotted DSE has transferred 2,886,042 shares and CSE transferred 1,714,932 shares to BO account of the company. The remaining balance has been kept under blocked account. Since there is no active market for shares of DSE and CSE and the fair value of the said investments could not be reliably measured.
6 Preliminary expenses
Total value at cost as on 31 December 540,125 540,125
Less: Accumulated amortization as on 31 December (432,100) (324,075)
108,025 216,050
Annual Report 2014266
Amount in Taka
31.12.2014 31.12.2013
7 Deferred revenue expenses
Total value at cost as on 31 December 2,441,852 2,441,852
Less: Accumulated amortization as on 31 December (1,953,481) (1,465,111)
488,371 976,741
8 Deferred tax assets
Accounting base of fixed assets 3,626,565
Tax base of fixed assets 4,529,081 -
Deductable temporary difference (DTD) 902,515 -
Deferred tax assets ( 35% of DTD) 315,880 -
9 Cash and cash equivalents
Cash in hand 19 4,660
Cash at bank 9.1 346,324,439 193,812,203
346,324,458 193,816,863
9.1 Cash at bank
i) IBSL account 281,966,263 36,585,767
ii) Customer account 64,358,176 157,226,436
346,324,439 193,812,203
10 Investment in securities
Own portfolio 10.1 1,483,281,601 1,551,780,685
Musharaka portfolio 10.2 33,075,657 31,259,575
1,516,357,258 1,583,040,260
10.1 Own portfolio
Opening balance at cost 1,913,693,110 1,533,852,541
Add: Shares purchased during the year 1,138,029,475 1,216,709,179
Less: Cost of shares sold during the year (1,175,692,383) (836,868,610)
Closing balance of investment at cost 1,876,030,202 1,913,693,110
Less: Provision against un-realized gain/(loss) (Note: 10.1.1) (392,748,601) (361,912,425)
1,483,281,601 1,551,780,685
10.1.1 Provision against unrealized gain/(loss)
Opening balance (361,912,425) (318,233,374)
Add: Addition during the year (Note:37.1) (30,836,176) (43,679,051)
Closing balance (392,748,601) (361,912,425)
10.2 Musharaka portfolio
Opening balance at cost 34,597,970 31,670,447
Add: Shares purchased/(sold) during the year 4,089,384 2,927,523
Closing balance of investment at cost 38,687,354 34,597,970
Less: Provision against un-realized gain/(loss) (Note: 10.2.1) (5,611,697) (3,338,395)
33,075,657 31,259,575
Annual Report 2014 267
Amount in Taka
31.12.2014 31.12.2013
10.2.1 Provision against unrealized gain/(loss)
Opening balance (3,338,395) (1,813,325)
Add: Addition during the year (Note: 37.2) (2,273,302) (1,525,070)
Closing balance (5,611,697) (3,338,395)
11 Accounts receivables
Receivable from clients 1,199,325 1,000,440
Receivable from CSE (Dealer) 16,986 412,435
Receivable from DSE (Broker) 487,449 6,391,272
Receivable from DSE (Dealer) 3,742,870 586,200
5,446,630 8,390,347
12 Advances, deposits and prepayments
Advance office rent for head office 12.1 5,467,000 8,449,000
Prepaid insurance premium 12.2 36,645 36,645
Prepaid motor car maintenance 12.3 35,174 35,500
Advance income tax 12.4 48,485,703 15,130,578
54,024,522 23,651,723
12.1 Advance office rent for head office
Opening balance 8,449,000 1,242,500
Add: paid during the year - 8,946,000
Less: Charged to profit & loss during the year 2,982,000 1,739,500
5,467,000 8,449,000
12.2 Prepaid insurance premium
Opening balance 36,645 43,796
Add: paid during the year 43,973 43,973
Less: Charged to profit & loss during the year 43,973 51,124
36,645 36,645
12.3 Prepaid motor car maintenance
Opening balance 35,500 42,000
Add: paid during the year 35,174 35,500
Less: Charged to profit & loss during the year 35,500 42,000
35,174 35,500
12.4 Advance income tax
Opening balance 15,130,578 17,870,970
Add: Income tax paid during the year 12.4.1 33,355,125 15,130,578
Less: Adjustment against tax assessment - (17,870,970)
48,485,703 15,130,578
12.4.1 Income tax paid during the year
Advance income tax 20,914,690 5,047,252
Tax deduction at source (TDS) 12.4.2 12,440,435 10,083,326
33,355,125 15,130,578
Annual Report 2014268
Amount in Taka
31.12.2014 31.12.201312.4.2 Tax deduction at source (TDS)
TDS against dividend income 4,879,430 1,871,460 TDS from bank account profit 6,162,135 7,245,536 TDS on brokerage commission by CSE 7,247 9,047 TDS on brokerage commission by DSE 1,391,623 957,283
12,440,435 10,083,326 13 Investment in MTDR
Opening balance 889,006,145 821,329,479 Add: New/reinvestment during the year 2,747,146,682 67,676,666 Less: Encashment during the year - -
3,636,152,827 889,006,145 14 Other asset
Stock in hand 44,650 - Dividend receivable 748,020 1,205,000 Receivable profit from bank on MTDR 11,218,112 15,075,838
12,010,782 16,280,838 15 Share capital
Authorized capital 5,000,000 ordinary shares of Taka 1,000 each. 5,000,000,000 5,000,000,000 Paid- up capital27,00,000 ordinary shares of Taka 1,000 only each:
Name of shareholder No. of shares % Amount in Taka1) IBBL (Represented by four directors) 2,699,946 99.998 2,699,946,000 2,699,946,000
2) Janab Mohd. Shamsul Haque 9 0.0003 9,000 9,000
3) Janab Md. Kabir Hossain 9 0.0003 9,000 9,000
4) Janab Md. Nurul Islam 9 0.0003 9,000 9,000
5) Janab Muhammad Abul Bashar 9 0.0003 9,000 9,000
6) Janab Md. Abdul Jabbar 9 0.0003 9,000 9,000
7) Janab Md. Obaidul Haque 9 0.0003 9,000 9,000
2,700,000 100.00 2,700,000,000 2,700,000,000 16 Deferred tax liability
Accounting base of fixed assets - 5,399,233 Tax base of fixed assets - 5,251,838 Taxable temporary difference (TTD) - 147,395 Deferred tax liabilities( 35% of TTD) - 55,273
17 Investment from IBBL Opening balance - 50,382,297 Add: Investment received during the year 3,000,000,000 - Less: Repayment/adjustment investment - (50,382,297)
3,000,000,000 -
Investment has taken from Islami Bank Bangladesh Limited under mudaraba mode. These amount has been invested in MTDR amounting to Taka 275 crore. The profit sharing ratio between IBBL and IBSL is to be at 50:50 basis.
Annual Report 2014 269
Amount in Taka
31.12.2014 31.12.201318 Accounts payables
Payable to clients 51,872,809 160,416,135 Payable to clients (IPO) 7,017,000 - Payable to CSE (Dealer) - 744,082 Payable to DSE (Broker) 1,631,549 56,254 Payable to DSE (Dealer) 637,481 438
61,158,839 161,216,909 19 Provision for income tax
Opening balance 37,356,636 36,827,715 Add: Provision for income tax for the year 25,368,838 33,362,272 Less: Adjustment against assessment (1,060,841) (32,833,351) Tax deduction at source (TDS) - (12,870,970) Advance income tax (Under sec. 64 of ITO) - (5,000,000) Payment for tax during the year (1,060,841) (14,962,381)
61,664,633 37,356,636 20 Accrued expenses
Ex gratia bonus 1,200,550 1,080,240 Auditor’s fees 92,000 75,000 CDS charges 106,760 86,213 Electricity bills 13,424 8,601 Holiday allowance 5,400 9,050 Legal fees 85,000 85,000 Network expenses 28,050 28,050 Office maintenance 6,048 2,900 Office rents 67,689 169,222 Professional and consultancy fees 40,250 35,000 Service charges 17,250 17,250 Software annual maintenance fees - 15,000 Telephone bills 24,737 30,781 Wages 12,030 24,072 Water bills 6,000 6,000
1,705,188 1,672,379 21 Quard against MTDR
Opening balance 200,000,000 - Add: Addition during the year 210,000,000 200,000,000 Less: Payment during the year 320,000,000 -
90,000,000 200,000,000 22 Other current liabilities
Security deposit from clients 1,111,279 1,111,279 Security deposits payable on fixed assets 22.1 16,920 289,318 Sundry creditors 25,757 23,190 TDS payable 240,608 347,900 VAT payable 32,769 396 Bank charge payable 31,150 -
1,458,483 1,772,083
Annual Report 2014270
Amount in Taka
31.12.2014 31.12.2013
22.1 Security deposits payable on fixed assets
Computer Source - 145,500
Digilog System 5,550 5,550
Gazi Communication - 33,180
Leads Corporation - 66,000
Net Com 11,370 39,088
16,920 289,318
Amount in Taka
23 Investment income 2014 2013
Cash dividend from own investment 28,602,873 8,485,700
Cash dividend from Musharaka investment 274,448 68,592
Profit from bank on SND 1,979,416 7,039,230
Profit from MTDR 57,286,496 74,316,509
Capital gains from direct investment 23.1 23,112,885 55,960,241
111,256,118 145,870,272
23.1 Capital gains from direct investment
Capital gains from sale of securities 23.1.1 22,305,654 55,257,974
Capital gain from Musharaka investment 23.1.2 807,231 702,267
23,112,885 55,960,241
23.1.1 Capital gains from sale of securities
Capital gains 68,499,785 55,257,974
Less: Capital loss 46,194,131 -
22,305,654 55,257,974
23.1.2 Capital gain from musharaka investment
Capital gains 868,407 732,637
Less: Capital loss 61,176 30,370
807,231 702,267
24 Brokerage commissions
Commission on CSE turnover 66,861 89,187
Commission on DSE turnover 12,891,911 9,443,380 12,958,772 9,532,567
25 Other operating income
BO account opening fees 317,100 318,300
BO accounts maintenance fees 1,960,477 1,604,715
Commission from IPO 8,248 -
Documentation fee (Margin account) 3,100 3,100
Miscellaneous income 39,388 14,464
2,328,313 1,940,579
Annual Report 2014 271
Amount in Taka
2014 201326 Salary and allowances
Salary 11,705,941 10,690,679 Eid bonus 1,142,510 1,001,455 Ex gratia bonus 1,200,550 2,026,680 Holiday allowance 173,100 74,100 Wages 146,172 109,072
14,368,273 13,901,986 27 Rents, taxes, insurance and electricity
Office rents 3,656,514 2,302,189 Renewal of tax token for motor vehicles 14,900 12,714 Insurance premiums 43,973 51,124 Electricity bills 190,326 125,363
3,905,713 2,491,390 28 Brokerage expenses
CSE Howla charges 884 1,120 CSE Laga charges 2,560 3,167 DSE Howla charges 140,392 109,554 DSE Laga charges 561,548 382,914 Investors’ protection fund charges 3,319 2,018
708,703 498,773 29 Postage, stamps and communications
Conveyances 23,245 11,553 Postage 3,517 22,110 Stamps 9,754 10,615 Telephone bills 162,153 160,504
198,669 204,782 30 Stationery, printing and advertisements
Stationeries expenses 120,413 102,487 Printing expenses 58,088 3,036 Advertisements 24,000 46,000
202,501 151,523 31 Directors’ fees and expenses
Directors’ fees 345,000 250,000 Add: Value added tax (VAT) 51,750 37,500
396,750 287,500 32 Repair and maintenances
Motor car running and maintenances 589,622 456,230 Network support 336,600 301,761 Office maintenances 64,435 99,439 Other repair and maintenances 56,936 21,120 Software annual maintenance fees 95,000 80,000
1,142,593 958,550
Annual Report 2014272
Amount in Taka
2014 201333 Depreciation
Mechanical Appliances 220,270 242,359 Computer 830,904 767,802 Furniture & fixture 191,070 219,023 Motor vehicles 1,139,772 1,123,200
2,382,016 2,352,384 34 Amortization
Preliminary expense 108,025 108,025 Deferred revenue expenses 488,370 488,370 Intangible assets 383,727 366,669
980,122 963,064 35 License expenses
Renewal fees for depository participant (DP) 4,000 4,000 Renewal fees for DSE (Broker and dealer) 20,000 20,000 Renewal fee for TREC 50,000 - Renewal fees for CSE (Broker and Dealer) 20,000 20,000 Authorized representative expenses 48,500 3,000 Renewal of trade license fees 17,500 13,600
160,000 60,600 36 Other expenses
Annual subscription fees 4,700 9,700 Bank charges 120,529 84,122 Computer accessories 173,360 179,650 Electronic expenses 54,672 25,740 Entertainments 314,311 191,908 Internet bills 99,841 72,448 Govt. fee 3,199 19,436 Reimbursement expenses 31,801 46,132 Miscellaneous expenses 32,377 18,792 Newspaper, magazine and periodicals 23,108 15,684 Professional and consultancy fees 103,638 80,225 Service charges 207,000 197,500 Software expenses 10,000 17,090 Subsidy of BO accounts maintenance exp. 4,290 - Training program expenses 97,300 8,000 Water bills 82,100 49,345
1,362,226 1,015,772 37 Provision against unrealized gain/(loss)
Own portfolio during the year 37.1 (30,836,176) (43,679,051)Musharaka portfolio during the year 37.2 (2,273,302) (1,525,070)
(33,109,478) (45,204,121)
Annual Report 2014 273
Amount in Taka
2014 2013
37.1 Own portfolio during the year
a) Investment in securities at market price as on 31 December 1,359,936,897 1,406,035,940
b) Investment in securities at cost price as on 31 December 1,876,030,202 1,913,693,110
c) Total unrealized gain/(loss) as on 31 December (a-b) 37.1.1 (516,093,305) (507,657,170)
d) Opening balance of provision (361,912,425) (318,233,374)
e) Provision required to be provided (c-d) (154,180,880) (189,423,796)
f) Less: Provision yet to be provided carry forward in next year* (123,344,704) (145,744,745)
g) Provision for the year (e-f) (30,836,176) (43,679,051)
As per directive # SEC/CMRRCD/2009-193/166 dated January 12, 2015 of Bangladesh Securities and Exchange Commission, it is required to maintain at least 20% provision against unrealized loss .IBSL has made 76% provision against unrealized loss arising to till date (31.12.14) revaluation of share purchase through own portfolio. However, the directives prohibit payments of cash dividend if the company makes less than 100% provision against such unrealized loss.
37.1.1 Unrealized gain/(loss)
Opening balance (507,657,170) (434,858,752)
Add: Addition during the year (8,436,135) (72,798,418)
Closing balance (516,093,305) (507,657,170)
37.2 Musharaka portfolio during the year
a) Investment in securities at market price as on 31 December 23,982,447 22,989,562
b) Investment in securities at cost price as on 31 December 38,687,354 34,597,970
c) Total unrealized gain/(loss) as on 31 December (a-b) 37.2.1 (14,704,907) (11,608,408)
d) Opening balance of provision (3,338,395) (1,813,325)
e) Provision yet to be provided (c-d) (11,366,512) (9,795,083)
f) Less: Provision yet to be provided carry forward in next year* (9,093,210) (8,270,013)
g) Provision for the year (e-f) (2,273,302) (1,525,070)
As per directive # SEC/CMRRCD/2009-193/166 dated January 12, 2015 of Bangladesh Securities and Exchange Commission, it is required to maintain at least 20% provision against unrealized loss.IBSL has made 38% provision against unrealized loss arising to till date (31.12.14) revaluation of share purchase through musharaka portfolio. However, the directives prohibit payments of cash dividend if the company makes less than 100% provision against such unrealized loss.
37.2.1 Unrealized gain/(loss)
Opening balance (11,608,408) (9,066,625)
Add: Addition during the year (3,096,499) (2,541,783)
Closing balance (14,704,907) (11,608,408)
Annual Report 2014274
38 Nature and type of related party transaction of the company
38.1 Nature and type of related party transaction disclosure of the company Amount in Taka
Name of related party Relationship Nature of transaction 2014
Islami Bank Bangladesh Limited (IBBL) Parent- subsidiary
Deposit to MSA 3,630,708,197
Withdraw from MSA 3,630,323,619
Deposit to AWCA 621,004,225
Withdraw from AWCA 692,190,267
Bank Charge paid 3,829
Payment against office rent 406,134
Tax deduction at source against MTDR 5,962,541
Profit withdraw against MTDR 57,950,000
Payment against Quard during the year 320,000,000
Quard availed during the year 210,000,000
38.2 Nature and type of balance of related party transaction of the company
Name of related party Relationship Nature of transaction Amount in Taka 2014
Islami Bank Bangladesh Limited (IBBL) Parent- subsidiary
Bank balance 41,082,194
MTDR balance 886,152,827
Quard balance 90,000,000
Receivable profit on MTDR 11,218,112
Investment received under Mudaraba Mode 3,000,000,000
Profit against MTDR 57,286,496
Profit against SND A/C. 5,297
Accounts payable 7,023,067
Office rent payable 67,689
Directors Board Member Board Meeting participation fees 396,750
Chief Executive Officer key management Short-term employee benefits 1,887,852
A.K.M. Payer Ahammed Mohd. Shamsul Haque Engr. Md. Eskander Ali Khan Chief Executive Officer Director Chairman
Annual Report 2014 275
ISLA
MI B
ANK
SECU
RITI
ES L
IMIT
EDSc
hedu
le o
f Pro
perty
, Pla
nt &
Equ
ipm
ent
as a
t 31
Dece
mbe
r 201
4
Amou
nt in
Taka
Parti
cular
sCo
stDe
prec
iation
W.D.
V. as
at
31.12
.2014
Balan
ce as
at
01.01
.2014
Addit
ionAd
justm
ent
Balan
ce as
at
31.12
.2014
Balan
ce as
at
01.01
.2014
Char
ged d
uring
the
year
Adjus
tmen
tBa
lance
as at
31
.12.20
14
Mech
anica
l App
lianc
es 1,
642,9
76
197,6
69
- 1,
840,6
45
777,0
48
220,2
70
- 99
7,318
84
3,327
Com
pute
r 3,
144,6
35
400,7
35
- 3,
545,3
70
2,21
3,277
83
0,904
-
3,04
4,181
50
1,189
Furn
iture
& fix
ture
2,19
5,759
35
,044
- 2,
230,8
03
784,5
87
191,0
70
- 97
5,657
1,
255,1
46
Moto
r veh
icles
5,61
6,000
18
0,019
-
5,79
6,019
3,
498,4
34
1,13
9,772
-
4,63
8,206
1,
157,8
13
Tota
l ass
ets
12,59
9,370
81
3,467
-
13,41
2,837
7,
273,3
46
2,38
2,016
-
9,65
5,362
3,
757,4
75
Amou
nt in
Taka
Parti
cular
sCo
stDe
prec
iation
W.D.
V. as
at
31.12
.2013
Balan
ce as
at
01.01
.2013
Addit
ionAd
justm
ent
Balan
ce as
at
31.12
.2013
Balan
ce as
at
01.01
.2013
Char
ged d
uring
the
year
Adjus
tmen
tBa
lance
as at
31
.12.20
13
Mech
anica
l App
lianc
es
1,61
2,976
30
,000
- 1,
642,9
76
534,6
89
242,3
59
- 77
7,048
86
5,928
Com
pute
r 3,
053,1
35
91,50
0 -
3,14
4,635
1,
445,4
75
767,8
02
- 2,
213,2
77
931,3
58
Furn
iture
& fix
ture
2,15
7,230
38
,529
- 2,
195,7
59
565,5
64
219,0
23
- 78
4,587
1,
411,1
72
Moto
r veh
icles
5,61
6,000
-
- 5,
616,0
00
2,37
5,234
1,
123,2
00
- 3,
498,4
34
2,11
7,566
Tota
l ass
ets
12,43
9,341
16
0,029
-
12,59
9,370
4,
920,9
62
2,35
2,384
-
7,27
3,346
5,
326,0
24
Anne
xure
-A
Annual Report 2014276
ISLA
MI B
ANK
SECU
RITI
ES L
IMIT
EDSc
hedu
le o
f Int
angi
ble
Asse
tsas
at 3
1 De
cem
ber 2
014
Amou
nt in
Taka
Parti
cula
rsCo
stDe
prec
iatio
nW
.D.V
. as
at
31.1
2.20
14Ba
lanc
e as
at
01.0
1.20
14Ad
ditio
nAd
just
men
tBa
lanc
e as
at
31.1
2.20
14Ba
lanc
e as
at
01.0
1.20
14Ch
arge
d du
ring
the
year
Adju
stm
ent
Bala
nce
as a
t 31
.12.
2014
Softw
are
1,5
21,9
08
19,
855
- 1
,541
,763
7
97,8
38
383
,727
-
1,1
81,5
65
360
,198
Tota
l ass
ets
1,5
21,9
08
19,
855
- 1
,541
,763
7
97,8
38
383
,727
-
1,1
81,5
65
360
,198
Amou
nt in
Taka
Parti
cula
rs
Cost
Depr
ecia
tion
W.D
.V.
as a
t 31
.12.
2013
Bala
nce
as a
t 01
.01.
2013
Addi
tion
Adju
stm
ent
Bala
nce
as a
t 31
.12.
2013
Bala
nce
as a
t 01
.01.
2013
Char
ged
durin
g th
e ye
arAd
just
men
tBa
lanc
e as
at
31.1
2.20
13
Softw
are
1,4
49,9
08
72,
000
- 1
,521
,908
4
31,1
69
366
,669
7
97,8
38
724
,070
Tota
l ass
ets
1,4
49,9
08
72,
000
- 1
,521
,908
4
31,1
69
366
,669
-
797
,838
7
24,0
70
Anne
xure
- B
Annual Report 2014 277
Islami Bank Capital Management Limited
• Report of the Directors• Auditors’ Report• Audited Financial Statements
Annual Report 2014278
Report of the DirectorsThe Directors is pleased to submit their report and audited financial statements for the year ended 31 December 2014 as follows:
Status of the company
Islami Bank Capital Management Limited was incorporated on the 01 April 2010 under the Companies Act, 1994 as a public limited company. It is a subsidiary company of Islami Bank Bangladesh Limited that hold all the shares of the company except 07 (Seven) shares being held by 7 (Seven) individual shareholders. The registered office of the company is situated at 20, Dilkusha C/A, Dhaka, Bangladesh.
Principal activities
Islami Bank Capital Management Ltd is yet to start up its operations. The objectives of the company is to carry on Merchant Banking Operations in all its aspects including underwriting and/or management of issue, public offer of shares, stocks, debentures, bonds, etc.; sale or purchase of securities or transfer thereof; fund management for clients, underwriting of shares, stocks, debentures, bonds, etc.; managing portfolio investments of any person or company, by investment in various avenues, etc.
Financial performance
The Company has earned Tk.33,352,300 as Net Profit After Tax (NPAT) in the year 2014 as against Tk.28,235,597 of previous year. Since the Company has not yet started its operation hence the income was generated mainly by investing the available fund in different deposit schemes with Scheduled Islamic Banks.
Dividend
The Board has recommended 35% cash interim dividend i.e. Tk.350 per share amounting to Tk.105,000,000 as final dividend for the year ended 31 December 2014.
Directors
The overall control and management of affairs of Islami Bank Capital Management Limited vests in its Board of Directors. To comply with the requirements of Bangladesh Securities and Exchnage Commission (BSEC), Companies Act 1994, Merchant Banker and Portfolio Manager Rules 1996 as amended and Memorandum of Association (MoA) of the Company Mr. Barrister Mohammed Belayet Hossain, one of the independent directors of Islami Bank Bangladesh Limited has been proposed to be appointed in the Board of the company and 1 (one) new director namely Mr. Nurul Islam Khalifa has been proposed to be elected as Director of the Company in the 5th Annual General Meeting of the Company to be held in 24 January 2015 at 11:00 AM in the Board Room of the Islami Bank Bangladesh Limited at 40 Dilkusha C/A, Dhaka-1000.
Auditor
Hussain Farhad & Co. Chartered Accountants have offered their willingness to be re-appointed and hence the Board recommends their re-appointment for the year 2015 and to continue till the next Annual General Meeting of the Company.
Key Management Personnel
The affairs of the Company mainly co-ordinated by the Director Mr. Abdus Sadeque Bhuiyan and recently there were some changes made in the other Key Management Personnel of the Company. New Chief Executive Officer (CEO) namely Mr. Md. Nasir Uddin ACA and Chief Financial Officer (CFO) namely Mr. Md. Mainudden Khondaker was appointed by the Board of the Company.
Material changes and commitments
There were no other material changes and commitments during the year that may affect financial position of the Company which have occurred between the end of the financial year of the Company to which the balance sheet related and the date of the report.
On Behalf of the Board
Engr. Mustafa Anwar Chairman (C.C.)
Annual Report 2014 279
Auditors’ ReportTo the shareholders of Islami Bank Capital Management Limited
Introduction
We have audited the accompanying financial statements of Islami Bank Capital Management Limited “(the Company)” which comprise the Statement of Financial Position as at 31 December 2014, the Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows for the year then ended, a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing(BAS). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements, give a true and fair view of the financial position of Islami Bank Capital Management Limited as at 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) and comply with the applicable sections of the Companies Act, 1994 and other applicable laws and regulations.
We further report that:
i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;
ii) in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books;
iii) the statement of financial position dealt with by the report are in agreement with the books of account;
iv) the expenditure incurred was for the purpose of company’s business.
Place: DhakaDate: January 07, 2015 Hussain Farhad & Co
Chartered Accountants
Annual Report 2014280
Islami Bank Capital Management LimitedStatement of Financial Position
As at 31 December 2014
Particulars Note 31.12.2014 Taka
31.12.2013 Taka
ASSETS:
Non-current assets - 537,485
Preliminary expenses 3 - 537,485
Current assets 463,795,405 426,715,977
Advance income tax 4 40,758,025 38,347,187
Prepaid rent 5 - -
Accrued income 10.2 9,966,581 -
Cash & cash equivalents 6 413,070,799 388,368,790
Total assets 463,795,405 427,253,462
SHAREHOLDERS’ EQUITY & LIABILITIES:
Shareholders equity 307,871,339 379,519,039
Share capital 7 300,000,000 300,000,000
Retained earnings 7,871,339 79,519,039
Current liabilities 155,924,066 47,734,423
Accrued expenses 8 23,000 23,000
Dividend payable 13 105,000,000 -
Provision for income tax 9 50,901,066 47,711,423
Total shareholders’ equity & liabilities 463,795,405 427,253,462
The annexed notes 1 to 13 form an integral part of these financial statements.
Director Director Chairman
Signed as per our annexed report of even date
Place: DhakaDate: January 07, 2015
Hussain Farhad & CoChartered Accountants
Annual Report 2014 281
Islami Bank Capital Management LimitedStatement of Comprehensive IncomeFor the year ended 31 December 2014
Particulars Notes 2014 Taka
2013 Taka
Operating income 10 52,663,859 45,790,331
Less : Operating expenses 702,131 613,376
Audit fees 23,000 23,000
Bank charge 11 2,270 2,710
Conveyance 70 401
Entertainment expenses 5,556 -
Excise duty 10,000 25,000
LTU charge 2,500 3,000
Office rent 12 - 499,765
Professional fees 119,250 34,500
Amortization of preliminary expenses 537,485 24,000
Tribunal fees 2,000 1,000
Profit/(loss) before tax 51,961,728 45,176,955
Less : Provision for income tax 18,609,428 16,941,358
Net profit/(loss) after tax 33,352,300 28,235,597
The annexed notes 1 to 13 form an integral part of these financial statements.
Director Director Chairman
Signed as per our annexed report of even date
Place: DhakaDate: January 07, 2015
Hussain Farhad & CoChartered Accountants
Annual Report 2014282
Islami Bank Capital Management Limited Statement of Changes in Equity
For the year ended 31 December 2014
Amount in Taka
Particulars Share capital Retained earnings Total
Balance as at 01 January 2013 300,000,000 51,283,442 351,283,442
Changes in equity during the year:
Issue of share capital - - -
Net profit/(loss) after tax - 28,235,597 28,235,597
Dividend - - -
Balance as at 31 December 2013 300,000,000 79,519,039 379,519,039
Balance as at 01 January 2014 300,000,000 79,519,039 379,519,039
Changes in equity during the year:
Issue of share capital - - -
Net profit/(loss) after tax - 33,352,300 33,352,300
Dividend (Note - 13) - 105,000,000 105,000,000
Balance as at 31 December 2014 300,000,000 7,871,339 307,871,339
The annexed notes 1 to 13 form an integral part of these financial statements.
Annual Report 2014 283
Islami Bank Capital Management LimitedStatement of Cash Flows
For the year ended 31 December 2014
Particulars 2014 Taka
2013 Taka
Cash flows from operating activities
Profit/(loss) before tax 51,961,728 45,176,955
Adjustment: - -
Amortization of preliminary expenses 537,485 -
Adjusted operating profit before changes in working capital 52,499,213 45,176,955
Changes in working capital: (9,966,581) 458,422
(Increase)/ decrease in prepaid rent - 458,500
Increase/ (decrease) in accrued income (9,966,581) -
Increase/ (decrease) in accrued expenses/other payables - (78)
Less: Tax paid 17,830,623 16,245,854
Net cash (used in)/ generated from operating activities (A) 24,702,009 29,389,523
Cash flow from investing activities (B) - -
Cash flows from financing activities (C) - -
Net Increase/ (decrease) in cash & cash equivalents (D)=(A+B+C) 24,702,009 29,389,523
Add: Opening cash & cash equivalents (E) 388,368,790 358,979,268
Closing cash & cash equivalents (D+E) 413,070,799 388,368,790
The annexed notes 1 to 13 form an integral part of these financial statements.
Annual Report 2014284
Islami Bank Capital Management LimitedNotes to the Financial Statements
For the year ended 31 December 2014
1. Establishment and status of Islami Bank Capital Management Limited Islami Bank Capital Management Ltd. was incorporated on 01 April, 2010 under the Companies Act, 1994 as a Public Limited Company. It is a subsidiary company of Islami Bank Bangladesh Limited. Islami Bank Bangladesh Limited holds all the shares of the company except 7 shares which are held by 7 individuals. The company has been established as per Bangladesh Bank letter # BRPD (R-1)717/2010-47 dated 7 February 2010. The registered office of the company is situated at Yousuf Chamber, 20 Dilkusha C/A (6th Floor), Dhaka-1000. The main objectives of the company are to carry on business of Merchant Banking in all its aspects including Underwriting and/or management of issue, public offer of shares, stocks, debentures, bonds, etc.; sale or purchase of securities or transfer thereof; fund management for clients, underwriting of shares, stocks, debentures, bonds, etc.; managing portfolio investments of any person or company, by investment in various avenues, etc. The Company has applied for Registration Certificate as per rule-4 of Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rule, 1996. The certificate of registration has not been issued yet by the Bangladesh Securities Exchange Commission against the application.
2. Significant accounting Policies2.1 Basis of accounting
The financial statements of the company have been prepared applying accrual basis of accounting under historical cost convention in accordance with Bangladesh Financial Reporting Standards (BFRS) and other applicable laws and regulations.
2.2 Statement of cash flowsThe statement cash flow is prepared using the indirect method as stipulated in Bangladesh Accounting Standard (BAS) 7 “Statement of Cash Flows”.
2.3 Cash and cash equivalentsCash and cash equivalents comprise cash in hand, cash at bank and term deposits that are readily convertible to a known amount of cash and that are subject to an insignificant risk of change in value.
2.4 GeneralThe figures appearing in these Financial Statements have been rounded off to the nearest integer. The financial statements have been authorized for issue in the 19th Meeting of the Board of Directors held on 7 January 2015.
2.5 Profit on bank depositsProfit on bank deposits has been recognized as per accrual basis from the year 2014.
31.12.2014Taka
31.12.2013 Taka
3. Preliminary expenses
Opening balance 537,485 537,485
Less: Amortization/write-off of preliminary expenses 537,485 -
Closing balance - 537,485 4. Advance income tax
Opening balance 38,347,187 22,101,333
Add: Deducted at source during the year 4,265,595 4,563,728
Shahjalal Islami Bank Ltd. 576,665 721,955
EXIM Bank Bangladesh Ltd. 3,128,998 3,295,771
First Security Islami Bank Ltd. 559,932 546,002
Islami Bank Bangladesh Ltd. - -
Add: Paid through challan during the year 13,565,028 11,682,126
Less: Adjusted during the year due to completion of assessment 15,419,785 -
Closing balance 40,758,025 38,347,187
Annual Report 2014 285
31.12.2014 31.12.2013
Taka Taka
5. Prepaid rent
Opening balance - 458,500
Less: Adjusted during the year - 458,500
Closing balance - -
6. Cash & cash equivalents
Cash in hand 394 4,020
Cash at bank Note - 6.1 413,070,405 388,364,770
413,070,799 388,368,790
6.1 Cash at bank
Shahjalal Islami Bank Ltd. 7,030,337 3,813,310
EXIM Bank Bangladesh Ltd. 50,000,000 54,701,760
First Security Islami Bank Ltd. 310,618,438 282,457,459
Islami Bank Bangladesh Ltd. 45,421,630 47,392,241
413,070,405 388,364,770
7. Share capital
Authorized capital
1,000,000 Ordinary shares @ Tk. 1,000 each 1,000,000,000 1,000,000,000
Issued, subscribed and paid up capital
300,000 Ordinary shares @ Tk.1,000 each fully paid up 300,000,000 300,000,000
Details of shareholders are as under:
Name of the shareholders No. of shares Taka Taka
Islamic Bank Bangladesh Limited 299,993 299,993,000 299,993,000
Mr. M. Fariuddin Ahmad 1 1,000 1,000
Mr. Mohammad Abdul Mannan 1 1,000 1,000
Mr. Md. Setaur Rahman 1 1,000 1,000
Mr. Gulam Moula Choudhury 1 1,000 1,000
Mr. A.K.M Malek Chowdhury 1 1,000 1,000
Mr. Nurul Islam Khalifa 1 1,000 1,000
Mr. Abdus Sadeque Bhuiyan 1 1,000 1,000
Total 300,000 300,000,000 300,000,000
8. Accrued expenses
Audit Fees 20,000 20,000
Add: Value Added Tax (VAT) @15% 3,000 3,000
Total 23,000 23,000
9. Provision for income tax
Opening Balance 47,711,423 30,770,065
Add: Provision made during the year 18,609,428 16,941,358
Less: Adjusted during the year due to completion of assessment 15,419,785 -
Closing balance 50,901,066 47,711,423
Annual Report 2014286
2014 2013
Taka Taka
10. Operating income
Income received from profit on bank deposits (Note - 10.1) 42,697,278 45,790,331
Accrued profit on bank deposits (Note - 10.2) 9,966,581 -
52,663,859 45,790,331
10.1 Income received from profit on bank deposits
Shahjalal Islami Bank Ltd. 5,766,661 7,219,548
EXIM Bank Bangladesh Ltd. 31,289,976 32,957,712
First Security Islami Bank Ltd. 5,599,321 5,460,025
Islami Bank Bangladesh Ltd. 41,320 153,045
42,697,278 45,790,331
10.2 Accrued profit on bank deposits
EXIM Bank Bangladesh Ltd. 6,433,631 -
Shahjalal Islami Bank Ltd. 1,123,206 -
First Security Islami Bank Ltd. 2,409,743 -
9,966,581 -
11. Bank charge
Account maintenance charge of IBSL 1,000 1,500
Account maintenance charge of Bank 1,270 1,210
2,270 2,710
12. Office rent
Rent - 458,500
Add: VAT - 41,265
- 499,765
13. Dividend
The Board of Directors of the Company declared 35% interim dividend in its 18th meeting held in 22 December 2014. And the Company declared 35% final dividend for the year 2014 in the 19th meeting of the Board of Directors held in 7 January 2015 which will be approved in next AGM of the Company.