AB Bank Limited - abbl.com · AB Bank Limited Notes to the Financial Statements For the year ended...

AB Bank Limited

Notes to the Financial Statements For the year ended 31 December 2009

1.1 The Bank and its Activities

AB Bank Limited is one of the first generation private commercial banks (PCBs), incorporated in Bangladesh on 31 December 1981 as a public limited company under the Companies Act 1913, subsequently replaced by the Companies Act 1994, and governed by the Banking Companies Act 1991. The Bank went for public issue of its shares on 28 December 1983 and its shares are listed with Dhaka Stock Exchange and Chittagong Stock Exchange respectively. AB Bank Limited has 78 Branches including 1 Islami Banking Branch, 1 Overseas Branch in Mumbai, India. The Bank has a subsidiary company, AB International Finance Limited, incorporated in Hong Kong. The Bank through its Branches and non-banking subsidiary provides a diverse range of financial services and products in Bangladesh and in certain international markets. The Bank has expanded its capital market oriented service horizon to its customers through Merchant Banking Wing. The Bank obtained permission to embark upon Merchant Banking from the Securities and Exchange Commission (SEC) vide its certificate no. MB-1.02/2001-30 dated 15 May 2001 under the Securities and Exchange Commission Act, 1993. Subsequently, Bank has formed a subsidiary company named AB Investment Company Limited in accordance with approval of Bangladesh Bank vide its Letter # BRPD(R-1)717/2009-538 dated 09 December 2009 and Securities and Exchange Commission vide its Letter # Sec/Reg/MB-79/2010/73 dated 10 March 2010 for dealing the Merchant Banking business.

AB Bank Limited started its Islami Banking operation through its Dilkusha Islami Banking

Branch, Dhaka on 21 December 2004 following the permission of Bangladesh Bank vide letter no. BRPD (P) 745 (12)/2004-2702 dated 08 July 2004. Subsequently the Branch has been shifted to Kakrail, Dhaka.

The Bank obtained permission as a Security Custodian from the Securities and Exchange Commission vide its certificate no. SC-05/2007 dated 22 January 2007 under the Securities and Exchange Commission (Security Custodian Service) Rules, 2003.

In the year 2009, the Bank obtained permission to operate Off Shore Banking Unit (OBU) vide

letter # BRPD(P-3)744/(106)/2009-4486 dated 06 December 2009 of Bangladesh Bank. OBU operation will be carried out from the EPZ Branch Chittagong.

The Bank has a dedicated philanthropic unit named Arab Bangladesh Bank Foundation (ABBF)

which is operating since 2002. Foundation has obtained Brokerage Licenses from SEC on 15 August 2006 and 23 October 2006 for Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) respectively and started its operation from 28 August 2006 and 05 December 2006 on DSE and CSE respectively. However, in view of the recent decision of the Bangladesh Bank and upon due agreement to that effect subsequently by the Board of Directors of ABBL and ABBF respectively, launching of a new subsidiary company for the operation of Brokerage business is under process. Bangladesh Bank has given approval for the mentioned new subsidiary.

1.2 Significant Accounting Policies and basis of preparation of the Financial Statements

A. Presentation of the financial statements Consolidated Financial Statements and Financial Statements of the Bank comprise of the Balance Sheet, Profit and Loss Account, Cash Flow Statements, Statement of Changes in Equity, Liquidity Statement and relevant notes and disclosures. Beginning this year, Financial Statements has been prepared on consolidated basis. Consolidated Financial Statements will encumber the Bank and other subsidiary accounts. Consolidated Financial Statements and Financial Statements of the Bank are made as at 31 December 2009 and are prepared under the historical cost convention except investments categorized under Held for Trading and in accordance with the First Schedule (Section- 38) of the Bank Companies Act 1991, BRPD circular # 14 dated 25 June 2003, other Bangladesh Bank circulars, the Companies Act 1994, the Securities and Exchange Ordinance 1969, Securities and Exchange Rules 1987 and other laws and rules applicable to a banking company. Consolidated Financial Statements and Financial Statements of the Bank have been prepared in accordance with the measurement and recognition requirements of the Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB). B. Basis of consolidation Separate set of records for consolidating the Financial Statements of the Branches including Mumbai Branch, India and AB International Finance Limited, Hong Kong are maintained at the Head Office, based on which these financial statements have been prepared. The Consolidated Financial Statements have been prepared in accordance with the BAS 27: Consolidated and Separate Financial Statements. The Consolidated Financial Statements have been prepared to a common reporting period ending on 31 December 2009. Mumbai Branch, India The assets and liabilities of Mumbai Branch, India have been incorporated in the accounts at year end exchange rate. Income and expenditures are incorporated in the accounts by each line item. Retained earnings of Mumbai Branch has been added with total retained earnings of Bank. In corresponding balance of 2008, Income and expenditures at the Mumbai Branch were not incorporated in the accounts; instead, net profit earned was shown as retained revenue under other liabilities. Such earnings were recognized as income of the Bank as and when remittance of profit was received from the Branch and then grouped under the head "other income". The Balance Sheet and Profit and Loss Account of the Mumbai Branch has been shown separately in Annexure - F. Merchant Banking Wing Financial statements of Merchant Banking Wing (MBW) have been audited by an independent auditor M/S. S. F. Ahmed & Co., Chartered Accountants. Assets-liabilities and income-expenditures of MBW are incorporated in similar heads of account of the Bank's financial statements. Balance Sheet and Profit and Loss Account of Merchant Banking Wing are shown separately in the Annexure - G. Subsequently, MBW has been converted into a subsidiary company named by AB Investment Limited (ABIL) which started its operation from March 10, 2010.

Islami Banking Branch Islami Banking Branch has maintained separate set of books and records for its operations. All assets-liabilities and income-expenses of this Branch are incorporated in similar heads of account of the Bank's financial statements. Detail Financial Statements of Islami Banking Branch is shown separately in Annexure-H as per Bangladesh Bank BRPD Circular No. 15 dated 09 November 2009. Distribution of Profit under Islamic Banking Operation and Fixation of final rate for the year 2009 are shown in Annexure-I. Custodian Wing Financial statements of Custodian Wing have been audited by independent auditor named M/S. ACNABIN, Chartered Accountants. Income-expenditures of that Wing are incorporated in similar heads of account of the Bank's Profit and Loss Account. Profit and Loss Accounts of Custodian Wing is shown separately in Annexure J. Arab Bangladesh Bank Foundation Arab Bangladesh Bank Foundation (ABBF) has maintained separate set of books and records for its operation. Financial statements of ABBF have been audited by an independent auditor M/S. Syful Shamsul Alam & Co., Chartered Accountants. Financial Statements of ABBF are not incorporated with the AB Bank Limited Consolidated Financial Statements and Separate Financial Statements due to undergoing legal settlement process. Bangladesh Bank vide its circular letter BRPD(R-1)651/(Special)-1/2007-767 and BRPD (R-1/651/2008-444 dated 05 December 2007 and 13 July 2008 respectively issued show cause notice to AB Bank Limited and forfeited a total of 248,594 shares of IFIC Bank Limited valuating Tk.21,176,920 held by ABBF. Pursuant to the above, AB Bank Limited filed a writ petition before the Honorable High Court Division of the Supreme Court on 31 August 2008 and the court extended the stay order till disposal of the rule. Subsequently, Bangladesh Bank vide letter # BRPD (R-2)/651/9(Bishes-1)/2009-450, dated 14 October 2009 directed AB Bank Limited to separate its stock broking activities from ABBF through the formation of a new subsidiary company and also agreed to return the confiscated shares of IFIC Bank Limited to the new company subject to fulfillment of certain specific conditions. Accordingly, in line with Bangladesh Bank’s directive, AB Securities Limited (ABSL), a subsidiary company of AB Bank Limited, has been formed on 24 December 2009 to deal with stock broking services of the Bank. The writ petition filed earlier was withdrawn by the Bank vide the order passed by the High Court Division of the Supreme Court of Bangladesh on 08 December 2009. Formal Commercial operation of ABSL will resume shortly and returning of the shares of IFIC Bank Limited is presently under process with Bangladesh Bank. The Balance Sheet and Profit and Loss Account of the ABBF has been shown separately in Annexure - K. Subsidiary AB International Finance Limited AB International Finance Limited (ABIFL) is a company incorporated and domiciled in Hong Kong and has its registered office and principal place of business at Unit 1201-B, 12/F, Admiralty Centre, Tower One, 18 Harcourt, Hong Kong.

As mentioned earlier, Financial Statements of ABIFL has been consolidated following the BAS 27: Consolidated and Separate Financial Statements. The Balance Sheet and Profit and Loss Account of the ABIFL has been shown separately in Annexure - L. Control exists when Bank has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits form its activities. The financial statements of subsidiary are included in the consolidated financial statements from the date that control effectively commences until the date that the control effectively ceases. Conversion rate policy of ABIFL is given below: For assets & Liabilities at closing rate of Tk.8.9321 per HK$ For income & expenses at average rate of Tk.8.8976 per HK$ All intra-group balances, transaction, income and expenses are eliminated in full for preparing consolidated Financial Statements. Associate Cashlink Bangladesh Limited Cashlink Bangladesh Limited (CBL) was incorporated on 24 September 2008 in Bangladesh under the Companies Act 1994 as a private company limited by shares with an authorized capital of Tk. 1,000,000,000 divided into 100,000,000 ordinary shares of Tk. 10 each. AB Bank holds 30% share in CBL. An associate is an entity of the Bank, over which the Bank has significant influence and that is neither the subsidiary nor an interest in a joint venture of the Bank. C. Use of estimates and judgments The preparation of Consolidated Financial Statements and Financial Statements of the Bank requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of accounting estimates are recognized in the period in which the estimate is revised and in the future periods affected if applicable. D. Materiality, aggregation and offsetting Bank presents each material class of similar items. Bank presents separately items of a dissimilar nature or function unless they are immaterial. Bank did not offset assets and liabilities or income and expense, unless required or permitted by BAS/ BFRS. E. Foreign currency transactions i. Functional and presentational currency Financial Statements of the Bank are presented in Taka, which is the Bank’s functional and presentational currency.

ii. Foreign currency translation Foreign currency transactions are converted into equivalent Taka currency at the ruling exchange rates on the respective date of such transactions as per BAS- 21 “The Effects of Changes in Foreign Exchange Rates”. Assets and liabilities in foreign currencies as at 31 December 2009 have been converted into Taka currency at the average of the prevailing buying and selling rates of the relevant foreign currencies at that date except "Balances with other Banks and Financial Institutions" which have been converted as per directives of Bangladesh Bank vide its circular no. BRPD (R) 717/2004-959 dated 21 November 2004. Differences arising through buying and selling transactions of foreign currencies on different dates of the year have been adjusted by debiting /crediting exchange gain or loss account. iii. Commitment Commitments for outstanding forward foreign exchange contracts disclosed in these Consolidated Financial Statements and Financial Statements are translated at contracted rates. Contingent liabilities / commitments for letter of credit, letter of guarantee and acceptance denominated in foreign currencies are expressed in Taka terms at the rates of exchange ruling on the balance sheet date. iv. Translation gain and Losses Gain and Loss arising on translation of foreign exchange are included in the profit and loss account, except those arising on the translation of net investment in foreign subsidiary. v. Foreign operations The results of Consolidated Financial Statements of Bank & its subsidiary’s operations whose functional currency is not Bangladesh Taka are translated into Bangladesh Taka as follows: a. assets and liabilities of Balance Sheet are translated at the closing rate at the date of

Balance sheet. b. income and expenses of Profit and Loss Account are translated at an average rate

approximating the exchange rates at the year end. c. all resulting exchange differences are recognized as a separate components of equity. F. Cash Flow Statement

Cash Flow Statement is prepared principally in accordance with BAS- 7 “Cash Flow Statement” under direct method as per the guidelines of BRPD Circular No.14 dated 25 June 2003. The Cash Flow Statement shows the structure of and changes in cash and cash equivalents during the financial year. It reported cash flows during the period classified by operating activities, investing activities and financing activities. G. Statement of Changes in Equity

Statement of Changes in Equity is prepared principally in accordance with BAS- 1 “Presentation of Financial Statements” and under the guidelines of Bangladesh Bank BRPD Circular No.14 dated 25 June 2003.

H. Liquidity statements The basis of the Liquidity Statement of assets and liabilities as on the reporting date is given below:

Particulars Basis used

Balance with other banks and financial institutions

Maturity term

Investments Respective maturity terms

Loans and advances Repayment schedule basis

Fixed assets Useful life

Other assets Realization/ amortization basis

Borrowing from other banks, financial institutions and agents

Maturity/ repayments terms

Deposits and others accounts Maturity term

Other liabilities Payments/ adjustments schedule basis

1.3 Assets and basis of their valuation

A. Cash and cash equivalents Cash comprise cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. B. Loans and advances i. Loans and advances/ investments in Islamic Banking Branch are stated at gross

amounts at 31 December 2009. ii. Interest/ profit is calculated on a daily product basis but changed and accounted for an

accrual basis. Interest/ profit on SMA and classified loans and advances/ investment is kept in suspense account as per Bangladesh Bank instructions and such interest/ profit is not accounted for as income until realized from borrowers. Interest/ profit are not charged on bad and loss loans/ investments as per guideline of Bangladesh Bank.

iii. Commission and discounts on bills purchased and discounted are recognized at the time

of realization.

iv. Provision for loans and advances is made on the basis of quarter-end review by the management and of instructions contained in Bangladesh Bank BCD circular no. 34 of 16 November 1989, 20 of 27 December 1994, 12 of 4 September 1995, BRPD circular no. 16 dated 6 December 1998, 9 of 14 May 2001, 02 of 15 February 2005, 9 of August 2005 and 17 of 6 December 2005, BRPD circular no. 05 dated 05 June 2006 and 05 of April 2008. The rates for provisions are stated below:

Types of Loan and Advances

UC SMA SS DF BL

Prov (%)

Prov (%)

Prov (%)

Prov (%)

Prov (%)

Consumer:

House building & Professional

2% 5% 20% 50% 100%

C. Investment Investments are initially recognized at cost, including acquisition charges associated with the investment. Premiums are amortized and discount accredited, using the effective or historical yield method. Accounting treatment of government treasury securities and bonds (categorized as HFT or/and HTM) is made following Bangladesh Bank DOS Circular Letter No. 05, dated 26 May 2008. The valuation methods of investment used are: i) Govt. Securities a. Held to maturity Investments which are intended to be held to maturity are classified as “Held to Maturity”. These are measured at amortized cost at each year end by taking into account any discount or premium in acquisition. Amortized amount of such premium or discount is booked to reserve until maturity/disposal.

b. Held for trading Investment primarily held for selling or trading is classified in this category. After initial recognition, investments are marked to market weekly. Decrease in the present value is recognized in the profit and loss account and any increase is booked to Revaluation Reserve Account through Profit and Loss Account. Value of investments has been enumerated as follows:

Investment class Initial recognition

Measurement after initial recognition

Recording of changes

Treasury Bill / Bond (HFT)

Cost Market Value Loss to P&L, gain to Revaluation Reserve through P & L

Treasury Bill / Bond (HTM)

Cost Amortized Value Increase in value to equity and decrease in value to P&L

Debenture Face Value None None

Prize Bond Cost None None

Shares Cost Lower of cost or market value

- any loss, charged in P/L - unrealized gain, not record in accounts

Other than House building &

Professional 5% 5% 20% 50% 100%

Small & Medium 2% 5% 20% 50% 100%

All Other 1% 5% 20% 50% 100%

ii) Investment in listed securities These securities are brought and held primarily for the purpose of selling them in future or held for dividend income. These are reported at cost. Unrealized gains are not recognized in the profit and loss account as per BAS 18: Revenue. iii) Investment in unlisted securities Investment in unlisted securities is reported at cost under cost method. iv) Investments in subsidiary Investment in subsidiary is accounted for under the cost method of accounting in the Bank’s financial statements in accordance with the BAS 27: Consolidated and Separate Financial Statements and BFRS 3: Business Combination. D. Property, plant and equipment i. All fixed assets are stated at cost less accumulated depreciation as per BAS -16

"Property, Plant and Equipment". The cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction or , where applicable, the amount attributed to that asset when initially recognized in accordance with the specific requirements of the BFRS.

ii. The cost of an item of property, plant and equipment shall be recognized as an asset if, and only if: a) it is probable that future economic benefits associated with the item will flow to the

entity; and b) the cost of the item can be measured reliably.

iii. Depreciation on fixed assets is charged using reducing balance method except motor vehicles, computers and photocopiers for which straight-line method is used. The rates of depreciation are as follows:

Name of the Assets Rate of Depreciation Land Nil Building 2.50% Furniture & Fixtures 10.00% Electrical appliances 20.00% Motor vehicles 20.00% Leasehold assets - vehicles 20.00%

iv. Depreciation for assets added during the year is charged from the month of addition. Whole month depreciation is charged for the month of addition.

v. On the month of disposal of fixed assets no depreciation is charged. The cost and

accumulated of depreciation of disposed assets are eliminated from the fixed assets schedule and gain or loss on such disposal is reflected in the profit and loss accounts.

vi. Useful life and method of depreciation of fixed assets are reviewed periodically. If

useful lives of assets do not differ significantly as it was previously estimated, bank management does not consider to revalue its assets by the meantime.

vii. Bank capitalized items value of which is over Tk.50,000 and the items below Tk.50,000

were booked in Non-capitalized items under the broader head of other expenses with effect from 01 March 2009 in accordance with the relevant policy.

viii. Bank also follows a policy of amortization of expenditures considering the durability and useful life of items. These are treated as Deferred Revenue expenditure and are booked under the head “Other Assets – Deferred Revenue Expenditures” and amortized amount is charged within the period and booked under the Broad head “Other Expenditure”.

E. Intangible Assets

An intangible asset is recognized if, and only if:

a. it is probable that the expected future economic benefits that are attributable to the assets will flow to the entity; and

b. the cost of the assets can be measured reliably. F. Other assets

Other assets include all balance sheet items not covered specifically in other areas of the supervisory activity.

G. Leasing Where property, plant and equipment have been financed by lease agreements under which substantially all the risks and rewards of ownership are transferred to the Bank, they are treated as finance leases as per BAS- 17 "Leases". All other leases are classified as operating leases as per BAS - 17 "Leases" i) As lessee Assets held under finance lease are recognized as assets of the bank at their fair value at the date of acquisition or if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Assets held under finance lease are depreciated over their expected useful life on the same basis as owned assets.

ii) As lessor The bank did not grant any lease finance.

H. Stock of stationery Stock of stationery has been shown under other assets and is valued at cost.

1.4 Capital, Reserve, Liabilities & provision and basis of their valuation A. Share Capital Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets. B. Statutory reserve Bank Companies Act, 1991 requires the bank to transfer from its current year's profit before tax to reserve until such reserve together with share premium account equals to its paid up capital. AB Bank transferred 20% of its current year’s Profit Before Tax (PBT) to this reserve.

C. Revaluation reserve When an asset’s carrying amount is increased as a result of revaluation, the increase amount should be credited directly to equity under the heading of revaluation surplus/ reserve as per BAS 16: Property, Plant and Equipment. D. Deposits and Other accounts Deposits are recognized when the Bank enters into contractual provisions of the arrangements with the counterparties, which is generally on trade date and initially measured at the consideration received. E. Borrowing Borrowed funds include call borrowing, term borrowings and re-finance from different commercial banks and central bank. F. Provision for taxation Income tax represents the sum of the current tax and deferred tax. i) Current Tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Provision for current income tax has been made @ 42.5% as prescribed in the Finance Ordinance 2009 of the accounting profit made by the Bank after considering some of the add backs of income and disallowances of expenditure as per Income Tax Ordinance, 1984. ii) Deferred Tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis. The impact on the account of changes in the deferred tax assets and liabilities has also been recognized in the profit and loss account as per BAS-12 "Income Taxes". (Note-13.3) G. Retirement benefits to the employees

The retirement benefits accrued for the employees of the bank as on the reporting date have been accounted for in accordance with the provision of BAS-19 "Employee benefit". Bases of enumerating the retirement benefits schemes operated by the bank are outlined below:

i) Provident fund

There is a provident fund scheme under the defined contribution plan. The fund is operated by a separate board of trustees approved by the National Board of Revenue as per Income Tax Ordinance, 1984. All eligible employees contribute 10% of their basic pay to the fund. The bank also contributes equal of employees contribution to the fund. These contributions are invested separately. Benefits from the fund are given to eligible employees at the time of retirement / resignation as per approved rules of the fund. ii) Staff gratuity The bank has a separate Board of Trustees for operating the staff gratuity fund approved by the National Board of Revenue. Employees of the Bank, who served the Bank for ten years or above are entitled to get gratuity benefit at rates determined by the Service Rules of the Bank. iii) Superannuation fund The Bank operates a Superannuation Fund as death-cum-retirement benefit for its employees. The fund is operated by a separate Board of Trustees. H. Provision for liabilities A provision is recognized in the balance sheet when the bank has a legal or constructive obligation as a result of past event and it is probable that an outflow of economic benefit will be required to settle the obligations, in accordance with BAS- 37 “Provision, Contingent Liabilities and Contingent Assets”. No provision is recognized for any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the bank, or any present obligation that arises from past events and it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimates of the amount of obligation can not made.

However, certain provisions on assets and liabilities are maintained in accordance with relevant Bangladesh Bank Circulars issued from time to time.

I. Provision for Nostro Accounts

Provision for nostro accounts is maintained as per Circular Letter No. FEPD(FEMO)/01/2005-677 dated 13 September 2005 issued by Foreign Exchange Policy Department of Bangladesh Bank.

1.5 Revenue recognition

A. Interest income

According to the BAS -18 "Revenue", the interest income is recognized on accrual basis. Interest on loans and advances ceases to be taken into income when such advances are classified or treated as SMA as per BRPD Circular No. 05 dated 05 June 2006 and is kept in interest suspense account. Interest on classified advances is accounted for as and when realised. B. Profit on investment (Islamic Banking Branch) Profit on investment is taken into income account from profit receivable account. Overdue charges/ compensation on classified investment is transferred to profit suspense/ compensation receivable account instead of income account. C. Investment income Interest income on investments is recognized on accrual basis except treasury bills. Capital gains on investments in shares are also included in investment income. Capital gain is recognized when it is realised. D. Fees and commission income Fees and commission income on services provided by the bank are recognized as and when the services are rendered. Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of affecting the transactions. E. Dividend income on shares As per BAS 18: Revenue, dividend income from investment in shares is recognised when the Bank's right to receive dividend is established. It recognized when:

a. it is probable that the economic benefits associated with the transaction will flow to the entity; and

b. the amount of the revenue can be measured reliably. F. Interest paid on deposits and borrowing Interest paid on deposits, borrowings etc. is accounted for on accrual basis according to the BAS – 1 “Presentation of Financial Statements”. G. Profit paid on deposits (Islami Banking Branch) Profit paid to different Mudaraba depositors is recognized on accrual basis as per provisional rate. However, the final rate of profit is determined and to be paid to the depositors as per Annexure I.

H. Other operating expenses All other operating expenses are provided for in the books of the account on accrual basis according to the BAS – 1 “Presentation of Financial Statements”.

1.6 Reconciliation of books of account

Books of account with regard to inter-bank (in Bangladesh and outside Bangladesh) and inter-branch transactions are reconciled and no material difference was found which may affect the financial statements significantly. There exist no un-reconciled items in NOSTRO accounts as at 31 December 2009.

1.7 Earning per share A. Basic earning per share Basic earnings per share have been calculated in accordance with BAS- 33 "Earning per Share" which has been shown in the face of the Profit and Loss Account. This has been calculated by dividing the basic earnings by the total ordinary outstanding share. B. Diluted earnings per share No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during the year under review.

1.8 Off-balance sheet items Off-Balance Sheet items have been disclosed under contingent liabilities and other commitments as per Bangladesh Bank's guidelines. In accordance with BRPD Circular # 08 and 10 dated 07 August 2007 and 18 September 2007 respectively general provision @ 1.00% has been made on the outstanding balance of letter of credit, guarantee and acceptances.

1.9 Memorandum items

Memorandum items are maintained to have control over all items of importance and for such transactions where the Bank has only a business responsibility and no legal commitment. Stock of traveller’s cheques, Value of savings certificates (Sanchaya Patra) etc. fall under the memorandum items.

1.10 Reporting period

These financial statements cover one calendar year from 01 January 2009 to 31 December 2009.

1.11 Segment Reporting

By Geographical Location

Inside

Bangladesh

India (Mumbai

Branch)Total

Income Statements

Interest income 9,003,401,681 43,767,527 9,047,169,208 64,205,688 9,111,374,896 Interest paid on deposits and borrowings, etc. 6,135,934,169 10,861,467 6,146,795,636 7,893,206 6,154,688,843 Net interest income 2,867,467,512 32,906,059 2,900,373,571 56,312,482 2,956,686,053

Investment income 2,915,477,543 8,059,681 2,923,537,225 - 2,923,537,225 Commission, exchange and brokerage 2,100,559,448 165,565,697 2,266,125,144 16,607,333 2,282,732,477 Other operating income 167,671,035 3,202,464 170,873,499 32,766,651 203,640,150

Total operating income 8,051,175,538 209,733,902 8,260,909,440 105,686,465 8,366,595,905

OPERATING EXPENSES

Salary and allowances 1,185,430,187 13,801,402 1,199,231,589 19,136,478 1,218,368,066 Rent, taxes, insurance, electricity, etc. 220,753,358 9,725,526 230,478,884 10,831,815 241,310,699 Legal expenses 3,956,488 3,718 3,960,205 89,287 4,049,492 Postage, stamps, telecommunication, etc. 79,103,744 5,273,784 84,377,528 5,639,731 90,017,259 Stationery, printing, advertisement, etc. 118,852,412 1,710,967 120,563,379 313,874 120,877,254 Chief executive's salary and fees 8,484,960 - 8,484,960 8,484,960 Directors' fees 2,374,492 2,374,492 2,374,492 Auditors' fees 1,107,332 1,102,630 2,209,962 186,850 2,396,811 Charges on loan losses - - - Depreciation and repairs of Bank's assets 190,952,657 11,253,768 202,206,424 657,520 202,863,944 Other expenses 565,252,968 39,372,792 604,625,760 1,601,553 606,227,312 Total operating expenses 2,376,268,597 82,244,586 2,458,513,183 38,457,107 2,496,970,290 Profit before provision 5,674,906,941 127,489,316 5,802,396,257 67,229,358 5,869,625,615

Provision against loans and advances 436,600,000 - 436,600,000.00 - 436,600,000

Provision for diminution in value of investments - - - - -

Other provisions 160,900,000 - 160,900,000.00 1,519,861.34 162,419,861

Total provision 597,500,000 - 597,500,000 1,519,861 599,019,861

Profit before taxation 5,077,406,941 127,489,316 5,204,896,257 65,709,497 5,270,605,753

Provision for taxation 1,777,398,202 64,942,054 1,842,340,256 11,080,386 1,853,420,642

Current tax 1,656,388,647 57,827,943 1,714,216,590 11,080,386 1,725,296,976

Deferred tax 121,009,555 7,114,111 128,123,666 - 128,123,666

Net profit after taxation 3,300,008,739 62,547,262 3,362,556,000 54,629,111 3,417,185,111

Balance Sheet

Segment assets 105,391,179,984 1,521,132,398 106,912,312,383 1,186,736,084 107,093,007,184

Segment advances 70,527,446,112 352,487,333 70,879,933,446 1,183,329,813 72,063,263,259

Segment deposits 82,536,705,431 550,423,683 83,087,129,114 - 83,087,129,114

Segment Liabilities 96,112,554,318 713,235,134 96,825,789,452 1,043,543,190 96,872,223,464

Segment Liabilities and share equity 105,941,106,194 971,206,190 106,912,312,383 1,186,736,084 107,093,007,184

The Bank reports its operations under the following two business segments as per Bangladesh Financial Reporting Standards (BFRS)-8

"Operating Segment".

ParticularsAB Bank Limited

& it's Subsidiary

AB Int.

Finance Ltd.

(Hong Kong)

AB Bank Limited

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

In preparing the Consolidated Financial Statements and separate Financial Statements, Bank applied most of the BAS and BFRS as applicable.

Sl # Name of the BAS BAS # Status

1 Presentation of Financial Statements 1 Complied

2 Inventories 2 N/A

3 Cash Flow Statements 7 Complied

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

5 Events after the Reporting Period 10 Complied

6 Construction Contracts 11 N/A

7 Income Taxes 12 Complied

8 Segment Reporting 14 Complied

9 Property, Plants and Equipments 16 Complied

10 Leases 17 Complied

11 Revenue 18 Complied

12 Employee Benefits 19 Complied

13 Accounting for Government Grants and Disclosure of Government Assistance

20 N/A

14 The Effects of Changes in Foreign Exchanges Rates 21 Complied

15 Borrowing Costs 23 Complied

16 Related Party Disclosures 24 Complied

17 Accounting for Investments 25 Complied

18 Accounting and Reporting by Retirement Benefit Plans 26 Complied

19 Consolidated and Separate Financial Statements 27 Complied

20 Investment in Associates 28 Complied

21 Disclosures in the Financial Statements of Banks and Similar Financial Institutions

30 Complied

22 Interest in Joint Ventures 31 N/A

23 Financial Instruments: Presentation 32 **

23 Earnings per Share 33 Complied

24 Interim Financial Reporting 34 Complied

25 Impairment of Assets 36 Complied

26 Provisions, Contingent Liabilities and Contingent Assets 37 Complied

27 Intangible Assets 38 Complied

28 Financial Instruments: Recognition & Measurement 39 **

28 Investment Property 40 Complied

29 Agriculture 41 N/A

* N/A = Not Applicable ** Relevant disclosures are made according to the requirement of Bangladesh Bank.

Sl # Name of the BFRS/IFRS BFRS # Status

1 Share- based Payments 2 N/A

2 Business Combinations 3 Complied

3 Insurance contracts 4 N/A

4 Non- current assets Held for sale and Discontinued Operations 5 N/A

5 Exploration for and Evaluation of Mineral Resources 6 N/A

6 Financial Instruments: Disclosure 7 **

7 Operating Segments 8 Complied

* N/A = Not Applicable ** Relevant disclosures are made according to the requirement of Bangladesh Bank.

1.13 Regulatory and legal compliance

The Bank complied with the requirement of the following regulatory and legal authorities : i. The Bank Companies Act, 1991. ii. The Companies Act, 1994. iii. Rules, Regulation and Circulars issued by the Bangladesh Bank from time to time. iv. The Securities and Exchange Rules, 1987. v. The Securities and Exchange Ordinance, 1969. vi. The Securities and Exchange Commission Act, 1993. vii. The Securities and Exchange Commission (Public Issues) Rules, 2006. viii. The Income Tax Ordinance, 1984. ix. The Value Added Tax (VAT), 1991. x. Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE) and Central Depository

Bangladesh Limited (CDBL) rules and regulations. 1.14 Risk management

Risk is defined as uncertainties resulting in adverse variations of profitability or in losses, financial or otherwise. The risk management of the Bank covers core risk areas of banking viz, credit risk, liquidity risk, market risk that includes foreign exchange risk, interest rate risk, equity risk, operational risk and reputation risk. The objective of the risk management is that the bank evaluates and takes well calculative business risks and thereby safeguarding the bank’s capital, its financial resources and profitability from various business risks through its own measures and through implementing Bangladesh Bank's guidelines and following some of the best practices as under: A. Credit risk It arises mainly from lending, trade finance and treasury businesses. This can be described as potential loss arising from the failure of a counter party to perform as per contractual agreement with the Bank. The failure may result from unwillingness of the counter party or decline in his / her financial condition. Therefore, the Bank’s credit risk management activities have been designed to address all these issues.

The Bank has segregated duties of the officers / executives involved in credit related activities. A separate Corporate Division has been formed at Head Office which is entrusted with the duties of maintaining effective relationship with the customers, marketing of credit products, exploring new business opportunities, etc. Moreover, credit approval, administration, monitoring and recovery functions have been segregated. For this purpose, two separate units have been formed within the credit division. These are (a) Credit Risk Management Unit and (b) Credit Administration Unit .Credit Risk Management Unit is entrusted with the duties of maintaining asset quality, assessing risk in lending to a particular customer, sanctioning credit, formulating policy / strategy for lending operation, etc. Adequate provision has been made on classified loans / investments. A thorough assessment is done before sanction of any credit facility at Credit Risk Management Unit. The risk assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer, security of the proposed credit facility, etc. The assessment process starts at Corporate Division by the Relationship Manager / Officer and ends at Credit Risk Management Unit when it is approved / declined by the competent authority. Credit approval authority has been delegated to the credit committee.

In determining Single borrower / Large loan limit, the instructions of Bangladesh Bank are strictly followed. Internal audit is conducted at periodical intervals to ensure compliance of Bank’s and Regulatory polices. Loans are classified as per Bangladesh Bank’s guidelines. Concentration of single borrower / large loan limit is shown in note-7.4. B. Operating risk Operational risk address the risk associated with fraud, forgery, unauthorised activities, error, omission, system failure and external events among others. Bank is managing these risk through written procedures, regular training and awareness programs. Departmental Control Function Checklist (DCFCL), Quarterly Operations Report, Loan Documentation Checklist etc. are in place covering all probable risks associated with bank’s business and operations. Surprise Inspections are also made on a regular basis to make sure that all control tools are functioning properly. C. Market risk The exposure of market risk of the bank is restricted to foreign exchange risk, interest rate risk and equity position risk. i) Foreign exchange risk Foreign exchange risk is defined as the potential change in earnings due to change in market prices. The foreign exchange risk of the bank is minimal as all the transactions are carried out on behalf of the customers against underlying L/C commitments and other remittance requirements. Financial Institution and Treasury (FIT) division independently conducted the FX transactions and the Mid Office and the Back Office of treasury is responsible for verification of the deals and passing of their entries in the books of account. All foreign exchange transactions are revalued at Market rate as determined by Bangladesh Bank at the month - end. All Nostro accounts are reconciled on a monthly basis and outstanding entry is reviewed by the management for its settlement. The position maintained by the bank at the end of day was within the stipulated limit prescribed by the Bangladesh Bank.

ii) Interest rate risk Interest rate risk may arise from trading portfolio and non- trading portfolio. The trading portfolio of the bank consists of government treasury bills, bond. The short term movement in interest rate is neglilgible or nil. Interest rate risk of non trading business arises from mismatches between the future yield of an asset and its funding cost. Asset Liability Committee (ALCO) monitors the interest rate movement on a regular basis. iii) Equity position risk Equity risk arises from movement in market value of equities held. The risks are monitored by the Investment Banking Division under a well designated policy framework. The market value of equities held was however higher than the cost price at the balance sheet date. D. Liquidity risk The object of liquidity risk management is to ensure that all foreseeable funding commitments and deposit withdrawals can be met when due. To this end, the Bank is maintaining a diversified and stable funding base comprising of core retail and corporate deposits and institutional balance. Management of liquidity and funding is carried out by Financial Institution & Treasury (FIT) department under approved policy guidelines. FIT front office is supported by a very structured Mid Office and Back Office. The liquidity management is monitored by Asset Liability Committee (ALCO) on a regular basis. A written contingency plan is in place to manage extreme situation. E. Risk arising from money laundering AB Bank Limited considers prevention of money laundering risk not only as a compliance requirement imposed by the law of the country but also as one of its core business values. The Board of Directors and Senior Management are firmly committed to combat money laundering. Every year, a message from the President and Managing Director’s office goes to all employees of the Bank reiterating the importance of the issue. There is a high profile Central Compliance Unit (CCU) in place to oversee the anty money laundering activities. The President and Managing Director himself supervise the function of CCU's. Operation has separate and dedicated headcount for surveillance of the anti money laundering functions across the Bank. Training and awareness programs are regularly held to make all employees aware of the issue. Bank has also undertaken campaign against money laundering in electronic media.

1.15 Credit Rating of the Bank

Credit rating of the Bank in last three years is:

Bases of incorporation (as on or period)

Date of Rating Long term Short term

Jan to June 2009 September 29, 2009 AA3 ST-1

Jan to Dec 2008 May 24, 2009 A1 ST-2

Jan to Dec 2007 May 15, 2008 A2 ST-2

1.16 Events after the Balance Sheet Date

As per BAS -10 "Events after the Balance Sheet Date" events after the reporting period are those events, favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. Two types of events can be identified:

(a) those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and (b) those that are indicative of conditions that arose after the reporting period (no adjusting events after the reporting period). There were no material events which have occurred after the reporting period which could affect the values stated in the financial statements.

1.17 Related party disclosures A party is related to the company if: (i) directly or indirectly through one or more intermediaries, the party controls, is

controlled by, or is under common control with, the company; has an interest in the company that gives it significant influence over the company; or has joint control over the company;

(ii) the party is an associate; (iii) the party is a joint venture; (iv) the party is a member of the key management personnel of the Company or its parent; (v) the party is a close member of the family of any individual referred to in (i) or (iv); (vi) the party is an entity that is controlled, jointly controlled or significantly influenced by

or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan for the benefit of employees of the

company, or of any entity that is a related party of the company. a) Significant contracts where Bank is a party and wherein Directors have interest:

Name of contracts Name of the Party Name of Director and Related by

Lease agreement with AB Bank Ltd. (CARD Department)

Elite International Ltd Mr. Salim Ahmed & Mr. Feroz Ahmed (Common Director)

b) Related party transactions:

Name of organization Relation Nature Amount

(In Taka)

Hyundai Motors Bangladesh Ltd.

Common Director's

Purchase of Vehicles 8,450,800

Elite International Ltd Common Director's

Rent of Card Department

750,000

1.18 Audit Committee of the Board of Directors

i) Particulars of Audit Committee

The Audit Committee of the Board was duly constituted by the Board of Directors of the Bank in accordance with the BRPD Circular No. 12 dated 23 December 2002 issued by Bangladesh Bank. The Committee was formed comprising 3 (three) members of the Board.

Sl. #

Name Status with Bank

Status with Committee

Duration Educational Qualification

01 Mr. Shishir Ranjan Bose, FCA

Director Chairman With effect from

16 July 2008

Fellow of Chartered

Accountants

02 Mr. M. Wahidul Haque Chairman Member With effect from

04 February 2008

BA, LLB

03 Mr. Salim Ahmed Vice-Chairman

Member With effect from

16 July 2008

B.A. (Hons.), M.A. (History)

The Company Secretary acts as Secretary of the Audit Committee of the Board.

ii) Meeting held with Audit Committee

During the year 2009, the audit committee conducted seven (07) meetings in which, among others, the following issues were reviewed and discussed:

comprehensive inspection report of Bangladesh Bank including status of compliance

thereof;

inspection reports of branches/Head Office conducted by Bank's internal inspection team;

financial statements of the Bank;

half-yearly accounts of 2009 of the Bank; and

status of compliance of different rules and regulations.

iii) Steps taken for implementation on effective internal control procedure of the

Bank The Committee placed its report regularly to the Board of Directors of the Bank mentioning its review results and recommendations on internal control system, compliance of rules and regulations and establishment of good governance within the organization.

1.19 Shariah Council

AB Bank Shariah Council was re-constituted during the year 2009 as per provision of it’s By-Laws. Members of Re-constituted Council are as under:

Sl Name

Status With the

Committee

Educational Qualification

1 Mr. Shah Abdul Hannan

Chairman Masters in Economics from Dhaka University & Scholar of Islamic Studies.

2 Mr. M. Azizul Haue Vice-Chairman M.A (Economics) Dhaka University & Scholar of Islamic Banking.

3 Dr. Md. Harun Rashid

Member M.A, M. Phil P.H.D (Aligor University), India. Islamic Law (1st class), Dewband, India. Fazel-E-Dewband (1st class), Dewband, India.

4 Mr. Muhammad Musa

Member Kamil, Madrasah Education Board, Dhaka. B.Com. (Hons.) & M.Com, Dhaka University.

5 Mr. M. Wahidul Haque Chairman, ABBL

Member BA, LLB

6 Mr. Kaiser A. Chowdhury

Member M.A (Economics) Dhaka University

7 Mr. Mukhlesur Rahman

Member Secretary

Kamil, Madrasah Education Board, Dhaka. B.A (Hons) & M.A in Islamic Studies, Dhaka University Higher Diploma in Arabic Language, Dhaka University.

During the year 2009, the Shariah Council & its Standing Committee met in four meetings. In these meetings different issues were discussed and prudent guidance/opinion were given among which important ones are as under:

Reviewing the Final Accounts 2008 of Islami Banking Branch in accordance with the Shariah principles.

Reviewing the Shariah Audit 2007 and 2008 and its’ observations. Formulating Guideline for selecting Institution and firms for Merchant Banking as per Islamic Shariah principles. Reviewing proposed `Higher Education Investment Scheme.’ Analyzing `Guideline for Islamic Banking’ issued by Bangladesh Bank

1.20 Number of employees

1.21 Name of Directors and the entities in which they had interest as at 31 December 2009

i) Deundi Tea Company (UK) Ltd.ii) The Noyapara Tea (UK) Ltd.i) Elite Chemical Industries Ltd.

ii) Elite International Ltd.

iii) Hexagon Chemical Complex Ltd.

iv) Super Petro Chemical (Pvt.) Ltd.v) Elite Super Plastic Ind. Ltd.

vi) Super Share & Securities Ltd.

vii) Elite Properties Management Ltd.

viii) Bangladesh General Insurance Co. Ltd.

ix) Ahmed Secutities Services Ltd.x) Elite Oil Refinery Ltd.xi) Centre Point Hospital (Pvt.) Ltd.i) Elite Chemical Industries Ltd.

ii) Elite International Ltd.

iii) Hexagon Chemical Complex Ltd.

iv) Ahmed Secutities Services Ltd.4. Mr. M. A. Awal Director

5. Mr. Shishir Ranjan Bose, FCA Independent Director

6.Mr. Faheemul Huq, Barrister-at-

LawDirector

i) Syed Ishtiaq Ahmed & Associatesii) Managwell Investment Limited

8. Mr. Mishaal Kabir Director

i) Reptiles Firm Ltd.

ii) Therapeutics Bangladesh Ltd.i) Hyundai Motors Bangladesh Ltd.

ii) Therapeutics Bangladesh Ltd.11. Mr. B. B. Saha Roy Director

12. Dr. M. Imtiaz Hossain Depositor Director

13. Mrs. Runa Zakia Shahrood Khan Depositor Director

14. Mr. Kaiser A. ChowdhuryPresident &

Managing Director

1.22 Approval of financial statements

These financial statements were approved by the Board of Directors on 29 April 2010.

2. General

i.

ii. Figures in these notes and in the annexed financial statements have been rounded off to the nearest Taka.

iii.

N/A

N/A

The number of employees engaged for the whole year or part thereof who received a total remuneration of Taka

36,000 or above was 1952. (Last Year 1804)

Mr. Feroz Ahmed Director3.

2.

Mr. M. Wahidul Haque Chairman1.

7.Mr. Syed Afzal Hasan Uddin,

Barrister-at-LawDirector

N/A

Hyundai Motors Bangladesh Ltd.

Mr. Md. Mesbahul Hoque9. Director

Name

Name of the firms/companies in which the

director had interest as proprietor/partner/

director/managing agent/guarantor, etc.

StatusSl.

#

Wherever considered necessary, previous year’s figures have been rearranged for the purpose of comparison

with current year's presentation without creating any impact on the operating result and value of assets and

liabilities as reported in the financial statements.

Vice ChairmanMr. Salim Ahmed

10.

S.R. Bose & Co. , Chartered Accountants

These notes form an integral part of the annexed financial statements and accordingly are to be read in

conjunction therewith.

Mr. Md. Anwar Jamil Siddiqui Director

N/A

CONTIC

N/A

31.12.2009 31.12.2008

Taka Taka

3. Cash

Cash in hand 489,993,012 679,556,149

Balance with Bangladesh Bank and its agent bank(s) 4,864,888,564 3,416,488,006

5,354,881,576 4,096,044,155

3(a) Consolidated Cash

AB Bank Limited 5,354,881,576 4,096,044,155

AB International Finance Limited - -

5,354,881,576 4,096,044,155

3.1 Cash in hand

In local currency 463,150,868 648,223,663

In foreign currency 26,842,144 31,332,486

489,993,012 679,556,149

3.1(a) Consolidated Cash in hand

AB Bank Limited 489,993,012 679,556,149


489,993,012 679,556,149

3.2 Balance with Bangladesh Bank and its agent bank(s)

Balance with Bangladesh Bank

In local currency 4,400,326,087 2,970,771,116

In foreign currency 156,824,678 89,717,952

4,557,150,765 3,060,489,069

Sonali Bank

(as an agent bank of Bangladesh Bank) - local currency 307,737,799 355,998,938

4,864,888,564 3,416,488,006

3.2(a) Consolidated Balance with Bangladesh Bank and its agent bank(s)

AB Bank Limited 4,864,888,564 3,416,488,006


4,864,888,564 3,416,488,006

3.3 Statutory deposits

Cash reserve ratio and statutory liquidity ratio

(a) Cash Reserve Ratio (CRR)

Required reserve 3,845,486,020 2,974,341,820

Actual reserve maintained 4,400,326,087 2,980,529,000

Surplus 554,840,067 6,187,180

(Note: 3.1)

(Note: 3.2)

The statutory cash reserve ratio is required on the Bank's time and demand liabilities at the rate of 5% and has been

calculated and maintained with Bangladesh Bank in current account while statutory liquidity ratio of 18% is required,

including cash reserve ratio, on the same liabilities is also maintained in the form of treasury bills, bonds and debentures

including foreign currency balance with Bangladesh Bank. Both the reserves are maintained by the Bank in excess of the

statutory requirements, as shown below :

Cash reserve ratio and statutory liquidity ratio have been calculated and maintained in accordance with section 33 of the

Banking Companies Act 1991 and Bangladesh Bank BRPD's subsequent circular nos. 11 and 12 dated 25 August 2005.

As per Bank ledger, balance with Bangladesh Bank (local currency) is Tk.4,400,326,087 while as per Bangladesh Bank

Statements balance is Tk. 4,395,704,003. Difference is properly reconciled and was adjusted before reporting date.

31.12.2009 31.12.2008

Taka Taka

(b) Statutory Liquidity Reserve (SLR)

Required reserve 9,998,263,652 7,733,288,732

Actual reserve maintained 10,446,355,129 8,163,405,862

Surplus 448,091,477 430,117,130

Total required reserve 13,843,749,672 10,707,630,552

Total actual reserve held 14,846,681,216 11,143,934,862

Total surplus 1,002,931,544 436,304,310

4. Balance with other banks and financial institutions

In Bangladesh 1,111,711,079 993,310,233

Outside Bangladesh 2,382,407,068 1,306,774,151

3,494,118,146 2,300,084,385

4.1 In Bangladesh

Current Deposits

Standard Chartered Bank, Dhaka City Centre Branch 2,546,348 1,764,102

Agrani Bank Ltd., Laldighir Par Branch, Modhuban, Sylhet 91,571 6,224

Agrani Bank Ltd., Brahmanbaria Branch 55 4,280

Agrani Bank Ltd., Principal Branch, Dilkusha, Dhaka 26,080 26,080

Islami Bank Bangladesh Ltd., Local Office 2,727 2,727

Agrani Bank Ltd., Bhairab Bazar Branch 1,579 5,001,579

The Trust Bank Ltd., Corporate Branch, Dilkusha, Dhaka 2,187,493 447,302

Janata Bank Ltd., Jessore Branch 145,300 48,922

Agrani Bank Ltd., Shaheb Bazar Branch, Rajshahi 11,255 290

Agrani Bank Ltd., Rangpur Branch 36,063 -

Agrani Bank Ltd., Mymensingh Branch 98,972

Bank Asia Ltd., Principal Branch 529,600 -

Agrani Bank Ltd., Thana Road Branch, Bogra 10,000,282 30,001,968

15,677,325 37,303,474

Short Term Deposits

Agrani Bank Ltd., Rangpur Branch 26,640,607 4,042,678

Agrani Bank Ltd., Saidpur Branch 9,174,106 7,597,668

Agrani Bank Ltd., Modhuban Branch, Sylhet 332,950 323,577

Agrani Bank Ltd., Bogra Branch 7,530 7,530

Agrani Bank Ltd., Jhikargachha Branch 33,721 13,149

Agrani Bank Ltd., Sir Iqbal Road Branch, Khulna 19,583 7,046

Agrani Bank Ltd., Naogaon Branch 2,121,971 6,398,066

Islami Bank Bangladesh Ltd., Local Office 60,812 60,118

Agrani Bank Ltd., Jessore Branch 17,652,979 9,538,402

Agrani Bank Ltd., Moulvi Bazar Branch 241 1,100,241

Agrani Bank Ltd., Satkhira Branch 7,227 662,517

Agrani Bank Ltd., Court Road Branch, Narayanganj 3,961 3,903

Agrani Bank Ltd., Chawk Bazar Branch, Barisal 38,389,595 24,997,331

Southeast Bank Ltd., Principal Branch 49,120 49,120

Agrani Bank Ltd., Local Office 985 21,840

Rupali Bank Ltd., Barisal Branch - 639

94,495,388 54,823,824

Savings Deposits

Social Islamic Bank Ltd. Principal Branch 921,106 610,198

617,261 572,738

1,538,366 1,182,936

Fixed Deposits

Islamic Finance and Investment Ltd. 150,000,000 200,000,000

Premier Bank Ltd. 200,000,000 -

Hajj Finance Company Ltd. 50,000,000 -

South East Bank Ltd. - 100,000,000

Al-Arafah Islami Bank Ltd. - 100,000,000

Social Islamic Bank Ltd. 300,000,000 200,000,000

Phoenix Finance and Investment Ltd. 300,000,000 300,000,000

1,000,000,000 900,000,000

1,111,711,079 993,310,234

Shahjalal Islami Bank Ltd., Foreign Exchange Branch

(Note: 4.1)

(Note: 4.2)

31.12.2009 31.12.2008

Taka Taka

4.1(a) Consolidated In Bangladesh

AB Bank Limited 1,111,711,079 993,310,234


1,111,711,079 993,310,234

4.2 Outside Bangladesh

Current Deposits

The Bank of Tokyo Mitsubishi Ltd. 26,663,722 5,034,227

HSBC Plc 20,560,658 -

Lloyds TSB Bank Plc 3,833,487 5,054,192

HSBC (Mumbai) 11,983,527 207,145

JP Morgan Chase Bank 16,830,732 -

Sonali Bank (Kolkata) 6,967,668 2,500,113

Myanmar Economic Bank 28,399 28,256

Citibank NA 333,329,929 25,193,940

Hatton National Bank Ltd. 1,646,518 22,533

Commerz Bank AG 1,382,670 13,192,163

AB International Finance Ltd. 1,123,713,674 820,699,359

State Bank of India 1,089,241 1,083,788

NIB Bank Ltd. 10,370,802 2,579,592

Lloyds TSB Bank Plc 1,745,377 4,297,465

Mashreq Bank Psc 10,319,507 11,806,293

Nepal Bangladesh Bank Ltd. 4,347,992 1,866,129

Bank of Bhutan 4,798,433 3,104,276

HSBC Plc 356,239 -

BCCI 117,452 116,864

Wachovia Bank 31,295,436 1,006,416

Habib America Bank 16,063,722 22,009,910

Commerz Bank AG 44,465,379 30,240,692

Hypovereins Bank 9,092,336 3,252,465

HSBC - 693,017

National Commercial Bank Ltd 11,252,756 3,444,965

Habib Metro Bank 664,960 -

U.B.A.F-BANQUES 1,383,602 -

Habib Bank AG 688,310 -

Reserve Bank of India 26,081,424 22,493,783

HDFC Bank 68,711,274 75,412,109

Central Bank of India 276,734 268,032

Commerz Bank AG (Euro) 23,744 2,538,499

HSBC (Euro) 454,327 3,168,637

HSBC (GBP) 1,883,378 22,206,075

HSBC (USD) 346,327,961 159,451,771

JP Morgan Chase Bank 5,735,697 35,263,444

2,144,487,068 1,278,236,151

Fixed Deposits

HDFC Bank 237,920,000 28,538,000

2,382,407,068 1,306,774,151

(Currency wise Balance is given in Annexure - A)

4.2(a) Consolidated Outside Bangladesh (Nostro Accounts)

AB Bank Limited 2,382,407,068 1,306,774,151

AB International Finance Limited 1,091,035 6,835,674

2,383,498,103 1,313,609,825

Less: Inter company transactions 1,000,837,339 824,316,713

1,382,660,764 489,293,112

31.12.2009 31.12.2008

Taka Taka

4.3

Current deposits 2,160,164,392 1,344,077,625

Savings deposits 1,538,366 1,182,936

Short-term deposits 94,495,388 54,823,824

Fixed deposits 1,237,920,000 900,000,000 3,494,118,147 2,300,084,385

4.4 Maturity grouping of balance with other banks

Repayable – on demand 2,160,164,392 1,400,013,425

– upto 3 months 304,213,755 420,000,000

– over 3 months but below 1 year 1,029,740,000 480,000,000

– over 1 year but below 5 years - -

– over 5 years - - 3,494,118,147 2,300,013,425

5. Money at call and on short notice

With banking companies

Southeast Bank Ltd. - 100,000,000

Jamuna Bank Ltd - 24,900,000

Bank of Ceylon, Corporate Branch - 704,362,400

- 829,262,400

With non-banking financial institutions

People's Leasing and Financial Services Ltd. 120,000,000 130,000,000

First Lease International Ltd. 80,000,000 80,000,000

International Leasing and financial Services Ltd 200,000,000 -

Uttara Finance and Investment Ltd 50,000,000 -

National Housing Company Ltd. 50,000,000 - Bay Leasing Company Ltd. 100,000,000 80,000,000

600,000,000 290,000,000 On calls and placements -ABBL, Mumbai Branch - 71,345,000

600,000,000 1,190,607,400

5(a) Consolidated Money at call and on short notice

AB Bank Limited 600,000,000 1,190,607,400

AB International Finance Limited - - 600,000,000 1,190,607,400

6. Investments

Investment securities are classified as follows:

Held for trading 3,161,717,761 3,401,227,000

Held to maturity 6,481,038,000 3,718,975,661

Others 6,726,547,464 4,275,733,401 16,369,303,225 11,395,936,062

6 (a) Consolidated investments

AB Bank Limited 16,369,303,225 11,395,936,062

AB International Finance Limited - - 16,369,303,225 11,395,936,062

Account-wise/grouping of balance with other banks and

financial institutions

31.12.2009 31.12.2008

6.1 Government securities Taka Taka

Treasury bills:

182 days' treasury bills 886,644,660 175,167,360

364 days' treasury bills 1,747,354,862 862,890,518

2,633,999,522 1,038,057,878

Treasury bills - Reverse Repo with :

City Bank Ltd. - 300,000,000

Debentures-

Bangladesh House Building Finance Corporation 30,000,000 35,000,000

(Maturity date: 14 March 2015, interest rate: 5.50%)

2,663,999,522 1,373,057,878

Government bonds

Prize bonds 2,710,700 3,980,600

Treasury bonds 7,008,756,240 5,782,144,784

7,011,466,940 5,786,125,384

Total Government securities 9,675,466,462 7,159,183,261

6.1.1 Treasury bonds

Type Rate of interest

BD Govt. Treasury Bond 7.50% 100,593,109 -

BD Govt. Treasury Bond 7.50% 201,056,176


BD Govt. Treasury Bond 10.82% 170,800,000 170,800,000

























BD Govt. Treasury Bond 11.72% - 100,450,622










7,008,756,240 3,427,044,784

21 November 2012

21 November 2012

18 April 2018

05 December 2017

19 December 2012

20 May 2014

25 July 2018

07 May 2018

02 January 2018

06 February 2018

04 June 2018

02 April 2018

(Note: 6.1.1)

Maturity date

04 July 2017

08 August 2017

19 September 2012

17 October 2012

07 May 2018

04 February 2019

18 July 2012

18 July 2012

10 April 2011

20 September 2011

12 June 2011

06 August 2018

02 July 2018

02 July 2018

02 July 2018

06 August 2018

06 August 2018

06 August 2018

03 September 2018

08 October 2018

08 October 2018

04 February 2019

03 September 2018

13 February 2023

04 February 2019

03 April 2019

31.12.2009 31.12.2008

Taka Taka

Treasury bonds - Reverse Repo

BD Govt. Treasury Bond 8.75% - 1,455,100,000





- 2,355,100,000

7,008,756,240 5,782,144,784

Treasury Bond - Reverse Repo (Bank wise) :

Jamuna Bank Ltd - 1,905,100,000

Eastern Bank Ltd. - 450,000,000

- 2,355,100,000

6.1(a) Consolidated Government securities

AB Bank Limited 9,675,466,462 7,159,183,261


9,675,466,462 7,159,183,261

6.2 Other investments

Shares 6,489,276,377 4,061,996,864

Zero Coupon bond 12,648,018 30,000,000

Investments -ABBL, Mumbai branch

Treasury bills 186,261,769 140,332,547

Debentures and bonds 5,650,600 4,423,390

191,912,369 144,755,937

Total other investments 6,693,836,764 4,236,752,801

Total investments 16,369,303,226 11,395,936,062

6.2 (a) Consolidated other investments

AB Bank Limited 6,693,836,764 4,236,752,801


6,693,836,764 4,236,752,801

6.2.1 Investments in Shares

Quoted

Powergrid Company Ltd. 1,207,665,683 889,558,736

International Finance Investment and Commerce Bank Ltd. - 123,351,866

Beximco Pharma Ltd. 158,348,355 366,687,426

Square Pharmaceuticals Ltd. 125,480,450 44,222,650

Southeast Bank Ltd. 29,650,302 61,441,040 Prime Bank Ltd. - 1,172,609 Beximco Ltd. - 241,400,781

Social Investment Bank Ltd. - 28,882,834

Lafarge Surma Cement Ltd. 574,538,061 553,990,123 National Life Insurance Company Ltd. 31,998,396 47,059,951

Usmania Glass Sheet Factory Ltd. 11,567,005 23,520,129 DESCO - 27,520,600 People's Leasing and Financial Services Ltd. - 516,953 Prime Life Insurance Company Ltd. 3,122,560 381,137

Heidelberg Cement Ltd. - 66,209,775 ACI Ltd. - 268,604,265

United Commercial Bank Ltd. 487,688,713 487,688,713

Aramit limited 11,492,038 -

Apex Adel. F.wear 271,129,478 273,017,178 Grameen Mutual Fund 2 69,355,700 -

(Note 6.2.1)

15 February 2009

04 March 2009

01 January 2009

01 January 2009

05 February 2009

31.12.2009 31.12.2008Taka Taka

Investment Corporation of Bangladesh 2,207,535 - BEXTEX Ltd. 350,304,840 - Singer BD Ltd 12,569,044 - S Alam Coll Rolled Mills 1,660,500 - BSRM Steel 180,957,890 - Apex Tannery Ltd. - 19,819,715 Shinepukur Ceramic Company Ltd. - 198,000,000 Summit Alliance Port Ltd. - 35,943,713

Meghna Cement Ltd. - 17,421,423

Miracle Industries Ltd. - 2,379,850

Titas Gas Ltd. 1,312,405,195 55,479,375

Premier Bank Ltd. - 62,713,275 Meghna Life Insurance Company Ltd. 4,893,627 15,761,802 Green Delta Insurance Company Ltd. 2,285,067 831,360

Pubali Bank Ltd. - 1,433,475 Islamic Finance and Investment Company Ltd. 123,351,866 4,626,113 JMI Bangla Company Ltd. - 960,000 Prime Finance and Investment Company Ltd. 97,562,794 - Fareast Islami Life Insurance Company Ltd. 123,332,703 - Delta Life Insurance Company Ltd. 465,850 - Sandhani Life Insurance Company Ltd. 1,886,850 -

Summit Power Ltd. 85,047,538 -

Padma Oil 221,954,200 -

Jamuna Oil 798,168,576 -

Industrial Development and Leasing Company of Bangladesh Ltd. 25,240,815 - LankaBangla Finance Ltd. 21,544,750 -

6,347,876,377 3,920,596,864 Unquoted

Central Depository Bangladesh Ltd. 10,000,000 10,000,000

Everest Power Ltd. 50,000,000 50,000,000

Cash Link Bangladesh Ltd. 71,400,000 71,400,000

Industrial and Infrastructure Development Finance Company Ltd. 10,000,000 10,000,000

141,400,000 141,400,000 6,489,276,377 4,061,996,864

(A Schedule of Investment in shares is given in Annexure - B)

31.12.2009 31.12.2008

Taka Taka

6.3 Maturity grouping


– upto 3 months 1,874,202,385 1,418,899,973

– over 3 months but below 1 year 5,285,382,925 2,802,652,560

– over 1 year but below 5 years 1,724,668,843 1,665,719,373

– over 5 years 5,314,159,867 2,651,244,784

16,369,303,225 11,408,536,062

7. Loans and advances

7.1 Maturity grouping


– upto 3 months 12,825,435,523 12,578,185,336

– over 3 months but below 1 year 28,046,756,800 32,275,265,435

– over 1 year but below 5 years 19,424,963,800 1,134,175,438

– over 5 years 1,691,967,700 267,087,719

69,732,552,194 54,412,358,249

7.2 Broad category-wise breakup

In Bangladesh

Loans 57,422,370,679 32,998,371,906

Overdrafts 12,033,737,445 21,074,025,125

Cash credits - -

69,456,108,124 54,072,397,031

Outside Bangladesh: ABBL, Mumbai Branch

Loans 227,204,006 309,577,962

Overdrafts 49,240,064 30,383,256

Cash credits - -

276,444,070 339,961,218

69,732,552,194 54,412,358,249

7.3 Significant concentration

Advances to allied concerns of Directors - -

Advances to Chief Executive 11,276,722 11,793,723

Advances to industries 23,901,800,000 21,833,700,000

Advances to customer groups 45,819,475,472 32,566,864,526

69,732,552,194 54,412,358,249

7.4

Total capital of the Bank 10,790,267,058 7,439,796,153

Number of clients 32 34

Amount of outstanding advances 26,407,700,000 18,732,200,000

Amount of classified advances - -

Measures taken for recovery Not applicable Not applicable

7.5 Industry-wise loans and advances

Agriculture 1,067,129,000 802,000,000

Large and medium scale industry 11,528,200,000 8,169,307,374

Working capital 12,333,500,000 10,614,584,118

Export 2,448,900,000 3,035,433,304

Commercial lending 28,009,200,000 20,614,600,000

Small and cottage industry 40,100,000 32,900,000

Others 14,305,523,194 11,143,533,453

69,732,552,194 54,412,358,249

Advances to customers for more than 10% of Bank's total

capital

31.12.2009 31.12.2008

Taka Taka

7.6 Geographical location-wise (division) distribution

In Bangladesh

Urban Branches

Dhaka 41,564,209,062 33,019,277,814

Chittagong 18,357,351,109 13,404,459,566

Khulna 1,891,188,223 1,794,520,559

Sylhet 1,361,508,300 964,183,598

Barisal 162,885,426 181,003,528

Rajshahi 2,631,058,698 1,812,549,475

65,968,200,818 51,175,994,540

Rural Branches

Dhaka 2,173,824,637 1,674,901,710

Chittagong 515,550,523 608,321,666

Khulna 329,502,210 276,909,646

Sylhet 469,029,936 336,269,470

Barisal - -

Rajshahi - -

3,487,907,306 2,896,402,492

Outside Bangladesh

ABBL, Mumbai Branch 276,444,070 339,961,218

69,732,552,194 54,412,358,249

7.7 Classification of loans and advances

Unclassified

Standard 67,646,383,518 52,492,279,672

Special mention account 136,999,863 224,697,000

Total unclassified loans and advances 67,783,383,381 52,716,976,672

Classified

Substandard 648,984,735 228,697,000

Doubtful 521,036,000 132,596,000

Bad/Loss 779,148,078 1,334,088,577

Total classified loans and advances 1,949,168,813 1,695,381,577

69,732,552,194 54,412,358,249

7.8 Particulars of loans and advances

(i)

(ii)- -

(iii)

15,472,038,948 9,449,822,956

(iv) - -

69,732,552,194 54,412,358,249

54,260,513,247

Loans adversely classified but provision not maintained thereagainst

44,962,535,293 Loans considered good in respect of which the Bank is fully secured

Loans considered good against which the Bank holds no security

other than the debtors’ personal guarantee

Loans considered good and secured by the personal undertaking of

one or more parties in addition to the personal guarantee of the

debtors

31.12.2009 31.12.2008

Taka Taka

(v)

(vi)

- -

(vii)

448,082,293 203,469,000

(viii)

- -

(ix) - -

(x)- -

(a) (231,295,145) (1,739,267)

(b) 633,098,000 105,069,000

(c) 101,523,000 63,036,000

(d)426,910,450 658,205,595

(e) 121,055,097 82,628,503

(xi)

During the year 633,098,000 105,069,000

1,940,977,000 1,508,318,000

2,532,516,000 2,333,951,000

4,473,493,000 3,842,269,000

1,851,378,000 1,418,719,000

7.9 Securities wise loans and advances

Nature of security

Collateral of movable/immovable assets 36,345,736,580 32,330,785,682

Cash collateral 4,875,902,870 3,287,611,604

Banks and financial institutions guarantee 142,483,840 352,176,519

Personal guarantee 6,733,498,820 5,370,947,562

Corporate guarantee 7,519,898,680 4,635,303,983

Other securities 14,115,031,404 8,435,532,899

69,732,552,194 54,412,358,249

7(a) Consolidated Loans and advances

AB Bank Limited 69,732,552,194 54,412,358,249


69,732,552,194 54,412,358,249

8. Bills purchased and discounted

In Bangladesh 1,071,337,988 2,190,741,253

Outside Bangladesh - ABBL, Mumbai Branch 76,043,263 105,672,403

1,147,381,251 2,296,413,657

448,082,293

Loans due from companies or firms in which the directors of the

Bank are interested as directors, partners or managing agents or, in

case of private companies, as members

Maximum total amount of advances, including temporary advances

made at any time during the year to directors or managers or

officers of the Bank or any of them either separately or jointly with

any other persons [note 7.8 (a)]

Maximum total amount of advances, including temporary advances

granted during the year to the companies or firms in which the

directors of the Bank are interested as directors, partners or

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

Due from other banking companies

Cumulative to-date (as per Bangladesh Bank guidelines)

Increase/(decrease) of provision (specific)

Amount of loan written off

Amount realised against loan previously written off

Provision kept against loans classified as bad /loss on the date of

preparing the balance sheet

Interest charged to interest suspense account

Amount of classified loans on which interest has not been charged

Written off loan

7.8 (a)

Cumulative to-date (in amicable settlement)

The amount of written off loans for which lawsuits have been

filed for its recovery

The amount represents loans Tk.447,942,293 due by the employees of the Bank & Tk.140,000 by the directors.

Loans due by directors or officers of the Bank or any of them either

separately or jointly with any other persons [note 7.8 (a)] 360,362,650

31.12.2009 31.12.2008

Taka Taka8.1 Maturity grouping

Repayable – within 1 month 229,476,250 688,924,097

– over 1 month but within 3 months 917,905,001 1,331,919,921

– over 3 months but within 6 months - 275,569,639

– over 6 months - -

1,147,381,251 2,296,413,657

8(a) Consolidated Bills purchased and discounted

AB Bank Limited 1,147,381,251 2,296,413,657

AB International Finance Limited 1,183,329,813 952,691,801

2,330,711,064 3,249,105,458

9. Fixed assets including premises, furniture and fixtures

Cost:

Land and Building 1,890,085,445 1,900,594,080

Furniture and fixures 129,167,546 178,652,199

Office appliances 57,101,776 48,633,015

Electrical appliances 592,715,898 595,748,777

Motor vehicles 316,447,139 265,058,436

Leasehold assets 8,020,074 8,020,074

2,993,537,878 2,996,706,581

Less: Accumulated depreciation 552,575,221 552,056,347

2,440,962,657 2,444,650,234

A Schedule of Fixed Assets is given in Annexure - C.

9(a) Consolidated Fixed assets including premises, furniture and fixtures

Cost:

AB Bank Limited 2,993,537,878 2,996,706,581


3,004,987,373 3,008,132,863

Accumulated depreciation:

AB Bank Limited 552,575,221 552,056,347


563,950,785 563,371,397

2,441,036,589 2,444,761,466

10. Other assets

Income generating

In Bangladesh:

Arab Bangladesh Bank Foundation 300,051,122 300,051,122

Outside Bangladesh:

AB International Finance Ltd., Hong Kong 5,203,944 5,203,944

(wholly owned subsidiary company of ABBL)

305,255,066 305,255,066

31.12.2009 31.12.2008

Taka Taka

Non-income generating

Inter-branch adjustment 92,423,134 651,672,022

Advance corporate income tax (Note: 10.1) 3,158,776,307 1,828,324,016

Accounts receivable 998,581,954 1,028,589,408

Preliminary, formation, organisational, renovation,

development, prepaid expenses and others 1,804,905,746 1,121,352,578

Exchange for clearing 870,737,423 471,174,214

Interest accrued on investment but not collected,

commission and brokerage receivable on shares

and debentures, and other income receivables 367,047,393 365,974,878

Security deposits 65,935,812 66,190,426

Local drafts paid without advice - -

Advance rent and advertisement 69,971,185 50,198,408

Stationery, stamps, printing materials, etc 39,479,313 28,787,425

Interest on bearer certificates of deposit - -

7,467,858,266 5,612,263,376

7,773,113,332 5,917,518,443

10(a) Consolidated Other assets

AB Bank Limited 7,773,113,332 5,917,518,443


7,775,354,636 5,924,678,736

Less: Inter-group transaction 5,203,944 5,203,944

7,770,150,692 5,919,474,791

10.1 Advance corporate income tax

In Bangladesh:

Balance at 01 January 1,689,914,412 909,830,893

Add: Paid during the year 1,280,647,393 896,758,330

Add: Tax withheld during the year 32,011,044 28,062,150

1,312,658,437 924,820,480

Less: Settlement during the year - 144,736,961

Balance at 31 December 3,002,572,849 1,689,914,412

Advance tax paid by ABBL, Mumbai Branch 156,203,458 138,409,604

3,158,776,307 1,828,324,016

11. Borrowings from other banks, financial institutions and agents

In Bangladesh (Note: 11.1) 6,105,823,504 2,924,753,879

Outside Bangladesh (Note: 11.2) 19,337,836 268,589,159

6,125,161,339 3,193,343,038

11.1 In Bangladesh

Bangladesh Bank refinance

26,332,604 -

1,007,043,594 904,753,879

SME & Women Entrepreneure 41,900,000 -

1,075,276,198 904,753,879

Islamic Investment Bonds

ADB loan

31.12.2009 31.12.2008

Taka Taka

Call & Term Borrowing from

Agrani Bank Ltd. 400,050,000 100,000,000

Rupali Bank Ltd. 500,055,556 500,000,000

Bangladesh Krishi Bank 1,000,000,000 -

Pubali Bank Ltd. 250,000,000 -

Uttara Bank Ltd. 300,035,417 -

United Commercial Bank Ltd. 1,000,000,000 -

Brac Bank Ltd. 100,012,500 -

Trust Bank Ltd. 300,247,917 -

Dutch Bangla Bank Ltd. - 200,000,000

380,045,917 -

Premier Bank Ltd. 150,000,000

Bangladesh Shilpa Bank 200,025,000 80,000,000

National Bank Ltd. - 350,000,000

One Bank Ltd. - 110,000,000

Bank of Small Industries and Cottage Ltd. - 130,000,000

Janata Bank Ltd. 600,075,000 400,000,000

5,030,547,306 2,020,000,000

6,105,823,504 2,924,753,879

11.2 Outside Bangladesh

HSBC UK (USD) - 4,535,291

HSBC Karachi (USD) 1,485,567 -

HSBC UK (UKP) - 313,793

JP Morgan Chase Bank - 162,812,278

American Express Bank Ltd. - 43,435,628

HSBC 17,852,269 57,492,167

19,337,836 268,589,159

(A Schedule of Borrowings from other banks, financial institutions and agents outside Bangladesh is given in Annexure - D)

11.3 Analysis by security

Secured (assets pledge as security for liabilities) - -

Unsecured 6,125,161,339 3,193,343,038

6,125,161,339 3,193,343,038

11.4 Repayment pattern

Repayable on demand 5,049,885,141 2,288,589,159

Repayable on maturity (Note: 11.4.1) 1,075,276,198 904,753,879

6,125,161,339 3,193,343,038

11.4.1 Repayable on maturity

Bangladesh Bank refinance:

ADB loan 26,332,604 -

SME & Women Entrepreneure 41,900,000 -

68,232,604 -

Term borrowings:

Islamic Investment Bonds 1,007,043,594 904,753,879

1,075,276,198 904,753,879

11(a) Consolidated Borrowings from other banks, financial institutions and agents

AB Bank Limited 6,125,161,339 3,193,343,038

AB International Finance Limited 1,011,963,306 824,316,713

7,137,124,645 4,017,659,750

Less: Intercompany transactions 1,000,837,339 824,316,713

6,136,287,306 3,193,343,038

Standard Bank Ltd.

31.12.2009 31.12.2008

Taka Taka

12. Deposit and other accounts

Inter-bank deposits (Note: 12.1) 2,198,114,000 7,259,596,546

Other deposits (Note: 12.2) 80,889,015,113 61,300,877,777

83,087,129,113 68,560,474,323

12(a) Consolidated Deposit and other accounts

AB Bank Limited 83,087,129,113 68,560,474,323


83,087,129,113 68,560,474,323

Less: Inter-group transaction 4,500,433 1,484,970

83,082,628,680 68,558,989,353

12.1 Maturity analysis of inter-bank deposits

Repayable – on demand 109,255,000 199,395,333

– within 1 month 1,026,222,812 2,962,463,023

– over 1 month but within 3 months 341,145,678 1,277,953,640

– over 3 months but within 1 year 721,490,510 2,819,784,550

– over 1 year but within 5 years - -

– over 5 years but within 10 years - -

– over 10 years - -

2,198,114,000 7,259,596,546

12.2 Maturity analysis of other deposits

Repayable – on demand - 101,104,667

– within 1 month 9,148,576,139 6,995,814,679

– over 1 month but within 3 months 19,342,150,740 17,850,634,800

– over 3 months but within 1 year 31,096,620,205 31,566,566,760

– over 1 year but within 5 years 19,878,740,477 2,515,790,003

– over 5 years but within 10 years 1,422,927,552 2,270,966,869

– over 10 years - -

80,889,015,113 61,300,877,777

13. Other liabilities

Accumulated provision against loans and advances (Note 13.1) 1,252,506,463 1,349,205,714

Accrued profit on investment - Islami banking branch 133,345,887 74,364,030

Provision for current tax (Note: 13.2) 4,254,236,613 2,556,729,929

Deferred tax liabilities (Note: 13.3) 129,739,689 1,616,023

Interest suspense account (Note: 13.4) 301,688,854 326,528,758

Retained revenue with ABBL, Mumbai Branch - 87,621,563

Provision against other assets (Note: 13.5) 228,235,215 167,335,215

Provision for outstanding debit entries in NOSTRO accounts 200,000 200,000

Exchange equalisation account 47,966,966 47,966,966

Accounts payable - Bangladesh Bank 233,310,356 68,171,456

Accrued expenses 36,789,076 11,454,975

Provision for off balance sheet items (Note: 13.6) 380,000,000 280,000,000

Provision against investments (Note: 13.7) 142,553,000 142,553,000

Obligation under finance lease - 565,427

Exchange fluctuation adjustment account - ABBL, Mumbai Branch 71,116,886 48,890,548

Others (*) 401,809,992 414,086,274

7,613,498,999 5,577,289,877

(*) Others includes provision for audit fee, payroll tax, excise duty, income tax and VAT deducted at source, unclaimed

dividend, accounts payable for safe keeping, earnest and security money, etc.

31.12.2009 31.12.2008

Taka Taka

13.1 Accumulated provision against loans and advances

The movement in specific provision for bad and doubtful debts

Balance at 01 January 654,359,957 659,944,862

Fully provided debts written off during the year (-) 538,245,507 96,995,405

Recovery of amounts previously written off (+) - -

Specific provision made for the year (+) 291,000,000 91,410,500

Transfer from general provision (+) 7,900,000 -

Recoveries and provision no longer required (-) - -

Net charge to Profit and Loss Statement (+) - -

(239,345,507) (5,584,905)

Balance at 31 December 415,014,450 654,359,957

Provision made by ABBL, Mumbai Branch 11,896,000 3,845,638

Total provision on classified loans and advances 426,910,450 658,205,595

On unclassified loans


Transfer from provision for other assets (+) - 20,200,000

Recoveries and provision no longer required (-) - -

Transfer (-) 7,900,000

General provision made for the year (+) 145,600,000 189,856,015

137,700,000 210,056,015


Provision made by MBW 28,154,298 28,154,298

Provision made by ABBL, Mumbai Branch 1,635,700 4,739,806

Total provision on un-classified loans and advances 825,596,013 691,000,119

Total provision on loans and advances 1,252,506,463 1,349,205,714

Provision for Required Maintained Excess/(Shortage)

Un-classified loans and advances 749,300,000 825,596,013 76,296,013

Classified loans and advances 414,300,000 426,910,450 12,610,450

1,163,600,000 1,252,506,463 88,906,463

13.2 Provision for current tax

Balance at 01 January 2,459,761,967 1,222,843,244

Add: Provision made during the year 1,714,216,590 1,381,655,684

Less: Adjustment during the year - 144,736,961

Balance at 31 December 4,173,978,557 2,459,761,967

Provision held by ABBL, Mumbai Branch 80,258,056 96,967,962

4,254,236,613 2,556,729,929

13.3 Deferred tax liabilities


Add: Provision made during the year 128,123,666 -

Less: Adjustment during the year - 81,655,684


Tax provision for the year 2008 (assessment year 2009-2010) has been made by the Bank considering necessary taxable

add-backs of income and inadmissible expenditures as per income tax law.

Tax assessments for the financial years 1995, 1996 and 1997 are pending and filed reference applications before the

Hon'ble High Court. Assessment for the financial years 2007 & 2008 has been disputed by the Bank in appeal.

31.12.2009 31.12.2008

Taka Taka

13.4 Interest suspense account


Transfer during the year (+) 121,055,097 82,628,503

Recovery during the year (-) 52,720,000 17,542,000

Write off during the year (-) 93,175,000 13,943,000


13.5 Provision against other assets

Provision for

Prepaid legal expenses 49,700,000 49,700,000

Protested bills 18,033,215 18,033,215

Balance with BCCI, London 120,000 120,000

London Representative Office 1,708,494 1,708,494

Myanmar Representative Office 1,112,430 1,112,430

Others 157,561,076 96,661,076

228,235,215 167,335,215

Provision against other assets was made as per BRPD Circular # 14 dated 25 June 2001 issued by Bangladesh Bank.

13.6 Provision for off balance sheet items


Add: Provision made during the year 100,000,000 200,000,000

Less: Adjustment during the year - -


13.7 Provision against investments


Add: Provision made during the year - 117,153,000

Less: Adjustment during the year - -


13(a) Consolidated Other liabilities

AB Bank Limited 7,613,498,999 5,577,289,877


7,653,307,477 5,621,252,945

14. Share Capital 2,564,253,200 2,229,785,400

14.1 Authorised Capital

60,000,000 ordinary shares of Taka 100 each 6,000,000,000 3,000,000,000

14.2 Issued, Subscribed and Paid-up Capital

1,500,000 ordinary shares of Taka 100 each issued for cash 150,000,000 150,000,000

2,414,253,200 2,079,785,400

2,564,253,200 2,229,785,400

14.3 Percentage of shareholding

No. of shares % No. of shares %

Sponsors and public 25,495,545 99.43 22,169,889 99.43

Government 146,987 0.57 127,965 0.57

25,642,532 100.00 22,297,854 100.00

As at 31 December 2008Particulars

As at 31 December 2009

24,142,532 ordinary shares of Taka 100 each issued as bonus shares

14.4 Classification of shareholders by holding

2009 2008 2009 2008

53,803 63,332 95.93 97.08

1,980 1,730 3.53 2.65

123 65 0.22 0.10

68 33 0.12 0.05

28 19 0.05 0.03

21 9 0.04 0.01

10 9 0.02 0.01

22 13 0.04 0.02

25 22 0.04 0.03

3 2 0.01 0.00

56,083 65,234 100.00 100.00

14.5 Names of the Directors and their shareholding as at 31 December 2009

As at 31 Dec 2009 As at 31 Dec 2008

5,550 4,827

605,687 526,686

532,050 462,654

161 140

115 100

115 100

115 100

115 100

Mr. Md. Mesbahul Hoque 115 100

115 100

100 -

- -

Mrs. Runa Zakia Shahrood Khan - -

- -

14.6 Capital adequacy ratio

31.12.2009 31.12.2008

Taka Taka

14.6.1 Core capital (Tier I)

Paid-up capital 2,564,253,200 2,229,785,400

Non-repayable share premium account - -

Statutory reserve 3,101,206,092 2,066,121,258

General and other reserve 42,199,200 42,199,200

Retained earnings 3,541,969,135 1,789,769,440

Non-cumulative irredeemable preference share - -

Dividend equalisation account - -

9,249,627,627 6,127,875,298

% of total holding

Mr. Mishaal Kabir

Mr. Syed Afzal Hasan Uddin, Barrister - at -Law

Mr. Md. Anwar Jamil Siddiqui Director

40,001 to 50,000

Mr. Salim Ahmed

Director

Mr. Kaiser A. Chowdhury Ex-officio

Director

Director

Depositor Director

Independent Director

Director

Mr. B. B. Saha Roy

Dr. M. Imtiaz Hossain

501 to 5,000

5,001 to 10,000

10,001 to 20,000

Over 1,000,000

Mr. M. Wahidul Haque

Depositor Director

30,001 to 40,000

100,001 to 1,000,000

Director

Director

Director

Status

Chairman

Mr. Shishir Ranjan Bose, FCA

Mr. Faheemul Huq, Barrister - at -Law

Mr. M. A. Awal

No of Shareholding

Holding

Upto 500

Mr. Feroz Ahmed

Vice-Chairman

No. of holders

20,001 to 30,000

Name of the Director

50,001 to 100,000

In terms of section 13(2) of Banking Companies Act 1991 and Bangladesh Bank BRPD Circulars no. 01, 14, 10, 07, 01, 05

and 03 dated 08 January 1996, 16 November 1996, 25 November 2002, 28 August 2006, 19 February 2007, 14 May 2007

and 12 March 2008 respectively, required capital of the Bank at the close of business on 31 December 2009 is Taka

7,833,137,517 as against available core capital of Taka 9,249,627,627 and supplementary capital of Taka 1,540,639,432

that is, a total of Taka 10,790,267,058 thereby showing surplus capital/equity of Taka 2,957,129,541 at that date. Details

are shown below:

31.12.2009 31.12.2008

Taka Taka

14.6.2 Supplementary capital (Tier II)

General provision maintained against unclassified loans 825,596,013 691,000,119

General provision maintained against off-balance sheet items 380,000,000 280,000,000

Assets revaluation reserves 284,062,876 292,505,905

All other preference shares - -

Perpetual subordinated debts - -

Exchange equalisation account 47,966,966 47,966,966

3,013,577 447,865

1,540,639,432 1,311,920,855

A. Total Eligible Capital 10,790,267,058 7,439,796,153

Total assets including off-Balance Sheet items 135,907,882,900 110,127,943,568

Total risk-weighted assets (Annexure E) 78,331,375,173 57,954,363,343

B. Required capital (10% of risk-weighted assets) 7,833,137,517 5,795,436,334

Actual capital maintained

Core capital, Tier-I 9,249,627,627 6,127,875,298

Supplementary capital, Tier II 1,540,639,432 1,311,920,855

10,790,267,059 7,439,796,153

Capital Surplus / (Shortfall) [A-B] 2,957,129,541 1,644,359,819

Capital adequacy ratio 13.78% 12.84%

14.7 Capital requirement

Required Holding Required Holding

Core capital 5.00% 11.81% 5.00% 10.57%

Supplementary capital 1.97% 2.27%

Total Capital 10.00% 13.78% 10.00% 12.84%

14.8 Capital Adequacy Ratio - As per BASEL II

Core capital (Tier I)

Fully Paid-up Capital/Capital Deposited with BB 2,564,253,200

Statutory Reserve 3,101,206,092

Non-repayable share premium account -

General Reserve 42,199,200

Retained earnings 3,541,969,135

Minority interest in Subsidiaries -

Non-Cumulative irredeemable Preferences shares -

Dividend Equalization Account -

9,249,627,627

Deductions from Tier-1 (Core Capital ) :

Book value of Goodwill -

-

Deficit on account of revaluation of investment in AFS category -

Any investment in TFCs of other banks exceeding the prescribed limit -

Other if any -

-

Total Eligible Tier-I Capital 9,249,627,627

As at 31 Dec 2008

Revaluation reserves of HTM Securities (Upto 50% of the revaluation

reserves)

As at 31 Dec 2009

Shortfall in provisions required against classified assets irrespective of any

relaxation allowed

In terms of Bangladesh Bank BRPD Circular no. 09 of 31 December 2008, required capital of the Bank at the close of

business on 31 December 2009 is Taka 9,845,963,770 as against available core capital of Taka 9,249,627,627 and

supplementary capital of Taka 1,668,218,503 that is, a total of Taka 10,917,846,130 thereby showing surplus capital/equity

of Taka 1,071,882,360 at that date. Details are shown below:

Supplementary capital (Tier II)

1,205,596,013

Assets revaluation reserves 284,062,876

All other preference shares

Perpetual subordinated debts

Exchange equalisation account 47,966,966

Revaluation reserves of Securities (Upto 50% of the revaluation reserves) 130,592,648

1,668,218,503

Capital eligible for market risk (Tier-III)

Short-term subordinated debt -

A. Total Eligible Capital 10,917,846,130

Total assets including off-Balance Sheet items 135,907,882,900

Total risk-weighted assets (RWA) 98,459,637,700

B. Total required capital (10% of Total RWA) 9,845,963,770

Capital Surplus / (Shortfall) [A-B] 1,071,882,360

Capital adequacy ratio 11.09%

14.8.1 Market Discipline Disclosures

Quantitative Disclosure

1. Assets

A. Banking Book

1 Cash in hand & Balance with BB 6,285,636,533

2 Money at call 600,000,000

3 Investment (HTM) 6,856,998,552

a. Government 6,667,299,934

b. Qualifying 30,000,000

c. Others 159,698,618

4 Loan & Advances 70,879,933,446

5 a. Classified (SMA, SS, DF and BL) 2,086,168,676

i) SMA 136,999,863

ii) SS 649,062,813

iii) DF 521,036,000

iv) BL 779,070,000

b. Unclassified 68,793,564,769

6 Rated Assets 106,912,312,383

a. Rated Assets 975,600,000

b. Unrated Assets 105,936,712,383

7 Other Assets (including Fixed Assets) 10,214,075,989

Total Banking Book Assets (1+2+3+4+7) 94,836,644,520

Under Pillar-III of the framework, Bank’s “Basel-II Disclosures” as on 31.12.2009 are as under:

General Provision for Unclassified loans & off Balance Sheet (Limited to

1.25% of RWA)

As per Bangladesh Bank guidelines, the Bank has migrated to Basel-II framework as on 31.03.2009 parallel to existing

BRPD Circular No. 10, dated November 25, 2002. From January 01, 2010 Basel II regime will be started and the guidelines

on RBCA (Risk Based Capital Adequacy) will fully come into force with its subsequent supplements/revisions.

B. Trading Book Assets

1 FC held in hand 26,842,144

2 FC held in BB and NOSTRO account 2,539,231,746

3 Investment (Trading) 9,509,593,973

a. Government 3,161,717,597

b. HFT 6,347,876,376

c. AFS -

Total Trading Book Assets (1+2+3) 12,075,667,863

Total Assets (A+B) 106,912,312,383

2. Credit Risk on Banking Book


Total Exposures of Credit Risk

1. Funded

• Domestic 70,527,446,112

• Overseas 352,487,333

2. Non-Funded

• Domestic 22,915,484,755

• Overseas 852,276,991

3. Distribution of risk exposure by claims

• Claims on sovereigns and central banks 15,720,888,321

• Claims on other official entities 30,000,000

• Claims on banks and securities firms 3,185,128,748

• Claims on corporate 33,242,365,259

• Claims included in the retail portfolio & small enterprises 16,176,098,333

• Claims secured by residential property 4,797,118,559

• Claims secured by commercial real estate 2,984,596,675

• Other Categories:

– Past due loans/NPL 1,376,164,641

– Off-balance sheet items 5,444,555,659

4. Credit Risk Mitigation

• Claims secured by financial collateral 10,892,859,759

• Net exposure after the application of haircuts. (3,884,870,460)

• Claims secured by eligible Guarantee -

3. Market risk on Trading Book


The capital requirements for:

• interest rate risk; 30,767,804

• equity position risk; 1,507,379,708

• foreign exchange risk; and 55,954,625

• Commodity risk -

4. Operational risk


The capital requirements for Operational Risk 942,964,133

5. Maintenance of Specific Provision


a. Gross Non Performing Assets ( NPAs)

Non Performing Assets ( NPAs) to Outstanding Loans and advances 2.94%

b. Movement of Non Performing Assets ( NPAs)

1. Opening balance 1,884,174,736

2. Additions 1,357,600,000

3. Reductions 1,194,983,138

4. Closing balance 2,046,791,598

Add: Mumbai Branch 39,377,078

2,086,168,676

C) Movement of specific provisions for NPAs

1. Opening balance 654,359,957

2. Provisions made during the period 298,996,156

3. Write-off (538,341,663)

4. Write-back of excess provisions -

5. Closing balance 415,014,450

Add: Mumbai Branch 11,896,000

426,910,450

6. Maintenance of Regulatory Capital


Core capital (Tier I)

Fully Paid-up Capital 2,564,253,200

Statutory Reserve 3,101,206,092

Non-repayable share premium account -

General Reserve 42,199,200

Retained earnings 3,405,361,181

Minority interest in Subsidiaries -

Non-Cumulative irredeemable Preferences shares -

Dividend Equalization Account -

9,113,019,673

Deductions from Tier-1 (Core Capital ) :

Book value of Goodwill -

-

Deficit on account of revaluation of investment in AFS category -

Any investment in TFCs of other banks exceeding the prescribed limit -

Other if any -

-

Total Eligible Tier-I Capital 9,113,019,673

Shortfall in provisions required against classified assets irrespective of

any relaxation allowed

Supplementary capital (Tier II)

1,205,596,013

Assets revaluation reserves 284,062,876

All other preference shares -

Perpetual subordinated debts -

Exchange equalisation account 47,966,966

130,592,648

1,668,218,503

Capital eligible for market risk (Tier-III)

Short-term subordinated debt -

A. Total Eligible Capital 10,781,238,176

7. Capital Adequacy


A) Amount of Regulatory Capital to meet unforeseen loss

o Amount to meet Credit Risk 7,308,897,500

o Amount to meet Market Risk 1,594,102,137

o Amount to meet Operational Risk 942,964,133

9,845,963,770

B) Additional capital over MCR maintained by the banks 935,274,406

31.12.2009 31.12.2008

15. Statutory reserve Taka Taka

In Bangladesh

Opening balance 1,971,945,858 1,251,821,530

Add: Addition during the year (20% of pre-tax profit) 1,015,481,388 720,124,328

Closing balance 2,987,427,246 1,971,945,858

Outside Bangladesh - ABBL, Mumbai Branch

Opening balance 94,175,400 105,083,920

Add: Addition during the year 15,636,846 7,990,640

Adjustment for Foreign Exchange Rate Fluctuation 3,966,600 (18,899,160)

Closing balance 113,778,846 94,175,400

3,101,206,092 2,066,121,258

16. Other reserve

General reserve (Note: 16.1) 42,199,200 42,199,200

Assets revaluation reserve (Note: 16.2) 568,125,753 585,011,810

Investment revaluation reserve (Note: 16.3) 268,769,552 9,618,239

879,094,505 636,829,248

16.1 General reserve

Opening balance 42,199,200 42,199,200

Add : Addition during the year - -

42,199,200 42,199,200

Revaluation reserves of Securities (Upto 50% of the revaluation

reserves)

General Provision for Unclassified loans & off Balance Sheet (Limited to

1.25% of RWA)

31.12.2009 31.12.2008

16.2 Assets revaluation reserve Taka Taka

Opening balance 585,011,810 598,054,760

Add : Addition during the year - -

Less : Adjustment during the year 16,886,057 13,042,950

568,125,753 585,011,810

16.3 Investment revaluation reserve ( Treasury Bills & Treasury Bonds)

In Bangladesh

Revaluation Reserve for:

Held to Maturity (HTM) (Note: 16.3.1) 6,027,153 895,731

Held for Trading (HFT) (Note: 16.3.2) 255,158,143 1,444,784

261,185,296 2,340,515

Outside Bangladesh

ABBL, Mumbai branch 7,584,256 7,277,724

268,769,552 9,618,239

16.3.1 Revaluation Reserve for Held to Maturity (HTM)

Opening balance 895,731 66,498,696

Add: Addition during the year 6,027,153 895,731

6,922,884 67,394,427

Less: Adjustment during the year 895,731 66,498,696

6,027,153 895,731

16.3.2 Revaluation Reserve for Held for Trading (HFT)

Opening balance 1,444,784 -

Add: Addition during the year 255,158,143 32,862,095

256,602,927 32,862,095

Less: Adjustment during the year 1,444,784 31,417,311

255,158,143 1,444,784

16(a) Consolidated Other reserve

AB Bank Limited 879,094,505 636,829,248


915,794,061 673,528,809

17. Retained earnings

Opening balance 1,789,769,440 1,695,795,728

Add: Post-tax profit for the year 3,362,556,000 2,300,621,640

Less: Transfer to statutory reserve 1,031,118,234 720,124,328

Cash dividend 334,467,810

Bonus shares issued 334,467,800 1,486,523,600

3,452,271,596 1,789,769,440

Add: Mumbai Branch 89,697,538 -

3,541,969,135 1,789,769,440

Interest income of HTM and HFT securities transferred to Revaluation Reserve Account as per Bangladesh Bank DOS

Circular No. 05 dated 26 May 2008 of which 50% of revaluation reserve for HTM will be treated as Supplementary Capital.

31.12.2009 31.12.2008

17(a) Consolidated Retained earnings Taka Taka

AB Bank Limited 3,541,969,135 1,789,769,440


3,639,318,550 1,847,870,125

Add: Foreign currency translation gain 211,816 -

3,639,530,366 1,847,870,125

18. Contingent liabilities 28,995,570,517 26,074,330,983

18.1 Letters of guarantee

Directors - -

Government - -

Banks and other financial institutions - -

Others 5,592,203,569 4,783,891,967

5,592,203,569 4,783,891,967

Money for which the Bank is in contingently liable in respect of guarantees

issued favouring:

2009 2008

Taka Taka

19. Profit and loss account

Income:

Interest, discount and similar income 9,989,268,472 7,967,919,523

Dividend income 122,671,920 140,634,046

Fee, commission and brokerage 1,781,781,511 1,386,225,802

Gains less losses arising from investment securities 1,774,426,855 1,374,818,145

Gains less losses arising from dealing in foreign currencies 484,343,634 372,793,369

Other operating income 170,873,499 206,424,306

Gains less losses arising from dealing securities 84,339,185 36,363,961

Income from non-banking assets - -

Profit less losses on interest rate changes - -

14,407,705,076 11,485,179,152

Expenses:

Interest, fee and commission 6,139,114,501 5,332,444,075

Administrative expenses 1,694,996,341 1,344,683,494

Other operating expenses 612,306,896 379,420,244

Depreciation on banking assets 158,891,082 130,243,184

Losses on loans and advances - -

8,605,308,820 7,186,790,997

5,802,396,256 4,298,388,155

20. Interest income

Interest on loans and advances:

Loans and advances 8,761,019,838 6,920,212,197

Bills purchased and discounted 76,617,850 32,522,057

8,837,637,688 6,952,734,253

Interest on:

Calls and placements 189,352,034 206,181,361

Balance with foreign banks 9,464,660 30,601,369

Reverse Repo 9,066,040 161,448,573

Balance with Bangladesh Bank 1,648,786 15,881,657

209,531,520 414,112,960

Profit/(Loss) due to change in interest rate - -

9,047,169,208 7,366,847,213

20(a). Consolidated Interest income

AB Bank Limited 9,047,169,208 7,366,847,213


9,111,374,896 7,368,464,534

21. Interest paid on deposits, borrowings, etc

Interest on deposits:

Fixed deposits 4,376,449,610 4,011,611,328

Savings deposits 475,581,926 427,619,944

Short-term deposits 529,402,992 240,612,758

Other deposits 511,047,233 321,941,782

5,892,481,762 5,001,785,812

Interest on borrowings:

Local banks, financial institutions including Bangladesh Bank 246,632,739 330,658,262

6,139,114,501 5,332,444,075

2009 2008

Taka Taka

21(a). Consolidated Interest paid on deposits, borrowings, etc

AB Bank Limited 6,139,114,501 5,332,444,075


6,147,007,707 5,347,854,381

22. Investment income

Capital gain on sale of shares 1,774,426,855 1,374,818,145

Interest on treasury bills 176,030,690 211,671,593

Dividend on shares 122,671,920 140,634,046

Interest on debentures 2,165,625 3,609,375

Interest on treasury bonds 763,846,054 383,472,730

Gain on treasury bills and treasury bonds 84,339,185 36,363,961

Interest on other bonds 56,897 2,318,613

2,923,537,225 2,152,888,463

22(a). Consolidated Investment income

AB Bank Limited 2,923,537,225 2,152,888,463


2,923,537,225 2,152,888,463

23. Commission, exchange and brokerage

Other fees, commission and service charges 1,241,544,525 959,379,390

Commission on letters of credit 438,774,597 348,065,477

Commission on letters of guarantee 101,462,389 78,780,934

Exchange gains less losses arising from dealings in foreign currencies 484,343,634 372,793,369

2,266,125,144 1,759,019,171

23(a). Consolidated Commission, exchange and brokerage

AB Bank Limited 2,266,125,144 1,759,019,171


2,282,732,477 1,820,010,163

24. Other income

Locker rent, insurance claim and others 10,661,893 11,952,566

Recoveries on loans previously written off 43,203,720 63,229,802

Profit remitted by ABBL, Mumbai Branch - 26,988,675

Recoveries on telex, telephone, fax, etc 41,580,158 19,596,732

Recoveries on courier, postage, stamp, etc 26,710,359 23,739,965

Finance charge from ABBF 48,283,709 50,751,234

Non-operating income (*) 433,660 10,165,333

170,873,499 206,424,306

(*) Non-operating income includes sale of vehicles, old tyres, tubes, newspapers, furniture, fixtures, etc.

24(a). Consolidated Other income

AB Bank Limited 170,873,499 206,424,306


203,640,150 224,080,645

2009 200825. Salary and allowances Taka Taka

Basic salary, provident fund contribution and all other allowances 1,052,374,231 908,621,180

Festival and incentive bonus 146,857,358 100,054,332

1,199,231,589 1,008,675,512

25(a). Consolidated Salary and allowances

AB Bank Limited 1,199,231,589 1,008,675,512


1,218,368,066 1,028,859,386

26. Rent, taxes, insurance, electricity, etc

Rent, rates and taxes 145,689,190 107,292,259

Electricity, gas, water, etc 36,790,772 27,101,686

Insurance 47,433,496 39,512,422

229,913,457 173,906,367

26(a). Consolidated Rent, taxes, insurance, electricity, etc

AB Bank Limited 229,913,457 173,906,367


240,745,272 178,544,409

27. Legal expenses

Legal expenses 3,960,205 4,409,340

27(a). Consolidated Legal expenses

AB Bank Limited 3,960,205 4,409,340

AB International Finance Limited 89,287 188,206

4,049,492 4,597,546

28. Postage, stamp, telecommunication, etc

Telex, fax, internet, wireless link, SWIFT, etc 54,398,476 36,794,710

Telephone 13,586,559 11,131,416

Postage, stamp and shipping 16,392,493 9,178,947

84,377,528 57,105,073

28(a). Consolidated Postage, stamp, telecommunication, etc

AB Bank Limited 84,377,528 57,105,073


90,017,259 62,409,532

29. Stationery, printing, advertisements, etc

Printing and stationery 68,088,481 44,345,443

Publicity, advertisement, etc 52,474,898 20,643,780

120,563,379 64,989,223

29(a). Consolidated Stationery, printing, advertisements, etc

AB Bank Limited 120,563,379 64,989,223


120,877,254 65,255,938

2009 2008

Taka Taka

30. Directors' fees

Directors' fees 1,031,588 1,499,600

Meeting expenses 1,342,904 879,349

2,374,492 2,378,949

30(a). Consolidated Directors' fees

AB Bank Limited 2,374,492 2,378,949


2,374,492 2,378,949

31. Auditors' fees

Statutory 706,000 365,750

Merchant Banking Wing 419,800 70,000

Others 1,084,162 1,126,350

2,209,962 1,562,100

31(a). Consolidated Auditors' fees

AB Bank Limited 2,209,962 1,562,100


2,396,811 1,739,946

32. Depreciation and repairs of Bank's assets

Depreciation:


Leasehold assets 565,427 6,540,914

Furniture and fixtures 9,974,847 8,137,273


Building 5,366,039 5,687,292

Motor vehicles 53,586,912 41,008,895

158,891,082 130,243,184

Repairs:

Motor vehicles 12,351,236 8,132,210


Office premises and others 11,274,327 5,784,188

Furniture and fixtures 1,001,898 562,523


43,880,769 24,315,479

202,771,852 154,558,663

32(a). Consolidated Depreciation and repairs of Bank's assets

AB Bank Limited 202,771,852 154,558,663

AB International Finance Limited 657,520 1,076,201

203,429,372 155,634,865

Directors' fees includes fees for attending the meeting of the Board, Executive Committee, Audit Committee and Shariah

Council. Each director was remunerated @ Tk.4,000 per meeting.

2009 2008

Taka Taka

33. Other expenses

Contractual service 86,598,628 69,296,501

Amortization of deferred revenue expenses 76,508,006 58,370,228

Petrol, oil and lubricant 43,916,167 35,470,405

Software expenses 60,356,716 9,556,585

Entertainment 29,365,468 21,082,223

Travelling 23,192,091 35,874,132

Subscription, membership and sponsorship 15,495,988 27,943,497

Training, seminar and workshop 8,590,967 5,223,600

Local conveyance 5,367,946 4,735,828

Professional charges 17,204,663 4,272,120

Books, newspapers and periodicals 1,781,071 882,999

Branch opening expenses 988,551 393,937

Bank Charges 7,681,136 3,709,200

Sundry expenses (*) 235,259,497 102,608,988

612,306,896 379,420,244

(*)

33(a). Consolidated Other expenses

AB Bank Limited 612,306,896 379,420,244


613,908,448 380,720,539

34. Provision against loans and advances

On un-classified loans 145,600,000 189,856,015

On classified loans 291,000,000 91,410,500

436,600,000 281,266,515

34(a). Consolidated Provision against loans and advances

AB Bank Limited 436,600,000 281,266,515


436,600,000 281,266,515

35. Provisions for diminution in value of investments

In quoted shares - 117,153,000

35(a). Consolidated Provisions for diminution in value of investments

AB Bank Limited - 117,153,000


- 117,153,000

36. Other provision

Provision for off balance sheet items 100,000,000 200,000,000

Provision for Outstanding debit entries in NOSTRO accounts - 200,000

Provision for Other assets 60,900,000 99,147,000

160,900,000 299,347,000

Provision for prepaid legal expenses and protested bills has been made as per Bangladesh Bank BRPD Circular # 14

dated 25 June 2001.

Sundry expenses includes corporate expenses, business promotion, expenses on managers' conferences and annual

general meeting, loss on sale of assets, non-operating expenses and other miscellaneous expenses.

2009 2008

36(a). Consolidated Other provision Taka Taka

AB Bank Limited 160,900,000 299,347,000

AB International Finance Limited 1,519,861 -

162,419,861 299,347,000

37. Appropriations

Retained earnings - brought forward 1,789,769,440 1,695,795,728

Less: Adjustment for prior year - -

Add: Post-tax profit for the year 3,362,556,000 2,300,621,640

5,152,325,440 3,996,417,368

Less: Bonus - 2008

Cash dividend 334,467,810 -

Bonus shares issued 334,467,800 1,486,523,600

Profit available for distribution 4,483,389,830 2,509,893,768

Transferred to:

Statutory reserve 1,031,118,234 720,124,328

Retained earnings 3,452,271,596 1,789,769,440

38. Earnings per share

Profit after taxation 3,362,556,000 2,300,621,640 Number of ordinary shares outstanding 25,642,532 25,642,532 Earnings per share 131.13 89.72

38(a). Consolidated Earnings per share

Consolidated Profit after taxation 3,417,185,111 2,332,340,348 Number of ordinary shares outstanding 25,642,532 25,642,532 Earnings per share 133.26 90.96

39. Receipts from other operating activities

Interest on treasury bills, bonds, debenture and others 2,800,865,305 2,012,254,416

Exchange earnings 484,343,634 372,793,369

Recoveries on telex, telephone, fax, etc. 41,580,158 19,596,732

Recoveries on courier, postage, stamp, etc. 26,710,359 23,739,965

Finance charge from ABBF 48,283,709 50,751,234

Non-operating income 433,660 10,165,333

Rent from Bank's property

Others 10,661,893 11,952,566

3,412,878,717 2,501,253,614

39(a). Consolidated Receipts from other operating activities

AB Bank Limited 3,412,878,717 2,501,253,614


3,445,645,368 2,518,909,953

Earnings per share (EPS) and Consolidated EPS has been computed by dividing the basic earnings by the number of

ordinary shares outstanding as of 31 December 2009 in terms of Bangladesh Accounting Standard (BAS)-33. Accordingly

to BAS-33, EPS for the year 2008 was restated for the issues of bonus share in 2009.

2009 2008

Taka Taka

40. Payments for other operating activities

Other expenses 612,306,896 379,420,244

Rent, taxes, insurance, electricity, etc 229,913,457 173,906,367

Postage, stamps, telecommunication, etc 84,377,528 57,105,073

Repairs of Bank's assets 43,880,769 24,315,479

Legal expenses 3,960,205 4,409,340

Directors' fees 2,374,492 2,378,949

976,813,347 641,535,452

40(a). Consolidated Receipts from other operating activities

AB Bank Limited 976,813,347 641,535,452


978,414,900 642,835,747

41. Increase/decrease in other assets

Inter-branch adjustment 92,423,134 651,672,022

Arab Bangladesh Bank Foundation 300,051,122 300,051,122

Advance corporate income tax 3,158,776,307 1,828,324,016

Preliminary, formation, organizational, renovation,

development and prepaid expenses 1,804,905,746 1,121,352,578

Exchange for clearing 870,737,423 471,174,214

Accounts receivable 998,581,954 1,028,589,408

Interest accrued on investment but not collected,

commission and brokerage receivable on shares

and debentures, and other income receivables 367,047,393 365,974,878

Security deposits 65,935,812 66,190,426

Advance rent and advertisement 69,971,185 50,198,408

Stationery, stamps, printing materials, etc 39,479,313 28,787,425

Investment in AB International Finance Ltd., Hong Kong 5,203,944 5,203,944

7,773,113,332 5,917,518,443

Less : Payment of corporate income tax 1,330,452,291 896,758,330

Adjustments for advances - 45,897,223

1,330,452,291 942,655,552

6,442,661,042 4,974,862,891

Net Increase 1,467,798,151 500,714,319

41(a). Consolidated Increase/decrease in other assets

AB Bank Limited 1,467,798,151 500,714,319


1,475,019,460 507,842,708

Less: Inter-company transaction 5,203,944 5,203,944

Net Increase 1,469,815,516 502,638,763

2009 2008

42. Increase/decrease in other liabilities Taka Taka

Accumulated provision against loans and advances 1,252,506,463 1,349,205,714

Provision for current tax 4,254,236,613 2,556,729,929

Deferred tax liabilities 129,739,689 1,616,023

Interest suspense account 301,688,854 326,528,758

Exchange fluctuation adjustment account -ABBL, Mumbai Branch 71,116,886 48,890,548

Retained revenue - ABBL, Mumbai Branch - 87,621,563

Accounts payable - Bangladesh Bank 233,310,356 68,171,456

Exchange equalization account 47,966,966 47,966,966

Provision against other assets 228,235,215 167,335,215

Obligation under finance lease - 565,427

Accrued expenses 36,789,076 11,454,975

Provision against investments 142,553,000 142,553,000

Provision against off balance sheet items 380,000,000 280,000,000

Accrued profit on investment - Islami Banking Branch 133,345,887 74,364,030

Provision for outstanding debit entries in NOSTRO accounts 200,000 200,000

Others 401,809,992 414,086,274

7,613,498,999 5,577,289,877

Less: Adjustment for provision & Others 5,769,086,729 4,543,399,212

1,844,412,269 1,033,890,664

Net Increase/(decrease) 810,521,605 20,621,206

42(a). Consolidated Increase/decrease in other liabilities

AB Bank Limited 810,521,605 276,197,066


Net Increase 850,330,083 320,343,330

43. Highlights of the overall activities of the Bank

2009 2008

Taka Taka

1 Paid-up capital 2,564,253,200 2,229,785,400 15.00

2 Total capital 10,790,267,058 7,439,796,153 45.03

3 Capital surplus 2,957,129,541 1,644,359,819 79.83

4 Total assets 106,912,312,383 84,053,612,585 27.20

5 Total deposits 83,087,129,113 68,560,474,323 21.19

6 Total loans and advances 70,879,933,446 56,708,771,906 24.99

7 Total contingent liabilities and commitments 28,995,570,517 26,074,330,983 11.20

8 Credit-deposit ratio 85.31 82.71 2.59

9 Ratio of classified loans against total loans and advances 2.75 2.99 (0.24)

10 Profit after tax and provision 3,362,556,000 2,300,621,640 46.16

11 Loans classified during the year 1,358,700,000 506,000,000 168.52

12 Provision kept against classified loans 426,910,450 658,205,595 (35.14)

13 Provision surplus/ (deficit) 88,906,463 81,600,219 8.95

14 Cost of fund 10.31% 11.09% -0.78%

15 Interest earning assets 87,068,323,061 68,580,491,857 26.96

16 Non-interest earning assets 19,843,989,322 15,473,120,728 28.25

17 Return on investments (ROI) 21.06% 23.89% -2.83%

18 Return on assets (ROA) 3.52% 3.17% 0.36%

19 Income from investments 2,923,537,225 2,152,888,463 35.80

20 Earnings per share 131.13 89.72 46.16

21 Net income per share 131.13 89.72 46.16

22 Price-earnings ratio (Times) 8.97 9.16 (0.19)

44.

Currency Equivalent BDT

British Pound Sterling GBP 1.00 110.1133

European Currency EURO 1.00 99.3700

Indian Rupee INR 1.00 01.4870

Japanese Yen JPY 1.00 00.7525

US Dollar USD 1.00 69.2667

Sl # Particulars

29 April 2010

Dhaka,

Change in %

Abbreviation and unit

Assets and liabilities as at 31 December 2009 denominated in foreign currencies have been converted to local

currency Bangladesh Taka (BDT) at the following exchange rates:

AB Bank Limited

Balance with Banks outside Bangladesh

Amounts in

foreign

currency

Conver-

sion

rate

Equivalent

amounts in

Taka

Amounts in

foreign currency

Conversion

rate

Equivalent

amounts in

Taka

The Bank of Tokyo Mitsubishi Ltd. Tokyo YEN 35,433,518 0.753 26,663,723 6,619,629 0.761 5,034,227

HSBC Plc London UKP 186,723 110.113 20,560,658 - 99.638 -

Lloyds TSB Bank Plc London UKP 34,814 110.113 3,833,487 50,726 99.638 5,054,192

HSBC Mumbai ACUD 173,006 69.267 11,983,527 3,006 68.920 207,145

JP Morgan Chase Bank New York USD 242,984 69.267 16,830,732 - 68.920 -

Sonali Bank Kolkata ACUD 100,592 69.267 6,967,668 36,276 68.920 2,500,113

Myanmar Economic Bank Yangon USD 410 69.267 28,399 410 68.920 28,256

Citibank NA New York USD 4,812,268 69.267 333,329,929 365,553 68.920 25,193,940

Hatton National Bank Ltd. Colombo ACUD 23,771 69.267 1,646,518 327 68.920 22,533

Commerz Bank AG Frankfurt USD 19,962 69.267 1,382,670 191,413 68.920 13,192,163

State Bank of India Kolkata ACUD 15,725 69.267 1,089,241 15,725 68.920 1,083,788

NIB Bank Ltd. Karachi ACUD 149,723 69.267 10,370,802 37,429 68.920 2,579,592

Lloyds TSB Bank Plc London USD 25,198 69.267 1,745,377 62,354 68.920 4,297,465

Mashreq Bank Psc New York USD 148,982 69.267 10,319,507 171,304 68.920 11,806,292

Nepal Bangladesh Bank Ltd. Katmandu ACUD 62,772 69.267 4,347,992 27,077 68.920 1,866,129

Bank of Bhutan Phuentsholing ACUD 69,275 69.267 4,798,433 45,042 68.920 3,104,276

HSBC Plc London USD 5,143 69.267 356,239 - 68.920 -

BCCI London USD 1,696 69.267 117,452 1,696 68.920 116,864

Wachovia Bank New York USD 451,811 69.267 31,295,435 14,603 68.920 1,006,416

American Express Bank Ltd. New York USD 69.267 - - 68.920 -

Habib American Bank New York USD 231,911 69.267 16,063,722 319,354 68.920 22,009,910

Commerz Bank AG Frankfurt EURO 447,473 99.370 44,465,379 314,042 96.295 30,240,693

Hypovereins Bank Humburgh EURO 91,500 99.370 9,092,336 33,776 96.295 3,252,465

HSBC Karachi ACUD 69.267 - 10,055 68.920 693,017

National Commercial Bank Ltd Jeddah USD 162,455 69.267 11,252,756 49,985 68.920 3,444,965

Habib Metro Bank Karachi ACUD 9,600 69.267 664,960 - - -

U.B.A.F Banques ACUD 19,975 69.267 1,383,602 - - -

Habib Bank AG Abudabi AED 36,500 18.858 688,310 - - -

Reserve Bank of India Mumbai INR 17,539,626 1.487 26,081,424 15,764,093 1.427 22,493,783

HDFC Bank Mumbai INR 46,207,985 1.487 68,711,274 52,850,311 1.427 75,412,109

Central Bank of India Mumbai INR 186,102 1.487 276,734 187,842 1.427 268,032

Commerz Bank AG (Euro) Mumbai INR 15,968 1.487 23,744 1,779,031 1.427 2,538,499

HSBC (Euro) Mumbai INR 305,533 1.487 454,327 2,220,644 1.427 3,168,637

HSBC (GBP) Mumbai INR 1,266,562 1.487 1,883,378 15,562,460 1.427 22,206,075

HSBC (USD) Mumbai INR 232,903,807 1.487 346,327,961 111,746,984 1.427 159,451,771

JP Morgan Chase Bank Mumbai INR 3,857,227 1.487 5,735,697 24,713,325 1.427 35,263,444

HDFC Bank Mumbai INR 160,000,000 1.487 237,920,000 20,000,000 1.427 28,538,000

AB International Finance Ltd. Hong Kong USD 16,223,000 69.267 1,123,713,674 11,908,000 68.920 820,699,359

2,382,407,068 1,306,774,151

Annexure - A

Name of the bank

As at 31 December 2009 As at 31 December 2008

Name of

currency Location

Annexure - B

Number of

shares

Market price

per share/

Taka

Total market

price/

Taka

Cost per Share Total cost/

Taka

94,236 333.75 31,451,265 314.64 29,650,302 226,703 3,190.00 723,182,570 2,151.22 487,688,713

International Finance Investment and Commerce Bank Ltd. 582,205 920.25 535,773,783 211.87 123,351,866 Prime Life Insurance Company Ltd. 2,400 1,966.50 4,719,600 1,301.07 3,122,560 LankaBangla Finance Limited 84,000 313.80 26,359,200 256.49 21,544,750

8,520 3,703.00 31,549,560 2,962.54 25,240,815 63,250 1,860.25 117,660,813 1,542.49 97,562,794

Green Delta Insurance Company Ltd. 2,000 1,669.75 3,339,500 1,142.53 2,285,067 National Life Insurance Company Ltd. 10,240 3,708.00 37,969,920 3,124.84 31,998,396 Meghna Life Insurance Company Ltd. 3,200 1,953.75 6,252,000 1,529.26 4,893,627 Fareast Islami Life Insurance Company Ltd. 50,000 2,599.50 129,975,000 2,466.65 123,332,703 Delta Life Insurance Company Ltd. 35 14,350.00 502,250 13,310.00 465,850 Sandhani Life Insurance Company Ltd. 1,050 2,036.75 2,138,588 1,797.00 1,886,850

62,850 1,211.00 76,111,350 1,353.18 85,047,538 1,789,900 454.40 813,330,560 445.93 798,168,576

450,000 620.20 279,090,000 493.23 221,954,200 2,000 2,399.25 4,798,500 1,103.77 2,207,535

2,002,000 723.25 1,447,946,500 603.23 1,207,665,683 4,600,000 81.40 374,440,000 76.15 350,304,840 1,146,360 155.80 178,602,888 138.13 158,348,355

45,375 2,876.25 130,509,844 2,765.41 125,480,450 1,145,626 505.00 578,541,130 501.51 574,538,061

23,000 443.60 10,202,800 499.65 11,492,038 77,560 2,583.25 200,356,870 3,495.74 271,129,478 4,385 2,793.00 12,247,305 2,866.37 12,569,044 2,000 946.25 1,892,500 830.25 1,660,500

275,250 1,021.50 281,167,875 657.43 180,957,890 Usmania Glass Sheet Factory Ltd. 3,295 2,355.50 7,761,373 3,510.47 11,567,005

1,250,000 37.90 47,375,000 55.48 69,355,700 2,100,000 686.50 1,441,650,000 624.95 1,312,405,195

7,536,898,542 6,347,876,377

Shares (unquoted)

Number of

shares

Book

Value/Cost/Taka

10 10,000,000

50,000 50,000,000

7,140,000 71,400,000

227,700 10,000,000

141,400,000

44 Industrial and Infrastructure Development Finance Company Ltd.

Particulars Face value/

Taka

1,000,000

1,000

IDLC Finance Limited

Summit Power

Jamuna Oil

Padma Oil

AB Bank Limited

Investment in Shares


Shares (quoted)

Particulars

Southeast Bank Ltd.

10

United Commercial Bank Ltd.

Powergrid Company Ltd.

Bextex Ltd.

Square Pharmaceuticals Ltd.

Aramit limited

Lafarge Surma Cement Ltd.

ICB

Prime Finance Limited

Beximco Pharma Ltd.

Cash Link Bangladesh Ltd.

Titas Gas

Central Depository Bangladesh Ltd.

Apex Adelchi Footwear Ltd.

Singer BD Ltd

BSRM Steel

S Alam Coll Rolled M.

Grameen M.F-2

Everest Power Co. Ltd.

Annexure - C

Cost

Balance at 01 January 2009 1,900,594,080 178,652,199 48,633,015 595,748,777 265,058,436 8,020,074 2,996,706,581

Addition during the year 10,155,820 39,799,215 7,864,995 138,448,535 52,432,539 - 248,701,104

Less : Disposal /Adjustment during the year** 20,664,455 88,868,717 74,496 141,218,304 1,043,835 - 251,869,807

At 31 December 2009 1,890,085,445 129,582,697 56,423,514 592,979,008 316,447,140 8,020,074 2,993,537,878

Accumulated Depreciation

Balance at 01 January 2009 16,428,942 90,643,789 31,180,484 309,379,989 96,968,496 7,454,647 552,056,347

Charged during the year 5,366,039 9,974,847 3,698,923 85,698,934 53,586,912 565,427 158,891,082

Less : Disposal /Adjustment during the year** 1,063,433 55,758,178 4,461,164 96,168,460 920,975 - 158,372,208

At 31 December 2009 20,731,548 44,860,458 30,418,244 298,910,463 149,634,434 8,020,074 552,575,221

Net Book Value as on 31 December 2009 1,869,353,897 84,722,239 26,005,270 294,068,545 166,812,706 - 2,440,962,657

Net Book Value as on 31 December 2008 1,884,165,138 88,008,410 17,452,531 286,368,788 168,089,940 565,427 2,444,650,234

Office AppliancesElectrical

AppliancesMotor Vehicles Leasehold Assets

** Disposal/Adjustments includes some fixed assets transferred to Deferred Revenue Expenses and Interhead transferred as per Auditor's Certification and actual disposal during the year.

AB Bank Limited

Schedule of Fixed Assets

As on 31 December 2009

(Amount in Taka)

Particulars Land and BuildingFurniture and

FixturesTotal

Annexure - D

Amounts in

foreign

currency

Conversion

rate

Equivalent

amounts in

Taka

Amounts in

foreign

currency

Conversion

rate

Equivalent

amounts in

Taka

HSBC UK UKP - - - 45,517.87 99.64 4,535,291

HSBC UK USD 257,732 69.27 17,852,269 4,553.01 68.92 313,793

HSBC Karachi USD 21,447 69.27 1,485,567 - - -

JP Morgan Chase Bank New York USD - - - 2,362,337 68.92 162,812,278

American Express Bank Ltd. New York USD - - - 630,232.56 68.92 43,435,628

HSBC New York USD - - - 834,187 68.9200 57,492,167

19,337,836 268,589,159

AB Bank Limited

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

Name of the bank

As at 31 December 2009 As at 31 December 2008

CurrencyLocation

Annexure E

Cash-in-Hand and at Bank (except banks abroad) 6,282,925,833 -

Money at Call and Short Notice 600,000,000 120,000,000

Foreign Currency Balances Held 2,565,873,890 -

Export and Other Foreign Bills 560,710,117 280,355,059

Foreign Investments 5,203,945 2,601,972

Import and Inland Bills 586,671,134 586,671,134

Advances 63,230,902,890 63,230,902,890

Investments (as per book value) 16,155,350,225 4,660,450,473

Head Office and Inter-Branches adjustments 92,423,134 -

Other Assets including Contingent Assets 22,251,942,207 9,450,393,644

112,332,003,375 78,331,375,173

AB Bank Limited

Particulars

Detail of Risk Weighted Assets

As on 31 December 2009

Amount Risk weight Assets

(Tk.)

Annexure F- 1/2

31.12.2009 31.12.2008

INR INR

369,822,602 369,822,602

173,484,233 151,421,516

368,222,891 248,862,698

Borrowings - -

17,574,970 7,901,296

929,104,697 778,008,112

19,806,043 18,211,672

446,246,246 250,936,864

Investments 129,060,100 101,447,850

235,940,237 312,308,936

38,606,654 13,144,692

59,445,416 81,958,098

929,104,697 778,008,112

Fixed Assets

Assets

Cash and Balances with RBI

Balance with Banks and Money at call short notice

Advances

Capital

Reserves & Surplus

Deposits

Other Liabilities & Provisions

Capital & Liabilities

Other Assets

Total

AB Bank Limited (Mumbai Branch)

Balance Sheet


Total

Annexure F- 2/2

2009 2008

INR INR

Income

Interest earned 34,851,915 43,340,340

Other Income 113,495,734 74,672,332

Total 148,347,649 118,012,672

Expenditure

Interest expended 5,692,332 6,625,988

Operating Expenses 56,919,396 40,410,260

Provision & Contingencies 43,673,204 -

Operating Profit 106,284,932 47,036,248

For the year ended 31 December 2009

AB Bank Limited (Mumbai Branch)

Profit and Loss Account

Annexure G 1/2

31.12.2009 31.12.2008

Taka Taka

Fixed Assets - at cost less depreciation 4,397,779 3,797,373

Intangible Assets 969,647 71,904

Current Assets

Loan to clients 6,718,925,072 5,143,846,031

Advances and receivables 1,044,292,807 358,688,502

Bank balances 4,886,952 24,400,630

Total Current Assets 7,768,104,831 5,526,935,163

Less: Current Liabilities and Provisions

Accruals and provisions 306,771,404 191,717,915

Contribution from clients 164,828,062 69,617,048

7,206,824,881 5,191,712,525

- 28,154,298

Total Current Liabilities 7,678,424,347 5,481,201,786

Net Current Assets 89,680,484 45,733,377

Net Assets 95,047,910 49,602,654

Financed by:

Equity Fund 20,000,000 20,000,000

Accumulated Profit 75,047,910 29,602,654

95,047,910 49,602,654

General provision on outstanding loan

AB Bank Limited (Merchant Banking Wing)

Balance Sheet


AB Bank general account

Annexure G 2/2

2009 2008

Taka Taka

INCOME (A)

Interest income 947,705,351 649,619,236

Management fee 207,996,009 154,463,223

Transaction/Settlement fee 324,305,499 175,197,199

Banker to the issue fees 55,898 1,035,526 Other income 5,231,000 110,000

1,485,293,757 980,425,184

EXPENDITURE (B)

Salary and allowances 7,094,356 5,347,808

Other administrative expenses 50,265,441 22,474,201

Interest expenses 645,753,402 521,529,412

Depreciation 1,448,974 1,287,030

Other expenses 240,052 137,488

704,802,225 550,775,939

Net profit for the year (C=A-B) 780,491,532 429,649,245

Accumulated profit, brought forward 29,602,654 92,802,152

810,094,186 522,451,397

Profit transferred to Head Office (735,046,276) (492,848,743)

Accumulated profit, carried forward to Balance Sheet 75,047,910 29,602,654

AB Bank Limited (Merchant Banking Wing)



Annexure H 1/2


31.12.2009 31.12.2008Taka Taka

63,493,496 4,043,940

3,493,496 4,043,940

60,000,000 -

1,001,599,179 901,243,054

1,001,599,179 901,243,054

- -

-

- -

- -

- -

1,756,564,091 1,083,749,668

1,743,233,328 1,071,507,612

13,330,763 12,242,056

13,250,170 15,359,863

21,310,564 21,879,468

8,060,394 6,519,605

403,282,192 2,215,313,400

- -

3,238,189,128 4,219,709,924

1,007,043,594 904,753,879

2,086,830,927 3,234,826,977

1,590,492,950 2,814,974,663

- -

414,648,813 396,077,102

Al-Wadeeah Current and Other Deposit Accounts 76,249,923 16,760,178

5,439,240 7,015,034

144,314,608 80,129,067

Deffered Tax Liabilities/(Assets)

3,238,189,128 4,219,709,924

- -

- -

- -

- -

- -

- -

3,238,189,128 4,219,709,924

ABBL General Account

Balance Sheet

Islami Banking Branch

AB Bank Limited

Total Liabilities

Capital and Shareholders' Equity:

Paid up Capital

Other Liabilities

Mudaraba Savings Deposits

Mudaraba Term Deposits

Total Shareholders' Equity

Total Liabilities and Shareholders' Equity

Statutory Reserve

Other Reserves

Retained Earnings

Deposits and Other Accounts

Other Mudaraba Deposits

Bills Payable

LIABILITIES AND CAPITAL

Liabilities:

Placement from banks & other financial institutions

Premises and Fixed Assets (Cost)

Non-Banking Assets

Accumulated Depreciation

Other Assets:

Total Assets

Investments

General Investments etc.

Bills Purchased & Discounted

Fixed Assets including Premises

In Bangladesh

Outside Bangladesh

Placement with other Banks & Financial Institutions

Investment in shares & other financial institutions

Government

Others

PROPERTY AND ASSETS

Cash in hand

Cash in Hand (Including foreign currencies)

Balance with Bangladesh Bank and its Agent Banks (Incl. FC)

Balance with Other Banks and Financial Institutions:

Annexure H- 2/2

2009 2008

Taka Taka

OPERATING INCOME

Investment income 592,942,205 489,459,742

Profit paid on deposits (397,909,211) (350,620,368)

Net Investment income 195,032,994 138,839,375

Income from Investments in shares/Securities - -

Commission, exchange and brokerage 17,046,978 8,297,899

Other operating income 1,337,572 759,559

Total operating income 213,417,544 147,896,833

Operating Expenses

Salaries and allowances 13,346,697 10,468,406

Rent, Taxes, Insurance, Electricity etc. 619,668 477,492

Legal expenses - -

Postage, stamps, telecommunication etc. 311,736 282,363

Stationeries, printing and advertisement etc. 439,643 543,979

Directors' Fees & Expenses - -

Shariah Supervisory Committee's Fees & Expenses 111,588 133,527

Auditors Fees - 209,000

Charges on lnvestment Losses - -

Depreciation and repair to bank's assets 2,312,650 2,164,001

Zakat Expenses

Other expenses 3,937,146 3,552,275

Total operating expenses 21,079,126 17,831,043

Profit / (Loss) before provisions 192,338,417 130,065,790

AB Bank Limited



Islami Banking Branch

Annexure I

AB Bank Limited

Islami Banking Branch Distribution of Profit under Islami Banking Operation

Profit and loss of Islami Banking Branch is calculated annually as at 31 December in every year. 65% to 70% of investment income is distributed among the different types of Mudaraba depositors according to the weightage and the remaining portion is retained by the Bank to meet administrative expenses and investment loss offsetting reserve. Provisional profit is applied to the different types of depositors at the rates decided by the Bank from time to time taking into consideration of the industry trend and that of the rates of other Islamic banks in the country.

In the year 2009 final profit has been paid to the depositors as per following weightage and rates:

Types of Deposit Weightage Final Rate of Profit (%)

1. Mudaraba Savings Deposits 2. Mudaraba Short Term Deposits 3. Mudaraba Term Deposits

36 Months 24 Months 12 Months 6 Months 3 Months 1 Months

4. Mudaraba Probable Millionaire Scheme 5. Mudaraba Quarterly Profit Paying

Scheme 6. Mudaraba Hajj Savings Scheme 7. Mudaraba Deposit Pension Scheme

0.2500 to 0.5000

0.3334 to 0.4200

1.0000 to 1.0208 0.9167 to 1.0208 0.9583 to 1.0458 0.7917 to 1.0000 0.9167 to 1.0800 0.9600 to 1.0833

1.0000

1.0000

1.0000

1.0000

3.08 to 6.17

4.11 to 5.14

12.34 to 12.59 11.31 to 12.59 8.73 to 12.90 5.14 to 13.08 4.31 to 13.33 6.66 to 12.33

12.34

12.34

12.34

12.34

A competent Shariah Council consisting of Islamic scholars, Ulema, Fukaha and Islamic bankers headed by Mr. Shah Abdul Hannan, a prominent Islamic scholar and former Secretary, Government of Bangladesh guides the Islamic banking operations of the Bank. During the year 2009, Shariah Council met in 3 (three) meetings along with 2 (two) meetings of it’s Standing Committee and reviewed different operational issues. The Council also audited the branch through it’s Muraquib and reviewed the audit report in it’s regular meeting. Shariah Council observed that both the officials and clients of the branch became more cautious about the compliance of Shariah Principles.

Annexure - J

2009 2008

Taka Taka

Operating Revenue

Commission, exchange and brokerage 1,199,202 24,824

Total Operating Revenue 1,199,202 24,824

Salaries and allowances 715,296 486,479

Rent, taxes, insurance, etc.(Licence Renewal) 15,000 10,000

Audit fees 10,450 - Other expenses-CDBL Charges 98,832 6,920

Total operating expenses 839,578 503,399

Net Profit / (Loss) 359,624 (478,575)

AB Bank Limited (Custodian Wing)



Annexure K -1/2

31.12.2009 31.12.2008

Taka Taka

I. Sources of Funds

Shareholders funds

Capital 20,000,000 20,000,000

Reserve & Surplus 232,963,742 89,183,785

Total 252,963,742 109,183,785

II. Application of Funds

Fixed Assets less accumulated depreciation 16,694,718 12,725,017

Investments 232,176,920 232,176,920

248,871,638 244,901,937

Current Assets, Loans and Advances:

Cash in hand & Bank 520,302,172 481,334,846

Other current assets 829,731,302 589,621,208

Advances 36,599,191 22,293,379

1,386,632,663 1,093,249,433

Less: Current Liabilities and Provisions:

Liabilities 1,319,960,425 1,183,269,873

Provisions 2,202,354 9,534,481

Provision for Tax 60,377,780 361,163,231

1,382,540,559 1,228,967,585

Net Current Assets 4,092,104 (135,718,152)

Total 252,963,742 109,183,785


Arab Bangladesh Bank Foundation

Balance Sheet

Annexure K -2/2

2009 2008

Taka Taka

Income 318,874,143 204,375,333

Brokerage Commission Less Howla & Laga charges 211,615,288 125,271,182

Interest Income 82,400,464 72,967,000

Other Operating Income 24,858,391 6,137,151

Less: Operating & Other Expenses 125,062,739 105,969,447

Operating Expenses 41,925,130 29,425,424

Finance Charge 79,930,105 74,332,049

Depreciation on Fixed Assets 3,207,504 2,211,974

Profit before Tax 193,811,404 98,405,886

Provision for Taxation :

Current Tax 49,489,502 24,830,400

Deferred Tax 117,588 198,750

Profit after tax 144,204,314 73,376,736

Arab Bangladesh Bank Foundation

Profit & Loss Account

For the period ended 31 December 2009

Annexure L- 1/4

31.12.2009 31.12.2008

HK$ HK$

NON-CURRENT ASSETS

Property, plant and equipment 8,277 12,453

CURRENT ASSETS

Discounted bills receivable 132,480,583 106,659,329

Deposits, prepayments and other receivable 250,927 256,821

Cash at banks and in hand 625,997 932,288

133,357,507 107,848,438

CURRENT LIABILITIES

Accrued liabilities and other payables 4,652,528 4,397,932

Deferred interest income 1,245,616 1,030,510

Provision for long service payments 391,279 220,462

Due to ultimate holding company 112,049,500 92,287,000

Tax payable 428,544 33,477

118,767,467 97,969,381

NET CURRENT ASSETS 14,590,040 9,879,057

14,598,317 9,891,510

Financed by

SHARE CAPITAL 1,000,000 1,000,000

RESERVES 13,598,317 8,891,510

14,598,317 9,891,510

AB International Finance Limited

Balance Sheet


Annexure L- 2/4

2009 2008

HK$ HK$

INTEREST INCOME 7,071,963 5,454,028

INTEREST EXPENSES (887,117) (1,779,207)

NET INTEREST INCOME 6,184,846 3,674,821

OTHER OPERATING INCOME 3,977,131 3,279,154

TOTAL OPERATING INCOME 10,161,977 6,953,975

Staff costs (2,150,746) (1,559,655)

Depreciation (6,775) (64,432)

Provision for long service payments (170,817) 46,156

Other operating expenses (2,164,667) (2,124,242)

TOTAL OPERATING EXPENSES (4,493,005) (3,702,173)

PROFIT BEFORE TAXATION 5,668,972 3,251,802

TAXATION (962,165) (508,621)

PROFIT FOR THE YEAR 4,706,807 2,743,181

OTHER COMPREHENSIVE INCOME FOR THE YEAR - -

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4,706,807 2,743,181


Comprehensive Income Statement


Annexure L- 3/4

2009 2008

HK$ HK$

CASH GENERATED FROM OPERATIONS 263,300 1,398,160

Hong Kong profits tax paid (567,098) (630,416)

NET CASH (USED IN)/GENERATED FROM

OPERATING ACTIVITIES (303,798) 767,744

INVESTING ACTIVITIES

Interest received 106 2,448

Purchase of fixed assets (2,599) (18,588)

NET CASH USED IN INVESTING ACTIVITIES (2,493) (16,140)

NET (DECREASE)/INCREASE IN CASH AND CASH

EQUIVALENTS (306,291) 751,604

CASH AND CASH EQUIVALENTS

AT THE BEGINNING OF THE YEAR 932,288 180,684

CASH AND CASH EQUIVALENTS

AT THE END OF THE YEAR 625,997 932,288

ANALYSIS OF THE BALANCES OF CASH AND

CASH EQUIVALENTS

Cash and bank balances 625,997 932,288

AB INTERNATIONAL FINANCE LIMITED

NOTES TO CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST DECEMBER 2009

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 5,668,972 3,251,802

Adjustments for :

Depreciation 6,775 64,432

Bank interest income (106) (2,448)

Provision for long service payments 170,817 (46,156)

OPERATING PROFIT BEFORE CHANGES IN

WORKING CAPITAL 5,846,458 3,267,630

Increase in discounted bills receivable (25,821,254) (39,741,784)

Decrease/(Increase) in deposits, prepayments and other receivable 5,894 (6,432)

Increase in accrued liabilities and other payables 254,596 379,490

Increase in deferred interest income 215,106 353,506

Increase in amount due to ultimate holding company 19,762,500 37,145,750

CASH GENERATED FROM OPERATIONS 263,300 1,398,160


Cash Flow Statement


Annexure L-4/4

Particulars Share Capital

HK$

Capital

Reserve HK$

Retained

Profits HK$

Total

HK$

Balance at 31 December 2007 1,000,000 4,108,726 2,039,603 7,148,329

Net profit for the year 2008 - - 2,743,181 2 ,743,181


Net profit for the year 2009 - - 4,706,807 4 ,706,807



Statement of Changes in Equity


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