THE REPORT Report On“Financial Statement and Notes to the Financial Statement of Bank”

Banks of Reference:

AB Bank Limited Dhaka Bank Limited Jamuna Bank Limited One Bank Limited Mercantile Bank Limited

STAMFORD UNIVERSITY BANGLADESH]

Report on Topic: “Financial Statement and Notes to the Financial Statement” Course Code: ACC 403 Course Title: Auditing

Submitted To: Md. Golam Sharoar Lecturer, Dept. Business Administration

Submitted by:

NAME IDS M Manirul Islam BBA 0370 12013MD. Zamidul Islam BBA 0370 12014Md. Yasin Khan BBA 0370 12020Md. Nurannabi Islam BBA 0370 12084Md. Awlad Hossain BBA 0370 12019Md. Kawsar Hossain BBA 0370 12045

Batch: 37 F

Submission Date: 25th July, 2010

July 20, 2010

ToGolam Saroar

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Lecturer,Stamford University Bangladesh

Dear Sir

I have great pleasure to replace before our practical financial report on some listed bank. We have and studied different function of five commercial bank of Bangladesh was assigned to submit a report on “Financial Statement and Notes to the Financial Statement”

To prepare this report, we have gathered what we believe to be most complete information available. Much of the information has been collected reading Annual Reports Of listed bank, articles, newspaper, etc. related to the bank area.

The experience we have gathered during this period will remain as an invaluable asset of immense useful of our life. We have worked hard preparing this report and we hope it will satisfy our report requirement. We will be always available for answering any query on the report. We request you to excuse us me for any mistake that may occur in the report despite our best effort.

Thanking you

Sincerely yours

Md. Zamidul IslamMd. Nurannabi IslamMd. Awlad HossainMd. Yasin KhanMd. Kawsar HossainS M Monirul IslamBatch: BBA (37F)

Acknowledgement

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We are very glad that in spite of many limitations we have completed the report successfully. Preparing this report, we received cordial and sincere from many concerns.

First of all wish to thank the immeasurable grace and profound kindness of the Almighty Allah, the supreme authority of the universe. From first inception until the final completion of the report, the success of this study rests not on us alone but on the contribution of many persons who have inspired, influence, and guided our work.

We express our deep sense gratitude and sincere appreciation to our course teacher Mr. Golam Sarwar, you guide us prepare such a report.

During our report preparing period we worked in different like department organizational vision and mission, management, account and book keeping, different types of note to the financial statement. We want to give special thanks to every person of those departments for their required support, encouragement, guidelines as well as generous comments and suggestion despite their very busy schedule.

Our thanks also go to our friends for their support. We are also quietly and heartily indebted to our presents that always inspire, encourage and support us to pursue such study.

Finally, we want to extend our deep gratitude to our course teacher Mr. Golam Saroar for his guidance and special supervision during our work

Preface

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Banking sector owes a pivotal importance in the economy of any country through its vibrant functions. This is the deep seated motivator that geared up us to prepare the report. Moreover, the practice and familiarity learned during this tenure would also attest very helpful and alleviating in the awaiting proficient life.

This report is an upshot of our two weeks on AB Bank Ltd, Dhaka Bank Ltd, Jamuna Bank Ltd, One Bank Lt, Mercantile Bank Ltd. These Banks posse an imperative importance in the banking sector in Bangladesh. These always remain the center of hustles in business activities. These always endow with great covenant of rally round in terms of funds and services at all epochs of its dynamism.

Although, a derisory period of two weeks is not enough to learn the complex operations of the bank yet we made industrious efforts to converse them comprehensively in this report. Particularly, we have remunerated more accents on study of distinguishing features and services of these banks. we have made maximum venture to elaborate this report with the material read, listened and observed.

We have strong belief that this report will guide and ease the readers to understand the operations of banking system and more prominently have good knowledge about these Banks, These are the most trusty and leading banks in Bangladesh.

Dear Sir, we hope that you will appreciate our report and sense that reading our report is not like to waste the time in any respect.

Table of Content

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Chapter: 1.1 Acknowledgement ……………………………………………………… 41.2 Prefaces……………………………………………………………………. 51.3 Executive Summary………………………………………………………. 7

Chapter:2.1 Background of the Report………………………………………..…… 82.2 Objective of the Report……………………………………………… 82.3 Methodology of the report……………………………………………… 92.4 Limitations of the report……………………………………………… 9

Chapter:3.1 Background of the bank…………………………………………………. 103.2 Corporate Mission and Vision……………………………………………. 15

Chapter:4.1 Balance Sheet………………………………………………………… 18 4.2 Profit and Loss Account………………………………………………… 244.3 Cash Flow Statement…………………………………………………… 304.4 Statement of Changes in Equity………………………………………….374.5 Liquidity Statement…………………………………………………… 41

Chapter:5.1 Notes to the Financial Statement…………………………………………44

Chapeter:6.1 Conclusion……………………………………………………………… 58 6.2 Reference and Bibliography…………………………………………… 59

Executive summary

The banking structure in Bangladesh comprises of the following types, Bangladesh Bank, Commercial Bank of Bangladesh; Exchange Banks, Saving banks, Cooperative banks, specialized credit institutions. The Bangladesh bank is the Central bank of the country. The network of bank branches now covers a very large segment of national

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economy. The Bangladesh Bank issues the shares of these periodically. Bank employees and other common peoples can also purchase these shares and earn profit.

To open an account the customer has to meet the general banking manager with an introducer. The procedure begins with the punching of account opening form to the customer file i.e. customer’s master file. Before closing any account, bank send letter to the account hold for informing him that his account is going to be closed. There is need an approval form higher authority to close any account. Current deposits are those which are payable to bank whenever demanded by the customer. Bank does not pay any profit on current deposits. The following are the financial products/services of PLS Account, Saving Account, Term deposit and Foreign currency accounts.

In remittance department Bank also have instruments for transferring of money, Telegraphic Transfer, Mail Transfer. In cash department both deposits and withdrawals go side by side. This department works under the CD In charge and deals with cash deposits and payments. This department maintains the following sheets, books, and ledger of account cash received voucher sheet.

Cash paid voucher sheet, Paying-in-slip, Cheque Book, Cash balance book. The clearing in banks is being done through NIFT (National Institute of Facilitation Technology).

Bank provides this facility to the people who need advance money to meet their requirement. Party dealing with other banks financial condition of borrower business and as a first step credit proposal is being made.

2.1 Background of the Report

In the later 19th century, Finance was a part of Economics. But due to the globalization and more expansion of international trade, Finance plays the major role for the economic development. The development of the modern economy would not have been possible without the use of money. A first fundamental characteristic of money is that it is very much like collective goods. It is parallel relationship between the money and banking. Bank is an important and essential institution for the necessity of use of money and the protection of the money.

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As a BBA student, financial institutions are the most appropriate field to gather the experience and among the financial institutions bank is the most prominent place. With a view to supply skilled personals in banking area, Stamford University Bangladesh has undertaking different types reporting program for BBA students. As a part of the BBA program we have placed a report on “Financial Statement on some listed bank.

2.2 Objective of the report

The main objective of the study is to get a clear idea about the Financial Statement and Notes to the Financial Statement.

To apply the theoretical knowledge into practical area. To gather practical knowledge. To analyze the financing system of the bank and to find out if banks have any

field to improve upon and greater contribution towards the country’s economy. To examine the profitability and productivity of the bank To familiarize the working hour, values and environment of the bank.

2.3 Methodology of the Report

While we were conducting the study we have collected various types of primary and secondary data. Data has been collected through different sources, by interviewing the responsible officers and from annual report published by the banks. Basically the data was collected from the two sources_

Primary sources: Face to face conversation with the officers.

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Face to face conversation with the clients. Personal observation

Secondary Sources: Annual Report of the bank Web site of the bank Newspaper

2.4 Limitation of the Report:

Although we received cooperation from the concerning body but most of the time they were busy with their work that’s why we did not get so many time, as we would like to have. The administrative authority, management policy and decision making policy is in the hands of the head office. As BBA student it is needed to gather he experience that, how to make the decision when the bank fall into a program and what is it’s management policy, how to set up their portfolio, what is their business strategy but a branch does not do so.

3.1 Background of the Banks

AB Bank Ltd

AB Bank Limited, the first private sector bank was incorporated in Bangladesh on 31st December 1981 as Arab Bangladesh Bank Limited and started its operation with effect from April 12, 1982.

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AB Bank is known as one of leading bank of the country since its commencement 28 years ago. It continues to remain updated with the latest products and services, considering consumer and client perspectives. AB Bank has thus been able to keep their consumer’s and client’s trust while upholding their reliability, across time.

During the last 28 years, AB Bank Limited has opened 77 Branches in different Business Centers of the country, one foreign Branch in Mumbai, India and also established a wholly owned Subsidiary Finance Company in Hong Kong in the name of AB International Finance Limited. To facilitate cross border trade and payment related services, the Bank has correspondent relationship with over 220 international banks of repute across 58 countries of the World.

In spite of adverse market conditions, AB Bank Limited which turned 28 this year, concluded the 2008 financial year with good results. The Bank’s consolidated profit after taxes amounted to Taka 230 cr which is 21% higher than that of 2007. The asset base of AB grew by 32% from 2007 to stand at over Tk 8,400 cr as at the end of 2008.

The Bank showed strong growth in loans and deposits. Deposit of the Bank rose by Tk. 1518 cr ie., 28.45% while the diversified Loan Portfolio grew by over 30% during the year and recorded a Tk 1579 cr increase. Foreign Trade Business handled was Tk 9,898 cr indicating a growth of over 40% in 2008.

The Bank maintained its sound credit rating in 2008 to that of the previous year. The Credit Rating Agency of Bangladesh Limited (CRAB) awarded the Bank an A1 rating in the long term and ST-2 rating in the short Term.

AB Bank believes in modernization. The bank took a conscious decision to rejuvenate its past identity – an identity that the bank carried as Arab Bangladesh Bank Limited for twenty five long years. As a result of this decision, the bank chose to rename itself as AB Bank Limited and the Bangladesh Bank put its affirmative stamp on November 14, 2007.

The Bank decided to change its traditional color and logo to bring about a fresh approach in the financial world; an approach, which like its new logo is based on bonding, and trust. The bank has developed its logo considering the contemporary time. The new logo represents our cultural “Sheetal pati” as it reflects the bonding with its clientele and fulfilling their every need. Thus the new spirit of AB is “Bonding”. The Logo of the bank is primarily “red”, as red represents velocity of speed and purity. Our new logo innovates, bonding of affiliates that generate changes considering its customer demand. AB Bank launched the new Logo on its 25th Anniversary year.

AB Bank commits to nation to take a lead in the Banking sector through not only its strong financial position, but also through innovation of products and services. It also ensures creating higher value for its respected customers and shareholders. The bank has focused to bring services at the doorstep of its customers, and to bring millions into banking channels those who are outside the mainstream banking arena. Innovative products and services were introduced in the field of Small and Medium Enterprise (SME) credit, Women’s Entrepreneur, Consumer Loans, Debit and Credit Cards (Local & International), ATMs, Internet and SMS Banking, Remittance Services, Treasury Products and Services, Structured Finance for Corporate, strengthening and expanding its Islamic Banking activities, Investment Banking, specialized products and services for

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NRBs, Priority Banking, and Customer Care. The Bank has successfully completed its automation project in mid 2008. It envisages enabling customers to get banking services within the comfort of their homes and offices.

AB Bank has continuously invests into its biggest asset, the human resource to drive forward with its mission “to be the best performing bank in the country.” The bank has introduced Dress Code for its employees. Male employees wear designed ties and females wear Sharee or Salwar Kamiz, all the dresses are consisted with the unique AB Bank logo.

AB is recognized as the people’s choice, catering to the satisfaction of its cliental. Their satisfaction is AB’s success.

Dhaka Bank Ltd.

Bangladesh economy has been experiencing a rapid growth since the '90s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers' remittance, local and foreign investments in construction, communication, power, food processing and service enterprises ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives as well as to channelize consumer investments in a profitable manner. A group of highly acclaimed businessmen of the country grouped together to responded to this need and established Dhaka Bank Limited in the year 1995.

The Bank was incorporated as a public limited company under the Companies Act. 1994. The Bank started its commercial operation on July 05, 1995 with an authorized capital of Tk. 1,000 million and paid up capital of Tk. 100 million. The paid up capital of the Bank stood at Tk 2,659,597,763 as on March 31, 2010. The total equity (capital and reserves) of the Bank as on March 31, 2010 stood at Tk 6,036,368,754.

The Bank has 52 Branches, 6 SME Service Centers, 6 CMS Units, 1 Offshore Banking Unit across the country and a wide network of correspondents all over the world. The Bank has plans to open more Branches in the current fiscal year to expand the network.

The Bank offers the full range of banking and investment services for personal and corporate customers, backed by the state–of–the-art technology and a team of highly motivated Professionals.

As an integral part of our commitment to Excellence in Banking, Dhaka Bank now offers the full range of real-time online banking services through its all Branches, ATMs and Internet Banking Channels. 

Dhaka Bank Ltd. is the preferred choice in banking for friendly and personalized

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services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce and high yield on investments.

Jamuna Bank Ltd.

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June 2001. 

The Bank undertakes all types of Banking transactions to support the development of trade and commerce of the country. JBL's services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Jamuna Bank Ltd., the only Bengali named new generation private commercial  bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers,  a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the filed of trade, commerce and industries. 

The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking.  The Management of the bank constantly focuses on understanding and anticipating customers needs. The scenario of banking business is changing day by day, so the bank's responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress within only eight years. The bank has already ranked as one of top quality service providers & is known for its reputation. 

At present the Bank has real-time centralized Online banking branches (Urban & Rural) throughout the Country having smart IT-Backbone. Besides these traditional delivery point, the bank has ATM of its own, sharing with other partner banks & Consortium throughout the Country.

The operation hour of the Bank is 10:00 A.M. To 6:00 P.M. from Sunday to Thursday with transaction hour from 10:00 A.M. to 4:00 P.M. The Bank remains closed on Friday including govern

ONE Bank Limited

ONE Bank Limited was incorporated in May, 1999 With the Registrar of Joint Stock Companies under the Companies Act. 1994, as a commercial bank in the private sector.

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The Bank is pledge-bound to serve the customers and the community with utmost dedication. The prime focus is on efficiency, transparency, precision and motivation with the spirit and conviction to excel as ONE Bank in both value and image.

The name 'ONE Bank' is derived from the insight and long nourished feelings of the promoters to reach out to the people of all walks of life and progress together towards prosperity in a spirit of oneness.

THIRD GENERATION PRIVATE COMMERCIAL BANK

OBL is a private sector commercial bank dedicated in the business line of taking deposits from public through its various saving schemes and lending the fund in various sectors at a higher margin. However, due attention is given in respect of risk undertaking, risk

from public through its various saving schemes and lending the fund in various sectors at a higher margin. However, due attention is given in respect of risk undertaking, risk hedging and if not appropriately hedged, reflection of the same in pricing. In the financing side, the bank's major concentration is in trade finance covering about 20.88% of total financing as on YE2006 which is mainly a short-term investment. The banks financing concentrate in both, working capital finance and long-term finance. OBL has major concentration of financing in medium and large industries. Since the short-term finance carries low risk compared to long-term finance; the financing strategy of OBL will assist the bank to keep the risk at minimal.

While financing the industrial sector, the major concentration of the bank appeared to be in the textile and RMG sector; both the above sectors cover 30.89% of the total portfolio. OBL also involved in cement construction and transport sector financing. In the investment portfolio, OBL have substantial investment in quoted and non-quoted shares of different organization including some very prospective financial institutions. The bank has shown its acumen in reducing its exposure from ship scrapping sector, steel re-rolling where the bank had investment earlier. With the increase in exposure to RMG, the bank has increased its non-funded business income substantially. With an age of only 8 years, the OBL has taken initiative to launch IT based banking products like ATM facilities, E-banking etc that are praiseworthy.

Mercantile Bank Ltd.

Mercantile Bank Limited is one of the leading private commercial bank having a spread network of 45 branches and 5 SME center across Bangladesh and plans to open few more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in 2010.   The bank, sponsored by the Army Welfare Trust (AWT), is first of its kind in the country.  With a wide range of modern corporate and consumer financial products Mercantile Bank has been operating in Bangladesh since 1999 and has achieved public confidence as a sound and stable bank.

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In 2001, the bank introduced automated branch banking system to increase efficiency and improve customer service.  In the year 2005, the bank moved one step further and introduced ATM services for its customers. Since bank’s business volume increased over the years and the demands of the customers enlarged in manifold, our technology has been upgraded to manage the growth of the bank and meet the demands of our customers.  In January 2007, Mercantile Bank successfully launched Online Banking Services which facilitate Any Branch Banking, ATM Banking, Phone Banking, SMS Banking, & Internet Banking to all customers.  Customers can now deposit or withdraw money from any Branch of Mercantile Bank nationwide without needing to open multiple accounts in multiple Branches. Via Online Services and Visa Electron (Debit Card), ATMs now allow customers to retrieve 24x7 hours Account information such as account balance checkup through mini-statements and cash withdrawals.  Mercantile Bank has successfully introduced Visa Credit Cards to serve it’s existing and potential valued customers.  Credits cards can now be used at shops & restaurants all around Bangladesh and even internationally.  Mercantile Bank is a customer oriented financial institution.  It remains dedicated to meet up with the ever growing expectations of the customer because at Mercantile Bank, customer is always at the center.   

3.2 Vision and Mission:

AB Bank Ltd

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Vision Statement"To be the trendsetter for innovative banking with excellence & perfection"

Mission Statement"To be the best performing bank in the country"

Dhaka Bank Ltd.

Our MissionTo be the premier financial institution in the country providing high quality products and services backed by latest technology and a team of highly motivated personnel to deliver Excellence in Banking.

Our VisionAt Dhaka Bank, we draw our inspiration from the distant stars. Our team is committed to assure a standard that makes every banking transaction a pleasurable experience. Our Endeavour is to offer you razor sharp sparkle through accuracy, reliability, timely delivery, cutting edge technology, and tailored solution for business needs, global reach in trade and commerce and high yield on your investments.

Jamuna Bank Ltd.

VISION

To become a leading banking institution and to play a pivotal role in the development of the country.

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MISSION The Bank is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work-force.

One Bank Ltd.

Our Vision Statement: To establish ONE Bank Limited as a Role Model in the Banking Sector of

Bangladesh.

To meet the needs of our Customers, Provide fulfillment for our People and create Shareholder Value.

Our Mission Statement: To constantly seek to better serve our Customers. Be pro-active in fulfilling our Social Responsibilities. To review all business lines regularly and develop the Best Practices in the

industry. Working environment to be supportive of Teamwork, enabling the Employees to

perform to the very best of their abilities.

Mercantile Bank Ltd.ission

Our Vision:We aim to provide financial services to meet customer expectations so that customers feel we are always there when they need us, and can refer us to their friends with confidence. We want to be a preferred bank of choice with a distinctive identity

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Our Mission:Our mission is to make banking easy for our customers byImplementing one-stop service concept and provide innovative and attractive products & services through our skilled and qualified human resources. We always look forward to benefit the local Community through supporting entrepreneurship, social responsibility and economic development the country.

Financial Statement 4.1 Balance Sheet

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Dhaka bank Ltd.

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19

20

Mercantile Bank Limited

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Balance Sheet as at December 31, 2009

PROPERTY AND ASSETSNotes

2009(BDT)

2008(BDT)

Cash 3 4,790,155,210 4,374,119,340

Cash in hand (Including Foreign Currencies) 498,486,173 443,342,558

Balance with Bangladesh Bank and Sonali Bank Limited (Including Foreign Currencies)

4,291,669,037 3,930,776,782

Balance with Other Banks and Financial Institutions

4 1,017,865,437 3 27,911,508

In Bangladesh 764,122,864 177,928,388

Outside Bangladesh 253,742,573 149,983,120

Money at Call and Short Notice 5    

Investments 6 9,664,722,134 6,264,705,100

Government 9,175,729,563 5,681,107,430

Others 488,992,571 583,597,670

Loans and Advances 7 48,295,546,954 43,419,362,481

Loans, Cash Credit, Overdraft etc. 7.A 44,574,237,307 38,787,868,658

Bills Purchased and Discounted 7.B 3,721,309,647 4,631,493,823

Fixed Assets Including Premises,Furniture and Fixtures

8 1,032,825,043 682,999,856

Other Assets 9 1,365,400,824 859,623,164

Non-Banking Assets - -

Total Assets 66,166,515,602 55,928,721,449

LIABILITIES AND CAPITALLiabilities

   

Borrowings from other Banks, Financial Institutions and Agents

10 1,842,825,721 2,326,325,000

Deposits and other Accounts 11 55,553,083,656 46,374,178,835

Current Accounts and Other Accounts 11.1 7,425,229,434 5,831,638,360

Bills Payable 11.2 789,044,669 677,763,825

Savings Bank Deposits 11.3 4,392,947,478 3,020,870,440

Fixed Deposits 11.4 19,215,499,453 17,501,418,866

Deposits Under Schemes 11.5 23,730,362,622 19,342,487,344

Other Liabilities 12 4,474,354,484 3,758,123,882

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Total Liabilities 61,870,263,861 52,458,627,717

Capital/ Shareholders' Equity    

Paid-up Capital 13.1 2,158,413,400 1,798,677,900

Statutory Reserve 14 1,555,373,902 1,222,833,902

Other Reserves 15 105,410,663 86,769,523

Surplus in Profit & Loss Account 16 477,053,776 361,812,407

Total Shareholders' Equity 4,296,251,741 3,470,093,732

Total Liabilities and Shareholders' Equity 66,166,515,602 55,928,721,449

OFF BALANCE SHEET ITEMS      

CONTINGENT LIABILITIES A    

Acceptances and Endorsements 17 8,054,757,500 8,157,477,000

Letters of Guarantee 17.1 4,161,302,647 3,640,902,808

Irrevocable Letters of Credit 17.2 8,546,632,687 7,281,346,277

Bills for Collection 17.3 56,785,690 73,305,882

Other Contingent Liabilities 17.4 937,694,607 764,829,154

Total   21,757,173,131 19,917,861,121

Other Commitments B    

Documentary credits and short term trade related transactions

    

Forward assets purchased and forward deposits placed

    

Undrawn note issuance and revolving underwriting facilities

    

Undrawn formal standby facilities, credit lines and other commitments

    

Total      

TOTAL OFF-BALANCE SHEET ITEMS INCLUDING CONTINGENT LIABILITIES (A+B)

  21,757,173,131 19,917,861,121

4.2 Profit and loss Account

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Dhaka Bank Ltd:

24

25

26

27

Mercantile Bank Ltd.

Profit and Loss AccountFor the year ended December 31, 2009

Notes2009

(BDT) 2008

(BDT)

Interest Income 18.1 6,066,171,939 5,106,008,463

Less : Interest Paid on Deposits, Borrowings etc.

19 4,755,901,859 4,045,970,142

Net Interest Income 1,310,270,080 1,060,038,321

Investment Income 18.4 696,663,198 520,333,916

Commission, Exchange and Brokerage

20 1,059,887,629 917,199,841

Other Operating Income 21 425,089,853 333,960,039

  2,181,640,680 1,771,493,796

Total Operating Income 3,491,910,760 2,831,532,117

Salaries and Allowances 23 807,198,037 611,587,111

Rent, Taxes, Insurance, Electricity, etc.

24 184,168,069 155,724,646

Legal Expenses 25 7,994,350 5 ,045,236

Postage, Stamps, Telecommunication etc.

27,205,921 27,045,459

Stationery, Printings, Advertisements etc.

26 82,341,385 6 3,499,399

Chief Executive's Salary and Fees 23.1 6,450,000 6 ,450,000

Directors' fees 22 4,055,400 2 ,163,600

Auditors' Fees 709,000 500,000

Depreciation & Repair of Fixed Assets

27 96,423,954 74,617,737

Other expenses 28 363,666,775 303,383,441

Total Operating Expenses 1,580,212,891 1,250,016,629

Profit before Provision 1,911,697,869 1,581,515,488

Provision against Classified Loans 12.5 159,621,000 117,958,107

Provision against Unclassified Loans

12.5 80,300,000 77,174,000

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Other Provisions 12.5 9,000,000 104,700,000

Total Provisions 248,921,000 299,832,107

Total Profit before Taxes 1,662,776,869 1,281,683,381

Provision for Taxation 12.4 855,260,000 665,800,000

Net Profit after Taxation 807,516,869 615,883,381

Retained Surplus brought forward from previous year

2,076,907 2,266,026

  809,593,776 6 18,149,407

Appropriations  

Statutory Reserve 332,540,000 256,337,000

Retained Surplus 477,053,776 361,812,407

  809,593,776 618,149,407

Earning Per Share (EPS) 29 37.41 28.53

These Financial Statements should be read in conjunction with the annexed notes (1 to 38)

     

sd/-Dewan Mujibur

Rahman Managing

Director and CEO

sd/-Alhaj Akram

Hussain (Humayun)

Director

sd/-Golam Faruk AhmedDirector

 

sd/-M. S. Ahsan

Director

See annexed auditors' report to the Shareholders of date.

sd/-Ahmed Zaker &

Co. Chartered

Accountants

 

sd/-Basu Banerjee Nath

& Co.Chartered Accountants

Dhaka, February 15, 2010

4.3 Cash Flow Statement

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Dhaka Bank Ltd.

30

31

32

CASH FLOW STATEMENT

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Mercantile Bank LimitedFor the year ended December 31, 2009

2009 (BDT) 2008 (BDT)

A. Cash Flows From Operating Activities

Interest Received 6,539,977,880 5,423,137,314

Interest Paid (4,154,550,199) (3,424,865,486)

Fees and Commission Received 488,656,221 459,036,752

Payment to the Employees (807,198,037) (486,587,111)

Payment to suppliers (82,233,119) (63,499,399)

Income Tax Paid (687,994,874) (638,616,891)

Received from other operating activities

1,001,161,940 788,994,91

Exchange Gain 571,157,810 458,155,089

Other Operating Income 430,004,130 330,839,823

Payment for other operating activities (607,226,990) (386,477,514)

Rent, Taxes, Insurances and Electricity (181,530,859) (154,613,531)

Legal Expanses (7,994,350) (5,045,236)

Postage, Stamps and Telecommunication (26,386,862) (27,045,459)

Auditors' Fees ( 709,000) (500,000)

Repair and Maintenance (16,433,744) (11,329,772)

Chief Executive's Salary and Fees (6,450,000) (6,450,000)

Directors' Fees (4,055,400) (2,163,600)

Other Expenses (363,666,775) (179,329,916)

Operating profit before changes in Operating Assets and Liabilities

1,690,592,822 1,671,122,577

Increase / Decrease in Operating Assets and Liabilities

Loans and Advances to other Banks - -

Loans and Advances to Customers (4,674,471,704) (5,316,085,710)

Other Assets (Item-wise) (375,768,145) (325,165,611)

Advance Deposits ( 138,572) (1,000,588)

Stock of Stationery (3,349,021) (10,414,961)

Suspense Account (246,553,307) (23,985,407)

Stamps in Hand (98,143) (881,385)

Advance Rent (56,804,386) (88,559,508)

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Excise Duty - 42,400

Clearing Adjustment - -

DD paid without advice (5,687,684) (240,000)

Premium on Bond ( 907,421) -

Mercantile Bank General Account - -

Adjusting Account Debit (62,229,611) (200,126,162)

Deposit from other Banks (483,499,279) 1,552,075,000

Deposit from Customers 9,780,256,481 4,194,277,066

Other Liabilities on account of Customers

- -

Other Liabilities 1,858,866,802 26,251,607

Net Cash Received from Operating Activities

7,795,976,977 1,802,474,929

B. Cash Flows From Investing Activities

Sale proceeds of Fixed Assets - 501,877

Dividend Received 7,590,576 2,457,119

Purchase/Sale of Property, Plant and Equipment

(269,834,977) (154,376,501)

Purchase/Sale of Shares (148,225,421) 215,272,192

Other Investment activities (2,784,895,223) (805,427,081)

  Net Cash from Investing Activities (3,195,365,045) (741,572,394)

C. Cash Flows from Financing Activities

Receipts from Issue of Loan Capital & Debt Securities

- -

Paid for Repayment of Loan and Debt Securities

- -

Received by Issue of Share - -

Dividend Paid - -

Net Cash from Financing Activities - -

D Net Increase/(Decrease) of Cash and Cash Equivalent (A+B+C)

4,600,611,932 1,060,902,535

  Effect of Exchange Rate Changes on Cash & Cash Equivalent

E Opening Cash & Cash Equivalent 10,383,138,278 9,322,235,743

F Closing Cash & Cash Equivalent (D+E)*

14,983,750,210 10,383,138,278

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These Financial Statements should be read in conjunction with the annexed notes (1 to 38)

     

sd/-Dewan Mujibur

Rahman Managing

Director and CEO

sd/-Alhaj Akram

Hussain (Humayun)Director

sd/-Golam Faruk AhmedDirector

 

sd/-M. S. Ahsan

Director

See annexed auditors' report to the Shareholders of date.

sd/-Ahmed Zaker

& Co. Chartered

Accountants

 

sd/-Basu Banerjee Nath

& Co.Chartered Accountants

4.4 Statement of Changes in equity

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Dhaka Bank Ltd.

37

38

39

4.5 Liquidity Statement

40

Dhaka Bank Ltd

41

42

Notes to the financial Statement

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5.01 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 Islamic 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) vides 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.

Dhaka Bank Ltd: Bangladesh economy has been experiencing a rapid growth since the '90s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers' remittance, local and foreign investments in construction, communication, power, food processing and service enterprises ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives as well as to canalize consumer investments in a profitable manner. A group of highly acclaimed businessmen of the country grouped together to responded to this need and established Dhaka Bank Limited in the year 1995.

The Bank was incorporated as a public limited company under the Companies Act. 1994. The Bank started its commercial operation on July 05, 1995 with an authorized capital of Tk. 1,000 million and paid up capital of Tk. 100 million. The paid up capital of the Bank stood at Tk 2,659,597,763 as on March 31, 2010. The total equity (capital and reserves) of the Bank as on March 31, 2010 stood at Tk 6,036,368,754.

The Bank has 52 Branches, 6 SME Service Centers, 6 CMS Units, 1 offshore Banking Unit across the country and a wide network of correspondents all over the world. The Bank has plans to open more Branches in the current fiscal year to expand the network.

The Bank offers the full range of banking and investment services for personal and

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corporate customers, backed by the state–of–the-art technology and a team of highly motivated Professionals.

As an integral part of our commitment to Excellence in Banking, Dhaka Bank now offers the full range of real-time online banking services through its all Branches, ATMs and Internet Banking Channels. 

Dhaka Bank Ltd. is the preferred choice in banking for friendly and personalized services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce

Jamuna Bank Limited was incorporated in Bangladesh on 2nd April in the period 2001 as a public Limited Company under Companies Act, 1994. The Bank within the stipulations laid down by the Bank Companies Act, 1991 and directives as received from Bangladesh Bank and applicable to it from time to time provides all types of commercial banking services. The Bank has fifty four (54) branches (including 2 Islamic Banking Branches) and four (4) SME centers, with no overseas branches as at December 31, 2009.

ONE Bank Limited was incorporated in May, 1999 With the Registrar of Joint Stock Companies under the Companies Act. 1994, as a commercial bank in the private sector.The Bank is pledge-bound to serve the customers and the community with utmost dedication. The prime focus is on efficiency, transparency, precision and motivation with the spirit and conviction to excel as ONE Bank in both value and image.The name 'ONE Bank' is derived from the insight and long nourished feelings of the promoters to reach out to the people of all walks of life and progress together towards prosperity in a spirit of oneness.

Mercantile Bank Limited (the Bank) is a scheduled commercial bank set up as a joint venture in Bangladesh. Incorporated as a public limited company under theCompanies Act 1994, the Bank obtained license from Bangladesh Bank on 23 July 1995 and started its banking business with one branch on 3 June 1996.The number of branches was 79 as on 31 December 2009 all over Bangladesh. The Bank is listed with Dhaka Stock Exchange and Chittagong Stock Exchange as a publicly quoted company.The principal activities of the Bank are to carry on all kinds of commercial banking business in Bangladesh.

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5.02 Basis of accounting

AB Bank Limited: Consolidated Financial Statements and Financial Statements of the Bank comprise of the Balance Sheet, Profit and Loss Account, Cash Flow Statements, and 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).

Dhaka Bank Ltd: The financial statements of the Company are made up to

31 December each year, and are prepared under the historical cost convention and in accordance with first schedule of Bank Companies Act (BCA) 1991 as amended byBangladesh Bank (Central Bank) BRPD Circular No.14 dated 25 June 2003, other Bangladesh Bank circulars,International Financial Reporting Standards adopted as Bangladesh Accounting Standards (BAS), the Companies Act 1994,the listing Regulations of the Stock Exchanges, the Securities and Exchange Rule 1987 and other laws and rules applicable in Bangladesh on a going concern basis.b) Islamic Banking:The bank operates Islamic Banking in two branches designated for the purpose in complying with the rules of Islamic shariah. The operations of Islamic Branches are accounted for and the financial statements of the branches are prepared as per Bank Companies Act 1991, Bangladesh Accounting Standards (BAS) and Financial Accounting Standard issued by the Accountancy & Auditing organization for Islamic Financial Institutions for which a separate set of books and records are being maintained. A separate balance sheet, income statement and a statement ofprofit paid on deposits are shown in Annexure - Fand the figures appearing in the annexure have been incorporated in the respective heads of these financial statements as recommended.c) Off-shore Banking Unit:The Off-shore banking unit maintains its accounting records in USDfrom which accounts are prepared according to the Bank Companies Act 1991, Bangladesh Accounting Standards and other applicable directives issued by

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Bangladesh Bank. Dl Capital Market Services: Dhaka Bank also performs brokerage operation through its six units under the license issued by Securities &Exchange Commission (SEC), Dhaka, Bangladesh. The unit maintains its accounting record through consolidation with Head Office General Ledger.e) SME Service Center:SME Service Centers of Dhaka Bank limited maintain its accounting records in the general ledger of their parent branches. The main functions of SME Service Centers are to render services only for receiving application, disbursement, monitoring, and recovery of SMEJRetail loans. They also serve the customers for opening of account, payments of foreign remittance etc.f) Central Processing Center (CPC):Dhaka Bank established the Central Processing Center for Trade & Credit Operations. The center maintains its accounting records in the general ledger of the respective branches. The import/Export related processing & CreditOperations are centrally controlled and monitored by the CPC for efficient and effective decision-making and reduction of cost as well.

Jamuna Bank Ltd: The financial statements of the Bank are prepared on a going concern basis under historical cost convention and in accordance with First Schedule (Sec- 38) of Bank Companies Act, 1991 as amended by Bangladesh Bank (Central Bank) BRPD Circular No. 14 dated June 25, 2003, other Bangladesh Bank circulars, International Financial Reporting Standards adopted as Bangladesh Accounting Standard (BAS), the Companies Act, 1994, the Listing Rules of the Stock Exchange, the Securities and Exchange Rule 1987 and other laws and regulations applicable in Bangladesh.

One Bank Ltd: These financial statements were prepared using GAAP, primarily based on Statement of Federal Financial Accounting Standards (SFFAS). Under these principles:• Expenses are generally recognized when incurred.• Nonexchange revenues, including taxes, duties, fines, and penalties, are recognized when collected and adjusted to the change in net measurable and legally collectable amounts receivable. Related refunds and other offsets, including those that are measurable and legally payable, are netted against nonexchange revenue.NOTES TO THE FINANCIAL STATEMENTS• Exchange (earned) revenues are recognized when the Government provides goods and services to the public for a price. Exchange revenues include user charges such as admission to Federal parks and premiums for certain Federal insurance.The basis of accounting used for budgetary purposes, which is primarily on a cash and obligation basis and follows budgetary concepts and policies, differs from the basis of accounting used for the financial statements which follow GAAP. See the Reconciliations of Net Operating Cost and Unified Budget Deficit in the Financial Statements section.Beginning in fiscal year 2009, the Government has implemented the requirements of SFFAS No. 31, Accounting for Fiduciary Activities. This statement requires the Government to distinguish fiduciary activities from all other activities of the Government. For further information related to fiduciary activities, see Note 25—Fiduciary Activities. In addition, fiscal year 2008 financial statements are not allowed to be restated to distinguish fiduciary activities from all other activities of the Government.

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Mercantile Bank Ltd: The financial statements of the Bank have been prepared under historical cost convention except investments which are measured at present value and in accordance with "First Schedule" of theBank Companies Act, 1991 as amended under sub-section 38(4) of the Act, relevant Bangladesh Bank Circulars, International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) and named as Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), the Companies Act, 1994, the Securities and Exchange Rules, 1987 and other rules and regulations applicable in Bangladesh.

5.03 Basis of consolidation

AB Bank Limited: 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.

Dhaka Bank Ltd: A Banking software system 'FlEXCUBE' produces

consolidated Balance Sheet and Profit & loss Account including Offshore Banking and Islamic Banking operation. These consolidated records are maintained at the Head

Office of the Bank based on which these financial statements have been prepared.1.3 Loans and Advances Interest is calculated on daily product basis but charged and accounted for quarterly on accrual basis. Interest on classified loans is kept in interest suspense account as per Bangladesh Bank guidelines and such interest is not accounted for as income until realized from borrowers. Interest is not charged on bad / loss loans as per instructions of Bangladesh Bank.Provision for loans and advances is made on the basis of year-end review by the management and of instructions contained in Bangladesh Bank BCD Circular No.34 dated1611111989; BCD Circular No.20 dated 2711211994, BCDCircular No.12dated 04/0911 995, BRPD Circular No.16 dated 0611211 998 and BRPD Circular No.09 dated 14/05/2001. A provision of Tk.674, 883,819 has been made during the year 2009 which has been found to be adequate. The total volume of non-performing loan is Tk.2, 946.14 million as of 31 December 2009.

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Jamuna Bank Ltd: The financial statements of the Bank have been prepared on the basis of the consolidated statements of affairs and income and expenditure account of all branches and head office .

One Bank Ltd: A separate set of records for consolidation of the statement of affairs and income & expenditure account of the branches are maintained at the head office of the Bank based on which these Financial Statements have been prepared.

Mercantile Bank Ltd: The financial statements of the Bank have

been prepared on the basis of the consolidated statements of affairs and income and expenditure account of all branches and head office.

5.04 Investments

AB Bank Limited: Value of investment is presented below:Nature of Investments Applicable Accounting

FDR Face ValueShares in CDBL At cost

Mutual Fund At cost

Dhaka Bank Ltd: All investment securities are initially recognized at cost,

being fair value of the consideration given, including acquisition charges associated with

the investment. Premiums are amortized and discounts accredited, using the effective yield method and are taken to discount income. The valuation method of investments used is: Investments which have fixed or determinable payments and are intended to be held to maturity, are classified as held to maturity. These investments are subsequently measured at amortized cost, less any provision for impairment in value. Amortized cost is calculated by taking into account any discount or premium on acquisition. Any gain or loss on such investments is recognized in the statement of income when the investment

is derecognized or impaired as per IA5-39 " Flnandal Instruments: Recognition and Measurement.

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Jamuna Bank Ltd: Investment values and classifications are assessed under the Bangladesh Accounting Standards (BAS) 25 “Accounting for Investments” which is shown below:Items Assessment of AccountingGovt. Treasury Bills Market valuePrize Bond & Other Bonds Cost priceShares & Debentures Cost or market price whichever is lower

One Bank Ltd: Securities and investments are classified as held-to-maturity, available-for-sale, and trading securities and investments. Held-to-maturity securities and investments are reported at amortized cost, net of unamortized premiums and discounts. Available-for-sale securities and investment are reported at fair value with unrealized.

Mercantile Bank Ltd:a) Investments are stated in the Balance Sheet net off unearned income and profit receivable.b) Income from investments is accounted for on accrual basis except investments underMusharaka, Mudaraba, Bai-Salam and Bai-as-Sarf modes of Investment. Income in case ofMudaraba, Musharaka, Bai-Salam and Bai-as-Sarf is accounted for on realisation basis.Besides, fees and commission income are recognised when earned. The Bank does notcharge any rent during the gestation/interim period of investment against Hire Purchaseunder (HPSM) mode of Investment but it fixes the sale price of the assets at ahigher level in such a way to cover its expected rate of return. Such income is recognised onrealisation basis.c) Provision for Classified Investment, Un-classified Investment, Off-Balance Sheet Items andOther Assets Provision for Investment is made as per instruction of Bangladesh Bank through BCD Circular No.34 dated 16.11.1989, BCD Circular No.20 dated 27.12.1994, BCD Circular No.12 dated 04.09.1995, BRPD Circular No.16 dated 06.12.19

5.05 Use of estimates and judgments

AB Bank Limited: 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.

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Dhaka Bank Ltd: The preparation of Financial Statements in conformity with Accounting Standards and statutory requirement requires the use of critical accounting estimates. It also requires management to exercise its judgment in the process of applying accounting policies. The areas involving a higher degree of judgment or complexity or areas where assumptions and estimates are significant to the Financial Statements are described in the following:- Note 19.6: Income Taxes- Note 20.0: Deferred Taxation- Note 35.0: Depreciation- Other Contingent Liabilities- Liquidity Statement

Jamuna Bank ltd: The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates is revised and in any future periods affected.

One Bank Ltd: The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Mercantile Bank Ltd: The preparation of Financial Statements in conformity with Accounting Standards and statutory requirement requires the use of critical accounting estimates. It also requires management to exercise its judgment in the process of applying accounting policies.

5.06 Foreign currency translation

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AB Bank Limited: 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.

Dhaka Bank Ltd: Foreign currency transactions are converted into equivalent Taka currency using the ruling exchange rates on the dates of respective transactions. Assets and liabilities as at 31 December 2009 in foreign currencies are translated intoTaka currency at the prevailing selling and buying rates of the concerned foreign currencies of that day. Difference arising through transactions of foreign currencies buying and selling on different dates of the year has been adjusted by debiting I crediting to the Profit & loss Account.

Jamuna Bank ltd: Transaction in Foreign Currencies are translated into Bangladesh Taka and recorded at the ruling Exchange rates applicable on the dates of transaction and are in accordance with Bangladesh Accounting Standards (BFRS/BAS) – 21 “The Effects of Changes in Foreign Exchange Rates”.

One Bank Ltd:a) The transactions in foreign currencies are translated into equivalent Taka currency using the exchange rates ruling on the dates of such transactions.b) The Assets and Liabilities including balance with other Banks denominated in foreign currencies as at December 31, 2009 are translated into Taka currency at the weighted average rate of inter Bank Market as determined by Bangladesh Bank. Balances held in foreign currencies other than US Dollar are converted into equivalent US Dollar at buying rates of New York closing of the previous day.

Mercantile Bank Ltd: Foreign currency transactions are converted into Taka using the exchange rates prevailing on the dates of respective transactions. In terms of instructions contained in Bangladesh Bank's Letter No. BRPD(R) 717/2004-959 dated 21 November 2004, foreign currency assets and liabilities are translated into Taka at the weighted average rate as determined by Bangladesh Bank . Gains and losses arising

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4.07 Cash Flow Statement

AB Bank Ltd: 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.

Dhaka bank Ltd: 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.

Jamuna Bank Ltd: Cash Flow Statement is prepared in accordance with Bangladesh Accounting Standard(BFRS/BAS) 7 “Cash Flow Statement” and the cash flow from the operating activities has been presented under direct method as prescribed by the Securities and Exchange Commission Rules 1987.

One Bank Ltd: BAS 1 Presentation of Financial Statements requires that a cash flow statement is to be prepared as it provides information about cash flows of the enterprise that is useful in providing users of Financial Statements with a basis to asses the ability of the enterprise to generate cash and cash equivalents and the needs of the enterprise to utilize those cash flows. Cash flow statement has been prepared under the direct method for the year, classified by operating, investing and financing activities as prescribed in paragraph 10 and 18(a) of BAS 7.

Mercantile Bank Ltd: Statement of Cash Flows is prepared by using the ‘Direct Method’ in accordance with BAS 7“Statement of Cash Flows” and under the guidance of Bangladesh Bank BRPD Circular No. 15dated 09.11.2009 and BRPD Circular No.14 dated 25.06.2003. The Statement of Cash Flow shows the structure and changes in cash and cash equivalents during the year. It is broken down into Operating Activities, Investing Activities and Financing Activities. Cash and Cash Equivalents comprise short term, highly liquid investments that are readily convertible and are subject to an insignificant risk to changes in value.

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4.08 Statement of Changes in Equity

AB Bank Ltd: 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.

Dhaka Bank Ltd: Statement of Changes in Equity is prepared principally in

accordance with BAS-1 "Presentation of Financial Statements" and under the guidelines of Bangladesh BankBRPD Circular No.14 dated 25th June 2003.

Jamuna Bank Ltd: Statement of Changes in Equity has been prepared in accordance with BAS 1 “Presentation of Financial Statements” and under the guidance of Bangladesh Bank BRPD Circular No.15 dated 09.11.2009 and BRPD Circular No.14 dated 25.06.2003.

One Bank Ltd: 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.

4.09 Statement of Liquidity

AB Bank Ltd: 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

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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

Dhaka Bank Ltd: The liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on 31 December 2009 and under the guidelines of Bangladesh Bank BRPD Circular No.14 dated 25th June 2003.

Jamuna Bank Ltd: The liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on 31st December, 2009.

One Bank Ltd: The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term as per the following bases:a) Balance with other banks and financial institutions, money at call and short notice etc. are on the basis of their maturity term.b) Investments are on the basis of their maturity.c) Loans and advances and lease receivables are on the basis of their repayment / maturity schedule.d) Fixed assets are on the basis of their useful life.e) Other assets are on the basis of their realization/adjustment.f) Borrowing from other banks, financial institutions and agents are as per their maturity repayment term.g) Deposits and other accounts are on the basis of their maturity term and past trend of withdrawal by the depositors.h) Other long term liabilities are on the basis of their maturity term.i) Provisions and other liabilities are on the basis of their payment /adjustment schedule.

Mercantile Bank Ltd: The liquidity statement of assets and liabilities as

on reporting date has been prepared on residual maturity term as per following bases:a. Balance with other Banks and financial institutions, money at call notice of short notice, etc are on their maturity term;b. Investments are on the basis of their respective maturity;c. Loans and advances/investments are on the basis of their repayment schedule;d. Fixed assets are on the base of their useful lives;e. Other assets are on the basis of their realization/amortization;f. Borrowing from other Banks, financial institutions, agents, etc. are as per as their maturity/repayment terms;

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5.10 Risk Management

AB Bank Ltd: 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 riskB. Operating riskC. Market riski) Foreign exchange riskii) Interest rate riskiii) Equity position riskD. Liquidity riskE. Risk arising from money laundering

Dhaka Bank Ltd: The Bank has established effective risk management for steady and stable growth of the Bank in accordance with the guidelines of Bangladesh Bank. The Risk Management of the Bank covers following five core risk areas of banking:i) Credit Riskii) Foreign Exchange Riskiii) Assets - Liability Managementiv) Prevention of Money launderingv) Internal Control and ComplianceThe prime objective of the risk management is that the bank takes credit and business risks while safeguarding the Bank's interest from the possibility of losses, financial or otherwise. The Bank's risk management ensures internal control and compliance are adhered by all branches and divisions of Head Office. The Bank has ManagementCommittee (MANCOM), Asset liability Committee (AlCO), Cost Containment Committee and Credit Risk Management Committee for assessment of credit risk, foreign exchange risk, market risk, money laundering risk, reduction of operating cost etc. at Head Office level on regular basis. Above that, the Executive Committee and AuditCommittee comprising of members of the Board of Directors conduct the Risk Assessment at Board level.

Jamuna Bank Ltd: The risk Management of Jamuna Bank Limited

evolves identification, measurement, monitoring and controlling risks to ensure that:• The Bank’s risk exposure is within the limits established by Board of Directors.

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• The Bank’s risk taking decisions are in line with the business strategy and objectives set by Board of Directors of the Bank as well as Bangladesh Bank guidelines.• The Bank’s risk taking decisions are explicit and clear.• Sufficient capital as a buffer is available to take risk. The Risk Management of the Bank covers following five core risk areas of banking:

Market Risk: Credit Risk Liquidity Foreign exchange risk Interest rate risk:

One Bank Ltd: In the ordinary course of business, the Bank is exposed to a variety of risks the most important of which are credit risk, operational risk, and solvency risk. These risks are being identified, measured and monitored through various control mechanisms across the Bank in order to assess the quality of products offered.

Credit Risk Liquidity Risk Operational Risk

Jamuna Bank Ltd: The risk is defined as the possibility of losses, financial or otherwise. The Risk Management of the Bank covers 6 (Six) Core Risk Areas of banking industries i.e. Investment Risk Management, Foreign Exchange Risk Management, Asset -Liability Management, Prevention of Money Laundering, Internal Control and Compliance andInformation & Communication Technology Risk.

Investment Risk Management Foreign Exchange Risk Management

Conclusion

A bank is an economic institution whose main aim to earn profit exchange of money and credit instruments. It is a service oriented as well as profit oriented organization. To perform those two functions simultaneously, the bank divides its operations mainly in tree parts- General Banking, Loans and Advances, and Foreign Exchange. Bank also invests their money into different financial securities and also in different types projects to diversify risk and getting more profit.

The five reference bank are the most leading private bank commercial bank in banks having a spread network and lots of branches across Bangladesh and plan to open many more branches to cover important commercial areas in Bangladesh. With a wide a range of modern corporate and consumer financial products these banks have been operating and have achieved public confidence as a sound, stable, and trustworthy Banks.

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We have completed our study in five banks named AB Bank Ltd, Dhaka Bank Ltd, Jamuna Bank Ltd, One Bank Ltd, and Mercantile Bank Ltd. During our study period we found here a good job environment and also got a lot of cooperation from every department and every person. It is a great task to prepare a report on many bank and at this moment we feel very happy to complete the report. We found that reference five bank gained success very early because they have a very strong backup to provide financial as well as administrative support. Within a very short time these banks have become very popular to all types of business persons. Business people are also very interested to deal with this bank. They gained success from the beginning of their operation and were capable enough to hold the success year after year.

BIBLIOGRAPHY

Annual Report, 2009, AB Bank Ltd. Annual Report, 2009, Dhaka Bank Ltd. Annual Report, 2009, Jamuna Bank Ltd. Annual Report, 2009, One Bank Ltd. Annual Report, 2009, Mercantile Bank Ltd. Web Site of the AB Bank Ltd, Dhaka Bank Ltd, Jamuna Bank Ltd, One Bank Ltd,

and Mercantile Bank Ltd. A Training Program Book by BIBM Www.Google.com

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