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Dhaka Bank Limited: Annual Report - 2017

IM Insights
By IM Insights
5 years ago
Dhaka Bank Limited: Annual Report - 2017

Hadith, Islam, Islamic banking, Mudaraba, Murabaha, Riba, Salah, Shariah, Credit Risk, Participation, Provision, Receivables, Reserves, Sales, Specific Provision


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  1. Engaging Tomorrow Today The 21st century is thriving towards a remarkable future . That’s why today makes us Engaging to have sustainable, exciting, actionable and popular alternative long-term futures. Engaging tomorrow today co-creates strategy transformation. We at Dhaka Bank re-engineered training and provide strategic visions, policies, strategies, innovative products and recruit right human resources. We work in areas of social planning, infrastructure, environment and economic strategy, organizational planning, and nation futures. Engaging today facilitates our understanding of tomorrow, and helps us transform today. As technological innovations flourish in all corners of the industry, opportunities for our human growing arguably, never been greater or more diverse than they are today. Bangladesh being a quickly emerging proving grounds for new technologies such as 4G connections, nuclear power, metro, automation in agriculture it’s not hard to spot the technical revolution which is taking place that also have become more integrated into our daily lives. By integrating experiential learning and offering a wide array of opportunities for co-op work placements in working with regional, national and international level, Dhaka Bank have shown a knack for generating real-world impacts. Dhaka Bank’s Annual Report of 2017 reflects its engaging eco-system.
  2. LETTER OF TRANSMITTAL Letter of Transmittal All Shareholders of Dhaka Bank Limited Bangladesh Bank Bangladesh Securities & Exchange Commission (BSEC) Registrar of Joint Stock Companies & Firms Dhaka Stock Exchange Limited (DSE) & Chittagong Stock Exchange Limited (CSE) Dear Sir(s), Annual Report of Dhaka Bank Limited for the year ended December 31, 2017 We are pleased to enclose a copy of Annual Report along with the audited financial statements including consolidated and separate balance sheet, profit and loss account, cash flow statement, statement of changes in equity, liquidity statement for the year ended December 31, 2017 along with notes thereto of Dhaka Bank Limited (the Bank) and its subsidiaries - Dhaka Bank Securities Limited and Dhaka Bank Investment Limited for your kind information and record. We have also enclosed separate financial statements of Islamic Banking Branches and Off-Shore Banking Unit (OBU) of the Bank. Financial statements of the Bank comprise those of Conventional and Islamic Banking Branches and Off-Shore Banking Unit while consolidated financial statements comprise financial statements of the Bank and its subsidiaries. General review of this report, unless explained otherwise, is based on the financials of the Bank rather than consolidated financial statements. Best regards, Yours truly, Arham Masudul Huq Company Secretary www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 1
  3. Contents CONTENTS About Us 1 2 2017 Performance Highlights - The Bank Bank ’s Profile Milestones 2017 Results Summary Vision, Mission & Corporate Values Strategic Objectives & Ethical Principles Customer Charter Our Strength & Our Confidence Our Story Board of Directors and Committees of the Board Sponsor Shareholders Chronicle of a Rare Visionary Directors’ Profile Chairman’s Statement Strategic Review of the Managing Director & CEO Report of the Audit Committee of the Board Report of the Shari’ah Supervisory Committee Dhaka Bank Management Committee Dhaka Bank Limited Annual Report 2017 Shareholders’ Information 04 05 07 08 09 10 11 11 13 14 18 19 20 26 29 32 34 35 2 Distribution of Shareholdings Financial Calendar Dividends & Stock Details Information Sensitive to Share Price Market Price Information Redressal of Investors’ Complaints 5-Year Financial Highlights Economic Impact Report Market Value Added Statement 5-Year Essential Performance Graphs-Bank Glimpses of 22nd AGM 37 37 37 38 38 39 40 42 43 44 49 Directors’ Report 3 Global Economic Situation 51 Bangladesh Economy 53 Highlights of Financial Performance 56 Summary of Segmented Performance 57 Business and Operational Highlights 60 Meeting & Business Review 61 AGM & Dividend 62 Way Forward 2018 62 Goals Set for 2018 62 cwiPvjKM‡Yi cÖwZ‡e`b 201764 www.dhakabankltd.com
  4. 4 Compliance Report on BSEC 's Notification Certificate on Compliance of Conditions of Corporate Governance CEO’s & CFO’s Declaration to the Board of Directors Contents Compliance Report on BSEC's Notification 66 74 75 Sustainability 5 6 SME Banking Green Banking Corporate Social Responsibility (CSR) 77 80 81 Management Discussion & Analysis Corporate Banking Syndications and Structured Finance Unit Business Operations Asset-Liability Management (ALM) Human Resources (HR) Information Technology (IT) Internal Control System Research & Development (R&D) Islamic Banking Retail Business Off-Shore Banking International Division Dhaka Bank Training Institute (DBTI) Communications & Branding RMG Financing Risk Management 7 Dhaka Bank Securities Limited Risk Management of Dhaka Bank Limited BASEL III 108 118 8 Report of the Board of Directors 122 Auditor's Report & Audited Financial Statements 9 Independent Auditor’s Report Consolidated Financial Statements Dhaka Bank Financial Statements Financial Statements of Islamic Banking Financial Statements of Off-Shore Banking Unit Financial Statements of Dhaka Bank Securities Limited Financial Statements of Dhaka Bank Investment Limited 126 128 134 203 214 227 243 Disclosures On Risk Based Capital 249 Notice of the 23rd AGM 10 www.dhakabankltd.com 85 86 88 92 92 93 94 95 96 100 100 101 102 105 105 263 Dhaka Bank Limited Annual Report 2017 3
  5. About Us 2017 PERFORMANCE HIGHLIGHTS – THE BANK Core Business Growth Operating Profit 5,205 M 2017 Performance Highlights – The Bank Deposits 170 Bn Amount in Taka (4%) 8% Assets 229 Bn Shareholders’ Equity 15 Bn 13% 14% Loans & Advances 154 Bn 7% Paid-up Capital 7.2 Bn 4% Tk. 2.07 Inward Remittance 11 Bn (21%) Export 103 Bn 17% Earnings Per Share stood at NPL Ratio increased to 5.98% Classified Loans 9,209 M 70% Capital to Risk Weighted Assets Ratio (CRAR) stood Total Customers’ Accounts 507,586 10% ADCs 76 16% SME Financing 26.79 Bn 25% Woman Entrepreneur Finance 440 M 246% 53% Agri Loan disbursed (Fiscal 2016-17) 2,505 M 15% Total Online Banking Accounts 507,586 10% Mobile/SMS Banking Accounts 295,530 74% at 11.96% Financial Inclusion Growth (direct & indirect) Total Delivery Channels 182 SME Customers 7,342 No. of Women Entrepreneurs 98 4 6% Dhaka Bank Limited Annual Report 2017 3% www.dhakabankltd.com
  6. BANK ’S PROFILE Dhaka Bank Limited is the brainchild of a host of committed entrepreneurs and farsighted dreamers of banking excellence. Established in July 5, 1995, the Bank is now an admired provider of financial services and has positioned itself as a strong brand in the mind of customers. ‘Excellence in Banking’ is our motto and to become the best performing bank in the country is our mission. As a leading private commercial bank in Bangladesh, our eminence is backed by quality products and services, superior technology and highly motivated personnel to realize your dream. We are recognized for our good governance practices, compliance with regulatory guidelines, flexibility to growing needs and adaptability to the changing world. Our strategy & achievement Our effort, strategy and action put together have made our footprint stronger in 2017 with 100 Branches, 3 SME Service Centres, 1 Business Kiosk, 2 Offshore Banking Units along with 56 ATMs and 20 ADMs. Total Assets of DBL is around Tk. 229.45 billion, equivalent to USD 2.79 billion as at the close of 2017. With a total of 507,586 customer-base (accounts), Tk. 170.04 billion in Deposits and Tk. 154.02 billion in Advances, Dhaka Bank turns out to be a change agent to contribute to the stand-out economic growth of Bangladesh. Capital Adequacy and Economic Capital The Bank has stepped in the regime of Basel-III compliance since January 2015 as an enhanced regulation for capital and liquidity strength. The Bank is engaging with Basel III to position itself competitively in the new post-crisis global financial risk and regulatory landscape. To keep www.dhakabankltd.com The concept of economic capital has come up to act as a safety cushion for the bank, particularly in the wake of the global credit crisis. Year 2017 still saw the effect of unanticipated losses of banks from credit risks and extent of market volatility. Under such a market it becomes imperative to manage the banking business in a risk-sensitive economic capital framework. So we are carefully considering the potential unexpected losses and thus, bringing up the concept of economic capital that is associated with each individual activity to minimize the risks of the Balance Sheet and safeguard the interest of the stakeholders. Our concern for people & environment We are committed to making a better society by working and donating in different sectors such as, education, health, disaster management, sports and some other sectors having national priority. Significant CSR involvement alongside our financial integration over long 23-year journey is a true reflection of our concern for people. On the other side, we have incorporated sustainability principles into day-to-day activities of the Bank. Green Banking Cell has been formed with the task of developing policies, products, planning and overseeing the overall green financing activities of the bank. Green banking considers all the social and environmental factors along with financial priorities with an aim to protect the environment as well as to foster the economic development in a more environment friendly way. In addition, our policy harmonizes green banking initiatives in its in-house management and participating in environment protecting activities. Commitment towards wider financial inclusion Our voyage across the industry picks up momentum every day one more account enters our Book. It’s like opening a new chapter in the world of prosperity. The way the digital age has fired up endless potentials of every human being, just an access to banking domain can unleash the fountains of economic benefit. To cite an example, the wishful eyes of a student swiping card at our ATM may grow into the wisdom of a financial planner ahead. Monthly savings of a housewife turns up an economic face of household labour. Harvesting farmer under our finance gives a secured look of the country’s agricultural development. Our woman entrepreneur who now can afford better schooling of her children is a sign of social equality. With this commitment towards wider financial inclusion, we keep weaving the dream for every individual in the society. Thus we with the industry together feel proud to be a partner of the country’s awe-inspiring economic growth over a decade. Dhaka Bank Limited Annual Report 2017 5 Bank’s Profile Customer centricity is our main strategic focus. The ultimate goal is to maximize investors’ wealth by running business efficiently and ethically. To protect investors’ interest, the Bank constantly pursues strategies for sustainable growth and wider financial integration. Key businesses are diversified into Corporate Banking, SME, Agriculture, Consumer Banking and Islamic Banking. Business is run on a viable platform backed by other functions such as Business Operations, IT, R&D, Marketing, HR, Procurement & Logistics, Risk Management, Compliance, Internal Audit, Financial Administration and so forth. Moreover, the Bank group has two subsidiaries namely Dhaka Bank Securities Limited to look after capital market and brokerage service and Dhaka Bank Investment Limited to conduct merchant banking operations (this company is yet to start operations). The Bank gathers strength from its growing customer base, skilled workforce, superior technological platform & process and a company-wide culture that binds us together. Tailored products and services facilitated by real-time online banking have become the right solution for every customer need. The Bank keeps on channel expansion by enhancing value chain, centralization & automation, payment system, etc so that customers find our service more accessible and comfortable. Our customers can send and receive money to/from any branch, any bank included in the system under Real Time Gross Settlement (RTGS) recently implemented by the Bank. We build systems as user-friendly to free up time for Customers that in turn adds better values to our relationship. Enhanced risk management system, compliance culture and anti money laundering platform guard us strong against the evils of mismanagement. up capital adequacy as per Basel-III requirement, the Bank issued BDT 3,000,000,000 Non Convertible Subordinated Bond in 2016, with consent of BSEC vide letter no. BSEC/CI/DS-34/2015/643 dated 28.12.2015 and subsequently approved by Bangladesh Bank vide letter no. BRPD(BFIS)661/14B(P)2016-2474 dated April 17, 2016 to strengthen the capital base in line with the newly introduced Capital Adequacy Guidelines under BASEL-III Accord. As a result, DBL’s regulatory capital as on December 31, 2017 stood at Tk. 21,884.29 million, whereas, the Capital Adequacy Ratio (CAR) was 11.96% under Basel-III, as per Central Bank’s minimum capital requirement of 11.25%. About Us About the Bank
  7. BANK ’S PROFILE Bank’s Profile About Us Continued Other information Chairman Managing Director & CEO Company Secretary Chief Financial Officer (CFO) Reshadur Rahman Syed Mahbubur Rahman Arham Masudul Huq Darashiko Khasru Auditors Head of Internal Control & Compliance Hoda Vasi Chowdhury & Co, Chartered Accountants S M Abdullah Hil Kafi Company Registration No. Bangladesh Bank License No. Accounting Year-end Registered Head Office C-28146 (1992)/95 BCD (D) 200/57-421/95 December 31 Biman Bhaban: 100, Motijheel C/A Dhaka-1000 Authorized Capital Total Capital Web Credit Rating Agency Tk. 10,000 million Tk. 21,884.29 million www.dhakabankltd.com Emerging Credit Rating Limited (ECRL) Credit Rating Report Dhaka Bank Limited was rated by Emerging Credit Rating Limited (ECRL) on the basis of audited Financial Statements as on December 31, 2017. The summary of Rating is presented below: Status 2017 2016 Long Term AA AA Short Term ST-2 ST-2 Outlook Stable Stable 2017 In 2017, ECRL awarded “AA” (Pronounced as Double A) rating in the Long Term and “ST-2” in the Short Term to Dhaka Bank Limited. The outlook was “Stable”. Brand DBL DBL relationship with and beyond banking boosted by superior customer service and good governance culture has given the Bank a proud brand image- EXCELLENCE IN BANKING. With the confidence of a Bank by Choice, DBL is going to emerge as a power brand in the industry. The potential power brand is taking shape in our everyday excellence from improved customer service, corporate governance, innovative products and care for the society. 6 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  8. MILESTONES Date of Incorporation July 5 1995 Commencement of Banking Business Mar 16 1996 First Dividend Declared Nov 25 1999 About Us April 6 1995 Initial Public Offering April 10 2000 Listing with Dhaka Stock Exchange (DSE) Limited Launching of Retail Banking (Consumer Banking) July 2 2003 Commencement of Islamic Banking April 1 2009 Centralization of Trade Operations & Credit Operations Dec 17 2009 AAA Guarantee Accorded by ADB under Trade Finance Facilitation Programme (TFFP) Apr 1 2004 Feb 5 2005 Real-time Online Banking Launching of Brokerage Business June 30 2010 Establishment of Islamic Banking Division SME Manufacturing Sector-friendly Bank of the Year www.dhakabankltd.com July 5 2015 Celebrating 20 years of Banking Excellence July 5 2015 Moving to own Corporate Head Office First Right Issue Feb 24 2002 Introduction of Alternate Delivery Channel (First ATM) July 5 2005 May 22 2006 Mar 1 2007 Celebrating First Decade of Excellence in Banking Commencement of Off-shore Banking Operation Launching of Credit Card Sept 5 2007 Dec 6 2010 Feb 13 2011 Sep 30 2012 April 29 2013 Inauguration of Subsidiary ‘Dhaka Bank Securities Limited’ Hosting Credit Card in own software and go live Visa Debit Card Introduction of Automated Deposit Machine (ADM) Launching of Internet Banking July 4 2010 Enhancement of Authorized Capital (from Tk. 600 crore to Tk. 1,000 crore) Basel-II Compliance: Issuance of 1st Subordinated Bond Nov 12 2014 Listing with Chittagong Stock Exchange (CSE) Limited Mar 11 2001 Milestones Mar 29 2002 July 6 2000 April 17 2016 Basel-III Compliance: Issuance of 2nd Subordinated Bond Dec 27 2017 Opening of 100th Branch Dhaka Bank Limited Annual Report 2017 7
  9. 2017 RESULTS SUMMARY About Us Taka million (unless mentioned otherwise) Dhaka Bank Limited Segmented Results of 2017 On-shore Off-shore Subsidiaries Islamic Banking Dhaka Bank Securities Ltd. Dhaka Bank Investment Ltd. Consolidated Operating Income 8,763 401 211 332 8 9,716 Operating Profits 4,686 385 134 252 8 5,465 Assets 204,064 17,031 8,358 5,434 292 230,828 Liability 204,064 17,031 8,358 5,434 292 230,828 Shareholders’ Value - Consolidated 2017 2016 Change Earnings Per Share (EPS) (BDT) 2.23 2.26 (1%) 10.63 7.92 25% 0% (Cash) 12.50% (Stock) 10% (Cash) 5% (Stock) (100%) 150% Net Asset Value (NAV) 15,828 14,446 10% NAV per Share (BDT) 21.91 21.68 1% Profitability & Performance Ratio – The Bank 2017 2016 Change Return on Assets (ROA) (%) 0.69 0.77 (10%) Return on Equity (ROE) (%) 9.21 10.15 (9%) Return on Investment (ROI) (%) 12.97 15.38 (19%) Operating Profit per Employee 2.94 3.24 (9%) 129.56 121.22 7% 2017 2016 Change Balance Sheet Size 229,453 202,192 13% Shareholders’ Equity 15,245 14,446 6% Total Deposits 170,035 157,162 8% Total Loans & Advances 154,017 134,689 14% Classified Loans 9,209 5,403 70% Capital Adequacy – The Bank (As per Basel III) 2017 2016 Change Tier-I Capital Ratio (%) 7.95 8.62 (8%) 11.96 13.67 (13%) 21,884 21,841 0% 2017 Results Summary Note: While consolidating segmented results under the Bank group, inter-company adjustments have been made. Price Earning Ratio (Time) Dividend (%) Assets Per Employee Balance Sheet Focus – The Bank Capital to Risk Weighted Assets Ratio (CRAR) (%) Total Eligible Capital 8 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  10. VISION , MISSION AND CORPORATE VALUES About Us VISION At Dhaka Bank, we draw our inspiration from the distant stars. Our vision is to assure a standard that makes every banking transaction a pleasurable experience. Our endeavor is to offer you supreme service 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. MISSION To 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. CORPORATE VALUES Customer Focus Integrity Quality Teamwork Respect for the Individual Responsible Citizenship www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 9 Vision, Mission & Corporate Values Our people, products and processes are aligned to meet the demand of our discerning customers. Our goal is to achieve a distinct foresight. Our prime objective is to deliver a quality that demonstrates a true reflection of our vision - Excellence in Banking.
  11. Strategic Objectives & Ethical Principles About Us STRATEGIC OBJECTIVES & ETHICAL PRINCIPLES • Our objectives are to conduct transparent and high quality business operation based on market mechanism within the legal and social framework spelt in our mission and reflected in our vision. • Our greatest concerns are our customers to provide them continually efficient, innovative and high quality products with excellent delivery system. • Our motto is to generate profit with qualitative business as a sustainable ever-growing organization and enhance fair returns to our shareholders. • We are committed to our community as a corporate citizen and contributing towards the progress of the nation as our corporate social responsibility. • Our employees are our backbone. We promote their wellbeing through attractive compensation package, promoting staff morale through training, development and career planning. • We strive for fulfilment of our responsibility to the government through paying entire range of taxes and duties and abiding by the other rules. • We are cautious about environment and climatic change and dutiful to make our homeland a green and clean soil. STRATEGIC OBJECTIVES ETHICAL PRINCIPLES • • • • • • • • 10 We are compliant to our country’s laws and regulations. We reject bribery and corruption. We avoid compromised gifts and entertainment. We speak up if we suspect any actual, planned or potential behaviour that may breach any laws and regulations. We are compliant to Anti Money Laundering guidelines and other prudential regulations provided by our regulators. We resolve customer complaints quickly and fairly. We maintain confidentiality and fidelity of our customer. We treat our colleagues with fairness and respect; work with highly motivated team spirit and fellowship bond. Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  12. CUSTOMER CHARTER About Us We seek to build long-term , sustainable beneficial relationships with all our customers based on the service commitments and on our underlying values of mutual respect, the pursuit of excellence and integrity in all our dealings. SERVICES RESPECT Customer Charter CUSTOMER CHARTER INTEGRITY EXCELLENCE • Our primary concern is to understand and satisfy customers’ needs and expectations. We promise to use all means open to us to establish and understand these needs which are both mutually beneficial and respect the values and principles in all our actions. • We promise to deal quickly, courteously and accurately with all correspondence between us. • Should disagreements arise between us, we undertake to seek a speedy and equitable solution, which takes account of the rights and obligations of both parties and is framed in the context of a long-term and enduring relationship. • We believe in openness, integrity, transparency and accountability and provide high standard of services to our valued customers. • We create customer value, loyalty and equity, which create customer delight over a lifetime of patronage. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 11
  13. About Us OUR STRENGTH & OUR CONFIDENCE OUR STRENGTH Our Strength & Our Confidence • • • • • • • • • A dynamic and vibrant Board of Directors. A strong and resilient capital base. Highly qualified team of management professionals. Forward looking strategies and management policies. Cutting-edge tools and technologies to support real time on-line banking. Well-diversified line of business. A good risk management and compliance culture. Deep focus on quality control. And a dedicated line of human resources. OUR CONFIDENCE • • • • • • • • • • 12 Ability to lead the competition in a changing business environment. A solid business growth to create sustainable shareholder value. Spirit to learn, adopt and adapt to the changes around us. Right collection of products and services to meet financial needs. Enhancement of customer responsiveness by leveraging financial advice. Rigorous teamwork to bring out synergy for optimum benefits. Strong compliance of the laws and regulations of the state and regulatory bodies. Trust by the community as a part of their lives. A rewarding work environment for our dedicated employees. High ethical standard in all level of operations under a corporate culture par excellence. Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  14. OUR STORY : A JOURNEY TO HISTORY, HERITAGE AND BUSINESS The Bank has stood out for its financial strength and operational craftsmanship marking its position as the potential market player in all core areas of banking in the country. It got listed in DSE and CSE in 2000. Alongside a lasting bond with the corporate world, DBL has got hold of a countrywide reach through a larger network of Branches, ATMs, SME channels, agricultural outreach and mobile banking. The Bank is now expanding far and wide to higher market share and big surge in assets. A great total of 507,586 customers’ accounts now we serve and seek to make them better-off as best as we can. Strong with 182 delivery centres, the Bank is still going strong with more expansion and inclusive banking programmes. Opening many gateways for financial freedom and services, DBL has made its vibrant presence at 100 locations (including 2 Islamic Banking Branches), 2 Off-shore Banking Units, 3 SME Service Centers, 1 Business Kiosk, 56 ATMs and 20 ADMs across the country. Catering to the needs of Capital Markets, the Bank has established a subsidiary company named ‘Dhaka Bank Securities Ltd.’ having 6 countrywide Branches. Another subsidiary in the name of 'Dhaka Bank Investment Limited' is yet to start operation. This has strengthened its capital base to Tk. 21,884 million with a Capital to Risk weighted Assets Ratio (CRAR) of 11.96%. Sailing past all odds and uncertainties in 2017, DBL posted an operating profit of Tk. Tk. 5,204.54 million. In addition to our priority of operating profitably and successfully, even in the tough market environment, we are acutely aware of our responsibilities that go beyond banking and reflect our commitment to our employees, society and environment. Above all, the clients are our fond obsession. We expect to rise from the heart of Bangladesh as a stronger force in the market we serve. We are committed to our goals to create superior shareholder value in our quest for excellence as we grow and mature into a banking veteran. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 13 Our Story From the very year of its landmark journey, Dhaka Bank has truly cherished and brought into focus the heritage and history of Dhaka and Bangladesh from Mughal outpost to modern metropolis. Most of its presentation, publications, brand initiatives, delivery channels, calendars and financial manifestations bear Bank’s commitment to this attachment. The Bank is widely recognized today for its exceptional service, simplicity, proximity and cutting-edge way of delivery. About Us The nation was just halfway of its age; the passion for history and heritage and an obsession for faster pace exerted a powerful force for change in the business world. Many budding hopes grew as a choice of the new generation in the shadows of banking reformation of the eighties. Dhaka Bank is such a dream that spread in profusion modern banking prospects with deep attachment to our community and culture. A host of visionary entrepreneur friends inspired by a futurist leader set forth the fight of this great corporate voyage that echoed the speed of technology on the inner soul of Bangladesh. Dhaka Bank was incorporated as a Public Limited Company on April 6, 1995 under Companies Act, 1994. The company commenced banking operations on July 5, 1995.
  15. About Us BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD Board of Directors & Committees of the Board Dhaka Bank today is manifestly a splendid outcome of constant care, creative concern, concerted efforts and progressive performance of its skilled architects, i.e. its sponsor shareholders who worked with crusading zeal for building up a sound financial institution which would hasten the pace of economic development of the country. It is indeed a privilege to have such forward looking group of guides. 14 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  16. BOARD OF DIRECTORS About Us Board of Directors Chairman Directors Independent Directors Mr . Reshadur Rahman Mr. Abdul Hai Sarker Mr. Altaf Hossain Sarker Mr. Mohammed Hanif Mr. Md. Amirullah Mr. Abdullah Al Ahsan Mr. Khondoker Monir Uddin Mr. Tahidul Hossain Chowdhury Mr. Jashim Uddin Mr. Khondoker Jamil Uddin Mr. Mirza Yasser Abbas Mr. Amanullah Sarker Mr. Syed Abu Naser Bukhtear Ahmed Mr. M. A. Yussouf Khan Vice Chairperson Mrs. Rokshana Zaman Managing Director & CEO (ex-officio) Mr. Syed Mahbubur Rahman Mr. M. N. H. Bulu www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 15
  17. About Us EXECUTIVE COMMITTEE OF THE BOARD Chairman Mr . Abdul Hai Sarker Executive & Audit Committee of the Board Members Mr. Altaf Hossain Sarker Mr. Md. Amirullah Mr. Mohammed Hanif Mr. Abdullah Al Ahsan Mr. Khondoker Jamil Uddin Mr. Mirza Yasser Abbas AUDIT COMMITTEE OF THE BOARD Chairman Mr. Syed Abu Naser Bukhtear Ahmed Members Mr. Reshadur Rahman Mrs. Rokshana Zaman Mr. Tahidul Hossain Chowdhury Mr. M. A. Yussouf Khan 16 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  18. RISK MANAGEMENT COMMITTEE OF THE BOARD About Us Chairman Mr . Khondoker Monir Uddin Members Mr. Reshadur Rahman Mrs. Rokshana Zaman Mr. Altaf Hossain Sarker Risk Management & Shari'ah Supervisory Committee of the Board Mr. Jasim Uddin SHARI’AH SUPERVISORY COMMITTEE Chairman Mr. M. Azizul Huq Members & Others Mr. Prof. Mowlana Mohammad Salah Uddin, Member of the Committee & Khatib of National Mosque Baitul Mukarram, (Absent in the picture) Mr. Md.Fariduddin Ahmed, Member of the Committee Dr. Mohd. Haroon Rashid, Member of the Committee Mr. Hafej Mawlana Abdul Gaffer, Member of the Committee Barrister Omar Sadat, Member of the Committee Mr. Syed Mahbubur Rahman, Managing Director & CEO, Member ex-officio Mr. Md. Sirajul Hoque, SEVP & Member Secretary Mr. Md. Kamaruzzaman, VP & Muraquib of Shariah Supervisory Committee www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 17
  19. SPONSOR SHAREHOLDERS About Us OUR GRATITUDE TO THE ARCHITECTS OF DHAKA BANK Sponsor Shareholders We owe a debt of gratitude to all of our Sponsor Directors for envisioning a great corporate voyage , now so admired and loved by the community. Mr. Abdul Hai Sarker Mr. A.T.M. Hayatuzzaman Khan Mrs. Afroza Abbas Mr. Altaf Hossain Sarker Mr. Khandaker Md. Shahjahan Mr. Aminul Islam Mr. Md. Amirullah Mr. Reshadur Rahman Mr. Abdullah Al Ahsan Mr. Khondoker Monir Uddin Mr. M.N.H. Bulu Mrs. Rakhi Das Gupta Mr. Tahidul Hossain Chowdhury Mr. Jashim Uddin Mrs. Kamala Khatun Mr. Abdul Wahed Mr. Mohammed Hanif Mr. Khondoker Jamil Uddin Mr. Mohammad Ali Sarker Mr. Suez Islam Mr. Mirza Abbas Uddin Ahmed Founder (Sponsor Shareholder Mr. Mainul Islam expired in 2008 whereupon Mr. Suez Islam succeeded him. Mrs. Kamala Khatun expired in 2011.) 18 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  20. CHRONICLE OF A RARE VISIONARY The Founder of Dhaka Bank was born in 1951 in a respectable Muslim family in Kishoreganj . He had his schooling in the local educational institutions and finally obtained B.Com. Degree from Dhaka University. Then he associated himself with his family business named Mirza Enterprize, Dhaka that flourished on his long attachment for 33 years. He was also the Advisor of Dhaka Bank Limited. Mirza Abbas Uddin Ahmed The Founder Mr. Abbas has left behind a shining profile of a successful Mayor, a resolute Member of Parliament and a benevolent Minister of the Government. During his incumbency as the 4th Mayor of Dhaka City Corporation from May 19, 1991 to December 28, 1993, he eased the suffering of thousands developing infrastructure around the metropolis. As a Cabinet Minister, Ministry of Housing and Public Works, between 2001 and 2006, Mr. Abbas, time and again focused on the strict enforcement of Wetland Protection Act to ensure environmental balance and flooding. The Ministry of Housing and Public Works under his able leadership amended the Building Construction Rules that was finally enacted in December 2006. Under his auspices, the Ministry also formulated Private Housing Land Development Rules, a guideline to streamline real estate developers particularly involved in filling up thousands of acres of wetland and flood flow zones. Apart from being a politician of repute, he is also a prominent figure in social sphere and much admired for his emphasis on universal values so necessary to reshape a world in new colours. His social commitment and passion for education came through establishing ‘Mirza Abbas Mohila College’ that grew as a model for quality education for the womenfolk of the society. His Vision - Dhaka Bank continues its journey to excellence. We stand proud to share this glory and dream at Dhaka Bank, day in day out. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 19 Chronicle of a rare visionary It was a dream of corporate grandeur to be a unique financial service provider that draws inspiration from the riches of golden Bangla, its history and heritage, but adopts global standard, tools and techniques in delivering service. The dream was the brainchild of Mr. Mirza Abbas Uddin Ahmed, a visionary rare individual who longed for a journey to the history and way forward to the future on the wheels of financial service and innovation. This vision urged the futurist leader to come up with a bank in Bangladesh. Profusely inspired, a highly committed group of entrepreneur friends dared to shoulder the great corporate voyage for excellence. The long cherished dream came to fruition in the name of Dhaka Bank Limited on the 5th of July in 1995 in great expectation of the people of Bangladesh. Mr. Abbas was officially introduced to the Board of Dhaka Bank as an Alternate Director in November 1995. He was appointed Director of the Bank on March 29, 2012. About Us Mirza Abbas Uddin Ahmed The Founder
  21. DIRECTORS ' PROFILE About Us Mr. Reshadur Rahman is a prominent industrialist in Bangladesh. As a successful business entrepreneur, he has many achievements to his credit. His able leadership has become more vibrant in banking where Dhaka Bank is an epitome of his continued success. Mr. Rahman is now leading the Bank as Chairman. He was elected the Chairman of the Board of Directors in the 243rd Meeting of the Board of Directors of Dhaka Bank held on May 13, 2015. He was also the Chairman of the Board of Directors during the tenure 2010-2013. Having accomplished his graduation, Mr. Rahman resolved on making a start in the line of business and succeeded in new ventures one after another over more than three decades of his career. His business grew as an enormous group and diversified into numerous worthy areas. He is also the Chairman of RR Aviation Ltd., Trade Hub Bangladesh Ltd. and Dhaka Bank Securities Ltd.; Managing Director of RR Holdings Ltd.; Proprietor of RR Trading & Co., RR Shipping Lines, RR Architecture & Engineering Co. and National Traders; and Shareholder of Alliance Deep Sea Fishing Ltd., Alliance Bags Ltd., Quality Breeders Ltd. and Quality Grains Ltd. Directors' Profile Reshadur Rahman Mr. Reshadur Rahman has membership in professional organization namely Dhaka Chamber of Commerce & Industry and all elite clubs in Dhaka and Chittagong. He is equally active in many community development and social services programmes. Time and again, he has remained an honourable Donor to BIRDEM Hospital, Cancer Hospital, SEID Trust and a good number of educational institutions. He has been the honorary Consul of the Republic of Poland in Dhaka since 31 August 2008. Mr. Abdul Hai Sarker is the Founder Chairman and one of the most experienced Board Members of Dhaka Bank Limited. He was the key architect to set the pace of this great corporate voyage for excellence. Today’s Dhaka Bank manifests his crusading zeal for a sound banking institution that would be a shining example for all and the best choice of the new generation. Most importantly, he is a big name in the domain of business and industry. He led the Bank as a Chairman for several times. He is now the Chairman of Executive Committee of the Board. Abdul Hai Sarker Born in a respectable Muslim family of Sirajgonj District, Mr. Hai accomplished his Post Graduation Degree (M.Com.) from the University of Dhaka in 1970. Soon he involved himself in international trade & business and became a reputed industrialist in the country. His sincere effort and dynamic leadership culminated in a large business conglomerate in the name of Purbani Group. He is the Chairman & CEO of Shohagpur Textile Mills Ltd. & Purbani Synthetic Spinning Mills Ltd., Purbani Fabrics Ltd., Karim Textile Ltd., Karim Spinning Mills Ltd., Purbani Yarn Dying Ltd., Purbani Agro Processing Ltd., Purbani Rotor Spinning Ltd. and Purbani Fashions Ltd.; Proprietor of Purbani Traders and Purbani Fisheries and Director of Dhaka Bank Securities Ltd. He is also the Chairman of Education, Science, Technology and Cultural Development Trust (ESTCDT) of Independent University, Bangladesh (IUB). Mr. Abdul Hai Sarker is the former Vice Chairman of Bangladesh Association of Banks (BAB), the former President of Bangladesh Textile Mills Association (BTMA) and a former Director of Federation of Bangladesh Chamber of Commerce and Industries (FBCCI). Mr. Hai is the Founder Trustee of Independent University, Bangladesh, Founder Member of the Board of Trustees of Bangladesh Enterprise Institute (BEI) and was an Associate Director of International Cotton Association based in Liverpool, UK. Besides being a leading business personality, he has been playing commendable role in social welfare and community development. Many organizations have awarded him for his outstanding contribution to the society. He has also been accorded Commercially Important Person (CIP) status by the Government. Mrs. Rokshana Zaman is an experienced business person and a prominent woman entrepreneur in the country. She has exposure in the line of business for more than 17 years. She is the Proprietress of Dhaka Enterprise, a reputed business firm in Bangladesh and M/s. Manehor Fisheries and Director of Dhaka Bank Securities Ltd. Mrs. Zaman first involved herself in banking business as an Alternate Director of the Bank back in 1996. Subsequently she was appointed a Director on June 29, 2004. She became the Chairperson of the Board of Directors on June 29, 2004 and continued her tenure till March 28, 2006. She is now a Member of the Audit Committee as well as Risk Management Committee of the Board. Since long, she has been associated with various CSR initiatives. Rokshana Zaman 20 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  22. DIRECTORS ' PROFILE Continued Altaf Hossain Sarker Mr. Sarker is the CEO of Rahmat Group, a renowned business conglomerate. He is the Chairman of Rahmat Spinning Mills Ltd., Belkuchi Spinning Mills Ltd., China Plastic (BD.) Ltd., Rahmat Plastic and Accessories Ltd. and Rahmat Rotors Ltd.; Managing Director of Rahmat Textiles Ltd. and Rahmat Knit Dyeing & Finishing Ltd.; Director of Rahmat Fashion Wear Ltd., and Dhaka Bank Securities Ltd. and Advisor of Logos Apparels Ltd. Textile and Garment products under Rahmat Group have captured an international market. Most importantly, many of his products have become a part of our everyday life being excellent items for clothing and adornment. Mr. Altaf Hossain is now Director of Dhaka Bank and also a member of Executive Committee and Risk Management Committee of the Board. He is also a sponsor shareholder of the Bank that began its banking operation in 1995. Earlier, he led the Bank as Chairman being elected in the 134th Board Meeting held in April, 2008. An experienced businessman Mr. Mohammed Hanif is a renowned industrialist in the country. He has made remarkable contribution towards business and banking in Bangladesh. The seasoned industrialist has a business career that extends over as long as 53 years. He is the Managing Director of Hanif Steels Ltd., Hanif Spinning Mills Ltd. and National Foundry & Engineering Works (Pvt.) Ltd. Mr. Hanif is a Sponsor Director and one of the long serving Board Members of Dhaka Bank Limited. He was elected the Vice Chairman of the Bank in the 134th Board Meeting held in April, 2008. He was first appointed as a Director of the Board on April 6, 1995. He is also a Founder Member of the Board of Trustees of Dhaka Bank Foundation and an erstwhile member of Audit Committee of the Bank. He is associated with different socio-cultural activities. Mohammed Hanif Mr. Md. Amirullah is a seasoned businessman in the country. He has considerable experience in business extending over above 48 years. His long attachment and commitment to business is something worth considering in the pace of economic development of the country. He started young in business and ended up with many achievements to be proud of. He is one of the pioneers in Bangladesh to initiate export of Video Cassettes worldwide. There is high recognition to his credit as a large exporter of chemicals in the international market. He had long been associated with HP Chemicals Ltd. and Orient Craft Ltd. He is one of the Directors of Dhaka Bank Investment Ltd. Mr. Amirullah associated himself with banking entrepreneurship as a Sponsor Director of Dhaka Bank. He still continues with the Bank as Director and has retained his position for several terms after required intervals. He is now the Member of the Executive Committee of the Board. He has also widened his contribution to education setting through up a university in Dhaka. He has life membership with almost all elite clubs. Md. Amirullah Dhaka Bank Limited Annual Report 2017 21 Directors' Profile His interest has an extra focus on education and social organizations. He is a Member Trustee of Independent University, Bangladesh (IUB) and Director of Bangladesh Textile Mills Association (BTMA). Mr. Sarker is founder Member of Board of Trustees of Dhaka Bank Foundation. Besides, he is a regular sponsor to different social activities, honourable Donor to BIRDEM Hospital, Cancer Hospital, SEID Trust and a good number of educational institutions. www.dhakabankltd.com About Us A seasoned industrialist Mr. Altaf Hossain Sarker is an admired name in the arena of business in Bangladesh. His brilliance and business foresight has added a new dimension to the industrial revolution in Bangladesh. As his brainchild, many enterprises are there to be named, which in turn have become a change maker not only in the heartland of Sirajgonj where he was born but also around the country as a whole. In his mid twenties, he started off as a businessman with an academic accomplishment of Bachelor of Commerce (B.Com.). The following years saw his sparks of business growth in diversified areas of business.
  23. DIRECTORS ' PROFILE Continued About Us Mr. Abdullah Al Ahsan, Director of Dhaka Bank has a prolific business background. For more than 32 years, his contribution to industry and commerce has remained vibrant. Academically he has completed M.Com. He is also a Sponsor Director of Dhaka Bank. His first appointment as a Director took place in April 6, 1995. As a business entrepreneur, he has made worthy contribution to Agro Industry, well-recognized as a thrust sector in Bangladesh. He is the Director of Aroma Poultry and Aroma Fisheries Ltd. He has widely travelled across the globe on business trips. He is associated with Gulshan Club, Chittagong Golf & Country Club and Chittagong Seniors Club Ltd. He was pro-VC of USTC. Directors' Profile Abdullah Al Ahsan Khondoker Monir Uddin A passionate entrepreneur and a perceptive businessman, Mr. Khondoker Monir Uddin is a Director of Dhaka Bank Limited. He is also one of the admired Sponsor Directors who envisioned Dhaka Bank as a house of corporate excellence. He is now the Chairman of the Risk Management Committee of the Board. Born and educated in Dhaka, he obtained B.Com. (Hons) and M.Com. degree from the Department of Accounting, University of Dhaka. On achieving academic feat, Mr. Monir set out his venture in business in 1985. The succeeding years saw his scintillating entrepreneurship in diverse fields of business spanning Readymade Garment (RMG), Real Estate, Chemicals, Business Equipment & Machine Supply, Banking, Health Care, Education and Brokerage Services, etc. With his visionary and proven business record, Mr. Monir has acquired a good entrepreneur image in the country. He puts indelible mark of perfection in whatever areas he works. For example, with his visionary leadership and keen business knowledge, Shanta Holdings Limited, a powerful portfolio of the country’s most distinctive and selective developments, drives forward to demonstrate unparalleled foresight by developing projects which are the epitome of modern architecture and comfortable living. He is the Managing Director of Shanta Apparel Ltd., Shanta Medical Centre Ltd., Universal Business Machines Ltd., STS Holdings Ltd., Shanta Holdings Ltd., GDS Chemical Bangladesh (Pvt.) Ltd. and Shanta Securities Ltd. To fulfil various priority needs of the people, Mr. Monir pioneered in different services of international stature. Among such enterprises, prominent are Apollo Hospitals, Dhaka, the only US-JCI accredited hospital in Bangladesh, International School Dhaka (ISD) and Delhi Public School (DPS) in Dhaka and other important cities in the country. He is equally compassionate about social responsibility and contribution in philanthropic services for the underprivileged children and women. This apart, he has affiliation with a number of social groups, namely Dhaka Club Ltd., Gulshan Club Ltd., Uttara Club Ltd. and Kurmitola Golf Club. He has visited a good number of countries across the globe on different occasions of business. Mr. Tahidul Hossain Chowdhury is a sponsor Director and one of the long serving Members of the Board of Dhaka Bank Limited. He is now holding the position of Director of the Bank. He is also a Member of the Audit Committee of the Board. His first appointment as Director dated April 6, 1995 while his last re-appointment took place on May 11, 2009. Academically, he is a Bachelor of Arts and his professional experience in business extends over more than 38 years. Mr. Chowdhury has earned a name as a prominent business personality in the country having stakes in diverse fields of business. He is the Chairman of Riotex Ltd. and Jerat Shirt Ltd.; Managing Director of Jerat Fashion Ltd. and Hotel Victory Ltd. and Director of Central Hospital Ltd., HURDCO International School and Dhaka Bank Investment Ltd. Besides, he is well-connected to various social initiatives and has a good travel record around the world on business and personal trip. Tahidul Hossain Chowdhury 22 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  24. DIRECTORS ' PROFILE Continued About Us Mr. Jashim Uddin, Director of Dhaka Bank Limited is a prominent businessman of the country. He is also a Sponsor Director of the Bank. Academically, he is a Bachelor of Arts and by profession he is an established businessman having more than 33 years of experience. He is involved in myriad fields of business comprising Banking Services, Insurance, Stock Brokerage, HR Development, Trading and others. He is now the Chairman of Impel Shares & Securities Ltd.; Director of HURDCO International School and Proprietor of Rafid Enterprise and Shareholder of Dhaka Imperial Hospital Ltd. Widely travelled, Mr. Jashim is involved with many social and educational initiatives and earned recognitions from a number of organizations. He is Life Member of Bhatiary Golf and Country Club, Red Crescent Society, Kidney Foundation, Chittagong and Diabetic Association, Chittagong. As a Donor Member he has contributed to a number of schools and colleges. Jashim Uddin Directors' Profile Mr. Khondoker Jamil Uddin is a Director and one of the long serving Board Members of Dhaka Bank Limited. He is also a Member of Executive Committee of the Board. Born in a respectable Muslim family in Dhaka, Mr. Jamil accomplished his B.S.S. (Hons), M.S.S. and MPhil from the Department of Sociology, University of Dhaka. He embarked on business in 1995 and the later years proved most prolific earning him the reputation of a distinctive industrialist in Bangladesh. His sincere effort and dynamic leadership culminated in a large business conglomerate in the name of Shanta Group and other renowned business houses. He is the Chairman of JAAZ Concerns Ltd., Executive Attire Ltd., Green Field Tea Estate Ltd., OK Mobile Ltd., Dhaka Bank Investment Ltd. and Shanta Garments Ltd.; Director of STS Holdings Ltd., GDS Chemical Bangladesh (pvt.) Ltd., Universal Business Machines Ltd. and Citizen Securities Ltd. and Sponsor Director of Apollo Hospitals Dhaka Ltd., International School Dhaka., Delhi Public School and STS Education Group Ltd. Khondoker Jamil Uddin Mirza Yasser Abbas www.dhakabankltd.com Alongside business, he is associated with many social, trade and sports associations. He is a Life Member of BIRDEM. He is the General Secretary to Bangladesh Hockey Federation, Vice President of Bangladesh Olympic Association, President of Bangladesh Rugby Association and Vice President of Dhaka Mohammedan Sporting Club. His excellence in social welfare reached its height when he established a charitable clinic in Ashulia namely CWCH where presently he is the Vice Chairman. A young entrepreneur Mr. Mirza Yasser Abbas is the Director of Dhaka Bank Limited. He is also a Member of Executive Committee of the Board. Mr. Yasser has an excellent academic record. He has accomplished his International MBA from Arcadia University, PA, USA and earned worthy expertise on business management affairs. He has been associated with Mirza Enterprise and family business over the last 15 years. He is the Chairman of LOUD Limited, Managing Director of Predictable Process Limited. He is also the Director of Dhaka Bank Investment Ltd. Mr. Yasser Abbas was appointed Member of the Board of Directors of Dhaka Bank on May 3, 2012. Since his joining, he has been spearheading many development and restructuring initiatives in the Bank on behalf of the Board. Apart from business, he has considerable social affiliation. He is an Associate Member of Gulshan Club, Dhaka. He has travelled widely across Asia, Europe and North America on business and personal trips. With a compassion for the underprivileged, he is involved in various philanthropic works in the community. Dhaka Bank Limited Annual Report 2017 23
  25. DIRECTORS ' PROFILE Continued About Us Mr. Amanullah Sarker is Director of Dhaka Bank Limited. He was appointed a Member of the Board of the Bank with effect from April 18, 2013. Having an excellent business background for 27 years, he is associated with Rahmat Group, a renowned business group which is one of the leading manufacturers of textiles, spinning, weaving, plastic and accessories in the country. Mr. Sarker was born on 18th May 1964 and belongs to a respectable Muslim family. He is the son of Alhajj Mohammad Ali Sarker and Mrs. Amina Khatun. Academically he has pursued B.A. (Hons) and M.A. degree at the University of Dhaka. Having accomplished his academic feat, he set out as a promising business entrepreneur in the eighties. Over the next two decades, his career grew on his continuous success leading up to the formation of Rahmat Group. He is the Managing Director of Rahmat Spinning Mills Limited, Chairman of Logos Apparels Limited and Director of Rahmat Textiles Ltd., Belkuchi Spinning Mills Ltd., China Plastic (BD) Limited, Rahmat Sweaters (BD) Limited. Besides business involvement, Mr. Amanullah Sarker has made worthy contribution to the society and public welfare. Directors' Profile Amanullah Sarker A leading business personality Mr. M. N. H. Bulu is a Director of Dhaka Bank Limited. He is also one of the Sponsor Directors who set the course of the Bank 23 years ago. He wields appreciably long experience in business that shaped up as a large conglomerate with the passage of time. BNS Group of Companies is the epitome of his business leadership and corporate excellence where he is the Honourable Chairman & Managing Director. BNS Group has a magnificent reach in diversified areas of business that contain Banking, Real Estate, Indenting, Telecom, Media (Press & Electronic), Chemicals and many others. He has interest in a good number of business concerns namely National Chemical Industries Limited, Nawshin Vinyl Industries Ltd., Abico Industries Ltd., Rumki Industries Limited, BNS Chemical Industries Limited, BNS BOPP Tape and Adhesive Industries Limited, Shafkat PVC Sole Industries Limited, BNS DOP & Chemical Industries Limited, Bulu International, Oishee International Company Limited, Bulu Trading Corporation, Bulu Enterprise, Bulu Traders, BNS International Co., BOSS PVC Vinyl Industries in the capacity of either Chairman/ Managing Director or Proprietor. M. N. H. Bulu Mr. Bulu has many rewards and recognitions to his credit for his business talent and entrepreneurship. In recognition of his outstanding contribution to business and national development, he won Humane Net Work Bangladesh President’s Trophy 1994, Srigyan Atish Dipankar Gold Medal 1998 and Arthakantha Business Award 2004. He also held prestigious positions in various industrial and trade associations. He is the ExPresident, Bangladesh Rexin & Plastic Sheet Manufacturers’ Association, Ex-Vice President, Mohammedan Sporting Club and Ex-President, Usha Krira Chakra. Besides, he has a long history of affiliation to various social clubs and organizations. Mr. Syed Abu Naser Bukhtear Ahmed is the Director of Financial Excellence Ltd. and Managing Director of Trade Hub (Bangladesh) Ltd. An MBA from IBA, University of Dhaka, he is a seasoned banker with over 45 years of international and domestic experience. He worked in formulating policies & guidelines and promulgating laws related to Banking. He has exposure to the World Bank & IMF reform agenda for the nationalized banking sector. Syed Abu Naser Bukhtear Ahmed 24 Dhaka Bank Limited Annual Report 2017 Mr. Ahmed started his career with State Bank of Pakistan in 1970. He then worked with Bangladesh Bank and later joined Central Bank of United Arab Emirates and worked there for 21 years. After serving three Central Banks in Pakistan, Bangladesh and UAE for over 25 years, he served Arab Bangladesh Bank Ltd. and Prime Bank Ltd. He thereafter worked for Southeast Bank Ltd. as the President & CEO and Agrani Bank Ltd. as the Managing Director & CEO. Mr. Ahmed has been awarded several prestigious awards including Nawab Sir Salimullah Gold Medal, Financial News Service Business Gold Medal etc. He was the Chairman of BAFEDA and Member of the Governing Body of ABB, BIBM and IBB. He was the Vice-Chairman of Primary Dealers Association of Bangladesh and President of IBA Alumni Association. Mr. Ahmed was the Director of Bangladesh Commerce Bank Ltd. and ICB. He is currently one of the Independent Directors of Dhaka Bank Ltd. He is associated with various social and cultural organizations & clubs. www.dhakabankltd.com
  26. DIRECTORS ' PROFILE Continued About Us Mr. M. A. Yussouf Khan is a seasoned banking expert and held the office of the Chief Executive Officer consecutively for three leading private commercial banks from 1989 to 2004. He started his career with National Bank of Pakistan in 1960. He served Eastern Banking Corporation (later renamed as Uttara Bank), Pubali Bank and United Commercial Bank. In 1989 Mr. Khan joined the City Bank as its Managing Director and led the bank to a breakthrough success. Later he led UCB as its President and Managing Director. In 1999 he led the formation and commencement of the Premier Bank and served as its founding Managing Director. Mr. Khan was Chairman of BAFEDA for two terms. He has received many awards. As a philanthropist, he is associated with a number of social and charitable organizations. M. A. Yussouf Khan Mr. Rahman worked in various roles with some of the biggest names in the financial sector of Bangladesh such as Prime Bank Limited, Citibank NA, Standard Chartered Bank, ANZ Grindlays Bank, IDLC Finance Limited etc. before moving to BRAC Bank Limited in 2008. He started his career in Saudi Bangladesh Agricultural & Industrial Investment Co. (SABINCO). He also served as the Director for BRAC EPL Investments Ltd., BRAC EPL Stock Brokerage Ltd., BRAC Saajan Exchange Ltd., bKash Ltd., BRAC IT Services Ltd. and IIDFC Securities Ltd. Mr. Rahman is also Chairman of the Board of Governors at Association of Bankers, Bangladesh Limited. He was accorded with the prestigious ‘The Asian Banker Leadership Achievement Award’ for Bangladesh for the period 20112013. Syed Mahbubur Rahman www.dhakabankltd.com He obtained his Masters in Business Administration (MBA) from Institute of Business Administration (IBA), University of Dhaka. During his career, he attended numerous trainings, seminars and workshops on different aspects of banking held in the country and abroad. Dhaka Bank Limited Annual Report 2017 25 Directors' Profile Mr. Syed Mahbubur Rahman joined Dhaka Bank Limited as the Managing Director on November 08, 2015. He has 31 years of experience in Banking Services and Credit related arena. Prior to joining DBL, he was the Managing Director & CEO of BRAC Bank Limited.
  27. Chairman ’s Statement About Us CHAIRMAN’S STATEMENT Reshadur Rahman Chairman, Board of Directors 26 Dhaka Bank Limited Annual Report 2017 Bangladesh’s growth prospect remains solid with progress in both domestic demand and external sector. She is thus a lucrative destination for Foreign Investors. Besides RMG, her Power, Gas, Telecom and Banking Sector are their main attractions. Amidst different realities in economic scenario, we endeavoured to achieve worthy financial results to create long-term value for Stakeholders. My special appreciation goes to Team Dhaka Bank for their passion, commitment, and dedication. I also gratefully express my sincere thanks for Bangladesh Bank, Ministry of Finance, Bangladesh Securities and Exchange Commission, Government agencies and other regulatory authorities on behalf of my Colleagues on the Board. www.dhakabankltd.com
  28. CHAIRMAN ’S STATEMENT Continued We are grateful for your investment and trust in us. In 2017, your company earned an operating profit of Tk. 5204.54 million. This progress is the result of continued strong business performance. I am thankful for the opportunity to present to you the Annual Report 2017. For your convenience, the Annual Report highlights the milestones of Dhaka Bank’s achievement in 2017. The year 2017 has been a very turbulent year in banking sector as the sector faced setbacks caused by financial scams and regulatory changes. Despite these challenges, Dhaka Bank delivered strong and sustainable performance throughout 2017 to uphold the core principles of the Bank and to advance its key strategic priorities. With your support, the Bank will continue its endeavours to deliver progressive and substantive business value over time for its Shareholders. Throughout 2017, the world economy went through differing growth across major economies like US, UK, Japan, Eurozone, Asia and Africa. US economy grew by 2.7% in 2017 as Dollar weakened and corporate tax lowered in the economy. UK remained mostly concerned with post BREXIT trade, immigration and taxation policy shifts. Japan picked up growth as its domestic demand firmed, supported by a gradual recovery in consumer spending and investment. Exports accelerated in response to strengthening global demand, but the net trade contribution to growth remained unchanged as imports picked up as well. In 2017, economic growth of European Union reached 2.4% due to broad based improvements across member countries spurred by policy stimulus and strengthening global demand. Inflation in the advanced economies has largely remained below the target of Central Banks. In most cases, Inflation remained low in developed economies. The reasons behind such low inflation include intense competition for goods and services on a global or national and regional level; the spread of an internet-based services economy, which increases price transparency, undermines oligopolies and eases market entry. In year 2018, as per the predictions of World Bank, it is expected that growth in advanced economies will be moderate. Central banks will gradually remove their post-crisis accommodation and there will eventually be an upturn in investment levels. Growth in emerging market and developing economies as a whole is projected to strengthen to 4.5 percent in 2018 by World Bank, as activity in commodity exporters continues to recover. Among Asian countries, growth in China is estimated to have reached 6.8 percent in 2017 as per World Bank’s Report on Global Economic Prospects, 2018. This growth is a result of effective policy reforms along with a stronger-than-expected recovery of exports and a slight positive outcome of net trade. Chinese growth is projected to edge down in 2018 to 6.4 percent as policies tighten, and average 6.3 percent in 2019-20. Longterm fundamental drivers of potential growth point to a further slowdown in China’s growth over the next decade, as population aging is expected to depress labour supply. China is currently focused on rebuilding the ‘Silk Road’ under its ‘One Belt One Road’ initiative. This initiative will help the surrounding regions comprising of the Middle East, the Mediterranean, parts of Europe and South Asia. In other parts of Asia, South Asian economy’s consumption will stay strong, exports will recover, and investment will be on track due to policy reforms and infrastructure upgrades after due consideration to effects of natural www.dhakabankltd.com Despite the slump in remittances from Middle Eastern countries due to the low oil prices and escalating fiscal deficits, Bangladesh’s growth prospects remain solid due to positive developments in both domestic demand and the external sector. According to the BBS final estimate the real GDP growth in FY2017 increased by 0.17 percentage points to register a growth of 7.28 percent. This incremental growth owed primarily to an increased contribution from the services sector, and in particular, from the wholesale and retail trades sector. Bangladesh remains a lucrative destination for foreign investors. Other than Ready-Made Garments Industry, foreign investors have been continuously involved in Bangladesh’s Power, Gas, Telecommunication and Banking Sector. Bangladesh is providing many incentives to foreign investors to invest in the Economic Zones and Export Processing Zones. However, our local economy and Banking Industry went through a cautious phase in 2017 in order to check the possibility of rising inflation, possible liquidity crisis and increasing NPL. The banking sector has been continuously suffering from bad loans which are affecting the Banks' profit margin, and adversely impacting business expansion and job creating investments. In a span of 8 years, the amount of non-performing loans (NPLs) in the banking system almost doubled. Appropriate measures need to be taken for managing the ever increasing NPL in Banking Sector. There has also been consideration for opening new Banks in this already overburdened economy. Instead of opening new Banks, it is better for existing Banks to open more traditional Branches, or Agent Banking outlets, or provide banking and financial services digitally where brick-and-mortar model is unfeasible. Amidst all the realities in economic scenario, Dhaka Bank delivered a commendable set of financial results to create long-term value for all Stakeholders. This year we witnessed a year-on-year (YOY) growth of 2.00% in net profit. In 2017, the Bank has opened 6 new Branches namely Chowmuhani, Kalibari, Mawna, Rupshi, Gunabati and Banani Road 11 Branch. At present, we are available to nationwide Customers with our 100 Branches including 2 Islamic Banking Branches, 3 SME Service Centres, 56 ATMs, 20 ADMs, 2 Offshore Banking Units, 1 Kiosk and 6 Branches under Dhaka Bank Securities Limited across the country. Not only did we spread our physical presence but we also initiated new digital services and boosted up our Core Banking Software to render better service to our Valued Customers in the coming years. Finally, I express my heartfelt gratitude to the Board of Directors, our valued Customers, Business Partners and Shareholders for their continuous support and trust. My special appreciation goes to the entire Dhaka Bank Team for their passion, commitment, and dedication. Last but not the least; I sincerely thank the Bangladesh Bank, Ministry of Finance, Bangladesh Securities and Exchange Commission, Government agencies and other regulatory authorities for the continuous guidance and support that help us achieve our goals. Reshadur Rahman Chairman, Board of Directors Dhaka Bank Limited Dhaka Bank Limited Annual Report 2017 27 Chairman’s Statement The world economy went through a lot of interesting shifts in 2017 due to post BREXIT issues, USA’s Trade Policy, strengthening economic power of China and India, prevailing Rohingya Crisis and other geo-political concerns. The geopolitical forces and global political unrest is constantly altering the scenario of global trade and economy. On the economic front, as per IMF, Economic Growth accelerated in about three quarters of the countries in 2017. Throughout 2017, most Central Banks have maintained accommodative monetary policy settings amid weak inflation. The trend of easier financial conditions reinforced growth momentum. disasters and global financial volatility. Economic growth of Central Asia will largely depend on policy reforms, economy of surrounding Euro Area and oil price fluctuation. Reforms across Middle East will be accelerated while oil price volatility will be reduced and tourism sector will get momentum in nonoil dependent economies. At the same time continued geopolitical conflicts and oil price weakness strengthens the possibility to set back economic growth. About Us Dear Shareholders,
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  30. STRATEGIC REVIEW OF THE MANAGING DIRECTOR & CEO About Us Strategic Review of the Managing Director & CEO Syed Mahbubur Rahman Managing Director & CEO www.dhakabankltd.com The cyclical upswing in global economy since mid2016 has continued to strengthen. Growth in emerging market and developing economies as a whole has been projected to fortify. Elevated input from wholesale and retail trade sector resulted it. Dhaka Bank made a moderate progress in the prevailing economic condition. We invested heavily on technology platform and upgrade Core Banking Software. Our Team of 1,700+ bright Colleagues do deserve the credit for their concerted effort. The Team is aspired to deliver their best for the happiness of our Customers. We treasure their Trust, felt its warmth again while celebrating the 22nd Anniversary! Dhaka Bank Limited Annual Report 2017 29
  31. STRATEGIC REVIEW OF THE MANAGING DIRECTOR & CEO Strategic Review of the Managing Director & CEO About Us Continued Respectable Shareholders, Respectable Shareholders, I am pleased to have the opportunity to present to all of you our Bank’s annual performance in the form of Annual Report 2017. The Bank has completed yet another remarkable year of its journey towards service excellence and we have made significant advancements in our pivotal performances. The cyclical upswing in global economy since mid-2016 has continued to strengthen and in 2017, stronger growth than the growth of 2016 was seen in many countries. Among advanced economies, notably in the United States, Japan, Korea and Germany, growth in the third quarter of 2017 was higher than projected previously. In 2018, as per the predictions of World Bank, it is expected that growth in advanced economies will be moderate. World Trade has grown strongly in 2017, supported by a pickup in investment, particularly among advanced economies, and increased manufacturing output in Asia. Similar to advanced economies, major players of emerging market and developing economies, including Brazil, China, and South Africa, also posted thirdquarter growth stronger than the previous forecasts. As per World Bank data, China, world's second-largest economy is likely to grow by 6.4 percent in 2018 due to "controlled moderation" in the economy, which would mark the slowest pace of expansion since 1990. It should be mentioned that the improvement in Global Trade has largely been driven by the rising demand from East Asia. In fact, East and South Asia remain the world’s most dynamic regions, contributing nearly half the global growth. Growth in emerging market and developing economies as a whole is projected to strengthen to 4.5 percent in 2018 by World Bank, as activity in commodity exporters continues to recover. Bangladesh by helping small, medium and large businesses grow. Dhaka Bank Limited has come a long way since the year 2017. We have made tangible changes in our Customers’ service experience. In 2017, we invested heavily for building up our technology platform and upgraded our Core Banking Software, FCUBS to Version 12.0.3. We also centralized our Retail Risk Unit and Card Management and ATM Switch migration. We established Cash Management Unit to cater professional Cash Flow Management services to the Mid to Large Corporate Entitites of the country. We introduced and redesigned some asset and liability products in 2017 for our Retail and SME Customers. Not only that, we have introduced ‘C Solutions’ – our Online Cash Management Portal, App based service ‘Dhaka Bank GO’ for on-the-go banking and Trade Cloud, an online foreign trade module for our Trade Customers. Dhaka Bank strongly emphasizes building a sustainable company. It is the core of our Business Model. In 2017, under our Green Banking initiative, we provided Account Opening Forms of all our Deposit Products on our Corporate Website. Our valued Customers now can download these Forms with ease while applying for opening Accounts. Dhaka Bank continues its voyage towards expanding its services. At the end of 2017, six new Branches and four ATMs were included in our service delivery network. Now we have ensured our presence through 100 Branches, 56 ATMs, 20 ADMs, 3 SME Service Centres and 1 Kiosk. We are committed to deliver superior services to our valued Customers supported by an excellent Team of professionals. Bangladesh Economy also went through its ups and downs in the year 2017. Undeterred by the odds, our national GDP grew by 17 basis points. The growth was a contribution of the elevated input from wholesale and retail trades sector. Although the performance of the banking sector of the country deteriorated in year 2017, the contribution from financial intermediaries also improved. Inflation had a mild rise in 2017 because of increase in prices of some food and non-food items. High tariffs of rice import, production shortfall due to early floods and decline in public stocks were the main reason behind this increased food price. The economy also went through higher growth of import payments against relative lower export growth and sluggish growth of remittance. However, in the last couple of months of 2017, there was an upward trend in remittance inflow. I expect this increased trend in remittance to continue in the coming months, given that the exciting exchange rate prevails. We also need proper monitoring of Hundi by Bangladesh Bank for the increasing trend of remittance inflow to continue. On the flip side, private sector credit growth increased in 2017 majorly because of the government's on-going mega infrastructure projects and several credit boosting initiatives by Banks and the private sector. However on the other hand, the Banking Sector faced immense difficulty due to increasing amount of NPL, which adversely affected the Banks' profit margin and business expansion capacity. All of these advancements were made possible by the combined effort of the more than 1,771 Teammates of Dhaka Bank. The whole Dhaka Bank Team is aspired to deliver their best in order to deliver more to the Customers we serve and to our honourable Shareholders. Our diverse and experienced Board of Directors has also provided independent oversight to ensure diversity and strength; and monitor corporate governance so that, we always adopt the best practices in the industry and make improvements when necessary. Amidst the prevailing economic condition of the country, Dhaka Bank Limited made a moderate progress and our operating profit grew by 2.00 percent. We hope to continue to deliver our best in the upcoming future too. In 2017, our loans & advances grew by 14.35 percent, while deposit grew by 8.19 percent. Our long and short-term Credit Ratings for 2017 are stable to 'AA' and 'ST2' correspondingly. We, at Dhaka Bank, ensured our level best to add value to the real economy of Syed Mahbubur Rahman Managing Director & CEO Dhaka Bank Limited 30 Dhaka Bank Limited Annual Report 2017 Dhaka Bank observed its 23rd Anniversary. We are grateful to our Customers for the continued trust they bestowed upon us. I, on behalf of the Management Team, am thankful to the Board of Directors for their guidance and continued support during this span of 22 years. I am honoured to work with an organization of such widespread legacy built on trust and respect. I am also enormously thankful to all my fellow Employees of our Bank for their patience and proactive approach throughout our journey towards service excellence. www.dhakabankltd.com
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  33. Report of the Audit Committee of the Board About Us REPORT OF THE AUDIT COMMITTEE OF THE BOARD The Audit Committee of the Board was duly reconstituted by the Board of Directors of the Bank in compliance with Bangladesh Bank guidelines and Bangladesh Securities and Exchange Commission (BSEC). Audit Committee efficiently conducts the monitoring activities of the Board and also plays an effective role in the supervision of execution of strategies and work plans so devised towards smooth operation of the Bank. The Committee supervises whether banking activities are carried out in line with the ongoing laws and rules and regulations imposed by the regulatory bodies as well as the Financial Statements, internal control management and audit system. Composition As per regulatory guidelines stipulated vide Bangladesh Bank BRPD Circular No.11 dated October 27, 2013, the composition of the Audit Committee of a bank shall comply with the following: i. Members of the committee shall be selected from among the directors of the board; ii. Audit Committee of the board shall comprise maximum 05 (five) members including at least 2 (two) members as independent directors; iii. Audit Committee shall be constituted with those members of the Board, who are not included in the Executive Committee; iv. Members shall be elected for a term of 03 (three) years; v. Company Secretary of the Bank shall be secretary of the Audit Committee. • Consider the oversight of bank’s compliance on recommendations made from time to time concerning establishment of an internal control mechanism/framework by internal as well as external auditors; • Apprise the board of any fraud-forgery, internal control lapses found by internal or external auditors and inspection team of regulatory authority or identification of such other areas and remedial measures therein. Disclosure of financial report • Scrutinize whether complete and true information is reflected in annual financial statements and conventional rules and regulations, standards along with BB guidelines are complied in making such statements; • Exchange views with the external auditors and the managing director/CEO before confirmation of the financial statements. Internal Audit • Review if internal control management is able to conduct its operation independent of bank management; • Review internal audit activities and its organizational structure and ensure that no untoward hurdles or limitations create bottleneck to internal audit activities; • Verify the skills and effectiveness of internal audit system; • Examine appropriateness of management consideration about observations/recommendations of the internal auditors regarding banking operation and mitigation of irregularities identified. Duties and responsibilities The Board Audit Committee of Dhaka Bank Limited was last reconstituted on February 14, 2017. The particulars of the members of the Audit Committee and their attendance in Meetings in the year 2017 are as under: Sl. No. Name 01. Mr. Syed Abu Naser Bukhtear Ahmed Status with the Bank Status with the Committee Educational Qualification No. of No. of Meetings Meetings held in Attended 2017 06 05 Independent Chairman MBA Director 02. Mr. Reshadur Rahman Chairman Member Graduate 06 03. Mrs. Rokshana Zaman Vice Member Intermediate 06 Chairperson 04. Mr. Tahidul Hossain Chowdhury Director Member Bachelor of Arts 06 05. Mr. M.A. Yussouf Khan* Independent Member Bachelor of Arts 06 Director *Inducted as a member of the Audit Committee w.e.f.14.02.2017 The company secretary of the Bank Mr. Arham Masudul Huq acts as the Secretary of the Audit Committee. Internal control • Evaluate whether the bank management has been able to build a compliance culture with respect to bank’s internal control system; whether bank employees/workforce have been clearly advised about their duties and responsibilities in this regard and whether management has established full control on their activities; • Review all initiatives taken by bank management as regards building a suitable Management Information System (MIS) along with the state of computer application in banking system and uses thereof; 32 Dhaka Bank Limited Annual Report 2017 06 06 05 03 Remarks The directors, who could not attend any meetings, were granted leave of absence External Audit • Review auditing activities of external auditors and their audit report; • Examine appropriateness of management consideration about observations/recommendations of the external auditors regarding banking operation and mitigation of irregularities identified; • Submit recommendations for appointment of external auditors to perform audit activities of the bank. www.dhakabankltd.com
  34. REPORT OF THE AUDIT COMMITTEE OF THE BOARD Continued Meeting of the committee According to applicable rules and regulations , 06 (Six) Meetings of the Committee were held in the year 2017.The committee from time to time invited the Managing Director, the Head of Internal Control and other responsible officials entrusted with internal control activities or any other personnel to participate in their meeting, as deemed necessary. All the recommendations/observations of the committee were recorded in minutes form. • • • • • • • • • • The Audit Committee of the Board,in their 06 (Six) Meetings held during the year 2017, mainly dealt with the following issues: • Summary of loan classification and provisioning as on 31.12.2016 • Latest Compliance Status of Audit Reports of Different Branches of Dhaka Bank Limited, Audits Conducted from January to December, 2013 • Latest Compliance Status of Audit Reports of Different Branches of Dhaka Bank Limited, Audits Conducted from January to December, 2014 • Latest Compliance Status of Audit Reports of Different Branches of Dhaka Bank Limited, Audits Conducted from January to December, 2015 • Latest Compliance Status of Audit Reports of Different Branches of Dhaka Bank Limited, Audits Conducted from January to December, 2016 • Latest Compliance Status of Audit Reports of Different Branches of Dhaka Bank Limited, Audits Conducted from January to December, 2017 • Achievement of Audit Division for the Year-2016 • Executive Summary Audits conducted during the year 2016 • Quarterly (31.12.2016) Statement of Self-Assessment of Anti-Fraud Internal Controls under DOS Circular Letter No.17 Dated November 07, 2012 of Bangladesh Bank • Open issues of 18th Bangladesh Bank Comprehensive Inspection on Dhaka Bank Limited, Head Office as on 31.12.2015 • Audit Plan for the Year-2017 • Deviations in Quarterly Operations Report for the Quarter Ended December 2016 • Discrepancies in the Loan Documentation Checklist (LDCL) for the quarter ended December 2016 • Quarterly (31.03.2017) Statement of Self-Assessment of Anti-Fraud Internal Controls under DOS Circular Letter No.17 Dated November 07, 2012 of Bangladesh Bank • Updated Organogram of ICCD of Dhaka Bank Limited • Internal Control & Compliance (ICC) Health of Dhaka Bank Limited • ICC Process Manual/Internal Audit Manual of ICCD of Dhaka Bank Limited • Revised ICC Policy of Internal Control and Compliance Division of Dhaka Bank Limited • Summary of loan classification and provisions as on 31.12.2016 • Effectiveness of the Internal Control System of Dhaka Bank Limited www.dhakabankltd.com • • • • • • • • • • • • • • • Approval of Financial Statements The Audit Committee reviewed and examined the Bank’s Annual Financial Statements for the year ended December 31, 2017 prepared by the Management and audited by External Auditors M/s. HodaVasi Chowdhury & Co., Chartered Accountants with recommendation to the Board for consideration and approval. The Audit Committee accords its sincere thanks and gratitude to members of the Board, Management streams and the Auditors for their continuous support to make DBL a compliant Bank in its journey to banking excellence. Syed Abu Naser Bukhtear Ahmed Chairman Audit Committee of the Board Dhaka Bank Limited Dhaka Bank Limited Annual Report 2017 33 Report of the Audit Committee of the Board Key Activities in 2017 Review of the Bank’s Management Information System (MIS) Audited Consolidated Financial Statements of the Company and Financial Statements of the Bank for the year ended 31st December, 2016 Appointment of External Auditors of the Bank for the year 2017 Summary of loan classification and provisioning as on 31.03.2017 Un-audited Quarterly Consolidated Financial Statements of the Company and Financial Statements of the Bank for the period ended 31st March 2017 Bangladesh Bank Inspection of 2016 Achievement of Audit Division for the Quarter Ended June 2017 Deviations in Quarterly Operations Report for the Quarter Ended March 2017 Half-yearly (January-June, 2017) Statement of Self-Assessment of Anti-Fraud Internal Controls under DOS Circular Letter No.10 Dated May 09, 2017 of Bangladesh Bank Misappropriation of fund from a deceased account of Laldighirpar Branch, Sylhet Un-audited Half-yearly Consolidated Financial Statements of the Company and Financial Statements of the Bank for the period ended 30th June, 2017 Summary of loan classification and provisioning as on 30.06.2017 Compliance and responses of 19th Comprehensive Bangladesh Bank Inspection Report on Dhaka Bank Limited, Head Office as on 31.12.2016 Un-audited Quarterly Consolidated Financial Statements of the Company and Financial Statements of the Bank for the period ended 30th September 2017 Discrepancies in the Loan Documentation Checklist (LDCL) for the quarter ended June 2017 Annual Health Report of Dhaka Bank Limited for the Year 2016 Summary of loan classification and provisioning as on 30.09.2017 Deviations in Quarterly Operations Report for the Quarter Ended June 2017 Latest compliance and response status of 65 inspection reports of 40 branches and 5 divisions of Head Office carried out by Bangladesh Bank during the year 2017 Review of the Bank’s Management Information System (MIS) Common Observations and latest compliance status of Internal Audit Conducted during the year 2016 Compliance Status of Audit Plan 2017 for the month ended November 2017 Audit Plan for the year 2018 Status of Password Sharing High Risk and Medium Risk Branches as per Internal Audit Report for the year 2017 About Us Adherence to existing laws, rules and regulations Review the status of compliance on rules and regulations prescribed by regulatory bodies (Central Bank and other authorities) as well as internal rules and regulations approved by the board of the bank.
  35. Report of the Shari ’ah Supervisory Committee About Us REPORT OF THE SHARI’AH SUPERVISORY COMMITTEE Salat and Salam are on Hazrat Muhammad (sm), the Greatest Prophet and the last messenger to mankind from the Almighty Allah. During the year 2017 under review the Shari’ah Supervisory Committee conducted several meetings and reviewed a number of operational issues including those referred to by the Board of Directors and the Bank Management. The Committee gave opinion & provided necessary guidelines and suggestions that they considered relevant to smooth functioning of Islamic Banking Business. As part of their key responsibilities the Committee arranged to oversee Islamic Banking activities of the Bank through fruitful discussion sessions and sharing spontaneous opinion of participant members and Shariah Supervisory Committee provided suggestions & recommendations on Shariah related issues of the operations of Islamic Banking Business, the Management of the bank implements those suggestions and recommendations in the operation. During the year 2017, the Shariah Supervisory Committee Secretariat alongwith Islamic Banking Division of the bank has published a book titled “In Daily life in Daily life” which was reviewed & approved by Shariah Supervisory Committee. The Committee expects that this book will be very much useful for the bankers and Customers of the Bank & guide them to the right path. The Management has taken initiative to expand Islamic Banking Business gradually. Therefore, in order to familiarize the employees of the Bank with the Islamic Banking principle, terms of products & marketing approach, Islamic Banking Division has been arranging exchange of views program on Islamic Banking in the branches. In the year 2017 they organized several programs which were participated by the branch Managers, Operation Managers & front desk officials have been completed. Preparation of separate Islamic Banking Software module in UBS is in progress. During the period under review the Bank introduced a new deposit product captioned “Mudaraba Gift Cheque” under Mudaraba principle. Shariah Audit/Inspection by the Muraqib of the Shari’ah Supervisory Committee of Islamic Banking Branches on sample and test basis has been completed during the year 2017. The report was discussed in the Shariah Supervisory Committee and necessary guidelines were provided to the management. Opinion of the Shari’ah Supervisory Committee on overall activities: Recommendations to upgrade Shari’ah practices in Dhaka Bank: 1. Dissemination of Shari’ah based banking knowledge in all tiers of Bank employees through regular training and development program. 2. Careful implementation of Shari’ah principles in every investment transaction and related business operations. 3. Strict adherence to Islamic Banking operation manual in Islamic Banking Branches. 4. Holding of meetings, seminars, Workshops and symposiums for clients and patrons to develop awareness and belongingness about Shari’ah practices in banking. 5. Recruitment, training & placement of personnel having adequate skill in Shari’ah Principle to ensure sustainable work environment, business and banking growth. 6. Proper Implementation of instructions contained in Islamic Banking guidelines circulated by Bangladesh Bank as per BRPD Circular No. 15 dated 9th November 2009. May Allah give us tawfique to achieve His satisfaction through implementation of Shari’ah in every sphere of our life including those to Islamic Banking. Ameen, Md. Sirajul Hoque Member Secretary M. Azizul Huq Chairman The Shari’ah Supervisory Committee opined and observed on the activities of Islamic Banking Operations are as under 1. The Bank has complied Shari’ah Principles in conducting Islamic Banking business with respect to Investment & Deposit. 2. Awareness about the Compliance of Shari’ah among the employees has been increased. 3. Profits have been announced and distributed to the deposit accounts pursuant to Shari’ah Guidelines. 4. During the Inspection the Muraquib pointed out some aspect of Shariah principle of the operation and the branch officials have complied with. 5. Frequency of inspection to be conducted at least once in every six months at the Islami Banking Branches to strengthen Shai’ah Compliance at Branch level.Compliance at Branch level. 34 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  36. Shareholders ’ Information SHAREHOLDERS’ INFORMATION National Revenue Profit Dividend EPS All our activities are derived from the thrust of making profit. Because that’s the only way Dhaka Bank can take care of employees, CSR and contribute to the national revenue and economy; can secure the interest of shareholders. With this in mind, we always concentrate on enhancing profitability to raise Earnings Per Share, Dividend as well as confidence of the shareholders. 36 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  37. SHAREHOLDERS ’ INFORMATION December 31, 2017 Shareholders’ Group No. of Shares % of Shareholding December 31, 2016 Value of Shares In BDT No. of Shares % of Shareholding Value of Shares In BDT Sponsors & Directors 286,138,928 39.6152 2,861,389,280 268,965,284 39.0994 2,689,652,840 General Public Financial Institutions Foreign Investors Others 273,509,701 37.8668 2,735,097,010 251,328,546 36.5355 2,513,285,460 130,647,021 18.0877 1,306,470,210 121,984,219 17.7328 1,219,842,190 926,085 0.1282 9,260,850 1,035,779 0.1506 10,357,790 31,073,985 4.3021 310,739,850 44,586,858 6.4817 445,868,580 Total 722,295,720 100.00 7,222,957,200 687,900,686 100.00 6,879,006,860 Shareholdings and Financial Calender, Dividends & Stock Details Shareholding Position 2015 Financial Calendar 2017 Stock Details Quarterly Results Submission Date to EPS BSEC Annualized Particulars DSE CSE Unaudited result for 1st quarter May 11, 2017 0.60 Stock Symbol DHAKABANK DHBNK Unaudited result for 2nd quarter July 31, 2017 0.82 Company Code 11118 22014 Unaudited result for 3rd quarter October 25, 2017 1.50 Year of listing 2000 2000 Market Lot 1 1 Market Category A A Electronic Share Yes Yes Face Value Tk. 10.00 Tk. 10.00 Market Value as on 28.12.2017 Tk. 22.00 Tk. 22.00 Dividends Particulars Date 22nd Annual General Meeting Notice Date May 23, 2017 Distribution of 10% Cash Dividend and 5% Stock Dividend for the year ended 31 December 2016 Record Date May 22, 2017 Held on June 12, 2017 Cash Dividend Date of Disbursement 4th to 5th July 2017 Stock Dividend Date of Disbursement June 21, 2017 Holding of 22nd Annual General Meeting www.dhakabankltd.com Shareholders’ Information Distribution of Shareholdings in 2017 Dhaka Bank Limited Annual Report 2017 37
  38. SHAREHOLDERS ’ INFORMATION Shareholders’ Information Continued Information Sensitive to Share Price Particulars Disclosure Corporate Disclosure for approval of Financial Statements for the year 2017, Date of AGM: Thursday, June 28, 2018 at 11:00 a.m. Recommendation of Dividend, Record Date for Dividend entitlement of 12.50% Stock 23rd AGM of DBL Record Date: Monday, May 21, 2018 Information Sensitive & Market Price Information Accessibility of Annual Report 2017 Dhaka Bank Annual Report 2017 and other information about DBL has been made available on Bank’s website www.dhakabankltd.com. The Bank has also dispatched Annual Report 2017 through leading Courier Service Companies to respective addresses of the shareholders as per regulatory timeframe. DBL has submitted a required set of copies of Annual Reports to the Securities and Exchange Commission, Bangladesh Bank, Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange(CSE) for their reference. Respectable Shareholders and other Stakeholders may read them at the public reference room or library. Market Price Information 38 Month DSE High (Tk.) DSE Low (Tk.) CSE High (Tk.) CSE Low (Tk.) Volume DSE (No. of shares) Jan-17 22.20 17.80 22.50 17.80 26,757,949 Feb-17 21.50 19.40 21.30 18.90 11,515,173 Mar-17 23.30 21.30 23.20 21.10 35,755,848 Apr-17 22.40 19.00 22.90 18.80 13,364,665 May-17 19.10 16.80 19.40 17.00 14,062,326 Jun-17 18.90 16.90 18.80 16.90 15,029,532 Jul-17 19.50 18.40 19.60 18.50 23,861,661 Aug-17 20.00 18.50 20.00 18.60 43,514,783 Sep-17 21.40 20.00 21.50 20.00 64,782,528 Oct-17 23.70 21.30 23.60 21.20 86,820,431 Nov-17 25.60 21.20 25.50 22.10 196,352,715 Dec-17 23.70 22.00 23.80 22.00 34,955,124 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  39. SHAREHOLDERS ’ INFORMATION Continued DBL always maintains a good relation with investors. Investors play a vital role in building a sustainable brand image among all the stakeholders. We care for our investors with a commitment so that they may carry out the flag of DBL in the front line and thus help us achieve our vision. With this view in mind, we have proper arrangement to hear the voice of investors. Investors have free access to bank and can collect available published information. Our Share Division is always ready to meet the statutory requirement of investors. Any query received from the investors is treated equitably, efficiently and fairly. Queries and complaints from investors are dealt with courtesy and in a timely manner. For Queries and Complaints Board Secretariat & Share Division Dhaka Bank Limited Corporate Office: 71 Purana Paltan Lane, Dhaka – 1000 Phone: 02-58314424-30 Fax: 88-02-58314419 Email: info@dhakabank.com.bd Web: www.dhakabankltd.com Directors’ Shareholding Status 2017 Sl. No. Name of Directors with Designation No. of share 2016 Value of share (Tk.) No. of share Value of share (Tk.) 1 Mr. Reshadur Rahman, Chairman 24,379,667 243,796,670 23,218,731 232,187,310 2 Mrs. Rokshana Zaman, Vice-Chairperson 17,694,260 176,942,600 13,771,792 137,717,920 3 Mr. Altaf Hossain Sarker, Director 20,143,714 201,437,140 19,184,490 191,844,900 4 Mr. Abdul Hai Sarker, Director 16,029,668 160,296,680 15,266,351 152,663,510 5 Mr. Md. Amirullah, Director 14,447,630 144,476,300 13,759,648 137,596,480 6 Mr. Abdullah Al Ahsan, Director 14,448,872 144,488,720 13,760,832 137,608,320 7 Mr. Tahidul Hossain Chowdhury, Director 14,506,481 145,064,810 13,815,697 138,156,970 8 Mr. Jashim Uddin, Director 14,447,762 144,477,620 13,759,774 137,597,740 9 Mr. Mohammed Hanif, Director 22,001,572 220,015,720 20,953,879 209,538,790 10 Mr. Khondoker Monir Uddin, Director 20,743,363 207,433,630 19,755,585 197,555,850 11 Mr. Khondoker Jamil Uddin, Director 14,447,562 144,475,620 13,759,583 137,595,830 12 Mr. Amanullah Sarker, Director 14,447,633 144,476,330 13,759,651 137,596,510 13 Mr. Mirza Yasser Abbas, Director 26,602,504 266,025,040 25,335,719 253,357,190 14 Mr. M.N.H. Bulu, Director 14,464,553 144,645,530 13,775,765 137,757,650 15 Mr. Syed Abu Naser Bukhtear Ahmed Independent Director Nil Nil Nil Nil 16 Mr. M.A. Yussouf Khan Independent Director Nil Nil Nil Nil 248,805,241 2,488,052,410 233,877,497 2,338,774,970 Total www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 39 Redressal of Investors’ Complaints Our ways and avenues to redress Investors’ Complaints: • Our corporate website (www.dhakabankltd.com) contains a Complaint Box where respective Officials’ contact numbers are given to attend to the investors query and complaints. • The Bank has designated email address (info@dhakabank.com. bd) where investors can email their complaint which is logged on daily basis and replies are made to the investors. • Investors can also make a written complaint through letter which is taken care of sincerely and proper actions are taken based on the merits of the complaints. • As the complaints are received from the investors, responsible Officials are asked to explain the reason and proper actions are taken to address the problem properly. • Serious complaints are referred to Company Secretary and even to Managing Director of the Bank if so warrants. Shareholders’ Information Redressal of Investors’ Complaints
  40. SHAREHOLDERS ’ INFORMATION 5-year Financial Highlights Shareholders’ Information Continued 5-year Financial Highlights Particulars INCOME STATEMENT Interest Income Interest Expense Net Interest Income Investment Income Commission, Exchange and Brokerage Operating Income Operating Expenses Operating Profit (profit before provision and tax) Provision for Loans, Investments and other Assets Profit Before Tax Tax Including Deferred Tax Profit After Tax BALANCE SHEET Authorized Capital Paid-up Capital Shareholders' Equity Deposits Borrowings Loans & Advances Investments Fixed Assets Earning Assets Total Assets Total Liabilities Total Off-balance Sheet Items FOREIGN EXCHANGE BUSINESS Import Business Export Business Inward Foreign Remittance Guarantee Business CAPITAL MEASURES Risk Weighted Assets Core Capital (Tier-I) Supplementary Capital (Tier-II) Total/Regulatory Capital Statutory Capital (paid up capital and statutory reserves) Capital to Risk weighted Assets Ratio (CRAR) – solo (regulatory capital/RWA) Tier-I Capital Ratio RWA to Total Assets CREDIT QUALITY Volume of Non-performing Loans NPL to Total Loans and Advances (%) Provision for Unclassified Loans Provision for Classified Loans 40 Dhaka Bank Limited Annual Report 2017 (BDT in million unless mentioned otherwise) 2013 2014 2015 2016 % change over 2016 2017 15,131 11,823 3,308 1,616 1,093 6,395 2,701 3,694 650 3,044 1,117 1,927 13,705 10,879 2,826 2,542 1,127 6,857 3,049 3,808 587 3,221 1,192 2,029 12,135 10,116 2,018 3,003 1,316 6,709 3,205 3,504 1,128 2,376 938 1,437 13,166 9,453 3,713 3,238 1,517 8,739 3,336 5,404 2,656 2,748 1,282 1,466 13,715 10,336 3,379 2,884 2,877 9,376 4,171 5,205 2,365 2,839 1,344 1,495 4% 9% (9%) (11%) 90% 7% 25% (4%) (11%) 3% 5% 2% 10,000 5,414 11,887 115,981 3,649 99,596 18,757 2,518 117,624 144,409 1,32,521 45,468 10,000 5,685 12,746 124,854 9,414 103,132 19,699 3,958 124,462 158,748 1,46,002 48,675 10,000 6,254 13,389 139,068 10,635 117,840 20,799 4,100 144,962 176,362 162,974 52,255 10,000 6,879 14,446 157,162 11,297 134,689 21,306 4,194 165,096 202,192 187,746 72,926 10,000 7,223 15,245 170,035 21,534 154,017 23,182 4,263 187,004 229,453 214,208 98,122 0% 5% 6% 8% 91% 14% 9% 2% 13% 13% 14% 35% 73,360 54,212 21,461 9,926 79,774 60,435 25,770 10,731 76,060 69,590 22,486 15,284 101,909 88,050 13,963 27,466 130,573 103,043 10,806 27,585 28% 17% (23%) 0% 117,693 10,927 3,410 14,817 9,595 137,842 12,035 3,403 15,439 10,510 147,343 12,643 2,765 15,408 11,554 159,790 13,770 8,072 21,841 12,729 182,954 14,540 7,345 21,884 13,641 15% 6% (9%) 0% 7% 12.18 11.20 10.46 13.67 11.96 (13%) 9.28 81% 8.73 87% 8.58 84% 8.62 79% 7.95 80% (8%) 1% 4,137 4.15 956 2,186 5,657 5.49 1,449 2,120 5,491 4.66 2342 1,903 5,403 4.01 3,832 2,409 9,209 5.98 3,372 4,407 70% 49% (12%) 83% www.dhakabankltd.com
  41. SHAREHOLDERS ’ INFORMATION Continued Particulars PROFITABILITY & PERFORMANCE RATIO Net Interest Margin (NIM) Credit to Deposit Ratio Gross Profit Ratio Return on Capital Employed Cost to Income Ratio Cost of Fund Return on Assets (ROA)% Return on Equity (ROE)% Current Ratio Cash Reserve Ratio (at the close of the year) Statutory Liquidity Ratio (at the close of the year) Operating Profit Per Employee (mn) Operating Profit Per Branch OTHER INFORMATION Number of Branches Number of ATMs Number of ADMs Number of Deposit Accounts Number of Loan Accounts Number of Employees Number of Foreign Correspondents/Banks www.dhakabankltd.com 2013 2014 2015 2016 2017 % change over 2016 3.56 541.44 46,840.00 21.95 18.80 5.28 0.86 3.57 568.51 41,797.00 22.42 18.30 5.13 0.82 2.30 625.36 32,798.00 21.41 19.70 8.57 0.92 2.13 687.90 28,388.00 21.68 17.90 8.40 0.83 2.07 722.30 26,997 20.97 22.00 10.63 1.05 (3%) 5% (5%) (3%) 23% 27% 27% 17% 5% 4.55 14% 10% 4.17 6% 10% 6.25 10% 5% 3.91 0% 12.50% 2.17 (100%) 150% (45%) 4.32 84.22 24% 22% 42.38 12.33 1.39 16.21 3.18 6.04 21.53 2.55 49.91 4.44 81.26 28% 22% 44.47 10.96 1.34 15.92 2.66 6.63 17.64 2.53 47.01 4.02 84.74 29% 15% 47.77 9.57 0.86 10.74 2.65 6.53 17.14 2.30 40.28 4.58 83.87 30% 13% 38.17 7.88 0.77 10.15 2.51 6.57 14.27 3.24 57.49 3.90 82.64 26% 13% 44.49 7.35 0.69 9.21 0.47 6.58 13.51 2.94 52.05 (15%) (1%) (13%) 0% 17% (7%) (10%) (9%) (81%) 0% (5%) (9%) (9%) 74 46 14 382,786 20,093 1,450 550 81 47 15 407,929 18,801 1,503 565 87 53 19 419,620 19,924 1,524 563 94 54 20 435,152 25,566 1,668 542 100 56 20 477,827 29,759 1,771 527 6% 4% 0% 10% 16% 6% (3%) Dhaka Bank Limited Annual Report 2017 41 5-year Financial Highlights SHARE DISTRIBUTION Earnings Per Share (Taka) Number of Shares Outstanding Number of Shareholders Net Assets Value (NAV) Per Share (Taka) Market Price Per Share (Taka) Price Earnings Ratio Price Equity Ratio Dividend Per Share Cash Dividend (%) Bonus Share (%) Dividend Cover Ratio (BDT in million unless mentioned otherwise) Shareholders’ Information 5-year Financial Highlights
  42. SHAREHOLDERS ’ INFORMATION Shareholders’ Information Continued Economic Impact Report Economic Value Added (EVA) indicates the true economic profit of the company. EVA is an estimate of the amount by which earnings exceed or fall short of required minimum return for shareholders at comparable risks. Shareholders/Equity providers are always conscious about their return on capital invested. As a commercial banking company we are deeply concern for delivery of value to all of our Shareholders/Equity providers. Amount in Taka Economic Value Added (EVA) Statement for the year ended December 31, 2017 Particulars Shareholders' Equity 2016 15,145,245,785 14,445,725,858 7,779,475,833 6,241,383,798 22,924,721,617 20,687,109,656 21,805,915,637 19,160,154,097 Profit after Taxation 1,495,371,858 1,465,928,034 Add: Provision made during the year 2,365,327,422 2,655,665,690 3,860,699,280 4,121,593,724 9.11% 8.78% Average cost of Equity (in Taka) 1,986,518,914 1,682,261,530 Economic Value Added 1,874,180,366 2,439,332,194 1,874 2,439 Add: Provision for Loans and Advances Economic Impact Report 2017 Average Shareholders' Equity Earnings Average cost of Equity (based on weighted average rate of 10 years Treasury Bond issued by Bangladesh Government) plus 2% risk premium Economic Value Added (Taka in million) 42 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  43. SHAREHOLDERS ’ INFORMATION Continued Market Value Added (MVA) is the difference between the market capitalization and the book value of the shares outstanding. A high MVA indicates the company has created substantial wealth for the shareholders. Market Value Added (MVA) Statement for the year ended 31 December 2017 Particulars Amount in Taka 2017 2016 10.00 10.00 Market Value per share 22.00 17.90 722,295,720 687,900,686 15,890,505,840 12,313,422,279 Book value of paid up capital 7,222,957,200 6,879,006,860 Market Value Added 8,667,548,640 5,434,415,419 8,668 5,434 Number of shares outstanding Total market capitalization Market Value Added (Taka in million) www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 43 Market Value Added Statement Face Value per share Shareholders’ Information Market Value Added Statement
  44. SHAREHOLDERS ’ INFORMATION Continued Market Indicators & Ratios 5-Year Essential Performance Graphs-Bank Shareholders’ Information 5-Year Essential Performance Graphs-Bank 44 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  45. SHAREHOLDERS ’ INFORMATION Continued 5-Year Essential Performance Graphs-Bank Shareholders’ Information Balance Sheet 5-Year Essential Performance Graphs-Bank www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 45
  46. SHAREHOLDERS ’ INFORMATION Continued Balance Sheet Mix 5-Year Essential Performance Graphs-Bank Shareholders’ Information 5-Year Essential Performance Graphs-Bank Revenue Mix 46 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  47. SHAREHOLDERS ’ INFORMATION Continued Shareholders’ Information Revenue 5-Year Essential Performance Graphs-Bank www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 47
  48. SHAREHOLDERS ’ INFORMATION Key Ratios 5-Year Essential Performance Graphs-Bank Shareholders’ Information Continued Foreign Exchange Business 48 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  49. SHAREHOLDERS ’ INFORMATION Continued Shareholders’ Information Glimpses of 22nd AGM Glimpses of 22nd AGM www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 49
  50. Directors ' Report DIRECTORS’ REPORT 2017 SustainabilityR esponsibility Green Banking Digitial Space Corporate Social Responsibility Financial Inclusion The present day function of Banking, like most areas of economy and state, puts highest stress on care for the Planet. So, Sustainable Growth and Responsible Banking is extremely important. Business continues financial growth and brand positioning keeping environment at the forefront. So in the process of running business, we place Green Banking, SME Banking, Financial Inclusion, Corporate Social Responsibility before many thing else. DBL therefore upholds comprehensive and inclusive Banking in its long- & shortterm goals & needs. 50 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  51. DIRECTORS ’ REPORT 2017 Transition from 2017 to 2018 On the economic front, 2017 has been a year of mixed reviews. As per IMF, economic growth accelerated in about three quarters of the countries -- the highest share since 2010. Throughout 2017, equity valuations have continued their ascent and are near record highs, as Central Banks have maintained accommodative monetary policy settings amid weak inflation. This is part of a broader trend across global financial markets, where low interest rates, an improved economic outlook, and increased risk appetite boosted asset prices and suppressed volatility. While easier financial conditions bolstered growth momentum, they also pose risks if the search for yield extends too far. In 2018, as per the predictions of World Bank, it is expected that growth in advanced economies will be moderate. Central Banks will gradually remove their post-crisis accommodation and there will eventually be an upturn in investment. Growth in emerging market and developing economies as a whole is projected by World Bank to strengthen to 4.5 percent in 2018 as activity in commodity exporters continues to recover. Developed Economies UNITED STATES Growth picked up in the United States in 2017 to an estimated 2.3 percent, supported by strengthening private investment. The recovery reflected a diminished drag from capacity adjustments in the energy sector, rising profits, a weakening dollar, and robust external demand. Economic activity was a little disrupted by major hurricane landfalls in September, and reconstruction efforts are likely to offset any negative effects over time (Deryugina, Kawano, and Levitt 2014). Private consumption continued to grow at a robust pace despite modest real income gains and moderate wage growth, as the personal savings rate fell further. Households’ income expectations continued to recover following a prolonged period of weakness. Labour market slack diminished further and employment growth slowed. With the economy www.dhakabankltd.com JAPAN In Japan, growth picked up in 2017 to an estimated 1.7percent. Domestic demand firmed, supported by a gradual recovery in consumer spending and investment, as well as the implementation of a fiscal stimulus package. Exports accelerated in response to strengthening global demand, but the net trade contribution to growth remained unchanged as imports picked up as well. Labour market conditions continued to tighten, with the unemployment rate at a 22-year low amid growing labour shortages. However, wage growth remained moderate and inflation below 1 percent. In this context, the Bank of Japan left policy rates unchanged in 2017 and continued to calibrate its bond purchases to stabilize long-term bond yields around zero. Growth is expected to slow to 1.3 percent in 2018, as fiscal stimulus is withdrawn and export growth moderates. In 2019, growth is forecast at 0.8 percent, in line with average potential growth estimates. The planned consumption tax hike in October 2019 is expected to have a negative effect on growth in 2020, which is projected to slow temporarily to 0.5 percent. Population aging and a shrinking labour force continue to weigh on long term growth prospects (Japan Cabinet Office 2017; Kawamoto et al. 2017 as cited in World Bank, 2018). EUROPEAN UNION: Growth in the European Union gained substantial momentum in 2017, reaching an estimated 2.4 percent 0.7 percentage point higher than previously expected- with broad-based improvements across member countries spurred by policy stimulus and strengthening global demand. In particular, private sector credit continued to respond to the stimulative stance of the European Central Bank, and both domestic demand and import growth were robust. The unemployment rate reached its lowest level since 2009, and labour shortages became increasingly prevalent in some countries. However, wage growth remained subdued, and the appreciation of the euro during 2017 is likely to further delay a pickup in inflation in 2018, as it puts downward pressure on import prices. With inflation remaining below target, the ECB is expected to keep interest rates unchanged during 2018, but to gradually scale back asset purchases. The aggregate fiscal stance of the Euro Area was somewhat expansionary in 2017 (European Commission 2017 as cited in World Bank, 2018).The cyclical upturn is expected to continue in2018, albeit at a more restrained pace, as domestic demand loses some momentum following strong gains in 2017, and policy stimulus is gradually unwound. GDP growth is expected to be 2.1 percent in 2018, down from the previous year but notably stronger than previously projected. Over the longer term, growth prospects remain constrained by Dhaka Bank Limited Annual Report 2017 51 Global Economic Situation Global Economic Situation moving closer to full employment, and despite inflation running below target, the U.S. Federal Reserve continued to normalize monetary policy in 2017, raising interest rates and starting to gradually reduce the size of its balance sheet (FOMC 2017). Recently legislated corporate and personal income tax cuts are expected to provide a lift to activity over the forecast horizon-particularly to investment, by lowering the statutory corporate tax rate and by allowing full expensing of new equipment. Directors' Report It is indeed a pleasure placing Report for the 23rd Annual General Meeting of Dhaka Bank Limited. The Bank does have a strong legacy of serving nationwide Customers with best products and services. Our journey is full with moments of success and we are honoured to partner with the people of the country to build a great nation. We have taken this journey with the support of thousands of our Shareholders, who have relentlessly stood by us on our approach to business. We will continue receiving support from our Shareholders to take your Company to greater heights in the coming years. Presenting Annual Report to our valued Shareholders and other stakeholders is a matter of delight. The Report mainly comprises Auditors’ Report, Directors’ Report, Management Analysis of Business, Audited Financial Statements of the Bank and its Subsidiary Company. General review of this Report, unless explained otherwise, is based on the financials of the Bank rather than consolidated financial statements. Moreover, the Directors would like to explain and disclose certain issues, which they deem relevant and important to ensure transparency and good governance practices. We hope, the Report will provide you with genuine insights into the Bank’s performance and continuous growth amid stiff competition in the industry.
  52. DIRECTORS ’ REPORT 2017 Global Economic Situation Directors' Report Continued the shrinking of the working-age population in the majority of Euro Area economies and persistent productivity and competitiveness gaps among the peripheral members (Díazdel Hoyo et al. 2017 as cited in World Bank, 2018). China and other Emerging Economies A structural slowdown in China is seen offsetting a modest cyclical pickup in the rest of the region. Risks to the outlook have become more balanced. Stronger-than-expected growth among advanced economies could lead to faster-than-anticipated growth in the region. On the downside, rising geopolitical tension, increased global protectionism, an unexpectedly abrupt tightening of global financial conditions, and steeper-than-expected slowdown in major economies, including China, pose downside risks to the regional outlook. Growth in China is estimated to have reached 6.8 percent in 2017- an upward revision from June forecasts, reflecting continued fiscal support and the effects of reforms, as well as a stronger-than expected recovery of exports and a slight positive contribution from net trade. Domestic rebalancing continued, with drivers of activity shifting away from state-led investment. China’s trade flows recovered markedly in 2017, partly reflecting rising commodity imports amid tightly enforced production cuts as well as strengthening foreign demand. Consumer price inflation increased steadily throughout the year but remained below target, while producer price inflation was stable, supporting a recovery of industrial profits. House price growth continued to slow, reflecting tighter regulations in larger cities. Despite further monetary and regulatory tightening in 2017, the total stock of non-financial sector debt, at about260 percent of GDP, continued to expand on a year-onyear basis (BIS 2017; World Bank 2017a). On the external side, the current account surplus continued to narrow but, with a moderation of net capital outflows, foreign exchange reserves recovered in 2017. In the second half of the year, the renminbi reversed some of its previous nominal appreciation following the removal of reserve requirements for foreign currency trading. Chinese growth is projected to edge down in 2018 to 6.4 percent as policies tighten, and average 6.3 percent in 2019-20. Long-term fundamental drivers of potential growth point to a further slowdown in China’s growth over the next decade, as population aging is expected to depress labor supply. On the other hand, in South Asia, it is expected that consumption will stay strong, exports will recover, and investment will be on track due to 52 Dhaka Bank Limited Annual Report 2017 policy reforms and infrastructure upgrades. Setbacks to reform efforts, natural disasters, or an upswing in global financial volatility could slow the growth. Economic growth of Central Asia will largely depend on policy reforms, economy of surrounding Euro Area and oil price fluctuation. Reforms across Middle East will be accelerated while oil price volatility will be reduced and tourism sector will get momentum in non-oil dependent economies. At the same time continued geopolitical conflicts and oil price weakness strengthens the possibility to set back economic growth. In African Region, growth will depend on commodity prices, fiscal constraints and implementation of policy reforms. Whereas in Latin America and the Caribbean region, growth momentum is expected to gather as private consumption and investment strengthen, particularly among commodity-exporting economies. Additional policy uncertainty, natural disasters, a rise in trade protectionism in the United States, or further deterioration of domestic fiscal conditions could throw growth off course. Global Inflation remained below target Despite the significant economic expansion since the financial crisis, inflation in the advanced economies has largely remained below the target of Central Banks. The persistence of slow wage growth and low inflation has surprised most in the USA, where the main unemployment measure has fallen well below what used to be regarded as the critical level at which inflation would pick up. In other countries, particularly Germany, the persistence of low inflation has also surprised, not least because, until 2017, strong growth went hand in hand with currency weakness, which should have boosted inflation.The reason behind such low inflation include intense competition for goods and services on a global or national and regional level; the spread of an internet-based services economy, which increases price transparency, undermines oligopolies and eases market entry; the flexible “gig” economy, as well as digitalization and robotics, which put pressure on specific labour market segments and wage structures; deliberate efforts of governments to deregulate labour markets; and the persistent weakness of organized labour. Global Trade throughout 2017 Global goods trade volumes have gathered significant momentum since mid-2016, following two years of pronounced weakness. A cyclical rebound in investment contributed to strong growth of trade in machinery, electronics and, semiconductors. Momentum was sustained throughout 2017, and global trade growth is estimated to have reached a stronger-than-expected 4.3 percent, thanks to synchronous recovery in import demand from both Advanced Economies and Emerging Market and Developing Economies (EMDEs). Export growth accelerated in most EMDE regions. However, it decelerated in the Middle East and North Africa, partly reflecting cuts in oil production agreed by OPEC members. Monetary Policy and Interest Rates Global financing conditions remain benign, benefiting from an improved global growth outlook and historically low interest rates, despite prospects of further monetary policy normalization in major advanced economies. The U.S. Federal Reserve hiked policy interest rates three times in 2017. It also began to gradually reduce the size of its balance www.dhakabankltd.com
  53. DIRECTORS ’ REPORT 2017 Continued key grains to multi-year highs. Moreover, fears of supply disruptions (notably, wheat in North America), which temporarily boosted some grain prices, have diminished. Low energy prices have helped reduce grain and oilseeds costs, given that their production is relatively energy-intensive, and have also reduced incentives to divert land to the production of bio-fuels. Moreover, highly accommodative financing conditions in major advanced economies supported a search for yield and strong demand for EMDE assets in 2017. This was reflected in declining bond spreads, particularly for EMDE investment grade borrowers, and an increase in capital flows, including portfolio and international bond issuances. Among commodity-exporting EMDEs, the waning effect of the termsof-trade shock, combined with moderating inflation and external imbalances, helped support market sentiment. Overall, capital inflows rose as a share of EMDE GDP in 2017, recovering further from their post-crisis low in 2015. The increase was particularly notable in Asia and Eastern Europe and Central Asia, while flows into Latin America remained weak. A rise in portfolio and bank lending flows were the main drivers of the overall improvement. Although foreign direct investment (FDI) flows were broadly stable in aggregate, the experience varied across regions. FDI flows to Asia remained strong, supported by a robust growth outlook and policy efforts to attract foreign investment (e.g., India, Indonesia, Vietnam). FDI flows to Sub-Saharan Africa rose only slightly in the wake of a moderate rise in commodity prices and an increase in non-commodity investments, and FDI inflows to Middle East and North Africa also posted modest growth, supported by privatization plans and improvements in business regulations (e.g., Algeria, the Arab Republic of Egypt, Tunisia). Monetary Policy July – December 2017 Metals prices gained 22 percent in 2017 partly due to robust demand from China. Low stocks for some metals, notably aluminium and zinc, and China’s efforts to reduce surplus production capacity and limit industrial pollution, also helped lift prices in the second half of 2017. Agricultural prices weakened marginally in 2017 and are projected to remain stable in 2018 and 2019. Weighing on prices is the fact that improved growing conditions have pushed stocks-to-use ratios of www.dhakabankltd.com Bangladesh Economy Bangladesh Bank (BB) announced Monetary Policy Statement (MPS) for the first six months of FY 2017-18. This monetary policy aimed at facilitating short-and medium-term macroeconomic management, with monetary and financial policies promoting socially responsible financing, facilitating attainment of the government's near-and longer-term inclusive, environmentally sustainable growth objectives. Central Bank declared to achieve GDP growth target of 7.40 percent and it also kept inflation target to 5.5 percent. The monetary policy will continue policy supports for financing of farm/non-farm MSME output initiatives, with realigned greater emphasis on the employment-focused manufacturing and service sub-sectors, and for ‘green’ projects of adopting environmentally benign output practices. Central Bank also declared to prioritize its forecasting capabilities and remove impediments to market-based financial pricing, including high NPLs from lax lending discipline, and nonmarket pricing of government’s non-bank NSCs borrowings. Macroeconomic Scenario During July - December 2017, export growth picked up and remittance witnessed a broad-based improvement but at the same time, strong import growth widened trade and current account deficits. The current account deficit was largely compensated by favourable financial accounts, with higher foreign direct investment and medium- to longterm loans (MLTs). Now, current account deficit is $1.5 billion, a figure of -0.6 percent as percentage of GDP. A large deficit has emerged after several years of surplus, leading to slower reserve accumulation with reduction in the size of overall balance of payment surplus. Bangladesh experienced a modest uptick in FDI inflow in 2017 at $2.5 billion, primarily from reinvestment. Total foreign aid disbursements during July-November, 2017-18 increased significantly by US$ 0.76 billion or 80.54 percent compared to July-November, 2016-17 and stood at US$ 1.71 billion. After principal repayment of US$ 0.44 billion, the net receipt of foreign aid stood at US$ 1.27 billion during July-November, 2017-18 as compared to US$ 0.58 billion of the same period of the previous year. Growth in GDP According to the BBS final estimate the real Gross Domestic Product (GDP) growth in FY2017 increased by 0.17 percent points to register 7.28 percent growth. An analysis of contribution to GDP growth and a comparison with the previous fiscal year’s performance (7.11 percent GDP growth) shows that the incremental growth owed primarily to an increased contribution from the services sector, and in particular, from the wholesale and retail trades sector. Growth contribution from financial Dhaka Bank Limited Annual Report 2017 53 Global Economic Situation & Bangladesh Economy COMMODITIES Energy and metals prices recovered in 2017 while agricultural prices remained broadly stable, in line with June expectations. Oil prices averaged $53 per barrel (bbl) in 2017, but were volatile throughout the year. Despite an agreement by some Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers to cut production, oil prices dropped to $46 in mid-2017, reflecting a rebound in U.S. crude oil output and rising production from Libya and Nigeria, which were exempted from production targets. The price dip temporarily halted the upturn in U.S. shale drilling. Oil prices are projected to average $58/bbl in 2018- a slight upward revision from June forecasts-and edge up to $59/bbl in 2019. These projections reflect expectations of an increase in U.S. production due to continued efficiency gains in the shale oil industry, moderate non-OECD demand growth, and very limited OECD demand growth. Directors' Report sheet in October 2017, although the target level over the mediumterm has not been specified yet. Despite prospects of tighter monetary policy, U.S. and Euro Area bond yields remained at historically low levels throughout 2017, reflecting subdued inflation trends and expectations of structurally low real interest rates (Rachel and Smith 2017). Amid low nominal and real interestrates, financial market volatility remained subdued despite policy and geopolitical uncertainties.
  54. DIRECTORS ’ REPORT 2017 intermediations also improved significantly in a year that was marked by deteriorating performance of the banking sector of the country. In FY2017, industries sector’s contribution has dropped due to lower contribution by both manufacturing and electricity sectors. In case of agriculture (broad) sector, the contribution was revised to lower than that reported in the provisional estimates as it incorporated the substantial loss of crop due to flash flood in haor areas in April 2017. not only for exports but also for remittances. Furthermore, total reliance on unskilled labour-intensive exports can prove to be self-defeating in the long run when the reliance on unskilled labour in the context of rapidly changing technological innovations and increased industrial automation can prove to be an unviable option for export-oriented industrialization of the future. Exchange Rate Following protracted stability, BDT started to experience some depreciation since second quarter of FY2017. Monthly average nominal exchange rate (NER) in the first half of FY2018 was USD/ BDT 82.57 (December 2017). Real effective exchange rate (REER), has declined in the first five months of FY2018 from 153.4 in July to 150.7 in November 2017. Analysis of the cross-currency rate with Bangladesh’s major trade competitors reveals that BDT is regaining its pre-appreciation level. For instance, INR-BDT exchange rates, now 1.25 (INR to BDT), has reached the rate posted in 2015. Bangladesh Economy Directors' Report Continued Export and Import Performance Exports sector performance has been sluggish but it is gradually picking up. Exports experienced an insufficient growth of 1.7 percent in FY17, the lowest in the last 15 years. A fall of the euro against the US dollar, uncertainty surrounding Brexit and the US elections and a decline in consumption in the West are some of the main factors that contributed to a slowdown in export growth. Bangladesh also received a sharp blow in June this year when the EU, placed Bangladesh on a list of high-risk exporters because of concerns about insufficient safety and security. Bangladesh continues to rely on traditional regions/countries namely the EU and the U.S. for majority of its export revenue. Even though RMG exports are gradually diversifying geographically towards more nontraditional destinations like Japan, Australia and Russia, there is still a long way to go both for RMG and non-RMG exports. The non-RMG items like tricycles, hats and caps, spectacles and objective lenses, cement and various chemical products, and golf equipment etc. were exported by some 4,000 exporters. As the trade policy regime has an anti-export bias, these exporters lack the incentive to become large and focusing on exports rather than the domestic market. This year, the Export Promotion Bureau has set a target of 8.2 percent export growth for which exports would have to amount to approximately $3.2 billion every month for the remaining period. It would make sense to also target some progress in export diversification that would aim at reducing export concentration. Import in FY17 increased by 9.0 percent and stood at $43.5 billion from $39 billion in FY16. Almost half of the import payments were spent on intermediate goods which comprise of key raw materials for manufacturing and exports sector. According to the Ministry of Food, Bangladesh imported more than 1.0 million tonnes of rice in the JulyOctober period of FY18. As the global economy shows signs of strengthening and trade flows are gathering momentum, Bangladesh can look forward to see a rebound in its exports. But this trade recovery still remains fragile, and cannot be taken for granted. Related to this an over-valued taka remains a concern 54 Dhaka Bank Limited Annual Report 2017 Foreign exchange reserve has also declined to US$ 32.0 billion as of 3 January 2018, from US$ 33.5 billion as of 30 June 2017. This depletion of forex reserve can be explained by the high growth of import payments, relatively lower export growth and sluggish recovery of growth in remittance. Moreover, Bangladesh Bank has seemingly refrained from intervening in the form of large scale foreign exchange purchases of US$ in the past few months. Remittance Remittance has been on a decline since last fiscal year, registering a decline of -14 percent in FY17 but is heading towards a positive trend in FY18. The slump in FY17 was due to lingering weaknesses in the Gulf Cooperation Council economies, consisting of some of the top destination countries for Bangladeshi migrant workers, as a result of the low oil prices and burgeoning fiscal deficits. The oil exporting countries in the Gulf region struggled with low oil prices and their commitment to cutting crude output per last year's November OPEC deal which ultimately had repercussions on investment and household consumption. Some other factors which contributed to the slump include the rise in a negative sentiment against immigrant workers in the U.S. and the U.K. owing to U.S. elections and Brexit, cautiousness in international money transfer operations and the large discrepancy between formal and informal exchange rates. Another reason for the decline in official remittance figures, can be attributed to the gaining importance of informal/illegal channels for transferring funds. Many expatriates are sending money home through the use of mobile financial services (MFS), sometimes referred to as "digital hundi" when not reflected in official inflows. Inflation After a period of steady decline, an increasing trend of inflation has been witnessed in 2017 due to an uptick in food inflation. In September, the point-to-point inflation rate hit a two-year-high of 6.12 percent, www.dhakabankltd.com
  55. DIRECTORS ’ REPORT 2017 Continued Interest rate spread has narrowed to 4.4 percent in November 2017 from the previous 4.7 percent in June 2017. The tightening of spreads partly reflects the gradual creep up of deposit rates as Banks' demand for additional funding rose from higher credit growth. We can expect that significant funds will continue to flow to the capital market in 2018 due to a sustained downtrend in interest rates and a depressed real estate sector. Moreover, total liquid assets of the scheduled Banks stood at Taka 259,601.25 crore as of end December 2017 which was Taka 267,194.31 crore at the end of June 2017. The minimum required liquid asset of the scheduled Banks was Taka 172,904.86 crore as of end December 2017. Sectoral distribution of total liquid assets as of end December 2017 in the form of cash in tills & balances with Sonali Bank Ltd., CRR, excess reserves, balances with Bangladesh Bank (foreign currency) and un-encumbered approved securities were 5.11 percent, 24.66 percent, 4.52 percent, 2.72 percent, and 63.00 percent respectively of total liquid assets. The main reason of concern for the Banking Sector at present is the ever increasing amount of Non-Performing Loans (NPL). The banking sector is suffering from bad loans which are affecting the Banks' profit www.dhakabankltd.com Making the story of endeavour and success Dhaka Bank is reminiscent of another ‘Dhaka Bank’ that dated back in the history in the city of Dhaka under the British Empire. A passion for heritage with the velocity of technological excellence set the pace of DBL in 1995 amidst great expectation of the countrymen. Now at the height of success, Dhaka Bank crossed more than two decades of banking excellence in the country. We call it a tale of prosperity and financial triumph with many petals to look around. DBL formally launched its operation in July, 1995 with a Branch at Motijheel, Dhaka. Islamic Banking window was opened in July of 2003. The company got listed with DSE and CSE in April 2000. Subsequently, DBL embarked on capital market services which amounted to the establishment of a subsidiary ‘Dhaka Bank Securities Limited’ in 2011. DBL opened up new avenues for foreign investors in the country by setting up Offshore Banking Unit in 2006. DBL network is now strong with 100 Branches including 2 Islamic Banking Branches, 56 ATMs, 20 ADMs, 3 SME service centres, 6 Brokerage Branches (DBL Securities), 2 Off-shore Banking Units and 1 Business Kiosk brightened with cutting edge delivery system, internet banking and mobile banking operation. We have left behind a track with an illustration of prosperity for 23 long years. With unbound joy and ecstasy we have celebrated our 23rd Anniversary on July 5, 2017 taking the pride of a balance sheet size of Tk. 229 billion, deposits of Tk.170 billion and advances of Tk.154 billion along a sustainable profit track of approximately Tk.5,205 million as on December 31, 2017. It is the perseverance and tenacity of the Board and our fellow Colleagues who have made our presence indispensable to the community. In our ultimate goal, we want to be a powerful voice for country’s economic development with a melody that we want to be heard even from the distant borders. Scopes of business Dhaka Bank acts as a trusted custodian of Customers’ deposit and a true financier of their wants. Apart from financial intermediation, DBL undertakes a series of financial services in exchange of fees and commissions. The mode of banking operation includes both conventional and Islamic Banking based on Shari’ah principles. DBL runs its business with a country-wide reach through state-of-the-art delivery system supported by real-time online banking. The Bank has established its own subsidiary named “Dhaka Bank Securities Ltd.” on February 13, 2011 to provide brokerage services and margin loans in the capital market. DBL has Off-Shore Banking Unit to provide banking services in Non-Resident foreign currency denominated assets and liabilities. Dhaka Bank Limited Annual Report 2017 55 Bangladesh Economy Banking Sector As of June 2017, public credit registered a negative growth of 12.02 percent compared to BB projection of positive 16.1 percent. The growth remained negative throughout the year as government was cleaning up too much money through saving instruments. In contrast, private sector credit growth hit a 57-month high in July 2017 as Banks have shifted focus on consumer loans, SME and farm loans to sustain their profitability. However, it was probably the government's on-going mega infrastructure projects that made major contributions to the higher credit growth in 2017. Some Banks have recently started to finance the large infrastructural projects, particularly in the energy sector, which made credit growth vibrant. Private credit also got a boost from import of industrial raw materials and capital machineries destined for large infrastructure and industrial undertakings. Banks are now also focusing on lending to agriculture and small- and medium-sized enterprises to expand their business activities, which is also helping boost private sector credit growth. To stimulate consumption expenditures, the Central Bank has also doubled the credit card limit to Tk 1.0 million and extended the personal loan ceiling to Tk 0.5 million from Tk 0.3 million. Thus the higher private credit growth in FY2017 is the outcome of several credit boosting initiatives by banks and the private sector. margin, and adversely impacting business expansion and job creating investments. In a span of 8 years, the amount of NPLs in the Banking system almost doubled. Though not in a turmoil like NPL issues of SCBs, Private Commercial Banks (PCBs) are also not immune to the NPL problem. Loan concentration, rescheduling problems, and mismatch of deposit-lending periodicity are festering problems in this group of Banks, though in a relatively lesser degree. Flexible measures, including loan rescheduling or restructuring policy favouring powerful people and lack of punishment for fraudulence in Banks should set off alarm bells in the banking sector. Directors' Report primarily due to rise in prices of some food and non-food items. The rise in food inflation reflects mostly rice price increases due to cost push factors such as high tariffs on rice imports as well as production shortfalls due to early floods and blast outbreak and a decline in public stocks. Although tariff has been reduced to 2 percent in August 2017, a permanent effect of increased rice import on the inflation figure will take a bit of time to have its impact. According to the final estimates by BBS, real GDP, supported by manufacturing and services, grew robustly by 7.28 percent in FY17, outperforming the average growth of 4.7 percent for emerging market and developing economies in 2017. Based on the recent sectoral trends and econometric estimates, Bangladesh Bank projects real GDP in the range of 7.1-7.4 percent in FY18, assuming continued political stability.
  56. DIRECTORS ’ REPORT 2017 Bangladesh Economy & Highlights of Financial Performance Directors' Report Continued Core areas of DBL business and banking • Care for customers’ deposit as a trusted custodian • Honour cash withdrawal by depositors on demand • Extend credit to large corporate business • Finance SME • Organize syndicated deals and structured finance • Conduct retail business • Finance import and export business (trade finance) • Take on project financing • Carry out lease and hire purchase financing • Issue local and international credit cards • Deliver Islamic banking services based on Shari'ah principles • Channel remittance from abroad • Provide off-shore banking service We value our Customers Customers are our first priority and driving force. Superior Customer service through the integration of the state-of-the-art technology is our motto. Our Customers come from all walks of life. They are professionals, businessmen, large companies, small enterprises, public servants, entrepreneurs, homemakers, marginal farmers, residents and non-residents maintaining local and foreign currency accounts comprising men and women. Introducing new products and upgrading existing ones are the strategies we adopt to serve our Customers. We are aware of natural consequences of globalization, liberalization, privatization, reforms, foreign investment, economic policy and infrastructure development. We have a long-term sustainable bond with our Customers caring and sharing with their values. To serve the millions in multiple forms of relationship, we have resolved to guide our way through the flashes of good governance and ethical practices on the top. Forces of globalizations, global challenges and changes all around have cast a shadow of volatility and uncertainties ahead. As a trusted custodian of people’s hard-earned money, we cannot shake their confidence. It is unwarranted too to put depositor’s interests at whims just for windfall gains. So Dhaka Bank activities have turned out to be a promising engagement and a reward of binding relationship. Our corporate responsibilities always look forward to sustainable means. Highlights of Financial Performance Profitability and performance of Dhaka Bank Dhaka Bank Limited recorded profit after tax of Tk.1,495.37 million in 2017 in comparison with Tk. 1,465.93 million in 2016 as a result of critical market condition. Bank focused on protection of Shareholders’ equity through building up remarkably higher Provision against Loans & Advances. Though the growth is notably not very significant considering earlier profitability of the Bank, the positive & significant movement in Provision built up depicts a cautionary outlook taken by the Bank during this time of drastic decrease in asset quality in the banking industry. Bank’s performance was accomplished mainly from downsizing of loan loss, sticking to core banking business, consolidation of business mix with expanded pie on SMEs, efficient cost management as well as appropriate strategic choice. 56 Dhaka Bank Limited Annual Report 2017 Our overall business performance for the year 2017 suggests that our achievement particularly revenue basket was more viable than we have expected especially in the category of investment income and fees & commission income. We have every reason to explain our position under most difficult circumstances that banking sector got through in 2017. Bank’s net interest income decreased by 9%, total operating income was sustained by reasonable growth in investment income (7.28%) and commission, fees & brokerage income (19.30%). Thus the Bank secured an amount of Tk. 9,375.51 million in Operating Income. On the balance sheet side, the Bank shaped an amazing balance in assets of Tk. 229 billion showing up an increase of Tk. 27 billion from Tk. 202 billion of 2016. The growth was achieved on the wings of 14.35% growth in Loans and Advances. Deposits also showed a growth of 8.19%. The Bank continued to have notable capital adequacy at11.96% in accordance with Basel-III requirement. Total Shareholders’ Equity increased to Tk.15.25 billion in 2017 from Tk. 14.45 billion in 2016. Liquidity maintained a comfortable position with liquid assets (cash, balance with other banks and financial institutions, money at call, treasury bonds and tradable securities) forming 20.96% of total assets. The Bank successfully improved its portfolio of Loans & Advances through increasing Loan to Deposit ratio at 82.64% at the yearend 2017 which was 83.87% in 2016. Appropriation of profit Profit after Tax (PAT) stood at Tk. 1,495 million. Profit available for distribution among shareholders is Tk. 953 million after a mandatory transfer of statutory reserve of Tk. 568 million (@20% on PBT). Directors have recommended by stock dividend @12.50% for the year 2017 (12.50 shares out of 100 shares held on record date) subject to approval in the AGM. Payment of dividend Optimizing Shareholders’ value always gets priority here in Dhaka Bank Limited. During the period of more than a decade, Bank’s dividend rate was as minimum as 1 share for 4 shares each (25% in stocks) and as maximum as 3 shares for 10 shares each (30% in stocks) in addition to cash dividend. In almost all occasions, Bank’s dividend was paid largely in stocks with a marginal proportion in cash. The initiative enhanced Bank’s solvency through capital adequacy. Capital adequacy Dhaka Bank is a firm follower of guidelines of the Bangladesh Bank regarding capital adequacy and its policy is to maintain regulatory capital at a level which is higher than the minimum required capital. Bank’s strength in capital base is also significant in the fact that the ratio of eligible capital to Risk Weighted Assets (RWA) was 11.96% as of Dec 31, 2017. The Bank has already entered the Basel III regime since January 2015 as an enhanced regulation for capital adequacy, liquidity and stability and remains committed to compliance of the requirement in phases till 2020. www.dhakabankltd.com
  57. DIRECTORS ’ REPORT 2017 Continued Particulars Profit after Tax (PAT) Retained earnings brought forward To be appropriated Transfer to statutory reserve Transfer to general reserve Dividend for the year 2017 (recommended) Stock dividend Cash dividend Retained earnings to be carried forward Dividend Year 2017 1,495.37 1,031.85 Year 2016 1,465.93 1,000.58 567.84 (115.52) 549.60 (38.19) 12.50% 953.47 5% 10% 942.27 1,031.85 1,000.58 Bank believes that the credit rating has a healing impact on the risky assets of Bank. Minimum capital requirement decreases significantly with a safer portfolio. Credit rating gives the Bank an economical advantage in holding minimum capital as the measure for risk weighted assets unloads risks from the rated exposure. As per regulatory practice, funded exposure to a Customer having external rating of at least double B (BB) with Bangladesh Bank rating grade 4, requires risk weight of 100% whereas exposure to any unrated Customers is risk weighted by 125%. Since external rating of most of our rated corporate Customers falls in the range of A to AAA (BB rating grade 1 & 2) bearing risk weight of 50% or below, the more our Customers do their entity rating, the less will be the capital requirement of Dhaka Bank. We will move forward with this vision to place the Bank on a sound financial footing in 2018 and coming days ahead. History of raising capital Dhaka Bank Limited started its operation as a private commercial Bank in the country on July 5, 1995 with a start-up authorized capital of Tk. 1,000 million and paid-up capital of Tk. 100 million. The Bank strengthened its authorized capital base in 2005 by raising the same from Tk. 1,000 million to Tk. 2,650 million and Tk. 6,000 million in 2007. Authorized capital was further enhanced to Tk. 10,000 million by passing a special resolution in the Bank’s 4th Extra-ordinary General Meeting (EGM) held on July 4, 2010. Out of the total issued, subscribed and paid-up capital, 1,320,000 ordinary shares of Tk. 100 each amounting to Tk. 132,000,000 was raised through Initial Public Offering www.dhakabankltd.com Special assets management Growing trend of Non-Performing Loan (NPL) again was a headache for banks in 2017 due to which the industry experienced remarkable pressure in deteriorating asset quality.In a year span, classified loans amounted to Tk. 921 crore from Tk. 540 crore of 2017. The amount of NPL increased to BDT 381 crore in 2017. In 2017, non-performing loans (NPL) to total loans ratio reached to 5.98% compared to 4.01% of the year 2016. Financial malpractices by a few groups, dull performance of the industry sector as well as extra cautious regulatory control on classification were some of the key players in shaping such the industry scenario in 2017. Non Performing Assets by Segments BDT Million As on As on Change 31.12.2017 31.12.2016 144,808 129,286 12.01% Particulars Unclassified Loans Standard (Including Staff Loan) Special Mention Accounts (SMA) Classified Loans Sub-standard (SS) Doubtful (DF) Bad/Loss (BL) Total Loans Non Performing Loans 142,014 124,365 14.19% 2,794 4,921 (43.22)% 9,209 322 1,809 7,088 154,017 5.98 5,403 70.44% 257 25.29% 288 528.13% 4,858 45.90% 134,689 14.35% 4.01 49.13% Summary of Segmented Performance The Bank operates under the following business segments along with a fully owned subsidiary of the Bank. The operations of these segments are specifically identified by income, expenses, assets and liabilities. Based on such allocation, segmented balance sheet as on December 31, 2017 segmented profit and loss account for the year ended December 31, 2017 have been prepared. Corporate Banking Division Dhaka Bank is more recognized among its valued Corporate Customers. DBL Corporate Banking provides financial products & services that fulfill various banking needs of large Corporate Houses, as well as Financial Institutions & Micro-Credit Organizations. Our product basket ranges from short term financing of day to day business operations to long term loans for expansion of business. In year 2017, Corporate Deposit registered 9% year on year growth. Import and Export also witnessed a YoY growth of 32% and 17% respectively. Corporate portfolio dominated Dhaka Bank Limited Annual Report 2017 57 Highlights of Financial Performance & Summary of Segmente Credit rating vis-à-vis capital adequacy Dhaka Bank is keen to ensure proper credit rating by fair banking practices. Bank kept up efforts to pursue its corporate and SME-mid Customers to get credit rated by eligible External Credit Assessment Institutions (ECAI). Credit rating by eligible rating agencies played an important role in decreasing Bank’s capital requirement. In accordance with Bangladesh Bank BRPD Circular No. 05 dated April 29, 2009 and BRPD Circular No. 31 dated October 25, 2010, Dhaka Bank has nominated 8 (Eight) recognized External Credit Assessment Institute (ECAI) namely, (i) Credit Rating Information & Services Ltd. (CRISL), (ii) Credit Rating Agency of Bangladesh (CRAB), (iii) National Credit Rating Ltd., (iv) Emerging Credit Rating Ltd, (v) ARGUS Credit Rating Services Ltd., (vi) WASO Credit Rating company (BD) Ltd., (vii) Alpha Credit Rating Limited & (viii) Bangladesh Rating Agencies Limited (for SME clients only). (IPO) of shares held in February 24, 2000. The Bank has increased its paid-up capital twice by issuance of 2:1 right share at par on April 15, 2003 and November 30, 2005 respectively. As on December 31, 2017, equity of the Bank including retained earnings reflected a balance of Tk. 15,245.25 million. Equity as a percentage of total assets was 6.64%. Bank’s paid-up capital increased by Tk. 344 million at the year ended 2017. The statutory reserve also increased by Tk. 568 million due to transfer of 20% of pre-tax profit under regulatory compliance. Directors' Report BDT Million
  58. DIRECTORS ’ REPORT 2017 Summary of Segmented Performance Directors' Report Continued the total Loan Portfolio with 84% stake. Cash Management Unit Dhaka Bank Cash Management Unit started its journey as a wing of Corporate Banking Division in January 2017.Cash Management Unit successfully launched the first automated payment portal “Dhaka Bank C Solution” as a local bank. Since the unit’s inception, a total of 14 renowned corporate clients have been booked under cash management services. They are: Abul Khair Group, Epyllion Group, Noman Group, IPDC Finance Ltd., M&J Group, SSL Wireless Ltd, Meghna Life Insurance Co Ltd, Sajida Foundation, Fu-Wang Foods, Vision Capital, Biddyut Ltd., Flight King, Sushilon NGO and Fu-Wang Foods Ltd etc. The average total amount of monthly transaction by the clients in 2017 was BDT. 2,645.40 Million (Two Thousand Six Hundred Forty Five point Forty Million). This showed an increase of approximately 1480% in transaction amount by the clients, so far brought under Cash Management Services. Syndication and Structured Finance Unit (SSFU) In 2017, Dhaka Bank Limited’s Syndication and Structured Finance Unit signed a Term Sheet with Chandpur Power Generations Limited, a concern of Doreen Group for arrangement of Syndicated facilities of USD 65.00 million for their upcoming 115 MW (net) HFO based power plant at Chandpur. Dhaka Bank is the ‘Mandated Lead Arranger’ and ‘Agent’ for this transaction. This is going to be the first ECA backed financing under lead arrangement of Dhaka Bank Limited”.   Retail Banking Division Dhaka Bank’s Retail Banking Division started its operation in the year 2002.The business has made a good deposit client base since then and approved total retail loans amountingto Tk.1,210 crore. Over the year 2017, the Bank has continued its momentum on acquiring new retail clients and growing retail business in the area of deposit accounts, cards and retail loans. The introduction& improvement of Digital Banking products such as Dhaka Bank Go, Direct Banking, has spurred the growth in retail space. In the year 2017, our Retail Asset portfolio grew by 36% compared to end of 2016, and 86% of our retail lending was extended as secured loans such as Car, Home and security covered loans. The focus has been to do with sourcing amongst creditsafe salaried segment. On the retail deposit side, we have witnessed encouraging growth in our CASA book, 14% growth in volume with 31,000 new CASA accounts in the retail deposit portfolio. The Bank has continued to strengthen Card Business eco-system and has observed an ascent in business parameters. During 2017, Credit Card issuance grew by 1.5 times and Debit Card issuance grew by 47% compared to 2016. In terms of card spending volume, our card holders (Debit & Credit) have used their cards 41% more in comparison to 2016. The clients got benefit of installment purchases of lifestyle goods and travel packages amounted to Tk. 3 Crore over the year. The Bank has launched its first Prepaid Card ‘Esteem’ for its employees as a pilot and will start issuing this card to payroll clients very soon. Now, with 150 discount merchant partners and 50 Swipe-it (installment purchase) merchant partners, Dhaka Bank Card is considered as one of the emerging cards in the industry. As a result, the Bank has also received marketing support from its scheme partner for the first time. 58 Dhaka Bank Limited Annual Report 2017 Major Retail Banking Initiatives / Campaign in 2017 • • • • • • Wind of Change (CASA acquisition campaign) Safe & Sound (Secured Credit Card campaign) Debit Card Cash Back Offer (Debit Card issuance& activation campaign) Secured Adventure (Secured term loan campaign) Insta-Money (Secured Overdraft campaign) Call of Duty (Retail deposit sourcing campaign) Major Card Business Initiatives / Campaign in 2017 • • • • • • Launch of Visa Prepaid Card ‘Buy One - Get One Free’ campaign during Ramadan Eid-Ul-Adha campaign: 5% Cash Back on Swipe-It transaction Travel Bonanza: discount and installment purchase of travel ticket / packages Passport endorsement campaign 5% Cash back on debit and credit card with ‘Deshi Dosh’ – the leading local fashion outlet SME Dhaka Bank Ltd. (DBL) has been gradually shifting its eye in Cottage, Micro, Small, Medium Enterprise (CMSME) lending since 2003. Dhaka Bank Ltd. has already outperformed in Small, Micro and Cottage Enterprise segment by having an exposure of 67.24% where as required exposure is 50.00% or more as per Bangladesh Bank (SMESPD Circular 3, June 29, 2017). DBL is also very close to required SME exposure of 20.00% of total loan of the Bank. In 2017, SME portfolio increased by 124.57% than that of 2016. With strong supervision & monitoring, arranging successful Non-Performing Loan (NPL) Management Campaign by both officials of Head Office & Branch team, DBL has reduced its NPL in this sector to 12.17% in 2017 from 13.79% of 2016. Aligning with Digital Bangladesh, DBL introduced “DBL Bills To Cash”, a digital financing solution to the supplier backed by buyer’s comfort for the 1st time in Bangladesh. “House Building SME loan (HBSM)” was introduced in the market to cater house building for commercial purpose in the outskirt of Dhaka. So far 100 clients are enjoying the loan & outstanding in this typical product was for Tk.275.31 million as on December 31, 2017. A new Cluster Product “DBL Dairy Loan’’ was also launched to boost up the dairy industry of the country specially Chatmohar &Vangura of Pabna. Tk.39.62 million was disbursed among 31 clients in 2017 since its inception Recently, SME Unit booked 1,010 nos. of fresh accounts for Tk.1,928.60 million. These accounts are enjoying loan facilities of maximum Tk.10.00 million. As on 31 December 2017, adding 10 new women entrepreneurs, total 98 women entrepreneurs are enjoying total loan facility of Tk.129.89 million from DBL. SME Unit also financed 5 marginal farmers/borrowers for Tk.0.75 million in 2017. Dhaka Bank obtained total refinance of Tk.2,505.84 million as on 31 December 2017 from various funds of Bangladesh Bank. Dhaka Bank also participated in “2nd International SME Fair Bangladesh 2017” held at World Trade Center, Chittagong organized by Chittagong Chamber of Commerce on 9-11 December 2017. www.dhakabankltd.com
  59. DIRECTORS ’ REPORT 2017 Continued Achievement 113.05% • Industry analysis Reportof different sectors • • Periodic review of different loans accounts Regular trainings of branch credit officers for capacity building and for proper analysis of Credit Risk • Periodic review of Large Loan Accounts performances • Introduction ofInternal Risk Rating system • Annual review of Credit Policy for adopting necessary changes in credit norms and practices to address the latest industry and market situation changes. NPL% 13.79% 12.17% 107.17% International Division International Division works for ensuring smooth foreign trade business, foreign exchange transactions and channelizing wage earners remittance. This division is mainly divided into two units: i. Financial Institutions (FI) Unit ii. Remittance Unit Financial Institutions (FI) Unit Trade finance business is one of the major concentration areas of Dhaka Bank Limited. In the year of 2017, International Division’s FI Unit was engaged in strengthening its correspondent networks to facilitate the Bank’s trade finance business. Dhaka Bank has routed 28,353 LCs through its correspondent banks with total value USD 1.60 billion in 2017. Dhaka Bank has achieved 23% growth in Import trade business. Clients were offered multiple options in routing their LCs with confirmation and discounting facilities without any major hurdle. Moreover, FI Unit of International Division arranged USD 55 million facilities agreements in March, 2017 from IFC. Under the signed agreement, IFC provided USD 20 million Working Capital Solutions facility to Dhaka Bank’s Offshore Banking Unit for expanding its foothold in SME-based export sector and USD 35 million Guarantee Facility under Global Trade Finance Program (GTFP). The USD 35 million GTFP of IFC has enhanced the capacity of Dhaka Bank to deliver trade financing by providing risk mitigation in new or challenging markets where trade lines may be constrained.International Division also helped OBU to arrange a good volume of trade loans from foreign correspondents. Remittance Unit DBL has correspondent relationship and agency arrangements with internationally reputable major banks, financial institutions and exchange houses throughout the world. At present, DBL has agency arrangements with total 21 exchange houses located in USA, UAE, UK, Oman, Italy, Kuwait, France and so on to facilitate remittance of expatriate Bangladeshis working abroad. Outlets of DBL’s NGO partners (PAGE and PadakhepManabikUnnayan Kendra that have more than 230 branches) have been used significantly to facilitate remittance recipients locating across the country. Arrangement with mobile financial services like bKash enables Dhaka Bank to reach to the remittance to beneficiaries living in the remotest areas. CRM Division At Dhaka Bank Ltd., CRM division process the credit proposals (except RMG & Allied) amounting more than Tk 10.00 Million. In the year 2017 CRM Division received 1166 number of proposals and issued 972 www.dhakabankltd.com Islamic Banking Dhaka Bank Limited has been providing Islamic Banking services through its 2 (two) branches to adhere to the Islamic values & Integrity. One is Islamic Banking Branch, Motijheel, Dhaka inaugurated on July 02, 2003 and second one is Islamic Banking Branch, Agrabad, Chittagong opened on May 22, 2004. This IBB Branch was later relocated at Muradpur, Chittagong in the name of IBB Muradpur. We may mention here that Dhaka Bank Limited is the pioneer to establish Shariah based banking operations through Islamic Banking branches in the country. At the end of the year 2017, the deposit and investment of Islamic Banking operations of Dhaka Bank Ltd. stood at Tk. 5,885 million & Tk. 5,236 million respectively. Off-Shore Banking Business We have come a long way since we launched our Off-shore Banking operations in Dhaka Export Processing Zone nine years ago. We are one of the pioneers among local banks in Bangladesh to set up an Off-shore Banking Unit, which went operation in the year of 2006 in Dhaka Export Processing Zone. As a second generation private commercial Bank, Dhaka Bank’s Off-shore Banking Unit has earned enormous confidence of the foreign investors due to its strong commitment and dedication over the years. Currently, the bank has been providing offshore banking services to several Types-A industrial units of the EPZ through itsOBU in Dhaka Export Process Zone and CEPZ. We, in the Off-shore Banking unit, pride ourselves in our ability to provide premier Off-shore Trade solutions to our clients, while ensuring that highest levels of professionalism are practiced by our colleagues. Though the country’s offshore banking market is dominated by the foreign banks, Dhaka Bank has been able to make its presence felt by attracting a good numberof Customers in a short period of time through effective marketing, competitive pricing of its offshore banking products and ensuring highest levels of professionalism and excellent Customer services backed by quality human and technological supports. OBU invested around USD 51 million in offshore market to support Type-A industries, local entrepreneurs as well as to strengthen its asset portfolios.   Dhaka Bank Limited Annual Report 2017 59 Summary of Segmented Performance 17,000.00 25,000.00 Asset (BDT in Million) 2016 2017 21,509.00 26,793.53 Directors' Report Disbursement Target number of sanctions.CRM Division has taken the various measures and initiatives for quality credit growth, efficient and faster processing of credit proposals, ensuring faster approvals and ensuring compliance of rules and Regulations. Some other recent measures and initiatives of CRM Divisions are as follows: SME Financial Summary:
  60. DIRECTORS ’ REPORT 2017 Business & Operational Highlights Directors' Report Continued Subsidiary: Dhaka Bank Securities Limited The Capital Market of Bangladesh was in bullish trend almost all the year around. With the positive market trend and prudent managerial capacities, the trade volume of the company was increased significantly in the year 2017 compared with that of the previous year. Total market trade volume increased by 82.65% in 2017 from the year 2016 whereas the growth of trade volume generated by DBSL was 102.33%. The company generated total trade volume of BDT 43,695.03 million in the year 2017 and captured 1.89% market shares in 2017 where it was 1.70% in 2016. Management was very conservative in selecting the Customers and strict credit disbursement immune the company from taking risky approach to increase market share and enable it to keep the asset quality good. With the prudent managerial capacity, DBSL has maintained Excellency in making profitability. Company’s total operating income was BDT. 332.47 million in 2017 which was BDT. 238.22 million in the previous year. Company’s total operating profit is BDT 252.05 million in 2017 which was BDT 164.98 million in the previous year. Company’s Net Profit stood at BDT. 108.07 million in 2017 which was BDT. 81.05 Million in the previous year. This increase of 33.34% in net profit figure is due to this year’s higher amount of trade volume and efficient management of dealer portfolio. recommendation. Business & Operational Highlights Digital Banking Avenue & Green Banking Initiatives Dhaka Bank has started strengthening its Internet Banking facilities, Mobile Apps facilities, Call Center & IVR, Card and ATM facilities under its current Digital Banking Solution. At present, the Bank is under process to launch NFC enabled EMV cards and QR code based payment service. Throughout the Bank’s digitizing initiatives the Bank has also re-engineered its workflow processes to ensure Green Banking Culture. LC Origination and Amendment, Bill Purchase/Discounting, Loan Origination, Debit Cards issuing, Credit Cards approval, Storing Digital copy of all Forms, Supporting Documents and Reports are now managed with Workflow Based Document Management System. As a part of Green Banking initiative, Bank is also sending e-statement and e-advice to the Customers in addition to the SMS notification. Service network enhancement Dhaka Bank has made its vibrant presence all over the country with a countrywide reach through a larger network of Branches, ATMs, ADMs, SME channels and SMS banking. In 2017, the Bank has opened 06 new Branches namely Chowmuhani, Kalibari, Mawna, Rupshi, Gunabati, and Banani Road 11 Branch. Presently we are available nationwide with our 100 Branches including 2 Islamic Banking Branches, 3 SME Service Centres, 56 ATMs, 20 ADMs, 2 Offshore Banking Units, 1 Kiosk and 6 Branches under Dhaka Bank Securities Limited. New Development in IT Infrastructure Understanding the changing scenario, Dhaka Bank Limited has started to digitize its services in order to offer simple but secured banking to its Customers. Following initiatives were taken in 2017 Core Banking System (CBS):The Bank recently upgraded its CBS to the latest 12.0.3 version of Flexcube UBS. The version has Conventional & Islamic banking modules required by the bank and supports multi country operations. Bank is using this solution for its OBU operations also. It has interface with Debit Cards, ATM, POS, SWIFT, Internet banking, Mobile Apps. etc. It can be used as Centralized or Decentralized model with full redundancy. It has multilayer security option. Identity and Access Management System:In order to ensure security through single sign on option, Bank procured Oracle Identity and Access Management for Identity Governance, Access Management and Directory Services. Data Center:Recently bank has setup new Data Center for its Production and DR operations. Production Data Center has been designed as per EPI recommendations. Bank selected Cisco SDN based solution for its Network infrastructure considering its security and flexibility. All types of redundancy and security option maintained for it as per EPI 60 Dhaka Bank Limited Annual Report 2017 Server and Storage: To ensure performance and security, bank implemented Oracle Sun SuperCluster M7 for its Core Banking and Cards system. SuperCluster has high-performance Architecture which is engineered for performance, security & efficiency. In addition to the above, bank is using EMC storage and IBM/HP/DELL servers both in Production & DR site for other banking systems. Process Automation DBL recently introduced ‘C Solution’, ‘Trade Cloud’, and ‘Bills-toCash’ for process automation. ‘C Solution’ is introduced to automate Cash Management activities where Customers can digitally send bulk payment requests to the bank to credit it to their beneficiaries (within or across the bank). It has maker/checker concept, 2FA option like OTP and notification system. On the other hand, ‘Trade Cloud’ is a web based solution for the Trade Customers. It allows them to send their LC Issue/ Amendment request along with supporting documents digitally, see the current status and receive the related advice from the bank after completion. It also has maker/checker concept, 2FA option like OTP and notification system. ‘Bills-to-Cash’ is introduced to automate Invoice and Distributor financing. It is end to end solution where Buyer, Seller and Bank can digitally send request and approve. It has maker/checker concept, 2FA option like OTP and notification system. Risk Management Initiatives Dhaka Bank has established Risk Management Division (RMD) integrating the existing ‘Risk Management Unit’ and ‘Basel II Implementation Unit’ in 2013 for strengthening risk management activities of the Bank. RMD is responsible for risk identifying, measuring and mitigating the risk of the bank. In 2017, RMD strongly monitored different level of management to reduce forward movement & NPL. Important measures like new loan and deposit product, have been launched by RMD to diversify the loans portfolio to mitigate the concentration risk. RMD also suggested launching new product to increase low cost deposit and resultantly mitigate liquidity crisis. From 2017, RMD also started Training on Comprehensive Risk Management among all employees of the bank. 100 employees already got the training and rests are expected to get the training by 2018. RMD also conducted training on AML & CFT and trade based money laundering. RMD also brought about an innovative ‘Risk Based Pricing Model’ in 2017 to identify the credit risk and to assess the proper lending rate/pricing for the borrowers. www.dhakabankltd.com
  61. DIRECTORS ’ REPORT 2017 Continued Training Initiatives Meeting & Business Review 22nd Annual General Meeting 22nd Annual General Meeting of Dhaka Bank Limited was held on 12th June, 2017 at Grand Ball Room, Pan Pacific Sonargaon, Dhaka. Mr. Reshadur Rahman, Chairman presided over the meeting. 10% Cash and 5% Stock Dividend have been declared as the dividend for the year 2016. All members of the Board of the Bankalong with a good number of Shareholders were present on the occasion. Meeting of Shariah Supervisory Committee 46th Meeting of the Dhaka Bank Limited Shari’ah Supervisory Committee held on December 2017. During the year 2016 the Shari’ah Supervisory Committee conducted several meetings and reviewed a number of operational issues including those referred to by the Board of Directors and the Bank Management. In those meetings, issues regarding important agendas of Islamic Banking Operations of the Bank were discussed. Quarterly Business Review Dhaka Bank held quarterly Business Review with due participation of Board Members and Bank Management at quarterly intervals to evaluate Bank’s position on yearly business target and discussed immediate issues that affected banking business. Strategic Alliance Signing Ceremony with JICA for Urban Building Safety Project (UBSP) Syed Mahbubur Rahman, Managing Director and CEO of Dhaka Bank Ltd. and Swapan Kumar Roy, General Manager, SMESPD, Bangladesh Bank recently signed a Participating Financial Institutions (PFI) Agreement under JICA assisted Urban Building Safety Project (UBSP) at the Bangladesh Bank Head Office. Governor of Bangladesh Bank Fazle Kabir, Deputy Governor S. K. Sur Chowdhury, Chief Representative www.dhakabankltd.com Signing Ceremony with IFC forUS$55 Million Facilities Agreements Dhaka Bank Limited and International Finance Corporation (IFC) recently signed US$55 million facilities agreements, under which, IFC will provide US$20 million Working Capital Solutions (WCS) facility to Dhaka Bank’s Offshore Banking Unit for expanding its foothold in SME-based export sector and US$35 million Guarantee Facility under Global Trade Finance Program (GTFP). Mr. Syed Mahbubur Rahman, Managing Director and CEO, Dhaka Bank Limited and Ms. Ariane Di Iorio, Regional Industry Manager, Financial Institutions Group, IFC South Asia recently signed the agreements at Corporate Office of Dhaka Bank on behalf of their respective organizations. Research & Development For taking a leading role, continuous improvement is a must. And it is attained through deep research. Research is crucial at every stage for informed decision-making. Keeping in mind the shifts and fluctuations in industry, Dhaka Bank is continuously digging deeper with its versatile R&D initiatives. R&D Unit provided support in content development of a large segment of Annual Report 2016. In 2017, R&D published four issues of Dhaka Bank’s Quarterly flagship Newsletter INSIGHT and distributed them to Regulatory bodies, Govt. Offices, Foreign embassies, Public & University libraries, Trade & Business bodies, all our Bank employees. In 2017, R&D repackaged the Mudaraba Hajj Deposit Scheme and also took a Green Initiative to make sure every Customer and employee can access online forms for opening various Accounts; and also for easy download and use internally at office. Additionally in 2017, R&D launched a YouTube Channel for Dhaka Bank’s AudioVisual contents and reached a large number of existing and potential online Customers. R&D also presented Regular Analysis and Reviews to Management to helpmake moreprudential decision. R&D time to time conducts different surveys as required by the Management for informed decision making. As development is a continuous and never-ending process, R&D initiatives are gradually expanding with each passing day.. Corporate Social Responsibility Dhaka Bank Limited embraces its role as a corporate citizen. It regards CSR not as a charity, but an investment in society and its own future. DBL’s goal as a responsible corporate citizen is to build social capital. In 2017 the bank has contributed USD 2,041,644.66 for various social and philanthropic causes as CSR. • Education Sector: Dhaka Bank contributed USD 573,457.38 at education sector in 2017. The bank donated USD 240,096 towards Prime Ministers’ Education Assistance Trust for financial support towards meritorious & poor students. The bank also donated USD 240,096 towards Suchona Foundation for financial assistance of Autistic Children. Other than that, we donated USD 14,406 towards SEID Trust for the welfare and development of Autistic Children, USD 24,010 towards PFDA Vocational Training Institute, USD 30,012 towards Shahid Smriti College of Mohangonj, Dhaka Bank Limited Annual Report 2017 61 Meeting & Business Review Training is by far the most important and crucial event for organizational advancement. The need for professional excellence at Dhaka Bank was duly recognized by its Board of Directors leading to the creation of Dhaka Bank Training Institute (DBTI) in 2000. In the year of 2017, DBTI conducted 118 training programs covering 33 diverse courses for 3,028 Officers and Executives.Besides conventional banking related training programs, DBTI also arranged, facilitated and conducted various Executive Development Programs, workshops, discussion meetings and exchanged views to meet the banking industry challenges in the twenty-first century. Dhaka Bank believes in bringing holistic approach in training and development area. For this reason, Handful of participants was also sent to attend various courses both at home and abroad to attain special skills. of JICA Bangladesh Office TakatoshiNishikata and Deputy Managing Director (International Business) of Dhaka Bank Limited Mohammad Abu Jafar were present on the occasion. Directors' Report Way Forward: • Development of Web Based ‘Risk Register’ as a part of Enterprise Risk Management (ERM) and to start risk culture of the bank • Strengthen the risk monitoring culture to the bank • Strengthen sound risk management practice of the bank • To start Risk based pricing • To start Risk based audit • To start Risk based valuation
  62. DIRECTORS ’ REPORT 2017 Directors' Report Continued • AGM & Dividend and Way forward 2018 • Netrokona for infrastructural development of College building, USD 30,012 towards Syedpur Abdur Rahman High School, Sirajdikhan, Munshigonj for infrastructural development of College building, USD 6,002 for Assistance for Blind Children (ABC), a specialized NGO working for Blind Children's Education. Health Sector: Dhaka Bank contributed USD 81,632.65 at health sector in 2017. The bank donated towards BIRDEM, Centre for Women & Child Health (CWCH). Other than that, the Bank helps different individuals for their treatment. Disasters Management: Dhaka Bank contributed USD 1,373,349.34 at Disaster Management sector in 2017. The bank donated USD 1,275,820 towards Prime Ministers’ Relief Fund towards for the cold affected people of Bangladesh, for RohingyaaRefeuges, for the flood affected people of the country. Other than that, we donated Prothom Alo Trust for the Land slide affected people, Zilla Parishad, Moulvibazar for flood affected people. In addition, the bank support to the affected families of BDR Carnage. Dhaka Bank Distributed Blankets & Shawl for Winter Affected distressed people of different parts of the country. AGM The 23rd Annual General Meeting of the Bank will be held on Thursday, June 28, 2018, at Grand Ball Room, Pan Pacific Sonargaon, 107, Kazi Nazrul Islam Avenue, Dhaka at 11:00 A.M. Dividend The Board of Directors has recommended 12.50% stock dividend for the year ended on December 31, 2017 subject to approval of shareholders in the 23rd Annual General Meeting. Election of Directors As per the Company Act 1994 and the Articles of Association of the Bank, 1/3 (one third) of the Directors of the Bank will retire in the 23rd Annual General Meeting and they are eligible for re-election, subject to approval of Bangladesh Bank. Appointment of Auditors The shareholders of Dhaka Bank Ltd., in the 22nd AGM held on Monday, June 12, 2017 appointed Hoda Vasi Chowdhury & Co., Chartered Accountants the statutory auditor of the company for the year 2017. ACNABIN was eligible for conducting audits for 3-year term ended in 2016. Way forward 2018 Appraising the outcomes of the days behind is essential for framing the future in a golden shape. And this is significant at least to envision the future roadmap. As banking business and industry growth depends on lot many internal and external factors, it is always not possible to predict the growth and way towards upfront. Still Dhaka Bank appreciates the fact that there have to be plans and strategies based on which we will continue our tracking to the height of excellence. Challenges: • Finding the way out of prevailing liquidity crisis with market competitive deposit rate 62 Dhaka Bank Limited Annual Report 2017 • • • • • Ensuring sophisticated IT system towards safe and lawful transactions Uncertainty still prevails in the political frontier. Unless there is any political stability, economic stability is less feasible Addressing NPL issue, as we perceive, will be the top most challenge for banks. The banks would face more hurdles in recovering loans With decreasing industrial production, business can be affected and defaulted. So asset quality may not improve further Ensuring market competitive lending rate. Under continuous business stagnancy, business community might seek more cut in lending rates from banks which may cause further decline in income from lending activities Opportunities • Prudential policies taken by Bangladesh Bank to strengthen the quality of banks’ assets will continue in 2017 and beyond so that the progressive trend in the financial sector can be retained, in accordance with the needs for sustained growth and expansion • Although the country witnessed a declining growth rate in export last year, the achievement in export proves our resilience against domestic challenges. RMG sector registered a growth rate of 7.46% which is our most well known export sector. Besides export growth in leather and pharmaceutical also seem promising for the country. Banks have high exposure in these sectors and it can be expected that banks will continue to earn profit through their association with these sectors • Foreign remittance has become an unswerving hand to take the responsibility of Bangladesh economy. Every year, inward remittance is perched on a historic high strengthening country’s position to meet foreign exchange demand. Banks will have ample scopes ahead to capture earnings from trade finance and channeling remittance from abroad • Infrastructural development like the construction of Padma Bridge definitely will make a floor to boost up the investment situation in coming days • There is also ample scope to earn profit from Non Funded Incomes (NFIs) by focusing more onto tuition fees, ticket revenue etc. Goals set for 2018 Towards safe & sound transactions Safety in banking transactions has become an alarming issue all over the world. In line with the massive application of information technology in banking arena, the fraud and forgery has emerged as the evil side of the coin. Believing in excellence in banking, we promise to ensure maximum safeguard in banking transactions for the sake of the hard earned public money. We have already upgraded the Core Banking System (CBS) to ensure safer and more hassle-free banking experience for the Customers. We are always strategizing to come up with new arena of development to make transactions smoother and serve better than our competitions. Achieving cost effectiveness www.dhakabankltd.com
  63. DIRECTORS ’ REPORT 2017 Continued • • • Controlling the cost of fund by healthy deposit mix enhancing share of low cost deposit and refinancing from Bangladesh Bank Controlling the operating expenses by boosting HR productivity, competitive bidding with the suppliers and rational promotion of banking business Controlling provisions against bad loans by accelerating recovery mechanism both on-going and alternative Betterment of asset quality Asset quality remains always a biggest challenge for the banking industry. Whatever growth we achieve, we have to get back to the root: Ethical Standard in every sphere of business for a sustainable growth. Business ethics is more oriented with culture than administrative response, as we have experienced for long. To establish a good ethics culture, we have formed Ethics Committee comprising the Senior Management. This year we will focus on building loyalty to the organization, training on ethical practices, recognizing ethical precedence in performance appraisal and transparency in all banking operation. Shareholders’ value All of our actions must lead to an ultimate goal-maximization of shareholders’ value for what we exist and excel. With this in mind, we will concentrate on enhancing profitability to raise Earnings per Share, Dividend as well as confidence of the Shareholders. DBL as a Power Brand Together with you and our great team of banking excellence, we dream to build Dhaka Bank as a Power Brand in the country and even beyond across the border. Convincingly, a power brand caries enough strength to weather difficult times. The Board of Directors of Dhaka Bank aspires to honour your dream to make the Bank ‘The First Choice of the Customers’ in the not too distant future. On behalf of the Board of Directors, Reshadur Rahman Chairman of the Board of Directors Dhaka Bank Limited Internal control & risk management Ensuring a healthy banking business largely depends on Banks’ internal soundness. In 2018 and beyond, we will stay most vigilant about financial scams, irregularities and other operational failures. We will ensure stable well-integrated operating process, new equipment to support work volume as well as strong Customer complaint resolution process and Anti-money Laundering&Combating Financing of Terrorism mechanism. To control credit losses, we will ensure appropriate debt rating models, rigorous monitoring of portfolio performance and timely and effective response to changes. HR productivity & efficiency We will give more concentration on HR productivity this year based on our experience and output in the last five years. We believe, heightened efficiency of HR forces adds more values to banking development than any other factors. We are committed to give every try to achieve the target by a combination of talent management, including expert bankers and brilliant chunk of business graduates, sharpening job efficiency, increasing learning curve and motivating through more reward and retribution. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 63 Goals set for 2018 Our main focus in the year is to reduce the NPL. We are developing in-built capacity in the Bank to help expedite loan recovery process. We are considering appointment of more loan recovery agents and new mechanism to avoid lengthy, expensive and cumbersome procedures and too much dependence on the court for recovering loans. Sound business mix Focusing on inclusive finance, at the end of December 31, 2017, Bank’s total SME loan portfolio was increased by124.57% to Tk. 26,793.53 million from Tk. 21,509million in 2016. Year 2017 will see more flourishes small ticket loans in the focus sectors of SMEs, cluster based finance, green projects, woman entrepreneurs finance, agriculture and others. Cluster development strategy has been chosen as one of the priorities. To comply with the Cluster Development Policy of the Central Bank, this year we introduced DBL Dairy Loan (DLTA) for the Dairy Industry. Tk.39.62 million was disbursed among 31 clients in 2017 since its inception.On the corporate sides, we will try to focus on growth supportive sectors including large infrastructure and PPP in the economy. For a sound business mix, we will introduce a bundle of new products and services in tandem with rising demand and need. Business ethics to reign supreme Directors' Report TThis year we are focusing on appropriating Profit after Tax at a higher level than the forgone years. Unless we hold back expenses in phases, we can hardly expedite our earnings towards our goal. In three stages, we will try to do that:
  64. cwiPvjKM ‡Yi cÖwZ‡e`b 2017 Directors' Report cwiPvjKM‡Yi cÖwZ‡e`b 2017 XvKv e¨vs‡Ki 23Zg evwl©K mvaviY mfvq Avcbv‡`i ¯^vMZ RvbvB| Ôevwl©K cÖwZ‡e`b 2017Õ XvKv e¨vs‡Ki Kg©KvÛ Ges AR©b m¤úwK©Z weeiYx| wgwjqb UvKv hv Zvi Av‡Mi eQ‡ii 1,466.00 wgwjqb UvKvi Zzjbvq 1.98 kZvsk †ewk| cwiPvjKMY 2017 mv‡ji Rb¨ ÷K wn‡m‡e 12.50 kZvsk jf¨vsk mycvwik K‡i‡Qb| wek¦ A_©bxwZ 2017 wgkª cwiw¯’wZ I `ye©j gy`ªvùxwZi †cÖ¶vc‡U DbœZ A_©bxwZi A‡bK †`‡ki †K›`ªxq e¨vsKB Af¨šÍixY †fvM I wewb‡qvM‡K h_vh_ ivLvi cÖqv‡m mgš^qkxj gy`ªvbxwZ †NvlYv K‡i| c&ªvq wZb PZz_v©sk †`‡ki A_©bxwZ wQ‡jv EשgyLx cÖZ¨¶ I c‡iv¶fv‡e 2017 mv‡ji evsjv‡`k A_©bxwZi MwZc_ wba©vi‡Y wek¦ A_©bxwZ cÖfve iv‡L| 2017 mv‡ji †k‡l Avgv‡`i †gvU MÖvnK wnmv‡ei msL¨v `vuovq 507,586 wU| 2017 mv‡ji †k‡l †gvU GmGgB F‡Yi cwigvY wQj 26.79 wewjqb UvKv| evsjv‡`k A_©bxwZ 2017 2017-18 A_©eQ‡ii gvwbUvix cwjwm †÷U‡g›U e¨wóK A_©bxwZi ¯^í I ga¨ †gqv`x e¨e¯’vcbvi cÿ wQ‡jv mvgvwRK `vqe×Zv c~i‡Y wewb‡qvM G‡Z ¸iæZ¡ †c‡q‡Q| mvgwóK I e¨wóK A_©bxwZi bvbv Pj‡Ki IVvbvgv wQj cÖvq eQi Ry‡oB| 2016-17 A_©eQ‡i †`‡ki wRwWwc cÖe„w× wQj 7.28 kZvsk hv PjwZ 2017-18 A_©eQ‡i cÖv°jb Kiv n‡q‡Q 7.40 kZvsk| G mg‡qi g‡a¨ g~j¨ùxwZ 5.5 kZvsk _vK‡e e‡j Avkv Kiv n‡q‡Q| Avg`vwb I ißvwb Av‡qI Avkve¨ÄK wPÎ †`Lv †M‡Q| 2017 mv‡j ißvbx Avq †e‡o‡Q gvÎ 1.70 kZvsk hv weMZ 15 eQ‡ii g‡a¨ me©wb¤œ Z‡e ißvwb Av‡q cÖe„w× n‡jI cÖevmx Av‡q Zv nq wb| 2017 mv‡j cÖevmx Avq ev †iwgU¨vÝ 14 kZvsk K‡g †M‡Q| we‡`kx wewb‡qv‡M wQ‡jv gvSvwi gv‡bi cÖe„w×| 2017 mv‡j †ekxifvM e¨vs‡Ki cwiPvjb gybvdv evo‡jI mvwe©K we‡ePbvq Avw_©K Lv‡Zi wPÎ Avkvbyiƒc wQ‡jv bv| 2017 mv‡jI g›` FY wQ‡jv GKUv eo mgm¨v| mswk­ó mK‡ji mw`”QvB Gi mgvavb Avb‡Z cv‡i| XvKv e¨vsKt AMÖhvÎvq AUj XvKv e¨vsK Av‡iv GKwU wgkÖ AwfÁZvi eQi AwZµg Kij| wKQz AR©b Avgv‡`i Avbw›`Z K‡i‡Q, Z‡e evKx c_Pjv wQ‡jv KwVb| XvKv e¨vs‡Ki cÖwZ m¤§vwbZ †kqvi‡nvìvie„›` Ges MÖvnKM‡Yi wbiew”Qbœ Av¯’v I wek¦vm KwVb cwiw¯’wZ‡ZI Avgv‡`i c_ †`wL‡q‡Q| Aby‡cÖiYv RywM‡q‡Q mvg‡b GwM‡q †h‡Z| GiBgv‡S †`kRy‡o 100wU kvLv (2wU Bmjvgx kvLvmn), 56wU GwUGg, 20wU GwWGg, 3wU GmGgB †mev †K›`ª, 2wU Ad‡kvi e¨vswKs †K›`ª, 1wU wKq¯‹ I XvKv e¨vsK wmwKDwiwU‡Ri Aaxb 6wU †eªvKv‡iR kvLvi gva¨‡g Avgiv Avgv‡`i Dcw¯’wZ wbwðZ K‡iwQ| cÖwZwbqZ bZzb gvbyl‡`i Avw_©K †mevi AvIZvq wb‡q Avm‡Z Avgiv memgqB m‡Pó| XvKv e¨vsK wmwKDwiwUR wjwg‡UW 2017 mv‡j wbU gybvdv AR©b K‡i‡Q 108.07 wgwjqb UvKv hv 2016 mv‡j wQj 81.05 wgwjqb UvKv| Aciw`‡K 2017 mvj †k‡l XvKv e¨vs‡Ki Bmjvgx e¨vswKs-Gi †gvU AvgvbZ Ges wewb‡qv‡Mi cwigvY `vuwo‡q‡Q h_vµ‡g 5,885 I 5,234 wgwjqb UvKvq| XvKv e¨vsK Gi cÖvwZôvwbK mvgvwRK `vqe×Zv Kvh©µ‡g wk¶v I wPwKrmv‡K we‡kl ¸iæZ¡ †`q| 2017 mv‡j XvKv e¨vsK mvgvwRK `vqe×Zv Kvh©µ‡g Ae`vb †i‡L‡Q †gvU 145 wgwjqb UvKvi hvi g‡a¨ gvbbxq cÖavbgš¿xi ÎvY Znwe‡j †`qv nq 170 wgwjqb UvKv| Avgv‡`i AMÖhvÎv 2018 mvjwU Avgv‡`i mvg‡b ¯úóZB Zz‡j ai‡e bvbvb m¤¢vebv Ges P¨v‡jÄ| Avgiv †cvU©‡dvwjI memgqB bvbvb web¨v‡m mvwR‡q _vwK| †UKmB e¨vswKs Avgv‡`i Kv‡Q ïiæ †_‡KB we‡kl ¸iæZ¡ †c‡q Avm‡Q| Avgv‡`i D`¨gx I m„wókxj Kg©x‡`i wb‡q GKwU AZ¨vaywbK, jvfRbK I w¯’wZkxj e¨emvq wb‡q Avgiv Avgv‡`i AwePj AMÖhvÎv wbwðZ Kie| Avgv‡`i mKj MÖvnK, †kqvi‡nvìvie„›`, cwiPvjbv cl©`, e¨vsK e¨e¯’vcbv, Kg©xe„›` Ges Ab¨vb¨ mKj ïfvbya¨vqx‡`i AveviI RvbvB AvšÍwiK ï‡f”Qv †ikv`yi ingvb †Pqvig¨vb cwiPvjbv cl©`, XvKv e¨vsK wjwg‡UW cÖwZ‡e`b 2017-Gi mvims‡ÿc wW‡m¤^i 31, 2017 ch©šÍ XvKv e¨vs‡Ki †gvU Avgvb‡Zi cwigvY `vuovq 170 wewjqb UvKv hv Zvi Av‡Mi eQ‡ii Zzjbvq 8.00 kZvsk †ewk| Aciw`‡K eQi †k‡l †jvb I A¨vWfv‡Ýi cwigvY wQj 154 wewjqb UvKv hv Av‡Mi eQ‡ii 134 wewjqb UvKvi Zzjbvq 14.00 kZvsk †ewk| †ek P¨v‡jwÄs cwiw¯’wZ‡ZI cwiPvjb gybvdv wQj 5,205 wgwjqb UvKv hv Zvi Av‡Mi eQ‡ii 5,404 wgwjqb UvKvi Zzjbvq 4.00 kZvsk Kg| eQi †k‡l XvKv e¨vsK wbU gybvdv AR©b K‡i 1,495.00 64 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  65. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION Compliance Report on BSEC’s Notification Board of Directors Independent Directors Audit Committee Subsidiary Company Reporting and Compliance of Corporate Governance Guidelines Engagement of External Auditors www.dhakabankltd.com Duties of CEO and CFO Management Dhaka Bank Limited Annual Report 2017 65
  66. Compliance Report on BSEC ’s Notification COMPLIANCE REPORT ON BSEC’S NOTIFICATION The Bangladesh Securities and Exchange Commission (BSEC) has made it mandatory for all listed companies to report on the compliance of the conditions described in BSEC’s Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated August 07, 2012 on ‘comply’ basis. The Notification requires that the company shall obtain a certificate from a practicing professional Accountant/Chartered Accountant/ Chartered Secretary/ Cost and Management Accountant regarding compliance of conditions of corporate governance guidelines of the commission. The issuer company should not engage its’ External /Statutory Auditors to perform Audit/ Certification Services on compliance of corporate governance as required under condition number 7. In compliance with the Notification, Dhaka Bank Limited has appointed M/s. ACNABIN Chartered Accountants for certification in this regard. The Board of Directors of Dhaka Bank Limited has taken appropriate steps to comply with the conditions as detailed in Annexure-I, II & III below: Annexure-I 25 (Twenty Five) Meetings of the Board of Directors were held from January 01, 2017 to December 31, 2017. Attendance of the Directors in these Meetings is given below: Position Number of Meetings Held Meetings Attended Remarks Mr. Reshadur Rahman Chairman 25 22 Mrs. Rokshana Zaman Vice-Chairperson 25 24 The directors who could not attend any Meeting were granted leave of absence Mr. Abdul Hai Sarker Director 25 19 Mr. Altaf Hossain Sarker Director 25 24 Mr. Md. Amirullah Director 25 25 Mr. Abdullah Al Ahsan Director 25 24 Mr. Khondoker Monir Uddin Director 25 16 Mr. Tahidul Hossain Chowdhury Director 25 22 Mr. Jashim Uddin Director 25 21 Mr. Mohammed Hanif Director 25 19 Mr. Khondoker Jamil Uddin Director 25 22 Mr. M.N.H. Bulu Director 25 17 Mr. Mirza Yasser Abbas Director 25 12 Mr. Amanullah Sarker Director 25 18 Mr. Syed Abu Naser Bukhtear Ahmed Independent Director 25 19 Mr. M. A. Yussouf Khan Independent Director 25 11 Managing Director & CEO 25 22 Name of Directors Mr. Syed Mahbubur Rahman 66 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  67. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION Continued a) Shareholding by Parent/Subsidiary/Associated Companies and other related parties: Nil b) Shareholding by: 1. Directors & their Spouses: SL No. Name of Directors No. of shares held Name of spouse No. of shares held 01. Mr. Reshadur Rahman 24,379,667 Mrs. Shamsi Rahman 2,348,109 02. Mrs. Rokshana Zaman 17,694,260 Mr. A.T.M. hayatuzzaman 1,701,357 03. Mr. Altaf Hossain Sarker 20,143,714 Mrs. Nilufar Hossain 1,200,000 04. Mr. Abdul Hai Sarker 16,029,668 Mrs. Selina Hai 05. Mr. Md. Amirullah 14,447,630 Mrs. Ayesha Amir 06. Mr. Abdullah Al Ahsan 14,448,872 Mrs. Amena Begum 885,151 07. Mr. Tahidul Hossain Chowdhury 14,506,481 Mrs. Jesmin Sultana Chowdhury 68,827 08. Mr. Jashim Uddin 14,447,762 Mrs. Mamtaj Begum 09. Mr. Mohammed Hanif 22,001,572 Mrs. Rowshan Ara Hanif 10. Mr. Khondoker Monir Uddin 20,743,363 Mrs. Jasmin Sultana 4,878,945 11. Mr. Khondoker Jamil Uddin 14,447,562 Mrs. Afroza Begum Nil 12. Mr. Amanullah Sarker 14,447,633 Mrs. Nasrin Aman Nil 13. Mr. Mirza Yasser Abbas 26,602,504 Mrs. Yakut Binte Sadek Nil 14. Mr. M.N.H. Bulu 14,464,553 - - 15. Mr. Syed Abu Naser Bukhtear Ahmed Nil Mrs. Mahin Ahmed Nil 16. Mr. M.A. Yussouf Khan Nil Mrs. Syeda Rowsan Ara Begum Nil 2. Managing Director: Nil 3. Company Secretary: Nil 4. Chief Financial Officer: Nil 5. Head of Internal Control and Compliance: Nil 6. Spouses of above Executives: Nil 898,874 3,435 1,214,675 598,967 c) Shareholding by other Executives (Top five salaried employees): 1. Mr. Emranul Huq, Additional Managing Director: Nil 2. Mr. Khan Shahadat Hossain, Deputy Managing Director: Nil 3. Mr. Md. Shakir Amin Chowdhury, Deputy Managing Director: Nil 4. Mr. Md. Shafquat Hossain, Senior Executive Vice President: Nil 5. Mr. A. M. M. Moyen Uddin, Senior Executive Vice President: Nil d) Shareholders holding ten percent (10%) or more shares: www.dhakabankltd.com Nil Dhaka Bank Limited Annual Report 2017 67 Compliance Report on BSEC’s Notification Annexure-II The pattern of shareholding of Dhaka Bank Limited as on 31.12.2017 as per BSEC’s Notification No.SEC/CMRRCD/2006-158/129/Admin/43 dated August 07, 2012 is as under:
  68. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION Compliance Report on BSEC’s Notification Continued Annexure-A Statement of Status of Compliance of Corporate Governance Guideline: Status of Compliance with the conditions imposed by the Bangladesh Securities and Exchange Commission’s Notification No. SEC/CMRRCD/2006-158/ Admin/44 dated 07 August 2012 issued under section 2CC of the Securities and Exchange Ordinance, 1969 is presented below: Condition No. 1 Title Complied Remarks (if any) Not Complied Board of Directors (BoD) 1.1 1.2 Board size(number of Board members - minimum 5 and Maximum 20) Independent Director: 1.2 (i) At least one fifth (l/5) of the total number of Directors shall be Independent Directors 1.2 (ii) Independent Director means a Director 1.2 (ii) (a) who either does not hold any share in the company or holds less than one percent (1%) shares of the total paid-up shares of the company 1.2 (ii) (b) Who is not a sponsor of the company and is not connected with the company's any sponsor or director or shareholder who holds one percent (1%) or more shares of the total paid-up shares of the company on the basis of family relationship. His/ her family members also should not hold above mentioned shares in the company 1.2 (ii) (c) who does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies 1.2 (ii) (d) who is not a member, director or officer of any stock exchange 1.2 (ii) (e) who is not a shareholder, director or officer of any member of stock exchange or an intermediary of the capital market 1.2 (ii) (f) who is not a partner or executive or was not a partner or an executive during the preceding 3 (three) years of the company’s statutory audit firm 1.2 (ii) (g) who shall not be an independent director in more than 3 (three) listed companies 1.2 (ii) (h) who has not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a bank or a Non-Bank Financial Institution (NBFI) 68 Compliance Status (“√” has been put in the appropriate column) Dhaka Bank Limited Annual Report 2017 √ According to the provision of 1.1of the Corporate Governance guidelines of BSEC, the Board of Dhaka Bank Limited has been constituted as per section 15(9) of Bank Company Act 1991(Amended upto 2018) √ √ √ √ √ √ √ √ √ www.dhakabankltd.com
  69. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION Continued Title 1.2 (ii) (i) who has not been convicted for a criminal offence involving moral turpitude 1.2 (iii) Independent Director(s) shall be appointed by BoD approved by the shareholders in the Annual General Meeting (AGM) 1.2 (iv) The post of independent director(s) cannot remain vacant for more than 90 (ninety) days 1.2 (v) 1.2 (vi) 1.3 1.3 (i) The Board shall lay down a code of conduct of all Board members and annual compliance of the code to be recorded The tenure of office of an independent director shall be for a period of 3 (three) years, which may be extended for 1 (one) term only Qualification of Independent Director (ID): 1.5 (ii) Independent director shall be a knowledgeable individual with integrity who is able to ensure compliance with financial, regulatory and corporate laws and can make meaningful contribution to business Independent Director should be a Business Leader/ Corporate leader/Bureaucrat/University Teacher with Economics or Business Studies or Law background /Professionals like Chartered Accountants, Cost & Management Accountants, Chartered Secretaries. The independent director must have at least 12 (twelve) years of corporate management/professional experiences In special cases the above qualifications may be relaxed subject to prior approval of Commission The Chairman of the Board and the Chief Executive Officer (CEO) shall be different individuals. The Chairman shall be elected from among the directors. The Board of Directors shall clearly define respective roles and responsibilities of the Chairman and the CEO The director's report shall include the following additional statements: Industry outlook and possible future developments in the industry Segment-wise or product-wise performance 1.5 (iii) Risk and concerns. 1.5 (iv) A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin 1.5 (v) Discussion on continuity of any Extra-Ordinary gain or loss Basis for related party transactions - a statement of all related party transactions should be disclosed in the annual report 1.3 (ii) 1.3 (iii) 1.4 1.5 1.5 (i) 1.5 (vi) www.dhakabankltd.com Compliance Status Complied Not complied Compliance Report on BSEC’s Notification SL No. Remarks N/A √ √ √ √ √ √ N/A √ √ √ √ Discussion on interest income, expense, operating and net profit margin are provided. √ N/A √ Dhaka Bank Limited Annual Report 2017 69
  70. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION Compliance Report on BSEC’s Notification Continued SL No. Title 1.5 (vii) Utilization of proceeds from public issues, rights issues and/or through any other instrument An explanation if the financial results deteriorate after the company goes for None Initial Public Offering (IPO) If significant variance occurs between Quarterly Financial performance and Annual Financial Statements, the management shall explain about the variance Remuneration to directors including independent directors The financial statements present fairly its state of affairs, the result of its operations, cash flows and changes in equity Proper books of account have been maintained 1.5 (viii) 1.5 (ix) 1.5 (x) 1.5 (xi) 1.5 (xii) 1.5 (xiii) Adaptation of appropriate accounting policies & estimates 1.5 (xiv) IAS/BAS/IFRS/BFRS, as applicable in Bangladesh, have been followed and adequate disclosure for any departure 1.5 (xv) The system of Internal control is sound in design and has been effectively implemented and monitored 1.5 (xvi) Going Concern (ability to continue as going concern) 1.5 (xvii) Highlight and explain significant deviations from the last year’s operating results 1.5 (xviii) Key operating and financial data of at least preceding 5(five) years shall be summarized 1.5 (xix) Reason for non-declaration of Dividend 1.5 (xx) 70 Compliance Status Complied Not complied N/A N/A N/A √ √ √ √ √ √ √ √ √ The number of Board meetings held during the year and attendance by each director is disclosed 1.5 (xxi) Pattern of shareholding and name wise details (disclosing aggregate number of shares): 1.5 (xxi)(a) Parent/Subsidiary/Associated Companies and other related parties 1.5 (xxi)(b) Directors, Chief Executive Officer (CEO). Company Secretary (CS), Chief Financial Officer (CFO), Head of Internal Audit (HIA) and their spouses and minor children 1.5 (xxi)(c) Executives √ 1.5 (xxi)(d) Shareholders holding ten percent (10%) or more voting interest in the company 1.5 (xxii) In case appointment/re-appointment of director, disclose: √ Dhaka Bank Limited Annual Report 2017 Remarks N/A √ √ √ www.dhakabankltd.com
  71. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION Continued Title 1.5 (xxii)(a) A brief resume of director 1.5 (xxii)(b) a brief resume of the director 1.5 (xxii)(c) nature of his/her expertise in specific functional areas names of companies in which the person also 2 held the directorship and the membership of committees of the board 2.1 Appointment of CFO, HIA and CS and defining their respective roles. responsibilities & duties 2.2 The CFO and the CS shall attend the meeting of the Board of Directors Audit Committee (AC): 3 3(i) 3(ii) 3(iii) 3.1 3.1(i) 3.1(ii) 3.1(iii) 3.1(iv) 3.1(v) 3.1(vi) 3.2 Compliance Status Complied Not complied √ √ √ √ The Audit Committee shall be composed of at least 3 members The BoD shall appoint members of the Audit Committee who shall be directors of the company and shall include at least 1 (one) Independent Director All members of the audit committee should be "financially literate" and at least 1 (one) member shall have accounting or related financial management experience √ www.dhakabankltd.com Remarks √ √ The Audit Committee shall be the sub-committee of the BoD The Audit Committee shall assist the BoD in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business. The Audit Committee shall be responsible to the BoD. The duties of the Audit Committee shall be clearly set forth in writing Constitution of Audit Committee: Expiration of the term of service of Audit Committee members making the number lower than 3 (three) and fill up the vacancy (ies) by the Board not later than 1 (one) month from the date of vacancy(ies) The Company Secretary shall act as the secretary of the Audit Committee The quorum of the Audit Committee meeting shall not constitute without at least 1(one) independent director Chairman of the Audit Committee Compliance Report on BSEC’s Notification SL No. √ √ √ √ √ √ √ Dhaka Bank Limited Annual Report 2017 71
  72. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION Compliance Report on BSEC’s Notification Continued SL No. Title 3.2(i) The BoD shall select the Chairman of the Audit Committee, who shall be an Independent Director Chairman of the audit committee shall remain present in the AGM Role of Audit Committee: Oversee the financial reporting process Monitor choice of accounting policies and principles Monitor Internal Control Risk Management process Oversee hiring and performance of external auditors Review the annual financial statements before submission to the board for approval Review the quarterly and half yearly financial statements before submission to the board for approval Review the adequacy of internal audit function Review statement of significant related party transactions submitted by the management Review Management Letters/Letter of Internal Control weakness issued by statutory auditors Disclosure to the Audit Committee about the uses/ applications of IPO funds by major category (capital expenditure, sales and marketing expenses, working capital, etc), on a quarterly basis, as a part of their quarterly declaration of financial results. Further, on an annual basis, shall prepare a statement of funds utilized for the purposes other than those stated in the prospectus Reporting of the Audit Committee: Reporting to BoD on the activities of the Audit Committee Reporting to BoD on conflicts of interests Reporting to BoD on any fraud or irregularity or material defect in the internal control system Reporting to BoD on suspected infringement of laws Reporting to the Board of Director (BoD) on suspected infringement of laws. Reporting to BoD on any other matter Reporting to BSEC (if any material impact on the financial condition & results of operation, unreasonably ignored by the management) Reporting to the Shareholders of Audit Committee activities, which shall be signed by the Chairman and disclosed in the Annual Report Engagement of External Auditors (EA): Non-engagement in appraisal or valuation services or fairness opinions Non-engagement in designing and implementation of Financial Information System 3.2(ii) 3.3 3.3 (i) 3.3(ii) 3.3(iii) 3.3(iv) 3.3(v) 3.3(vi) 3.3(vii) 3.3(viii) 3.3(ix) 3.3(x) 3.4 3.4.1 3.4.1(i) 3.4.1(ii) (a) 3.4.1(ii) (b) 3.4.1(ii) (c) 3.4.1(ii) (d) 3.4.2 3.5 4 4.00(i) 4.00(ii) 4.00(iii) 4.00(iv) 72 Non-engagement in Book Keeping or other services related to the accounting records or financial statements Non-engagement in Broker-dealer services Dhaka Bank Limited Annual Report 2017 Compliance Status Complied Not complied Remarks √ √ √ √ √ √ √ √ √ √ √ N/A √ √ N/A N/A N/A N/A N/A N/A √ √ √ √ www.dhakabankltd.com
  73. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION Continued Title 4.00(v) 4.00(vi) Non-engagement in internal audit services Non-engagement in any other services that the Audit Committee determines No partner or employees of the external audit firms shall possess any share of the company during the tenure of their assignment Audit/ Certification services on compliance of corporate governance as required under clause (i) of condition 7 Audit/ Certification services on compliance of corporate governance as required under clause (i) of condition 7 Subsidiary Company: Provisions relating to the composition of the BoD of the holding company shall be made applicable to the composition of the BoD of the subsidiary company 4.00(vii) 4.00(viii) 4.00 (ix) 5 5.00(i) 5.00(ii) 5(iii) 5(iv) 5(v) 6 6(i) 6(i)(a) 6(i)(b) 6(ii) 7 At least 1(one) Independent Director on the BoD of the holding company shall be a director on the BoD of the subsidiary company. The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company The minutes of the respective Board Meeting of the holding company shall state that they have reviewed the affairs of the subsidiary company also The Audit committee of the holding company shall also review the financial statements, in particular the investments made by the subsidiary company Duties of Chief Executive Officer (CEO) and Chief Financial Officer (CFO): The CEO and CFO shall certify to the Board that they have reviewed financial statements for the year and that to the best of their knowledge and belief: these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading these statements together present a true and fair view of the company's affairs and are in compliance with existing accounting standards and applicable laws There are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent. illegal or violation of the company's code of conduct Compliance Status Complied Not complied Compliance Report on BSEC’s Notification SL No. Remarks √ √ √ √ √ √ √ √ √ √ √ √ √ √ Reporting and Compliance of Corporate Governance Guidelines: 7(i) √ 7(ii) Directors statement in the directors' report whether the company has complied with these conditions www.dhakabankltd.com √ Dhaka Bank Limited Annual Report 2017 73
  74. Compliance Report on BSEC ’s Notification Certificate on Compliance of Conditions of Corporate Governance ACNABIN Chartered Accountants ACNABIN Chartered Accountants BDBL Bhaban (Level-13) 12 Kawran Bazar Commercial Area Dhaka-1215, Bangladesh. Telephone: (+88-02) 8144347 to 52 Fascimile: (+88-02) 8144353 E-mail: acnabin@bangla.net Web: www.acnabin.com Certificate on Compliance of Conditions of Corporate Governance Guidelines [Issued under condition #7(i) of Corporate Governance Guidelines of BSEC vide Notification NO. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012] I have reviewed the compliance with the conditions of Corporate Governance Guidelines by Dhaka Bank Limited (“the Bank’’) for the year ended 31 December 2017. These conditions of Corporate Governance were issued by Bangladesh Securities & Exchange Commission (BSEC) vide there notification no. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012. The compliance with the said conditions of Corporate Governance and reporting the status thereof is the responsibility of the management of the Bank. My responsibility is to provide a certificate about whether the Bank is in compliance with the said conditions of Corporate Governance based on my examination. My examination for the purpose of issuing this certificate was limited to the procedures including implementation thereof as adopted by the Bank for ensuring the compliance of the conditions of Corporate Governance and correct reporting of the status of the compliance on the attached statement on the basis of evidence gathered and representation received. It is neither an audit nor an expression of opinion on the financial statements of the Bank. To the best of my information and according to the explanations given to me by the Bank, I hereby certify that Dhaka Bank Limited has complied with the conditions of Corporate Governance stipulated in the above mentioned BSEC’s notification dated 07 August 2012. Dhaka, 24 April 2018 74 Dhaka Bank Limited Annual Report 2017 M. Moniruzzaman, FCA Partner ACNABIN, Chartered Accountants ICAB Enrollment # 787 www.dhakabankltd.com
  75. CEO ’S & CFO’S DECLARATION TO THE BOARD OF DIRECTORS To The Board of Directors Dhaka Bank Limited Certification of Financial Statements by the CEO & CFO In accordance with the notification of Bangladesh Securities and Exchange Commission No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August, 2012 we declared the followings regarding the financial statements of Dhaka Bank Limited for the year ended 31 December 2017: i) We have reviewed the financial statements for the year and that to the best of our knowledge and belief: Compliance Report on BSEC’s Notification Date: April 24, 2018 a. These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; There are, to the best of knowledge and belief, no transactions entered into by the Bank during the year which are fraudulent, illegal or violation of the Bank’s code of conduct. Darashiko Khasru Senior Executive Vice President & Chief Financial Officer (CFO) www.dhakabankltd.com Syed Mahbubur Rahman Managing Director & Chief Executive Officer (CEO) Dhaka Bank Limited Annual Report 2017 75 CEO’s & CFO’s Declaration to the Board of Directors b. These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws;
  76. Sustainability SUSTAINABILITY Steering the wheel for 23 years Dhaka Bank always values heritage , upholds tradition and looks forward to brighter future. Keeping stakeholder’s interest intact we are eager to perform our social responsibility and love to build a strong economic platform for Generation next. We focus on stable approach, solid ground and steady growth. Our focus on Digitization of SME Cottage Enterprise Product Innovation Manufacturing (Predominant Family Labour) Alternative Financing Model Micro Enterprise New & Young Entrepreneur Women Entrepreneur Non-financing Services Micro & Small Segment Manufacturing Sector 76 Dhaka Bank Limited Annual Report 2017 Manufacturing Service Trade of SMEs on the basis of business size Small Enterprise Manufacturing Service Trade Medium Enterprise Manufacturing Service Trade www.dhakabankltd.com
  77. SUSTAINABILITY SME BANKING Quality of Assets : Classification of SME in 2016 was 13.79%. It is now 12.17% as on 31 December 2017. Classification of Agri in 2016 was 2.06%. It is now 2.23% in 2017. Women Entrepreneur: 10 new Women Entrepreneurs obtained financing facilities from SME in 2017. Total approved limit was for Tk. 18.63 million. As on December 31, 2017, 81 Women Entrepreneurs were enjoying total Loan of Tk.413.85 million from DBL. Marginal Farmers/Borrowers: 5 marginal farmers/borrowers were financed for Tk.0.75 million in 2017. Refinance: (Graph): Dhaka Bank obtained total refinance of Tk. 2,505.84 million as on December 31, 2017 from various funds of Bangladesh Bank. Summary of all refinance is as follows: Particulars Refinance as on 31.12.2017 Contracts 2016 2017 Asset 21,509.00 26,793.53 NPL% 13.79% 12.17% Amount (in Million) WEF 333 632.80 ADB 662 646.22 BBK 624 901.32 EGBMP 175 168.07 ADB(2) 130 147.43 Year Disbursement Target Achievement 2016 17,000.00 113.05% Agro 1 10.00 2017 25,000.00 117.76% Total 1,925 2,505.84 Products: • House Building SME Loan (HBSM) was kicked off in the market to cater house building for commercial purpose in the outskirt of Dhaka. • A new Cluster Product DBL Dairy Loan was launched to boost up the dairy industry of the country specially Chatmohar &Vangura of Pabna. • Dhaka Bank SME Unit launched DBL BillsToCash, a financing solution to the supplier backed by buyer’s comfort for the first time in Bangladesh. Initiatives: New of Its Kind • Docudex, a digital platform for sending proposal from Branch to Head Office was launched. • Spot Decision Campaign was carried out across the country. Market Visibility: Dhaka Bank participated in the 2nd International SME Fair Bangladesh 2017 held at World Trade Center, Chittagong organized by Chittagong Chamber of Commerce from December 09 to 11, 2017. SME Activities: Portfolio: Portfolio of SME stands at Tk. 26,793.53 million as on December 31, 2017. It was Tk. 21,509.00 million in 2016. Total exposure in Agri as on December 31, 2017 was Tk.2,387.22 million. It was Tk.1,588.80 million in 2016. www.dhakabankltd.com Product & Services: Docudex is a digital platform for sending proposal from Branch to Head Office. It also provides archiving documents. Currently SME Unit receives proposals from 5 branches through Docudex. It will be expanded in the coming days. DBL BillsToCash is a reverse factoring product of Dhaka Bank. Dhaka Bank Ltd. is the 1st Bank in Bangladesh to do this kind of transaction in 2017 through this automated solution where bank, buyer and supplier are integrated on same digital platform and supplier is financed based on accepted invoice. Bank, buyer & seller can complete all dealings using this mobile application based platform (Veefin). SME Unit launched House Building SME loan (HBSM) in the market to cater house building for commercial purpose in the outskirt of Dhaka. So far 100 clients are enjoying the loan & outstanding in this typical product was for Tk.275.31 million as on December 31, 2017. Marketing: Dhaka Bank participated in “2nd International SME Fair Bangladesh 2017” held at World Trade Center, Chittagong organized by Chittagong Chamber of Commerce on 9-11 December 2017. Regional workshops & capacity building: Regional workshops were arranged at North zone, South zone, Sylhet Dhaka Bank Limited Annual Report 2017 77 SME Banking Fund name Financial Summary: (BDT in Million) Sustainability SME Highlights Dhaka Bank Limited (DBL) has been shifting its focus to Cottage, Micro, Small, Medium Enterprise (CMSME) lending since 2003. Recognizing the booming of this segment in Bangladesh for employment creation, escalating economic activities, We have already outperformed in Small, Micro and Cottage Enterprise segment by having an exposure of 67.24% where as required exposure is 50.00% or more as per Bangladesh Bank (SMESPD Circular 3, June 29, 2017). DBL is also very close to required SME exposure of 20.00% of total loan of the Bank. In 2017, SME portfolio increased by 24.57% than that of 2016. With strong supervision & monitoring, arranging successful Non-Performing Loan (NPL) Management Campaign by both officials of Head Office & Branch team, DBL has reduced its NPL in this sector to 12.17% in 2017 from 13.79% of 2016. Aligning with Digital Bangladesh, DBL introduced “DBL BillsToCash”, a digital financing solution to the supplier backed by buyer’s comfort for the 1st time in Bangladesh.
  78. SUSTAINABILITY SME BANKING Sustainability Continued zone and Chittagong zone to bring mindset of both SME Unit & Branch Officials on the same page. Branch officials were also shown practical credit decision making through Spot Decision Campaign. During the regional workshop, SME team visited across the all zones and visited many accounts. So, far 43.00% of the feasible clients’ availed loans from Dhaka Bank and many more are in the pipe line. SME Banking Cluster Program: DBL Dairy Loan (DLTA) was introduced for the Dairy Industry in 2017. Tk.39.62 million was disbursed among 31 clients in 2017 since its inception. Lending Reshaping: SME Unit has reduced continuous loan significantly and induced term loan & demand loan among the clients enjoying limit not exceeding Tk.10.00 million. We are aiming to keep continuous loan below 50.00% in 2018. BB requirement (SMESPD Circular 3, June 29, 2017) Position of DBL as of Dec 31, 2017 SME exposure of the total loan book >=20% 17.40% Women Entrepreneur loan >=10% 0.90% Small, Micro and Cottage Enterprise exposure >=50% 67.24% Manufacturing Segment exposure >=40% 32.71% Trading Segment Exposure <=35% 49.70% Service Segment Exposure >=25% 17.59% Particular Goals for coming days: Agreement with BB for SMEDP-2 for availing refinance from the Central Bank for the CMSMEs dds Launching of app based Bills_To_Cash Launching of new SME Liability Products Launching of new SME Asset Products Active participation in Women Entrepreneurs’ fair going forward Incentivizing the Pay Masters of the SME clients 78 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  79. SUSTAINABILITY GREEN BANKING Sustainability Global warming , ozone layer and continuous ice-breaking in the earth poles are big time concern of the environmentalists. First world economy, may not be to the justified range, trying to invest a portion of their budget to negate these climate issues. The wave of climate change touched the periphery of Bangladesh a few years ago. Being guided and self-driven, Banking Industry also puts its due emphasis. We value the eco-stability and try to paint our business with green. Green Banking Using eco friendly electronic gadgets to minimize paper work www.dhakabankltd.com Invest in eco friendly projects of technology Training employees to achieve Green Banking Policy Guidelines Implementation Building an eco friendly tower to save energy and better waste management process Dhaka Bank Limited Annual Report 2017 79
  80. Sustainability SUSTAINABILITY GREEN BANKING GREEN BANKING : During 2017 too, Dhaka Bank has been relentlessly putting their effort in Green Banking activities, mainly through financing in green initiatives of Entrepreneurs in different corners of the country. Our involvement was with the Solar Panel/Renewable Energy Plants, Brick Manufacturing etc. As a measure to keeping the environment cleaner, we financed for installing Effluent Treatment Plant or ETPs to remove the unwanted, hazardous chemicals from the wastewater to meet the statutory pollution control requirements. Environmental Risk is here integral to Core Risk Management procedure. The following data will portray our green financing activities in 2017. Introducing Green Finance Number Amount in BDT million - - 86 6199.85 - - 11 118 - - 11 144 Others (Please specify) - - Green Finance at reduced rate of interest - - Particular Green Banking For Installation of ETP (Amount Disbursed) Projects financed having ETP (Full amount disbursed) Bio-gas Plant Solar Panel/Renewable Energy Plant Bio-fertilizer Plant Hybrid Hoffman Kiln (HHK)/Tunnel Kiln/equivalent technology in Brick manufacturing Industry Incorporation of Environmental Risk in Core Risks Management (CRM) As of December 31, 2017 Total Particular No. of Projects applicable for Environmental Due Diligence (EDD) No. of Projects Rated (Environmental Risk Rating) Low Moderate High Total Number Rated Projects financed 80 Dhaka Bank Limited Annual Report 2017 Low Moderate High Total Amount Disbursed (Amount in BDT million) Low Moderate High 500 497 434 63 548 445 103 22,929.99 19,055.97 3,874.02 - www.dhakabankltd.com
  81. SUSTAINABILITY CORPORATE SOCIAL RESPONSIBILITY (CSR) Sustainability Meeting Corporate Social Responsibility In our year-long countrywide activities engage us in looking at social needs and problems. Corporate Social Responsibility or CSR does have a strategic importance. We intend to see it as the concept of corporate social responsibility to a new integrated design known as corporatesustainability and responsibility. Social sustainability is the main point of CSR in thecontext of concerns for companies to develop strong and sustainable relationships with Customers, Employees, Suppliers, Stakeholders and last but not least, community at large especially the distressed part. Dhaka Bank Donated Tk. 3.00 crore at Prime Minister’s Relief Fund Mr. Reshadur Rahman, Chairman of Dhaka Bank Limited along with Mr. Altaf Hossain Sarker, Director of Dhaka Bank Limited donates Tk. 3.00 crore to Prime Minister’s Relief Fund for the rehabilitation of the recent flood affected people all over the country. The cheque was ceremoniously handed over to the Hon’ble Prime Minister Sheikh Hasina at Prime Minister’s Office on August 23, 2017. Corporate Social Responsibility (CSR) Cheque handed over to the Hon’ble Prime Minister’s Relief Fund. Syedpur Abdur Rahman High School, Sirajdikhan, Munshigonj Gets about Tk. 14.00 lac from Dhaka Bank Recently, Dhaka Bank Limited donated a cheque of Tk.13,69,400/(Taka Thirteen Lac Sixty Nine Thousand Four Hundred Only) to Syedpur Abdur Rahman High School, Sirajdikhan, Munshigonj to complete Construction Work of the New Academic Building for Higher Secondary Level at its Corporate Office. Mr. Syed Mahbubur Rahman, Managing Director & CEO of Dhaka Bank Limited handed over the Cheque to Syed Mohammad Selim, Head Teacher, of Syedpur Abdur Rahman High School to complete Construction Work of the New Academic Building for Higher Secondary Level under corporate social responsibility. Additional Managing Director Mr. Emranul Huq, Deputy Managing Director Mr. Khan Shahadat Hossain, Company Secretary Mr. Arham Masudul Huq, FVP & Head of Communications & Branding Mr. Khandaker Anwar Ehtesham of Dhaka Bank Ltd, Mr. M. A. Kashem, Chairman, Managing Committee, Syedpur Abdur Rahman High School other officials were present on this handover ceremony. www.dhakabankltd.com PFDA-Vocational Training Institute Receives Tk. 24.00 lac Dhaka Bank Limited donated a cheque of Tk.24.00 lac to PFDAVocational Training Center Trust (welfare and development of underprivileged people with Autism and Neuro-Development Disability Institute) at its Corporate Office. Mr. Syed Mahbubur Rahman, Managing Director & CEO of Dhaka Bank Limited handed over the Cheque to Ms. Sanjida Rahman, Chairman of PFDA-Vocational Training Center Trust for the welfare and development of underprivileged people with Autism and Neuro-Development Disability under corporate social responsibility. Additional Managing Director Mr. Emranul Huq, FVP & Head of Communications & Branding Mr. Khandaker Anwar Ehtesham of Dhaka Bank Ltd, Vice Principal Ms. Begum Nur Jahan Dipa of PFDA along with other Officials were present at the Handover Ceremony. Dhaka Bank Limited Annual Report 2017 81
  82. SUSTAINABILITY CORPORATE SOCIAL RESPONSIBILITY (CSR) Donation of Tk. 4.00 crore to Prime Minister’s Education Assistance Trust & Shuchona Foundation Mrs. Rokshana Zaman, Vice Chairperson of Dhaka Bank Limited along with Mr. Abdullah Al Ahsan, Director and Mrs. Rakhi Das Gupta, Former Director of Dhaka Bank Limited recently donated Tk. 4.00 crore towards Prime Minister’s Education Assistance Trust and Shuchona Foundation on May 15, 2017. The cheque was ceremoniously handed over to the Hon’ble Prime Minister Sheikh Hasina at Gonobhaban. Corporate Social Responsibility (CSR) Sustainability Continued Cheque handed over to the Hon’ble Prime Minister’s Education Assistance Trust & Shuchona Foundation. Warmth of Shawl to Distressed People of Araihazar People of Syedpur and Rajanagar Receive Shawl from DBL Dhaka Bank Limited distributed Shawl to the poor and distressed communities of the country as a part of CSR of the Bank. Former Chairman of Dhaka Bank Limited Mr. A.T.M Hayatuzzaman Khan donated the Shawl to the poor and distressed people of Araihazar Thana, Narayanganj on behalf of the Bank on Friday, January 20, 2017. Managing Director & CEO of Dhaka Bank Mr. Syed Mahbubur Rahman, Dhaka Bank Deputy Managing Directors namely Mr. Md. Shakir Amin Chowdhury, Mr. Mohammad Abu Jafar along with Dhaka Bank Company Secretary Mr. Arham Masudul Huq and Branch Managers of Narayanganj zone were also present in the event. Dhaka Bank Limited distributed Shawl to the poor and distressed communities of the country as a part of Corporate Social Responsibility (CSR) of the Bank. In this connection, Dhaka Bank donated Shawl to the poor and distressed people of Syedpur and Rajanagar of Sirajdikhan Thana. Additional Managing Director of the Bank Mr. Emranul Huq distributed the blankets on behalf of the Bank on Monday, January 23, 2017. Dhaka Bank Deputy Managing Director Mr. Mohammad Abu Jafar along with Local Renowned Businessman Mr. Ashfaqur Rahman Turin along with other distinguished representatives of both the places were present in the event. 82 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  83. SUSTAINABILITY CORPORATE SOCIAL RESPONSIBILITY (CSR) Continued Mr. Abdul Hai Sarker, Founder Chairman and Director of Dhaka Bank Limited along with Mr. A.T.M. Hayatuzzaman Khan, Former Chairman and Sponsor of Dhaka Bank Limited recently donated Tk. 5.00 crore to Prime Minister’s Relief Fund for the assistance of Rohingya Refugees in Bangladesh. The cheque was ceremoniously handed over to the Hon’ble Prime Minister Sheikh Hasina at Prime Minister’s office on October 16, 2017. Tk. 2.50 crore as Donation to Prime Minister’s Relief Fund Mr. Reshadur Rahman, Chairman along with Mr. Abdul Hai Sarker, Founder Chairman & Director and Mr. A.T.M. Hayatuzzaman Khan, Former Chairman & Sponsor of Dhaka Bank Limited donated Tk. 2.50 crore to Prime Minister’s Relief Fund with an aim to help the cold stricken poor and distressed communities of the country. The cheque was ceremoniously handed over to the Hon’ble Prime Minister Sheikh Hasina at Prime Minister’s Office on November 27, 2017. In that program, Directors and High Officials of other Banks were also present. Cheque handed over to the Hon’ble Prime Minister’s Relief Fund. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 83 Corporate Social Responsibility (CSR) Cheque handed over to the Hon’ble Prime Minister’s Relief Fund. Sustainability We Donated Tk. 5.00 crore to Prime Minister’s Relief Fund
  84. Management Discussion & Analysis MANAGEMENT DISCUSSION & ANALYSIS Everything is entirely interconnected in the business arena. Good or bad happens to any part consequently affects the others in a straight line. As together we drive for excellence, each and every part of our business matters a lot in what we achieve collectively. We scrutinise, analyse and further adjust our business strategies as and when required to cope up with newly demanding and diversified realities. Meanwhile, Dhaka Bank always cares the value and upholds the tradition as we believe; every skyscraper firmly stands on its deeprooted pillars. PLAN COLLABORATE DELIVER 84 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  85. MANAGEMENT DISCUSSION & ANALYSIS Corporate Banking Since the inception, the business portfolio of Dhaka Bank Limited has been dominated by all sorts of Corporate Banking, to which the bank is fully acquainted. Efficiency in addressing the sophistication of the corporate lending modalities and introducing tailored services to its corporate customers ensuring the cost efficiency have lifted this bank to the current position in the industry. Backed up by the strong corporate strategy as well as the state of the art online banking platform, DBL has gained its reputation among the corporate conglomerates of the country, which is reflected by all the big names of almost all the business sectors of the country, who are satisfactorily enjoying our products and services. Business Portfolio segregation At the end of the balance sheet period, total corporate lending stood at around BDT 117 billion, which comprises approximately 82% of the entire lending portfolio of the bank. Fig. in million BDT Sector Amount % of Portfolio Corporate 117,106.81 76.03% Syndication 7,190.00 4.67% SME 26,790.00 17.00% Consumer 1,621.67 1.05% Others 1,305.02 0.85% Corporate Credit Portfolio Corporate portfolio of the Bank is governed by Head Office Credit Committee with segregation of responsibilities under three essential www.dhakabankltd.com At the end of 2017, credit portfolio of the Bank increased to reach the total of Tk. 154,017 million against Tk. 134,689 million of 2016, with a growth of 14 per cent over the preceding year. DBL adopts a cautious and selective approach in choosing borrowers so as to maintain a quality credit portfolio. Thus as a whole the Bank represented a quality credit portfolio. Our Credit line-up comprises core exposures to business, industry, service and trade sectors. DBL has been keeping its loan portfolio well diversified with the blend of corporate lending, project finance, trade finance, SME loans, agriculture credit, house building loan, staff loan, retail and credit card to the deserving clients. Commercial Loans Commercial Loans hold the major portion of corporate lending comprising a complete range of banking products namely working capital finance, trade finance and other loans intended to serve commercial purpose. This segment of financing extends supports to large and thriving business entities in Bangladesh including commodity trading, financing in infrastructures like roads, bridges, transportations, etc and lots of industrial undertakings. Export Finance Export earnings and inward remittances from abroad have a telling effect upon the Balance of Payment (BoP) of the country and are the main sources of foreign exchange. A significant part of Bank’s lending portfolio belongs to export financing. DBL has tailored a complete solution to its export driven customers with a countrywide network of 18 Authorized Dealer (AD) Branches, 1 offshore banking unit and other 82 Non - AD branches. DBL has got several big names among the large exporters of the country in its portfolio and the volume of direct exports in 2017 was worth Tk. 103,043.27 million approximately against the preceding year’s figure of Tk. 880,503.85 million with a growth of 17%. Bank’s total volume of export encompassed the area of RMG, home-textile, fisheries, leather, ceramics, pharmaceuticals, jute, natural rubber and others. Project Finance Dhaka Bank financing window to pioneering but non-conventional undertakings was wide open during the year 2017. The Bank continued project financing in support of entrepreneurship, innovative schemes and ventures profitable in terms of commercial, economic and environmental outlook. Project finance undertaken by the Bank exclusive of Syndication and Structured Finance, Export Finance and General Credit Unit was significant in number of deals and in volume that spanned industrial, energy, social and physical infrastructure as well as ICT sectors. The initiative has opened up new avenues and opportunities for pioneering entrepreneurship in the recent times. Strategic Priorities – 2018 Centralization of Corporate Banking Shifting from the traditional branch banking concept, Dhaka Bank is on the verge of introducing fully centralized corporate banking through an organized and structured formation for ensuring one-stop solution for the valued clients that will add significant value in the client service as well as boost up efficiency. The entire shift is planned to take place in phases so that uninterrupted service to the existing clients can be ensured. Dhaka Bank Limited Annual Report 2017 85 Corporate Banking Banking in 2017 was mixed bag again. Banks were perplexed with all its idle money finding safe baskets nowhere to invest. Deposit and Advance were in a good position; saw around 13% and 14% growth respectively. The private sector credit growth was moderately fine than the previous year. Though the industry was relatively stable, but the reserve heist and ATM scam were two major indicatives urging us to be more cautious about the use of information technology. Dhaka Bank was on the go in ensuring its market share under the challenging market setting in 2017. Amid the challenging scenario, Dhaka Bank so far covered those negatives and sustained its voyage to the prosperity using its manifold potentials; competitive pricing of the products and services and definitely highly skilled and trained human resources and a state of the art IT infrastructure to remain vibrant in the race. Our major focus in 2017 was ensuring more customer satisfaction, employee engagement, process re-engineering and maintaining regulatory compliance keeping in mind the long-term sustainability. parts namely assessment of risks, credit administration and monitoring function. Management Discussion & Analysis Another challenging year has gone reflecting the diverse effects all around. The world economy continued the same stagnant pace of the previous year in 2017 again. Continuance of declining crude oil price, Brexit issue, slow growth in major developed economies, refugee issue and violence in some regions summed up the year 2017. After a lacklustre outturn in 2016, economic activity is projected to pick up pace in 2017 and 2018, especially in emerging markets and developing economies, the IMF stated. Here in Bangladesh, the economy was on the right track to grow with relatively stable GDP growth (7.11% in FY’16) amid the global economic stagnancy. Inflation was also seen declining (5.03% P2P on Dec’16; 51 month lowest) throughout the year mainly because of low oil price in the international market. The export saw a notable upturn (4.44%) while the remittance left a bit bad notion, decreased by 11.16%.
  86. MANAGEMENT DISCUSSION & ANALYSIS Syndications & Structured Finance Unit Management Discussion & Analysis Continued In order to ensure custom-made services for the valued clients, corporate banking activities will be compartmentalized as per the size and the nature of the clients, i.e. Large Corporate, Mid Corporate and Commercial segment along with wide scale Cash Management Services. Focusing on the Thrust Sectors: Dhaka Bank’s business portfolio is already well diversified and a number of big names covering all the sectors are doing business with us since long. Still we believe there are some untapped areas in the Pharmaceuticals sector, Chemical and Engineering sector, Leather and Leather Goods as well as the FMCGs, for which we have special concern. Besides, Bangladesh’s all time major contributing RMG & Textile sector is also in the spotlight. Supporting upward shifting within the business sectors: Dhaka Bank always believes in creating new entrepreneurs for the greater good of the country, set aside the business prospect of the bank. In addition, as a trusted financial partner we have observed the gradual development of many concerns from their beginning. In the coming year DBL will be focusing more on this area and will emphasize on boosting up the emerging corporate to large ones and also the medium enterprises to the corporate. In line with the centralization of the Corporate Banking Division, the mid corporate and emerging corporate customers will be supervised and looked after through dedicated units so that necessary effective services are ensured for all the customer segments. Ensuring proper blend in various services: In today’s banking processes, customers are offered various services ranging from direct funded facilities to advisory services along with other services like, cash management services, payroll accounts, credit cards, personal loans and so on. DBL is and will be focusing on a perfect blend in these services depending on the nature and requirement of each client. In order to do so, we have put a segregated unit to look after cash management and other corporate relationships under the centralized corporate banking command. In the coming year we positively hope to render complete services to our valued clients. Passionate and committed people and culture Our people and culture are critical links in our effort to strengthen client service. We are striving to establish an identity for Dhaka Bank, built on a culture of confidence and client excellence while developing the capability of our people, providing competitive and fair compensation and living by common values. We are focused on delivering the people and culture pillar of our strategy by ensuring that we achieve the following: • Empower and trust our people to act responsively and do the right thing. • Promote a common set of values which align with the bank’s value. 86 Dhaka Bank Limited Annual Report 2017 • Encourage sustainability and transformation, which should reflect in our identity, image, and culture being socially relevant. • Create a team which feels collectively responsible for performance, and is coherent and united in representing Dhaka Bank to the best effect. Syndications & Structured Finance Unit The Bank has started its Syndications and Structured Finance initiatives as a separate Unit in 2004. Since its inception, the Unit maintains highest standard, adopts market best practices and offers customized, friendly, and flexible financial solutions to its clientele. It offers a wide range of products and services viz. Term Loan, both in Local and Foreign Currency, ECA backed financing for capital machineries, IPFF financing for infrastructure projects, LTFF financing for manufacturing concerns, Working Capital financing, financing in derivatives like Commercial Paper, Preference Shares, Bonds, etc. The Bank has always been diligent in client selection to maintain a diversified and quality asset portfolio and has seen a steady growth in its portfolio to uphold its position as a strong market player. Till 2017, the Unit’s performance is summarized as under: • As ‘Lead Arranger’ – Raised over BDT 20.00 billion and USD 90.00 million Syndicated Term financing. • As ‘Arranger’ - Successfullyclosed 5(five) Commercial Paper deals amountingBDT 2,500.00 million. • Leading Bank to channelize maximum IPFF Fund (1/3 of the total). • Arranged largest IPFF financing of USD 58.50 million for United Ashuganj Energy Limited, a 195 MW Power Plant. Later, the project won ‘Asian Power Awards - 2015’. • Participated in good nos. of projects, arranged by other Banks / Financial Institutions. • Maintained a diverse asset portfolio covering different sectors like Steel, Textiles, Food & Allied, etc. with special emphasis on power & energy. For more details please visit our website at http://dhakabankltd.com/syndications-structured-finance/ In 2017, the Unit arranged Syndication financing amounting BDT 4,709 million covering different sectors with a YoY growth of 31.61%. As of December 2017, the Unit was managing a loan portfolio of BDT 7,200.00 million approximately registering a 15.80% growth from the previous year. A milestone for the Unit in 2017 was signing a Term Sheet with Chandpur Power Generations Limited - a concern of Doreen Group for arrangement of Syndicated Term Loan of USD 65.00 million for their upcoming 115 MW (net) HFO based power plant at Chandpur. This is going to be the first ECA backed financing under the lead arrangement of Dhaka Bank Limited. www.dhakabankltd.com
  87. MANAGEMENT DISCUSSION & ANALYSIS Continued Management Discussion & Analysis Project Pictures Petromax LPG Limited KDS Logistics United Ashuganj Power Limited Saif Power Tec Epyllion Fabrics Limited Fakir Apparels Limited Dana Sweater Industries Limited www.dhakabankltd.com Project Pictures Bashundhara Industrial Complex Limited (A cement manufacturing mill at Mongla, Bagerhat) Dhaka Bank Limited Annual Report 2017 87
  88. MANAGEMENT DISCUSSION & ANALYSIS Business Operations Management Discussion & Analysis Continued AML & CFT Compliance Country Scenario On the backdrop of growing money laundering and terrorist financing challenges in the country, Bangladesh Bank has given strong message to the banking sector to strengthen AML & CFT compliance initiatives. As a result, there remains a pressing obligation for banks to ensure AML/CFT compliance across all areas of banking business. In recent times, the sphere of money laundering and terrorist financing has changed in colours and techniques, many of which we come across everyday through media reports. The changing landscape of business and economy around us is getting much bigger, more complex and immensely diversified in size, product mix, use of technology, operational procedure, etc that are hard to control. As a going concern, our business will continue to grow and expand. To make this journey sound and sustainable, the Bank is required to remain compliant in its practices, which in turn will yield further growth. In response to the changing scenario and regulatory stand, Dhaka Bank strengthened its position on AML and CFT compliance in 2017as per set standard of BFIU and international supervisors. Developing Compliance Structure In line with changing regulatory requirement, we have formed Central Compliance Committee (CCC) at Head Office comprising 12 Members from different core business segments. The Bank has also formed a separate Anti Money Laundering & Combating Financing of Terrorism Division (AML & CFT Division) at Head Office to carry out the official responsibilities of Central Compliance Committee (CCC) and to execute day-to-day AML/CFT compliance issues. The EVP & Deputy CAMLCO of the Bank is the Head of AML & CFT Division while the Division is run under the direct supervision of DMD-Operations & CAMLCO of the Bank. To ensure smooth operation of AML & CFT Division, the Division has been divided into following Units: a. Compliance & Monitoring Unit b. Policy, Guidelines & Training Unit c. Reporting Unit Functional Organogram of AML & CFT Division is provided below: Board of Directors Managing Director & CEO Chief Anti Money Laundering Compliance Officer (CAMLCO) (DMD – Operations) AML & CFT DIVISION (Headed by EVP & Deputy CAMLCO) BMs/BAMLCOs/Branch Desk Officials Compliance & Monitoring Unit Policy, Guidelines & Training Unit Reporting Unit 88 Central Compliance Committee (CAMLCO, Deputy CAMLCO, Heads of CRM, SME, Retail, Corporate Banking, Operations, International Banking, RMD, IT Division & Others) Dhaka Bank Limited Annual Report 2017 MD & CEO’s Statement of Commitment on AML & CFT The Bank communicates clearly to all Employees on an annual basis by a statement from the Managing Director that sets forth Bank’s policy against ML, TF & PF and any activity which facilitates Bank’s preventive measures against money laundering or the funding of terrorist or criminal activities. MD’s Statement of Commitment for the year 2017 conveys a clear message about every Employee’s responsibility to protect themselves as well as the institution from exploitation of money laundering. Non-compliance may lead to criminal, civil and disciplinary penalties. The Managing Director & CEO has highlighted some specific areas for immediate focus and compliance of all Employees: a. Develop a clear understanding on the affairs of money laundering & financing of terrorism; b. Watchful eye on what’s happening around particularly media news on ML, TF & PF; c. Adequate monitoring and Enhanced Due Diligence for high risk customers, products, delivery channels and geographies; d. Attention on cross border trade and transaction; e. Find out suspicious transaction using different tools, techniques and triggers; f. Developing massive fire wall against cyber attack and hacking; g. BAMLCO’s commitment, competence and responsibilities to comply with required norms; h. Senior Management’s awareness about their role for AML & CFT Role of Senior Management & the Board of Directors All Members of Senior Management are made aware of having clear and prolific knowledge on AML & CFT as well as Trade Based Money Laundering so that AML/CFT risks may be considered regarding any decision related to business and banking operations. In May 2017, a comprehensive AML circular was issued about role and awareness of Senior Management on important AML/CFT issues for their kind updates and necessary compliance. The Board is also aware about the money laundering consequence of the Bank. The Board is being updated about AML activities of the Bank at periodic rest. BFIU Master Circular 19 Bangladesh Financial Intelligence Unit (BFIU) has issued Master Circular 19 dated September 17, 2017 on AML/CFT which is a revision and extended version of its earlier Master Circular 10 dated Dec 28, 2014. This is viewed as the most important circular on AML/CFT compliance issued from BFIU for the banking industry in recent times. Under the instruction from CAMLCO, AML & CFT Division has circulated BFIU Master Circular # 19 with annexures to all Branches/Divisions/Units of the Bank for necessary action. The key changes/ revisions and new incorporation of the Circular have been highlighted for a clear overview. All Managers/Heads/In-charges of Branches/Divisions/Units as well as the BAMLCOs were advised to disseminate the above Circular among all Employees under their supervision and ensure immediate compliance related to their business. www.dhakabankltd.com
  89. MANAGEMENT DISCUSSION & ANALYSIS Continued - OUR ULITIMATE COMMITMENT TO AML & CFT COMPLIANCE • We do not open fictitious accounts nor we allow relationship made on fake documents; • We do not accept Customers with criminal or terrorist background; • We prevent ill-gotten wealth acquired through predicate offence or funds meant for terrorist financing; • We screen Customers and their transactions and freeze/ report them when found suspicious; • We prevent trade based money laundering as well as fraudulent traders from abuse of our trade system; • We stand firm against fraud, forgery and financial crime; • We are guided by all local and international norms and fight ML, TF & TBML by all means; • We learn things and improve everyday to safeguard our Bank, our Stakeholders and above all, our Homeland. ‘‘WE ARE A COMPLIANT BANK.’’ Risk Categorization of Customers - Around 926 high risk customers including 230 Influential Persons have been identified based on nature of business, size, source of fund and KYC Risk Grading (14 + score) to mitigate AML/CFT risk. - Database is continuously maintained and monitored through Branches and Central Monitoring Cell, HO. - Approval for opening of high risk Customers (PEP/IP) by Senior Management/CAMLCO, HO has been made mandatory. Uniform Account Opening Form The Bank introduced Uniform Account Opening Form in compliance with BFIU Circular Letter 01/2017 dated January 16, 2017. The Form has been designed in 02 (Two) separate sets i.e. Personal Account and Non Personal/Corporate/SME Account with Bengali translation and published in booklet form. In developing the Account Opening Form, the Bank has considered all mandatory fields as required by BFIU circular, requirement of Core Banking Software Upgradation project, Bank’s regular practices, market standard as well as customer convenience and understanding. Branches have been instructed to groom Account Opening Officers with clear knowledge about all fields/areas and terms and conditions of Account Opening Form to avoid confusion and audit observations. Snapshots of AML & CFT training 2017 conducted by AML & CFT Division: SL Training Type 01 Outreach Training 02 03 04 Geographical Areas covered Venue No. of Branches No. of Participants 09 Bogra, Sylhet, Chittagong, Khulna, Cox’s Bazar, Comilla & Sirajgonj Regions Renowned Hotel/ Training Centre in the region 44 Br. 409 In-house 06 Dhaka & Narayangonj Region DBTI 38 Br. 402 In-house (Foundation Training) 02 Trainee Officers across the country DBTI TOTAL 17 Sessions Lead Bank Training on AML/CFT 02 www.dhakabankltd.com No of day-long sessions Senior Branch Officials from all banks under Jessore & Dinajpur District 82 Renowned Hotel/ Training Centres in the region 82 Br. 893 Officials 95 Br. 102 Dhaka Bank Limited Annual Report 2017 89 Business Operations The Bank provided considerable trainings during 2017 with a special session on Trade Based Money Laundering (TBML). - AML & CFT Division and the CAMLCO Circulated special circulars, concept papers and checklist to all Bank officials. - ‘nSmart’ software has been introduced for trade operations to screen UN/International/Local sanction lists among the trading entities. - MD’s Alert Message highlighted the need for immediate knowledge and compliance procedure to prevent related risks. Senior Management is made aware to remain attentive on the issue and consider AML/CFT Risk while taking business decision. - International Division, CPC-Trade and CRM were advised to be properly equipped with policy/procedure/mechanism to combat TBML. - The Bank has incorporated credit based money laundering preventive measures in its CRM policy in order to mitigate credit fraud and other risks. Credit proposals are assessed in light of ML & TF risks and required mitigants in addition to usual credit rules and standar. Training & Awareness Building Initiatives - The Bank made a strategic choice in 2017 to equip all Employees with best possible learning and training initiatives on AML/CFT with a year-long calendar approved by the Managing directors & CEO. - A good total of 900 personnel have received upgraded training on AML, CFT & TBML in 2017 through day-long outreach training programmes covering all regions as well as day-long in-house training at Dhaka Bank Training Institute. - More values have been added to training initiative by issuing Certificates for the participants after successful completion of AML/CFT Quiz Test through Questionnaire. - AML & CFT Division has designed ‘An Easy Guide to Anti Money Laundering & Combating Financing of Terrorism’ covering important AML/CFT terms and terminologies and circulated the same to all Employees of the Bank. - Besides, the Bank has been selected by BFIU to conduct 02 Lead Bank Training for all other Banks’ Officials in Jessore and Dinajpur covering around 100 participants. - For Customer awareness, promotional materials such as AML Poster/Leaflet has been revised, updated and displayed at Branches/Service Centres. Management Discussion & Analysis Trade & Credit Based Money Laundering
  90. MANAGEMENT DISCUSSION & ANALYSIS Business Operations Management Discussion & Analysis Continued Know Your Transaction (KYT) & Know Your System (KYS) The time any transaction is processed, concerned Official has to care about the source of fund and ultimate beneficiary of the transaction. The Bank has given a clear message to all Employees to know AML system that covers appointment of compliance officers, KYC procedure, Customer Due Diligence, transaction profile, risk categorization, auto screening of sanction lists and others. Employees are reminded of their obligation to process STR when they suspect any activity of Customers. It has been ensured that your Core Banking System (FCUBS) adequately captures AML/CFT compliance issues and application. Monitoring & reporting - The Bank is using goAML Middleware software through which CTR is processed and reported to BFIU. In 2017, around 1,20,000 Cash Transaction Reports have been generated, assessed and reported to BFIU for further analysis. - We have enhanced awareness about Suspicious Transaction Report (STR) and Suspicious Activity Report (SAR) through training, circulars, guidelines across the Bank/Branches. - AML & CFT Division has formed Central Monitoring Cell for monitoring transactions on regular basis by analyzing Cash Transaction Reports, exception reports and daily transaction journal. - As a result, the reporting statistics of STR has increased significantly at the year-end 2017. - Provision of information to the regulators has been streamlined and monitored accurately so that no information regarding targeted Customers is missed out. Protection from Cyber Crime Employees are made aware that fraudsters might dare to hack your system anytime from anywhere all of a sudden. Therefore, Employees at all levels have been advised to remain on high alert regarding cyber attack. Measures are in place to prevent counterfeit and skimming devices at ATM and to drive out email security threats like SPAM, Phishing, Spoofing, Hoaxes, etc. The Bank has taken steps to keep the SWIFT system secure and the application justified. Awareness is prevalent to build firewalls to protect our cyber space as per IT policy and procedure. It has been ensured that the new upgraded core banking system is AML/CFT compliant, compatible with AML/CFT standard and capable of handling AML/CFT issues & reports. System architecture and design has been made user-friendly and workable for AML/CFT compliance. Planning ahead • Ensure 100% training to all Employees of the Bank in 2018; • Implement 20 new User ID for verification of Customer NID through online in order to reduce KYC risk significantly; • Revise related Policy/Guideline/Manual; • Enhance monitoring activities on AML & CFT; • Develop awareness, mechanism and procedure to prevent credit and trade based money laundering; • Introduce e-Learning process through e-Archive on AML/ CFT compliance and e-Exam online to check AML aptitude of Employees. Customer Services and Compliant Management System The Bank has established Central Customer Services and Compliant Management Cell (CCS&CMC) at Head Office to supervise overall complaint management activities of the Bank. During the year 2017, the Bank took steps to implement ‘Guidelines for Customer Services & Complaint Management’ issued by FICSD of Bangladesh Bank. The key focus was to establish complaint management system at Branch-level and Zonal Office, enhance complaint lodgment procedures through various means and expedite complaint resolution process. Summary of complaint management actions and initiatives in 2017: 1. Reformed Central Customer Service & Complaint Management Cell in line with the changes in management. 2. Reviewed customer complaints received every month and reported to FICSD, Bangladesh Bank and the progress of outstanding complaints; 3. Discussed thoroughly the nature and background of outstanding complaint and reason for its pending status; 4. Discussed the process of filtering and channeling huge customer queries/ requests received from online Complaint Box to appropriate authorities for necessary action; 5. Maintained strong liaison with Branches, HO Divisions/ Units, FICSD, BB and Customers to deliver rapid solutions to Customer complaints; 6. Reviewed suggestions/recommendations/decisions to improve Bank’s complaint management system. Challenges of De-risking De-risking means cancellation of correspondent relationship with local bank by foreign correspondent banks because of AML/CFT noncompliance. De-risking is considered a big shock to a bank as a consequence of losing access to foreign trade business. To remain safe from the danger of De-risking, the Branches and HO Divisions has been made aware of their AML/CFT rating, audit lapses, Customer screening, regulatory instructions, AML system and negative media report. 90 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  91. MANAGEMENT DISCUSSION & ANALYSIS Continued Particulars Amount in Crore (BDT) Outward Clearing – 2017 393,344 38,289.00 Inward Clearing – 2017 421,246 37,315.00 Outward EFT – 2017 142,189 753.00 Inward EFT – 2017 173,201 1,534.00 Besides, all Branches of the Bank are constantly motivating/ educating customers to do more and more transactions through EFT to mitigate fraud and forgery in the banking system. RTGS Easy Transfer Cash Management transaction summary 2017: SL Particulars No. of Instructions Amount in Crore (BDT) 01 Dividend 58,225 5,058.00 02 Payroll Accounts 15,734 4,179.00 03 C-Solution 9,808 2,636.00 Settlement of Foreign Remittance Foreign Remittance position 2016 Year Item Real Time Gross Settlement After shaping up the country’s retail payment, it was both a demand and necessity to develop the large value time critical payment system like Real Time Gross Settlement (RTGS) in our country. It may be mentioned that under present system high value interbank payments are done on same day. But under RTGS, interbank high value claims and obligations are being settled instantly. Thus it brings Bangladesh’s payment system to the international standard and creates an environmental in which more options and channels for sending money with quicker settlement encourages migrant workers to remit money through Official channel. RTGS enhances the use of formal remittance channels such as banks by migrant workers, thus provide better investment opportunities for migrant workers as well as encourage investments by Non Resident Bangladeshi (NRBs). Establishing RTGS will also give a new signal to both Resident & non Resident Bangladeshi in line with the vision of Digital Bangladesh. However, a significant number of transactions have been settled in 2017 under RTGS System: Particulars No. of Instructions Amount in Crore (BDT) Inward Remittance 9,485 6,099.00 Outward Remittance 24,018 8,579.00 www.dhakabankltd.com No. of Instructions Processing of Outward Remittance Processing of Export Proceeds Processing of Inward Remittance 2017 Amt in million (USD) No. of Instructions Amt in million (USD) 4,283 38.70 4,746 50.04 22,489 971.72 29,171 1,118.44 8,219 297.19 7,846 216.04 Inward Foreign Remittance Inward Foreign Remittance means Remittance received from abroad. In other words remittance coming into our country from other countries by the remitter by way of permissible banking channel through freely convertible Foreign Currencies is called ‘Inward Foreign Remittance’ from the beneficiary country’s point of view. From the remitter’s point of view it is called outward Foreign Remittance. Inward Remittance plays important role in our overall economy. We are receiving Inward Remittance into two ways: • Through Wire Transfer • Through Exchange Houses Outward Remittance Remittance from our country to foreign countries is called outward foreign remittance. On the other word, sales of foreign currency by the authorized dealer or formal channels may be addressed as outward remittance. The authorized dealers must exercise utmost caution to ensure that foreign currencies remitted or released by them are used only for the purpose for which they are released. Outward remittance may be made by appropriate method to the country to which remittance is authorized. Most outward remittance is approved by the authorized dealer on behalf of Bangladesh Bank. Dhaka Bank Limited Annual Report 2017 91 Business Operations No. of Instructions Cash Management Operations With a view to maintaining sufficient liquidity of Clients and maximizing their return, Dhaka Bank Ltd has introduced a range of Cash Management Solutions that has enabled Corporate group to manage their cash flows efficiently and effectively by optimizing liquidity, reducing default risk and lowering operating cost. Our Cash Management product and services provide transactional value by automating collection and payments of our customers that creates a win-win situation. In line with this, a number of following worthy initiatives have been made during the year 2017: 1. Collection arrangement has been made with PDB/Chittagong WASA/ Karnaphuly Gas Distribution Company Ltd. (KGDC) and maintained existing collection arrangement with DPDC, DESCO, REB, Titas gas and others. 2. Central Software already developed in the brand name “Dhaka Bank C-Solution” in order to settle Cash dividend/Payables of various Insurance Companies and Corporate clients. 3. DBL successfully initiated a number of depository relationship with Bangladesh Telecom Regulatory Commission (BTRC), Grameen Phone Ltd, Banglalink ,RobiAxiata ,bKash etc. In addition to that, DBL signed a number of agreements with a corporate group, Garments Industries and Institutional Clients to disburse monthly salary under Cash Management Operations. Management Discussion & Analysis Bangladesh Automated Clearing House (BACH) Operation Bangladesh Automated Clearing House (BACH) is a sophisticated and high tech based module for handling clearing cheques and EFT transaction to facilitate smoother customer services all over the country under the arrangement of Bangladesh Bank. Dhaka Bank Limited has started participating in BACH Operation on October 05, 2010 when Bangladesh Bank implemented the process in the country and has been running the payment system with good reputation since then. During the period of 2017, Dhaka Bank Limited has successfully processed clearing cheques (Inward& Outward) and EFT transactions (Inward & Outward). The key statistics are as follows:
  92. MANAGEMENT DISCUSSION & ANALYSIS Asset Liability Management (ALM) & HR Management Discussion & Analysis Continued Asset Liability Management The Asset Liability Management procedure designed to earn an adequate return while maintaining a comfortable surplus of Assets beyond liabilities, takes into consideration interest rates, earning power and degree of willingness to take on debt. The Dhaka Bank have a committee typically called the Asset Liability Committee (ALCO), should meet at least once every month to analysis, review and formulate strategy to manage the balance sheet. The Asset Liability Committee (ALCO) of the Dhaka Bank monitors Market Risk and Liquidity Risks at the same time it interpret the market views and the competition. ALCO prepare the liquidity plan as per the maturity profile of Assets and Liabilities, Deposits and Advances. The most important objective of the ALCO is to maintain a contingency plan to equivocate significant market volatility like Interest Rate Risk. Asset Liability Committee (ALCO) evaluates liquidity requirement and the pricing strategy of the bank. ALCO takes necessary market information from Treasury Division, Finance & Account Division and from all other well conversant members of the committee to take strategic decision. The members of the committee are The Managing Director, The Deputy Managing Director-Business Development, The Deputy Managing Director - Risk Management, The Head of Marketing, The Head of Credit, The Head of Retail Banking, The Head of Finance & Accounts Division, The Head of Treasury Division. ALCO also included invitees to enrich the total decision making process by their valuable interpretation. Through ALCO of Dhaka Bank takes all major strategic plan regarding interest rates on Deposits and Advances, Market Risk, Foreign Exchange Risk and comply with the regulatory requirement of Bangladesh Bank. Liquidity Risk Management Liquidity Risk is the risk that the bank may not meet financial commitments without raising funds at unreasonable prices or sell assets on forced basis. This situation may arise in the case of withdrawal of deposits, debt maturities and commitment to provide credit facilities. The objective of liquidity management is to ensure that an organization is able to generate sufficient funds to meet all of its financial commitments in a timely and cost effective manner. Dhaka Bank’s liquidity risk management process has been maintaining adequate liquidity and a healthy funding profile. The liquidity risk management framework is designed to identify, measure, monitor, and control the liquidity position. Dhaka Bank have an overall flexible funding strategy to cover both short and long-term liquidity needs as well as a contingency plan to cover unexpected or unusual situations, which could lead to market disruptions. We manage the liquidity structure of our assets, liabilities and commitments so that the cash flows are appropriately balanced and all funding obligations are met when appropriate. Dhaka Bank’s liquidity risk management approach starts at the intra day level managing the daily payment queue, forecasting cash flows and our access to central bank. This enables us to ensure that we have sufficient fund to meet our financial commitments even in times of crisis. 92 Dhaka Bank Limited Annual Report 2017 Human Resources (HR) Banking has been and will always be a “people business”. Efficient and effective management of the human resource in the organization turns it a successful one. For banking, importance of human resource management has grown manifold because the nature of banking industry, which is mainly service based. The management of people in the organization along with handling the financial and economic risks at the wider level is the most potent challenges in front of the banking industry in any given time frame. Efficient and skilled manpower is the key to manage the risks that the banks need to take on regular basis. The Human ResourcesDivision is accountable for finding such talented manpower and placing them in right jobs in the banks. A vital key to our success is nothing but a smart, skilled and motivated team of employees. Our employee commitment, qualifications and loyalty toward the Bank give us a strong competitive edge. We want to reinforce our leading position in the long-run. That is why we combine modern banking and innovative strategies with traditional values such as fairness, trust and professionalism. Our employees act as the dominant element in achieving this aspiration, so we continuously develop and expand the skills and knowledge of our employees by providing timely training and other HR programs. HR Vision Team Dhaka Bank represents and upholds the brand of Dhaka Bank through their customer centric services. To strengthen the team spirit, Dhaka bank Human Resources Division has set its own vision towards a splendidly managed, most productive and well equipped workforce among local Banks in Bangladesh. Recruitment, Selection & Hiring Dhaka Bank has a well reputation in pulling efficient professionals in the Banking arena in Bangladesh. We constantly seek innovative ways to attract talented young people to our Bank, provide opportunities for the fresh and talented graduates from different reputed Universities. Through different communication channels, Dhaka Bank arranges talent hunts to include best calibre within its workforce. It invites best talents, experts to work in an excellent environment where they can flourish their knowledge, skills and abilities. Dhaka Bank has a well organized Code of Conduct and employees are not permitted to solicit or accept any inducements, which are likely to conflict with their duties to clients. Appraisal of their individual performance is done in a rating scale against objectives and the Bank’s prescribed core values. Dhaka Bank recruits fresher and experienced employees on a permanent basis as per yearly manpower planning considering the attrition and expansion requirements of the bank. This year we have recruited 215 people. DBL Team at a glance Particulars 2017 2016 2015 2014 2013 Number of Employees 1771 1668 1524 1501 1400 Female Representation 404 364 345 345 319 Average Employee Age 36.75 36.33 37.69 37.7 37.35 Average Length of Service 7.75 7.58 7.66 7.3 8.13 www.dhakabankltd.com
  93. MANAGEMENT DISCUSSION & ANALYSIS Continued We have market driven salary package which includes Hospitalization Benefits as short term benefits and provident funds, gratuity, superannuation fund as long term benefits. Under corporate agreement with different renowned hospitals in Bangladesh and abroad, employees of Dhaka Bank also enjoy health care facilities at a discounted rate and priority services. In addition, we also offer our employees soft loans like employee house building loan and provident fund loan. Employees within the financial sector must remain compliant with specific regulation imposed by the regulatory authorities. Frequent training ensures these employees remain qualified for their jobs and always in compliance, even as the regulations changes time to time. Effective training is an investment of human resources of an organization, with both immediate and long-range returns. In recent times, e-learning has become increasingly popular in the financial sector due to its lower cost involved in online delivery as opposed to travel required for off-site, in-person training. And the ability to reach a large learning audience at one time is beneficial to the financial sector. To address the fact, Dhaka Bank also emphasizing for e-learning opportunities for its employees. The technology along with the method of working in banking sector is changing rapidly. Not only the machines, but approaches to various schemes, policies and banking facilities are changing with time. The new recruit and the older ones as well, need to undergo necessary training to grasp the same from time to time. The human resource division makes sure that the people working in the bank are not suffering from any such discrepancy. The followings are the methods we follow in providing training: • Orientation Program • Foundation Training Program • Job Specific Training Program • Need based Local/Foreign Training • Peer or supervisors’ Coaching In 2017 Human Resources Division arranged in-house, local and foreign training programmes. We try to ensure 30 hours of training for each employee. It covers areas like Basic Foundation Course for the freshers; specialized training courses i.e. Credit Appraisal and Management, Foreign Exchange and Foreign Trade, BASEL Implementation, Corporate Social Responsibility, Retail Banking, SME, Corporate Banking, Green Banking, Information Security etc. Beyond the local and in-house training program, Human Resources Division also arranged foreign training in India, Bahrain, Netherlands, Germany, USA, Thailand, Srilanka, UK, Italy, Malaysia, Indonesia, and Singapore. www.dhakabankltd.com Programmes Participants In House (DBTI) 118 3028 Local/Outsource 69 303 Foreign Training Program 22 46 In 2017, we moved our Training Institute at a new specious location with modern facilities.We consider training as not an expense but an investment. Information Technology (IT) The banking industry is evolving very quickly from the traditional brick and mortar banks to digital banks. As the internet era expanded, the banking channels and models have gone a long way far beyond the human imagination. The Internet has opened the gates towards digital transformation and innovation and completely revolutionized the banking industry by empowering banks to serve their customers in a better way thereby reducing costs and improving banking experience. Understanding the changing scenario, Dhaka Bank Limited has already stared initiatives for digitalization of its services on a focus to offer simple but secured banking to its customers. Key Performance in 2017 A. New Development in IT Infrastructure & Application Core Banking System (CBS) Bank recently upgraded its CBS to the latest version of Flexcube UBS. Current version is 12.0.3. Flexcube UBS is a product of Oracle Financial Services Software Ltd. (OFSS). It is one of the best CBS in the world using by the numerous banks. It has Conventional & Islamic banking modules required by the bank and supports multi country operations. Bank is using this solution for its OBU operations also. It has interface with Debit Cards, ATM, POS, SWIFT, Internet banking, Mobile Apps. etc. It can be used as Centralized or De-centralized model with full redundancy. It has multilayer security option. Cards Management System Currently TranzWare cards management system is using by the bank. It is a product of Compass Plus, Russia and PA DSS certified solution. It has all the issuing and acquiring modules and supports most of the networks like VISA, MasterCard etc. Identity and Access Management System In order to ensure security, single sign on options is required. Bank procured Oracle Identity and Access Management for identity governance, access management and directory services. Data Center Recently bank setup new Data Center for its Production and DR operations. Production Data Center has been designed as per EPI recommendations. Bank selected Cisco SDN based solution for its Network infrastructure considering its security and flexibility. All types of redundancy and security option maintained for it as per EPI recommendation. Server and Storage To ensure performance and security, bank implemented Oracle Sun Dhaka Bank Limited Annual Report 2017 93 Information Technology (IT) Training & Development Training and development is an important factor for most industries as it helps keep employee and organizational goals aligned. Besides this, training also serves as a safeguard for the banks in turmoil situation, when the sector comes under heightened scrutiny. Training Management Discussion & Analysis Compensation & Benefit There is always competition to attract high-performing employees in the banking industry, but the competition has heated up considerably in the past few years. As the competition for banking industry talent continues to intensify, it becomes increasingly important that management teams understand current trends in compensation, incentives, and human resource practices in order to develop a successful talent management strategy.
  94. MANAGEMENT DISCUSSION & ANALYSIS IT& Internal Control System Management Discussion & Analysis Continued SuperCluster M7 for its Core Banking and Cards system. SuperCluser has high-performance Architecture which is engineered for performance, security & efficiency. It has Silicon Secured Memory and Transparent Data & Network Encryption without impacting Performance. Both Production and DR site have the same hardware. In addition to the above, bank is using EMC storage and IBM/HP/DEL servers both in Production & DR site for other banking systems. Data Backup Bank is using EMC Data Domain system for its Server level data backup solution which has data encryption, compression & deduplication capability and is instantly replicating data to DR site. For End-user data backup, bank is using EMC Avamar backup and recovery system which has also data encryption, compression, de-duplication and single step data recovery capability. B. Process Automaton C Solution C Solution to automate Cash Management activities where customers can digitally send bulk payment requests to the bank to credit it to their beneficiaries (within or across the bank). It has maker/checker concept, 2FA option like OTP and notification system. Trade Cloud Trade Cloud is a web based solution for the Trade Customers which allows them to send their LC Issue/Amendment request along with supporting documents digitally, see the current status and receive the related advice from the bank after completion. It has maker/checker concept, 2FA option like OTP and notification system Bills-to-Cash Bills-to-Cash to automate Invoice and Distributor financing. It is end to end solution where Buyer, Seller and Bank can digitally send request and approve. It has maker/checker concept, 2FA option like OTP and notification system. C. Digital Banking Internet Banking for the Retail, SME and Corporate Customers where customer can see their Account/Card information, view & download statement, Limit view, Fund Transfer within/across the bank, Bill payment, Airtime top up etc. Customer must use OTP for other account transfer and getting notification after each transaction. Mobile Apps for the Retail and SME customers where customer can see their Account/Card information, view statement, Fund Transfer within/ across the bank, Bill payment, Airtime top up etc. At time of registration, Customer’s Mobile IME number is tagged with his/her User ID and system validate it at the time of login. Customer must use OTP for other account transfer and getting notification after each transaction. Call Center & IVR solution have Inward & Outward Voice Call option, Predictive Dialer, Tele-banking and Web Chat option. Registered customers can do banking through IVR using their TPIN in secured way. Cards and ATM : bank has full pledged Cards Management system, currently offering Debit, Prepaid and Credit cards in the issuing site and ATM at the acquiring site. Customers are doing ATM, POS and e-commerce transaction using VISA/NPSB network. Currently baking is 94 Dhaka Bank Limited Annual Report 2017 working to launch NFC enabled EMV cards and QR code based payment service. D. Green Banking Bank is using Workflow based Document Management System for the following request handling and document digitization : • LC Origination and Amendment • Bill Purchase/Discounting • Loan Origination • Debit Cards issuing • Credit Cards approval • Storing Digital copy of all Forms, Supporting Documents and Reports As a part of Green Banking initiative, Bank also sending e-statement and e-advice to the customers in addition to the SMS notification. Internal Control System The Bank’s internal control system comprises a well-established organizational structure and comprehensive policies and standards. Areas of responsibilities for each business and functional unit are clearly defined to ensure effective checks and balances. Procedures have been designed for safeguarding assets against unauthorized use or disposition; for maintaining proper accounting records; and for ensuring the reliability of financial information used within the business or for publication. The Audit Committee of the Board (ACB) reviewed the Group’s system of internal control over financial reporting and the developments affecting it over the course of 2017. The ACB considered the process used to evaluate the effectiveness of the system, overseeing the transition by management to the control framework. The transition included a comprehensive program of upgrades across all branches, division and subsidiary level controls. This work focused on those business and function level controls that did not meet the required standards and the ACB received progress updates from management at each meeting. In addition, particular emphasis was given to the remediation of controls over access management in IT and the financial controls necessary to mitigate the impact on financial reporting and MIS. Applying control framework, the ACB assessed the effectiveness of the internal control system over financial reporting as part of the Board’s overall assessment of internal controls. Effectiveness of internal controls The Board of Directors, through the Senior Management Team (SMT) and the Audit Committee of the Board (ACB), has conducted an annual review of the effectiveness of our system of risk management and internal control. The Audit Committee of the Board has received confirmation that management has taken or is taking the necessary actions to remedy any failings or weaknesses identified through the operation of our framework of controls. Internal Control & Compliance Function In order to establish the efficient, effective and compliant internal control system in the Bank, Internal Control & Compliance Division segregated its functions into 03 (Three) separate units: www.dhakabankltd.com
  95. MANAGEMENT DISCUSSION & ANALYSIS Continued Audit & Inspection Unit ; Monitoring Unit; and Compliance Unit. 1. Audit & Inspection Unit The Audit Committee of Board (ACB) approved Internal Audit’s annual plan. As this role reports to the Chairman of ACB, frequent meetings were held during the year. The ACB annually assesses the performance and effectiveness of the Internal Audit function. The ACB effectiveness review encompassed the scope of the function’s work and the adequacy of the skills of its team. The ACB considered that the Internal Audit function remained effective. The internal audit guideline, manual & charter are reviewed and updated periodically. 2. Monitoring Unit The Monitoring Unit of the division monitors effectiveness of the Bank’s internal control system on an ongoing basis through follow-up of compliances and regularization of deficiencies that are identified by Audit & Inspection teams throughout the year. In addition, off-site monitoring of selected risk attributes by the unit has already been introduced which aided to improve the control environment of the Bank. 3. Compliance Unit Compliance unit is entrusted to ensure that bank complies with all regulatory requirements while conducting its business. The unit ensures adequate and effective oversight on evolving changes in business climate and increased requirement of regulators. They maintain and manage a better relationship with the regulators and notify the other units/departments and Branches regarding any regulatory changes. Compliance unit ensures the tracking, monitoring and validation of implementation of external audit, internal audit and regulatory audit and inspections. Bangladesh Bank Inspection and Compliance: Dhaka Bank Ltd. received 144 reports and letters from Bangladesh Bank during the year 2017 and successfully submitted compliance of all reports and letters within stipulated timeline. Bangladesh Bank inspection team conducted a total number of 53 inspections that includes 43 Branches and 09 divisions during 2017. Research & Development (R&D) There is no alternative to research for continuous improvement and to stay ahead of competition. Research is crucial at every stage for informed decision-making. Proper analysis of the business information can bring about competitive edge among businesses. Keeping in mind the industry shifts and fluctuations, Dhaka Bank are continuously digging deeper with its versatile R&D initiatives. www.dhakabankltd.com • Feasibility Study on Branch A comprehensive Feasibility Study was performed in order to examine appropriateness of our Cox’s Bazar Branch location. • Product Repackaging and Designing New Products Considering the market scenario, we time to time repackage the both asset & liability products. In 2017, we repackaged the Mudaraba Hajj Deposit Scheme. We also took a Green Initiative to make sure every customer and employee can access online forms for opening various Accounts; and also for easy download and use internally at office. • Publication of INSIGHT Dhaka Bank’s Quarterly flagship Newsletter INSIGHT is an R&D initiative to make our stakeholders updated about the con-current business moves. In 2017, four issues of INSIGHT were published and distributed to Regulatory bodies, Govt. Offices, Foreign embassies, Public & University libraries, Trade & Business bodies, all our Bank employees. • i-Quiz Our Quiz programme based on the INSIGHT contents namely i-Quiz were arranged Quarterly for our Employees with a view to give them an amusement in their everyday busy banking life along with learning experience. Awards and e-certificates are given to them by the Hon’ble Managing Director & CEO. It inspired our colleagues to have some fun and also learn about the industry context. • Managing Bank’s Web page and Facebook services Regular updating of Bank’s Corporate Website and Facebook page was done. Under Website maintenance 24/7 security maintenance, content upload etc. are conducted along with Social Media management and Social Customer Relationship Management. • Launched Dhaka Bank YouTube Channel R&D launched a YouTube Channel for Dhaka Bank’s Audio-Visual contents and reached a large number of existing and potential online Customers • Daily and Periodical E-publications Regular (daily, weekly, monthly, quarterly and yearly) Analysis on industry perspective are presented to Management to take decision more prudentially. Reviews on Monetary Policy, National Budget, etc. are also made. Some of these are appropriately shared with Colleagues electronically. • Conducting Client Survey (Customer Feedback at Local Office) Develop templates for Client Survey; Improve Customer Service Standard formats; Mystery Shopping. • Preparing Periodic Sector Reports on Industries Collect inputs from various business segments; segment-wise exposure and performance and present these in usable format for help in lending and other decisions. • Placing RD Notes time to time for providing ideas to improve service R&D places RD Notes to point out scopes of overall service on environment improvement or put suggestions to help make well informed decisions. • Contribution in Annual Report 2016 R&D Unit contributed in writing a large segment of Annual Report 2016. In publishing the Report, we seriously steered ourselves in Dhaka Bank Limited Annual Report 2017 95 Internal Control System & R&D During the year, work was undertaken to streamline Internal Audit reporting across committees and to ensure key thematic issues were appropriately highlighted. These items included, for example, AML risk level controls remediation, and systems and information security. Enhancement was also made to the management information in relation to audit conclusions and the tracking-to-resolution of outstanding audit recommendations. This enhancement better aligned audit recommendations to the individual accountabilities of senior managers. Performance Highlights in 2017 Management Discussion & Analysis 1. 2. 3.
  96. MANAGEMENT DISCUSSION & ANALYSIS R&D & Theoretical Foundation of Islamic Banking Management Discussion & Analysis Continued line with the regulatory stipulations, thus the standard disclosure issues were met meticulously. New Initiatives in 2017 • Digital forms in Portal & Website to promote Green and Digital Banking • Launched YouTube Channel • E-promotion of Product and Services of Islamic Banking Regulatory Compliance Maintained/Regulatory Disclosure We prepared several Regulatory Reports and submitted to the Bangladesh Bank. We also prepared Reports on request from the Agencies/Institutions like MoF, BIBM, CPD etc. Looking forward to 2018 Development is a continuous and never-ending process. We learn with each passing day in our series of brainstorming sessions so that we can open up new avenues of business or take new direction while treading the current path. With the learning curve, we have achieved through the just concluded year, we are much confident of its upsurge in future. However, our actions and assertions are not conclusive and warrant management review and recommendation to pick the best possible methods, processes and decision. To take our R&D Mission to a newer height, we want to translate R&D resource and support into a tangible gain. We draw inspiration from our achievements of 2017 and turn our sails to more an ambitious feat of 2018. Theoretical Foundation of Islamic Banking Islamic Banking is the considerable part of Islamic Economic System which is a significant part of Islamic Shariah. Islam distinguishes human life into three: 1. Aqidah (Iman), 2. Ibadah (Certain Worships), 3. Muamalat (Daily & regular all activities), Aqidah (Kalimah) to believe in certain items is the pathway to direct one into Islam like Allah, Prophets, Hereafter, Angels, Devine holy kitabs & sahifa etc., Salat, Fasting, Zakaat & Hajj are the obligatory performance under Ibadah. Other than Akhlaq & Ibadah each & every transaction of human life is of Muamalat. What is “Riba”? “Riba” is Arabic word. Riba means - increasing, to be more, to increase something from root etc. Riba is that amount which is charged on given any Loan/Lending & recovered. Dr. Omar Chapra defined Riba as it predetermined excess amount of Money or Premium which was bound to pay by borrower as the condition of Loan. To receive anything extra upon transaction or in exchange of same items of Goods/Commodities is called Riba Fadal. Riba in Al Qur’an : Sura Al Baqarah, Verse 275 - 279 “Those who eat Riba (usury) will not stand (on the day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: Trading is only like Riba (usury), whereas Allah has permitted trading and forbidden Riba (usury). So whosoever receives an admonition from his lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns (to Riba i.e. usury), such are the dwellers of the Fire- they will abide therein.” “Allah will destroy Riba (usury) and will give increase for Sadaqat (deeds of charity, alms, etc.) And Allah likes not the disbelievers, sinners.” “Truly those who believe, and do deeds of righteousness, and perform As Salat (Iqamat as Salat) and give Zakat, they will have their reward with their Lord. On them shall be no fear, nor shall they grieve. “O you who believe! Be afraid of Allah and give up what remains (due to you) from Riba (usury)(from now onward), if you are (really) believers.” “And if you don’t do it, then take a notice of war from Allah and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).” Definition of Islamic Banking: OIC defined Islamic Banking in its Foreign Ministers Conference held in 1978 in Senegal as: “a financial institution whose statutes, rules and procedures expressly state its commitment to the principles of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations.” Riba in Hadith Almost 27 Hadiths from authentic sources of various Books alongwith sihah sittah are found on Riba. Hazrat Jabir (Rd.) quoted, prophet Mohammad (Sm.) may cursed the receiver and the payer of interest, the one who records it and the two witnesses to the transaction and said: “They are all alike [in guilt].” (Muslim, Kitab al-Musaqat, Bab la’ni akili al-riba wa mu’kilihi; also in Tirmidhi and Musnad Ahmad) (Sahih Muslim) Objectives of Islamic Banking: Genesis of Islamic Banking The objective in the context of its role in the economy are as under: a) Offer Financial Services, b) Banking for Development, c) Optimum Allocation of Resources, d) Equitable Distribution of Resources In early Islamic Era: Prophet Mohammad (SM) conducted business with fund from Khadiza on the basis of Mudaraba. Quard e Hasanah was wide used for personal needs mitigation during tenure of Khulafa e Rshidin. Baitul Maal has a vital role to meet the needs of general people. Hisbah was established for Market Management. Riba was fully banned at all level of transaction. Major Fundamental difference between Islamic Banking & Conventional Banking: a) Collection of Deposits & Investment are fully Interest/usury free. Conventional Banks giving interest to depositors & receiving interest from entrepreneurs b) Islamic Banks are free from Gharar Contract i.e. confusing contract / uncertain contract c) Islamic Banks are free from Mysr i.e. Lottery items transactions. d) Islamic Banks don’t contract with any enterprise, business firm, company, business person producing items prohibited by Al Quran & Hadith i.e. Shariah 96 Dhaka Bank Limited Annual Report 2017 Theoretical Exercise: Islamic Banking came into reality through a long theoretical exercise of several Islamic Scholars and economist. Muslim thinkers and theologists of this Sub-continent have substantially contributed to Islamic Economics & Banking. Among those “Sharhul Biqaya” in 700-800 AD by Islamic Thinker & Theologist Ubayd Allah ibn Masud al-Mahbubi al-Hanafi. Book on Muamalat “Hidaya” by Allama Burhanuddin Marginani, a Urdu book on Economic system of Islam “Islam ka Iqtisadi Nizam: Nadwatul Musannifin, 1942 by Hifzur Rahman, Islamic Economics by Manazir Ahsan Gilani of Jamia Osmania www.dhakabankltd.com
  97. MANAGEMENT DISCUSSION & ANALYSIS Continued Islamic Banking in Bangladesh In August 1974, Bangladesh signed the Charter of IDB & committed to recognize its economy & financial system as per Islamic Shariah, In 1978 Bangladesh recommended in OIC Foreign Ministers Conference held in Senegal regarding systematic efforts to establish Islamic Banks in members’ countries gradually, In 1979 the than Ambassador of BD to UAE addressed a letter to Foreign Secretary recommending to set a Islamic Bank in Bangladesh in line with Dubai Islami Bank, In 1980, Prof. Shamsul Huq the than Foreign Minister in OIC FMs Conference held in Pakistan proposed to develop an Islamic International Banking System throughout the members countries. In early from 1975 to 1980, in Sonali Bank Staff College, more than 500 conventional bankers of various banks have been received Islamic banking Training in evening under Guidance of SBSC Principal M. Azizul Huq, In 1981 Bangladesh Islamic Bankers Association established against Riba, In between 1977 In April 14, 1981 Finance Ministry suggested in a letter to Bangladesh Bank that all nationalized banks set separate Islamic Banking Counter & maintain separate ledger in this regard, In 1982 a representative of IDB visited Dhaka to evaluate possibility for establishment of Private Islamic Bank & they recommended to invest capital as entrepreneur, In this regard a brave & positive role was played by the than KSA Ambassador to Bangladesh Syed Shaikh Fuad Abdul Hamid Al Khatib (Rah.), After long days preparation in March 13, 1983 a dream of Bangladesh Islami Bank Bangladesh Limited was established with the entrepreneur s in which 19 Bangladeshi Nationals, 4 Bangladeshi Institutions, 11 Banks, Financial Institutions & Government Bodies of the Middle East and www.dhakabankltd.com Islamic Banking Operations of Dhaka Bank Ltd. Introduction It has been mentioned earlier that “Islamic Banking business means banking business whose aims and operations do not involve any element which is not approved by the religion Islam.” It appears from the above definitions that – Islamic banking is a system of financial intermediation that avoids receipt and payment of interest in its transactions and conducts its operations in a way that it help achieve the objectives of an Islamic economy. Dhaka Bank Limited is the pioneer to establish Shariah based banking operations through Islamic Banking branches in the country. Generation Bangladesh is a Muslim majority Country. Almost 90% of it’s population is Muslim. So, General Muslim alongwith businessmen of our Country are verily willing to engage their economic activities with Islamic Banking for saving their faith. So, Islamic Banking & Finance has turned into well accepted to the general people and its’ suitability has been rising in our country and all over the world enormously.Islamic Banking & Finance has already been proved it’s significance in the field of economy caring almost 30% business volume of the whole banking business. The sector is also standing at leading point by discharging its responsibilities in Corporate Social Responsibility (CSR). Highlighting on elevated ethical standards it builds a society with the honest, responsible, caring & trustworthy people. The well structured Liability & Assets products based on Islamic Shariah principle save the banks from the rapid raising of non-performing resources and ensures quality of the assets. Islamic banking asset products confirm real transaction instead of only financial transaction which role is high productivity, employment etc. Thus, it has been effectively crossing the financial crisis broaden out all over the world following latest economic depression. Now Islamic Banking & Finance are well competent to meet the emerging demand of the people who are interested with Riba free banking and also eager to manage their assets by this holistic system. These successes are achieved only for following the divine principles of banning interest. Service Providing Points Dhaka Bank Limited has been providing Islamic Banking services through its 2 (two) branches with adhere to the Islamic values & Integrity. One is Islamic Banking Branch, Motijheel, Dhaka inaugurated on July 02, 2003 and second one is Islamic Banking branch Muradpur, Chittagong was opened in May 22, 2004. Dhaka Bank Limited Annual Report 2017 97 Theoretical Foundation of Islamic Banking Islamic Banking around the World: Ahmad Al Najjar played pioneer role in establishing the first Islamic Bank in the modern world in 1963 at Mitgamar, Egypt. At present more than 600 Islamic Banks & Financial Institutions are being established more than 100 Muslim & Non Muslim Countries all over the world. Full pledged Islamic Banking & Economy over the world Only 3 (three) countries of the world since established full pledged Islamic Banking & Economy. Those are Iran, Sudan & Brunei. Europe including IDB and 2 eminent personalities of KSA joined their hands & made the dream reality, At present 8 nos. full pledged, 12 conventional banks established Islamic Banking branches , booths & Windows. Recently Sonali Bank Ltd. obtained permission for opening & conducting 7 windows of Islamic Banking in addition of existing IBs windows. Almost 8 conventional banks have applied to Bangladesh bank for conversion into Islamic banking, A new Full pledged Islamic Bank is coming in operation soon in the Market, 23% of total deposit 2,040.07 bln is under Islamic banking, Deposit growth : MSD 18.55% : Conv. SA Growth 11%, MTD 48% NBFI: Islamic Finance and Investment Ltd., Hajj Finance Co. Ltd. Management Discussion & Analysis of Hydrabad in 1945, a basic book on Islamic Banking “Interest & Modern Banking” alongwith several contribution to understanding of Islamic economics & Banking,Great Islamic by Thinker & Muzaddid Syed Abul A’la Mowdudi, “Islam & the theory of Interest” by Anwar Iqbal Qureshi, pointing out clearly by Mahmud Ahmad in 1952 in his book on Economics & establishment of Islamic banking on the basis of a joint stock company, outlining on Mudaraba Principle as the operational methodology of an Islamic Bank in his paper ‘An Outline of Interestless Banking’ in 1955 by Muhammad Uzair, structuring framework of Islamic Banking in 1968 & introducing at first the two-tier model of Islamic banking based on Mudaraba principle by Dr.Nejatullah Siddiqui, Professor of Economics, Aligarh Muslim University & later on extending the two-tier model incorporating Musharaka principle as another alternative for managing fund, a basic book framing a separate holistic Financial System “Towards a Just Monetary System” published by The Islamic Foundation, U.K. Dr.Umar Chapra, Professor of Economics, Aligarh Muslim University & later on Advisor of IDB, Jeddah, KSA has contributed more to Islamic Banking. M. Mohsin ex- Ambassador to UAE has presented a detailed & elaborate framework of Islamic banking in modern context to Bangladesh Government.
  98. MANAGEMENT DISCUSSION & ANALYSIS Theoretical Foundation of Islamic Banking Management Discussion & Analysis Continued Islamic Banking Division in Head Office As per Guideline on Islamic Banking issued by Bangladesh Bank BRPD Circular No.15 dated 09.11.2009, a full pledged separate division namely “Islamic Banking Division” established in Head Office headed by a Senior Executive Vice President having experience in Islamic Banking & Finance. Regular Activities of Islamic Banking Division The duty & responsibility of the Division is exclusively as follows: 1. Framing Islamic Banking rules, regulations and Guidelines ensuring their implementations. 2. Maintaining co-ordination with the Shariah Supervisory Committee and the other divisions of the bank. 3. To hold Shariah Supervisory Committee meeting at least once in a quarter and various Shariah related issues are being discussed, reviewed & resolved. 4. Confirm investment of the Funds received for Islamic Banking Business under modes approved by Islamic Shariah. 5. To provide the employees have been received Islamic Banking Training. 6. Submission of required statements to the Central Bank. 7. To discharge of any other responsibility (ies), the Central Bank may assign from time to time. 8. Supervise the Islamic Treasury Function (Fund Management of Bangladesh Government Islamic Investment Bond, SLR/CRR maintenance etc.) 9. Conduct Shariah Audit/Inspection of the Islamic Banking Branches. 10. Supervise & monitoring Islamic Mudaraba deposit products namely “Tawfeer Mudaraba Savings Bond Account-TMSBA. 11. Other responsibilities/activities as and when assigned by the management & day to day activities. 12. To coordinate with Central Shariah Board of Islamic Banks in Bangladesh-CSBIB & Islamic Banks Consultative Forum-IBCF. 13. Formulating Business Planning of Islamic Banking Business. 14. To prepare & make capable the employees of the Bank with the primary knowledge of Islamic Banking to approach the customers with the Islamic Banking business. 15. Idea generation for various Islamic Banking derivatives/products formulation 16. Conduct business marketing to the valued customers Islamic Banking Business Islamic banking products and services based on Islamic Shari’ah principles introduced by Dhaka Bank through its two Islamic banking branches got tremendous response from a considerable Portion of its clientele who are eager to accept Shari’ah compliant products and services. Dhaka Bank is also offering Islamic banking products and services from its conventional banking branches using Online through Islamic Banking Branches. Dhaka Bank enjoys a very strong brand image in the banking sector and the bank has a very good market reputation and its Islamic banking business also has proved to be superior compared to others and also its own conventional system. Its Islamic banking market share and growth rate is also mentionable among the conventional banks having Islamic banking branches. Considering the fact that the Islamic banking industry is at its growth stage in the country and competitive rivalry among the industry members is increasing, Dhaka Bank have set the vision to be a trend setter in this field by adopting proper strategy and objective in 98 Dhaka Bank Limited Annual Report 2017 order to achieve its goal. The Islamic banking business is growing at a competitive rate despite various limitations for its expansion. This growth is also remarkable compared to the overall growth of the Islamic banking sector of the Country. The Islamic banking manpower of the bank is more than one hundred for whom the bank arranges regular training programs on operation of Islamic banking. Dhaka Bank is an active member of Central Shari’ah Board for Islamic Banks of BangladeshCSBIB and Islamic Banks Consultative Forum-IBCF. Thus Dhaka Bank is committed to uphold the outlook of majority of the people in the country as a bank providing “Excellence in Service”. It is expected that Islamic branches would also perform better and achieve targets this year under the guidance and prudent leadership of the Management of Dhaka Bank Ltd., In Sha Allah. Among the Islamic banks, full fledged Islamic banks conduct around 90% of the Islamic banking business of the country while the rest is done by the conventional banks having Islamic branches and windows. Among these banks, Dhaka Bank is one of the better performers. Since inception, Islamic banking business of Dhaka Bank marked steady growth in all areas - deposit, investment and profit. With only 2 branches, around 5 -6% of Dhaka Bank’s business (in terms of deposit & investment) is being conducted under Islamic banking modes. At the end of the year 2017, the deposit and investment of Islamic Banking operations of Dhaka Bank Ltd. stand at 5,884.84 & 5,235.96 million. Cost Effectiveness of Islamic banking products is better compared to overall business. Islamic Banking Products and services At present Dhaka Bank offers almost all the deposit & investment products those are available in the country under its Islamic banking operations for collecting & sourcing and utilization of funds or in other words, pooling resources and deployment of the said resources. The following products are available now: Dhaka Bank Ltd. has been maintaining following products under Al Wadeeah & Mudaraba principle of Islamic Shariah under Islamic Banking Operations: 1.Al-Wadeeah Current Account, 2. Mudaraba Savings Account, 3.Mudaraba Term Deposit Account 4. Mudaraba Special Notice Deposit Account, 5.Mudaraba Hajj Savings Account, 6.Mudaraba Pension Scheme Account, 7. Mudaraba Special Deposit Scheme Account, 8. Mudaraba Foreign Currency Deposit Account, 9.Tawfeer Mudaraba Deposit Pension Scheme – T- MDPS, 10.Tawfeer Mudaraba Savings Bond Account – T- MSBA, 11.Tawfeer Mudaraba Foreign Remittance Account – T- MFRA, 12.Mudaraba Gold Deposit Account, 13. Mudaraba Platinum Deposit Account, 14. Mudaraba Silver Deposit Account, 15.Mudaraba Residence Foreign Currency Account, 16.Mudaraba Ratib (Salary) Account,17.Mudaraba Deposit Double Scheme Dhaka Bank Limited Islamic Banking Branches offer to the customers the following Investment products: 1. Murabaha Purchase Order, 2. Bai-Muazzal Industrial, 3. Bai-Muazzal Others, 4. Murabaha Post Import Trust Receipt, 5. Murabaha Term Finance Industrial, 6. Murabaha Term Finance Others, 7. Hire Purchase Shirkatul Meelk, 8. Ijarah Transport, 9.Ijarah Machinary & Equipment, 10. Quard against MTDR www.dhakabankltd.com
  99. MANAGEMENT DISCUSSION & ANALYSIS Continued Activities – Year 2017 During the year 2017, Islamic Banking Division of the Bank has published a Book titled “Ibadat and Muamalat in daily life”. Our Board of Directors & Management expect that this Book will be very useful for the Bankers and Customers of the Bank & guide them to the right path. The Management has taken initiative to expand Islamic Banking Business gradually. Therefore, in order to familiarize the employees of the Bank with the Islamic Banking principles, terms of products & marketing approach, Islamic Banking Division has been arranging exchange of views program on Islamic Banking in the branches. In the year 2017 they organized several programs which were participated by the branch Managers, Operation Managers & Front Desk officials. For this purpose, a team headed by SEVP & Head of Islamic Banking Division alongwith VP & Muraquib worked in various regions with the employees to provide marketing, development and sales effort. The Shariah Supervisory Committee Islamic Banking Operations of Dhaka Bank Limited is being conducted under keen supervision of Shariah Supervisory Committee. Shariah Supervisory Committee of Dhaka Bank Limited consist of a team of Shariah Scholars & experts, renowned Islamic banker, Lawyer along with personalities having outstanding strength in Qur’an, Hadith & Fiqh.The Shariah Supervisory Committee meeting is being held at least once in a quarter and reviews the Islamic Banking activities and provides their expert opinion on various Shariah related issues of Islamic Banking Operations. The Member Secretary is discharging his duty as chief of the Shariah Supervisory Committee Secretariat & Muraquib is working in the Secretariat under Member Secretary & helps the Shariah Supervisory Committee for its regular activities. A short introduction of Shariah Supervisory Committee is given below: SL Name Designation Chairman Qualification 1 M. Azizul Huq 2 Prof. Mowlana Mohammad Salahuddin Member (Faqih) 3 Md. Fariduddin Ahmed Member (Expert in Is. Banking) B.Com, DAIBB 4 Dr. Mohd. Haroon Rashid Member (Faqih) Fazil (Hadith), MA, Phd 5 Hafej Mawlana Abdul Gaffar Member (Faqih) Takmil (Dawrah) 6 Barrister Omar Sadat Member (Lawyer) Bar- at – law, LL.M, LL.B, 7 Syed Mahbubur Rahman Member (Ex-Officio) MSC, MBA 8 Md.Sirajul Haque Member Secretary M Com, C.A. (Intermediate) 9 Md.Kamaruzzaman Muraquib Kamil, MA, MBA, LL.B Islamic Banking Training i.In this year, EVP & Manager of Ibb Motijheel, Dhaka and VP & Muraquib of Shariah Supervisory Committee have participated in International Training for 1 week long in Bahrain Institute of Banking & Finance-BIBF, Bahrain. ii.SVP of Retail Business Division & VP & Muraquib of Shariah Supervisory Committee have attended another 2 days International Conference on “Cash Waqf” held in Pan Pacific Hotel Sonargaon, Dhaka where 18 countries participants & speakers were attended. iii. 2 Executives from Treasury Division & Islamic Banking Division joined 3 days International Workshop on “Sukuk” held in Hotel Purbani Int’l, www.dhakabankltd.com M Com (Renowned Islamic Banker) Kamil, MA (Khatib of Baitul Mukarram National Mosque) Dilkusha, Dhaka. iv. 15 Executives/Officials attended in a Seminar “Islamic Investment for Socio –economic Development : The Better Alternative” held in Pan Pacific Hotel Sonargaon, Dhaka. v.12 no’s of executives & Officials have been given Islamic Banking Training in IBCF T&RA & BIBM. vi. Two special Exchange of views program on Introduction, Marketing & Development of Islamic Banking Products arranged in Sylhet & Chittagong by Islamic Banking Division where attended 60 nos executives & officials of 20 branches. Dhaka Bank Limited Annual Report 2017 99 Theoretical Foundation of Islamic Banking performance of the team was excellent – targeted number of accounts was opened and enough deposit under Mudaraba principle mobilized. Set up of separate Islamic Banking Software module has been completed during the period. In this time the Bank introduced a new deposit product captioned “Mudaraba Gift Cheque” under Mudaraba principle. Management Discussion & Analysis Other Products Besides these Selling of Payment Order, Demand Draft, issuance of Bank Guarantee, Performance Guarantee, Bid bond, Certificates and other necessary banking services are also available in the 2 (two) Islamic Banking Branches under Islamic Banking Operation of Dhaka Bank Ltd.
  100. MANAGEMENT DISCUSSION & ANALYSIS Retail Banking Division & Off-Shore Banking Unit Management Discussion & Analysis Continued Retail Banking Division Dhaka Bank’s Retail Banking Division started its operation in the year 2002.Since then the business has made a good deposit client base and approved total retail loans amountingto Tk.1,210 crore. Over the year 2017, the Bank has continued its momentum on acquiring new retail clients and growing retail business in the area of deposit accounts, cards and retail loans. The introduction& improvement of Digital Banking products such as Dhaka Bank Go, Direct Banking, has spurred the growth in retail space. In the year 2017, we have witnessed a growth of 36% in our Retail Asset portfolio compared to end of 2016, and 86% lending was extended as secured loans such as Car, Home and security covered loans. The focus has been to do with sourcing amongst credit-safe salaried segment. On the retail deposit side, we have witnessed encouraging growth in our CASAbook, 14% growth in volume with 31,000 new CASA accounts in the retail deposit portfolio. The Bank has continued to strengthen Card Business eco-system and has observed an ascent in business parameters. During 2017, Credit Card issuance grew by 1.5 times and Debit Card issuance grew by 47% compared to 2016. In terms of card spending volume, our card holders (Debit & Credit) have used their cards 41% more in comparison to 2016. The clients got benefit of instalment purchases of lifestyle goods and travel packages amounted to Tk. 3 Crore over the year. The Bank has launched its first Prepaid Card ‘Esteem’ for its employees as a pilot and will start issuing this card to payroll clients very soon. Now, with 150 discount merchant partners and 50 Swipe-it (installment purchase) merchant partners, Dhaka Bank Card is considered as one of the emerging cards in the industry. As a result, the Bank has also received marketing support from its scheme partner for the first time. Over the year,the following areas have been prioritized: • Building the Retail team • Working on the infrastructure and eco-systems such as upgrading Core Banking System, changing Card Management System & Switch • Bringing focus of frontline to retail business through campaigns • Building up strategic alliance such as restaurant, lifestyle and travel merchants for card business and auto merchants for car loan • Enhancing capability on Digital Banking front: Dhaka Bank Go – mobile app, Direct Banking – internet banking, University Tuition Fee Solution. Major Retail Banking Initiatives / Campaign in 2017 • Travel Bonanza: discount and instalment purchase of travel ticket / packages • Passport endorsement campaign • 5% Cash back on debit and credit card with ‘Deshi Dosh’ – the leading local fashion outlet The Bank looks forward to continue its investment and persuasion for growing card business with respect to new technology, product capability, security and client value propositions. Encouraging internet transactions, EMV and contactless technology,new payment options via Cards are the special area of concentration for 2018. Off-Shore Banking Unit We have come a long way since we launched our Off-shore Banking operations in Dhaka Export Processing Zone eleven years ago. We are one of the pioneers among local banks in Bangladesh to set up Offshore Banking Unit, which started its operation in the year of 2006 at Dhaka Export Processing Zone, Savar, Dhaka. Though the country’s offshore banking market is dominated by the foreign banks, Dhaka Bank has been able to make its strong and delightful presence by attracting a good number of customers in a short period of time through effective marketing, competitive pricing and ensuring highest levels of professionalism along with excellent customer services backed by quality human and technological supports. OBU has invested around USD 201.30 million in offshore market in the year of 2017 to support Type-A industries, local entrepreneurs as well as to strengthen its asset portfolios. Portfolio of the unit during December, 2017 is shown in the following info graph: OBU Business Portfolio - Sales OBU Business Portfolio A-type Industries To Local Industries USD million USD million Short Term Loan 10.38 Buyers 134.16 OD & Time Loan 11.77 Suppliers credit 26.38 Bills Purchased 1.60 Term Loan 11.68 Others 5.34 • Wind of Change (CASA acquisition campaign) • Safe & Sound (Secured Credit Card campaign) • Debit Card Cash Back Offer (Debit Card issuance& activation campaign) • Secured Adventure (Secured term loan campaign) • Insta-Money (Secured Overdraft campaign) • Call of Duty (Retail deposit sourcing campaign) Major Card Business Initiatives / Campaign in 2017 • Launch of Visa Prepaid Card • ‘Buy One - Get One Free’ campaign during Ramadan • EidUlAdha campaign: 5% Cash Back on Swipe-It transaction 100 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  101. MANAGEMENT DISCUSSION & ANALYSIS Continued International Division OBU Profitability (5 Years) BDT million 2013 75.00 2014 102.00 2015 109.50 2016 194.10 2017 393.50 OBU Profitability (5 Years) Nature of OBU facilities extended to the enterprises Dhaka Bank OBU extends the following funded, non-funded and working capital facilities to the Type “A” industries of EPZ: • EXP Certifying • LC Advising • Export Bill Negotiation • Export Bill Discounting • LC Opening • LTR creation • Short Term Loan • OD for working capital • Guarantee • NFCD Deposit www.dhakabankltd.com Financial Institution (FI) Unit Trade finance business is one of the major concentration areas of Dhaka Bank Limited. Presently this sector is more focused and it is expected that export-import transactions will be increasing with a substantial amount under the present capable management. Financial Institutions Unit has been playing a key role as facilitator to overall trade finance and foreign exchange transactions under prevailing local and international laws. Financial Institutions Unit mainly manages the correspondence banking relations with the different banks and financial institutions in home and abroad. In this regard, FI needs to maintain Relationship Management Applications (RMA), Nostro Accounts and different correspondent banking arrangements. Financial Institutions arranges correspondent banking network, credit lines and other facilities required for 19 Authorized Dealer (AD) branches, Two Central Processing Centers (CPCs) and one Off-shore Banking unit of DBL. It mainly provides customized supports to the following areas of Dhaka Bank Trade Finances: 1. Import Letter of Credits 2. Export Letter of Credits 3. Negotiation and Documentary Collection 4. Confirmation and Discounting 5. Arranging Credit Lines for funded and non-facilities 6. Monitoring reporting of foreign trade and foreign exchange transactions In the year of 2017, International Division’s FI Unit was engaged in strengthening its correspondent networks to facilitate the Bank’s trade finance business. Dhaka Bank has routed 28,353 LCs through its correspondent banks with total value USD 1.60 billion in 2017. Dhaka Bank has achieved 23% growth in Import trade business. Clients were offered multiple options in routing their LCs with confirmation and discounting facilities without any major hurdle. Moreover, geographical coverage with correspondent banks is continuously being increased ensuring smooth LC issuance service for our import clients. Dhaka Bank Limited and International Finance Corporation (IFC) have signed USD 55 million facilities agreements in March, 2017. Under the agreements, IFC provided USD 20 million Working Capital Solutions Dhaka Bank Limited Annual Report 2017 101 Off-Shore Banking Unit & International Division OBU of the bank has added diversification in its overall portfolio to mitigate overall credit risk of the bank. The unit also earns reasonable spread on different short-term financing. Profitability curve of the unit looks as follows: International Division works for ensuring smooth foreign trade business, foreign exchange transactions and channelizing wage earners remittance. This division is mainly divided into two units: • Financial Institutions (FI) Unit • Remittance Unit Management Discussion & Analysis • Current FC Account Deposit • FC Term Deposit We also extend the following facilities to the bonafide local entrepreneurs for their business growth as well as employment generation: • UPAS LC Financing • Suppliers Credit facilities • Exporters Financing etc.
  102. MANAGEMENT DISCUSSION & ANALYSIS International Division & Dhaka Bank Training Institute (DBTI) Management Discussion & Analysis Continued facility to Dhaka Bank’s Offshore Banking Unit for expanding its foothold in SME-based export sector and USD 35 million Guarantee Facility under Global Trade Finance Program (GTFP). The USD 35 million GTFP of IFC has enhanced the capacity of Dhaka Bank to deliver trade financing by providing risk mitigation in new or challenging markets where trade lines may be constrained. International Division’s FI Unit has arranged and coordinated this whole program successfully. International Division also helped OBU to arrange a good volume of trade loans from foreign correspondents Remittance unit DBL has correspondent relationship and agency arrangements with internationally reputable major banks, financial institutions and exchange houses throughout the world. As a part of its continuous endeavor to facilitate international transactions including trade facilitations and remittance services, DBL is continuing its efforts to maintain relationship with banks and exchange houses in all important financial centers of the world to cater to the growing needs of its clients at home and abroad. At present, DBL has agency arrangements with total 21 exchange houses located in USA, UAE, UK, Oman, Italy, Kuwait, France and so on to facilitate remittance of expatriate Bangladeshis working abroad. Outlets of DBL’s NGO partners (PAGE and Padakhep Manabik Unnayan Kendra that have more than 230 branches) have been used significantly to facilitate remittance recipients locating across the country. Arrangement with mobile financial services like bKash enables Dhaka Bank to reach to the remittance to beneficiaries living in the remotest areas. Dhaka Bank Training Institute (DBTI) also arranges offsite programs for officers/executives of Branches outside Dhaka. The course content is commensurate with the experience level of participants. Academic & Logistics: Besides the Principal, DBTI & Faculty members and internal resource persons, DBTI invites external resource persons comprising experienced professionals to facilitate its programs. They lead the class sessions with their versatile knowledge & experience and develop the participants with the holistic approaches and broader perceptions. DBTI Library For its participants, DBTI has a library containing books on banking, economics and other disciplines and different local and international journals and periodicals. At present we have around 1,500 books in our library. Preparation of Course Plan While designing & formulating a Course, DBTI gathers general information regarding the course, identifies target groups, and code of conduct for them to follow. While drawing up a list of programs/courses, we include need-based programs in addition to basic/core banking courses. We have already conducted 3/4 Training Need Assessment (TNA) sessions in this connection. We interact with the training institutes of others Banks as well as the Bangladesh Institute of Bank Management (BIBM) for curriculum development. Our Centre for Excellence Liaisons Training is by far the most important and crucial event for organizational The DBTI maintains constant liaison with universities, other organizations, training institutions for keeping itself updated with changes and development in relevant areas and also for necessary dissemination thereof among our staff working at field level. advancement. Human Resource development through training is a perpetual process that enhances the competency of personnel as well as the organization. Human Resource development is the most important part in any organizational growth and sustainability. The need for professional excellence at Dhaka Bank was duly recognized by its Board of Directors leading to the creation of Dhaka Bank Training Institute (DBTI) in 2000. DBTI located to its present premises at Sara Tower in Motijheel Commercial Area in January 2004. DBTI conducted the following courses for the last five years: Year Number of Course Number of Participants 2011 59 1,521 2012 51 1,344 DBTI is committed to develop the human resources, the driving force 2013 46 1,270 of the Bank through structured modular training programs. With a 2014 47 1,449 view to achieving professional excellence in Banking, DBTI conducts various courses, workshops, executive development programs mainly for Officers and Executives of the Bank. Since August 2000 till December 2017, DBTI trained as many as 21,835 participants through 769 different training programs covering diverse courses in banking, finance, management, law etc. In the year of 2017 DBTI conducted 118 training programs covering 33 diverse courses for 3,028 Officers and Executives. 2015 44 1,277 2016 69 118 1,807 2017 3,028 Besides conventional banking related training programs, DBTI also arranged, facilitated and conducted various Executive Development Programs, workshops, discussion meetings and exchanged views to meet the banking industry challenges in the twenty-first century. DBTI 102 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  103. MANAGEMENT DISCUSSION & ANALYSIS Continued DBTI Hostel Dhaka Bank Training Institute Hostel is operative since September 09, 2012 with full board residential accommodation for 27 participants (mainly non - Dhaka Branches). The hostel is located at Shahidbagh, Dhaka. DBTI Update: Training Workshop/Executive Development Program/Training Course in 2017 Sl. No. Name of The Training Course / Workshop Number of Courses Number of Participants International Trade Facilitation for Bankers 03 160 02 Credit Management for GB Officials 01 36 03 Comprehensive Risk Management 03 110 04 Foundation Training 05 189 05 Orientation Program for Newly Recruited TOs & TCOs 03 106 06 Orientation on KPI 02 168 07 Online Gas Bill Collection 01 33 08 Preparation of Credit Proposal & Corporate Account Management 01 35 09 ICT Security Awareness 01 36 10 Integrated Supervision System 08 251 11 Retail Credit Management 01 33 12 AML, CFT & Prevention of Trade Based Money Laundering 05 333 13 Oracle Flex cube Universal Banking 12.0.3v Training 01 30 14 Flex cube Direct Banking (FCBD) for IT Officials 01 04 15 Cheque Processing System (CPS) 02 74 16 Card System (TranZware Operational Training) for Card ADC Officials 01 07 17 Quality & Efficiency Improvement in Credit Proposal 01 41 18 Customer Service 01 35 19 Environment & Social Risk in Credit Risk Management 01 31 Number of Courses Number of Participants Sl. No. Name of The Training Course / Workshop Dhaka Bank Training Institute (DBTI) 01 CBS Up – gradation Programme 20 CBS Up-gradation - GB Module 28 437 21 CBS Up-gradation - Teller Module 21 359 22 CBS - Training on Loans & Advances 09 151 23 CBS Up-gradation - Import Module 03 52 www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 Management Discussion & Analysis Dhaka Bank also believes in bringing holistic approach in training and development area. Human Resources Division sent handful of participants to attend various courses both at home and abroad to attain special skills. 103
  104. Management Discussion & Analysis MANAGEMENT DISCUSSION & ANALYSIS Continued Sl. No. Name of The Training Course / Workshop Number of Courses Number of Participants 25 CBS Up-gradation - Money Market & Foreign Exchange Module 02 06 26 CBS Up - gradation on - BACH Module 03 27 27 CBS - ELMCM & OD Module 01 21 28 CBS - Data Entry and Bulk Upload in FCUBS 02 27 29 Document Management System – Credit Category 01 10 Dhaka Bank Training Institute (DBTI) Executive Development Programme 30 Revised ICC - Guidelines 2016 01 35 31 Self Leadership, Advance Managerial Communication & 21stCentaury Managerial Mindset 02 73 32 Unleash Your True Potential 01 35 33 Bangladesh Bank Regulation & Compliance on SME Financing 01 66 118 3,028 Grand Total Other Initiatives Dhaka Bank Training Institute has been relentlessly working for both personal and professional development of the human resources of DBL. DBTI assists people to enhance their efficiency and effectiveness at respective workstations and offers regular Foundation Course to freshers. Dhaka Bank Training Institute (DBTI) along with Risk Management Division conducted a Six days long Comprehensive Training on Risk Management for DBL Officials.The programme held from November 11 to 16, 2017 at DBTI. The Managing Director & CEO, Mr. Syed Mahbubur Rahman addressed the Closing ceremony as Chief Guest and distributed Certificates among the 34 Participants. The program was conducted by Mr. Md. Abdul Motaleb Miah,Vice President, DBTI 104 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  105. MANAGEMENT DISCUSSION & ANALYSIS Continued Customers recognize a company, a product or a service through its brand image. A strong brand image not only helps an organization to make profit but also ensures sustainable growth. The objective of branding is no longer about creating a space in the customers’ mind. Rather it is about winning customers’ hearts. Based on this core understanding, Communications and Branding Division was formed to uphold the face of the Bank. This division is considered as the face of Bank since it deals with the externals which include customers, shareholders, regulatory bodies, etc. Since the inception of this division, it has been contributing towards corporate image building through various marketing tools and techniques. The core functions of this division include brand management, advertising, public relations, event management, media planning and buying, activation, etc. Major Sponsorship Events • • • • • • 1st Bengal Sanskriti Utsav 2017, Sylhet 3rdDhaka International Folk Fest 2017 1stDhaka International Weaver Fest 2016 6thDhaka Bank Victory Day Golf Tournament 2017 at BGCC 3rdDhaka Bank Golf Tournament at AGC 2017 Sponsoring Rajshahi Kings in BPL 2017 Major Celebration with Clients - - - - 22nd Anniversary of the Bank Celebration of Bengali New Year Eid-Ul-Fitre 2017 New Year Calendar 2017 Launching and Repackaging Products - Launch of Antorik – specialized service for pregnant, senior and physically challenged citizens - Launching of Dhaka Bank Go – Mobile App for Banking Solution - Launching of Dhaka Bank TradeCloud – Digital Trade Solution - Launching of Dhaka Bank BillsToCash – Digital Solution for Reverse Factoring - Launching of Dhaka Bank C-Solution– Digital Solution for Cash Management - Dhaka Bank Car Loan Campaign - Repackaged Dhaka Bank Car Loan, Home Loan, Swipe It, Credit Card, Debit Card, etc. Media Channel Utilization - - - - Television (Program Sponsorship) Newspaper (Advertisement and Articles) Magazine (Advertisement and Articles) Out-Of-Home (Billboard, Hording, Airport Counter, Beautification Projects, etc.) - Online Newspaper (Advertisement and Articles) - Social Media (Facebook, Twitter, LinkedIn) - Viral Marketing (#tag) Major Programmed Events • Annual Manager’s Conference 2017 • 22nd Annual General Meeting 2017 • 22nd Anniversary of Dhaka Bank RMG Financing Bangladesh is one of the largest apparel exporters in the world. In the 1980s, about 50 factories were involved in manufacturing of readymade garments, while the number is now estimated to hover around 4,365 (Source: BGMEA). The RMG Industry is now the lifeline to Bangladesh economy. In FY2016-17, overall national export was US$34.84 billion and RMG export was US$28.15 billion (Source: EPB). Around 80 per cent (Source: EPB) of the country’s export earnings come from RMG. Production of Ready Made Garment is also crucial to our economy, as the sector is creating largest job opportunities for women, and the largest source of foreign currency. International brands appreciate Bangladesh as a sourcing location because of reliable production quality, fast times and low costs. In banking, RMG clients are major source of fee based income. In Dhaka Bank, we are engaged in financing RMG clients since the inception of the bank. In 2013, separate RMG & Allied Unit was formed to serve the RMG concerns. In 2017, the unit was converted into RMG Division to ensure better service to the RMG clients as well as to ensure proper monitoring and control. Total number of clients of Dhaka Bank Ltd. involved in direct & deemed export of RMG were 239 by the end of December 2017, of which, 33 new clients have been included in RMG portfolio during 2017. Clients involved in direct export were 126 (Knit: 46, Woven: 62 & Sweater: 18) & deemed exported 113 (consists of accessories, spinning, interlining, fabrics, textile, dyeing, printing etc.). Major CSR Events - Distributed Blankets to poor and distressed People in different parts of Bangladesh - Donation towards SEID - Donation towards Rainbow Valley - Donation towards Holy Family Red Crescent Medical College Hospital - Donation towards Prime Minister’s Relief Fund www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 105 Communications and Branding & RMG Financing Key Performance Highlights - Donation towards Suchona Foundation Management Discussion & Analysis Communications and Branding
  106. MANAGEMENT DISCUSSION & ANALYSIS Continued RMG Financing Management Discussion & Analysis Sector-wise Number of RMG Clients Total export reflected by RMG concerns of Dhaka Bank Ltd. was US$ 1,276.12 million (~Tk.103,020.80 million) in 2017, that was 89.27% of yearly export target of 2017 & showing ~17.00% growth from total export of previous year. 106 Dhaka Bank Limited Annual Report 2017 Yearly Export Performance Total funded exposure of RMG concerns as on 31.12.2017 was Tk.37,805.40 million, representing ~24.56% of the Bank’s total funded exposure which was 29.54% growth from last year. Total non funded exposure as on 31.12.2017 was Tk. 27,243.80 million, Representing ~32.81% of the Bank’s total non funded exposure (showing ~37.84% growth from last year). Total funded & non funded exposure as on 31.12.2017 was Tk.65,049.20 million, Representing ~27.45% of the Bank’s total exposure (showing ~32.75% growth from last year). www.dhakabankltd.com
  107. RISK MANAGEMENT Asset Liability Management Risk Credit Risk 01 Information & Communication Technology Security Risk 03 06 Core Risk 05 Money Laundering Risk www.dhakabankltd.com 02 Foreign Exchange Risk 04 Internal Control and Compliance Risk Dhaka Bank Limited Annual Report 2017 107 Risk Management Risk and convenience are always inversely proportionate. Making perfect balance between these two aspects is a classical predicament to successful growth of business. We focus on transparency of contracts between parties, accountability to stakeholders and proper mix of assets and liabilities to make sure risk is duly addressed and effectively minimized.
  108. Risk Management of Dhaka Bank Limited Risk Management RISK MANAGEMENT Risk A probability or threat of damage , injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action. The probability that an actual return on an investment will be lower than the expected return. Financial risk is divided into the following categories: Basic risk, Capital risk, Country risk, Default risk, Delivery risk, Economic risk, Exchange rate risk, Interest rate risk, Liquidity risk, Operations risk, Payment system risk, Political risk, Refinancing risk, Reinvestment risk, Settlement risk, Sovereign risk, and underwriting risk. Risk is inherent in every walk of life. We cannot avoid risk, rather we may optimize risk. Every investment has got a potential of reward as well as a threat for risk. Risk and return are related to one another. The more the risk is, the more will be the return. But there remains some limit of risk taking. If risk is beyond some tolerable level the existence of the institution will be at stake. As such risks should be take according to the strength of the entity. Risk and Banking: Banks deal with public money in the form of capital as well as deposit. As such, the businesses the banks are involved in, are done in a very calculative way. Requirement for making balance in the risk return trade-off is of utmost importance. This needs to be looked into with prudence from the various viewpoints like: type and degree of uncertainty, impact and its nature, degree of severity etc. In financial sector, risk can be viewed as the financial risk and is measured by the amount of money involved. Since the financial sector plays a very pivotal role for development of the economy and deals with public money, it is required to follow stringent regulations. As such the Bank’s are to avoid extreme risks, and accordingly the requirement of risk management becomes inevitable. Risk, according to the modern view in a positive approach, is called the opportunity of gaining something against a tolerable and optimum amount of threat to the position. Risk Management in Banking Not only the banks, but also the business units of the economies have been managing the risks of their business for their own benefits. But presently, for banks, the risk management has got a structured form, which started basically with the introduction of Basel Accord by the Basel Committee for Banking Supervision (BCBS). The Basel III framework is a central element of the Basel Committee’s response to the global financial crisis. It addresses a number of shortcomings in the pre-crisis regulatory framework and provides a foundation for a resilient banking system that will help avoid the build-up of systemic vulnerabilities. The framework will allow the banking system to support the real economy through the economic cycle. Focus on risk-weighted assets Banks fund their investments with capital and debt, such as customer deposits. Capital can absorb losses in a way that reduces the likelihood of a bank failing and the impact if it does. Regulatory capital consists of: • Common Equity Tier 1 – common shares, retained earnings and other reserves. • Additional Tier 1 – capital instruments with no fixed maturity. • Tier 2 – subordinated debt and general loan-loss reserves. Banks with more regulatory capital are better able to fund lending growth. 108 Dhaka Bank Limited Annual Report 2017 The capital ratio is the amount of regulatory capital divided by the amount of risk-weighted assets. The greater the amount of riskweighted assets, the more capital is needed, and vice versa. Credit Risk o o Risk-based capital ratio Market Risk Regulatory capital Risk Weighted Assets = Operational Risk Other A bank’s assets typically include cash, securities and loans made to individuals, businesses, other banks, and governments. Each type of asset has different risk characteristics. A risk weight is assigned to each type of asset, as an indication of how risky it is for the bank to hold the asset. To work out how much capital banks should maintain to guard against unexpected losses, the value of the asset (ie the exposure) is multiplied by the relevant risk weight. Banks need less capital to cover exposures to safer assets and more capital to cover riskier exposures. Risk Management of Dhaka Bank Limited Dhaka Bank Limited has established Risk Management Division (RMD), complying the direction of Bangladesh Bank (DOS(RMSS)/1154/1/2013-61, dated 24-01-2013), integrating the Existing ‘Risk Management Unit’ and ‘Basel Implementation Unit’ for strengthening risk management activities of the bank with effect from February 26, 2013. RMD looks after effectiveness of the Core Risks Management of the Bank and also ensure the capital management of the Bank under Basel Accords together with the directives of Bangladesh Bank from time to time. Risk Management Framework Risk Management is an integrated, bird’s eye view approach for consolidating all individual risk management functions. It adopts/ formulates contemporary risk management methods to identify, measure monitor and control risks throughout the banking organization. The objectives of Risk Management are to ensure: • The individuals who take and manage the risks clearly understand the same • Risk taking decisions are explicit and clear • The organization’s risk exposure is within the respective limits. • Decisions relating to risk are in line with the business strategy and objectives. • The expected payoffs compensate for the risks taken and Adequate capital to support the Risk • Risk Management Committee of the Board Strategic Level All Risk Committee Sub Risk Committee Business Units Managerial Level Pre managerial level Operational level www.dhakabankltd.com
  109. RISK MANAGEMENT Continued Organizational Structure of the Risk management Committee : 1. Members of the committee will be nominated by the board of directors from themselves; 2. The Risk Management Committee will comprise of maximum 05 (five) members; 3. Members may be appointed for a 03 (three) year term of office; 4. Company secretary of the bank will be the secretary of the Risk Management Committee. Risk Management Risk Management Committee of the Bank Bangladesh Bank vide their BRPD Circular No. 11 dated October 27, 2013 made formation of a sub-committee of the Board naming “Risk Management Committee” to play an effective role in mitigating impending risks arising out from strategies and policies formulated by the Board and to carry out the responsibilities efficiently. Accordingly the Risk Management Committee of the Board had been formed and subsequently reconstituted as per the following structure: Sl. Name of the Directors Status Mr. Khondoker Monir Uddin Chairman 02. Mr. Reshadur Rahman Member 03. Mrs. Rokshana Zaman Member 04. Mr. Altaf Hossain Sarker Member 05. Mr. Jashim Uddin Member RMD is responsible to manage and measure risk on the basis of the bank’s approved risk parameters, independently of regulatory requirements and category. It is responsible for designing risk management strategy, establishing risk management policies & procedure, communicating views of Board & Senior Management regarding risk issues throughout the bank, informing Board & All Risk Committee about appetite for risk, measuring & monitoring risk, identifying & quantifying bank’s exposure to material loss, independently monitor limits, developing & implementing loss prevention/ retention programs, securing & maintaining adequate loss coverage, periodic stress testing, preparation of monthly & half-yearly risk management paper & holding meeting of All Risk Committee and Sub-risk Committee. Presently the Chief Risk Officer (CRO) of the Bank is Mr. Khan Shahadat Hossain, Deputy Managing Director (Risk Management) of the Bank. RMD is working as secretary of All Risk Committee (which comprised of heads of all core risk owners) of the bank. Members (by designation) of All Risk Committee are as given below: All Risk Committee Sl. Name of the Employee Designation Position in the Committee 1. Mr. Khan Shahadat Hossain DMD-Risk Management and Chief Risk Officer Chairman 2. Mr. A.M.M. Moyen Uddin SEVP & Head of IT Member 3. Mr. Darashiko Khasru SEVP & CFO Member 4. Mr. Abdulla Hil Kafi EVP & Head of ICC Division Member 5. Mr. Manik Lal Biswas EVP & Head of Risk Management Division Member Secretary 6. Mr. Md. Abdul Matin EVP & Head, CRM Division Member 7. Mr. Md. Fakhrul Islam EVP & Head, AML & CFT Member 8. Mr. K. M. Faisal Faruqui VP & Head, Treasury Division and FX Member www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 109 Risk Management of Dhaka Bank Limited 01.
  110. RISK MANAGEMENT Risk Management of Dhaka Bank Limited Risk Management Continued A Sub Risk Committee constituting the second in command and other officials of the respective divisions in Head Office as follows : Sl. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Name of the Employee Designation Mr. H. M. Mostafizur Rahaman Mr. Azfar Ahmed Mr. Sanjib Kumar Dey Mr. Sahabub Alam Khan Mr. Md. Mohibullah Khan Mr. Mahbubur Rahman Mr. Md. Mokhlesuzzaman Khan Mr. Md. Rafiquzzaman Mr. Mohammed Istiaq Parvez Mr. Emdad Hossain Mr. Saifuddin Ahmed Mr. Mahamudur Rahman Mr. Md. Nahid Ul Hasan Mr. Yashin Arafat SVP, Card Business Unit SVP, SAMD VP, SME VP, FAD VP, CRM VP, Operations Division VP, RMD FVP, Treasury FVP, IT FVP, ICCD SAVP, CPC-Credit AVP, Basel SPO, RMD SPO, RMG Reporting by Risk Management Division: In compliance with Bangladesh Bank directives, Risk Management Division conducted the following reporting and takes actions accordingly: Sl. Deliverables Format/Method 1. Risk Management Paper 2. Stress Testing Report Bangladesh Bank Guideline 3. Comprehensive Risk Management Report Bangladesh Bank Guideline Bangladesh Bank Guideline Compliance Status Remarks Monthly reporting to Bangladesh Complied Bank. Stress Testing Report is submitted Complied on a quarterly basis starting from June 2010. Half-yearly reporting to BanglaComplied desh Bank. Different stakeholders of the organization and their focused issues: Shareholders Employees • Profitability • Compensation • Earning growth • Professional growth • Dividends • Reputation • Wealth maximization • values 110 Dhaka Bank Limited Annual Report 2017 Regulators Community Customers • CSR • Service Quality • Financial Strength • Asset Quality • Community Reinvestment • Competitive pricing • Regulatory compliance • Leadership involvement • Reputation • Liquidity • Capital Adequacy • Role for economy Rating Agencies • Financial Strength • Asset quality • Liquidity • Capital Adequacy www.dhakabankltd.com
  111. RISK MANAGEMENT Continued Risk Management Paper (RMP) consisting of various data related to Credit Risk, Market Risk, Liquidity Risk and Operational Risk from all related divisions are presented in the monthly meeting of All Risk Committee and Sub-risk Committee conducted under the supervision of Risk Management Division (RMD). Credit risk under RMP covers the sector concentration of the portfolio, area concentration, classification, recovery, provisioning, top 20 defaulters, collateral, fund diversion etc. Market Risk covers the Interest Rate Risk, Foreign Exchange Risk, and Equity Risk. Liquidity Risk covers Statutory Liquidity Requirement (SLR), Cash Reserve Ratio (CRR), Advance Deposit Ratio (ADR) etc. Operational Risk covers internal fraud, external fraud, evaluation of core risk management etc. The RMP is submitted to the Risk Management Committee of the Board and the decisions are communicated to relevant divisions of the bank for implementation. The report is submitted to Bangladesh Bank on monthly basis. Risk Management Risk Management Paper Comprehensive Risk Management Report (CRMR) Bangladesh Bank also determines the status of risk management of the bank on the basis of RMP and half yearly Comprehensive Risk Management Credit Risks: Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximize a bank’s risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk inherent in the entire portfolio as well as the risk in individual credits or transactions. Banks should also consider the relationships between credit risk and other risks. The effective management of credit risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization. For most banks, loans are the largest and most obvious source of credit risk; however, other sources of credit risk exist throughout the activities of a bank, including in the banking book and in the trading book, and both on and off the balance sheet. Banks are increasingly facing credit risk (or counterparty risk) in various financial instruments other than loans, including acceptances, interbank transactions, trade financing, foreign exchange transactions, financial futures, swaps, bonds, equities, options, and in the extension of commitments and guarantees, and the settlement of transactions. Since exposure to credit risk continues to be the leading source of problems in banks world-wide, banks should be able to draw useful lessons from past experiences. Banks should now have a keen awareness of the need to identify, measure, monitor and control credit risk as well as to determine that they hold adequate capital against these risks and that they are adequately compensated for risks incurred. The credit risk management approach used is to be sufficient for the lending activities and sufficient risk-return discipline is to be instilled in the credit risk management processes. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 111 Risk Management of Dhaka Bank Limited Report provides Risk Management rating semiannually which is ultimately considered for the CAMELS rating of the Bank. The report consists of different risk related information and indicators a few of which are furnished below:
  112. RISK MANAGEMENT Portfolio risk analysis Sl . Risk Management of Dhaka Bank Limited Risk Management Continued Loan portfolio A Agriculture, Fishing, and Forestry B Industry (a+b) 166.04 1.23% 8,340.29 61.92% 4,800.14 35.64% 3,540.15 26.28% Nature of Industry loan 9,850.61 63.96% 8,340.29 61.92% a) Term loans 4,124.58 26.78% 3,359.82 24.94% b) Working capital loans 5,726.04 37.18% 4,980.47 36.98% *Scale-wise distribution of industry portfolio (1+2+3) 9,850.61 63.96% 8,340.29 61.92% 1. Large Industries 8,290.03 53.83% 7,039.58 52.27% 929.49 6.03% 650.34 4.83% 631.10 4.10% 650.38 4.83% Trade & Commerce: 2,271.83 14.75% 2,211.35 16.42% (i) Secured by eligible securities 1,522.67 9.89% 1,395.02 10.36% (ii) Secured by other than eligible securities 749.16 4.86% 816.32 6.06% a) Retail Trading 429.51 2.79% 304.92 2.26% b) Wholesale Trading 777.62 5.05% 730.05 5.42% c) Export Financing 217.47 1.41% 179.32 1.33% d) Import Financing 679.54 4.41% 602.75 4.48% - 0.00% 35.16 0.26% 167.70 1.09% 360.19 2.67% Construction (commercial real estate, construction and land development loans): 1,820.76 11.82% 1,615.19 11.99% (i) Secured by eligible securities 1,466.82 9.52% 1,415.68 10.51% 353.94 2.30% 199.51 1.48% a) Residential Real estate c) Infrastructure development 8.58 0.06% 65.46 0.49% 486.73 3.16% 996.72 7.40% 1,213.23 7.88% 407.88 3.03% d) Others 112.21 0.73% 145.13 1.08% Transport: 307.29 2.00% 111.68 0.83% a) Road Transport 135.08 0.88% 27.02 0.20% b) Water Transport 157.82 1.02% 72.41 0.54% 14.39 0.09% 12.25 0.09% Consumer financing 582.82 3.78% 478.15 3.55% a)Loans for the purchase of flats or other single-family dwellings 128.41 0.83% 26.47 0.20% 88.49 0.57% 41.29 0.31% c) Air Transport b) Loans for the purchase of motorized personal transport c) Loans for the purchase of durable consumption goods 63.71 0.41% 141.45 1.05% d) Credit card loans 35.07 0.23% 29.52 0.22% e) Other personal loans 267.14 1.73% 239.43 1.78% Loans to financial institutions 360.58 2.34% 512.83 3.81% 86.71 0.56% 75.34 0.56% 1) Loans to NBFIs 2) Loans to insurance companies 3) Loans to merchant banks and brokerage houses 4) Other, including loans to microfinance institutions and NGOs Miscellaneous **Total loans & Advances: 112 1.27% 63.96% 31.40% b) Commercial Real estate H 196.20 9,850.61 32.56% (ii) Secured by other than eligible securities G Percentage 4,835.88 e) Lease Finance F Amount 5,014.73 f) Others E Dec, 2016 Percentage (i) Secured by eligible securities 3.Service industries D Dec, 2017 Amount (ii) Secured by other than eligible securities 2.Small,medium,cottage & micro industries C (BDT in crore) Dhaka Bank Limited Annual Report 2017 - 0.00% 1.63 0.01% 248.51 1.61% 229.25 1.70% 25.36 0.16% 206.61 1.53% 11.61 0.08% 32.36 0.24% 15,401.70 100.00% 13,468.93 100.00% www.dhakabankltd.com
  113. RISK MANAGEMENT Continued Dec , 2017 SL Name of industry Amount Dec, 2016 % of total Loans Amount % of total Loans 1 RMG 2,426.82 15.76% 1,393.45 10.35% 2 Textile 1,818.73 11.81% 2,307.76 17.13% 3 Food and allied industries 1,080.22 7.01% 913.52 6.78% 4 Pharmaceutical industries 209.60 1.36% 85.69 0.64% 104.70 0.68% 141.80 1.05% 519.22 3.37% 225.69 1.68% 7 Ship building industries 186.58 1.21% 112.37 0.83% 8 Ship breaking industries 146.72 0.95% 105.14 0.78% 9 Power and gas 525.77 3.41% 422.00 3.13% 2,201.17 14.29% 1,975.14 14.66% 631.10 4.10% 342.47 2.54% 0.00 0.00% 315.27 2.34% 9,850.61 63.96%* 8,340.30 61.92%* 10 Other manufacturing or extractive industries 11 Service industries 12 Others Total * Total industrial loan is shown as percentage of total loans and advances Loan Portfolio Loans to industries Geographical Concentration: (based on the location of factory/fund use) Name of Area Dhaka Chittagong Rajshahi December- 2017 (BDT in crore) December-2016 Outstanding % of total loans 11,330.54 73.57% 10,216.44 75.86% 2.18 18.58% 2,527.59 18.76% 236.07 1.53% 184.78 1.37% 2,86 Outstanding % of total loans Sylhet 213.87 1.39% 100.09 0.74% Khulna 344.32 2.24% 138.84 1.03% Rangpur 280.92 1.82% 222.15 1.65% Barisal 71.39 0.46% 79.04 0.59% Mymensingh Total 62.41 0.41% - - 15,401.70 100.00% 13,468.93 100.00% www.dhakabankltd.com Division wise Loan Dhaka Bank Limited Annual Report 2017 113 Risk Management of Dhaka Bank Limited 5 Chemical, fertilizer, etc. 6 Cement and ceramic industries Risk Management (BDT in crore) Industrial Loans
  114. RISK MANAGEMENT Risk Management Continued Top-20 borrower ’s loan concentration (as of 31.12.2017) Outstanding Name of Borrowers SL Funded 1 ARMANA GROUP Non funded Limit Total (Current Qtr) Funded Non funded Total (Current Qtr) 215.64 336.06 551.70 273.55 410.98 684.53 85.94 435.68 521.61 225.22 560.00 785.22 3 BASHUNDHARAA GROUP 218.34 227.91 446.24 173.86 290.96 464.82 4 BANGLA TRAC 159.12 258.75 417.87 287.35 190.00 477.35 5 T.K. GROUP 181.94 205.08 387.02 304.00 371.25 675.25 6 AMBER-PARTEX GROUP 258.42 111.09 369.51 318.59 380.98 699.57 7 BANGLADESH ERECTORS GROUP 218.91 134.16 353.07 227.18 192.50 419.68 8 PRAN-RFL GROUP 238.65 91.29 329.95 315.81 246.00 561.81 9 RING SHINE GROUP 2 BSRM GROUP Risk Management of Dhaka Bank Limited (Amount in Crore) 118.75 145.76 264.51 143.06 186.40 329.46 10 UNITED GROUP 184.23 139.60 323.83 379.83 372.17 751.99 11 KABIR GROUP 194.00 129.28 323.28 246.88 290.00 536.88 12 RANGS GROUP 168.64 141.11 309.75 227.45 290.95 518.40 57.89 228.11 286.00 119.67 246.35 366.03 14 FAKIR GROUP 155.10 122.14 277.24 158.40 257.00 415.40 15 NOMAN GROUP 176.42 91.10 267.52 194.18 100.00 294.18 16 KARNAFULY GROUP 132.55 130.68 263.23 318.20 241.12 559.32 17 M & J GROUP 121.28 128.80 250.08 172.86 210.04 382.90 18 ABUL KHAIR GROUP 189.56 58.02 247.58 235.00 330.00 565.00 19 S.A. GROUP 240.03 0.00 240.03 160.00 160.00 320.00 20 SURUJ MIAH GROUP 230.16 0.48 231.23 197.54 13.64 211.18 3,545.57 3,115.10 6,661.25 4,903.63 5,340.34 10,018.97 13 EXPERIENCE GROUP Total Bashundhara Group: As of 31.12.2017, total amount of forced loan of Tk. 59.69 crore remained outstanding. These forced loans were created to make payment of accepted liabilities against import of raw materials for cement plant. Forced loans were created to make overseas payment, as the client arranged less amount for payment. As such the limits were exceeded. It is to be mentioned that the client is engaged with supplying cement for some large scale projects like Padma Multipurpose bridge construction project and to the largest construction houses of the country like Sinohydro Corporation Limited, major Bridge engineering Group Company Limited etc. Due to huge institutional sales huge amount of trade receivables stuck up in the market. That is why forced loans are created against the L/C payment and funded outstanding exceeded the limit. However, the bank is monitoring the account closely so that the forced loan amounts may be reduced. SURUJ MIAH GROUP: Limit exceeded due to charging quarterly interest. S.A Group: Limit exceeded due to charging quarterly interest. BANGLA TRAC: The Bank kept adequate margin against the L/Cs opened in excess of their limit. Overall Large Loan concentration Sl. (Amount in Crore) Particulars 01. No. of group enjoying large loans As on 31.12.2016 53 54 02. Outstanding amount of Large Loans (funded + non-funded) 10,807.60 8,546.90 03. Total loans and advances for determining large loan ceiling Percentage (Total funded+50% of total non-funded loans) 19,894.88 16,899.83 54.32% 50.58% 04. Aggregate ratio of large loan to total loans & advances 114 As on 31.12.2017 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  115. RISK MANAGEMENT Continued (BDT in crore) Dec, 2017 Particulars % of total non-funded Dec, 2016 % of total non-funded Contingent liabilities: LC 2,708.55 27.60% 1,744.76 23.92% Acceptance 3,286.81 33.50% 2,526.37 34.64% Bank Guarantee 2,308.31 23.52% 1,992.87 27.33% a) Total contingent liabilities 8,303.67 84.63% 6,264.00 85.89% Bills for Collections: 1,159.15 11.81% 825.01 11.31% 349.39 3.56% 203.62 2.79% b ) Total other commitments 1,508.54 15.37% 1,028.63 14.11% Grant total of Off-balance sheet exposure (a+b) 9,812.22 100.00% 7,292.63 100.00% Risk Management Off-Balance sheet exposure concentration: Stand by LC Other commitments: Non-performing loans (NPL) Sl. (BDT in crore) Status of classifications December 2017 December 2016 1 SMA 279.43 492.15 2 % of Total Loan (1/7) 1.81% 3.65% 3 SS 32.15 25.70 4 DF 180.98 28.80 5 Bad and Loss 707.75 485.80 6 Total CL(3+4+5) 920.88 540.30 15,401.70 13,468.93 8 NPL Ratio (6/7) 5.98% 4.01% 9 Cash recovery against classified loans 279.16 205.35 7 Total loans and advances Provision maintenance Sl. Particulars 1 Required provision against loans and advances 2 Required provision against OBS (BDT in crore) December 2016 (Audited) December 2017 (Un-Audited) 777.95 624.13 83.04 62.64 3 Total required provision (1+2) 860.99 686.77 4 Provision maintained 860.99 686.77 - - 100% 100% 5 Surplus/deficit 6 Provision maintenance ratio (4/3) www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 115 Risk Management of Dhaka Bank Limited Asset Quality
  116. RISK MANAGEMENT Risk Management Continued Credit Rating status (Fig. in Crore) Sl. Particulars 1 Total no. of customer/entity 2 Total loans and advances 3 No. of customer/entity eligible for rating 4 Amount of loans eligible for rating (Funded) 31.12.17 17,106 14,291 15,401.70 13,468.93 1,276 1,006 13,379.73 11,761.90 917 716 11,089.10 9,421.60 82.88% 80.10% 359 290 2,290.63 2,340.30 11 07 45.32 41.48 5 No of customer/entity rated by the external credit rating agency 6 Amount of rated loans (Funded) 7 % of rated loans to total eligible loans for rating (7= 6/4 x 100) 8 Unrated no of customer/entity eligible for rating Risk Management of Dhaka Bank Limited 9 Amount of unrated loans eligible for rating (Funded) 10 No of customer/entity whose credit ratings deteriorated 11 Outstanding 31.12.16 Capital Management (Amount in Crore) Particulars Total Assets (on and off-balance sheet) December 2017 December 2016 32,757.51 27,511.80 16,687.49 14,703.58 370.17 144.29 RWA Credit risk Market risk Operational risk 1,237.70 1,131.13 18,295.36 15,979.00 Required capital 2,058.23 1,697.77 Capital maintained 2,188.43 2,184.15 1,453.96 1,376.98 Total RWA Tier 1 (after all deductions) Tier 2 (after all deductions) Capital surplus/(shortfall) 734.47 807.17 130.20 486.38 7.95% 8.62% 11.96% 13.67% CRAR: On Tier 1 capital On total capital Liquidity Risks Liquidity is the ability of a bank to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses. The fundamental role of banks in the maturity transformation of short-term deposits into long-term loans makes banks inherently vulnerable to liquidity risk, both of an institution-specific nature and that which affects markets as a whole. Virtually every financial transaction or commitment has implications for a bank’s liquidity. Effective liquidity risk management helps ensure a bank’s ability to meet cash flow obligations, which are uncertain as they are affected by external events and other agents’ behavior. Liquidity risk management is of paramount importance because a liquidity shortfall at a single institution can have system-wide repercussions. Financial market developments in the past decade have increased the complexity of liquidity risk and its management. Statutory Liquidity Requirement (SLR) (Amount in Crore) Particulars Total time and demand liabilities December- 2017 December- 2016 16,580.30 15,575.70 Required SLR 2,109.18 1,871.57 Maintained SLR 2,200.14 2,053.93 Excess/Shortfall 90.96 182.36 Shortfall in any day during the year - - Mention if any penalty interest or fine imposed by the regulatory body during the year - - 116 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  117. RISK MANAGEMENT Continued (Amount in Crore) Particulars December- 2017 Total time and demand liabilities December- 2016 16,580.30 15,575.70 Required CRR 1,077.71 935.78 Maintained CRR 1,116.36 945.76 38.65 9.98 - - 1.65* - Excess/Shortfall Shortfall in any day during the half-year Mention if any penalty interest or fine imposed by the regulatory body during the half-year Risk Management Cash Reserve Ratio (CRR) *Bangladesh Bank debited Dhaka Bank account with them by Taka 16,485,124.59 as penal interest due to shortfall in maintaining CRR at different dates (July 2016 to January 2017), which have been effected in May 2017. (Amount in Crore) Advance Deposit Ratio/Credit Deposit Ratio Particulars December- 2017 16,720.92 15,511.40 709.66 588.75 Interbank Deposit Surplus (142.64) 272.87 Credit excluding Interbank 15,401.70 13,468.93 82.64% 83.87% Deposit Growth 7.79% 12.56% Credit Growth 14.36% 14.29% Interbank borrowing Credit/Advance Deposit Ratio liquidity stress test Banks’ liquidity position (whether the bank is liquid or not) if a certain percentage point of liquid asset is withdrawn over average withdrawal for a consecutive 5 days. Liquidity as per Stress Testing of quarter as ended on Dec 31, 2017 Particulars Withdrawn per day (%) Minor Moderate Major 2 4 6 Day 1 Liquid Liquid Liquid Day 2 Liquid Liquid Liquid Day 3 Liquid Liquid Liquid Day 4 Liquid Liquid Liquid Day 5 Liquid Liquid Liquid Regulatory standard 31.12.2017 31.12.2016 Stock of high quality liquid assets 3,308.00 3,544.23 Net cash outflow over a 30 days period 3,306.02 3,509.49 > 100% 100.06% 100.99% Regulatory standard 31.12.2017 31.12.2016 Available amount of stable funding 17239.50 15550.17 Required amount of stable funding 16980.67 13982.30 101.52% 111.21% Liquidity Coverage Ratio (LCR) Particulars Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR) Particulars Net Stable Funding Ratio (NSFR) www.dhakabankltd.com > 100% Dhaka Bank Limited Annual Report 2017 117 Risk Management of Dhaka Bank Limited Deposit Excluding Interbank December- 2016
  118. RISK MANAGEMENT Risk Management Continued BASEL III Basel III reforms are the response of Basel Committee on Banking Supervision (BCBS) to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spillover from the financial sector to the real economy. Basel III reforms strengthen the bank-level i.e. micro prudential regulation, with the intention to raise the resilience of individual banking institutions in periods of stress. Besides, the reforms have a macro prudential focus also, addressing system wide risks, which can build up across the banking sector, as well as the procyclical amplification of these risks over time. These new global regulatory and supervisory standards mainly addressed the following areas: BASEL III • • • • • raise the quality and level of capital to ensure banks are better able to absorb losses on both a going concern and a gone concern basis; increase the risk coverage of the capital framework; introduce leverage ratio to serve as a backstop to the risk-based capital measure; raise the standards for the supervisory review process (Pillar 2); and Pillar-1: Minimum Capital Requirements Provide approaches to the calculation of Minimum Capital Requirements (MCR). MCR is based on credit risk, market risk and operational risk to: • reduce risks of failure by cushioning against losses; provide continuing access to financial markets to meet liquidity need; and provide incentives to prudent risk management Pillar-2: Supervisory Review Process Provides the framework to ensure that each Bank has sound internal processes to enable it to perform a thorough evaluation of its risks and therefore assess the required capital. The Supervisory Review Process (SRP) recognizes the responsibility of Bank management in developing an internal capital assessment process and setting capital targets that are commensurate with the Bank’s risk profile and control environment. The Basel Committee has identified four key principles of supervisory review: • • • • 118 The purpose of Pillar-3, market discipline, is to complement the minimum capital requirements (Pillar-1) and the supervisory review process (Pillar-2). The Basel Committee aims to encourage market discipline by developing a core set of disclosure requirements which will allow market participants to assess key pieces of information on the scope of application, capital, risk exposure, risk assessment process, and hence the capital adequacy of the institution. In principle Banks’ disclosure should be consistent with how senior management and the Board of Directors (BoDs) of the Bank assesses and manage different risks of the Bank. Capital Charge Method for Risks As per the requirement of Basel III accords, Banks have to determine minimum capital for three major types of risks faced by the banking industry as described below: • • Public disclosures (Pillar 3) etc. Consequently, Basel III capital regulations would be fully implemented as on January 1, 2019. The framework of Basel III Capital Accord consists of three pillars: • • Pillar-3: Market Discipline Banks should have a process for assessing their overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital levels; Supervisors should review and evaluate Bank’s internal capital adequacy assessments and strategies, as well as their ability to monitor and ensure their compliance with regulatory capital ratios; Supervisors should expect Banks to operate above the minimum regulatory capital ratios and should have ability to require Banks to hold capital in excess of the minimum; and Supervisors should seek to intervene at an early stage to prevent capital from falling below the minimum levels required to support the risk characteristics of a particular Bank and should require rapid remedial action if capital is not maintained or restored. Dhaka Bank Limited Annual Report 2017 • Credit Risk – risk of losses resulted from debtor’s non-payment of a loan, double default etc. Operational Risk – risk of losses resulted from inadequate and failed internal processes, systems, people and external events like information technology, fraud & forgery, money laundering, legal contracts etc. Market Risk – risk of losses in on- and off-balance sheet items arising from movements in the market prices of interest rate, foreign exchange rate, equity securities, commodities etc. Rationale for Basel III To cope with the international best practices and to make the Bank’s capital more risk-sensitive as well as more shock-resilient, Bangladesh Bank has made it mandatory to comply with Risk Based Capital Adequacy (RBCA) under Basel III. Accordingly, capital requirement for Banks those hold risky assets in their investment portfolio shall be higher compared to Banks that hold safer portfolio. Basel III: Dhaka Bank Perspective Dhaka Bank believes that stepping into the Basel III regime, the new capital accord, is sincere and most appropriate decision of Bangladesh Bank. This changeover is justified in order to make Bank’s capital more risk-sensitive and shock-absorbent in changed scenario of banking industry of our country which is characterized by increased complexity, increased use of information technology and diversity in the asset portfolio of the Banks. Accordingly, Dhaka Bank has taken the issue of Risk Based Capital Adequacy for Banks under Basel III accord, as one of its topmost priorities. Accordingly, Dhaka Bank has taken the issue of Risk Based Capital Adequacy for Banks under Basel III accord, as one of its topmost priorities. Dhaka Bank has established an independent Basel Unit (BU) at Head Office on January 10, 2016 for effective implementation of the new capital accord and ensuring Board & Senior Management oversight. The BU, is exclusively responsible for planning & reviewing the implementation of Basel III accord as per Bangladesh Bank’s Road Map, for liaison about issues of Basel III with top management of DBL, for capacity building of concerned Bank personnel and for planning & developing process for assessing overall capital adequacy. Dhaka bank has formed an exclusive body, named SRP Team to ensure that Dhaka Bank has a process for assessing overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital at an adequate level. Accordingly DBL is ensuring compliance under Pillar-2: Supervisory Review Process of Basel III Accord. www.dhakabankltd.com
  119. RISK MANAGEMENT Continued Dhaka Bank has a 13-member Basel Unit , having cross-functional representations, to ensure effective implementation of Risk Based Adequacy requirements under the new capital accord named Basel III. However, to supervise the implementation more closely and sincerely a Core Team for Basel III was formed with members from the existing Basel Unit. It is presently headed by Mr. Syed Mahbubur Rahman, Managing Director & CEO of the Bank. The Basel Unit consists of the following members representing Senior Management from different cross-functional Divisions: SL. No. Name Designation Position in the Committee 1 Mr. Syed Mahbubur Rahman Managing Director & CEO Chairman 2 Mr. Emranul Huq Additional Managing Director Member 3 Mr. Khan Shahadat Hossain DMD - RM & CRO Member Mr. Md. Shakir Amin Chowdhury DMD-Operations Member Mr. Mohammad Abu Jafar DMD- International Business Member 6 Mr. A M M Moyen Uddin SEVP & Head, IT Division Member 7 Mr. Darashiko Khasru SEVP & CFO Member 8 Mr. S.M. Abdullah Hil Kafi EVP & Head, ICC Division Member 9 Mr. Md. Abdul Matin EVP & Head, CRM Division 10 Mr. Manik Lal Biswas EVP & Head, Risk Management Division 11 Mr. Syed Sazzad Haider Chowdhury EVP & Head, Operations Division Member 12 Mr. K.M. Faisal Faruqui VP & Head, Treasury Division Member AVP, Basel Unit Member BASEL III 4 5 Member Member Secretary Working Team: 13 Mr. Mahamudur Rahman The BU members meet on regular basis, to monitor the implementation status of Risk Based Capital Adequacy for the Bank and, also to discuss issues which may directly influence capital requirement. Supervisory Review Process (SRP) Team The SRP Team, responsible for assessing overall capital adequacy in relation to their risk profile and capital planning, consisting of following members representing Senior Management and different cross-functional Divisions of the Bank: SL. No. Name Designation Position in the Committee 1 Mr. Syed Mahbubur Rahman Managing Director & CEO Chairman 2 Mr. Emranul Huq Additional Managing Director Member 3 Mr. Khan Shahadat Hossain DMD - RM & CRO Member 4 Mr. Md. Shakir Amin Chowdhury DMD-Operations Member 5 Mr. Mohammad Abu Jafar DMD- International Business Member 6 Mr. A M M Moyen Uddin SEVP & Head, IT Division Member 7 Mr. Darashiko Khasru SEVP & CFO Member 8 Mr. S.M. Abdullah Hil Kafi EVP & Head, ICC Division Member 9 Mr. Md. Abdul Matin EVP & Head, CRM Division Member 10 Mr. Syed Sazzad Haider Chowdhury EVP & Head, Operations Division Member 11 Mr. Mir Saidul Islam SVP & Head, CPC- Credit Operations Division Member 12 Mr. Manik Lal Biswas EVP & Head, Risk Management Division Member Secretary The SRP Team regularly review and assess overall capital adequacy in line with the Bank’s risk profile and strategy for maintaining Bank’s capital at an adequate level, i.e., enough capital to compensate all the risks in the Bank’s business, and to develop & practice better risk management techniques in monitoring and managing risks. The SRP Team of the Bank is responsible to ensure that the Bank has adequate capital to support its risks beyond the minimum regulatory requirements. The SRP Team is entrusted with responsibility to move gradually towards more advanced approaches of calculating risk-weighted assets against credit risk, capital charge against market risk and operational risk. www.dhakabankltd.com Risk Management Basel Unit (BU) Dhaka Bank Limited Annual Report 2017 119
  120. RISK MANAGEMENT Risk Management Continued Liquidity Coverage Ratio (LCR): Sl. Compliance Status Remarks 1 Quantitative Impact Analysis (QIS) Deliverables Complied – 2 Nomination Of Recognized ECAIs Complied – 3 Pillar-1: MCR Reporting Complied MCR Report is regularly submitting on quarterly basis 4 Pillar-2: Statement Of Capital Adequacy Under SRP (ICAAP) Complied Submitting regularly on yearly basis. 5 Pillar-3: Market Discipline A Disclosure Framework (Qualitative & Quantitative) Complied Market Disclosure is given on yearly basis started from the year- 2009. BASEL III & ICAAP Internal Capital Adequacy Assessment Process (ICAAP) Internal Capital Adequacy Assessment Process has been formulated by Bangladesh Bank to facilitate the process of implementation of the Pillar-2 Supervisory Review Process (SRP) of Basel III. A dialogue between SRP team of the Bank & Supervisory Review Evaluation Process (SREP) team of the Bangladesh Bank will also be held. The objective of the dialogue is to determine the adequate level of capital needed for a bank by reviewing the ICAAP and strategies of the bank. The bank conducts ICAAP reporting each year to incorporate the additional capital requirement under Pillar 2 Supervisory Review Process. The assessment started from the year 2011 based on the year end figure of 2010 and completed the assessment up to the year 2016. The assessment for the year 2017 is under process. The bank developed ‘Internal Capital Adequacy Assessment Process-ICAAP’ document following the ‘Revised Process Document for SRP-SREP Dialogue on ICAAP, 31-May-2014’ of Bangladesh Bank. This document covers capital charge process under Pillar II Supervisory Review Process (SRP) for nine risks areas namely residual risk, concentration risk, liquidity risk, reputation risk, strategic risk, settlement risk, core risk, environmental & climate change risk & other material risks, if any. Besides the Credit Risk, Market Risk and Operational Risk under Pillar-1 bank has to assess additional capital under Pillar-2 Supervisory Review Process for the following risk areas: SL. No. 1 Name Residual Risk Designation Error in documentation Error in valuation of collateral 2 Evaluation of Core Risk Management Ratings of Core Risks implementation 3 Credit Concentration Risk Credit Concentration Risk Market Concentration Risk 4 Liquidity Risk Cash Reserve Ratio (CRR) Statutory Liquidity Ratio (SLR) Medium Term Funding (MTFR) Maximum Cumulative Outflow (MCO) Advance Deposit Ratio (ADR) 5 Reputation Risk Credit Rating conducted by ECAIs Internal Fraud External Fraud Non-Payment or Delayed payment of accepted bills 6 Settlement Risk Issues of foreign trade settlement All types of receivables that have not been realized or have been realized lately 7 Strategic Risk CAMELS rating Operating expenses Classified loans ratio Recovery of classified loan Written-off loans Interest waiver Cost of fund 8 Environmental & Climate change Risk Damage of assets due to adverse change of environment 9 Other Material Risk Other risks that may jeopardize bank’s assets or income. Issuance of Non Convertible Subordinated Bond The Board of Directors of Dhaka Bank Limited in their 310th meeting held on 26 September 2017 approved issuance of Non-convertible 3rd Subordinated Bond for Tk. 500.00 crore to strengthen Bank’s capital base and expansion of business in line with BASEL-III accord. Subsequently, we have submitted application for the approval of 3rd Subordinated Bond from Bangladesh Securities & Exchange Commission (BSEC). After obtaining the approval from BSEC, we will apply for approval from Bangladesh Bank. It is expected that the subscription of BDT 500.00 Crore Non-convertible 3rd Subordinated Bond of Dhaka Bank Limited will be closed by March, 2018. 120 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  121. DHAKA BANK SECURITIES LIMITED REPORT OF THE BOARD OF DIRECTORS Dhaka Bank Securities Limited Dhaka Bank Securities Management Team Mr . Emranul Huq, Acting Managing Director Mr. Mohammad Ali, FCA, Executive Vice President Mr. Md. Shahjahan Miah, Company Secretary Mr. Md. Kamrul Aziz, Business Development Manager Mr. Md. Aftab Uddin Biswas, Senior Assistant Vice President Mr. Forhad Hossain Khandaker, ACMA, Head of Finance & Accounts Mr. Md. Reazur Rahman, Head of Operations Mr. Md. Juel Reza, Head of Compliance & Trade Administration Mr. Abdullah Abu Syade, Head of Research www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 121 Report of the Board of Directors The economy of Bangladesh continues to show resilience despite lingering obstacles such as the effects of countrywide flooding in August and the ongoing accommodation of Rohingya refugees in the east. Net foreign investment in Dhaka Stock Exchange was BDT 1,704.94 crore in 2017 against BDT 1,340.70 crore in 2016. Dhaka Bank Securities Ltd. being one of the largest brokerage houses of Bangladesh drove strongly in line with the market and ensured maximum return for the stakeholders.
  122. Dhaka Bank Securities Limited DHAKA BANK SECURITIES LIMITED REPORT OF THE BOARD OF DIRECTORS Dear Shareholders , 200% It is an immense pleasure on the part of the Board of Directors in presenting the Audited Financial Statements of your Company for the year ended 31st December 2017 together with the Auditors’ Report thereon, for your kind consideration and approval. Additional disclosures and explanations relating to certain issues have been given by the Directors, which they consider relevant and vital to ensure transparency and good governance practices. It is our firm conviction that the report will give an insight into the Company’s past performance and future strategies. Report of the Board of Directors Financial Performance Our capital market witnessed a mildly rising trend round the year and there was no severe fluctuation in the indices. The benchmark index of the Dhaka Stock Exchange (DSE) registered 24% growth to more than 6,200 points in 2017, showing a sign that the market reached a state of overcoming the setback suffered for a long period of six years since the debacle in 201011. Due to the favorable state of the Capital Market backed by the persistent effort of all the employees of the company, DBSL posted more profit after tax in 2017 than in 2016. DBSL faced tremendous competitive pressures and increasing regulatory compliances last year. But with prudent managerial capacities DBSL has done satisfactorily well to remain in profitability. Company’s total operating profit is BDT 252.05 million in 2017 which was BDT 164.98 million in the previous year. Fees & others Interest Por olio Commission 0.00 25.005 0.00 75.001 00.001 25.001 50.001 75.002 00.002 25.002 50.00 2015 2016 2017 In response to the market movement, DBSL was able to earn reasonable income. Income from brokerage commission increased by 72.41% from the In response to the market movement, DBSL was able to earn reasonable income. Income from brokerage commission increased by 72.41% from the last year. Capital gain and dividend income from dealer operation is BDT. 210.43 million in 2017 compared to BDT 166.75 million in the year 2016. Company’s Net profit stood at BDT 108.07 million in 2017, which had been BDT. 81.05 million in the previous year. This increase of 33.00% in net profit in net profit figure is due to this year’s higher amount of brokerage commission & income from dealer operation. Head wise Income Distribution Income Heads 2017 2016 2015 Commission 120.27 69.76 56.56 Investment gain & Dividend 210.42 166.75 210.75 Interest 0.71 0.83 3.07 Fees & Others 1.06 0.87 2.49 122 Dhaka Bank Limited Annual Report 2017 77% 150% 100% 21% 29% 69% 72% 50% 26% 0% -50% Commission Investment gain & Dividend 2017 1% 1% Interest -14% 22% 1% 1% Fees & Others 2016 Operations & Business Activities of the Company Dhaka Bank Securities Limited (DBSL) is a subsidiary of Dhaka Bank Limited and one of the top stock brokers of Bangladesh and provider of state-of-the-art trading facilities. Professional workforces have engaged within the company to ensure quality services towards local and foreign clients, which include cash trading, margin trading, on-line trading and other DP related services. DBSL has extended its services to different areas in and outside of Dhaka through six existing branches and extended information services through different branches of Dhaka Bank Limited. In 2017, DBSL participated in World Investors Week organized by Bangladesh Securities and Exchange Commission (BSEC) and a “Financial Literacy and Investors & Entrepreneurs Conference” organized by Central Depository Bangladesh Limited to promote offered product and services. Infrastructure & Facilities DBSL possesses a proficient setup of Infrastructures including advanced broker and back office software, efficient Human Resources, own mail server, well informative website, superior customer Service, regular research update with other facilities. DBSL has all kinds of IT & electronic capability which give customers the choice to enter prices and execute trades electronically, directly via one of DBSL’s electronic trading systems, and/or to engage with a broker to execute his/her trades. Client Base DBSL has a large client base of around 7,500 accounts in which almost 5,200 accounts are regular in trade. Both Individual and institutional clients are maintaining their account with DBSL. Moreover, DBSL has a good number of Foreign and NRB clients who have sizable portfolio investment. Growth in Trade Volume and Brokerage Commission The trade volume of the company experienced positive trend in 2017 because of extreme marketing drive & active participation of corporate and retail investors. Total market trade volume increased by 82.65% in 2017 from the year 2016 and the daily average trade volume generated by DBSL followed the similar pattern. The company generated trade volume of BDT 43,692.03 million in the year 2017 which was BDT. 21,595.50 million in 2016 and captured almost 1.89% market share in 2017 which was 1.70% in 2016. DBSL Management’s proper marketing strategy helped the company to increase market share. www.dhakabankltd.com
  123. DHAKA BANK SECURITIES LIMITED REPORT OF THE BOARD OF DIRECTORS Continued Margin L oan Growth 2983 .32 2015 9.54% 2758.41 2016 -7.54% 2466.22 2017 -10.59% Magin Loan Growth As on 31 December 2017, outstanding Margin Loan provided to the clients stood at BDT. 2,446.22 million whereas it was BDT. 2,758.41 million in 2016 and net interest earned from the margin loan during year 2017 is BDT 0.71 million, which was BDT. 0.83 million in the previous year. Both Margin Loan and Net Interest Income decreased in 2017 because DBSL remained very cautious towards providing margin loan. Ratio Analysis DBSL has managed to book daily average Trade Volume of BDT 176.19 million in the year 2017 compared to BDT 89.61 million in the year 2016, which was in line with the overall market trade volume growth. DBSL captured 1.89% of market share in DSE’s trade in 2017 compared to 1.70% in 2016. The Earning per Share posted a growth of 42.00%, thanks to the dealer portfolio management team for outperforming the market again and generating most of the income for the company. In line with this, other financial ratios have improved satisfactory. Accounting Policies and Maintenance of Books of Accounts TThe Directors consider that in preparing the Financial Statements, the Company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates and that all International Accounting Standards as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) have been followed. In preparing financial statements, information has been obtained from the books of accounts, which have been maintained properly as required by the applicable rules and regulations. Internal Control The internal control system provides reasonable but not absolute assurance against material misstatements, losses and fraud of safeguarding of the assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate rules and regulations and best practices and the identification and management of business risk. Our internal control department is supported by professional staffs who conduct periodic audits of all aspects of DBSL’s operations. The Board retaining ultimate responsibility for its operations, has delegated the review of the effectiveness of the system of internal controls to the Audit Committee. Auditors M/S. HODAVASI CHOWDHRY & CO., Chartered Accountants was appointed as the independent auditor of the Company in the seventh Annual General Meeting held on May 29, 2017. The auditor will retire in the eighth Annual General Meeting. Being eligible under Section 212 of the Company’s Act, 1994 and the Financial Institutions Act, 1993, the Auditors have expressed their willingness to continue their office for the year 2018. A resolution proposing the reappointment of M/S. HODAVASI CHOWDHRY & CO., Chartered Accountants, as the independent auditor of the Company will be proposed at Annual General Meeting of DBSL. Directors to Retire and be Re-Appointed As per the Company Act 1994 and the Articles of Association of the company, 1/3 (one third) of the Directors of the company shall retire by rotation in the 8th Annual General Meeting and they expressed their willingness to be reappointed. Outlook The “Outlook” part in this document is based on the DBSL’s views & expectations and thus the actual outcome is not certain. Stakeholders should consider the above-noted factors when reviewing these sections. The Board remains very excited with the prospects of DBSL. We will maintain our growth and diversity in our revenue and earning flows. We are working hard to bring innovative approaches into regular business www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 123 Report of the Board of Directors Dhaka Bank Securities Limited continues to achieve its business growth with sensible execution of business development strategies. The loan facilities are restricted only to selection of credit customer with few fundamentally sound instruments in accordance with the instructions of the Regulatory Bodies. DBSL has 679 margin clients. The interest income from margin loan dropped due to lowering the rate of interest with the trend of market competition. Observance of BAS, BFRS & Applicable Laws Company keeps accounting records, which disclose with reasonable accuracy the financial position of the Company and it is the responsibility of the directors to ensure that the financial statements comply with the Companies Act, 1994 and the Securities and Exchange Rules, 1987. The Directors also confirm that the financial statements have been prepared in accordance with the Bangladesh Accounting Standards, Bangladesh Financial Reporting Standards and other applicable rules and regulations. Dhaka Bank Securities Limited Growth in Margin Loan and Interest Income
  124. DHAKA BANK SECURITIES LIMITED REPORT OF THE BOARD OF DIRECTORS Dhaka Bank Securities Limited Continued operations as well as mixing up the resources we have to fetch the maximum output from existing opportunities . Expenses will be vigilantly handled and initiatives will be taken to improve customer satisfaction. The DBSL’s net interest income is expected to increase as robust effort has been taken for realization of accrued interest. Growth in brokerage commission income will be accelerated and provisions for credit losses will remain relatively stable in 2018. It is expected that 2018 will be the year of recovery. In 2018, we expect that all departments would experience a transformation and contribute to the overall profitability of DBSL. We will devote our full efforts to accomplish the target to reward our shareholders and the community in coming year. On behalf of the Board of Directors, I would like to express my gratitude to our customers, business partners and shareholders for their continuous support and confidence in DBSL. A special note of appreciation goes to the Management team and all the employees for their devotion, integrity, hard work and professionalism. My sincere thanks also go to Bangladesh Securities and Exchange Commission, Bangladesh Bank, Dhaka Stock Exchanges Limited and Chittagong Stock Exchanges Limited, all retail & institutional investors, who were the partners in the growth of this Company for their invaluable assistance, support, guidance and counsel. Report of the Board of Directors Acknowledgement Reshadur Rahman Chairman Dhaka Bank Securities Limited 124 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  125. Auditor ’s Report & Audited Financial Statements Auditor’s Report Consolidated & Separate Financial Statements Finance Operations Result Evaluation Quality Procedure www.dhakabankltd.com Assessment Dhaka Bank Limited Annual Report 2017 125
  126. Consolidated & Separate Financial Statements Auditor’s Report Independent Auditor’s Report to the Shareholders of Dhaka Bank Limited Report on the Financial Statements We have audited the accompanying consolidated financial statements of Dhaka Bank Limited and its subsidiaries (the “Group”) as well as the separate financial statements of Dhaka Bank Limited (the “Bank”), which comprise the consolidated and separate balance sheets as at 31 December 2017, and the consolidated and separate profit and loss accounts, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements and Internal Controls Management is responsible for the preparation of consolidated financial statements of the Group and also separate financial statements of the Bank that give a true and fair view in accordance with Bangladesh Financial Reporting Standards as explained in note 2 and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements of the Group and also separate financial statements of the Bank that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 (amended up to 2013) and the Bangladesh Bank Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Bank. The Management is also required to make a self-assessment on the effectiveness of antifraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements of the Group and the separate financial statements of the Bank based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements of the Group and separate financial statements of the Bank are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements of the Group and separate financial statements of the Bank. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements of the Group and separate financial statements of the Bank, whether due to fraud or error. In making these risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements of the Group and separate financial statements of the Bank that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements of the Group and also separate financial statements of the Bank. 126 Dhaka Bank Limited Annual Report 2017 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and also separate financial statements of the Bank give a true and fair view of the consolidated financial position of the Group and the separate financial position of the Bank as at 31 December 2017, and of its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in note 2. Report on Other Legal and Regulatory Requirements In accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Bank Company Act, 1991 (amended up to 2013) and the rules and regulations issued by Bangladesh Bank, we also report the following: a) we have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; b) to the extent noted during the course of our audit work performed on the basis stated under the Auditor’s Responsibility section in forming the above opinion on the consolidated financial statements of the Group and the separate financial statements of the Bank and considering the reports of the Management to Bangladesh Bank on anti-fraud internal controls and instances of fraud and forgeries as stated under the Management’s Responsibility for the Financial Statements and Internal Control: i) internal audit, internal control and risk management arrangements of the Group and the Bank as disclosed in note 2.36 of the financial statements appeared to be materially adequate; ii) nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Bank and its related entities; c) financial statements of the subsidiaries of the Bank have also been audited by us and have been properly reflected in the consolidated financial statements; d) in our opinion, proper books of account as required by law have been kept by the Group and the Bank so far as it appeared from our examination of those books; e) the consolidated balance sheet and consolidated profit and loss account of the Group and the separate balance sheet and separate profit and loss account of the Bank dealt with by the report are in agreement with the books of account; f) the expenditure incurred was for the purposes of the Bank’s business; g) the consolidated financial statements of the Group and the separate financial statements of the Bank have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as with related guidance issued by Bangladesh Bank; www.dhakabankltd.com
  127. Independent Auditor ’s Report to the Shareholders of Dhaka Bank Limited i) the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements; j) the information and explanation required by us have been received and found satisfactory; and www.dhakabankltd.com l) Capital to Risk-weighted Assets Ratio (CRAR) as required by the Bangladesh Bank has been maintained by the Bank. Consolidated & Separate Financial Statements Dhaka, 26 April 2018 k) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 3,750 person hours for the audit of the books and accounts of the Bank. Hoda Vasi Chowdhury & Co Chartered Accountants Dhaka Bank Limited Annual Report 2017 Auditor’s Report h) as mentioned in note 7.11: A) adequate provisions have been made for advances which are, in our opinion, doubtful of recovery; 127
  128. Dhaka Bank Limited and its Subsidiaries Consolidated Balance Sheet As at 31 December 2017 Auditor ’s Report Notes 31.12.2016 Taka PROPERTY AND ASSETS Cash Cash in hand (including foreign currencies) Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies) 3(a) 3.1(a) 3.2(a) 13,684,691,050 1,839,941,316 11,844,749,734 16,715,758,759 1,797,462,755 14,918,296,004 Balance with other banks and financial institutions In Bangladesh Outside Bangladesh 4(a) 4.1(a) 4.2(a) 11,394,521,215 10,190,843,071 1,203,678,144 11,229,483,485 8,640,709,728 2,588,773,757 11,300,000 1,051,300,000 Money at call and on short notice Consolidated & Separate Financial Statements 31.12.2017 Taka 5(a) Investments Government Others 6(a) 6.1(a) 6.2(a) 26,040,501,710 19,706,422,487 6,334,079,223 23,783,240,894 18,805,722,760 4,977,518,134 Loans, advances and lease/investments Loans, cash credits, overdrafts, etc./ Investments Bills purchased and discounted 7(a) 7.1(a) 8(a) 153,867,641,893 150,656,808,845 3,210,833,048 134,833,390,731 131,707,113,368 3,126,277,363 Fixed assets including premises, furniture and fixtures Other assets Non-banking assets Total Assets 9(a) 10(a) 11(a) 4,269,381,542 21,537,286,973 23,166,033 230,828,490,416 4,201,264,375 11,439,308,527 23,166,033 203,276,912,804 Borrowings from other banks, financial institutions and agents 12(a) 21,633,548,366 11,496,873,150 Deposits and other accounts 13 (a) 169,729,720,650 156,756,948,352 20,025,396,323 2,826,174,811 19,061,994,573 127,816,154,943 21,093,467,455 2,047,637,778 16,735,239,732 116,880,603,387 14 3,000,000,000 3,800,000,000 15(a) 20,637,340,094 16,308,113,207 215,000,609,111 188,361,934,709 15,827,823,977 14,914,932,104 7,222,957,200 6,418,181,801 684,339,747 1,502,345,228 6,879,006,860 5,850,338,779 800,010,946 1,385,575,519 57,329 45,991 15,827,881,305 14,914,978,095 230,828,490,416 203,276,912,804 LIABILITIES & CAPITAL Liabilities Current accounts & other accounts Bills payable Savings bank deposits Term deposits Non Convertible Subordinated Bond Other Liabilities Total Liabilities Capital/Shareholders’ Equity Equity attributable to equity holders of the parent company Paid-up capital Statutory reserve Other reserve Retained earnings Non-controlling interest Total Equity Total Liabilities & Shareholders’ Equity 128 Dhaka Bank Limited Annual Report 2017 16.2 17 18(a) 19(a) 19.1(a) www.dhakabankltd.com
  129. Off-Balance Sheet Items Contingent Liabilities 31 .12.2017 Taka 31.12.2016 Taka 21 Acceptances and Endorsements Irrevocable Letter of Credit Letter of Guarantee Bills for Collection Other Contingent Liabilities 32,868,131,246 27,085,569,676 23,083,135,224 11,591,497,583 3,493,879,200 98,122,212,930 25,263,660,677 17,447,623,500 19,928,711,771 8,250,158,750 2,036,246,400 72,926,401,097 - 72,926,401,097 Auditor’s Report Notes Other Commitments - 98,122,212,930 Total off-balance sheet items including contingent liabilities These Financial Statements should be read in conjunction with the annexed notes 1 to 44. Syed Mahbubur Rahman Managing Director & CEO Altaf Hossain Sarker Director Mohammed Hanif Director Reshadur Rahman Chairman This is the consolidated balance sheet referred to in our separate report of even date. Dhaka, 26 April 2018 www.dhakabankltd.com Hoda Vasi Chowdhury & Co Chartered Accountants Dhaka Bank Limited Annual Report 2017 129 Consolidated & Separate Financial Statements Documentary credit 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
  130. Dhaka Bank Limited and its Subsidiaries Consolidated Profit and Loss Account Consolidated & Separate Financial Statements Auditor’s Report For the year ended 31 December 2017 Notes 2017 Taka 2016 Taka Operating Income Interest income/profit on investments Interest paid/profit on deposits and borrowings, etc. Net interest income 22(a) 23(a) 13,727,205,143 (10,339,604,517) 3,387,600,626 13,173,471,870 (9,451,375,496) 3,722,096,375 Investment income Commission, exchange and brokerage Other operating income 24(a) 25(a) 26(a) 3,094,917,268 2,997,010,487 236,734,487 6,328,662,242 9,716,262,868 3,404,981,086 1,587,140,031 271,693,740 5,263,814,856 8,985,911,231 27(a) 28(a) 29(a) 30(a) 31(a) 32(a) 33(a) 34(a) 35(a) 36(a) 2,221,634,512 649,438,474 21,686,243 45,415,750 150,115,511 14,095,183 5,020,850 1,782,500 365,643,104 776,670,102 4,251,502,230 5,464,760,638 2,153,981,089 7,377,931 283,968,402 2,445,327,422 3,019,433,216 1,744,368,347 528,706,421 17,792,303 40,674,152 149,468,134 12,890,167 4,639,000 1,782,500 345,278,702 563,526,474 3,409,126,200 5,576,785,031 2,444,517,209 8,200,000 252,948,481 2,705,665,690 2,871,119,341 1,410,678,073 1,439,667,055 (28,988,981) 1,608,755,143 1,318,839,116 1,352,164,621 (33,325,504) 1,552,280,224 1,608,743,805 11,338 1,608,755,143 1,552,271,589 8,635 1,552,280,224 567,843,022 (115,519,953) 7,800,000 1,031,851,026 1,502,345,228 2,994,319,323 2.23 549,596,961 (38,192,034) 5,700,000 1,000,582,816 1,385,575,519 2,903,263,261 2.15 Total operating income (a) Operating Expenses Salary and allowances Rent, taxes, insurance, electricity, etc. Legal expenses Postage, stamps, telecommunication, etc. Stationery, printing, advertisement, etc. Chief executive's salary and fees Directors' fees Auditors' fees Depreciation and repairs of Bank's assets Other expenses Total operating expenses (b) Profit/(Loss) before provision (c = (a-b)) Provision against loans and advances Provision against good borrower Provision for diminution in value of investments Other Provisions Total provision (d) Profit/(Loss) before taxation (c-d) 37(a) 15.2 38 39(a) Provision for taxation Current tax Deferred Tax Net profit after taxation Net profit after tax attributable to: Equity holders of DBL Non-controlling interest Appropriations Statutory reserve General reserve Investment Fluctuation Fund Dividends etc. Retained earnings Consolidated Earning per Share (CEPS) 40(a) These Financial Statements should be read in conjunction with the annexed notes 1 to 44. Syed Mahbubur Rahman Managing Director & CEO Mohammed Hanif Director Reshadur Rahman Chairman Dhaka, 26 April 2018 130 Altaf Hossain Sarker Director Dhaka Bank Limited Annual Report 2017 Hoda Vasi Chowdhury & Co Chartered Accountants www.dhakabankltd.com
  131. Dhaka Bank Limited and its Subsidiaries Consolidated Cash Flow Statement For the year ended 31 December 2017 41 (a) 42(a) 43(a) 44(a) Add: Effects of exchange rate changes on cash & cash equivalent Add: Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (*) (*) Cash and cash equivalents Cash in Hand Balance with Bangladesh Bank & Sonali Bank Balance with other banks & Financial Institutions Money at call & Short Notice Prize Bond 2016 Taka 16,174,739,589 (10,335,544,529) 64,469,332 49,202,153 1,638,589,367 (2,235,729,695) (239,849,380) (1,353,072,300) 239,809,771 (1,496,474,455) 2,506,139,854 14,468,057,834 (9,418,911,699) 67,205,591 50,461,881 1,144,854,688 (1,757,258,514) (234,541,734) (772,709,861) 370,515,201 (1,164,121,478) 2,753,551,908 (369,516,454) (19,034,251,162) (8,798,997,478) 5,568,154,933 7,404,617,365 82,400,563 331,619,229 (14,815,973,004) (12,309,833,149) 5,899,422,270 (16,357,597,702) (3,872,807,928) (1,273,265,661) 19,438,712,268 22,681,744 (564,279,276) 3,292,865,715 6,046,417,624 665,172,853 (1,895,881,889) (320,595,906) 2,490,121 (1,548,814,820) 988,590,387 (5,655,342,471) (317,060,803) 4,018,467 (4,979,794,421) 10,136,675,217 (800,000,000) (687,900,686) 8,648,774,531 (5,209,873,439) 370,830,215 3,000,000,000 (600,000,000) (375,218,556) 2,395,611,659 3,462,234,862 1,303,653,561 29,000,627,043 25,094,407,165 339,485,945 25,198,906,236 29,000,627,044 1,839,941,316 11,844,749,734 11,394,521,215 11,300,000 3,894,900 25,094,407,165 1,797,462,755 14,918,296,004 11,229,483,485 1,051,300,000 4,084,800 29,000,627,043 These Financial Statements should be read in conjunction with the annexed notes 1 to 44. Syed Mahbubur Rahman Managing Director & CEO Altaf Hossain Sarker Director Mohammed Hanif Director Reshadur Rahman Chairman Dhaka, 26 April 2018 www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 131 Consolidated & Separate Financial Statements Cash Flow From Operating Activities Interest / Profit receipts Interest / Profit payments Dividend receipts Recovery of loans previously written off Fee and commission receipts Payments to employees Payments to suppliers Income taxes paid Receipts from other operating activities Payments for other operating activities (i) Operating profit before changes in operating assets & liabilities Changes in operating assets and liabilities Purchase / Sale of trading securities Loans and advances to customers Other assets Deposits from other banks Deposits from customers Other liabilities account of customers Other liabilities (ii) Cash flow from operating assets and liabilities Net cash flow from operating activities (a)= (i+ii) Cash Flow From Investing Activities Proceeds from sale of securities Sale/ (Purchase) of securities Purchase of property, plant & equipment Proceeds from sale of fixed assets Purchase / sale of subsidiary Net cash used in investing activities (b) Cash Flow From Financing Activities Borrowing from other banks Issuance of Non Convertible Subordinated Bond Redemption of Non Convertible Subordinated Bond Dividends paid Net cash flow from financing activities (c) Net increase in cash and cash equivalents (a+b+c) 2017 Taka Auditor’s Report Notes
  132. 132 Dhaka Bank Limited Annual Report 2017 www .dhakabankltd.com - Currency transaction differences Net gains and losses not recognized in the income statement Net Profit for the year Adjustment made during the year 6,418,181,801 - 567,843,022 - - - - - - - 5,850,338,779 - 5,850,338,779 Statutory Reserve 6,560,631 - (115,519,953) - - - - - - - 122,080,584 - 122,080,584 General Reserve 622,516,800 Dhaka, 26 April 2018 Syed Mahbubur Rahman Managing Director & CEO - - - - - - - - - 622,516,800 - 622,516,800 Asset Revaluation Reserve Altaf Hossain Sarker Director These Financial Statements should be read in conjunction with the annexed notes 1 to 44. 7,222,957,200 - Non-controlling interest Balance as at 31 December 2017 - Changes in reserve Cash dividend Stock dividend Dividend: 343,950,340 - Surplus/deficit on account of revaluation of investments Transfer to reserve - Surplus/deficit on account of revaluation of properties 6,879,006,860 - Changes in accounting policy Restated balance 6,879,006,860 Paid up capital Balance as at 1 January 2017 Particulars 21,562,316 - - - - - 21,562,316 - (7,951,246) - 29,513,562 - 29,513,562 Investment Revaluation Reserve For the year ended 31 December 2017 57,329 11,338 - - - - - - - - 45,991 - 45,991 15,827,881,305 - - (687,900,686) - - 1,608,755,143 - - (7,951,246) - 14,914,978,094 - 14,914,978,094 Total (Amount in Taka) Reshadur Rahman Chairman 1,502,345,228 (11,338) (460,123,069) (687,900,686) (343,950,340) - 1,608,755,143 - - - - 1,385,575,519 - 1,385,575,519 Retained Earnings Auditor’s Report Non-controlling interest Mohammed Hanif Director 33,700,000 7,800,000 - - - - - - - - - 25,900,000 - 25,900,000 Investment Fluctuation Fund Consolidated Statement of Changes in Equity Dhaka Bank Limited and its Subsidiaries Consolidated & Separate Financial Statements
  133. - Surplus /deficit on account of revaluation of investments Currency transaction differences Net gains and losses not recognized in the income statement Net Profit for the year Adjustment made during the year - Non-controlling interest Dhaka Bank Limited Annual Report 2017 5,850,338,779 122,080,584 - (38,192,034) - - - - - - - - 160,272,618 - 160,272,618 General Reserve 622,516,800 - - - - (25,938,200) - - - - - 648,455,000 - 648,455,000 Asset Revaluation Reserve 29,513,562 - - - - - - 29,513,562 - (33,654,885) - 63,168,447 - 63,168,447 Investment Revaluation Reserve Consolidated & Separate Financial Statements These Financial Statements should be read in conjunction with the annexed notes 1 to 44. 6,879,006,860 - Balance as at 31 December 2016 - - Cash dividend Changes in reserve 549,596,961 - - - - - - - 5,300,741,818 - 5,300,741,818 Statutory Reserve 625,364,260 Stock dividend Dividend: Transfer to reserve - Surplus/deficit on account of revaluation of properties 6,253,642,600 - Changes in accounting policy Restated balance 6,253,642,600 Paid up capital Balance as at 1 January 2016 Particulars For the year ended 31 December 2016 25,900,000 - 5,700,000 - - - - - - - - 20,200,000 - 20,200,000 Investment Fluctuation Fund Consolidated Statement of Changes in Equity Dhaka Bank Limited and its Subsidiaries 45,991 8,635 - - - - - - - - - 37,355 - 37,355 Non-controlling interest 1,385,575,519 (8,635) (517,104,927) (375,218,556) (625,364,260) 85,938,200 1,552,280,225 - - - - 1,265,053,471 - 1,265,053,471 Retained Earnings Auditor’s Report www.dhakabankltd.com 133 14,914,978,095 - - (375,218,556) - 60,000,000 1,552,280,225 - - (33,654,885) - 13,711,571,310 - 13,711,571,310 Total Equity (Amount in Taka)
  134. Dhaka Bank Limited Balance Sheet Auditor ’s Report As at 31 December 2017 Consolidated & Separate Financial Statements Notes 31.12.2017 Taka 31.12.2016 Taka PROPERTY AND ASSETS Cash Cash in hand (including foreign currencies) Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies) 3 3.1 3.2 13,684,591,050 1,839,841,316 11,844,749,734 16,715,649,259 1,797,353,255 14,918,296,004 Balance with other banks and financial institutions In Bangladesh Outside Bangladesh 4 4.1 4.2 11,224,922,706 10,021,244,562 1,203,678,144 11,170,526,692 8,581,752,935 2,588,773,757 Money at call and on short notice 5 11,300,000 1,051,300,000 Investments Government Others 6 6.1 6.2 23,181,794,347 19,706,422,487 3,475,371,860 21,305,722,760 18,805,722,760 2,500,000,000 Loans, advances and lease/investments Loans, cash credits, overdrafts, etc./Investments Bills purchased and discounted 7 7.1 8 154,017,029,266 150,806,196,218 3,210,833,048 134,689,308,364 131,563,031,001 3,126,277,363 Fixed assets including premises, furniture and fixtures 9 4,262,893,303 4,193,540,105 Other Assets 10 23,047,157,792 13,042,382,648 Non-Banking Assets 11 23,166,033 23,166,033 229,452,854,497 202,191,595,861 21,533,553,426 170,035,420,927 11,296,873,150 157,161,630,521 20,025,396,323 2,826,174,811 19,061,994,573 128,121,855,220 21,093,467,455 2,047,637,778 16,735,239,732 117,285,285,556 Total Assets LIABILITIES & CAPITAL Liabilities Borrowings from Other Banks, Financial Institutions and Agents Deposits and other accounts 12 Current accounts & other accounts Bills payable Savings bank deposits Term deposits Non Convertible Subordinated Bond 14 3,000,000,000 3,800,000,000 Other Liabilities Total Liabilities 15 19,638,634,359 214,207,608,713 15,487,366,332 187,745,870,003 15,245,245,785 7,222,957,200 6,418,181,801 650,639,747 953,467,037 14,445,725,858 6,879,006,860 5,850,338,779 774,110,946 942,269,273 229,452,854,497 202,191,595,861 Capital / Shareholders' Equity Total Shareholders’ Equity Paid-up capital Statutory reserve Other reserve Retained earnings Total Liabilities & Shareholders' Equity 134 Dhaka Bank Limited Annual Report 2017 16.2 17 18 19 www.dhakabankltd.com
  135. Contingent liabilities Acceptances and endorsements Irrevocable Letters of Credit Letter of guarantee Bills for collection Other contingent liabilities 21 31 .12.2016 Taka 98,122,212,930 32,868,131,246 27,085,569,676 23,083,135,224 11,591,497,583 3,493,879,200 72,926,401,097 25,263,660,677 17,447,623,500 19,928,711,771 8,250,158,750 2,036,246,400 - - 98,122,212,930 72,926,401,097 Other commitments Documentary credit and short term trade-related transactions Forward assets purchased and forward deposits placed Undrawn note issuance and revolving underwriting facilities Undrawn formal standby facilities, credit lines and other commitments Total off-balance sheet items including contingent liabilities The annexed notes form an integral part of these financial statements. These Financial Statements should be read in conjunction with the annexed notes 1 to 44. Syed Mahbubur Rahman Managing Director & CEO Altaf Hossain Sarker Director Mohammed Hanif Director Reshadur Rahman Chairman This is the balance sheet referred to in our separate report of even date. Dhaka, 26 April 2018 www.dhakabankltd.com Hoda Vasi Chowdhury & Co Chartered Accountants Dhaka Bank Limited Annual Report 2017 135 Consolidated & Separate Financial Statements 31.12.2017 Taka Auditor’s Report Notes OFF- BALANCE SHEET ITEMS
  136. Dhaka Bank Limited Profit & Loss Account Auditor’s Report For the year ended 31 December 2017 Notes 2016 Taka Operating Income Interest income/profit on investments Interest paid/profit on deposits and borrowings, etc. Net interest income 22 23 13,714,929,994 (10,336,326,037) 3,378,603,957 13,165,602,608 (9,452,611,371) 3,712,991,237 Investment income Commission, exchange and brokerage Other operating income 24 25 26 2,884,488,508 2,876,740,973 235,674,687 5,996,904,168 9,375,508,125 3,238,231,845 1,517,376,553 270,819,482 5,026,427,880 8,739,419,116 27 28 29 30 31 32 33 34 35 36 2,179,485,872 634,454,439 20,256,493 44,604,307 148,203,308 14,095,183 3,847,544 1,380,000 357,664,024 766,974,424 4,170,965,595 5,204,542,530 1,711,533,723 508,410,393 17,395,303 40,064,088 148,276,067 12,890,167 3,700,186 1,380,000 337,001,950 555,116,746 3,335,768,622 5,403,650,494 37 15.2 38 39 2,153,981,089 7,377,931 203,968,402 2,365,327,422 2,839,215,108 2,444,517,209 8,200,000 202,948,481 2,655,665,690 2,747,984,804 1,343,843,250 1,372,864,467 (29,021,217) 1,495,371,858 1,282,056,770 1,314,967,979 (32,911,209) 1,465,928,034 567,843,022 (115,519,953) 1,031,851,026 953,467,037 2,437,641,131 2.07 549,596,961 (38,192,034) 1,000,582,816 942,269,273 2,454,257,016 2.03 Total operating income (a) Consolidated & Separate Financial Statements 2017 Taka Operating Expenses Salary and allowances Rent, taxes, insurance, electricity, etc. Legal expenses Postage, stamps, telecommunication, etc. Stationery, printing, advertisement, etc. Chief executive's salary and fees Directors' fees Auditors' fees Depreciation and repairs of Bank's assets Other expenses Total operating expenses (b) Profit/(Loss) before provision (c = (a-b)) Provision against loans and advances Provision against good borrower Provision for diminution in value of investments Other provisions Total provision (d) Profit/(Loss) before taxation (c-d) Provision for taxation Current tax Deferred tax income Net profit after taxation Appropriations Statutory reserve General reserve Dividends etc. Retained earnings Earning per Share (EPS) 40 These Financial Statements should be read in conjunction with the annexed notes 1 to 44. Syed Mahbubur Rahman Managing Director & CEO Altaf Hossain Sarker Director Mohammed Hanif Director Reshadur Rahman Chairman Dhaka, 26 April 2018 Hoda Vasi Chowdhury & Co Chartered Accountants 136 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  137. Dhaka Bank Limited Cash Flow Statement For the year ended 31 December 2017 41 42 43 44 These Financial Statements should be read in conjunction with the annexed notes 1 to 44 . Syed Mahbubur Rahman Managing Director & CEO Altaf Hossain Sarker Director 2016 Taka 16,005,513,079 (10,332,266,049) 10,405,000 49,202,153 1,518,319,853 (2,193,581,055) (214,444,109) (1,290,315,902) 238,749,972 (1,485,605,471) 2,305,977,471 15,334,485,309 (9,420,147,575) 14,750,000 50,461,881 1,075,091,210 (1,724,423,890) (207,115,457) (725,025,033) 369,640,943 (1,154,772,936) 3,612,944,452 11,672,775 (19,327,720,902) (8,773,910,241) 5,568,154,933 7,305,635,473 82,400,563 306,441,792 (14,827,325,606) (12,521,348,135) 6,103,104,253 (16,849,142,401) (3,812,918,811) (1,273,265,661) 19,365,996,863 22,681,744 (453,614,536) 3,102,841,453 6,715,785,904 665,172,853 (1,895,881,889) (319,718,198) 2,490,121 (1,547,937,112) 988,590,387 (6,643,932,858) (315,573,767) 4,018,467 (5,966,897,771) 10,236,680,277 (800,000,000) (687,900,686) 8,748,779,591 (5,320,505,657) 1,303,653,561 28,941,560,751 24,924,708,656 662,142,729 3,000,000,000 (600,000,000) (375,218,556) 2,686,924,173 3,435,812,306 339,485,944 25,166,262,501 28,941,560,751 1,839,841,316 11,844,749,734 11,224,922,706 11,300,000 3,894,900 24,924,708,656 1,797,353,255 14,918,296,004 11,170,526,692 1,051,300,000 4,084,800 28,941,560,751 Mohammed Hanif Director Reshadur Rahman Chairman Dhaka, 26 April 2018 www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 137 Consolidated & Separate Financial Statements Cash Flow From Operating Activities Interest / Profit receipts Interest / Profit payments Dividend receipts Recovery of loans previously written off Fee and commission receipts Payments to employees Payments to suppliers Income taxes paid Receipts from other operating activities Payments for other operating activities (i) Operating profit before changes in operating assets & liabilities Changes in operating assets and liabilities Purchase / Sale of trading securities Loans and advances to customers Other assets Deposits from other banks Deposits from customers Other liabilities account of customers Other liabilities (ii) Cash flow from operating assets and liabilities Net cash flow from operating activities (a)= (i+ii) Cash Flow from Investing Activities Proceeds from sale of securities Sale/ (Purchase) of securities Purchase of property, plant & equipment Proceeds from sale of fixed assets Purchase / sale of subsidiary Net cash used in investing activities (b) Cash Flow from Financing Activities Borrowing from other banks Issuance of Non Convertible Subordinated Bond Redemption of Non Convertible Subordinated Bond Dividends paid Net cash flow from/(used in) financing activities (c) Net increase/ (decrease) in cash and cash equivalents (a+b+c) Add: Effects of exchange rate changes on cash & cash equivalent Add: Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (*) (*) Cash and cash equivalents Cash in Hand Balance with Bangladesh Bank & Sonali Bank Balance with other banks & Financial Institutions Money at call & Short Notice Prize Bond 2017 Taka Auditor’s Report Notes
  138. 138 Dhaka Bank Limited Annual Report 2017 www .dhakabankltd.com - - Surplus/deficit on account of revaluation of properties Surplus/deficit on account of revaluation of investments Currency transaction differences Net gains and losses not recognized in the income statement Net Profit for the year Adjustment for made during the year 567,843,022 6,418,181,801 7,222,957,200 Cash dividend Changes in reserve Dhaka, 26 April 2018 Syed Mahbubur Rahman Managing Director & CEO 6,560,631 (115,519,953) - - - - - - - - 122,080,584 - 122,080,584 General Reserve Altaf Hossain Sarker Director These Financial Statements should be read in conjunction with the annexed notes 1 to 44. Balance as at 31 December 2017 - 343,950,340 Stock dividend Dividend: Transfer to reserve 5,850,338,779 6,879,006,860 - - Changes in accounting policy Restated balance 5,850,338,779 Statutory Reserve 6,879,006,860 Paid up capital Balance as at 1 January 2017 Particulars 21,562,316 - - - - - 21,562,316 - (7,951,246) - 29,513,562 - 953,467,037 (452,323,069) (687,900,686) (343,950,340) - 1,495,371,858 - - - - 942,269,273 - 942,269,273 Retained Earnings Auditor’s Report 29,513,562 Investment Revaluation Reserve Mohammed Hanif Director 622,516,800 - - - - - - - - - 622,516,800 - 622,516,800 Asset Revaluation Reserve For the year ended 31 December 2017 Dhaka Bank Limited Statement of Changes in Equity Consolidated & Separate Financial Statements Reshadur Rahman Chairman 15,245,245,785 - (687,900,686) - - 1,495,371,858 - - (7,951,246) - 14,445,725,858 - 14,445,725,858 Total Equity (Amount in Taka)
  139. - - Surplus /deficit on account of revaluation of properties Surplus/deficit on account of revaluation of investments Currency transaction differences Net gains and losses not recognized in the income statement Net Profit for the year Adjustment for made during the year 549,596,961 5,850,338,779 6,879,006,860 Cash dividend Changes in reserve 122,080,584 (38,192,034) - - - - - - - - 160,272,618 - 160,272,618 General Reserve 622,516,800 - - - (25,938,200) - - - - - 648,455,000 - 648,455,000 Asset Revaluation Reserve Consolidated & Separate Financial Statements These Financial Statements should be read in conjunction with the annexed notes 1 to 44. Balance as at 31 December 2016 - 625,364,260 Stock dividend Dividend: Transfer to reserve 5,300,741,818 6,253,642,600 - - Changes in accounting policy Restated balance 5,300,741,818 Statutory Reserve 6,253,642,600 Paid up capital For the year ended 31 December 2016 Balance as at 1 January 2016 Particulars Dhaka Bank Limited Statement of Changes in Equity 29,513,562 - - - - - 29,513,562 - (33,654,885) - 63,168,447 - 63,168,447 Investment Revaluation Reserve 942,269,273 (511,404,927) (375,218,556) (625,364,260) 25,938,200 1,465,928,034 - - - - 962,390,782 - 962,390,782 Retained Earnings Auditor’s Report www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 139 14,445,725,858 - (375,218,556) - 1,465,928,034 - - (33,654,885) - 13,388,671,266 - 13,388,671,266 Total Equity (Amount in Taka)
  140. 140 Dhaka Bank Limited Annual Report 2017 www .dhakabankltd.com (4,961,533,534) (28,513,328,571) 27,007,323,639 27,007,323,639 Total Liabilities Net Liquidity Gap Cumulative Liquidity Gap - (22,886,395,037) (665,400,000) 55,520,652,210 - 13,936,098,446 - Other liabilities Non Convertible Subordinated Bond Deposits & Other Accounts Borrowing from Bangladesh Bank, Other banks, financial institutions and agents Liabilities: Total Assets Non-banking assets Other assets Fixed assets including premises, furniture and fixtures 19,668,975,660 - Investment Loans and Advances - 8,230,987,054 Balance with other banks and financial institutions Money at call on short notice 13,684,591,050 Upto 01 month Cash in hand Assets: Particulars Liquidity Statement - 40,908,294,661 13,900,971,022 (35,817,851,963) - - (35,817,851,963) - 49,718,822,984 - - - 41,148,502,657 5,705,784,675 - 2,864,535,652 1 - 3 months - (13,110,862,646) (54,019,157,306) (111,568,896,644) (14,677,100,825) (800,000,000) (77,988,998,628) (18,102,797,191) 57,549,739,338 - 4,435,225,177 - 49,312,518,420 3,672,595,741 - 129,400,000 3 - 12 months (Asset and Liability Maturity Analysis) As at 31 December 2017 Dhaka Bank Limited Consolidated & Separate Financial Statements - - - 6,142,904,746 19,253,767,391 (24,570,661,415) - (1,800,000,000) (20,005,305,180) (2,765,356,235) 43,824,428,806 23,166,033 2,903,484,323 689,839,549 32,920,731,915 7,287,206,987 1 - 5 years - - 15,245,245,784 9,102,341,038 (13,736,870,120) - (400,000,000) (13,336,870,120) - 22,839,211,158 - 1,772,349,846 3,573,053,753 10,966,300,615 6,516,206,945 11,300,000 more than 5 years Auditor’s Report - 15,245,245,785 (214,207,608,713) (19,638,634,359) (3,000,000,000) (170,035,420,927) (21,533,553,426) 229,452,854,497 23,166,033 23,047,157,792 4,262,893,303 154,017,029,266 23,181,794,347 11,300,000 11,224,922,706 13,684,591,050 (Amount in Taka) Total
  141. Dhaka Bank Limited and its Subsidiaries Notes to the Consolidated & Separate Financial Statements For the year ended 31 December 2017 Status of the Bank and Principal Activities 1.1 Legal form of the bank 1.2 Nature of business/principal activities of the bank 1.2.1 Conventional banking The principal activities of the bank are to provide all kinds of commercial banking services to its customers through its branches and SME Centers and electronic delivery channels in Bangladesh. 1.2.2 Islamic banking The Bank operates Islamic Banking in two branches designated for this purpose in complying with the rules of Islamic Shariah. A separate balance sheet, income statement and a statement of profit paid on deposits are shown in Annexure-I and the figures appearing in the annexure have been incorporated in the respective heads of these financial statements as recommended by the Central Shariah Board for Islamic Banks in Bangladesh. A separate unit for Islamic Banking has been formed in Head Office to monitor and comply with the rules of Islamic Shariah and other Regulatory bodies. 1.2.3 Off-shore banking unit Off-Shore Banking Unit is a separate business unit of Dhaka Bank Off-Shore Banking Unit is a separate business unit of Dhaka Bank Limited, governed under the Rules & Guidelines of Bangladesh Bank. Currently, the Bank has two OBUs in DEPZ & CEPZ. The Bank obtained DEPZ Offshore Banking Unit permission vide letter no. BRPD (P)744(92)/2005-2181 dated June 18, 2005 and CEPZ Offshore Banking Unit permission vide letter no. BRPD (P-3)744(92)/2017-123 dated January 05, 2017. The Bank commenced the operation of its DEPZ Offshore Banking Unit with effect from May 10, 2006 and CEPZ www.dhakabankltd.com 1.2.4 SME service center The main functions of SME Service Centers are to render services only for receiving application, disbursement, monitoring, and recovery of SME/Retail loans. They also serve the customers for opening of account, payments of foreign remittance etc. 1.2.5 Central processing center (CPC) Dhaka Bank has established the central processing center (CPC) for trade & credit operations. The center maintains its accounting records in the general ledger of the respective branches. The Import/Export related processing & Credit Operations are centrally controlled and monitored by the CPC for efficient and effective decision-making and reduction of cost as well. 1.2.6 Subsidiaries of the bank 1.2.6.1 Dhaka Bank Securities Limited (Former DBL Securities Limited) As per decision of the 153rd meeting of the Board of Directors of Dhaka Bank Limited, a separate subsidiary company in the name of DBL Securities Limited was formed to carry out the stock broker and stock dealer activities of Capital Market Services Division of the Bank. The Board of Directors of Dhaka Bank Limited in its 208th meeting renamed the subsidiary company as “Dhaka Bank Securities Limited” instead of “DBL Securities Limited”. Dhaka Bank subscribed Tk.149,999,990 divided into 14,999,999 shares @Tk.10 each with 99.99% of contribution to Equity participation. Further, Tk.1,350,000,000 were injected by Dhaka Bank Limited as Fresh Capital during the year 2011. 05(five) new Directors were inducted in the Board of Dhaka Bank Securities Limited by transferring 05(five) share certificates @ Tk.10.00 each of Dhaka Bank Securities Limited held by Dhaka Bank Limited.Now, the total number of Shareholding in Dhaka Bank Securities Limited is 171,599,994 shares after considering the stock dividend of Tk.60,000,000& Tk.156,000,000 issued respectively in 2011 and 2014. Financial Statements of this subsidiary are portrayed in Annexure-K. 1.2.6.2 Dhaka Bank Investment Limited As per approval of the Board of Directors of Dhaka Bank Limited in its 190th meeting, a separate subsidiary company in the name and style of “Dhaka Bank Investment Limited” was formed with Authorized Capital of Tk.2,000,000,000and Paid-up Capital of Tk. 250,000,000, amongst other,to conduct Merchant Banking Activities, to act as Issue Manager, Securities Management and Brokerage, Custodian Service, Investment and Asset Management, Portfolio Management, Capital Market operation etc.Dhaka Bank Limited subscribed Tk.249,999,940 divided into 24,999,994 shares @Tk.10 each with 99.99% of contribution to Equity participation. The company is yet to receive the license from Bangladesh Securities and Exchange Commission (BSEC) to commence its operation.Unaudited Financial Statements of this subsidiary are given in Annexure-L. Dhaka Bank Limited Annual Report 2017 141 Consolidated & Separate Financial Statements The Dhaka Bank Limited (the “Bank”) was incorporated in Bangladesh as a public limited company as on 06 April 1995 under the Companies Act, 1994 and commenced commercial operation on 05 July 1995. The Bank went for the public issue of shares on 18 November 1999 and its shares are listed with the Stock Exchanges of Bangladesh. Now it has 100 branches all over Bangladesh which includes 63 urban and 37 rural branches, two offshore banking unit at EPZ, Dhaka & EPZ, Chittagong and 03 SME Service Centers. Out of the above, 2 branches of the Bank are run under Islamic Shariah, the modus operandi of which is substantially different from other nonIslamic branches.The Bank has two subsidiary companies in the name of Dhaka Bank Securities Limited and Dhaka Bank Investment Limited. The Bank has been holding 99.99% shares of Dhaka Bank Securities Limited with 6 branches in Dhaka, Chittagong and Sylhet and Dhaka Bank Investment Limited. Moreover the Bank has a dedicated philanthropic unit named Dhaka Bank Foundation which has been operating since 28 July 2004. The principal place of business is the registered office at 100, Motijheel Commercial Area, BimanBhaban, Dhaka-1000, Bangladesh. Offshore Banking Unit with effect from February 12, 2017. Separate financial statements of Off-shore Banking Unit are also presented. Auditor’s Report 1.0
  142. Auditor ’s Report Significant accounting policies and basis of preparation of the financial statements 2.1 Basis of accounting 2.1.1 Statement of compliance The Financial Reporting Act 2015 (FRA) was enacted in 2015. Under the FRA, the Financial Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as banks. The Bank Companies Act 1991 has been amended to require banks to prepare their financial statements under such financial reporting standards. The FRC has been formed but yet to issue any financial reporting standards as per the provisions of the FRA and hence Bangladesh Financial Reporting Standards (BFRS) as issued by the Institute of Chartered Accountants of Bangladesh (ICAB) are still applicable. Accordingly, the financial statements of the Bank and its subsidiaries (the “Group”) continue to be prepared in accordance with Bangladesh Financial Reporting Standards (BFRS) and the requirements of the Bank Companies Act 1991, the rules and regulations issued by Bangladesh Bank, the Companies Act 1994, Securities and Exchange Rules 1987. The operations of Islamic Banking branches are accounted for in accordance with Financial Accounting Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions for which a separate set of books and records are being maintained. In case any requirement of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank differ with those of BFRS& AAOIFI standards, the requirements of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank shall prevail. Consolidated & Separate Financial Statements 2.0 Material departures from the requirement of BFRS are as follows i) Investment in shares and securities BFRS: As per BAS 39, investment in shares and securities generally falls either under “at fair value through profit and loss account” or under “available for sale” where any change in the fair value (as measured in accordance with BFRS 13) at the year end is taken to profit and loss account or revaluation reserve respectively. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment; otherwise investments are recognised at cost. ii) Revaluation gains/losses on government securities BFRS: As per BAS 39, where securities will fall under the 142 Dhaka Bank Limited Annual Report 2017 category of Held for Trading (HFT), any change in the fair value of held for trading assets is recognised through profit and loss account. Securities designated as Held to Maturity (HTM) are measured at amortised cost method and interest income is recognised through the profit and loss account. Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognised in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortisation of discount are recognised in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortised at the year end and gains or losses on amortisation are recognised in other reserve as a part of equity. iii) Provision on loans and advances/investments BFRS: As per BAS 39, an entity should start the impairment assessment by considering whether objective evidence of impairment exists for financial assets that are individually significant. For financial assets that are not individually significant, the assessment can be performed on individual or collective (portfolio) basis. Bangladesh Bank: As per BRPD circular no. 14 (23 September 2012), BRPD circular no. 19 (27 December 2012) and BRPD circular no. 05 (29 May 2013) a general provision at 0.25% to 5% under different categories of unclassified loans (good/ standard loans) has to be maintained regardless of objective evidence of impairment. Also provision for substandard loans, doubtful loans and bad losses has to be provided at 20%, 50% and 100% respectively for loans and advances depending on the duration of overdue. Again, as per BRPD circular no. 10 dated 18 September 2007 and BRPD circular no. 14 dated 23 September 2012, a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39. iv) Recognition of interest in suspense BFRS: Loans and advances to customers are generally classified as ‘loans and receivables’ as per BAS 39 and interest income is recognised through effective interest rate method over the term of the loan. Once a loan is impaired, interest income is recognised in profit and loss account on the same basis based on revised carrying amount. Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified, interest on such loans are not allowed to be recognised as income, rather the corresponding amount needs to be credited to an interest in suspense account, which is presented as liability in the balance sheet. v) Other comprehensive income BFRS: As per BAS 1, Other Comprehensive Income (OCI) is a component of financial statements or the elements of OCI are to be included in a single Other Comprehensive Income statement. www.dhakabankltd.com
  143. vii ) Repo transactions BFRSs: When an entity sells a financial asset and simultaneously enters into an agreement to repurchase the same (or a similar asset) at a fixed price on a future date (REPO or stock dealing), the arrangement is accounted for as a collateralized borrowing and the underlying asset continues to be recognized in the entity’s financial statements. This transaction will be treated as borrowing and the difference between selling price and repurchase price will be treated as finance cost. Bangladesh Bank: As per BB circular/guidelines, when a Bank sells a financial asset and simultaneously enters into an agreement to repurchase the same (or a similar asset) at a fixed price on a future date (REPO or stock dealing), the arrangement is accounted for as a normal sale transaction and the financial asset should be derecognized in the seller’s book and recognized in the buyer’s book. viii) Financial guarantees BFRS: As per BAS 39, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are recognised initially at their fair value, and the initial fair value is amortised over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are included within other liabilities. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, financial guarantees such as letter of credit, letter of guarantee will be treated as off-balance sheet items. No liability is recognised for the guarantee except the cash margin. ix) Cash and cash equivalent BFRS: Cash and cash equivalent items should be reported as cash item as per BAS 7. Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short notice’, treasury bills, Bangladesh Bank bills and prize bond are not shown as cash and cash www.dhakabankltd.com xii) Balance with Bangladesh Bank: (Cash Reserve Requirement) BFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per BAS 7. Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents. xiii) Presentation of intangible asset BFRS: An intangible asset must be identified and recognised, and the disclosure must be given as per BAS 38. Bangladesh Bank: There is no regulation for intangible assets in BRPD circular no. 14 dated 25 June 2003. xiv) Off-balance sheet items BFRS: There is no concept of off-balance sheet items in any BFRS; hence there is no requirement for disclosure of offbalance sheet items on the face of the balance sheet. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.) must be disclosed separately on the face of the balance sheet. xv) Loans and advances/Investments net of provision BFRS: Loans and advances/Investments should be presented net of provision. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, provision on loans and advances/investments are presented separately as liability and cannot be netted off against loans and advances. 2.1.2 Basis of measurement The financial statements have been prepared on the historical cost basis except for the following material items: • Government Treasury Bills and Bonds designated as ‘Held for Trading (HFT)’ are measured weekly using ‘mark to market’ concept with gain credited to revaluation reserve but loss charged to Profit and Loss Account. Dhaka Bank Limited Annual Report 2017 143 Consolidated & Separate Financial Statements xi) Cash flow statement BFRS: The Cash flow statement can be prepared using either the direct method or the indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently. Bangladesh Bank: : As per BRPD circular no. 14 dated 25 June 2003, cash flow is the mixture of direct and indirect methods. Auditor’s Report equivalents. Money at call and on short notice presented on the face of the balance sheet, and treasury bills, prize bonds are shown in investments. x) Non-banking asset BFRS: No indication of Non-banking asset is found in any BFRS. Bangladesh Bank: : As per BRPD circular no. 14 dated 25 June 2003, there must exists a face item named Non-banking asset. Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income nor are the elements of Other Comprehensive Income allowed to be included in a single Other Comprehensive Income (OCI) Statement. As such the Bank does not prepare the other comprehensive income statement. However, elements of OCI, if any, are shown in the statements of changes in equity. vi) Financial instruments – presentation and disclosure In several cases Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in BAS 39. As such full disclosure and presentation requirements of BFRS 7 and BAS 32 cannot be made in the financial statements.
  144. Auditor ’s Report Consolidated & Separate Financial Statements 2.1.3 • Government Treasury Bills and Bonds designated as ‘Held to Maturity (HTM)’ are amortized each year with resulting gain credited to revaluation reserve but loss charged to Profit and Loss Account. • Land is recognized at cost at the time of acquisition and subsequently measured at fair value as per BAS-16 ‘Property Plant & Equipment’ and BSEC notification SEC/ CMRRCD/2009-193/150/Admin dated 18 August 2013. Use of estimates and judgments The preparation of the financial statements in conformity with BAS and BFRS 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 estimate is revised and in any future period affected. The most significant areas where estimates and judgements have been made are on provision for loans and advances, income tax, deferred tax, employee benefits and liquidity statement. Key estimates include • Provision for loan and advances • Deferred tax assets/liabilities • Provision for gratuity and superannuation fund • Depreciation of fixed assets Interest is calculated on a daily basis in product level, but charged or capitalized on quarterly basis. Interests due against classified loans (up to DF) are usually keeping in interest suspense account as per Bangladesh Bank guidelines, and such interest is not accounted for income realization, until the same is recovered from borrowers. Interest is not charged on Bad/ Loss loans, as per guidelines of Bangladesh Bank. a) Provision for Loans and Advances is made on the basis of yearend review by the Management and of instructions contained in Bangladesh Bank BRPD Circular No. 14 dated 23.09.2012, BRPD Circular No. 19 dated 27.12.2012, BRPD Circular No. 05 dated 29.05.2013, BRPD Circular No. 16 dated 18.11.2014 and BRPD Circular No. 8 dated 02.08.2015. b) General Provision against all unclassified Credit Card loans under Consumer Financing: BRPD Circular No-12 dated 20 August, 2017 c) Provision for Short-term Agricultural and Micro-Credits: BRPD Circular No- 15 dated 27 September, 2017 The provisioning rates are given below: Business unit UC SMA SS DF BL House Building and Professional 2% 2% 20% 50% 100% Other than House Building and Professional 5% 5% 20% 50% 100% 2% 2% 20% 50% 100% Small and Medium Enterprises 0.25% 0.25% 20% 50% 100% Agriculture 2.5% 2.5% 5% 5% 100% 1% 1% 20% 50% 100% Consumer • Amortization of Intangible assets 2.2 Basis of consolidation The consolidated financial statements include the financial statements of Dhaka Bank Limited, the Off-shore Banking Unit and its two subsidiaries i.e. Dhaka Bank Securities Limited and Dhaka Bank Investment Limited made up to the end of the financial year. The consolidated financial statements have been prepared in accordance with BFRS-10 based on a common financial year ended 31 December 2017. 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. Transaction eliminated on consolidation All intra-group transactions, balances, income and expenses are eliminated on consolidation. Profits (losses) resulting from transactions within Group are also eliminated on consolidation. 2.3 Cash and cash equivalents Cash and cash equivalents include notes and coins in hand, unrestricted balances held with Bangladesh Bank and highly liquid financial assets which are subject to insignificant risk of changes in their fair value and are used by the Bank Management for its short-term commitments. 2.4 Loans and advances and provision thereon 144 Dhaka Bank Limited Annual Report 2017 Provision in % Brokerage Houses/ Merchant Banks/ Stock Dealers against shares Others Written off against classified Loans and Advances are considering to the extent that there is no realistic prospects of recovery and. Legal cases those were unsettled for more than five years as per guidelines of Bangladesh Bank. However, write off application will not reduce the total claim against the borrower and detailed records of such write off accounts are generally maintained in a separate ledger. 2.5 Investments 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 investments used are: a) Held to maturity (HTM) Investments which are intended to be held till maturity are www.dhakabankltd.com
  145. discount or premium on acquisition . Premiums are amortized and discount accredited, using the effective or historical yield method. Any increase or decrease in value of such investments is booked to equity and in the profit and loss statement respectively. b) Held for trading (HFT) Measurement after initial recognition Held for Trading (T Bills, T Bonds, etc.) Cost Fair Value Loss to Profit and Loss Account, gain to Revaluation Reserve through Profit and Loss Account. Held to Maturity (T Bills, T Bonds etc.) Cost Amortized Cost Increase or decrease in value to equity and in the profit and loss statement respectively. Prize Bond Cost Cost None Shares(Quoted ) Cost Market value Loss (gain net off) to Profit and Loss Account but no unrealized gain booking. Shares(Unquoted ) Cost At cost or book value as per last audited balance sheet, whichever is lower Loss to Profit and Loss Account but no unrealized gain booking. Investment in Islamic Bond Cost Cost None Commercial Paper Cost Amortized cost None c) Investment in listed shares and securities These securities are bought and held primarily for the purpose of selling them in future or holding for dividend income. These are reported at cost. Unrealized gains are not recognized in the profit and loss account. But provision for diminution in value of investment is provided in the financial statements which market price is below the cost price of investment as per Bangladesh Bank guideline (Note-6.2.1). Recording of changes 2.6 Property, plant and equipment and depreciation Property, plant & equipment are recognized if it is probable that future economic benefits associated with the assets will flow to the Bank and the cost of the assets can be reliably measured. i) All fixed assets are stated at cost less accumulated depreciation as per BAS-16. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes. ii) The Bank recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the company and the cost of the item can be measured reliably. Expenditure incurred after the assets have been put into operation, such as repairs and maintenance, is normally charged off as revenue expenditure in the period in which it is incurred. iii) Depreciation is charged on straight-line method at the following rates on cost of assets from the month of their purchase as per revised policy with effect from the year 2012. d) Investment in unquoted shares and securities Investment in unlisted securities is reported at cost under cost method (Note-6.2.1). e) Investment in Commercial Paper Investment in Commercial Papers is reported at cost and are bought and held for a short term maturity. Interest income on Commercial Papers is recognized in Profit & Loss Statement on accrual basis. Repayment of principal with capitalized interest is made at maturity. f) REPO and Reverse REPO Since 1 September 2010 transactions of REPO and Reverse REPO are recorded based on DOS Circular no. 06, dated 15 July 2010 of Bangladesh Bank. In case of REPO of both coupon and non-coupon bearing (Treasury bill) securities, the Bank adjusts the Revaluation Reserve Account for HFT securities and stops the weekly revaluation (if the revaluation date falls within the REPO period) of the same security. For interest bearing security, the Bank does not accrue interest during REPO period. g) Investment in subsidiary Investment in subsidiaries is accounted for under the cost method of accounting in the Bank’s financial statements in accordance with the Bangladesh Accounting Standard. Accordingly, investments in subsidiaries are stated in the Bank’s Balance Sheet at cost, less impairment losses if any. Value of Investment has been enumerated as follows: www.dhakabankltd.com Name of the Assets Rate of Depreciation (p.a) Land Building Furniture & Fixtures Office Appliances & Equipment Computer and Software Vehicles Nil 2.50% 10.00% 20.00% 20.00% 20.00% Dhaka Bank Limited Annual Report 2017 145 Consolidated & Separate Financial Statements Investment classified in this category are acquired principally for the purpose of selling or repurchasing in short trading or designated as such by the management. After initial recognition, investments are measured at fair value and any change in the fair value is recognized in the profit and loss statement and revaluation reserve as per Bangladesh Bank DOS Circular no. 05 dated 28 January 2009. Initial Recognition Investment Class Auditor’s Report classified as “Held to Maturity”. These are measured at amortized cost at each year end by taking into account any
  146. Auditor ’s Report Consolidated & Separate Financial Statements 2.7 Impairment of assets The policy for all assets or cash-generating units for the purpose of assessing such assets for impairment is as follows: 2.12 The Bank assesses at the end of each reporting period or more a) The Bank as lessor Amounts due from leases under finance lease are recorded in the assets side of the Balance Sheet at the amount of the bank’s net investment in the leases. Finance lease rental income is allocated to accounting periods so as to reflect a constant periodic rate of return on the bank’s net investment outstanding in respect of the leases. No depreciation has been charged for such lease in the account. frequently if events or changes in circumstances indicate that the carrying value of an asset may be impaired, whether there is any indication that an asset may be impaired. If any such indication exists, or when an annual impairment testing for an asset is required, the bank makes an estimate of the assets recoverable amount. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount by debiting to profit and loss account. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may be impaired.Building includes a floor space in the BGMEA Bhaban at Hatirjheel, Kawran Bazar, Dhaka, against which there is a dispute and Honorable High Court had published a verdict to demolish the building but recently the deadline to do the same has been extended further. Besides, Bank will receive compensation from BGMEA once the building is demolished. So, Bank will maintain provision or will make impairment loss at the time of demolishment of the structure or at the time of settlement of the issue with BGMEA. [For detail please see Note-9 &18.2]. 2.8 2.9 2.10 2.11 146 Asset revaluation reserve Dhaka Bank Limited re-valued the Land during the year 2011 by an independent valuation firm according to Paragraph 36 of BAS-16 as per approval of the Board of Directors of the Bank. As per Risk Based Capital Adequacy Guidelines for Banks under BASEL - III, the Revaluation Reserve for Assets and Securities will diminish at 20% per year on the base amount of 31 December 2015 so that the whole revaluation reserve amount will not get capital treatment after the end of five years (starting from January 2015). [For detail please see Note-16.9 & 18.2]. Other assets As per BRPD Circular No. 14 dated 25 June 2003, all balance sheet accounts not covered specifically in other areas of the supervisory activity and such accounts may be quite insignificant in the overall financial condition of the Bank has been shown in other assets. These assets are grouped into income and non income generating activities. Other assets include investment in subsidiaries, Capital work in progress, prepaid expenses security deposits and other branch adjustments etc. Receivables Receivables are recognized when there is a contractual right to receive cash or another financial asset from another entity. Non-banking assets Non-banking assets are acquired on account of the failure of a debtor to repay the loan in time after receiving the decree from the Court regarding the right & title of mortgaged property during the year 2010. The value of the properties has been incorporated in the books of accounts on the basis of third party valuation report. Dhaka Bank Limited Annual Report 2017 Leased assets Leases are classified as Finance Lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as Operating Leases. b) The Bank as lessee Assets held under finance leases are recognized as assets of Bank at 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. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Assets held under Finance Leases are depreciated over their expected useful lives on the same basis as owned assets. 2.13 Share capital The Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets. 2.14 Statutory reserve Under section 24.1 of The Bank Companies Act, 1991 (amended 2013) Banks are required to transfer 20% of its current year’s profit before tax to reserve until such reserve equals to its paid up capital. 2.15 Non-controlling interest in subsidiaries Non-controlling interest in business is an accounting concept that refers to the portion of a subsidiary company’s stock that is not owned by the parent company. The magnitude of the noncontrolling interest in the subsidiary company is always less than 50% of outstanding shares, else the company would cease to be a subsidiary of the parent. 2.16 Non convertible subordinated bond i) The Bank issued Redeemable Non-Convertible Subordinated Bond of Tk.2,000,000,000 as Supplementary Capital (Tier-2) of the Bank for a term of 07 (seven) years to strengthen the capital base of the Bank on the consent of Bangladesh Securities and Exchange Commission Vide Letter No. SEC/CI/CPLC-10/2001-256 dated 09.09.2010. It has been fully redeemed in December, 2017. ii) The Bank issued another tranche of Non-Convertible Subordinated Bond of Tk. 3,000,000,000 with consent of BSEC vide letter no. BSEC/CI/DS-34/2015/643 dated 28.12.2015 and subsequently approved by Bangladesh Bank vide letter no. BRPD(BFIS)661/14B(P) 2016-2474 dated April 17, 2016 to strengthen the capital base in line with the newly introduced Capital Adequacy Guidelines under BASEL-III Accord. iii) The Bank is going to issue 3rd tranche of Non-Convertible www.dhakabankltd.com
  147. 2 .17 Deposits and other accounts Deposits by customers and banks 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. Borrowings from other banks, financial institutions and agents Borrowed funds include call money deposits, borrowings, refinance borrowings and other term borrowings from banks. These are stated in the balance sheet at amounts payable. Interest paid/ payable on these borrowings is charged to the profit and loss account. 2.19 Interest suspense account Interests on classified loans were not taken into income account. The amount was credited to Interest Suspense Account. Interest/ profit on classified advances is accounted for on a cash receipt basis. 2.20 The revenue is recognized complying with the conditions of revenue recognition as provided in BAS 18 “Revenue Recognition”. a) Interest income/Profit received: The interest/profit receivable on unclassified loans and advances/investments is recognized quarterly on accrual basis. Interest/profit on classified advances is accounted for on a cash receipt basis. Interest on Credit Card outstanding is calculated on daily product balance but charged on monthly basis. Interest is charged on Credit Card up to 28 September 2017. Monthly bill of Credit Card is issued on 28th day of each month. b) Investment income: Interest income on investments is recognized on accrual basis. c) Fees and commission income: Fees and commission income arises on services provided by the Bank and recognized on a cash receipt basis. Commission charged to customers on letter of credit and letter of guarantee are credited to income at the time effecting the transactions. Retirement benefits to the employees a) Provident fund: Provident Fund benefits are given to the employees of the bank in accordance with the locally registered Provident Fund Rules. The Commissioner of Income Tax, Tax Zone-5, Dhaka has approved the provident fund as a recognized provident fund as per section 2(1) of part-B of the first schedule of Income Tax Ordinance, 1984. The recognition took effect from 1st July 1996. All confirmed employees of the Bank are contributing 10% of their basic salary as subscription of the fund. The Bank also contributes equal amount of the employees’ contribution to the fund. Interest earned from the investments is credited to the members account annually. b) Superannuation fund: The bank operates a Superannuation Fund Trust by a Board of Trustees consisting of seven members at present. The death–cum survival benefits are given to the employees as per the eligibility narrated in the Trust Rules. The fund got recognition from the National Board of Revenue (NBR) with effect from 1st January 2001 under section 3 & 4 of part- A of first schedule of Income Tax Ordinance 1984. During this year Dhaka Bank Limited has appointed an actuary and as per The Bank contributes to the fund annually as per Superannuation Fund Rules of the bank. Bank has conducted an actuarial valuation for the said Superannuation Fund on 18 May 2016 and contributions to the fund will be maintained onward as per actuary report. c) Gratuity: The bank operates an Employee Gratuity Fund Trust by a Board of Trustees consisting of seven members at present. All confirmed employees who have been in the service of the bank for a minimum of five years without break, should be eligible to have the benefit under the gratuity scheme. The Gratuity Trust Rules got recognized from the National Board of www.dhakabankltd.com Revenue recognition d) Dividend income: Dividend income from shares is recognized at the time it is realized. e) Interest/profit paid and other expenses: The interest/profit paid on deposits, borrowings and other expenses are recognized on accrual basis. 2.22 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 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”. iii) Assets and liabilities as at 31 December 2017 in foreign currencies are converted into Taka currency at the average of the prevailing selling and buying 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 717/2004-959 dated 21 November 2004. Effects of exchange rate differences (rates at which transactions were initially recorded and the rate prevailing on the reporting date/date of settlements) applied on the monetary assets or liabilities of the Bank are recorded in the Profit and Loss Account as per BAS 21 ‘The Effect of changes in foreign exchange rates’. Commitment: Commitments for outstanding forward foreign Dhaka Bank Limited Annual Report 2017 147 Consolidated & Separate Financial Statements 2.18 2.21 Auditor’s Report Revenue (NBR) with effect from 25.04.2006 under section 2 & 3 of part-C of first schedule of Income Tax Ordinance 1984. The bank has started making provision against gratuity from the year 2004. Bank has conducted an actuarial valuation for the said Gratuity Fund and contribution to the gratuity fund will be made onward as per actuary report. Subordinated Bond of Tk. 5,000,000,000 which is approved by the Board of Directors in its 310th meeting held on September 26, 2017.Bank has already got approval from BSEC vide letter no.BSEC/ CI/CPLC/DS-210/2009/210 dated March 28, 2018and from Bangladesh Bank vide letter no. BRPD (BFIS) 661/14B (P) 20182569 dated April 17, 2018.
  148. Auditor ’s Report exchange contracts (SWAP) 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. 2.23 Consolidated & Separate Financial Statements The Bank is considered as a publicly traded company as per the Income Tax Ordinance, 1984. Provision for Current Income Tax has been made at the existing rate of 40.00% as prescribed in the Finance Act, 2017 of the business income of the Bank after considering some of the taxable add backs of income and disallowances of expenditures. b) Deferred tax Deferred tax arises due to temporary difference deductible or taxable for the events or transaction recognized in the income statement. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible temporary differences. Deferred tax liabilities are the amount of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the balance sheet date. The Bank has recognized deferred tax in accordance with the Bangladesh Accounting Standard (BAS)-12. (See Note: 15.8). 2.25 2.26 2.27 148 2.28 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. 2.29 Statement of liquidity The liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on 31 December 2017 and under the guidelines of Bangladesh Bank BRPD Circular No.14 dated 25 June 2003. Taxation a) Provision for taxation 2.24 The cash flow statement shows the structure of changes in cash and cash equivalents during the financial year. Earnings per shares (EPS) Earnings per share has been calculated in accordance with BAS 33 “Earnings per Share” which has been shown on the face of Profit and Loss Account. This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the year. Previous year’s figures have been adjusted as per guidelines of BAS 33. (See Note: 40). Off-balance sheet items & provisions As per Bangladesh Bank Guidelines Off-balance sheet items have been disclosed under contingent liabilities & other commitments. Dhaka Bank Limited has maintained provision @ 1% against off-balance sheet exposures (L/C, Guarantee and Acceptances & Endorsements) as per BRPD Circular #14 dated 23 September 2012. 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. Bills for Collection, Stock of Travellers cheques, Savings Certificates, Wage Earner Bonds fall under the memorandum items. However, Bills for Collection is shown under contingent liabilities as per Bangladesh Bank’s format of reporting. 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/Repayment terms Deposits and Other Accounts Maturity term Other Liabilities Payments/Adjustments schedule basis 2.30 Reconciliation of inter-bank/books of accounts Books of accounts in regard to inter-bank (in Bangladesh and outside Bangladesh) and inter-branch are reconciled and no material difference was found which might effect the financial statements significantly. Un-reconciled entries in case of inter-branch transactions as on the reporting date are not mentionable due to the time gap before finalizing the same. 2.31 Offsetting Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. 2.32 Reporting period These financial statements cover one calendar year from 01 January to 31 December 2017. 2.33 Post Balance sheet event The Board of Directors of the company approved the financial statements of the company for the period ended 31 December 2017 on April 26, 2018 in its 323rd meeting. Cash flow statement Cash Flow Statement is prepared principally in accordance with BAS 7 “Cash Flow Statement” and under the guidelines of Bangladesh Bank BRPD Circular No.14 dated 25 June 2003. Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  149. General a ) Wherever considered necessary figures of previous year have been rearranged to conform to current year’s presentation; b) The expenses, irrespective of capital or revenue nature, accrued/due but not paid have been provided for in the books of the bank; and c) Figures appearing in these financial statements have been rounded off to the nearest Taka. Number of employees The number of employees engaged for the year or part thereof was 1,771 (Male- 1,368& Female-403). The Bank recruited 215 numbers of staff during the year. Attrition rate is 6.38% in 2017 compared to 4.79% in 2016. 2.36 Compliance of disclosure on risk management with related pronouncement of Bangladesh Bank i. Risk management The financial sector of emerging economies like that of Bangladesh is undergoing a monumental and persistent change. The premier reasons for this rapid evolution are increased interaction with world economies, diversification of services and products of the clients which are of newer genre and advancement of intradivision initiatives of the financial organizations for achievement of enhanced efficiency. The resultant effect for the financial sector is a newer facet of risk phenomena, which are unique at source and requires innovative approach to deal with. Dhaka Bank is addressing these ever-developing risk phenomena through a coordinated model of identifying the sources, assessment and control mechanism of the following core risks• Internal Control & Compliance Risk; • Market Risk Management; • Foreign Exchange Risk; • Interest Rate Risk; • Equity Risk; • Credit Risk; • Asset Liability Management Risk; • Money Laundering Risk; • Information and Communication Technology Security Risk; • Internal Audit; • Fraud and Forgeries. The 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 Management Committee (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 Audit Committee comprising of members of the Board of Directors conduct the Risk Assessment at Board level. www.dhakabankltd.com iii. Internal control & compliance • Integral part of the daily activities of a bank; • Identifies the risks associated with the process followed in the effectiveness and efficiency of operations; • Risk of compliance with applicable laws, regulations and internal policies; • In order to mitigate the risks, effective internal controls are developed and monitored along with the Compliance Standards. The Compliance Unit ensures that bank complies with all regulatory requirements while conducting its business. They maintain liaison with the regulators at all level and notify the other units regarding regulatory changes. The Monitoring Unit monitors the operational performance of various branches. They collect relevant data and analyze those to assess the risks of individual unit. In case they find major deviation, they recommend to the Head of ICCD for sending Audit & Inspection Team for thorough review. The Audit & Inspection Unit performs periodic and special audit when required. Dhaka Bank has different section within this team responsible for carrying out specific tasks. The IS/IT Audit Unit conducts regular IS/IT audit in all branches/ divisions/departments/Units of Head Office. To achieve these objectives Dhaka Bank is gradually moving towards risk based internal audit to evaluate the risk management system and control procedures prevailing in various areas of its operation. Dhaka Bank already introduced risk based internal audit and continues the same with necessary improvements when felt necessity. In risk based audit, the audit team evaluates the level of inherent risk of individual borrower as well as the level of a particular branch on the basis of a risk matrix. The Audit Committee of the Board subsequently reviews all audit/ inspections reports and instructed to take corrective measures. iv. Market risk management a) Foreign exchange risk To address the issue of Foreign Exchange Risk Management, all foreign exchange activities have been segregated between Front and Back Office. The issue is being addressed through various Dhaka Bank Limited Annual Report 2017 149 Consolidated & Separate Financial Statements 2.35 ii. Internal control and compliance risk management With the advent of globalization vis-à-vis technological changes, banking has become more and more diversified. As the banking function entails high risk, effective internal control system, good corporate governance, transparency and accountability have become more important for banking sector worldwide. Internal control system identifies the risk inherent in the process, adopts mitigation measures and ensures compliance thereof. As per guidelines issued by Bangladesh Bank, Dhaka Bank established an organizational structure which allows segregation of duties among key functional units. Internal Control & Compliance Division (ICCD) has been reconstructed into 4 (four) units, i.e., (i) Compliance Unit, (ii) Monitoring Unit (iii) Audit & Inspection Unit and (iv) IS/IT Audit Unit. Auditor’s Report 2.34
  150. Auditor ’s Report techniques so that no exposure is uncovered in any time. Dhaka Bank follows all prudential procedures for covering foreign exchange risks as per guidelines of Bangladesh Bank. Treasury Division always monitors the market scenario of risks and manages the foreign exchange operations in a way so that earnings are not hampered against any adverse movement in market prices. The foreign exchange risk is at minimum level as all the transactions are carried out on behalf of the customers against L/Cs and foreign remittances. All Nostro accounts are reconciled on monthly basis and outstanding entry beyond 30 days is reviewed by the management for its settlement. b) Interest rate risk Consolidated & Separate Financial Statements Interest rate risk may arise either from trading portfolio or nontrading portfolio. The trading portfolio of the Bank consists of Government treasury bills and bonds of different maturities. Interest risk arises from mismatches between the future yield of an asset and their funding costs. Asset Liability Committee of the Bank regularly monitors the interest rate movement and Treasury division actively manages the Balance Sheet gap profitability on a regular basis. c) Equity risk Equity risk arises from movement in market value of equities held. The risks are monitored by the Basel Unit of the Bank under a well-defined prudent investment framework v. Credit risk management Credit Risk, broadly adverted as the uncertainty to meet financial obligations as per agreed terms and condition by the borrowers during the tenor of the credit facilities, occupies the largest constituent in the risk spectrum of financial institutions. Efficacy in credit risk management is demanded to secure the bank’s asset quality as well as market reputation. Credit Risk Management largely controls the risk appetite of financial institutions as an effective risk management process of the credit facilities brings up the constancy of the growth even in the dire market situation. Dhaka Bank Limited has formulated 2 (two) phases in managing credit risk as depicted below: a) Pre approval phase • Identifying the sources of risk; • Assessment of the magnitude of the risk; • Devising the terms and condition to control the risk (if feasible and supported by the Credit Risk Management Policy of the Bank). Credit risk management process flow at pre approval phase: Level-1 Branch Credit Committee 150 Level-2 Level-3 Credit Risk Management Division Executive Committee Management Credit Committee Dhaka Bank Limited Annual Report 2017 Board of Directors b) Post approval phase • Implementation of risk control process i.e. documentation and securitization; • Supervision of extended facilities; • Identification of the Red Flag borrowers; • Addressing the Red Flag borrowers according to the prevailing regulatory framework. Recent development in credit risk management One of the recent developments in the Bank’s credit risk management has been the adoption of a revised Credit Risk Management Policy that acknowledges the metamorphosis of the stimulants of credit risk and contriving the scheme to curb the affect of the evolved scenario. The epitome of the revised Credit Risk Management policy are• Segregation of the clientele base of the Bank under purview of the existing regulatory framework and client’s portfolio. • Re-script bank’s lending strategy i.e. expansion or contraction to various industry. • Re-fixing the industry-wise exposure ceiling in view of the industry life cycle, economic importance and repayment record. • Revision of the product-wise i.e. Demand, Continuous and Term Loan exposure cap. • Restructure of the approving authority related to different types credit facilities. vi. Asset liability management risk Dhaka Bank meets at least once a month to analyze, review and formulate strategy to manage the balance sheet of the Bank. Dhaka Bank formed Asset Liability Committee (ALCO) in March 2003. The Asset Liability Committee (ALCO) of the Bank monitors market risk and liquidity risk and at the same time it interprets the market views and competition. ALCO prepares the liquidity plan as per the maturity profile of Assets & Liabilities, review rate of interest on deposits and advances, foreign exchange position and analyzes the different financial ratios. The ALCO comprises of the Managing Director, Deputy Managing Directors, CFO, Head of IT, Head of Credit, Head of Retail, Head of Treasury and Head of Risk Management Division. vii. Money laundering risk management Reputational Risk arises from non compliance of relevant laws and regulations related to Money Laundering by the reporting agencies as the loss of reputation and expenses incurred as penalty. Every branch has a nominated AML compliance officer who will review and evaluate the daily transactions of his branch and report to Deputy CAMLCO or CAMLCO if any abnormal / suspicious activities is detected for further analysis and reporting to Bangladesh Bank. The Bank has a Chief Anti Money Laundering Compliance Officer (CAMLCO) who is also the Deputy Managing Director-Operations at Head Office. The Bank has a Central Compliance Unit (CCU), Head Office for ensuring the compliance related to AML/CFT of all branches. www.dhakabankltd.com
  151. a ) Core banking software up gradation Dhaka Bank Limited is one of the forerunners in introducing a modern customer centric core banking solution named Flexcube (Oracle) in early 2004 which has served both the bank and the customer to the fullest extent. It is very evident that technology in the banking arena has been changing rapidly over the years which enabled the client reaching the bank via their handheld devices. In light of these, Dhaka Bank Limited decided to upgrade the Core Banking Software to keep the bank abreast of the foreseeable technology change. The preparatory works and the work plan have been finalized by the Bank and the vendor. The up gradation is expected to be completed within 2017. We view this as an opportunity to cater our services to the doorstep of our client. b) Central bank and internal business reporting Bangladesh Bank (The Central Bank of Bangladesh) has introduced a large number of reports from each commercial bank under various interval frequencies, such as, Monthly, Quarterly etc. Major portion of these reports data are extracted from the Core Banking Solution and forwarded to the respective divisions/branches to verify and place to the Central Bank. www.dhakabankltd.com Dhaka Bank Limited is using twenty-first century’s technology virtualization for Data center Server & Application. With the help of VM server Administration, scalability and recourse management has improved tremendously. Also the cost of power, cooling, space has reduced significantly. c) Network hardware redundancy at Data Center • Dhaka Bank IT has initiated a project to reduce network downtime at zero level by implementing auto switching between redundant hardware in the Data Center. The project will be executed in 2 phases. • 1st Phase: In this phase network team is working to install 2 core routers where all the links from vendors will be connected. The configuration between these two routers is arranged in such a way that in case one router goes down, the other will take over all the traffic. • 2nd Phase: In this phase 2 core firewall will be installed at Data Center with Intrusion Prevention System. After completion of this phase current firewall will be transferred to Disaster Recovery Site. Dhaka Bank Limited Annual Report 2017 151 Consolidated & Separate Financial Statements viii. Information and communication technology security risk Banking environment has become highly competitive nowa-days. Being able to grow and sustain in the ever-changing market scenario, banks have to use latest technologies and tools which can help in developing learner and more flexible structure that can react or respond as per the dynamics of the situation of the market. IT is also acting as an instrument of cost efficiency and effective communication with people and institutions associated with the banking business. Moreover, IT is moving from a back office function to a prime assistant in increasing the value of a bank over time. In line with these, IT Division of Dhaka Bank Ltd., has taken pro-active measures such as strengthening and standardizing banks infrastructure in respect of security, communication and networking, achieving inter branch connectivity, moving towards Real Time gross settlement (RTGS) environment etc. to face the fierce competition locally and globally. To continue fulfilling these objectives, we have made some significant changes to IT functions so far. • RIT (Rationalized Input Template): Bangladesh Bank are maintaining a SAP solution based on RS/400 system for importing data from a very critical and unique format, which is called RIT (Rationalized Input Template). IT Division is working restless to supply these data to the concerned divisions, so that it can be accommodated with the central bank system. • go-AML: Anti-Money Laundering is a very big challenge to Bangladesh Government to support the local and international compliance. The Central Bank already changed its major architecture in both physical and software system. New software is in the project pilot phase, which requires data each month. Dhaka Bank IT prepares Cash Transaction data, Customer Data and relevant stakeholder’s data each month for due submission to Bangladesh Bank. • Online CIB: CIB is one of the most important reports for each and every Commercial Bank in Bangladesh, which reflects the borrowers’ position with the Bank. Dhaka Bank IT Division extracts these data through some complex process each month and publishes it into intra-net portal. • Import and export reporting: IT has developed application integrated with the core banking system for batch uploading of import and export information of the clients so that manhour can be reduced and efficiency of reporting can be increased. • Green banking activities: We have been using a high performance automated core banking software and e-mail for intra bank correspondence where no more manual banking is required. With a view to reducing the usage of hard copy statement as well as to popularize paperless banking, Dhaka Bank introduced e-statements, M-Banking, Internet Banking, ATM, ADM. Through e-statements client can view, download or print an electronic version of the statement that looks just like the paper version. Auditor’s Report CCU collects the mandatory statements related to AML/CFT from branches and submits to Bangladesh Bank after confirming the statements are in order and as per the prescribed format. In compliance with the Money Laundering Prevention Act 2012 & Anti Terrorism Act 2009 (amended in 2012, 2013) Dhaka Bank Limited has revised its AML/CFT policy in due course. Branches has been instructed or guided to review the KYC and TP of their clients as and when requires depending upon the nature and volume of the transaction of their client to mitigate the AML risk. Bank has prepared its money-laundering manual for applications. Training has been continuously given to all officers and executives for developing awareness and skill for identifying suspicious transactions/activities.
  152. Auditor ’s Report d) Utilities bill payment Dhaka Bank Limited being a tech-savvy bank supported by state-of-the-art technology always prioritizes digitalized financial and banking services that we have been doing for more than a decade. Although we carry out formal banking operations through our 94 branch locations but virtually we are present here and there across the globe through real-time online banking, card services, internet banking, utility bill collection units, MRP & MRV Fee, WASA bill, mobile bill and remittance network. Consolidated & Separate Financial Statements ix. Internal audit The internal audit function which is centrally controlled, monitors compliance with policies and standards and the effectiveness of internal control structure of the Bank. Internal Control and Compliance Division of the Bank carries out internal audit with a view to enrich the compliance culture and full control on the exertion of the Banking operations. The division directly report simultaneously to the Board Audit Committee and the Managing Director. Sometimes internal audit team conducts surprise visit to the branches. Regular monitoring has been done for the effectiveness of the control and compliance policies and procedures with the effect to evaluate the application of Internal Control System, and Internal Audit Policy, Policy for financial risk, existing rules and regulations, other obligation from regulatory authority etc. x. Fraud and forgeries The Bank is operating its business with the public money. As a custodian of such money, bank has to set up strong internal control structure, introduced corporate governance, practicing ethical standards in the bank for safeguard and interest of the stakeholders. Public confidence has been shaken when different types of malpractice, fraud and forgeries occurred in the banking sector. Dhaka Bank is fully aware of its responsibility towards stakeholders specially depositors. 2.37 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 Letter No. 11 dated 27 October 2013 issued by Bangladesh Bank. The Committee was formed with the following 4 (four) members of the Board: Sl. No. Name Status with the Bank Status with the Committee Educational Qualification Independent Director Chairman MBA 1 Mr. Syed Abu Naser Bukhtear Ahmed 2 Mr. Reshadur Rahman Chairman Member Graduate 3 Mrs. Rokshana Zaman Vice Chairperson Member Intermediate 4 Mr. Tahidul Hossain Chowdhury Director Member Bachelor of Arts 5 Mr. M.A. Yussouf Khan Independent Director Member Bachelor of Arts 152 Dhaka Bank Limited Annual Report 2017 ii) Meeting held with audit committee During the year December 2017, 03 (three) Meetings of the Audit Committee of the Board were held. The Committee in these Meetings discussed the following issues and made relevant recommendations/ instructions to the Management for compliance: • Summary of loan classification and provisioning for the quarters ended as on 31.12.2016, 31.03.2017, 30.06.2017&30.09.2017 • Audited Consolidated Financial Statements of the Company and Financial Statements of the Bank for the year ended 31st December, 2016 • Un-audited Quarterly Consolidated Financial Statements of the Company and Financial Statements of the Bank for the period ended 31st March 2017 • Un-audited Half-yearly Consolidated Financial Statements of the Company and Financial Statements of the Bank for the period ended 30th June, 2017 • Un-audited Quarterly Consolidated Financial Statements of the Company and Financial Statements of the Bank for the period ended 30th September 2017 • Common Observations and latest compliance status of Internal Audit Conducted during the year 2016and January to December 2017 • Quarterly (31.12.2016, 31.03.2017) &Half-yearly (January-June, 2017)Statement of Self-Assessment of Anti-Fraud Internal Controls under DOS Circular Letter No.17 Dated November 07, 2012 of Bangladesh Bank • Achievement of Audit Division for the Year-2016, for the Quarter Ended June 2017 • Submission of Executive Summary Audits conducted during the year 2016 • An information Memo on the compliance i.e. open issues of 18th Bangladesh Bank Comprehensive inspection on Dhaka Bank Limited, Head Office as on 31.12.2015 • Compliance and responses of 19th Comprehensive Bangladesh Bank Inspection Report on Dhaka Bank Limited, Head Office as on 31.12.2016 • Audit Plan for the Year-2017& Year 2018 • Deviations in Quarterly Operations Report for the Quarter Ended December 2016, for the Quarter Ended March 2017, for the Quarter Ended June 2017 • Discrepancies in the Loan Documentation Checklist (LDCL) for the quarter ended December 2016, for the quarter ended June 2017 • Updated Organogram of ICCD of Dhaka Bank Limited • Internal Control & Compliance (ICC) Health of Dhaka Bank Limited • ICC Process Manual/Internal Audit Manual of ICCD of Dhaka Bank Limited • Revised ICC Policy of Internal Control and Compliance Division of Dhaka Bank Limited • Effectiveness of the Internal Control System of Dhaka Bank Limited • Review of the Bank’s Management Information System (MIS) • Appointment of External Auditors of the Bank for the year 2017 • An information Memo on Misappropriation of fund from a deceased account of Laldighirpar Branch, Sylhet • Annual Health Report of Dhaka Bank Limited for the Year 2016 • Latest compliance and response status of 65 inspection reports of 40 branches and 5 divisions of head office carried out by Bangladesh Bank during the year 2017 www.dhakabankltd.com
  153. 2 .38 Shariah supervisory committee Shariah Supervisory Committee of Dhaka Bank Ltd. has been formed with the veteran Islamic Scholars, Economists, Bankers and competent Faqihs having vast knowledge. In this regard, the bank has followed the criteria for selection of Shariah Supervisory Committee member according to BRPD Circular No.15 dated 09.11.2009 of Bangladesh Bank. The Executive Committee of the Board of Directors constituted the Shariah Supervisory Committee of Dhaka Bank Limited. The members are as follows: • Approval of Shariah Supervisory Committee Opinion for publication in Bank’s Annual Report, 2016; Name Designation Status Date of Birth M. Azizul Huq Chairman 1st CEO of IBBL 16.10.1935 MA (Economics) 2 Prof. Mowlana Mohammad Salah Uddin Member (Faqih) Khatib of National Mosque, Baitul Mukarram 01.11.1944 Kamil, MA 3 Dr. Mohd. Haroon Rashid Member (Faqih) Member Secretary, Shariah Supervisory Committee, AB Bank Ltd. 11.06.1969 Fazill, MA, PhD Imam & Khatib, Shahidbag Jame Mosque & Vice Principal, Madrasa Jamiatul Uloomil Islamia, Tejgoan, Dhaka 05.11.1960 Ex Managing Director, IBBL EX. Managing Director & Advisor, EXIM Bank Ltd. 25.07.1947 Lawyer & Head of Chamber: Sadat Sarwat& Associates 20.08.1974 5 6 Hafej Mawlana Abdul Gaffar Md. Fariduddin Ahmed Omar Sadat Member (Faqih) Member (Expert in Islamic Banking) Member (Lawyer) • Discussion on development of publishing a Booklet on Muamalat of Daily lives regarding Islamic Solutions; • Approval of final rates on various Mudaraba Deposits on the basis of weight age for the Year 2016; • Discussion on Islamic Banking Software UBS for Islamic Banking Operations; • Maintenance of Compensation GL separately from Income Account; • To train the employees of the bank with the knowledge of Islamic banking, Economics & Finance; • Compliance of Shariah principle in all transaction of Deposits & Investments; 2.39 • Marketing & Development of Islamic Banking products through conventional branches using online. Information about segment reporting The bank operates under the following business segments: (Figure in ’000) Particulars Takmil, Darul Ulum Dewband, UP, India BA, DAIBB Bar-at-law, LL.M, LL.B (Hons.) Syed Mahbubur Rahman Member (Ex-Officio) Managing Director & CEO Dhaka Bank Ltd. 16.02.1962 MBA, IBA, University of Dhaka 8 Md. Sirajul Hoque Member Secretary SEVP & Head of Islamic Banking Division 18.10.1960 B Com (Honours) M Com (Accounting) CA, CC Conventional Islamic OBU DBL Securities Dhaka Bank Investment Total Total Operating Income 8,763,271 211,063 401,173 332,465 8,290 9,716,263 Allocated Expenses 4,177,887 76,899 16,179 80,416 120 4,351,502 Operating Profit (Before Tax & Provision) 4,585,384 134,164 384,994 252,049 8,169 5,364,761 Total Provision (Loans/ Advances & Others) 2,345,937 - 19,390 80,000 - 2,445,327 Profit Before Tax 2,239,447 134,164 365,604 172,049 8,169 2,919,433 Provision for Income Tax 1,343,843 - - 63,976 2,859 1,410,678 895,603 134,164 365,604 108,073 5,310 1,508,755 Segment Assets 204,063,732 8,358,347 17,030,775 5,433,872 292,023 230,828,490 Segment Liabilities 204,063,732 8,358,347 17,030,775 5,433,872 292,023 230,828,490 Net Profit 7 www.dhakabankltd.com • Discussion on Shariah Inspection Report of Islamic Banking Branches (IBBs) as on dated 31.12.2016; Education Qualification 1 4 • Discussion & Approval on Quard Policy against Mudaraba Term Deposit of Islamic Banking; The operations of these segments are specifically identified by Income, expenses, assets and Liabilities. Based on such allocation, segment balance sheet up to period December 2017 and segmental profit and loss account for the period ended 31 December 2017 have been prepared.. 2.40 Compliance with financial reporting standards as applicable in Bangladesh The Financial Reporting Act 2015 (FRA) was enacted in 2015. Under the FRA, the Financial Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for Dhaka Bank Limited Annual Report 2017 153 Consolidated & Separate Financial Statements Sl. No During the year 2017, the following issues were discussed in the meetings: • Approval of Islamic Liability Products i) Mudaraba Gold Deposit Account, ii) Mudaraba Platinum Deposit Account & iii) Mudaraba Silver Deposit Account of Islamic Banking Operations; Auditor’s Report • Review of the Bank’s Management Information System (MIS) • Status of Password Sharing • High Risk and Medium Risk Branches as per Internal Audit Report for the year 2017 • High Risk and Medium Risk Branches as per Internal Audit Report for the year 2017 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.
  154. Consolidated & Separate Financial Statements Auditor’s Report public interest entities such as banks. The Bank Companies Act 1991 has been amended to require banks to prepare their financial statements under such financial reporting standards. The FRC has been formed but yet to issue any financial reporting standards as per the provisions of the FRA and hence Bangladesh Financial Reporting Standards (BFRS) as issued by the Institute of Chartered Accountants of Bangladesh (ICAB) are still applicable. Sl. No. BFRS No. 1 1 First-time Adoption of Bangladesh Financial Reporting Standards Not Applicable 2 2 Share-based Payment Not Applicable 3 3 Business Combinations Not Applicable 4 4 Insurance contracts Not Applicable Accordingly, the financial statements of the Bank and its subsidiaries (the “Group”) continue to be prepared in accordance with Bangladesh Financial Reporting Standards (BFRS) and the requirements of the Bank Companies Act 1991, the rules and regulations issued by Bangladesh Bank, the Companies Act 1994, Securities and Exchange Rules 1987. 5 5 Non-Current Assets Held for Sale and Discontinued Operations Not Applicable 6 6 Exploration for and Evaluation of Mineral Not Applicable 7 7 Financial Instruments: Disclosures Complied * 8 8 Operating Segments Complied 9 10 Consolidated Financial Statements Complied The operations of Islamic Banking branches are accounted for in accordance with Financial Accounting Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions for which a separate set of books and records are being maintained. 10 11 Joint Arrangements 11 12 Disclosure of Interest in other Entities Complied 12 13 Fair Value Measurement Complied 13 14 Regulatory Deferral Accounts In case any requirement of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank differ with those of BFRS& AAOIFI standards, the requirements of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank shall prevail. While reporting the financial statements, Dhaka Bank Limited applied all the applicable of BAS and BFRS as adopted by ICAB. Details are given below: Sl. No. BAS No. 4 8 5 6 7 8 9 10 11 10 11 12 16 17 18 19 12 20 13 14 15 16 17 18 21 23 24 26 27 28 Sl. No. BAS No. 19 31 Interest in Joint Venture 20 32 Financial Instruments: Presentation Complied * 21 33 Earnings per Share Complied 22 34 Interim Financial Reporting Complied 23 36 Impairment of Assets Complied 24 37 Provisions, Contingent liabilities and Contingent Assets Complied 25 38 Intangible Assets Complied 26 39 Financial Instruments: Recognition and Measurement Complied * 27 40 Investment Property Not Applicable 28 41 Agriculture Not Applicable 1 2 3 154 1 2 7 BAS Title Presentation of Financial Statements Inventories Statement of Cash Flows Accounting Policies, Changes in Accounting Estimates and Errors Events after the Balance Sheet Date Construction Contracts Income Taxes Property, Plant & Equipment Leases Revenue Employee Benefits Accounting for Government Grants and Discloser of Government Assistance The Effects of Changes in Foreign Exchanges Rates Borrowing Costs Related Party Disclosures Accounting and Reporting by Retirement Benefit Plans Separate Financial Statements Investment in Associates BAS Title Dhaka Bank Limited Annual Report 2017 Compliance Status Complied * Not Applicable Complied Complied Complied Not Applicable Complied Complied Complied Complied Complied Not Applicable Complied Complied Complied Complied Complied Not Applicable Compliance Status Not Applicable Compliance Status BFRS Title Not Applicable Not Applicable * Subject to departure disclosed in note no. 2.1.1 * In order to comply with certain specific rules and regulations of the Central Bank (Bangladesh Bank) which are different from BAS/BFRS, some of the requirements specified in these BAS/BFRSs are not applied. Standards issued but not yet effective The Institute of Chartered Accountants of Bangladesh (ICAB) has adopted following new standards and amendments to standards during the year 2017. All previously adopted reporting standards are consistently applied by the Bank as explained in Note 3.16. BFRS 9 Financial instruments: BFRS 9, published in July 2014, replaces the existing guidance in BAS 39 ‘Financial instruments: Recognition and measurement’. BFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from BAS 39. BFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Bank is assessing the potential impact on its financial statements resulting from the application of BFRS 9. BFRS 15 Revenue from contracts with customers: BFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including BAS 18 ‘Revenue’, BAS 11. ‘Construction contracts’ and BFRIC 13 ‘Customer loyalty programmes’. BFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Bank is assessing the potential impact on its financial statements resulting from the application of BFRS 15. 2.41 Approval of Audited Financial Statements These financial statements were reviewed by the Audit Committee of the Board of the Bank in its 82nd meeting held on April 26, 2018 and was subsequently approved by the Board of Directors of the Bank in its 323rd meeting held on April 26, 2018. www.dhakabankltd.com
  155. 3 . 3(a) 3.1 Cash Cash in hand Balance with Bangladesh Bank and its agent bank(s) Consolidated Cash Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 31.12.2016 Taka 1,839,841,316 11,844,749,734 13,684,591,050 1,797,353,255 14,918,296,004 16,715,649,259 (Note: 3) 13,684,591,050 100,000 13,684,691,050 16,715,649,259 109,500 16,715,758,759 1,794,943,053 44,898,263 1,839,841,316 1,776,810,310 20,542,945 1,797,353,255 Cash in hand In local currency In foreign currencies Cash in hand (local currency) includes balance of Cash held at Automated Teller Machine (ATM) of Tk.4,32,51,500 as on 31.12.2017. 3.1(a) Consolidated Cash in hand Dhaka Bank Limited (Note: 3.1) 1,839,841,316 1,797,353,255 Dhaka Bank Securities Limited 100,000 109,500 Dhaka Bank Investment Limited 1,839,941,316 1,797,462,755 3.2 Balance with Bangladesh Bank and its agent bank(s) Balance with Bangladesh Bank In local currency Conventional Al-Wadiah current account In foreign currencies Balance with Sonali Bank as agent of Bangladesh Bank 11,042,061,959 10,620,604,771 421,457,187 9,994,344,869 9,568,380,071 425,964,798 613,398,289 11,655,460,248 189,289,486 11,844,749,734 4,816,003,831 14,810,348,700 107,947,304 14,918,296,004 As per Bangladesh Bank circulars/guidelines, balance with Bangladesh Bank is part of cash and cash equivalent regardless of any restriction. However, to meet up the foreign currency liabilities of the bank, the cover fund against the liabilities has been kept and booked in Bangladesh Bank FC Clearing account as well as Nostro Bank Accounts. 3.2(a) Consolidated Balance with Bangladesh Bank and its agent bank(s) Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 3.2) 11,844,749,734 11,844,749,734 14,918,296,004 14,918,296,004 3.3 Statutory deposits Cash Reserve Ratio and Statutory Liquidity Ratio have been calculated and maintained as per Section 33 of the Bank Companies Act 1991 (amended up to 2013) and MPD Circular No. 04, dated 01.12.2010, MPD Circular No.05 dated 01.12.2010 and MPD Circular No.01 dated 23.06.2014. 3.3.1 Cash Reserve Ratio (CRR) Conventional Banking Bi-weekly Requirement (6.50% of Average Demand and Time Liabilities) 10,376,314,455 9,357,849,072 Required reserve Actual reserve maintained 10,499,248,280 9,457,561,409 Surplus 99,712,337 122,933,825 Required 6.50% 6.50% 6.57% 6.58% www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 155 Consolidated & Separate Financial Statements (Note: 3.1) (Note: 3.2) Auditor’s Report 31.12.2017 Taka
  156. Auditor ’s Report 31.12.2017 Taka Consolidated & Separate Financial Statements Daily Requirement (6.00% of Average Demand and Time Liabilities) Required Reserve Actual reserve maintained Surplus Required Required Maintained Islamic Banking Bi-weekly Requirement (6.50% of Average Demand and Time Liabilities) Required reserve Actual reserve maintained Surplus Required Maintained Daily Requirement (6.00% of Average Demand and Time Liabilities) Required Reserve Actual reserve maintained Surplus Required Maintained 3.3.2 Statutory Liquidity Ratio (SLR) Conventional Banking (13% of Average Demand & Time Liabilities ) Required Reserve Actual reserve maintained Surplus Required Maintained Islamic Banking (5.50% of Average Demand and Time Liabilities) Required Reserve Actual reserve maintained Surplus Required Maintained Held for Statutory Liquidity Ratio (Conventional) Cash in Hand Balance with Bangladesh Bank and its agent Bank(s) over CRR Government Securities (excluding Assured Liquidity Support) Held for Statutory Liquidity Ratio (Islamic) Cash in Hand Balance with Bangladesh Bank and its agent Bank(s) over CRR Government Securities (excluding Assured Liquidity Support) 31.12.2016 Taka 9,578,136,420 10,625,125,899 1,046,989,479 6.00% 6.50% 7.21% 8,638,014,528 9,583,022,093 945,007,565 6.00% 6.50% 7.21% 400,881,050 664,398,360 263,517,310 414,438,359 425,964,798 11,526,439 6.50% 10.77% 6.50% 6.68% 370,044,045 421,457,187 51,413,142 382,558,485 425,964,798 43,406,313 6.50% 7.40% 6.50% 7.24% 20,752,628,910 21,571,342,636 818,713,726 18,715,698,144 20,539,335,533 1,823,637,389 13.00% 13.51% 13.00% 14.27% 339,207,040 430,123,016 90,915,976 350,678,611 404,213,491 53,534,880 5.50% 6.97% 5.50% 6.34% 1,810,294,438 248,811,444 19,322,527,587 21,381,633,470 1,774,666,204 333,031,369 18,431,637,960 20,539,335,533 29,546,878 20,576,139 380,000,000 430,123,016 22,687,052 11,526,440 370,000,000 404,213,491 Dhaka Bank Limited has maintained the above SLR and CRR requirement based on weekly average total demand and time liabilities (ATDTL) of the base month which is two months back of the reporting month. As per DOS Circular No. 05 dated 26 May 2008, all the Government treasury bond and bill will be open for SLR requirement and Dhaka Bank Limited has maintained the minimum SLR as per said circular. 156 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  157. 3 .4 4. 4.1 Balance with other banks and financial institutions In Bangladesh Outside Bangladesh (Note: 4.1) (Note: 4.2) Consolidated Balance with other banks and financial institutions In Bangladesh (Note: 4.1(a) Outside Bangladesh (Note: 4.2(a) In Bangladesh Current Deposit Sonali Bank Limited Janata Bank Limited Southeast Bank Limited Standard Chartered Bank (Visa Settlement) Brac Bank Limited Agrani Bank Limited Islami Bank Bangladesh Limited United Commercial Bank Limited Special Notice Deposit (SND) Janata Bank Limited Dutch Bangla Bank Limited Sonali Bank Limited AB Bank Limited Agrani Bank Limited National Bank Limited Fixed Deposit Commercial Banks Social Islami Bank Limited Eastern Bank Limited AB Bank Limited Premier Bank Limited BRAC Bank Limited Mercantile Bank Limited Trust Bank Limited The City Bank Limited Financial Institutions Phoenix Finance and Investment Limited Prime Finance International Leasing & Financial Service Limited IDLC Finance Limited Peoples Leasing Company Limited www.dhakabankltd.com 13,684,591,050 13,684,591,050 16,715,649,259 16,715,649,259 10,021,244,562 1,203,678,144 11,224,922,706 8,581,752,935 2,588,773,757 11,170,526,692 10,190,843,071 1,203,678,144 11,394,521,215 8,640,709,728 2,588,773,757 11,229,483,485 126,921,755 5,322,574 212,514 26,476,733 14,613,580 33,617,466 16,093,204 223,257,827 58,165,306 201,772,652 214,164 4,291,243 70,398 21,911,904 14,797,440 1,009,564 302,232,671 191,283 10,584,822 583,159 43,133 3,648,686 15,051,083 2,783,215 6,695,550 65,363 1,055,132 5,056,083 589,270 16,244,612 827,000,000 2,067,500,000 413,500,000 620,250,000 827,000,000 2,894,500,000 7,649,750,000 790,000,000 2,054,000,000 1,185,000,000 395,000,000 - 133,185,652 2,000,000,000 2,133,185,652 10,021,244,562 179,275,652 200,000,000 200,000,000 100,000,000 679,275,652 8,581,752,935 3,160,000,000 7,584,000,000 Dhaka Bank Limited Annual Report 2017 157 Consolidated & Separate Financial Statements 4(a) Maturity grouping of cash On Demand Upto 1 month Over 1 month but not more than 3 months Over 3 months but not more than 6 months Over 6 months but not more than 1 year Over 1 year but not more than 5 years Over 5 years 31.12.2016 Taka Auditor’s Report 31.12.2017 Taka
  158. Auditor ’s Report 31.12.2017 Taka 4.1(a) Consolidated In Bangladesh Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 4.1) Less: Inter company transaction Consolidated & Separate Financial Statements 4.2 Outside Bangladesh (Nostro Accounts) Current Deposits Standard Chartered Bank, New York Mashreq Bank, New York Habib American Bank, New York, OBU Commerz Bank, Frankfurt Habib American Bank Wells Fargo Bank N.A., New York United Bank of India JP Morgan Chase Bank NA Standard Chartered Bank, Mumbai Sonali Bank, Kolkata AB Bank Mumbai Nepal Bangladesh Bank Sampath Bank, Srilanka Bhutan National Bank Bank of Bhutan Habib Metropolitan Bank Ltd. Pakistan Dhaka Bank OBU Nostro ICICI Bank Limited, India Mashreq Bank, Mumbai Axis Bank Ltd, India Union Bank of Switzerland Commerz Bank, Frankfurt Standard Chartered Bank, Frankfurt Unicredit S.P.A. Milano Commerz Bank, Frankfurt Standard Chartered Bank, Japan Standard Chartered Bank, London United Bank of India Commerz Bank, Frankfurt Al-Rajhi Bank, Kingdom of Saudi Arabia 31.12.2016 Taka 10,021,244,562 188,476,888 286,821,899 10,496,543,348 305,700,277 10,190,843,071 8,581,752,935 184,272,326 279,366,635 9,045,391,896 404,682,168 8,640,709,728 95,266,686 115,520,063 277,064,344 6,042,995 150,664,263 98,789,768 19,952,936 124,948,105 72,184,469 21,600,758 36,601,527 660,670 210,223 2,760,623 358,880 13,058,968 59,814 31,174,282 19,634,644 720,657 64,274,866 437,675 3,691,583 3,019,999 15,405,437 9,316,599 17,950,312 696,447 1,610,551 1,203,678,144 962,431,530 145,374,604 85,320,047 78,943,983 127,679,181 115,934,702 14,984,824 208,065,167 70,323,669 3,685,539 44,084,152 641,776 9,175,831 1,128,212 2,025,524 29,960,673 474,000,000 25,759,300 37,851,495 14,711,939 42,284,738 3,099,493 2,296,476 2,759,720 17,999,529 25,297,397 31,462,893 5,746,574 5,744,788 2,588,773,757 (Details are given in Annexure - A) In order to meet up the foreign currency liabilities of the bank, the cover fund against the liabilities has been kept and booked in Nostro Bank Accounts as well as Bangladesh Bank Foreign Currency Clearing Account. All balances of Nostro Accounts have been reconciled. 4.2(a) 4.3 158 Consolidated outside Bangladesh (Nostro Accounts) Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Account-wise/grouping of balance with other banks and financial institutions Current Deposits Short-Notice Deposits Fixed Deposits Dhaka Bank Limited Annual Report 2017 (Note: 4.2) 1,203,678,144 1,203,678,144 2,588,773,757 2,588,773,757 1,426,935,971 15,051,083 9,782,935,652 11,224,922,706 2,891,006,428 16,244,612 8,263,275,652 11,170,526,692 www.dhakabankltd.com
  159. 4 .4 5. 5.1 Money at call and on short notice With banking companies With non-banking financial institutions Consolidated money at call and on short notice Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 2,441,987,054 5,789,000,000 2,864,535,652 100,000,000 29,400,000 11,224,922,706 2,891,006,428 411,244,612 2,138,000,000 5,654,025,000 43,065,000 33,185,652 11,170,526,692 (Note: 5.1) (Note: 5.2) 11,300,000 11,300,000 761,300,000 290,000,000 1,051,300,000 (Note: 5) 11,300,000 11,300,000 1,051,300,000 1,051,300,000 11,300,000 11,300,000 200,000,000 500,000,000 50,000,000 11,300,000 761,300,000 With banking companies Midland Bank ltd The City Bank Ltd Mercantile Bank Ltd ICB Islamic Bank Limited ICB Islamic Bank Limited has been repaying their liabilities phase by phase under “The Oriental Bank Limited (Reconstruction) Scheme, 2007” as per Bangladesh Bank instructions vide Ref : BRPD(R-1)651/9(10)2007-446 dated 02.08.2007. 5.2 5.3 6. 6(a) With non-banking financial institutions International Leasing & Financial Service Limited Lanka Bangla Finance Ltd. Prime Finance - 90,000,000 100,000,000 100,000,000 290,000,000 2,000,000 6,000,000 3,300,000 11,300,000 1,040,000,000 11,300,000 1,051,300,000 (Note: 6.1) (Note: 6.2) 19,706,422,487 3,475,371,860 23,181,794,347 18,805,722,760 2,500,000,000 21,305,722,760 (Note: 6) 23,181,794,347 2,858,707,363 26,040,501,710 21,305,722,760 2,477,518,134 23,783,240,894 Maturity grouping of money at call & short notice On demand Upto 1 month Over 1 month but not more than 3 months Over 3 months but not more than 6 months More than 6 months but less than 1 year More than 1 year but less than 5 years More than 5 years Investments Government securities Other investments Consolidated Investments Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 159 Consolidated & Separate Financial Statements 5(a) Maturity grouping of balances with other banks and financial institutions On demand Upto 1 month Over 1 month but not more than 3 months Over 3 months but not more than 6 months Over 6 months but not more than 1 year Over 1 year but not more than 5 years Over 5 years 31.12.2016 Taka Auditor’s Report 31.12.2017 Taka
  160. Auditor ’s Report 31.12.2017 Taka 6.1 6.1(a) Consolidated & Separate Financial Statements 6.1.1 6.1.2 6.2 6.2(a) 6.2.1 Government securities Bangladesh Bank bills Treasury bonds Government islamic bond Prize bond Consolidated Government securities Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 6.1.1) (Note: 6.1.2) 4,397,491,220 14,925,036,367 380,000,000 3,894,900 19,706,422,487 18,431,637,960 370,000,000 4,084,800 18,805,722,760 (Note: 6.1) 19,706,422,487 19,706,422,487 18,805,722,760 18,805,722,760 4,397,491,220 4,397,491,220 - 1,500,249,997 6,079,495,753 6,419,317,676 699,378,491 226,594,451 14,925,036,367 12,605,838 6,082,035,904 10,169,002,772 1,941,409,279 226,584,167 18,431,637,960 (Note:6.2.1) (Note:6.2.2) (Note: 6.2.3) 226,121,860 3,099,250,000 150,000,000 3,475,371,860 226,000,000 1,524,000,000 750,000,000 2,500,000,000 (Note: 6.2) 3,475,371,860 2,858,707,363 6,334,079,223 2,500,000,000 2,477,518,134 4,977,518,134 26,121,860 200,000,000 226,121,860 26,000,000 200,000,000 226,000,000 900,000,000 240,000,000 159,250,000 300,000,000 750,000,000 750,000,000 3,099,250,000 95,000,000 300,000,000 79,000,000 300,000,000 750,000,000 1,524,000,000 Treasury Bills 7 days Bangladesh Bank Bills Treasury Bonds 2 years Bangladesh Government Treasury Bond 5 years Bangladesh Government Treasury Bond 10 years Bangladesh Government Treasury Bond 15 years Bangladesh Government Treasury Bond 20 years Bangladesh Government Treasury Bond Other investments Investment in shares Investment in subordinated bonds Investment in Commercial Paper Consolidated Other investments Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Shares Quoted (Publicly Traded) Unquoted 31.12.2016 Taka (Details are given in Annexure - B) 6.2.2 160 Investment in subordinated bonds MTBL Subordinated Bond Mercantile Bank Subordinated Bond The City Bank Subordinated Bond One Bank Limited Bank Asia Limited Southeast Bank Limited Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  161. 31 .12. 2016 Taka MTBL Subordinated Bond - date of purchase is 23.09.2010 and redemption started on 30.09.2015; Mercantile Bank Subordinated Bond - date of purchase is on 29.06.2014 and redemption will start on 30.06.2017; The City Bank Subordinated Bond - date of purchase is on 21.10.2014 and redemption will start on 21.10.2017; One Bank Limited Subordinated Bond - date of purchase is on 27.10.2016 and redemption will start on 27.10.2019; Southeast Bank Limited Subordinated Bond - date of purchase is on 27.10.2016 and redemption will start on 27.10.2019.Bank Asia Limited Subordinated Bond - date of purchase is on 23.04.2017 and redemption will start on 23.04.2020.The City Bank Limited Subordinated Bond - date of purchase is on 21.06.2017 and redemption will start on 21.06.2020. Auditor’s Report 31.12.2017 Taka As per DOS Circular No. 02 dated 16 September 2013 and subsequent DOS Circular No. 03 dated 20 December 2015 of Bangladesh Bank, the total market value of investment in the Capital Market of any Bank cannot be exceeded 25% of the total amount of Paid up Capital, Share Premium Account, Statutory Reserve and Retained Earnings of the Bank.. In compliance with the guidelines of the Bangladesh Bank, the portfolio exposure of Dhaka Bank Ltd. is 20.21% as of December 31, 2017. 6.2.3 Investment in securities are classified as per Bangladesh Bank Circular Held for Trading (HFT) 28 days Treasury Bills 30 days Treasury Bills 91 days Treasury Bills 182 days Treasury Bills 364 days Treasury Bills 2 years Bangladesh Government Treasury Bond 5 years Bangladesh Government Treasury Bond 10 years Bangladesh Government Treasury Bond 15 years Bangladesh Government Treasury Bond Held to Maturity (HTM) 7 days Bangladesh Bank Bills 91 days Treasury Bills 182 days Treasury Bills 364 days Treasury Bills 2 years Bangladesh Government Treasury Bond 5 years Bangladesh Government Treasury Bond 10 years Bangladesh Government Treasury Bond 15 years Bangladesh Government Treasury Bond 20 years Bangladesh Government Treasury Bond 150,000,000 150,000,000 250,000,000 500,000,000 750,000,000 - 12,605,838 12,605,838 4,397,487,600 1,500,249,997 6,079,495,753 6,419,317,676 699,378,491 226,594,451 19,322,523,967 19,322,523,967 6,082,035,904 10,169,002,772 1,941,409,279 226,584,167 18,419,032,122 18,431,637,960 As per DOS Circular N0. 01 dated 19 January 2014, the maximum limit of holding approved Securities under Held to Maturity (HTM) is 110% of SLR for all nonprimary dealer banks and Dhaka Bank Limited has invested in Treasury bonds under HTM category as per said circular. 6.4 Assets pledged as security Assets in the amounts shown below were pledged as security for the following liabilities Liabilities to bank Liabilities to customers Following assets were pledged as security for the above mentioned liabilities Claim on banks Claim on customers www.dhakabankltd.com - - - - Dhaka Bank Limited Annual Report 2017 161 Consolidated & Separate Financial Statements 6.3 Investment in Commercial Paper Hashem Food Limited KSRM Billete Industries Limited Partex Leminates Ltd
  162. Auditor ’s Report 31.12.2017 Taka 6.5 7. Consolidated & Separate Financial Statements 7(a) Maturity grouping of investments On demand Over 2 Days but not more than 3 Months Over 3 months but not more than 6 months More than 6 months but less than 1 year Over 1 year but not more than 5 years Over 5 years Loans, advances and lease/investments including Bills purchased and discounted Loans, cash credits, overdrafts, etc./Investments Bills purchased and discounted Consolidated Loans, advances and lease/investments including Bills purchased and discounted Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 5,705,784,675 816,765,158 2,855,830,583 7,287,206,987 6,516,206,945 23,181,794,347 776,000,000 386,690,638 1,641,090,358 6,594,033,425 11,907,908,339 21,305,722,760 (Note: 7.1) (Note: 8) 150,806,196,218 3,210,833,048 154,017,029,266 131,563,031,001 3,126,277,363 134,689,308,364 (Note: 7) 154,017,029,266 2,088,210,237 156,105,239,503 2,237,597,610 153,867,641,893 134,689,308,364 2,057,523,809 136,746,832,173 1,913,441,442 134,833,390,731 34,906,979,506 6,871,534,101 1,009,756,433 1,180,903,554 51,948,964,722 6,222,107,802 156,176,413 1,965,997 228,280,607 631,655,435 3,348,153,978 350,713,201 2,756,196,992 40,529,593,209 150,142,981,951 663,214,268 150,806,196,218 31,686,036,697 6,819,836,713 1,880,858,465 563,478,631 44,057,645,551 4,231,011,084 110,572,130 1,891,495 1,404,688,247 396,517,436 2,233,076,259 295,155,175 499,909,445 37,382,353,674 131,563,031,001 131,563,031,001 150,806,196,218 2,088,210,237 152,894,406,455 2,237,597,610 150,656,808,845 131,563,031,001 2,057,523,809 133,620,554,810 1,913,441,442 131,707,113,368 19,668,975,660 17,671,280,491 23,477,222,166 30,339,170,975 18,973,347,445 32,920,731,915 10,966,300,615 154,017,029,266 14,064,801,005 16,890,830,255 24,875,497,369 29,168,983,069 19,204,335,303 25,341,474,123 5,143,387,240 134,689,308,364 Less: Inter company transaction 7.1 Loans, cash credits, overdrafts, etc./Investments Broad category-wise breakup In Bangladesh Secured Overdraft/Quard Cash Credit/Murabaha House Building Loan Transport Loan Term Loan Loan Against Trust Receipt Payment Against Documents Loan Against Imported Merchandize Loan Against Accepted Bills Packing Credit Lease Finance / Izara Credit Card Retail Loan Other Loans (Including Bai-Muajjal) Outside Bangladesh 7.1(a) Consolidated Loans, cash credits, overdrafts, etc./Investments Dhaka Bank Limited (Note: 7.1) Dhaka Bank Securities Limited Dhaka Bank Investment Limited Less: Inter company transaction 7.2 162 Residual maturity grouping of loans including bills purchased and discounted Repayable on Demand Upto 1 month Not more than 3 months More than 3 months but not more than 6 months More than 6 months but not more than 1 year More than 1 year but not more than 5 years More than 5 years Dhaka Bank Limited Annual Report 2017 31.12.2016 Taka www.dhakabankltd.com
  163. 7 .4 Product wise loans and advances Loans Cash Credits Overdrafts Bills purchased and discounted 2,574,628,748 773,525,229 3,348,153,978 3,348,153,978 1,146,931,112 1,355,643,267 2,502,574,379 269,498,120 2,233,076,259 107,865,787,564 7,098,899,988 35,841,508,666 3,210,833,048 154,017,029,266 93,057,157,591 6,819,836,713 31,686,036,697 3,126,277,363 134,689,308,364 3,766,966 - 1,011,413 2,792,665 151,236,644 1,961,961,069 22,364,753,824 13,428,887,401 4,605,284,977 12,647,161,256 1,305,020,308 97,700,193,465 154,017,029,266 1,660,368,959 90,144,267,908 10,912,419,446 1,387,608,719 21,509,000,558 923,556,636 7,997,045,417 134,689,308,364 (Note: 8) Loans on the basis of significant concentration including bills purchased & discounted a. Advances to allied concerns of Directors (Note: 7.5.1) b. Advances to Chief Executive c. Advances to Other Senior Executives d. Advances to Customer's Group: Agriculture loan Commercial lending Export financing Consumer credit scheme Small and Medium Enterprise (SME) Staff Loan Others 7.5.1 The amount represents loan in the name of existing directors & related parties of the bank. Details are provided in Annexure-G. 7.6 Advances to customers for more than 10% of Bank’s total capital Total capital of the Bank Number of customers Amount of outstanding loans and advances* Amount of classified loans and advances Measures taken for recovery 21 69,684,162,630 1,730,537,175 - 13 40,042,693,997 - *The amount represents the sum of total loans and advances (both funded and non funded) to each customer exceeding 10% of total capital of the bank as at 31 December 2017. ( Details are given in Annexure - C ) 7.7 Industry-wise loans, advances and lease/investments Agricultural Pharmaceuticals Textile & Garment Chemical Food & alied Transport & Communication Electronics & Automobile Housing & Construction Engineering & Metal Industres including Ship Breaking Energy & Power Service Others www.dhakabankltd.com 1,961,961,069 2,095,992,873 42,455,481,250 6,153,017,980 10,565,000,686 5,435,460,811 968,229,336 16,999,644,565 13,993,257,887 5,257,658,769 5,044,726,734 43,086,597,307 154,017,029,266 1,660,368,959 856,850,090 37,012,047,145 1,418,003,455 9,135,150,181 2,270,617,135 35,345,803 16,407,229,143 12,380,904,493 4,220,010,784 5,712,256,127 43,580,525,048 134,689,308,364 Dhaka Bank Limited Annual Report 2017 163 Consolidated & Separate Financial Statements 7.5 Investment in lease / izara finance Lease rental receivable within 1 year Lease rental receivable more than 1 year Total lease/ izara rental receivable Less: unearned interest/profit receivable Net investment in lease/izara finance 31.12.2016 Taka Auditor’s Report 7.3 31.12.2017 Taka
  164. Auditor ’s Report 7.8 Geographical location-wise (division) distribution Urban Dhaka Region Chittagong Region South Region North Region Sylhet Region Other Consolidated & Separate Financial Statements Rural Dhaka Region Chittagong Region South Region North Region Sylhet Region Other 7.9 Sector-wise loans, advances and lease/investments Government & Autonomous bodies Financial Institutions (Public & Private) Private Sector 7.10 Classification of loans, advances and lease/investments Unclassified Standard Special Mention Account Classified Sub-Standard Doubtful Bad or loss 7.11 A) Provision required for loans and advances Status Base for Provision Unclassified Unclassified Unclassified 21,891,303,195 Unclassified 105,923,298,383 Unclassified 2,629,403,273 Unclassified Unclassified 584,499,342 Unclassified 197,515,285 Unclassified Unclassified * Unclassified * 6,431,281,269 Unclassified * Special Mention Account 518,093,044 Special Mention Account 1,633,674,491 Special Mention Account * 10,376,329 Special Mention Account 2,345,446 Special Mention Account 542,193,590 Special Mention Account Classified: Sub-Standard Sub-Standard Doubtful Bad or loss Bad or loss 1,241,593 202,205,333 1,518,626,442 433,103,018 3,324,282,480 Required provision for loans & advances Total provision maintained Provision will be maintained in future Excess / short provision as at 31 December 164 Dhaka Bank Limited Annual Report 2017 31.12.2017 Taka 31.12.2016 Taka 106,099,419,533 27,438,420,373 4,157,113,459 3,291,285,006 2,021,112,862 624,109,541 143,631,460,773 90,689,575,547 24,149,664,181 2,340,713,599 2,403,257,199 872,783,051 5,117,451,983 125,573,445,559 7,205,944,235 1,183,403,085 1,878,633,468 117,587,705 10,385,568,492 154,017,029,266 4,518,998,969 1,115,854,724 1,666,045,610 128,160,847 1,686,802,654 9,115,862,805 134,689,308,364 3,104,721,222 150,912,308,044 154,017,029,266 794,698,521 4,320,416,768 129,574,193,075 134,689,308,364 142,013,884,527 2,794,294,465 144,808,178,991 124,364,862,317 4,921,496,854 129,286,359,171 321,518,861 1,809,802,653 7,077,528,761 9,208,850,274 154,017,029,266 257,483,421 287,950,818 4,857,514,954 5,402,949,193 134,689,308,364 54,728,258 1,059,232,984 52,588,065 29,224,967 39,503,057 6,431,281,269 1,295,232.61 16,336,745 207,527 117,272 271,096,795 7,955,612,172 43,815,539 945,353,283 53,560,763 22,905,529 31,747,578 143,483,501 30,416,330 966,301,682 1,363,285,891 12,570,523 1,239,017 21,508,998 39,894,140 433,500 2,623,116 153,156,944 3,832,296,334 62,080 40,441,067 759,313,221 283,103,018 3,324,282,480 4,407,201,865 12,362,814,037 7,779,475,833 4,583,338,204 0.00 92,985 24,793,240 72,863,162 2,307,858,438 2,405,607,824 6,237,904,158 6,241,383,798 3,479,640 Rate % 0% 0.25 1 2 2.5 5 20 50 100 Special 0.25 1 2 5 50 100 5 20 50 Special 100 www.dhakabankltd.com
  165. 31 .12.2016 Taka Auditor’s Report 31.12.2017 Taka Note: * (1) Provision has been kept as per CL as at 31 December 2017. (2) However, as per requirement of Bangladesh Bank in respect to loan provisioning total required provision against loans and advances is BDT 1,243.05 crore, against which the Bank has maintained an amount of BDT 777.95 crore as provision. The remaining balance of BDT 465.10 crore will be provided equally within 3 years from 2018 to 2020 as per Bangladesh Bank approval given vide letter no DBI-1/92/ 2018-1249 dated 15 April 2018. As per this letter, Bank will not distribute any cash dividend. B) Provision for good borrower 16,831,931 9,454,000 Provision for good borrower has been kept following the BRPD Circular No. 06, dated 19 March 2015 & BRPD Circular Letter No. 03, dated 16 February 2016. C) Provision required for Off-Balance Sheet Exposures Status Acceptances and Endorsements 32,868,131,246 Letter of Credit 27,085,569,676 Letter of Guarantee 23,083,135,224 Required provision Total Provision Maintained Excess / (Short) Provision as at 31 December Rate % 1 1 1 7.12 Securities against loans including bills purchased & discounted a. Secured Collateral of movable / immovable assets Local Banks & Financial Institutions guarantee Foreign Banks Guarantee Export documents Government Guarantee Fixed Deposits Receipts Own FDR FDR of Other Banks Personal Guarantee Corporate Guarantee Other Securities Government bonds 328,681,312 270,855,697 230,831,352 830,368,362 830,368,362 - 252,636,607 174,476,235 199,287,118 626,399,959 626,399,959 - 99,166,339,608 - 122,839,278,647 2,911,138,109 215,115,608 110,572,130 - 3,696,144,561 445,858,876 1,374,990,235 20,007,433,817 7,478,684,052 21,847,578,119 154,017,029,266 154,017,029,266 1,899,986,632 33,676,031 1,872,611,319 4,806,929,888 134,689,308,364 134,689,308,364 99,166,339,608 98,336,144,517 1,374,990,235 1,757,461,918 4,142,003,436 2,320,262,277 - - 1,308,787,274 1,078,597,358 3,766,966 1,011,413 1,308,830,690 1,081,882,297 b. Unsecured 7.13 Particulars of Loans, advances and lease/investments (i) Loans considered good in respect of which the bank company is fully secured; (ii) Loans considered good against which the banking company holds no security other than the debtor's personal guarantee; (iii) Loans considered good secured by the personal undertakings of one or more parties in addition to the personal guarantee of the debtors; (iv) Loans adversely classified; provision not maintained there against; (v) (vi) (vii) www.dhakabankltd.com Loans due by directors or officers of the banking company or any of these either separately or jointly with any other persons;* Loans due from companies or firms in which the directors of the banking company have interests as directors, partners or managing agents or in case of private companies as members; (See Note-7.5.1) Maximum total amount of advances including temporary advance made at any time during the year to directors or managers or officers of the banking companies or any of them either separately or jointly with any other person;* Dhaka Bank Limited Annual Report 2017 165 Consolidated & Separate Financial Statements Base for Provision
  166. Auditor ’s Report (viii) Maximum total amount of advances including temporary advances granted during the year to the companies or firms in which the directors of the banking company have interests as directors, partners or managing agents or in the case of private companies as members; (ix) Due from banking companies; (x) Amount of classified loan on which interest has not been charged, should be mentioned as follows: a) Decrease / increase in provision; b) Amount realized against loan previously written off; ** c) Amount of provision kept against loan classified as 'bad/loss" on the date of preparing the balance sheet; d) Interest creditable to the Interest Suspense A/c; (xi) Cumulative amount of the written off loan;*** 31.12.2017 Taka 31.12.2016 Taka 3,810,381 4,296,352 - - 1,538,092,035 49,202,153 (133,673,686) 50,461,881 3,607,385,498 2,307,858,438 6,121,520,944 5,466,295,628 Consolidated & Separate Financial Statements * The amount represents loan in the name of existing directors and officers of the bank. **The detail of Recovery up to December 31, 2017 from loan previously written off may be seen in the Annexure - E *** The detail of the amount of the written - off loans up to December 31, 2017 may be seen in the Annexure - F 8. Bills purchased and discounted In Bangladesh Outside Bangladesh 8(a) Consolidated Bills purchased and discounted Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 8) 8.1 Maturity grouping of bills purchased & discounted Payable within 1 month Over 1 month but less than 3 months Over 3 months but less than 6 months 6 months or more 9 Fixed assets including premises, furniture and fixtures Cost/ Revaluation Land Building Furniture and fixture including office decoration Office appliances and equipment Computer Software Bank's vehicle Less: Accumulated depreciation 711,569,593 2,499,263,455 3,210,833,048 1,117,983,911 2,008,293,452 3,126,277,363 3,210,833,048 3,210,833,048 3,126,277,363 3,126,277,363 1,475,722,525 1,378,650,315 356,460,208 3,210,833,048 1,415,053,247 1,364,116,169 347,107,947 3,126,277,363 2,950,332,536 622,721,217 453,711,763 1,035,562,183 239,317,326 107,607,120 199,916,665 5,609,168,810 1,346,275,507 4,262,893,303 2,950,332,536 622,721,217 428,892,919 866,487,334 217,967,490 77,845,853 142,893,420 5,307,140,769 1,113,600,664 4,193,540,105 (Details are given in Annexure - D) Building includes a floor space in the BGMEA Bhaban at Hatirjheel, Kawran Bazar, Dhaka, against which there is a dispute and Honorable High Court had published a verdict to demolish the building but recently the deadline to do the same has been extended further. Besides, Bank will receive compensation from BGMEA once the building is demolished. So, Bank will maintain provision or will make impairment loss at the time of demolishment of the structure or at the time of settlement of the issue with BGMEA. 9(a) Consolidated Fixed assets including premises, furniture and fixtures Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 166 Dhaka Bank Limited Annual Report 2017 (Note: 9) 4,262,893,303 6,488,239 4,269,381,542 4,193,540,105 7,724,271 4,201,264,375 www.dhakabankltd.com
  167. 10 . Other Assets Investment in Shares of subsidiary companies Stationery, stamps, printing materials etc. Advance rent Prepaid expenses against advertisement Interest/Profit accrued and other receivable Security deposit Preliminary, formation, Work in progress, renovation expenses and prepaid expenses Branch adjustments Suspense account Others (Note: 10.1) (Note: 10.2) (Note: 10.3) (Note: 10.4) (Note: 10.5) (Note: 10.6) 31.12.2016 Taka 1,749,999,880 44,821,499 378,401,447 23,936,330 491,744,070 22,349,966 1,749,999,880 30,044,856 279,331,753 18,709,878 572,958,051 21,988,606 3,429,830,055 66,491,777 269,019,211 16,570,563,558 23,047,157,792 2,860,612,139 39,897,115 139,958,704 7,328,881,667 13,042,382,648 10(a) Consolidated Other assets Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 10) 23,047,157,792 291,889,279 5,200,771 23,344,247,842 13,042,382,648 217,833,900 4,371,820 13,264,588,368 1,499,999,940 249,999,940 1,173,725 55,787,264 1,806,960,869 21,537,286,973 1,499,999,940 249,999,940 1,173,725 74,106,236 1,825,279,841 11,439,308,527 (Note:1.2.6.1) 1,499,999,940 1,499,999,940 (Note:1.2.6.2) 249,999,940 1,749,999,880 249,999,940 1,749,999,880 Less: Inter-company transactions Investment in Dhaka Bank Securities Limited Investment in Dhaka Bank Investment Limited Stock dividend from Dhaka Bank Securities Limited Receivable from Dhaka Bank Investment Limited Receivable from Dhaka Bank Securities Limited 10.1 Investment in shares of subsidiary companies Dhaka Bank Securities Limited (99.99% owned subsidiary company of DBL) Dhaka Bank Investment Limited (99.99% owned subsidiary company of DBL) The total number of Shareholding in Dhaka Bank Securities Limited is 171,599,994 shares after considering the stock dividend issued in 2011 and 2014. 10.2 Interest accrued and other receivable Amount represents interest/profit accrued on loans/investment but not collected, commission & brokerage receivable on shares and debenture and other income receivable etc. 10.3 The amount represents payment in advance against opening of new branches, various types of insurance premiums, legal expenses, software maintenance etc. It also includes the advance for work in progress of head office building at Gulshan and Kakrail. 10.4 Branch adjustments Branch adjustment account represents outstanding amount of Inter-Branch and Head Office transactions at the Balance Sheet date. 10.5 Suspense account Suspense Account represents advance paid against renovation of different branches which is Capital Expenditure and will be adjusted after receiving the final bills. 10.6 Others Advance Tax Deferred Tax Assets Account receivable others 10.6.1 Advance Tax Opening Balance Add: Paid during the year Less: Adjustment during the year www.dhakabankltd.com (Note: 10.6.1) (Note: 15.8) (Note: 10.6.2) 2,881,721,341 21,762,982 13,667,079,236 16,570,563,558 1,591,405,439 5,737,476,228 7,328,881,667 1,591,405,439 1,290,315,902 2,881,721,341 2,881,721,341 866,380,406 725,025,033 1,591,405,439 1,591,405,439 Dhaka Bank Limited Annual Report 2017 167 Consolidated & Separate Financial Statements Work in progress includes a building under construction in Gulshan for head office purpose and is awaiting for the approval of RAJUK for commercial conversion. After getting the approval, registration proccess will be started immediately in the name of Dhaka Bank Limited and will be transferred to fixed assets. Bank has maintained Tk.6.95 Lac provision @1% against Tk.6.95 Crore payment to RAJUK as advance for a plot at Motijheel. Auditor’s Report 31.12.2017 Taka
  168. Auditor ’s Report 10.6.2 Account receivable others Receivable against Bangladesh / Paribar Sanchaya Patra Fees receivable Receivable from share sale proceeds Finance to AD branches for Local Documentary Bill Purchased Finance to AD branches for Import Bill Discounting Protestation account ATM settlement account Receivable from exchange houses Receivable from Dhaka Bank Investment Limited Receivable from Dhaka Bank Securities Limited 31.12.2017 Taka (Note: 10.6.2.a) (Note: 10.6.2.b) 180,078,159 4,422,392 1,226,336 2,198,196,309 11,195,948,315 1,666,805 27,589,748 990,184 1,173,725 55,787,264 13,667,079,236 31.12.2016 Taka 35,148,165 2,235,517 2,024,402,632 3,571,042,791 1,666,805 26,200,609 1,499,749 1,173,725 74,106,236 5,737,476,228 Consolidated & Separate Financial Statements 10.6.2.a In accordance with the FE Circular No.03 dated 04 February 2013 of Bangladesh Bank, the amount represents bills discounted Tk.2,198,196,309 to facilitate the exporters of the country 10.6.2.b In accordance with the BRPD Circular No.28 dated 05 September 2010 of Bangladesh Bank, Dhaka Bank Limited’s Off-shore Banking Unit (OBU) has been financing the importers who import at usance basis through Bank’s Authorised Dealer (AD) branches. 10.7 Income generation grouping of Other assets Income generating Investment in Shares of subsidiary companies Account receivable others Finance to AD branches for Local Documentary Bill Purchased Finance to AD branches for Import Bill Discounting Non-income generating Stationery, stamps, printing materials etc. Advance rent Prepaid expenses against advertisement Interest/Profit accrued and other receivable Security deposit Preliminary, formation, work in progress, renovation expenses and prepaid expenses Branch adjustments Suspense account Advance tax paid Account receivable others Receivable against Bangladesh / Paribar Sanchaya Patra Protestation account Receivable from exchange houses Receivable from Dhaka Bank Investment Limited Receivable from Dhaka Bank Securities Limited Fees receivable Receivable from share sale proceeds ATM settlement account 11. Non-banking assets Land and Building 1,749,999,880 1,749,999,880 2,198,196,309 11,195,948,315 15,144,144,504 2,024,402,632 3,571,042,791 7,345,445,303 44,821,499 378,401,447 23,936,330 491,744,070 22,349,966 30,044,856 279,331,753 18,709,878 572,958,051 21,988,606 3,429,830,055 66,491,777 269,019,211 2,881,721,341 2,860,612,139 39,897,115 139,958,704 1,591,405,439 180,078,159 1,666,805 990,184 1,173,725 55,787,264 4,422,392 1,226,336 27,589,748 7,881,250,307 23,025,394,810 35,148,165 1,666,805 1,499,749 1,173,725 74,106,236 2,235,517 26,200,609 5,696,937,345 13,042,382,648 23,166,033 23,166,033 Dhaka Bank received a decree from Court regarding right and title of mortgaged land along with building, which was mutated in the name of Dhaka Bank Limited. The value of the property was incorporated in the books of account on the basis of third party valuation report provided by a surveyor company. The property has been auctioned and sold to the highest bidder at a price of Tk.26,000,000. The contract for sale (baina) has been executed for Tk.20,000,000 and the rest amount of Tk.6,000,000 will be paid by the bidder before execution of sale deed. After completion of all legal formalities the asset will be handed over to the purchaser 11(a) Consolidated Non-banking assets Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 168 Dhaka Bank Limited Annual Report 2017 (Note: 11) 23,166,033 23,166,033 23,166,033 23,166,033 www.dhakabankltd.com
  169. Borrowings from other banks , financial institutions and agents In Bangladesh Outside Bangladesh 12.1 (Note: 12.1) In Bangladesh Call Borrowing Sonali Bank Limited Janata Bank Mutual Trust Bank Limited Outside Bangladesh Bank Muscat, Oman Nabil Bank, Nepal IFC Caixa Bank Bank of Tokyo NIC Asia Bank Ltd IDCOL, Bangladesh 15,102,340,246 6,431,213,181 21,533,553,426 10,452,934,335 843,938,814 11,296,873,150 300,000,000 165,400,000 200,000,000 665,400,000 - 139,359,965 2,765,356,235 82,792 9,459,217,386 68,994,548 2,003,929,319 14,436,940,246 194,704,228 2,766,195,834 365,772 7,491,668,501 10,452,934,335 831,924,670 628,155,603 1,657,779,528 858,304,438 2,069,490,152 167,020,920 218,537,869 6,431,213,181 21,533,553,426 246,899,362 395,730,507 201,308,946 843,938,814 11,296,873,150 Dhaka Bank Limited received Investment Bond’s Fund from Bangladesh Bank against Mudaraba Term Deposit Receipt (MTDR) as per Bangladesh Bank Circular No.FRTMD(PDS)146/2004-15 dated 15.09.2004. The amount of Tk.6,431,213,181 represents fund borrowed from foreign banks by Off-shore Banking Unit. 12.2 Disclosure regarding Outstanding Repo on 31 December 2017 Sl. No. Counterparty Name Agreement Date Reversal Date Amount in Taka 12.3 Disclosure regarding Outstanding Reverse Repo on 31 December 2017 Sl. No. Counterparty Name Agreement date Reversal date Amount in Taka 12.4 Disclosure regarding Overall transaction of Repo and Reverse Repo during 2016 Sl. No. Counterparty Name - - Minimum outstanding during the year Maximum outstanding during the year - - - - - - Maximum outstanding during the year Securities sold under Repo 1 With Bangladesh Bank 2 With other Banks & FIs Securities purchased under Reverse Repo 1 From Bangladesh Bank 2 From other Banks & FIs www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 169 Consolidated & Separate Financial Statements Bangladesh Bank refinance Small and Medium Enterprise Syndication Green Banking Export Development Fund FSSP Fund Mudaraba Refinance 31.12.2016 Taka Auditor’s Report 12. 31.12.2017 Taka
  170. Auditor ’s Report Consolidated & Separate Financial Statements 31.12.2017 Taka 12.5 Analysis by security Secured (assets pledge as security for liabilities) Unsecured 12.6 Repayment pattern Repayable on demand Repayable on maturity 12.7 Maturity grouping Repayable on demand Repayable within 1 month Over 1 month but within 3 months Over 3 months but within 6 months Over 6 months but within 1 year Over 1 year but within 5 years Over 5 years 12(a) Consolidated Borrowings from other banks, financial institutions and agents Dhaka Bank Limited (Note: 12) Dhaka Bank Securities Limited Dhaka Bank Investment Limited Less: Inter company transaction 13. Deposits and other accounts Current and other accounts Bills payable Savings deposits Term deposits (Note: 13.1) (Note: 13.2) (Note: 13.3) (Note: 13.4) 31.12.2016 Taka 21,533,553,426 21,533,553,426 11,296,873,150 11,296,873,150 665,400,000 20,868,153,426 21,533,553,426 11,296,873,150 11,296,873,150 665,400,000 68,994,548 18,033,802,643 2,765,356,235 21,533,553,426 8,530,677,315 2,766,195,834 11,296,873,150 21,533,553,426 2,337,592,550 23,871,145,977 2,237,597,610 21,633,548,366 11,296,873,150 2,113,441,442 13,410,314,592 1,913,441,442 11,496,873,150 20,025,396,323 2,826,174,811 19,061,994,573 128,121,855,220 170,035,420,927 21,093,467,455 2,047,637,778 16,735,239,732 117,285,285,556 157,161,630,521 11,164,633,072 1,849,561,598 1,101,635,757 852,060,951 973,346,674 4,084,158,272 20,025,396,323 10,374,651,794 2,184,671,554 1,045,111,125 833,454,505 655,839,263 5,999,739,213 21,093,467,455 3,857,565,330 95,752,320 61,239,558 6,583,592 7,360,530 55,656,943 4,084,158,272 5,703,107,536 147,771,478 79,833,471 7,537,968 6,539,730 54,949,031 5,999,739,213 Non-interest bearing accounts 13.1 Current and other accounts Current account Foreign currency deposits Margin under Letter of Credit Margin under Letter of Guarantee Deposits awaiting disposal Sundry deposit 13.1.1 Sundry deposit F.C held against Back to Back L/C Sundry creditors Unclaimed deposits Risk fund Security deposits for locker Advance lease rent 170 Dhaka Bank Limited Annual Report 2017 (Note: 13.1.1) www.dhakabankltd.com
  171. Bills payable Pay order Demand draft 31 .12.2016 Taka 1,954,270,035 871,904,776 2,826,174,811 1,679,616,208 368,021,570 2,047,637,778 22,851,571,134 23,141,105,233 18,556,159,571 505,835,002 19,061,994,573 16,330,841,801 404,397,930 16,735,239,732 16,745,221,057 85,699,682,960 25,631,490,774 34,823,903 193 10,636,333 128,121,855,220 12,782,768,668 81,488,309,356 22,972,975,423 32,399,917 193 8,831,999 117,285,285,556 128,121,855,220 128,121,855,220 305,700,277 127,816,154,943 117,285,285,556 117,285,285,556 404,682,168 116,880,603,387 Total Interest bearing Account 147,183,849,793 134,020,525,288 Total Deposits and other accounts 170,035,420,927 157,161,630,521 11,455,697,594 158,579,723,333 170,035,420,927 5,887,542,661 151,274,087,860 157,161,630,521 8,034,025 11,257,074,167 190,589,402 11,455,697,594 34,585,178 2,957,483 5,850,000,000 5,887,542,661 11,164,633,072 1,849,561,598 1,101,635,757 852,060,951 973,346,674 4,084,158,272 20,025,396,323 10,374,651,794 2,184,671,554 1,045,111,125 833,454,505 655,839,263 5,999,739,213 21,093,467,455 1,954,270,035 871,904,776 2,826,174,811 1,679,616,208 368,021,570 2,047,637,778 18,556,159,571 497,800,977 19,053,960,548 16,330,841,801 369,812,752 16,700,654,554 Total Non-interest bearing accounts Auditor’s Report 13.2 31.12.2017 Taka Interest bearing Account Savings deposits Savings account Mudaraba savings accounts 13.4 Term deposits Special Notice Deposits Fixed Deposits Deposit Pension Scheme Gift Cheque Marriage Deposit Scheme Non Resident Foreign Currency Deposit (NFCD) 13.4 (a) Consolidated Term deposits Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Less: Inter company transaction 13.5 Deposits and Other Accounts Deposits from Banks Deposits from Customers Deposits from Banks Current Deposits and Other Accounts Savings Bank/Mudaraba Special Notice Deposits Fixed Deposits Deposits from Customers i) Current Deposits and Other Accounts Current Account Foreign Currency Deposits Margin under Letter of Credit Margin under Letter of Guarantee Deposits Awaiting Disposal Sundry Deposit ii) Bills Payable Pay Order Demand Draft iii) Savings Deposits Savings Account Mudaraba Savings Accounts www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 171 Consolidated & Separate Financial Statements 13.3
  172. Auditor ’s Report 31.12.2017 Taka iv) Term Deposits Special Notice Deposits Fixed Deposits Deposit Pension Scheme Gift Cheque Marriage Deposit Scheme Non Resident Foreign Currency Deposit (NFCD) Consolidated & Separate Financial Statements 13.6 Payable on demand and time deposits a) Demand deposits Current Account Savings Deposits (10%) Foreign Currency Deposits Margin under Letter of Credit Margin under Letter of Guarantee Deposits Awaiting Disposal Sundry Deposit Bills Payable b) Time Deposits Savings Deposits (90%) Special Notice Deposits Fixed Deposits Deposit Pension Scheme Gift Cheque Marriage Deposit Scheme Non Resident Foreign Currency Deposit (NFCD) 13.7 31.12.2016 Taka 5,488,146,890 85,509,093,558 25,631,490,774 34,823,903 193 10,636,333 116,674,191,651 158,579,723,333 12,779,811,185 75,638,309,356 22,972,975,423 32,399,917 193 8,831,999 111,432,328,073 151,274,087,860 11,164,633,072 1,906,199,457 1,849,561,598 1,101,635,757 852,060,951 973,346,674 4,084,158,272 2,826,174,811 24,757,770,591 10,374,651,794 1,673,523,973 2,184,671,554 1,045,111,125 833,454,505 655,839,263 5,999,739,213 2,047,637,778 24,814,629,206 17,155,795,116 16,745,221,057 85,699,682,960 25,631,490,774 34,823,903 193 10,636,333 145,277,650,336 170,035,420,927 15,061,715,759 12,782,768,668 81,488,309,356 22,972,975,423 32,399,917 193 8,831,999 132,347,001,315 157,161,630,521 22,886,395,037 24,552,743,771 44,456,233,733 11,114,058,433 22,228,117,060 20,005,305,180 13,336,870,120 158,579,723,333 23,173,505,150 29,489,297,737 39,444,513,912 9,861,128,478 19,722,257,149 17,750,031,260 11,833,354,174 151,274,087,860 11,265,108,192 190,589,402 11,455,697,594 170,035,420,927 37,542,661 5,850,000,000 5,887,542,661 157,161,630,521 1,326,950,175 7,905,490,032 160,802,980,720 170,035,420,927 1,099,584,071 7,704,657,097 148,357,389,353 157,161,630,521 170,035,420,927 170,035,420,927 305,700,277 157,161,630,521 157,161,630,521 404,682,168 169,729,720,650 156,756,948,353 Maturity grouping of deposits and other accounts Other than Bank Deposits Repayable on demand Repayable within 1 month Over 1 month but within 3 months Over 3 months but within 6 months Over 6 months but within 1 year Over 1 year but within 5 years Over 5 years but within 10 years Inter-bank deposits Repayable on demand Repayable within 1 month Over 1 month but within 3 months Over 3 months but within 6 months Over 6 months but within 1 year Over 1 year but within 5 years Over 5 years but within 10 years 13.8 Sector wise Deposits Government Public Sector Private sector 13.(a) Consolidated Deposits and other accounts Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Less: Inter company transaction 172 Dhaka Bank Limited Annual Report 2017 (Note: 13) www.dhakabankltd.com
  173. 14 . Non Convertible Subordinated Bond 3,000,000,000 31.12.2016 Taka 3,800,000,000 The Bank issued Redeemable Non Convertible Subordinated Bond of Taka 2,000,000,000 as Supplementary Capital (Tier-2) of the Bank for a term of 7 years to strengthen the capital base of the bank on the consent of BSEC vide letter no.SEC/CI/CPLC-10/2001-256 dt.09.09.2010. The redemption of the Bond has been started from the year 2015. The Bond has been fully redeemed in December 2017. Moreover, The Bank issued another tranche of Non Convertible Subordinated Bond of Tk. 3,000,000,000 with consent of BSEC vide letter no. BSEC/CI/DS-34/2015/643 dated 28.12.2015 and subsequently approved by Bangladesh Bank vide letter no. BRPD(BFIS)661/14B(P)2016-2474 dated April 17, 2016 to strengthen the capital base in line with the newly introduced Capital Adequacy Guidelines under BASEL-III Accord. iii) The Bank is going to issue 3rd tranche of Non-Convertible Subordinated Bond of Tk. 5,000,000,000 which is approved by the Board of Directors in its 310th meeting held on September 26, 2017. Bank has already got approval from BSEC vide letter no. BSEC/CI/CPLC/DS-210/2009/210 dated March 28, 2018 and from Bangladesh Bank vide letter no. BRPD (BFIS) 661/14B (P) 2018-2569 dated April 17, 2018. 15(a) Consolidated Other liabilities Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 15.1) (Note: 15.2) (Note: 15.3) (Note: 15.4) (Note: 15.5) (Note: 38) (Note: 15.6) (Note: 36.1) (Note: 15.7) (Note: 15.9) (Note: 15) Less: Inter-company transactions Dhaka Bank Securities Limited Dhaka Bank Investment Limited 15.1 15.2 15.3 Provision for loans and advances i) The Movement in specific provision for Bad and Doubtful Debts: Provision held at the beginning of the year Specific provision Recoveries from written off loans Fully provided debt written off Provision no longer required Provision held at the end of the year ii) The movement in general provision on unclassified loans: Provision held at the beginning of the year Additional provision for the year Provision held at the end of the year Provision for Good Borrower Opening Balance Add: Addition during the year Less: Disbursement during the year Provision for Off Balance Sheet Exposures Opening balance Add: Addition during the year (+) (+) (-) (-) 48,201,672 7,779,475,833 12,523,697 830,368,362 1,874,880,813 51,466,437 12,151,156 27,432,031 4,167,700,964 333,278,461 35,001,271 4,466,153,662 19,638,634,359 44,141,685 6,241,383,798 9,454,000 626,399,959 1,831,665,015 13,576,027 11,797,024 27,479,849 2,794,836,497 7,258,236 270,441,417 15,437,752 3,593,495,073 15,487,366,332 19,638,634,359 1,039,740,118 15,926,605 20,694,301,082 15,487,366,332 883,074,456 12,952,380 16,383,393,167 55,787,264 1,173,725 56,960,989 20,637,340,094 74,106,236 1,173,725 75,279,961 16,308,113,207 2,409,087,464 2,614,003,456 (511,121,061) (104,767,993) 4,407,201,865 1,902,698,726 954,049,421 50,461,881 (460,532,282) (37,590,282) 2,409,087,464 3,832,296,334 (460,022,367) 3,372,273,967 7,779,475,833 2,341,828,546 1,490,467,788 3,832,296,334 6,241,383,798 9,454,000 7,377,931 4,308,234 12,523,697 1,254,000 8,200,000 9,454,000 626,399,959 203,968,402 830,368,362 426,578,478 199,821,481 626,399,959 Bank has made a provision of Tk. 203,968,402 @ 1.00% on off balance sheet exposure (i.e. Acceptence & Endorsement, Letter of Credit & Letter of Guarantee) as per BRPD Circular number 14 dated 23.09.2012 from current year’s profit. The total amount of provision of Tk.830,368,361 is deemed sufficient on requirement as on 31 December 2017. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 173 Consolidated & Separate Financial Statements 15. Other Liabilities Accrued Interest Provision on loans and advances Provision for Good Borrower Provision for Off Balance Sheet Exposure Interest Suspense Account Provision against Expenses Provision for decrease in value of investments Provision for Other Assets Fund for Dhaka Bank Foundation Provision for Current Tax Deferred tax liability Tax deducted at source & payable Excise Duty Payable Other Account Payable Auditor’s Report 31.12.2017 Taka
  174. Auditor ’s Report 15.4 Consolidated & Separate Financial Statements 15.5 31.12.2017 Taka Interest Suspense Account Balance at the beginning of the year Amount transferred to "Interest Suspense" A/c during the year (+) Amount recovered from "Interest Suspense" A/c during the year (-) Amount written off during the year (-) Balance at the end of the year Provision against expenses Provision for Audit Fees Provision for House Rent, Telephone, Utility, Risk Premium etc. Provision for Promotional Expenses for Exchange Houses Provision for Superannuation Fund Provision for gratuity fund Provision for other Professional Fees 31.12.2016 Taka 1,831,665,015 1,542,524,155 (1,428,447,557) (70,860,800) 1,874,880,813 2,419,863,452 1,614,619,700 (1,945,971,642) (256,846,494) 1,831,665,015 1,380,000 8,199,251 382,079 13,500,000 27,912,000 93,107 51,466,437 1,380,000 5,647,040 589,319 2,500,000 3,459,668 13,576,027 As per Actuary Report, Bank has to maintain provision for Tk.8.37 Crore against Gratuity and Tk.4.05 Crore against Superannuation Fund within December 2019. In line with the requirement, Bank has maintained provision for Tk.2.79 Crore against Gratuity and Tk.1.35 Crore against Superannuation Fund as one-third portion of the requirement. 15.6 Provision for Other Assets Balance at the beginning of the year 11,797,024 Add: Addition during the year 15.7 8,670,024 354,132 3,127,000 12,151,156 11,797,024 2,794,836,497 1,479,868,518 1,372,864,467 1,314,967,979 4,167,700,964 2,794,836,497 - - 4,167,700,964 2,794,836,497 Provision for Current Tax Opening Balance Add: Provision made during the year Less: Adjustment during the year Provision for taxation has been made on accounting profit considering taxable allowances / disallowances as per Income Tax Ordinance 1984 amounting to Tk.1,372,867,246 as Current Tax Provision for the period up to December 31, 2017 (Assessment Year 2018-2019). Assessment for the years from 1995 to 2006 have since been completed and Bank got Tax Clearence Certificate upto 2006 (Assesment year 2007-2008) from Tax Authority. But under section 120, the assessment for the year 2004, 2005 and 2006 had been re-opened and the Bank had filed appeal to the Honorable High Court. Bank filed an appeal against the assessment order for the year 2007, 2008, 2009, 2010, 2011 and 2015 to The Honorable High Court. The Bank received Tax Clearance Certificate for the year 2012, 2013 and 2014. The Income Tax Return for the year 2015 (Assessment year 2016-2017) & for the year 2016 (Assessment year 2017-2018) had been submitted respectively in July, 2016 & September, 2017. 15.7(a) Consolidated Provision for Current Tax Dhaka Bank Limited (Note: 15.7) Dhaka Bank Securities Limited Dhaka Bank Investment Limited 15.8 Deferred tax liabilities/ (Assets) 31 December 2017 Fixed Asset excluding land Non adjusting difference for Vehicle exceeding Tk 2,500,000 Provision for gratuity Provision for Superannuation fund Deductible temporary difference Applicable tax rate Deferred Tax Asset Revaluation reserve of land at carrying amount Applicable Tax Rate Deferred Tax Liability Carrying amount 1,312,560,767 Dhaka Bank Limited Annual Report 2017 2,794,836,497 180,895,067 14,407,880 79,145,670 - 4,363,003,911 2,873,982,167 Taxable/ (deductible) temporary difference Tax base 1,321,288,052 (8,727,286) (69,125,669) - (69,125,669) 1,243,435,098 27,900,000 13,500,000 1,321,288,052 - (77,852,954) (27,900,000) (13,500,000) (119,252,954) 40% (47,701,182) 648,455,000 4% - 648,455,000 4% 25,938,200 Net Deferred Tax (Asset)/ Liability as on 31 December 2017 174 4,167,700,964 (21,762,982) www.dhakabankltd.com
  175. 31 .12.2016 Taka Taxable/ (deductible) 31 December 2016 Fixed Asset excluding land Non adjusting difference for Vehicle exceeding Tk 2,500,000 Provision for gratuity Provision for Supper annuation fund Taxable temporary difference Applicable tax rate Deferred Tax Liability Tax base temporary difference 1,243,207,569 1,262,087,157 (18,879,588) (21,860,655) - (21,860,655) 1,221,346,914 3,459,668 2,500,000 1,262,087,157 (40,740,242) (3,459,668) (2,500,000) (46,699,910) 40% (18,679,964) 648,455,000 - - 648,455,000 4% 25,938,200 Net Deferred Tax Liability as on 31 December 2016 Deferred tax expense/ (Income) Closing Deferred tax Liability excluding liability for revaluation reserve for land Opening Deferred tax liability excluding liability for revaluation reserve for land 7,258,236 (21,762,982) 7,258,236 (29,021,217) 7,258,236 40,169,445 (32,911,209) Deferred tax (asset)/liability has been recognised and measured as per BAS 12 ‘Income taxes’ and BRPD circular no. 11 dated 12 December 2011. 15.8(a) Consolidated Deferred tax liabilities Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 15.9 Other Account Payable 3 months and 5 years Bangladesh/Pratirakhkha Sanchay Patra Application, Processing, Membership & Utilisation Fee Adjusting Account Credit Export Proceeds Suspense Vendors' Security Deposit Finance from Bill Discounting OBU Compensation Income of Islamic Banking operations Import Payment Suspense Baina against Non-Banking Assets (Note: 15.9.1) (Note: 15.9.2) (Note: 15.9.3) - 7,258,236 2,170,619 9,428,854 224,736,231 4,876,030 17,925,976 1,250,479,221 6,722,072 2,283,443,574 22,912,759 635,057,800 20,000,000 4,466,153,662 84,328,536 18,116,030 25,932,745 948,126,832 2,551,509 2,053,278,130 15,823,055 425,338,236 20,000,000 3,593,495,073 15.9.1 Authorised Dealer Branches maintained cover fund of Tk.2,283,443,574 through Off-shore Banking Unit (OBU) to further facilitate the exporters in accordance with FE Circular No.03 dated 04 February 2013 of Bangladesh Bank. 15.9.2 The amount of Tk.22,912,759 represents profits on various overdue Investments of Islamic Banking operations, which has been maintained as per Shariah Principle. 15.9.3 The amount represents the contract for sale (baina) executed for Tk.20,000,000 against the mortgaged land along with building which was mutated in the name of Dhaka Bank Limited (Note-11). The amount will be adjusted after receiving the rest amount of the auction and execution of the sale deed. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 175 Consolidated & Separate Financial Statements Revaluation reserve of land at carrying amount Applicable Tax Rate Deferred Tax Liability Carrying amount Auditor’s Report 31.12.2017 Taka
  176. Auditor ’s Report 31.12.2017 Taka 16 Share capital 16.1 Authorised Capital 1,000,000,000 ordinary shares of Tk.10 each 31.12.2016 Taka 10,000,000,000 10,000,000,000 The Bank increased its authorized capital from Tk 6,000 million to Tk 10,000 million by passing a special resolution in the Bank’s 4th Extra Ordinary General Meeting (EGM) held on 04 July 2010. 16.2 Issued, Subscribed and Paid-up Capital 687,900,686 ordinary shares (2016: 625,364,260 ordinary shares of Tk. 10.00 each) of Tk.10 each issued for cash Consolidated & Separate Financial Statements 34,395,034 ordinary shares ( 2016: 62,536,426 ordinary shares of Tk. 10.00 each) of Tk.10.00 each 6,879,006,860 6,253,642,600 343,950,340 625,364,260 7,222,957,200 6,879,006,860 The Bank has increased its paid up capital by issuance of 5% bonus share i.e 34,395,034 ordinary shares of Tk. 10.00 each as on 12/06/2017. The Bank had denominated its face value of share at Tk. 10.00 per share instead of Tk. 100.00 of each share by passing a special resolution in the banks 4th EGM held on 04 July 2010. 16.3 16.4 16.5 Initial Public Offer (IPO) Out of the total issued, subscribed and paid up capital of the bank 1,320,000 Ordinary shares of Tk.100 each amounting to Tk.132,000,000 was raised through public offering of shares held in 24 February 2000. Right Issue The Bank has increased its paid up capital twice by issuance of 2R:5 and 1R:2 right share at par on 15 April 2003 and 30 November 2005 respectively. History of Paid-up Capital Year 176 Declaration 1995 Opening Capital 1996 No.of share Value in Capital Cumulative 1,000,000 100,000,000 100,000,000 10% Stock Dividend 100,000 10,000,000 110,000,000 1997 20% Stock Dividend 220,000 22,000,000 132,000,000 1998 9% Stock & 10% Cash Dividend 1,438,800 143,880,000 275,880,000 1999 25% Cash - 275,880,000 2000 25% Cash & 10% Stock Dividend 275,880 27,588,000 303,468,000 2001 25% Cash & 25% Stock Dividend 758,670 75,867,000 379,335,000 2002 20% Cash & (15,17,340 nos. right shares) 1,517,340 151,734,000 531,069,000 2003 15% Cash & 25% stock Dividend 1,327,673 132,767,250 663,836,200 2004 35% Stock & 1R:2 5,642,608 564,260,813 1,228,097,000 2005 5% Stock Dividend 614,049 61,404,853 1,289,501,900 2006 10% Cash & 20% Stock Dividend 2,579,004 257,900,383 1,547,402,300 2007 25% Stock Dividend 3,868,506 386,850,575 1,934,252,875 2008 15% Cash & 10% Stock Dividend 1,934,253 193,425,287 2,127,678,200 2009 25% Stock Dividend (Split: Note 16.2) 244,682,988 531,919,540 2,659,597,700 2010 35% Stock Dividend 93,085,920 930,859,195 3,590,457,030 2011 5% Cash & 30% Stock Dividend 107,713,707 1,077,137,069 4,667,594,130 2012 16% Stock Dividend 74,681,503 746,815,034 5,414,409,190 2013 17% Cash & 5% stock Dividend 27,072,045 270,720,450 5,685,129,640 2014 14% Cash & 10% stock Dividend 56,851,294 568,512,945 6,253,642,600 2015 6% Cash & 10% stock Dividend 62,536,424 625,364,239 6,879,006,860 2016 10% Cash & 5% stock Dividend 34,395,033 343,950,340 7,222,957,200 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  177. Percentage of shareholding Particulars 31 .12.2017 % of holdings Value of Shares (Tk.) - Financial Institutions 11.7447 848,310,550 6.0800 418,244,060 Sponsors 39.6152 2,861,389,280 39.0994 2,689,652,840 General Public 37.8668 2,735,097,010 36.5356 2,513,285,460 Mutual Funds 0.7183 51,879,870 0.7973 54,847,430 Unit Funds 0.5134 37,083,440 0.5785 39,796,150 ICB Account Holders 0.0833 6,018,690 0.0957 6,584,110 ICB Head office (Investors A/c) 0.0488 3,524,920 0.0650 4,470,340 ICB Mutual Fund 0.0014 100,000 - - - 11.6528 801,598,130 ICB Unit Fund 0.0076 550,000 0.0032 222,580 ICB AMCL Unit Fund 0.0208 1,500,000 0.0408 2,809,610 Non-Resident Bangladeshi (NRB) 0.2526 18,243,260 0.2559 17,604,410 - - 0.0200 1,375,000 ICB Asset Management Company Ltd. 0.1249 9,020,000 - - ICB Capital Management Limited 0.1801 13,009,760 0.3326 22,882,160 Other Investor's A/C 8.6941 627,969,570 4.2924 295,276,790 99.8720 7,213,696,350 99.8494 6,868,649,070 Particulars 31.12.2017 % of holdings Value of Shares (Tk.) 2. Foreign Ownership Financial Company Individual Investors 0.1280 0.1280 100.00 9,260,850 9,260,850 7,222,957,200 31.12.2016 % of holdings Value of Shares (Tk.) 0.1506 0.1506 100.00 10,357,790 10,357,790 6,879,006,860 Classification of shareholders by holding 31.12.2017 Holdings No. of share holders 31.12.2016 Number of Shares No. of share holders Number of Shares 1 to 500 shares 12,225 1,835,880 14,645 2,083,679 501 to 5,000 shares 10,911 19,282,235 11,393 17,951,139 1,625 12,115,480 1,180 8,031,781 10,001 to 20,000 shares 891 13,044,438 518 7,259,129 20,001 to 30,000 shares 340 8,401,683 185 4,551,067 30,001 to 40,000 shares 179 6,378,595 86 3,012,064 40,001 to 50,000 shares 159 7,431,536 48 2,236,984 50,001 to 100,000 shares 271 20,807,920 106 7,579,612 100,001 to 1,000,000 shares 310 88,740,899 146 44,768,572 86 544,257,054 81 590,426,659 26,997 722,295,720 28,388 687,900,686 5,001 to 10,000 shares 1000001 & above shares www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 177 Consolidated & Separate Financial Statements 1. Local Ownership Banking Companies ICB Mutual Fund 16.7 31.12.2016 % of holdings Value of Shares (Tk.) Auditor’s Report 16.6
  178. Auditor ’s Report 16.8 Name of the Directors and their shareholdings as on 31 December Consolidated & Separate Financial Statements Sl. No. 2017 Value of share No. of share (Tk.) 24,379,667 243,796,670 Mr. Reshadur Rahman (Chairman) 2 Mrs. Rokshana Zaman (Vice Chairman) 17,694,260 176,942,600 13,771,792 137,717,920 3 Mr. Abdul Hai Sarker (Director) 16,029,668 160,296,680 15,266,351 152,663,510 4 Mr. Altaf Hossain Sarker (Director) 20,143,714 201,437,140 19,184,490 191,844,900 5 Mr. Mohammed Hanif (Director) 22,001,572 220,015,720 20,953,879 209,538,790 6 Mr. Md. Amirullah (Director) 14,447,630 144,476,300 13,759,648 137,596,480 7 Mr. Abdullah Al Ahsan (Director) 14,448,872 144,488,720 13,760,832 137,608,320 8 Mr. Khondoker Monir Uddin (Director) 20,743,363 207,433,630 19,755,585 197,555,850 9 Mr. Tahidul Hossain Chowdhury (Director) 14,506,481 145,064,810 13,815,697 138,156,970 10 Mr. Jashim Uddin (Director) 14,447,762 144,477,620 13,759,774 137,597,740 11 Mr. Khondoker Jamil Uddin (Director) 14,447,562 144,475,620 13,759,583 137,595,830 12 Mr. Mirza Yasser Abbas (Director) 26,602,504 266,025,040 25,335,719 253,357,190 13 Mr. Amanullah Sarker (Director) 14,447,633 144,476,330 13,759,651 137,596,510 14 Mr. M.N.H. Bulu (Director) 14,464,553 144,645,530 15 Mr. Syed Abu Naser Bukhtear Ahmed (Independent Director) Mr. M.A. Yussouf Khan (Independent Director) Total 13,775,765 137,757,650 nil nil - - nil nil - - 233,877,497 2,338,774,970 248,805,241 2,488,052,410 Capital to Risk Weighted Assets Ratio (CRAR) - as per BASEL III Tier - I Capital (Going - Concern Capital) Common Equity Tier 1 Capital (CET 1) Paid up Capital Statutory Reserve General Reserve Surplus in Profit and Loss Account Regulatory Adjustment: Deferred Tax Assets (DTA) Book value of Goodwill and value of all other Intangible Assets** (Written down value of Software which is treated as Intangible Assets) Additional Tier 1 Capital (AT 1) Total Tier - I Capital Tier - II Capital (Going - Concern Capital) General Provision Asset Revaluation Reserve (50%) Revaluation Reserve for HTM & HFT Securities (50%) Non-convertible Subordinated Bond Regulatory Adjustment (if any) Total Tier - II Capital A. Total Eligible Capital 178 2016 Value of share No. of share (Tk.) 23,218,731 232,187,310 1 16 16.9 Name of Directors with Designation Dhaka Bank Limited Annual Report 2017 (Note - 16.9.1) (Note-18.2) (Note - 16.9.2) (Note-16.9.3) 31.12.2017 Taka 31.12.2016 Taka 7,222,957,200 6,418,181,801 6,560,631 953,467,037 14,601,166,669 6,879,006,860 5,850,338,779 122,080,584 942,269,273 13,793,695,496 21,762,982 39,783,794 14,539,619,893 14,539,619,893 23,939,277 13,769,756,219 13,769,756,219 4,202,642,329 129,691,000 12,336,327 3,000,000,000 7,344,669,656 7,344,669,656 21,884,289,549 4,458,696,293 194,536,500 18,504,491 3,400,000,000 8,071,737,285 8,071,737,285 21,841,493,503 www.dhakabankltd.com
  179. 31 .12.2016 Taka 144,737,835,014 22,137,025,678 166,874,860,692 129,904,754,729 17,131,092,346 147,035,847,075 Market Risk Operational Risk Total Risk-weighted Assets 3,701,657,912 12,376,972,302 182,953,490,906 1,442,876,247 11,311,260,340 159,789,983,662 C. Required Capital on Risk Weighted Assets 20,582,267,727 15,978,998,366 1,302,021,822 11.96% 5,862,495,137 13.67% B. Risk Weighted Assets Credit Risk Balance sheet business Off- Balance sheet business D. Capital Surplus / (Shortfall) [A-C] Total Capital Ratio (%) 2017 Required (%) 2016 Held (%) Required (%) Held (%) Tier - I Capital (Going Concern Capital) 5.50% 7.95% 5.50% 8.62% Tier - II Capital (Gone Concern Capital) - 4.01% - 5.05% 11.250% 11.96% 10.625% 13.67% Total 16.9.1 As per Risk Based Capital Adequacy Guideline for Banks under BASEL - III, 2014, the Tier 2 Capital under heading “General Provision” was limited to the actual amount of General Provision or 1.25% of Credit Risk Weighted Assets, which is lower. In subsequent BRPD Circular Letter No. 05 dated May 31, 2016, full amount of General Provision is allowed to be treated as part of Tier-II Capital. 16.9.2 As per risk based capital adequacy guidelines for banks under BASEL - III, the revaluation reserve for assets and securities will diminish at 20% per year on the base amount of 31 December 2014 so that the whole revaluation reserve amount will not get capital treatment after the end of five years (starting from January 2015). 16.9.3 As per the risk based capital adequacy guidelines in line with Basel-III issued in December 2014 by Bangladesh Bank, the amount of subordinated debt in the regulatory capital will have to be reduced (amortized) in the last 05 (five) years of the bond's life by 20% from the amount of the instrument. According to the rules, an amount of Tk.1,600,000,000 of non-convertible subordinated bond has not been treated as Supplementary Capital (Tier-2) in 2016. According to the guidelines, Tk.400,000,000 in 2013, Tk.800,000,000 crore in 2014, Tk.1,200,000,000 in 2015 and Tk.1,600,000,000 in 2016 of non convertible subordinated bond has not been treated as supplementary capital (Tier-2). It has been fully redeemed in 2017 and has not contributed in Bank's Capital. DBL 2nd Subordinated Bond amounting Tk. 3,000,000,000.00 was issued on May, 2016 which is treated as Supplementary Capital (Tier2). The tenure of the bond is 7 years. Hence, the reduction of the bond amount from regulatory capital will be started from May 2018. Capital to Risk weighted Assets Ratio (CRAR) has been calculated as per risk based capital adequacy guidelines in line with BASEL-III issued in December 2014, DOS Circular No. 02 dated 04 April 2015 & BRPD Circular No. 05 dated 31 May 2016 on reporting CRAR & leverage ratio by Bangladesh Bank. 31.12.2017 16.9(a) Consolidated Capital to Risk Weighted Assets Ratio (CRAR) - as per BASEL III Tier - I Capital (Going - Concern Capital) Common Equity Tier 1 Capital (CET 1) Paid up Capital Minoriy Interest Statutory Reserve General Reserve Surplus in profit and loss account/ Retained Earnings Regulatory Adjustment: Book value of Goodwill and value of all other Intangible Assets** (**Written down value of Software which is treated as Intangible Assets) Deferred Tax Assets (DTA) Additional Tier 1 Capital (AT 1) Total Tier - I Capital www.dhakabankltd.com Taka 31.12.2016 Taka 7,222,957,200 57,329 6,418,181,801 6,560,631 1,502,345,228 15,150,102,189 6,879,006,860 45,991 5,850,338,779 122,080,584 1,385,575,519 14,237,047,733 39,783,794 23,939,277 23,901,364 15,086,417,031 15,086,417,031 2,170,621 14,210,937,834 14,210,937,834 Dhaka Bank Limited Annual Report 2017 179 Consolidated & Separate Financial Statements Capital Requirement Auditor’s Report 31.12.2017 Taka
  180. Auditor ’s Report 31.12.2017 Taka Tier - II Capital (Gone Concern Capital) General Provision Asset Revaluation Reserve (50%) (Note-18.2) Revaluation Reserve for HTM & HFT Securities (50%) [Note-2.5(a) & (b) and 18.3] Non-convertible Subordinated Bond (Note-16.9.1) 4,458,696,293 194,536,500 18,504,491 3,400,000,000 8,071,737,285 Regulatory Adjustment (if any) Total Tier - II Capital 4,202,642,329 129,691,000 12,336,327 3,000,000,000 7,344,669,656 7,344,669,656 A. Total Eligible Capital 22,431,086,687 22,282,675,119 146,192,738,000 22,137,025,678 168,329,763,678 6,853,922,949 12,812,895,731 187,996,582,358 132,292,271,259 17,131,092,346 149,423,363,605 3,782,048,423 11,777,306,397 164,982,718,425 21,149,615,515 17,529,413,833 1,281,471,172 4,753,261,286 11.93% 13.51% B. Risk Weighted Assets Credit Risk Balance sheet business Off- Balance sheet business Consolidated & Separate Financial Statements 31.12.2016 Taka Market Risk Operational Risk Total Risk-weighted Assets C. Required Capital on Risk Weighted Assets (11.25% on Total Risk Weighted Assets) D. Capital Surplus / (Shortfall) [A-C] Total Capital Ratio (%) Capital requirement 2017 Required (%) 8,071,737,285 2016 Held (%) Required (%) Held (%) Tier - I Capital (Going Concern Capital) 5.50% 8.02% 5.50% 8.61% Tier - II Capital (Gone Concern Capital) - 3.91% - 4.89% 11.250% 11.93% 10.625% 13.51% CRAR Capital to Risk weighted Assets Ratio (CRAR) has been calculated as per risk based capital adequacy guidelines in line with BASEL-III issued in December 2014, DOS Circular No. 02 dated 04 April 2015 & BRPD Circular No. 05 dated 31 May 2016 on reporting CRAR & leverage ratio by Bangladesh Bank. 17. Statutory reserve Opening balance Add: Addition during the year 18. Other reserve General reserve Assets revaluation reserve Investment revaluation reserve 18(a) Consolidated other Reserve Dhaka Bank Limited Dhaka Bank Securities Limited Dhka Bank Investment Limited 31.12.2017 Taka 5,850,338,779 567,843,022 6,418,181,801 31.12.2016 Taka 5,300,741,818 549,596,961 5,850,338,779 As per Section 24 of Bank Companies Act 1991 (amended up to 2013), 20% of pre tax profit has been transferred to Statutory Reserve Account. 180 Dhaka Bank Limited Annual Report 2017 (Note 18.1) (Note 18.2) (Note 18.3) 6,560,631 622,516,800 21,562,316 650,639,747 122,080,584 622,516,800 29,513,562 774,110,946 650,639,747 33,700,000 684,339,747 774,110,946 25,900,000 800,010,946 www.dhakabankltd.com
  181. General Reserve Opening balance Add : Addition during the year 122,080,584 122,080,584 115,519,953 6,560,631 Less: Transfer to Capital Account for issue of Bonus Shares 18.2 31.12.2016 Taka 160,272,618 160,272,618 38,192,034 122,080,584 As per Rule, Bonus share / cash dividend may be issued out of surplus of the profit of the year. If there is any shortfall, that may be covered from General Reserve Account as per approval of the Board of Directors of the bank. Assets revaluation reserve Opening balance 622,516,800 648,455,000 Add: Addition during the year (25,938,200) 622,516,800 622,516,800 Location 71, Purana Paltan Line, VIP Road, Naya Paltan, Dhaka Area of Land 16.50 decimal Investment revaluation reserve Revaluation reserve for HTM securities Opening balance Add: Addition during the year Less: Adjustment during the year Closing Balance Revaluation reserve for HFT securities Opening balance Add: Addition during the year Less: Adjustment during the year Closing Balance Value before Revaluation Revalued Amount 51,545,000 Revaluation Reserve 700,000,000 648,455,000 28,702,360 (7,140,044) 21,562,316 43,125,493 299,685 (14,722,817) 28,702,360 811,202 (811,202) 21,562,316 20,042,955 157,955,028 (177,186,781) 811,202 29,513,562 Interest income of HTM and HFT securities transferred to Revaluation Reserve Account as per Bangladesh Bank DOS Circular No. 05 dated 26.05.2008 of which 50% of revaluation reserve for HTM & HFT used to be treated as Supplementary Capital. Now as per Basel III accord, capital treatment of the same is being diminished by 20% each year. 19. Retained earnings Opening balance Add: Post-tax profit for the year Transferred from general reserve Adjustment made during the year Less: Transfer to statutory reserve Stock dividend Cash dividend 942,269,273 1,495,371,858 115,519,953 2,553,161,084 962,390,782 1,465,928,034 38,192,034 25,938,200 2,492,449,050 567,843,022 343,950,340 687,900,686 1,599,694,048 953,467,037 549,596,961 625,364,260 375,218,556 1,550,179,777 942,269,273 Adjustment made in 2016 is related to deferred tax arises from asset revaluation reserve which is a component of other comprehensive income but in the year 2015 it was recognized as expense in profit and loss account. As a result retained earnings 2015 was understated by Taka 25,938,200. 19(a) Consolidated Retained earnings (attributable to equity holders of DBL) Opening balance Add: Post-tax profit for the year Transferred from general reserve Adjustment made during the year Less: Transfer to statutory reserve Transfer to investment fluctuation fund Stock dividend Cash dividend Stock dividend paid by subsidiary 1,385,575,519 1,608,743,805 115,519,953 3,109,839,276 1,265,053,471 1,552,271,589 38,192,034 85,938,200 2,941,455,295 567,843,022 7,800,000 343,950,340 687,900,686 1,607,494,048 1,502,345,228 549,596,961 5,700,000 625,364,260 375,218,556 1,555,879,777 1,385,575,519 Consolidated retained earnings has been adjusted in 2016 by Taka 60,000,000 for the stock dividend declared by Dhaka Bank Securities Limited which has been deducted from retained earnings in 2011 and amount of Taka 25,938,200 for deferred tax expense recognized in 2015 from asset revaluation reserve. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 181 Consolidated & Separate Financial Statements Dhaka Bank Limited revalued the land during the year 2011 by an independent valuation firm according to Paragraph 36 of BAS-16 as per approval of the Board of Directors of the Bank. As per para 62 of BAS-12- Income Taxes, deferred tax liability arises from asset revaluation reserve shall be recognized in other comprehensive income. But deferred tax liability has been deducted from asset revaluation reserve as there is no line item of other comprehensive income in the financial statements of Bank. 18.3 Auditor’s Report 18.1 31.12.2017 Taka
  182. Auditor ’s Report 31.12.2017 Taka 19.1(a) Non-controlling interest Opening balance Add: Addition for the year from Dhaka Bank Securities Limited Addition for the year from Dhaka Bank Investment Limited Dhaka Bank Investment Limited Consolidated & Separate Financial Statements 20. Profit & Loss Account Income Interest, discount and similar income Dividend Income Fee, Commission and Brokerage Gains less Losses arising from dealing securities Gains less Losses arising from investment securities Gains less Losses arising from dealing in foreign currencies Income from non-banking assets Other operating income Profit less Losses on interest rate changes Expenses Interest, fee and commission Administrative expenses Other operating expenses Depreciation and repairs of bank’s assets 21. Contingent liabilities Acceptance & Endorsement Letters of Credit Usance/Defer Letter of Credit Sight Letter of Credit Back to Back Letter of Credit BD-Sight (EDF) Back to Back - Local Letters of Guarantee Bid Bond Performance Bond Counter Guarantee Other Guarantee Shipping Guarantee Bills for collection Local bills for collection Foreign bills for collection Other contingent liabilities Bangladesh/Pratirakhkha/Paribar Sanchay Patra ICB Unit certificate Forward exchange position US investment & premium Bond (Note: 21.2) (Note: 21.1) 31.12.2016 Taka 45,991 10,807 531 57,329 37,355 8,105 530 45,991 13,714,929,994 10,405,000 1,518,319,853 2,875,187,984 1,358,421,120 234,570,211 19,711,834,161 13,165,602,608 14,750,000 1,075,091,210 3,250,970,891 442,285,343 243,330,435 18,192,030,488 10,336,326,037 3,046,327,147 766,974,424 357,664,024 14,507,291,631 5,204,542,530 9,452,611,371 2,443,649,926 555,116,746 337,001,950 12,788,379,993 5,403,650,494 32,868,131,246 27,085,569,676 11,862,464,424 8,300,578,082 2,707,268,694 1,181,871,874 3,033,386,602 23,083,135,224 25,263,660,677 17,447,623,500 5,645,894,541 6,035,185,722 2,249,193,087 1,174,023,526 2,343,326,623 19,928,711,771 1,191,487,419 11,910,943,564 1,400,540,558 8,580,163,683 11,591,497,583 6,713,162,813 4,878,334,770 3,493,879,200 2,223,155,000 51,340,900 910,288,000 309,095,300 98,122,212,930 1,431,426,409 9,438,841,732 1,003,016,404 8,055,427,226 8,250,158,750 5,540,907,546 2,709,251,203 2,036,246,400 1,569,255,000 51,340,900 393,609,500 22,041,000 72,926,401,097 21.1 The amount represents the forward position of foreign currencies at the end of the period December 31, 2017 which are very short term in nature and adjustment are made on a continuous basis. 21.2 Letters of Guarantee Money for which the bank is contingently liable in respect of guarantees given favouring: Directors Government 16,303,298,433 14,075,372,874 Bank and other financial institutions 1,071,468,991 925,047,507 Others 5,708,367,800 4,928,291,390 23,083,135,224 19,928,711,771 182 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  183. 22 (a) Consolidated interest income/profit on investments Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 22) Less: Inter company transaction 23. Interest paid/profit on deposits and borrowings, etc. Savings Account including Mudaraba Special Notice Deposit Term deposits Deposits under Scheme Call borrowing & fund placement Non-convertible subordinate bond Repurchase Agreement (REPO) Overseas accounts charges Leased assets HTM / HFT securities Others 23.1 Others Interest paid on NFCD Interest/profit paid against Refinance from Bangladesh Bank Interest paid on Gift Cheque Interest paid on Excel Account Interest on Finance Bill Rediscounting Interest on Fund Borrowing-OBU Treasury Bond Premium (Note: 23.1) (Note: 23.1.a) 6,924,033,644 3,528,189,671 554,541 928,859,532 35,760,079 805,292,773 14,282,494 236,862,524 82,651,164 409,376,626 32,317,383 288,376,156 44,424,759 13,330,981,344 334,167,480 49,781,170 13,714,929,994 6,478,302,517 3,498,399,485 4,914,338 1,016,920,120 25,418,259 865,599,697 14,169,262 204,328,530 87,054,426 318,049,163 38,336,690 261,870,596 38,402,705 12,851,765,788 282,040,433 31,796,387 13,165,602,608 13,714,929,994 147,540,545 13,862,470,539 135,265,396 13,727,205,143 13,165,602,608 159,231,617 13,324,834,225 151,362,355 13,173,471,870 484,868,100 581,181,740 4,566,408,691 2,633,244,523 663,057,718 372,051,389 24,054,364 1,625,835 19,996,624 464,770,265 525,066,788 10,336,326,037 435,666,529 374,213,741 4,843,859,027 2,289,916,778 224,209,111 340,945,696 31,036,292 5,194,144 30,372,932 475,718,324 401,478,798 9,452,611,371 49,819 244,118,492 684,181 534,528 102,307,505 155,058,983 22,313,280 525,066,788 1,753,949 76,935,883 599,625 567,168 85,703,863 30,915,328 205,002,983 401,478,798 23.1.a Treasury Bond Premium expenses reflects the amount of interest accrued upto the date of purchase of the Treasury Bond. This amount has been paid at the time of purchase of the Bond. 23(a) Consolidated Interest / Profit Paid On Deposits & Borrowings, etc. Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Less: Inter company transaction www.dhakabankltd.com (Note: 23) 10,336,326,037 146,833,391 10,483,159,428 143,554,911 10,339,604,517 9,452,611,371 158,403,128 9,611,014,500 159,639,004 9,451,375,496 Dhaka Bank Limited Annual Report 2017 183 Consolidated & Separate Financial Statements 22. Interest income/profit on investments Term Loan Overdrafts Loan against Imported Merchandise/Murabaha Loan against Trust Receipt Packing Credits Cash Credits / Bai-Muajjal Payment against Documents House Building Loan Transport Loan Syndicate Loan Hire Purchase Lease Rental/Izara Credit Card Total Interest / profit & Rental Income on loans & advances Call Lending and Fund Placement with banks Accounts with Foreign Banks 2016 Taka Auditor’s Report 2017 Taka
  184. Auditor ’s Report 24. Income from investment Interest on Treasury bills / bonds Profit on Govt. Islamic Bond Capital Gain on Government Securities Interest on Commercial Papers Interest on Subordinated Bond Dividend on Shares 24(a) Consolidated income from investment Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 24) Consolidated & Separate Financial Statements 25. Commission / fees and exchange earnings Commission / fees and exchange earnings Commission on Letter of Guarantee Commission on Remittance / Bills Processing fee consumer loan Other comm./ fees (Clearing, cash tr., risk prem., utilisation fee etc.) Rebate from foreign bank outside Bangladesh Commission & fee on Credit Card Exchange gain including gain from foreign currency dealings 25(a) Consolidated commission / fees, exchange earnings & brokerage Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 26. Other operating income Other Income on Credit Card and ATM Incidental charges Supervision & monitoring charges Management Fees Swift charge recoveries Locker rent Capital gain on sale of Shares Profit from sale of fixed assets Recovery from written off loans (Note: 25) (Note: 26.1) 26.1 Capital gain on sale of Shares Sale proceeds of Shares Less: Cost of Shares 26(a) Consolidated other operating income Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Less: Inter company transaction 184 Dhaka Bank Limited Annual Report 2017 (Note: 26) 2017 Taka 2016 Taka 1,934,340,553 930,727 665,172,853 27,565,278 246,074,097 10,405,000 2,884,488,508 2,116,156,227 879,375 988,590,387 40,062,500 77,793,356 14,750,000 3,238,231,845 2,884,488,508 210,428,761 3,094,917,268 3,238,231,845 166,749,241 3,404,981,086 563,340,360 320,970,818 51,891,634 7,235,119 519,608,057 455,719,713 257,878,307 33,662,464 8,582,035 279,540,500 23,512,971 31,760,894 1,358,421,120 2,876,740,973 17,010,516 22,697,675 442,285,343 1,517,376,553 2,876,740,973 120,269,514 2,997,010,487 1,517,376,553 69,763,477 1,587,140,031 19,365,583 83,573,941 4,819,385 39,774,621 27,338,507 8,005,900 1,104,476 2,490,121 49,202,153 235,674,687 14,122,330 70,055,902 4,376,408 115,054,274 27,977,283 7,766,300 27,489,047 3,977,938 270,819,482 1,226,336 121,860 1,104,476 119,552,858 100,579,094 18,973,764 235,674,687 1,059,799 8,289,515 245,024,002 8,289,515 236,734,487 270,819,482 874,258 8,276,649 279,970,389 8,276,649 271,693,740 www.dhakabankltd.com
  185. 27 (a) Consolidated salary and allowances Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 27) 28(a) Consolidated rent, taxes, insurance, lighting etc. Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 28) 29. Legal expenses Legal expenses Other professional fees 29(a) Consolidated Legal expenses Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 29) 30. Postage, stamps, telecommunication, etc. Stamps, postage & courier Telephone charges Fax, internet, radio link, & DDN charges 30(a) Consolidated postage, stamps, telecommunication, etc. Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 31. Salary and allowances Table stationery Printing stationery Security stationery Computer stationery Advertisement www.dhakabankltd.com (Note: 30) 730,087,379 1,005,668,997 211,656,404 133,824,242 27,900,000 70,348,849 2,179,485,872 620,627,625 789,655,737 126,263,285 110,284,757 3,459,668 61,242,651 1,711,533,723 2,179,485,872 42,148,640 2,221,634,512 1,711,533,723 32,834,624 1,744,368,347 422,387,999 69,488,659 32,246,106 110,331,675 634,454,439 332,403,057 62,924,552 11,410,121 101,672,663 508,410,393 634,454,439 14,984,035 649,438,474 508,410,393 20,296,028 528,706,421 14,929,826 5,326,667 20,256,493 13,058,134 4,337,168 17,395,303 20,256,493 1,429,750 21,686,243 17,395,303 397,000 17,792,303 933,404 9,121,901 34,549,003 44,604,307 2,176,449 9,104,847 28,782,791 40,064,088 44,604,307 811,443 45,415,750 40,064,088 610,064 40,674,152 12,369,660 51,347,622 8,875,107 17,008,266 58,602,653 148,203,308 11,746,301 45,963,389 10,776,416 21,176,294 58,613,666 148,276,067 Dhaka Bank Limited Annual Report 2017 185 Consolidated & Separate Financial Statements 28. Rent, taxes, insurance, electricity, etc. Office rent Electricity and lighting Regulatory charges Insurance 2016 Taka Auditor’s Report 27. Salary and allowances Basic salary Allowances Bonus & ex-gratia Leave fare assistance Bank contribution to gratuity fund Bank's contribution to provident fund 2017 Taka
  186. Auditor ’s Report 31(a) Consolidated stationery, printing, advertisement, etc. Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 2017 Taka (Note: 31) 32. Chief executive’s salary and fees Basic salary House rent allowances Entertainment allowances House maintenance allowances Medical allowances Bonus Consolidated & Separate Financial Statements 32(a) Consolidated Chief Executive’s salary and fees Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 32) 33. Directors’ fees Directors fees Fees related to shariah council meeting Board/Executive committee / Shariah council meeting expenses 2016 Taka 148,203,308 1,912,203 150,115,511 148,276,067 1,192,067 149,468,134 11,385,183 300,000 120,000 300,000 120,000 1,870,000 14,095,183 10,350,167 300,000 120,000 300,000 120,000 1,700,000 12,890,167 14,095,183 14,095,183 12,890,167 12,890,167 3,523,600 193,200 130,744 3,847,544 3,459,200 138,000 102,986 3,700,186 Directors fees are paid following the Bangladesh Bank’s BRPD Circular No. 03 dated 18 January 2010 and subsequent BRPD Circular Letter # 11 dated 04 October 2015. 33(a) Consolidated Directors’ fees Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 33) 34. Auditor’s fees 34(a) Consolidated Auditor’s fees Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 35. Depreciation and repairs of Bank’s assets Depreciation & Amotization: Building Furniture & fixture Office appliance & equipment Computer Software Motor vehicle Repair & Maintenance: Office Premises Office Equipment Office Furniture Motor Vehicle Computer and accessories Software (AMC) 186 Dhaka Bank Limited Annual Report 2017 (Note: 34) 3,847,544 1,173,306 5,020,850 3,700,186 938,814 4,639,000 1,380,000 1,380,000 1,380,000 287,500 115,000 1,782,500 1,380,000 287,500 115,000 1,782,500 15,568,030 42,590,012 135,913,699 15,699,512 13,916,750 26,214,926 249,902,929 15,053,353 41,375,613 118,539,143 16,308,572 11,840,335 18,859,474 221,976,490 37,762,286 39,053,497 2,149,292 11,276,333 3,036,708 14,482,979 107,761,095 357,664,024 31,644,125 34,815,797 1,828,139 9,383,002 3,106,270 34,248,127 115,025,460 337,001,950 www.dhakabankltd.com
  187. (Note: 35) 36. Other expenses (Note: 36.1) 36.1 Fund for Dhaka Bank Foundation Opening balance Add: Addition during the year Less: Transferred to DBL Foundation trustee account Closing balance 357,664,024 7,979,080 365,643,104 337,001,950 8,276,753 345,278,702 296,781,950 24,030,791 33,727,365 3,864,232 167,400,367 4,480,719 21,505,923 13,890,048 2,789,726 1,103,270 16,826,780 15,602,500 1,523,002 5,646,421 3,097,343 2,393,950 82,302,267 1,895,196 19,632,043 7,548,499 13,500,000 27,432,031 248,323,545 23,933,477 28,685,193 1,764,307 64,906,944 3,844,090 10,721,797 16,042,756 2,076,247 816,001 10,999,935 10,447,500 1,675,847 4,248,771 2,737,218 2,205,597 61,648,831 1,780,062 16,752,737 11,526,042 2,500,000 27,479,849 766,974,424 555,116,746 27,479,849 27,432,031 (27,479,849) 27,432,031 23,999,322 27,479,849 (23,999,322) 27,479,849 Dhaka Bank Limited has been contributing towards Dhaka Bank Foundation since 2003. In 2016, the Bank has contributed Tk. 27,479,849 for Dhaka Bank Foundation @1% on pre tax profit (i.e. profit after provision for loans and other provisions) as per the decision of the Executive Committee of the Board of Directors which was transferred to DBL Foundation Trustee Account in 2017. 36(a) Consolidated Other Expenses Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Less: Adjustment for prior year preliminary expenses of DBIL 37. Provision against loans & advances On classified loans & advances On unclassified loans & advances www.dhakabankltd.com (Note: 36) 766,974,424 9,690,378 5,300 776,670,102 555,116,746 8,404,428 5,300 563,526,474 2,614,003,456 (460,022,367) 2,153,981,089 954,049,421 1,490,467,788 2,444,517,209 Dhaka Bank Limited Annual Report 2017 187 Consolidated & Separate Financial Statements Contractual service charge (own & third party) Petrol, oil and lubricants (vehicle & generator) Entertainment (canteen & other) AGM expenses Donation Subscription Travelling Expenses Conveyance Branch opening expenses Godown expenses Training expenses Bond issue expenses Books and papers WASA charges Staff uniform Potted plants Business development & promotion Reuters charges Fees and expenses for credit card ATM network service charges Contribution to superannuation fund Dhaka Bank Foundation 2016 Taka Auditor’s Report 35(a) Consolidated depreciation and repairs of bank’s assets Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 2017 Taka
  188. Auditor ’s Report 37(a) Consolidated provision against loans & advances Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Consolidated & Separate Financial Statements 38. Provision for diminution in value of investments In quoted shares Opening balance Less: Adjustment during the year Add: Addition during the year Closing balance Unquoted 38(a) Consolidated provision for diminution in value of investments Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited 39. Other provisions Provision for off balance sheet items Provision for other assets (Note: 39.1) (Note: 15.6) 39.1 Provision against off balance sheet exposures On off balance sheet exposures 2017 Taka 2016 Taka 2,153,981,089 2,153,981,089 2,444,517,209 2,444,517,209 - 4,967,735 (4,967,735) - - - 203,968,402 203,968,402 199,821,481 3,127,000 202,948,481 203,968,402 199,821,481 Bank has made a provision ofTk.203,968,402 @ 1.00% on off balance sheet exposure (i.e. Acceptence & Endorsement, Letter of Credit & Letter of Guarantee) as per BRPD Circular number 14 dated 23.09.2012 from current year’s profit. 39(a) Consolidated other provisions Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 39) 203,968,402 80,000,000 283,968,402 202,948,481 50,000,000 252,948,481 40. Earnings Per Share (EPS) Net profit after taxation Number of ordinary shares outstanding 1,495,371,858 722,295,720 Earnings Per Share (EPS) -Restated 2.07 1,465,928,034 722,295,720 2.03 Earnings Per Share (EPS) has been computed by dividing the basic earnings by the number of ordinary shares outstanding as of 31 December 2017 as per Bangladesh Accounting Standard (BAS)-33. According to BAS-33, EPS for the period ended 31 December 2016 was restated for the issues of bonus shares (for 2016) in 2017. 40(a) Consolidated Earnings Per Share (CEPS) Net profit after taxation Less: Non-controlling interest Net profit attributable to the shareholders of parent company Number of ordinary shares outstanding Consolidated Earnings per share (CEPS)- Restated 188 Dhaka Bank Limited Annual Report 2017 1,608,755,143 11,338 1,608,743,805 722,295,720 2.23 1,552,280,224 8,635 1,552,271,589 722,295,720 2.15 www.dhakabankltd.com
  189. 41 . Receipts from other operating activities Exchange earnings Other operating income Non operating income 41(a) Consolidated receipts from other operating activities Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 41) Less: Intercompany Transactions Dhaka Bank Foundation 42(a) Consolidated payments for other operating activities Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 42) 43. Other assets Stationery, stamps, printing materials etc. Advance rent and advertisement Security deposit Preliminary, formation, work in progress and organization expenses, renovation / development expenses and prepaid expenses Branch adjustments Suspense account Other assets Increase / (decrease) during the year 43(a) Consolidated Other Assets Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited (Note: 43) 44. Other liabilities Provision against Expenses Provision for Other Assets Interest Suspense Account Other Account Payable Amount transferred to DBL Foundation Trustee Account Adjustment of loss on shares from provision for decrease in value of investment Rebate disbursed to Good Borrowers Adjustment of Classified Loan from Provision Increase / (decrease) during the year 44(a) Consolidated other liabilities Dhaka Bank Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited www.dhakabankltd.com (Note: 44) 54,767,559 183,982,413 238,749,972 238,749,972 102,799,399 266,841,544 369,640,943 369,640,943 238,749,972 1,059,799 8,289,515 248,099,286 8,289,515 239,809,771 369,640,943 874,258 8,276,649 378,791,850 8,276,649 370,515,201 634,454,439 3,847,544 107,761,095 766,974,424 1,513,037,502 (27,432,031) 1,485,605,471 508,410,393 3,700,186 115,025,460 555,116,746 1,182,252,785 (27,479,849) 1,154,772,936 1,485,605,471 10,863,684 5,300 1,496,474,455 1,154,772,936 9,343,242 5,300 1,164,121,478 44,821,499 402,337,776 22,349,966 30,044,856 298,041,631 21,988,606 3,429,830,055 66,491,777 269,019,211 13,667,079,236 17,901,929,519 2,860,612,139 39,897,115 139,958,704 5,737,476,228 9,128,019,279 8,773,910,241 3,812,918,811 (8,773,910,241) (25,087,237) (8,798,997,478) (3,812,918,811) (59,889,117) (3,872,807,928) 51,466,437 12,151,156 1,874,880,813 4,466,153,662 6,404,652,069 13,576,027 11,797,024 1,831,665,015 3,593,495,073 5,450,533,139 (27,479,849) (4,308,234) (615,889,054) 306,441,792 (23,999,322) (4,967,735) (498,122,564) (453,614,536) 306,441,792 25,062,438 115,000 331,619,229 (453,614,536) (110,664,741) (564,279,276) Dhaka Bank Limited Annual Report 2017 189 Consolidated & Separate Financial Statements 42. Payments for other operating activities Rent, taxes, insurance, lighting etc. Directors' fees & meeting expenses Repair of bank's assets Other expenses 2016 Taka Auditor’s Report 2017 Taka
  190. Dhaka Bank Limited Highlights on the overall activities of the Bank Consolidated & Separate Financial Statements Auditor’s Report SL. No. 190 Particulars 1 Paid up Capital 2 Total Capital 3 Capital surplus / (deficit) (Note - 16.9) 4 31.12.2017 31.12.2016 7,222,957,200 6,879,006,860 21,884,289,549 21,841,493,503 882,744,135 5,862,495,137 Total Assets 229,452,854,497 202,191,595,861 5 Total Deposits 170,035,420,927 157,161,630,521 6 Total Loans and Advances 154,017,029,266 134,689,308,364 7 Total Contingent Liabilities and Commitments 98,122,212,930 72,926,401,097 8 Credit Deposit Ratio (%) 82.64 83.87 9 Percentage of classified loans against total loans and advances (%) 5.98 4.01 10 Profit after tax and provision 1,495,371,858 1,465,928,034 11 Amount of classified loans during the year 9,208,850,274 5,402,949,193 12 Provisions kept against classified loans 4,407,201,865 2,409,087,464 13 Provision surplus / (deficit) - 3,479,640 14 Cost of fund [deposit cost & overhead cost] (%) 7.35 7.88 15 Interest earning Assets 187,004,215,448 165,095,766,588 16 Non-interest earning Assets 42,448,639,048 37,095,829,273 17 Return on Investment (ROI) [%] 12.97 15.38 18 Return on Assets (ROA) [%] 0.69 0.77 19 Income from Investments 2,884,488,508 3,238,231,845 20 Earnings per Share (Taka) 2.07 2.13 21 Price Earning Ratio (Times) 10.63 8.40 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  191. 191 ACU Mumbai EURO EURO AUD Milano KOLKATA Frankfurt Unicredit S .P.A. UNITED BANK OF INDIA London Frankfurt Saudi Arabia Standard Chartered Bank Commerz Bank Al-Rajhi Bank SAR CAD GBP 73,075 10,647 83,971 21,112,015 46,952 182,244 37,479 4,444 652,562 8,572 237,420 241,269 376,956 723 - 157,908 4,340 33,381 2,542 7,989 442,582 261,194 872,847 1,510,860 1,194,556 1,821,817 73,071 3,350,234 1,396,857 1,151,955 Amounts in foreign currency 2017 22.04 65.41 110.95 0.73 64.32 98.50 98.50 98.50 98.50 84.07 82.70 82.70 82.70 82.70 - 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 Conversion rate 1,203,678,144 1,610,551 696,447 9,316,599 15,405,437 3,019,999 17,950,312 3,691,583 437,675 64,274,866 720,657 19,634,644 19,952,936 31,174,282 59,814 - 13,058,968 358,880 2,760,623 210,223 660,670 36,601,527 21,600,758 72,184,469 124,948,105 98,789,768 150,664,263 6,042,995 277,064,344 115,520,063 95,266,686 Equivalent amounts in Taka 273,075 98,707 261,936 26,761,120 48,702 182,244 27,929 37,696 514,262 191,285 - 398,264 479,133 326,067 6,000,000 379,249 25,640 14,281 116,150 8,124 558,027 46,652 890,173 2,633,736 1,467,528 1,616,192 999,291 1,080,001 1,840,185 12,182,678 Amounts in foreign currency 2016 21.04 58.22 96.58 0.67 56.67 82.22 82.22 82.22 82.22 76.91 - 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 79.00 Conversion rate 2,588,773,757 5,744,788 5,746,574 25,297,397 17,999,529 2,759,720 14,984,824 2,296,476 3,099,493 42,284,738 14,711,939 - 31,462,893 37,851,495 25,759,300 474,000,000 29,960,673 2,025,524 1,128,212 9,175,831 641,776 44,084,152 3,685,539 70,323,669 208,065,167 115,934,702 127,679,181 78,943,983 85,320,047 145,374,604 962,431,530 Equivalent amounts in Taka Annexure-A As per Bangladesh Bank Circular No. FEPD(FEMO)/01/2005-677 dated 13 September 2005, the books of accounts of nostro account are reconciled and there exist no un-reconciled entries that may affect financial statements significantly. Total Japan Standard Chartered Bank JPY EURO EURO Frankfurt Frankfurt Commerz Bank Standard Chartered Bank Commerz Bank CHF Switzerland Union Bank of Switzerland Axis Bank Ltd, India ACU Kolkata ACUD ACUD United Bank Of India India Mumbai ICICI Bank Limited USD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD Mashreq Bank OBU Pakistan Habib Metropolitan Bank Ltd. Dhaka Bank OBU Nostro Bhutan Bhutan Bhutan National Bank Bank of Bhutan Nepal Srilanka Nepal Bangladesh Bank Sampath Bank Kolkata Mumbai Sonali Bank AB Bank Mumbai Standard Chartered Bank USD USD USA Wells Fargo Bank N.A. JP Morgan Chase Bank NA New York USD USD USA Frankfurt Habib American Bank Commerz Bank USD USD New York New York Mashreq Bank Habib American Bank, OBU Name of currency USD Location New York Standard Chartered Bank Name of the bank As at 31 December 2017 Currency wise Balances Dhaka Bank Limited Consolidated & Separate Financial Statements Dhaka Bank Limited Annual Report 2017 Auditor’s Report www.dhakabankltd.com
  192. Annexure-B Dhaka Bank Limited Investment in Shares Auditor ’s Report As at 31 December 2017 (Amount in Taka) Name of the Company Face Value No. of Shares Average Cost Cost Price Market price per Share Total Market Value Quoted Acme Laboratories Limited 10 500,000 52 26,000,000 114.00 57,000,000 Oimex Electrode Limited 10 6,480 10 64,800 65.20 422,496 Nahee Aluminum Composite Panel Ltd. 10 5,706 10 57,060 73.40 418,820 Consolidated & Separate Financial Statements Unquoted Bangladesh Fund 200,000,000 200,000,000 Total 226,121,860 257,841,316 The cost price of investment in shares represents the book value as on 31.12.2017 being ordinary shares of different companies purchased from primary and secondary markets. Bangladesh Fund The Bank invested Tk.200,000,000 in the subscription of 2,000,000 number of units of Tk.100 each of Bangladesh Fund to ICB AMCL as per the decision in the meeting of The Executive Committee of the Board of Directors. 192 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  193. Annexure-C Dhaka Bank Limited Detail of information on advances More than 10 % of bank’s total capital (Funded & Non-funded) SL. No. Name of the Client 1 ARMANA GROUP 2 BSRM GROUP 3 Outstanding as on 31.12.2017 Funded Non funded Total 3,360,628 5,517,015 859,371 4,356,760 5,216,131 BASHUNDHARA GROUP 2,183,383 2,279,067 4,462,450 4 BANGLA TRAC 1,591,225 2,587,515 4,178,740 5 T.K. GROUP 1,819,412 2,050,757 3,870,169 6 AMBER-PARTEX GROUP 2,584,192 1,110,942 3,695,133 7 BANGLADESH ERECTORS GROUP 2,189,079 1,341,589 3,530,668 8 PRAN-RFL GROUP 2,386,521 912,937 3,299,459 9 RING SHINE GROUP 1,187,510 2,091,697 3,279,207 10 UNITED GROUP 1,842,309 1,395,971 3,238,280 11 KABIR GROUP 1,939,983 1,292,784 3,232,767 12 RANGS GROUP 1,686,444 1,411,060 3,097,503 13 EXPERIENCE GROUP 578,932 2,281,086 2,860,018 14 FAKIR GROUP 1,551,045 1,221,361 2,772,406 15 NOMAN GROUP 1,764,174 911,001 2,675,175 16 KARNAFULY GROUP 1,325,496 1,306,797 2,632,293 17 M & J GROUP 1,212,782 1,288,012 2,500,794 18 ABUL KHAIR GROUP 1,895,613 580,169 2,475,782 19 DHAKA BANK GROUP 2,237,598 200,000 2,437,598 20 S.A. GROUP 2,400,302 - 2,400,302 21 SURUJ MIAH GROUP 2,307,443 4,829 2,312,272 37,699,202 31,984,960 69,684,163 Total www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 193 Consolidated & Separate Financial Statements 2,156,387 Auditor’s Report (Taka in Thousand)
  194. 194 Dhaka Bank Limited Annual Report 2017 www .dhakabankltd.com 428,892,919 866,487,334 217,967,490 142,893,420 Furniture & Fixture Office Appliances & Equipments Computer Bank Vehicle 4,658,685,769 Sub Total 5,307,140,769 4,999,514,479 TOTAL 2016 648,455,000 Sub Total Total 2017 (A+B) 648,455,000 Land B. Revaluation 77,845,853 Software Intangible Assets 622,721,217 2,301,877,536 Balance as at 01.01.2017 Building Land Tangible Assets A. At Cost Particulars 315,573,767 319,718,198 - 319,718,198 29,761,267 71,822,896 21,349,835 169,864,362 26,919,838 Addition during the year (7,947,477) 17,690,157 - 17,690,157 14,799,651 789,512 2,100,994 Transfer/ Adjustment during the year Cost Price 5,307,140,769 5,609,168,810 648,455,000 648,455,000 4,960,713,810 107,607,120 199,916,665 239,317,325 1,035,562,184 453,711,763 622,721,217 2,301,877,536 Total as at 31.12.2017 - - - - - 20% 20% 20% 20% 10% 2.5% - Rate of Dep. 899,531,123 1,113,600,664 - - 1,113,600,664 53,906,576 63,583,809 181,421,441 522,756,758 224,499,455 67,432,625 Balance as at 01.01.2017 As at 31 December 2017 221,976,490 249,902,919 - - 249,902,929 13,916,750 26,214,993 15,699,512 135,913,621 42,590,013 15,568,030 Addition during the year (7,906,948) 17,228,076 - - 17,228,086 - 14,799,643 706,957 1,721,476 Transfer/ Adjustment during the year Depreciation Schedule of Fixed Assets including premises, furniture & fixtures Dhaka Bank Limited Consolidated & Separate Financial Statements - 1,346,275,507 1,113,600,664 - - 1,346,275,507 67,823,326 74,999,159 197,120,953 657,963,422 265,367,993 83,000,655 Total as at 31.12.2017 - - - Disposal/ Transfer to Annexure-D 4,193,540,105 4,262,893,303 648,455,000 648,455,000 3,614,438,303 39,783,794 124,917,505 42,196,372 377,598,763 188,343,770 539,720,562 2,301,877,536 Written Down Value as at 31.12.2017 (Amount in Taka) Auditor’s Report
  195. Annexure-E Dhaka Bank Limited Recovery of loans previously written-off during the period January-December 2017 Sl . No. Name of borrower Amount written-off Amount recovered after Loan written-off Suit Value Agrani Enterprise 14,315,154 11,599,129 17,683,191 14,310,000 2 Iqbal And Brothers 1,789,290 1,644,775 4,399,757 1,790,000 3 Sundari Fashion 181,694 139,499 250,000 180,000 4 Mousumi Enterprise 251,045 242,216 690,404 230,000 5 Nipa Traders 426,961 294,093 563,819 420,000 6 Gonoshasthaya Antibiotic Ltd. 71,628,580 60,192,640 75,998,182 7,500,000 7 Anudip Autos 43,767,825 32,747,739 40,257,537 2,750,000 8 Anar Impex Ltd 2,421,470 363,221 316,211 200,000 9 Momin Knit Fabrics 9,668,217 7,603,335 13,980,000 300,000 10 Rainbow Consortium Ltd. 1,078,222 161,733 1,057,258 270,000 11 Friends International 4,050,000 3,060,000 4,570,592 3,950,000 12 Mohua Naksha 1,553,470 1,335,057 1,553,497 16,000 13 Prime Construction 4,348,273 3,426,199 4,497,646 1,398,000 14 Prolific Amaze 1,226,906 889,021 1,485,769 10,000 15 Sundry parties of Consumer Banking - - - 15,878,153 156,707,107 123,698,657 167,303,861 49,202,153 Sub Total www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 195 Consolidated & Separate Financial Statements 1 Auditor’s Report (Amount in Taka) Amount of provision kept at the time of written-off
  196. Dhaka Bank Limited Details of Borrowers for written-off loan during the year 2017 Annexure-F Auditor ’s Report (Amount in Taka) Sl. No. Name of borrower Amount written-off Consolidated & Separate Financial Statements Corporate & SME Loan 1 Jhalok Fashion 167,552.35 2 Sun Flower Electric 179,294.78 3 Shovon Trading 12,427,748.15 4 Nurul Hoque & Sons 12,741,618.26 5 Shamem Construction 6,473,430.16 6 Udayan Construction 10,511,900.24 7 Agrani Enterprise 14,315,154.33 8 Anar Impex 2,421,470.26 9 Orkishtra Kraft 1,232,967.52 10 Nowabia Traders 8,171,444.01 11 Orchi Yarn Project 78,271,277.59 12 Well Tex 229,496,494.06 13 Moulana & Sons 175,759,352.47 14 Orchid Travels and Tours 56,970,535.60 15 A. Zaman & Brothers 46,085,076.29 Sub Total 655,225,316 196 Dhaka Bank Limited Annual Report 2017 Amount of interest suspense kept at the time of written-off 4,368.99 46,466.19 2,631,411.34 888,448.16 422,455.91 2,440,730.28 2,716,025.74 159,399.96 212,117.92 2,057,269.65 7,898,713.38 30,242,000.00 6,768,850.75 13,097,932.96 1,274,608.85 70,860,800 Amount of provision kept at the time of written-off 163,183.36 132,828.59 4,288,337.81 11,853,170.10 6,050,974.25 8,071,169.96 11,599,128.59 363,220.54 184,945.13 1,225,716.60 68,405,561.50 161,574,991.82 161,036,478.95 40,360,886.79 35,810,467.44 511,121,061 Suit Value 368,605.92 413,314.93 20,283,961.32 12,339,586.75 7,855,194.43 10,838,412.72 17,683,191.42 316,210.87 2,045,820.42 7,465,153.67 92,398,916.98 238,794,474.90 202,910,141.77 51,266,055.90   62,884,041.70 664,979,042 www.dhakabankltd.com
  197. Annexure-G i ) Name of the Directors and their interest in the Bank as on 31.12.2017: Sl. No. Designation Mr. Reshadur Rahman Mrs. Rokshana Zaman Mr. Abdul Hai Sarker Mr. Altaf Hossain Sarker Mr. Md. Amirullah Mr. Abdullah Al-Ahsan Mr. Khondoker Monir Uddin Mr. Tahidul Hossain Chowdhury Mr. Jashim Uddin Mr. Mohammed Hanif Mr. Khondoker Jamil Uddin Mr. Mirza Yasser Abbas Mr. Amanullah Sarker Mr. M.N.H. Bulu Mr. Syed Abu Naser Bukhtear Ahmed Mr. M.A. Yussouf Khan Chairman Vice Chairperson Director Director Director Director Director Director Director Director Director Director Director Director Independent Director Independent Director % of interest as on 31.12.2017 3.37530 2.44973 2.21927 2.78885 2.00024 2.00041 2.87187 2.00839 2.00026 3.04606 2.00023 3.68305 2.00024 2.00258 Nil Nil Consolidated & Separate Financial Statements 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Name of Directors ii) Name of the Directors and their interest in the Bank as on 31.12.2016: Sl. No. Name of Directors Designation 1 Mr. Reshadur Rahman Chairman 2 Mrs. Rokshana Zaman Vice Chairperson 3 Mr. Abdul Hai Sarker Director 4 Mr. Altaf Hossain Sarker Director 5 Mr. Md. Amirullah Director 6 Mr. Abdullah Al-Ahsan Director 7 Mr. Khondoker Monir Uddin Director 8 Mr. Tahidul Hossain Chowdhury Director 9 Mr. Jashim Uddin Director 10 Mr. Mohammed Hanif Director 11 Mr. Khondoker Jamil Uddin Director 12 Mr. Mirza Yasser Abbas Director 13 Mr. Amanullah Sarker Director 14 Mr. M.N.H. Bulu Director 15 Mr. Syed Abu Naser Bukhtear Ahmed Independent Director 16 Mr. M.A. Yussouf Khan Independent Director iii) Name of Directors and their interest in different entities as on 31.12.2017: Sl. No. Name Name of the firms/Companies in which they have interest Dhaka Bank Securities Ltd. RR Aviation Ltd. RR Holdings Ltd. RR Trading & Co. RR Shipping Lines RR Architecture & Engineering Co. National Traders Alliance Deep Sea Fishing Ltd. Alliance Bags Ltd. Quality Breeders Ltd. Quality Grains Ltd. Trade Hub Bangladesh Ltd. Chairman Chairman Managing Director Proprietor Proprietor Proprietor Proprietor Shareholder Shareholder Shareholder Shareholder Chairman Dhaka Enterprise Manehor Fisheries Dhaka Bank Securities Ltd. Proprietress Proprietress Director 1 Mr. Reshadur Rahman Chairman 2 Mrs. Rokshana Zaman Vice-Chairperson www.dhakabankltd.com % of interest as on 31.12.2016 3.37530 2.00201 2.21927 2.78885 2.00024 2.00041 2.87187 2.00839 2.00026 3.04606 2.00023 3.68305 2.00024 2.00258 Nil Nil Status with the Bank Status in the interested entities Dhaka Bank Limited Annual Report 2017 Auditor’s Report Related Party Disclosures 197
  198. Consolidated & Separate Financial Statements Auditor’s Report Sl. No. 198 Name Status with the Bank Name of the firms/Companies in which they have interest Status in the interested entities 3 Mr. Abdul Hai Sarker Director Shohagpur Textile Mills Limited. Purbani Fabrics Limited. Karim Textiles Limited. Purbani Traders. Purbani Yarn Dyeing Limited. Karim Spinning Mills Limited. Purbani Synthetic Spinning Limited. Purbani Rotor Spinning Limited. Purbani Fisheries. Purbani Fashion Limited. Purbani Agro Processing Limited. Dhaka Bank Securities Limited. Chairman & CEO Chairman & CEO Chairman & CEO Proprietor Chairman & CEO Chairman & CEO Chairman & CEO Chairman & CEO Proprietor Chairman & CEO Chairman & CEO Director 4 Mr. Altaf Hossain Sarker Director Rahmat Textiles Ltd. Rahmat Spinning Mills Ltd. Belkuchi Spinning Mills Ltd. China Plastic (BD.) Ltd. Rahmat Plastic and Accessories Ltd. Rahmat Knit Dyeing & Finishing Ltd. Rahmat Fashion Wear Ltd. Rahmat Rotors Ltd. Dhaka Bank Securities Ltd. Managing Director Chairman Chairman Chairman & Managing Director Chairman Managing Director Director Chairman Director 5 Mr. Mohammed Hanif Director Hanif Steels Ltd. Hanif Spinning Mills Ltd. National Foundry & Engineering Works (Pvt.) Ltd. Managing Director Managing Director Managing Director 6 Mr. Md. Amirullah Director Dhaka Bank Investment Ltd. Director 7 Mr. Abdullah Al-Ahsan Director Aroma Poultry Aroma Fisheries Ltd. Director Director 8 Mr. Khondoker Monir Uddin Director Shanta Apparels Ltd. Shanta Medical Centre Ltd. Universal Business Machines Ltd. STS Holdings Ltd. STS Capital Ltd. Shanta Holdings Ltd. GDS Chemical Bangladesh (Pvt.) Ltd. Shanta Securities Ltd. Managing Director Managing Director Managing Director Managing Director Managing Director Managing Director Managing Director Managing Director 9 Mr. Tahidul Hossain Chowdhury Director Riotex Ltd. Jerat Fashion Ltd. Jerat Shirt Ltd. Central Hospital Ltd. HURDCO International School Ltd. Hotel Victory Ltd. Dhaka Bank Investment Ltd. Chairman Managing Director Chairman Director Director Managing Director Director 10 Mr. Jashim Uddin Director Impel Shares & Securities Ltd. Rafid Enterprise HURDCO International School Ltd. Dhaka Imperial Hospital Ltd. Chairman Proprietor Director Shareholder 11 Mr. Khondoker Jamil Uddin Director JAAZ Concerns Ltd. Executive Attire Ltd. Green Field Tea Estate Ltd. OK Mobile Ltd. Shanta Garments Ltd. STS Holdings Ltd. Delhi Public School, STS Education Group Ltd. GDS Chemical Bangladesh (pvt.) Ltd. Universal Business Machines Ltd. Citizen Securities Ltd. Apollo Hospitals Dhaka Ltd. International School Dhaka. Dhaka Bank Investment Ltd. Chairman Chairman Chairman Chairman Chairman Director Sponsor Director Director Director Director Director Sponsor Director Sponsor Director Chairman Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  199. 13 14 16 . iv) v) vi) vii) Status with the Bank Director Name of the firms/Companies in which Status in the interested they have interest entities Mr. Mirza Yasser Abbas Mirza Enterprise Executive Dhaka Bank Investment Ltd. Director Predictable Process Ltd. Managing Director LOUD Limited Chairman Mr. Amanullah Sarker Director Rahmat Textiles Ltd. Director Rahmat Spinning Mills Ltd. Managing Director Logos Apparels Ltd Chairman Belkuchi Spinning Mills Ltd. Director China Plastic (BD.) Ltd. Director Rahmat Sweaters (BD) Ltd. Director Mr. M.N.H Bulu Director National Chemical Industries Ltd. Managing Director Nawshin Vinyl Industries Proprietor Abico Industries Ltd. Chairman Rumki Industries Ltd. Managing Director BNS Chemical Industries Ltd. Chairman & Managing Director BNS BOPP Tape &Adhesive Industries Ltd. Chairman & Managing Director Shafkat PVC Sole Industries Proprietor BNS DOP & Chemical Industries Proprietor Bulu International Proprietor Oishee International Company Proprietor Bulu Trading Corporation Proprietor Bulu Enterprise Proprietor Bulu Traders Proprietor BNS International Co. Proprietor Boss PVC Vinyl Industries Proprietor Trade Hub (Bangladesh) Ltd. Managing Director Mr. Syed Abu Naser Bukhtear Independent Director Financial Excellence Ltd. Director Ahmed Mr. M.A. Yussouf Khan Independent Director Share issued to Directors & Executives without consideration or exercisable at discount: Nil Related party Transactions: Tk. 37,66,965.58 Lending Policies to related parties: Lending to related parties is effected as per requirements of Section 27 (1) of Bank Companies Act 1991 (Amended up to July 2013). During the period 1 January 2017 to 31December 2017, the Bank concluded business deals with the following directors/organizations in which the directors had interest: Name MD AMIRULLAH TAHIDUL HOSSAIN CHOWDHURY KHONDOKER JAMIL UDDIN MIRZA YASSER ABBAS M N H BULU ROKEYA KHAN Relationship Nature of transactions Director Director Director Director Director Sister of Director Credit Facility Credit Facility Credit Facility Credit Facility Credit Facility Credit Facility Name Relationship Nature of transactions Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Deposit Deposit Credit Facility Investment Investment Account receivable Account receivable Interest Income Interest Expense Interest Expense Balance at 31.12.2017 108,606 72,000 296,991 663,580 346,319 2,279,469 37,66,965 TOTAL Dhaka Bank Securities Limited Dhaka Bank Investment Limited Dhaka Bank Securities Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Dhaka Bank Investment Limited Dhaka Bank Securities Limited Dhaka Bank Securities Limited Dhaka Bank Securities Limited Dhaka Bank Investment Limited Consolidated & Separate Financial Statements 15 Name Auditor’s Report Sl. No. 12 Balance at 31.12.2017 118,878,378 186,821,898 2,237,597,610 1,499,999,940 249,999,940 1,173,725 55,787,264 130,022,808 5,242,588 8,289,515 viii) Business other than Banking business with any related concern of the Directors as per Section 18 (2) of Bank Companies Act 1991 (Amended up to July 2013): Lease agreement: 1. Lease agreement for Uttara Branch, Data Recovery Center, Consumer Banking Division (Hub) of the Bankwas executed with Mr. A.T.M. Hayatuzzaman Khan, Land Owner who is the Husband of Mrs. Rokshana Zaman, Vice Chairperson of the Bank. 2. Lease agreement for Shahjahanpur Branch of the Bank was executed with Mr. Mirza Abbas Uddin Ahmed & others, Land Owner who is the father of Mr. Mirza Yasser Abbas, Director of the Bank. Service provider: Omni Technologies, a service provider company which provides various sorts of services to the Bank has Mr. Hasanuzzaman as a Director in its board who is the son of Mrs. Rokshana Zaman, Vice Chairperson of the Bank. ix) Investments in the Securities of Directors and their related concern: Nil www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 199
  200. 200 Dhaka Bank Limited Annual Report 2017 www .dhakabankltd.com 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2 3 4 5 6 7 8 9 10 11 12 13 Total 2018-2019 2005-2006 1 14 Assessment Year Sl. No. 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Income Year 13,338,065,237 1,343,843,250 1,282,056,770 938,402,032 1,191,845,133 1,117,341,489 759,226,556 1,488,500,000 1,238,519,148 1,176,070,227 1,025,132,803 827,127,829 370,000,000 305,000,000 275,000,000 Provision for Income Tax as per accounts 10,071,640,324 - 934,833,819 1,142,636,345 913,596,502 759,226,556 1,391,529,539 1,178,120,075 1,033,362,354 948,021,327 775,887,042 455,657,668 287,430,386 251,338,711 Total Tax Paid 347,393,568 3,568,214 49,208,788 157,487,323 (114,860,509) 85,511,470 414,057 121,007,254 62,791,713 31,105,997 (86,484,543) 15,379,758 22,264,047 Provision Excess/ (Shortage) As at 31 December 2017 Statement of Tax Position Dhaka Bank Limited 992,026,891 157,582,175 - 46,257,663 114,860,509 74,218,389 160,348,772 123,759,180 99,289,991 127,430,746 16,537,501 43,797,123 27,944,842 Further Claimed by TAX Authority Consolidated & Separate Financial Statements 1,435,767,664 - 1,142,636,340 46,257,663 114,860,509 11,458,991 59,985,016 21,700,619 14,319,763 20,134,790 826,875 2,189,856 1,397,242 Tax Paid for Tribunal & High Court Present Status Annexure-H 541,313,392 - - - - Return to be submitted as required Income Tax Return Submitted to the LTU Assessment Completed and file to Appeal Case settle after DCT Level &Tax Clearance Certificate received Case settle after CT Appeal /Tax Clearance Certificate received Case settle after CT Appeal /Tax Clearance Certificate received 62,759,398 Filed Appeal to Honorable High Court 100,363,756 Filed Appeal to Honorable High Court 102,058,561 Filed Appeal to Honorable High Court 84,970,228 Filed Appeal to Honorable High Court 107,295,956 Filed Appeal to Honorable High Court 15,710,626 Re-opened U/S:120 Filed Appeal to Honorable High Court 41,607,267 Re-opened U/S:120 Filed Appeal to Honorable High Court 26,547,600 Re-opened U/S:120 Filed Appeal to Honorable High Court Remaining Tax Liability Auditor’s Report
  201. Islamic Banking Auditor ’s Report www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 201 Islamic Banking Dhaka Bank is operating two Islamic Banking branches complying with the rules of Islamic shariah, which absolutely prohibits receipts of and payments of interest in any form. The modus operandi of these two branches is totally different from other conventional branches.
  202. Auditor ’s Report Annexure-(i) Distribution of Profit under Islamic Banking Operation Dhaka Bank has been operating two Islamic Banking branches in complying with the rules of Islamic shariah, which absolutely prohibits receipts of and payments of interest in any form. The modus operandi of these two branches is totally different from other conventional branches. A separate balance sheet and income statement are being maintained as recommended by the Central Shariah Board for Islamic Banking in Bangladesh. Final Rates on Mudaraba Deposit Products of Islamic Banking for the Year 2017 Dhaka Bank Limited has successfully completed the business year 2017 and declared final profit rates on various Mudaraba Deposits Accounts for the year 2017 to the depositors. The final rates of various Mudaraba Deposits Accounts of Banks as per approved weight age for the year 2017 have come up lower than declared provisional profit rates of Mudaraba Deposits Accounts except Mudaraba Savings Deposit. As per recommendation of the Shariah Supervisory Committee final rate of Mudaraba Savings Deposit Account as per approved weight age and declared provisional profit rates of other Mudaraba Deposit Accounts for the year 2017 is hereby declared as final rates considering present market position. Islamic Banking Sl. No. 202 Type of Deposit Weightage Final Rate For the Year 2017 1. Mudaraba Savings Deposit 0.75 3 2. Mudaraba Savings Deposit For Bank 0.70 3 3. Mudaraba Short Notice Deposit 0.50 3.50 4. Mudaraba Term Deposit Account 36 Months 24 Months 12 Months 6 Months 3 Months 1 Month Bank 0.98 0.92 0.90 0.85 0.80 5.16 4.70 4.70 4.00 4.00 5. Mudaraba Hajj Savings Scheme 1.10 6.00 6. Mudaraba Special Deposit Scheme 1.00 6.50 7. Mudaraba Deposit Pension Scheme 1.10 8.00 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  203. Dhaka Bank Limited (Islamic Banking) Balance Sheet As at 31 December 2017 PROPERTY AND ASSETS Cash Cash in hand (including foreign currencies) Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies) Balance with other banks and financial institutions In Bangladesh Outside Bangladesh 31.12.2016 Taka Taka 451,004,065 29,546,878 421,457,187 448,651,849 22,687,052 425,964,798 2 - - - - 380,000,000 370,000,000 5,235,965,555 5,204,601,790 31,363,765 5,035,893,361 4,992,829,547 43,063,814 Investment in securities 3 3.1 3.2 Fixed assets including premises, furniture and fixtures 4 13,686,640 26,069,364 Other Assets 5 2,277,691,051 1,232,894,928 - - 8,358,347,312 7,113,509,502 6 2,019,866,605 188,961,509 7 5,884,845,560 157,374,204 29,293,714 505,835,242 5,192,342,399 453,635,147 8,358,347,312 6,472,830,284 350,467,186 30,321,181 404,397,931 5,687,643,987 451,717,708 7,113,509,502 Non-Banking Assets Total Assets LIABILITIES AND CAPITAL LIABILITIES Borrowings from other banks / financial Institutions and agents Deposits and Other Accounts Current Accounts & Other Accounts Bills Payable Savings Bank Deposits Term Deposits Other Liabilities Total Liabilities www.dhakabankltd.com 8 Dhaka Bank Limited Annual Report 2017 203 Islamic Banking 1 Money at call and on short notice Investments General Investments Bills Discounted and Purchased 31.12.2017 Auditor’s Report Notes Annexure - I (i)
  204. Auditor ’s Report Islamic Banking Notes 31.12. 2017 31.12. 2016 Taka Taka 923,935,833 524,569,039 64,185,050 88,720,681 1,601,410,601 1,028,174,198 526,498,152 82,443,076 318,714,365 1,955,829,790 1,601,410,601 1,955,829,790 Off-balance Sheet Items Contingent Liabilities Acceptances and Endorsements Letter of Credit Letter of Guarantee Bills for Collection Other Contingent Liabilities Other Commitments Documentary credit and short term trade-related transactions Forward assets purchased and forward deposits placed Undrawn note issuance and revolving underwriting facilities Undrawn formal standby facilities, credit lines and other commitments Total off-balance sheet items including contingent liabilities These Financial Statements should be read in conjunction with the annexed notes 1 to 44. 204 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  205. Dhaka Bank Limited (Islamic Banking) Profit and Loss Account For the year ended 31 December 2017 2017 Taka 2016 Taka 9 10 578,622,984 405,560,702 173,062,282 545,201,570 369,376,997 175,824,572 Commission, Exchange Earnings & Brokerage Other Operating Income 11 12 31,632,328 6,368,738 38,001,066 211,063,348 36,048,855 5,139,489 41,188,344 217,012,917 13 14 35,335,491 25,115,302 586,880 880,512 1,089,445 240,075 4,621,806 1,572,361 7,457,176 76,899,049 134,164,300 28,380,055 11,518,615 559,082 783,691 1,230,450 116,168 4,033,644 1,067,880 6,133,024 53,822,609 163,190,308 Total Operating Income ( A ) Operating Expenses Salary & Allowance Rent, Taxes, Insurance, Lighting etc. Legal Expenses Postage, Stamp, Telecommunication etc. Stationery, Printing, Advertisement etc. Shariah Council Meeting Expenses Depreciation of Bank’s Assets Repair of Bank’s Assets Other Expenses TOTAL Operating Expenses ( B ) Operating Profit During the Year ( A - B ) 15 16 17 18 19 These Financial Statements should be read in conjunction with the annexed notes 1 to 44. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 205 Islamic Banking OPERATING INCOME Profit Received from Investment Profit Paid on Deposits & Borrowings Net Investment Income Auditor’s Report Notes Annexure - I (ii)
  206. Dhaka Bank Limited (Islamic Banking) Notes to the Financial Statements Auditor’s Report For the year ended 31 December 2017 1. 31.12. 2017 Taka Cash Cash in hand Balance with Bangladesh Bank and its agent bank(s) 1.1 (Note: 1.1) (Note: 1.2) Outside Bangladesh Islamic Banking 29,546,878 22,687,052 421,457,187 421,457,187 425,964,798 425,964,798 - - - - 5,204,053,137 31,912,419 5,235,965,555 4,992,829,547 43,063,814 5,035,893,361 1,617,308,501 863,130,452 500,123,945 1,411,525,857 446,765,998 306,257,415 58,940,969 5,204,053,137 5,204,053,137 1,554,413,967 774,443,037 441,258,503 1,663,603 1,355,363,201 220,613,195 424,040,241 221,033,800 4,992,829,547 4,992,829,547 General Investments In Bangladesh Murabaha (Purchase Order) Murabaha (Term Financing) MPI Trust Receipt Murabaha Import Bill (PAD) Bai Muajjal Ijara (Lease Financing) (Note-3.5) Shirkatul Mulk (Hire Purchase) Others Outside Bangladesh 206 22,687,052 - Investments General Investments Bills Purchased & Discounted 3.1 29,546,878 - Balance with other banks and financial institutions In Bangladesh Mudaraba Term Deposits Social Islami Bank Limited 3. 22,687,052 425,964,798 448,651,849 Balance with Bangladesh Bank and its agent bank(s) In Local Currency Al-Wadiah Current Account In Foreign Currencies 2. 29,546,878 421,457,187 451,004,065 Cash in hand In Local Currency In Foreign Currencies 1.2 31.12. 2016 Taka Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  207. Bills Purchased & Discounted Payable in Bangladesh: Inland bills purchased Payable outside Bangladesh: Foreign bills purchased & discounted 3.3 3.5 3.6 Maturity grouping of bills purchased & discounted Payable within 1 month Over 1 month but less than 3 months Over 3 months but less than 6 months 6 months or more Investment in lease / izara finance Lease rental receivable within 1 year Lease rental receivable more than 1 year Total lease/ izara rental receivable Less: unearned interest receivable Net investment in lease/izara finance Investments on the basis of significant concentration including bills purchased & discounted a. Investments to allied concerns of Directors; b. Investments to Chief Executive c. Investments to Other Senior Executives d. Investments to Customer’s Group: Agriculture investments Commercial investment Export financing 43,063,814 31,912,419 43,063,814 1,792,072,276 1,081,631,916 1,077,104,112 689,581,656 499,263,797 96,311,798 5,235,965,555 1,977,689,670 1,285,235,238 728,760,647 271,845,246 750,453,611 21,908,949 5,035,893,361 8,584,952 14,881,442 8,446,025 31,912,419 20,216,972 15,718,715 7,128,127 43,063,814 340,096,089 106,669,908 446,765,998 446,765,998 188,122,607 46,952,105 235,074,712 14,461,517 220,613,195 1,594,085 - - 28,997,741 4,138,031,390 48,204,528 182,472,085 Consumer investment scheme 118,817,648 37,976,889 SME investment 402,676,883 385,324,282 38,528,510 38,561,715 4,598,740,245 5,235,965,555 251,932,915 5,035,893,361 Investments Bai Murabaha/ Bai Muajjal 1,312,088,326 3,891,964,810 3,637,466,345 1,355,363,201 Bills Purchased and discounted 5,204,053,137 31,912,419 5,235,965,555 4,992,829,547 43,063,814 5,035,893,361 Staff investments Others 3.7 31,912,419 Investments under the following broad categories www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 207 Islamic Banking 3.4 Residual maturity grouping of investments including bills purchased and discounted Repayable on Demand Not more than 3 months More than 3 months but not more than 6 months More than 6 months but not more than 1 year More than 1 year but not more than 5 years More than 5 years 31.12.2016 Taka Auditor’s Report 3.2 31.12.2017 Taka
  208. Auditor ’s Report 3.8 31.12.2017 Taka Industry - wise investments including bills purchased & discounted Textile & Garment Industries Chemical Industries Food & alied Industries Transport & Communication Housing & Construction Industries Engineering & Metal Industres including Ship Breaking Energy & Power Industries Service Industries Other Industries Islamic Banking 3.9 Sector - wise investments In Bangladesh Government & Autonomous bodies Financial Institutions (Public & Private) Other Public Sector Private Sector Outside Bangladesh 3.11 3.12 Classification of investments Unclassified (including staff investment) Sub-Standard Doubtful Bad or loss Provision required for investments Status: Unclassified Special Mention Account Classified: Sub-Standard Doubtful Bad or loss Required provision for investments Total provision maintained Excess / short provision as at 31 December 208 1,632,860,634 815,891,925 205,048,059 34,590,826 280,261,861 1,604,691,475 327,625,050 14,955,383 320,040,343 5,235,965,555 1,857,158,428 12,650,000 205,005,622 18,004,266 199,168,483 1,622,072,653 327,625,050 16,721,426 777,487,432 5,035,893,361 3,249,303,617 1,986,661,938 5,235,965,555 2,983,840,452 2,052,052,909 5,035,893,361 5,235,965,555 5,235,965,555 5,235,965,555 5,035,893,361 5,035,893,361 5,035,893,361 4,455,485,251 780,480,304 5,235,965,555 4,781,373,616 254,519,745 5,035,893,361 5,436,506 226,568 575,580,738 109,888 5,663,074 575,690,626 Geographical Location - wise investments Dhaka Region Chittagong Region Sylhet Region Other 3.10 31.12.2016 Taka Dhaka Bank Limited Annual Report 2017 Rate % 0.25,1,2,5 & 100 0.25, 1 20 - - 50 - - 348,719,136 348,719,136 354,382,210 354,382,210 - 127,020,404 127,020,404 702,711,030 702,711,030 - 100 www.dhakabankltd.com
  209. Securities against investments including bills purchased & discounted a. 4. 5. 6. Unsecured Premises and Fixed Assets Land Building Furniture and Fixture including Office decoration Office Appliances & Equipment Computer Software Bank’s Vehicle Less: Accumulated depreciation Other Assets Stationery, stamps, printing materials etc. Profit accrued on investment but not collected, Advance rent Security deposit; Preliminary, formation and organization expenses, renovation / development expenses and prepaid expenses Branch Adjustments Suspense Account Others 4,747,625,063 3,512,454 146,808,872 161,586,079 176,433,087 5,235,965,555 5,235,965,555 3,399,853,865 43,063,814 38,561,715 1,554,413,967 5,035,893,361 5,035,893,361 7,026,510 18,676,224 3,368,164 421,959 2,850,375 32,343,232 18,656,592 13,686,640 277,000 24,323,000 5,030,760 12,128,950 3,196,164 421,959 2,850,375 48,228,209 22,158,845 26,069,364 35,162 4,233,750 8,770,930 315,000 74,912 16,935,000 6,744,913 315,000 779,069 2,260,453,350 190,769 2,913,021 2,277,691,051 675,894 1,205,261,889 196,408 2,690,912 1,232,894,928 15,937,286 2,003,929,319 2,019,866,605 188,961,509 188,961,509 130,319,172 3,425,175 6,656,236 5,353,238 4,241,866 7,378,518 157,374,204 102,183,112 2,279,631 12,168,290 7,834,178 552,331 225,449,644 350,467,186 Borrowings From Other Banks, Financial Institutions & Agents Bangladesh Bank refinance Export development fund Islami Investment bond’s fund 7. Deposits & Other Accounts 7.1 Current and Other Accounts Current Account Foreign Currency Deposits Margin under Letter of Credit Margin under Letter of Guarantee Deposits Awaiting Disposal Sundry Deposit www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 209 Islamic Banking b. Secured Collateral of movable / immovable assets Local Banks & Financial Institutions guarantee Government Guarantee Foreign Banks Guarantee Export documents Fixed Deposits Receipts 1 Own FDR 2 FDR of Other Banks Government bonds Personal Guarantee Other Securities 31.12.2016 Taka Auditor’s Report 3.13 31.12.2017 Taka
  210. Auditor ’s Report 31.12.2017 Taka 7.2 Bills Payable Pay Order 29,293,714 Demand Draft 7.3 Islamic Banking 8. 9. 10. 11. 210 30,321,181 - - 29,293,714 30,321,181 505,835,242 404,397,931 101,595,497 4,354,815,052 735,931,851 5,192,342,399 128,707,955 4,928,435,137 630,500,895 5,687,643,987 433,738,595 38,565 6,519,793 4,845,875 8,492,319 453,635,147 437,193,616 36,840 4,967,861 3,784,206 5,735,184 451,717,708 Savings Deposits Mudaraba Savings Accounts 7.4 31.12.2016 Taka Term Deposits Mudaraba Special Notice Deposits Mudaraba Term Deposits Mudaraba Deposit Pension/Hajj Savings Scheme Other Liabilities Profit Suspense Account Finance from OBU for Bill Discounting Tax/VAT deducted at source & payable Excise Duty Payable Others Profit received from Investment Murabaha Term Investment Investment against Imported Merchandise/Murabaha Investment against MPI Trust Receipt Cash Credits / Bai-Murabaha House Building Investment Transport Investment Hire Purchase/Shirkatul Mulk Total Profit receved from Investment Fund Placement with banks Inter Branch Profit received Profit Paid On Deposits & Borrowings Mudaraba Savings Account Special Notice Deposits Term Deposits Mudaraba Deposit Pension / Hajj Savings Scheme Inter Branch Profit paid Borrowing & Fund Placement Commission / Fees, Exchange Earnings & Brokerage Commission on L/C Commission on L/G Commission on Remittance / Bills Processing Fee Consumer Loan Other Commission / Fees Exchange gain including gain from foreign currency dealings Dhaka Bank Limited Annual Report 2017 2017 Taka 2016 Taka 55,249,928 384,625 8,467,052 159,678,684 498,503 66,122,806 290,401,597 288,221,387 578,622,984 51,448,227 17,696 583,427 111,034,162 398,836 227,703 44,814,144 208,524,196 336,677,373 545,201,570 12,380,080 3,336,748 286,554,248 73,956,443 29,333,184 405,560,702 29,405,809 5,035,590 267,816,511 61,664,484 4,322,507 1,132,096 369,376,997 16,968,522 872,356 612,124 152,000 13,016,485 10,842 31,632,328 17,041,195 1,457,507 293,479 65,500 4,757,143 12,434,032 36,048,855 www.dhakabankltd.com
  211. Other Operating Income Profit on Govt . Islamic Bond Postage charge recoveries Incidental charges Supervision & monitoring charges Management Fees ATM charges realised Swift charge recoveries 13. Salary and Allowances Basic Salary Allowances Bonus & Ex-gratia Leave Fare Assistance Bank’s contribution to Provident Fund 14. 15. Rent, Taxes, Insurance, Lighting Etc. Office Rent Electricity and Lighting Regulatory Charges Insurance Postage, Stamps, Telecommunication Etc. 930,727 424,793 1,427,591 15,000 2,106,302 223,700 1,240,625 6,368,738 879,375 410,932 1,324,283 22,325 1,350,449 171,000 981,125 5,139,489 11,752,013 16,998,225 3,332,307 2,118,200 1,134,746 35,335,491 10,236,122 13,748,985 1,723,643 1,657,473 1,013,832 28,380,055 19,462,341 1,612,702 54,000 3,986,260 6,956,562 1,395,998 170,736 2,995,319 25,115,302 11,518,615 371,092 110,635 398,785 308,427 179,569 295,695 880,512 783,691 248,552 251,600 88,718 124,220 376,355 270,281 289,502 202,558 106,410 361,699 1,089,445 1,230,450 50,673 608,075 Stamps, Postage & Courier Telephone Charges Fax, Internet, Radio Link, & DDN Charges 16. Stationery, Printing, Advertisement Etc. Table Stationery Printing Stationery Security Stationery Computer Stationery Advertisement 17. Depreciation of Bank's Assets Land Building Furniture & Fixture Office Appliance & Equipment Computer Software Motor Vehicle www.dhakabankltd.com 682,918 498,852 3,118,785 2,144,306 186,471 212,141 12,884 47,702 570,075 522,569 4,621,806 4,033,644 Dhaka Bank Limited Annual Report 2017 211 Islamic Banking 12. Auditor’s Report 2016 Taka 2017 Taka
  212. Auditor ’s Report 2016 Taka 2017 Taka 18. Repair & Maintenance of Bank’s Assets Office Premises Office Equipment Office Furniture Motor Vehicle Computer & Office Appliances Islamic Banking 19. 212 Other Expenses Contractual Service Charge Petrol, Oil and Lubricants Entertainment: canteen & other Donations Travelling Conveyance Training Expenses Books and Papers WASA Charges Staff Uniform Potted Plants ATM Network Service Charges Miscellaneous expenses Dhaka Bank Limited Annual Report 2017 682,916 646,183 6,700 234,102 326,723 23,000 49,062 187,500 1,572,361 32,700 451,355 1,067,880 5,702,064 238,800 415,264 171,122 169,654 327,799 14,809 13,520 38,894 108,000 230,250 27,000 7,457,176 4,062,563 226,070 386,828 600,000 140,136 152,129 51,750 13,718 82,320 31,510 81,000 275,000 30,000 6,133,024 www.dhakabankltd.com
  213. Off-Shore Banking Auditors ’ Report Off-Shore Banking Find a bank It Apply online should be in an Don't go there Off-shore jurisdiction like DBL Send your documents to the bank Pre approval if accepted Provide them with additional docs If required Wait for the banker to get back to you Allocation letter make your initial payment to the bank Your ready to start using your bank account Off-shore Pin's and codes are send to you Send original docs to the bank if required www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 213
  214. Dhaka Bank Limited (Off-Shore Banking Unit) Balance Sheet As at 31 December 2017 Off-Shore Banking Auditors’ Report Annexure- J Notes 31.12.2017 USD 31.12.2016 Taka USD Taka PROPERTY AND ASSETS Cash Cash in Hand (including foreign currencies) Balance with Bangladesh Bank & Sonali Bank (including foreign currencies) Balance with other banks and financial institutions In Bangladesh Outside Bangladesh Money at call and on short notice Investments Government Others Loans, advances and lease/investments Loans, cash credits, overdrafts, etc./Investments Bills purchased and discounted Fixed assets including premises, furniture and fixtures Other assets Non-banking assets Total Assets - - - 3,350,234 3,350,234 277,064,344 277,064,344 1,080,001 1,080,001 85,320,047 85,320,047 - - - - 40,623,530 39,015,614 1,607,916 3,359,565,907 3,226,591,251 132,974,656 17,981,726 16,886,732 1,094,994 1,420,556,382 1,334,051,825 86,504,557 - - 4 161,960,636 205,934,400 13,394,144,624 17,030,774,875 70,828,423 89,890,150 5,595,445,423 7,101,321,852 Borrowings from other banks, financial institutions and agents 5 77,765,577 6,431,213,181 10,682,770 843,938,814 Deposits and other accounts Current accounts & other accounts Bills payable Other deposits 6 8,669,684 7,314,895 4,811 1,349,978 716,982,876 604,941,825 397,892 111,643,158 12,027,664 11,135,025 892,640 950,185,490 879,666,969 70,518,521 Other liabilities 7 114,843,827 9,497,584,472 64,684,616 5,110,084,677 201,279,087 16,645,780,528 87,395,050 6,904,208,981 4,655,313 4,655,313 384,994,347 384,994,347 2,495,100 2,495,100 197,112,871 197,112,871 205,934,400 17,030,774,875 89,890,150 7,101,321,852 LIABILITIES AND CAPITAL Liabilities Total Liabilities Capital/Shareholders’ Equity Paid-up capital Statutory reserve Other reserve Surplus in Profit and Loss Account Total Shareholders' Equity Total Liabilities & Shareholders' Equity 214 3 3.1 3.2 - Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  215. CONTINGENT LIABILITIES Notes 31 .12.2017 USD 31.12.2016 Taka USD Taka 8 Acceptances and Endorsements Irrevocable Letters of Credit Letter of Guarantee Bills for Collection Other Contingent Liabilities Sub-total: 2,104,507,382 1,184,715,281 1,666,369,065 4,955,591,727 12,037,463 12,593,801 6,851,349 31,482,612 950,959,546 994,910,240 541,256,599 2,487,126,386 - - - - - - - - - - - - - - - - 59,922,512 4,955,591,727 31,482,612 2,487,126,386 These Financial Statements should be read in conjunction with the annexed notes 1 to 16. Syed Mahbubur Rahman Managing Director & CEO Altaf Hossain Sarker Director Mohammed Hanif Director Reshadur Rahman Chairman This is the balance sheet referred to in our separate report of even date. Dhaka, 26 April 2018 www.dhakabankltd.com Hoda Vasi Chowdhury & Co Chartered Accountants Dhaka Bank Limited Annual Report 2017 215 Off-Shore Banking OTHER COMMITMENTS Documentary credit 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 Sub-total: Total off-balance sheet items including contingent liabilities 25,447,490 14,325,457 20,149,565 59,922,512 Auditors’ Report Off-Balance Sheet Items
  216. Dhaka Bank Limited (Off-Shore Banking Unit) Profit and Loss Account Auditors’ Report For the year ended 31 December 2017 Notes 2017 2016 USD Taka 6,352,602 2,507,629 3,844,973 525,360,210 207,380,929 317,979,282 3,276,174 1,190,242 2,085,932 258,817,750 94,029,127 164,788,623 903,323 102,653 4,850,949 74,704,787 8,489,390 401,173,459 593,773 76,962 2,756,667 46,908,045 6,080,026 217,776,694 104,011 5,491 10,377 1,204 64,111 10,442 195,636 8,601,672 454,073 858,170 99,604 5,302,013 863,580 16,179,112 178,020 8,970 3,600 6,960 21,840 18,930 23,247 261,567 14,063,580 708,630 284,400 549,840 1,725,360 1,495,470 1,836,543 20,663,823 4,655,313 384,994,347 2,495,100 197,112,871 234,463 19,390,095 179,817 14,205,564 4,420,849 365,604,252 2,315,282 182,907,307 Less: Provision for Income Tax - - - - Net Profit / (Loss) after Tax : 4,420,849 365,604,252 2,315,282 182,907,307 Operating Income Interest Income/Profit Received Interest/Profit paid on Deposits & Borrowings Net Interest Income 9 10 Income from Investment Commission/Fees & Exchange Earnings Other Operating Income Total Operating Income (A) 11 12 USD Taka OPERATING EXPENSES Off-Shore Banking Salary and allowances Rent, taxes, insurance, electricity, etc. Legal expenses Postage, stamps, telecommunication, etc. Stationery, printing, advertisement, etc. Chief executive's salary and fees Directors' fees Auditors' fees Depreciation and repairs of Bank's assets Other expenses Total operating expenses (b) 13 Profit / (Loss ) Before Provision (C)=(A-B) Less: Provision for Loans (D) Total Profit/(Loss) before Tax ( C-D ) These Financial Statements should be read in conjunction with the annexed notes 1 to 16. Syed Mahbubur Rahman Managing Director & CEO Altaf Hossain Sarker Director Mohammed Hanif Director Reshadur Rahman Chairman This is the profit and loss account referred to in our separate report of even date. Dhaka, 26 April 2018 216 Dhaka Bank Limited Annual Report 2017 HodaVasi Chowdhury & Co Chartered Accountants www.dhakabankltd.com
  217. Dhaka Bank Limited (Off-Shore Banking Unit) Cash Flow Statement For the year ended 31 December 2017 Cash Flow from Operating Acrivities: Interest receipts Interest payments Receipts from other operating activities 14 Payments for other operating activities 15 Operating profit before changes in current assets & liabilities 2016 Taka USD Taka 6,352,602 (2,507,629) 1,005,976 (195,636) 4,655,313 525,360,210 (207,380,929) 83,194,177 (16,179,112) 384,994,347 3,276,174 (1,190,242) 670,735 (261,567) 2,495,100 258,817,750 (94,029,127) 52,988,071 (20,663,823) 197,112,871 (2,318,553) (23,446,306) (94,301,079) 67,560,754 (2,819,862) 53,053,202 2,383,469 (191,744,298) (1,939,009,525) (7,798,699,200) 5,587,274,366 (233,202,614) 4,387,499,795 197,112,871 5,534,541 (8,077,669) (48,688,176) (5,918,249) 2,838,446 53,274,910 1,458,902 437,228,711 (638,135,864) (3,846,365,888) (467,541,643) 224,237,198 4,208,717,867 115,253,252 - - - - (2,383,469) (2,383,469) (197,112,871) (197,112,871) (1,458,902) (1,458,902) (115,253,252) (115,253,252) - - - - - - - - - - - - Cash Flow from Investing Activities (B) Cash Flow from Financiang Activities Profit/Loss remitted to Head Office Net cash in financing activities (C) Net increase / (Decrease) in cash (A+B+C) Opening cash & cash equivalent Closing cash & cash equivalent Closing cash & cash equivalents Cash in Hand Balance with Bangladesh Bank & Sonali Bank Balance with other banks & Financial Institutions Money at call & Short Notice Prize Bond These Financial Statements should be read in conjunction with the annexed notes 1 to 16. Dhaka, 26 April 2018 www.dhakabankltd.com Syed Mahbubur Rahman Managing Director & CEO Altaf Hossain Sarker Director Mohammed Hanif Director Reshadur Rahman Chairman Dhaka Bank Limited Annual Report 2017 217 Off-Shore Banking Changes in operating assets and liabilities Other banks Loans and advances to customers Other assets Deposits & Borrowings from other banks Deposits from customers Other liabilities account of customers Other liabilities Net cash flow from operating activities (A) 2017 USD Auditors’ Report Notes
  218. 218 Dhaka Bank Limited Annual Report 2017 www .dhakabankltd.com - Non-banking assets (134,761,445) (134,761,445) (1,629,522) (1,629,522) Net Liquidity Gap Cumulative Liquidity Gap - (58,968,954) (701,128,086) - (642,159,132) - 566,366,641 - - - 289,302,297 - - 277,064,344 (8,477,970) Total Liabilities Capital & Reserve (713,047) (7,764,923) Deposits & Other Accounts Other liabilities - Borrowing from Bangladesh Bank, Other banks, financial institutions and agents Liabilities: 6,848,448 - Other assets Total Assets - Fixed assets including premises, furniture and fixtures 3,498,214 - Investment Loans and Advances - 3,350,234 - Money at call on short notice Balance with other banks and financial institutions Cash in hand Assets: Taka Upto 01 month USD - - - - (97,167,680) (95,538,158) (111,988,978) - (111,988,978) - - 16,450,820 - - - - - (8,035,767,116) (7,901,005,671) (9,261,488,449) - (9,261,488,449) - - 1,360,482,778 - - - 1,360,482,778 Taka 1 - 3 months 16,450,820 USD - - - - (4,608,529) 92,559,151 (80,812,140) - (2,141,803) (904,761) (77,765,577) 173,371,291 - 161,960,636 - 11,410,655 USD - - (381,125,329) 7,654,641,787 (6,683,163,993) - (177,127,069) (74,823,744) (6,431,213,181) 14,337,805,781 - 13,394,144,624 - 943,661,157 Taka 3 - 12 months as at 31 December 2017 - - - - - - - 766,119,676 - - - 766,119,676 - - - 4,608,529 (0) 381,125,329 (4,655,313) (384,994,347) (4,655,313) (384,994,347) - - - 9,263,841 - - - Taka 1 - 5 years 9,263,841 USD Liquidity Statement (Asset and Liability Maturity Analysis) Dhaka Bank Limited (Off-shore Banking Unit) Off-Shore Banking USD - - - - - - - - - - - - - - - - Taka More than 5 years (0) - - - - - - - - - - - - - - (8,669,684) (77,765,577) 205,934,400 - 161,960,636 - 40,623,530 - - - 3,359,565,907 - - (384,994,347) (9,497,584,472) (716,982,876) (6,431,213,181) 17,030,774,875 - - (0) - (0) (205,934,400) (17,030,774,875) (4,655,313) 277,064,344 Taka 13,394,144,624 Total 3,350,234 USD (114,843,827) Auditors’ Report
  219. Dhaka Bank Limited (Off-Shore Banking Unit) Notes to the Financial Statements For the year ended 31 December 2017 Nature of Business Off-Shore Banking Unit is a separate business unit of Dhaka Bank Limited, governed under the Rules & Guidelines of Bangladesh Bank. Currently, the Bank has two OBUs in DEPZ & CEPZ. The Bank obtained DEPZ Offshore Banking Unit permission vide letter no. BRPD (P)744(92)/2005-2181 dated June 18, 2005. The Bank commenced the operation of its Offshore Banking Unit with effect from May 10, 2006. The Bank obtained CEPZ Offshore Banking Unit permission vide letter no. BRPD (P-3)744(92)/2017-123 dated January 05, 2017. The Bank commenced the operation of its CEPZ Offshore Banking Unit with effect from February 12, 2017. 2 Significant Accounting Policy Auditors’ Report 1 2.1 Basis of accounting The accounting records of the unit are maintains in USD forms and the financial statements 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 by Bangladesh 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. Establishment expenses in the nature of rent, rates, taxes, salaries, management expenses, printing & stationery, electricity & lighting, postage, stamps, telecommunication etc. have not been separately accounted for in the Financial Statements. 31.12.2017 3 Loans and Advances 3.1 Loans, Cash Credits & Overdrafts etc: In Bangladesh Overdraft Term Loan Short Term Loan Loan against Accepted Bills Loan against Trust Receipt Payment against Documents Other Loans 31.12.2016 USD Taka USD 6,411,604 11,787,712 396,385 20,419,913 39,015,614 530,239,612 974,843,807 1,688,726,793 3,226,591,251 39,015,614 2,781,180 6,753,412 474,516 - 219,713,252 533,519,512 37,486,793 - 3,226,591,251 6,877,624 16,886,732 16,886,732 543,332,267 1,334,051,825 1,334,051,825 1,607,916 132,974,656 1,094,994 86,504,557 Sub-total 1,607,916 132,974,656 1,094,994 86,504,557 Total 40,623,530 3,359,565,907 17,981,726 1,420,556,382 3,498,214 16,450,820 11,410,655 9,263,841 40,623,530 289,302,297 1,360,482,778 943,661,157 766,119,676 3,359,565,907 3,375,021 5,973,379 899,149 1,505,560 6,228,618 17,981,726 266,626,659 471,896,909 71,032,768 118,939,217 492,060,830 1,420,556,382 32,781,040 Outside Bangladesh Sub-total 3.2 3.3 Bills Purchased & Discounted Payable in Bangladesh: Inland bills purchased Payable outside Bangladesh: Foreign bills purchased & discounted Residual maturity grouping of loans including bills purchased and discounted Repayable on Demand Not more than 3 months More than 3 months but not more than 1 year More than 1 year but not more than 5 years More than 5 years www.dhakabankltd.com Taka Dhaka Bank Limited Annual Report 2017 219 Off-Shore Banking 2.2 Allocation of common expenses
  220. Auditors ’ Report 31.12.2017 3.4 Maturity grouping of bills purchased & discounted Payable within 1 month Over 1 month but less than 3 months Over 3 months but less than 6 months 6 months or more 3.5 Off-Shore Banking Taka USD Taka 922,184 685,732 1,607,916 76,264,647 56,710,009 132,974,656 539,663 555,332 1,094,994 42,633,367 43,871,190 86,504,557 - - - - 1,607,916 39,015,614 40,623,530 132,974,656 3,226,591,251 3,359,565,907 16,364,796 1,094,695 522,235 17,981,726 1,292,818,878 86,480,911 41,256,593 1,420,556,382 32,794,605 - 2,712,113,795 - 13,047,237 524,793 - 1,030,731,690 41,458,682 - 7,828,925 40,623,530 647,452,112 3,359,565,907 4,409,696 17,981,726 348,366,009 1,420,556,382 40,469,932 153,598 40,623,530 3,346,863,389 12,702,518 3,359,565,907 17,981,726 17,981,726 1,420,556,382 1,420,556,382 40,623,530 40,623,530 40,623,530 3,359,565,907 3,359,565,907 3,359,565,907 524,793 17,456,933 17,981,726 17,981,726 41,458,682 1,379,097,700 1,420,556,382 1,420,556,382 Loans on the basis of significant concentration including bills purchased & discounted: a. Advances to allied concerns of Directors b. Advances to Chief Executive c. Advances to Other Senior Executives d. Advances to Customer’s Group: Agriculture loan Commercial lending Export financing Consumer credit scheme Small and Medium Enterprise (SME) Staff Loan Others 3.6 Industry-wise loans including bills purchased & discounted Agricultural Pharmaceuticals Textile & Garment Chemical Food & allied Transport & Communication Electronics & Automobile Housing & Construction Engineering & Metal Industries including Ship Breaking Energy & Power Service Others 3.7 Geographical Location - wise Loans and Advances Dhaka Region Chittagong Region South Region North Region Sylhet Region Other 3.8 Sector wise loans In Bangladesh Government & Autonomous bodies Financial Institutions (Public & Private) Other Public Sector Private Sector Outside Bangladesh 220 31.12.2016 USD Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  221. 3 .9 Classification of loans & advances Unclassified (including staff loan) Sub-Standard Doubtful Bad or loss 3.10 Provision required for loans and advances Status Rate% Unclassified 0.25,1,2 & 5 Special Mention Account 0.25,1,2 & 5 20 50 100 Required provision for loans & advances Total provision maintained Excess / short provision as at 31 December USD Taka 40,623,530 40,623,530 3,359,565,907 3,359,565,907 17,981,726 17,981,726 1,420,556,382 1,420,556,382 406,235 406,235 33,595,659 33,595,659 179,817 179,817 14,205,564 406,235 406,235 - 33,595,659 33,595,659 - 179,817 179,817 - 14,205,564 14,205,564 - 2,851,431 31,359,688 6,412,410 235,813,369 2,593,446,232 530,306,307 16,886,732 1,094,994 - 1,334,051,825 86,504,557 - 40,623,530 3,359,565,907 17,981,726 1,420,556,382 37,772,098 3,123,752,539 16,886,732 1,334,051,825 2,900,533 235,813,369 - - - - 1,094,994 86,504,557 - - - - - - - - 14,205,564 3.11 Securities against loans including bills purchased & discounted a. Secured Collateral of movable / immovable assets Local Banks & Financial Institutions guarantee Government Guarantee Foreign Banks Guarantee Export documents Fixed Deposits Receipts 1. Own FDR 2. FDR of Other Banks Government bonds Personal Guarantee Other Securities b. Unsecured 3.12 Particulars of Loans and Advances (i) Loans considered good in respect of which the bank company is fully secured; (ii) Loans considered good against which the banking company holds no security other than the debtor's personal guarantee; (iii) Loans considered good secured by the personal undertakings of one or more parties in addition to the personal guarantee of the debtors; (iv) Loans adversely classified; provision not maintained there against; (v) Loans due by directors or officers of the banking company or any of these either separately or jointly with any other persons; www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 221 Off-Shore Banking Classified: Sub-Standard Doubtful Bad or loss 31.12.2016 Taka Auditors’ Report 31.12.2017 USD
  222. Auditors ’ Report 31.12.2017 Off-Shore Banking USD 4 31.12.2016 Taka USD Taka (vi) Loans due from companies or firms in which the directors of the banking company have interests as directors, partners or managing agents or in case of private companies as members; (vii) Maximum total amount of advances including temporary advance made at any time during the year to directors or managers or officers of the banking companies or any of them either separately or jointly with any other person; (viii) Maximum total amount of advances including tempo rary advances granted during the year to the companies or firms in which the directors of the banking company have interests as directors, partners or managing agents or in the case of private companies as members; (ix) Due from banking companies; - - - - - - - - - - - - - - - - (x) Amount of classified loan on which interest has not been charged, should be mentioned as follows: (a) Decrease / increase in provision; (b) Amount realized against loan previously written off; (c) Amount of provision kept against loan classified as ‘bad/loss” on the date of preparing the balance sheet; (d) Interest creditable to the Interest Suspense A/c; Cumulative amount of the written off loan; (xi) Cumulative amount of the written off loan; - - - - - - - - - - - - - - - - 2,893,053 239,255,443 3,028,550 239,255,443 26,580,366 135,380,270 2,198,196,309 11,195,948,315 25,625,350 45,203,073 2,024,402,632 3,571,042,791 161,960,636 13,394,144,624 70,828,423 5,595,445,423 77,765,577 6,431,213,181 10,682,770 843,938,814 77,765,577 77,765,577 6,431,213,181 6,431,213,181 10,682,770 10,682,770 843,938,814 843,938,814 Other Assets Finance to AD Branches for IBP (See Note-9.6.2.a) Finance to AD Branches for Import Bill Discounting (See Note-9.6.2.b) 5 Borrowing from Other Banks/Financial Institutions 5.1 Maturity grouping of Borrowings Repayable on demand Repayable within 1 month Over 1 month but within 6 months Over 6 months but within 1 year Over 1 year but within 5 years According to BCD Circular No.(P)744(27) dated 17 December 1985 of Bangladesh Bank, Dhaka Bank maintained foreign currency accounts with Off-shore Banking Units in the manner they maintain such accounts with their foreign correspondents. 222 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  223. 6 6 .1 Deposits and Other Accounts Current and Other Accounts Foreign Currency Deposits 6.2 Bills Payable 6.3 Other deposit Margin under L/C Term Deposit Deposits Awaiting Disposal Sundry Deposit 7 8 Maturity grouping of deposits and other accounts Repayable on demand Repayable within 1 month Over 1 month but within 6 months Over 6 months but within 1 year Over 1 year but within 5 years Over 5 years but within 10 years Other Liabilities Finance from Bill Discounting Import Payment Suspense Export proceeds suspense Interest Suspense Account Tax deducted at source & payable Branch Adjustment Contingent Liabilities Acceptance & Endorsement Letters of Credit Letters of Guarantee Bills for Collection Other Contingent Liabilities USD Taka 7,314,895 604,941,825 11,135,025 879,666,969 4,811 397,892 - - 97,585 904,761 347,631 1,349,978 8,070,310 74,823,744 28,749,104 111,643,158 81,638 402,678 408,324 892,640 6,449,411 31,811,545 32,257,566 70,518,521 8,669,684 716,982,876 12,027,664 950,185,490 7,764,923 904,761 8,669,684 642,159,132 74,823,744 716,982,876 11,624,987 402,678 12,027,664 918,373,946 31,811,545 950,185,490 2,141,803 143,862 520,194 48,991 111,988,978 114,843,827 177,127,069 11,897,392 43,020,044 4,051,519 9,261,488,449 9,497,584,472 891,696 1,003,596 16,678 27,481 62,745,166 64,684,616 70,443,948 79,284,078 1,317,569 2,170,988 4,956,868,094 5,110,084,677 25,447,490 14,325,457 20,149,565 59,922,512 2,104,507,382 1,184,715,281 12,037,463 12,593,801 6,851,349 31,482,612 950,959,546 994,910,240 1,666,369,065 4,955,591,727 2017 9 10 Interest Income Interest on Advances Interest on Money at call and short Notice Call Lending and Fund Placement with banks Accounts with Foreign Banks Interest / Profit Paid On Deposits & Borrowings Term Deposits Fund Borrowings Inter Branch Interest paid www.dhakabankltd.com 541,256,599 2,487,126,386 2016 USD Taka USD 6,352,602 6,352,602 525,360,210 6,047 1,874,957 626,625 2,507,629 Taka 525,360,210 3,276,174 3,276,174 258,817,750 258,817,750 500,051 155,058,983 51,821,894 207,380,929 4,042 391,333 794,867 1,190,242 319,316 30,915,328 62,794,483 94,029,127 Dhaka Bank Limited Annual Report 2017 223 Off-Shore Banking 6.4 31.12.2016 Taka Auditors’ Report 31.12.2017 USD
  224. Auditors ’ Report 2017 USD 11 12 Off-Shore Banking 13 14 15 16 224 Commission / Fees and Exchange Earnings Commission/ Fees Income Exchange gain including gain form foreign currency dealings Other Operating Income Postage Charge Recoveries Swift Charge Recoveries Other Fees Other expenses Contractual service charge Petrol, oil and lubricants (vehicle & generator) Entertainment (canteen & other) Conveyance Training expenses Books and papers Potted plants Business development & promotion Bank Account Charges Cash Received from Other Operating Activities Commission & Exchange Other Operating Income Cash Paid for Other Operating Activities Office Operating Expenses 2016 Taka USD Taka 880,041 72,779,367 552,903 43,679,331 23,282 1,925,420 40,870 3,228,714 903,323 74,704,787 593,773 46,908,045 24,505 77,235 913 102,653 2,026,548 6,387,370 75,472 8,489,390 24,113 52,850 76,962 1,904,906 4,175,120 6,080,026 3,272 2,764 2,033 503 1,270 601 10,442 270,615 228,585 168,100 41,568 105,001 49,711 863,580 7,992 3,900 3,690 1,095 4,000 285 1,110 1,175 23,247 631,398 308,100 291,510 86,505 316,000 22,515 87,690 92,825 1,836,543 903,323 102,653 1,005,976 74,704,787 8,489,390 83,194,177 593,773 76,962 670,735 46,908,045 6,080,026 52,988,071 (195,636) (16,179,112) (261,567) (20,663,823) General • Fixed Assets of this unit are appearing in the books of the main operation of the bank and depreciation is also charged to Profit & Loss Account of the main operation of the bank. • Assets and liabilities have been converted into Taka Currency @ US$ 1 = Tk. 82.70, GBP=95.4143, Euro = 108.8207 (2016 : Us $ 1 = Tk 79.00) which represents the period end mid rate of exchange as at 31 December 2017. • Previous year’s figures have been rearranged, where considered necessary, to conform to current year’s presentation. Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  225. Dhaka Bank Securities Limited Auditor ’s Report Sound Capital Market is an indispensible part of an Economy. Without sound and efficient capital market, rapid economic development could be hampered as capital market provides long term funds to entrepreneurs. Capital Market of Bangladesh is still highly speculative and lacks transparency due to poor regulatory framework. In Bangladesh, Financial sector was historically driven by banks and capital market had fewer rules to play as people had mixed perception about the risk pattern in capital market that discouraged them mostly to invest there. Inspite of all adversity, we drive very strongly to keep up pace with the market and ensure maximum return for the stakeholders. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 225 Dhaka Bank Securities Limited Secure Banking Promise
  226. Auditor ’s Report Auditor’s Report to the Shareholders of Dhaka Bank Securities Limited We have audited the accompanying financial statements of Dhaka Bank Securities Limited which comprise the Statement of Financial Position as on 31 December 2017 and the related Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for year then ended and a summary of significant accounting policies and other explanatory information. Dhaka Bank Securities Limited Management’s Responsibilities for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 226 Dhaka Bank Limited Annual Report 2017 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above give a true and fair view of the financial position of Dhaka Bank Securities Limited as on 31 December 2017 and of the results of its operations and its cash flows for year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS). Report on Other Legal and Regulatory Requirements We also report that the financial statements comply with the Companies Act 1994, the Securities and Exchange Act 1993, the Securities and Exchange Rules 1987, conditions for Registration issued by Bangladesh Securities and Exchange Commission and other applicable laws and regulations; and a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; b) in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of those books; c) the financial statements dealt with by this report are in agreement with the books of account and returns; and d) the expenditure incurred was for the purpose of business of the Dhaka Bank Securities Limited. Dhaka, 04 April 2018 Hoda Vasi Chowdhury & Co Chartered Accountants www.dhakabankltd.com
  227. Dhaka Bank Securities Limited Statement of Financial Position As on 31 December 2017 Annexure - K ASSETS Non Current Assets Property , plant & equipments Intangible asset Investment in un-quoted shares 31.12.2017 31.12.2016 Taka Taka 986,972,659 7,724,270 977,077,770 Current Assets Cash and bank balances Investment in quoted shares Margin loan Accounts receivable Advance income tax Advance, prepayments & other receivables Deferred tax asset Total assets 07 08 09 10 11 12 4,448,167,614 3,958,009,281 188,576,888 1,881,629,593 2,088,210,237 93,335,781 161,326,341 35,088,774 184,381,826 1,500,440,363 2,057,523,809 46,405,391 112,325,964 56,931,927 13 2,138,382 2,170,618 5,433,872,005 4,944,981,940 2,056,539,337 1,948,466,042 1,801,800,000 33,700,000 221,039,337 1,716,000,000 25,900,000 206,566,042 3,377,332,668 2,337,592,550 218,730,867 180,895,067 583,760,904 56,353,280 3,377,332,668 5,433,872,005 2,996,515,898 2,113,441,442 175,470,262 129,878,773 503,173,973 74,551,448 2,996,515,898 4,944,981,940 EQUITY AND LIABILITIES Equity Paid up capital Investment fluctuation fund Retained earnings 14 15 16 Liabilities Current Liabilities Short-term loan from bank and NBFI Accounts payables Provision for income tax Provision for unrealized losses Other liabilities Total Liabilities Total Equity and Liabilities 17 18 19 20 21 The annexed notes from 1 to 39 form an integral part of these financial statements. Mohammad Ali EVP & COO Emranul Huq Acting Managing Director Altaf Hossin Sarker Director Reshadur Rahman Chairman This is the Statement of Financial Position referred to in our separate report of even date. Dhaka, 04 April 2018 www.dhakabankltd.com Hoda Vasi Chowdhury & Co Chartered Accountants Dhaka Bank Limited Annual Report 2017 227 Dhaka Bank Securities Limited 985,704,391 6,488,239 977,077,770 4 5 6 Auditor’s Report Notes
  228. Dhaka Bank Securities Limited Statement of Profit or Loss and Other Comprehensive Income Dhaka Bank Securities Limited Auditor ’s Report For the year ended 31 December 2017 Notes Operating Income Net brokerage commission income Gain on investments in shares Dividend on shares Net interest income Fees & other income Total operating income (A) Operating Expenses Salary & allowances Rent, taxes, insurance, electricity etc. Legal & professional expenses Postage, stamp, telecommunication etc. Stationery, printing, advertisement etc. Directors' fee & meeting expenses Audit fees Repair & maintenance of assets Other expenses Depreciation and amortization Total Operating Expenses (B) 2017 Taka 2016 Taka 22 23 23 24 25 120,269,514 156,364,428 54,064,332 707,154 1,059,799 332,465,228 69,763,477 114,293,649 52,455,591 828,490 874,258 238,215,466 26 27 28 29 30 31 32 33 34 35 42,148,640 14,984,035 1,429,750 811,443 1,912,203 1,173,306 287,500 5,865,340 9,690,378 2,113,740 80,416,335 32,834,624 18,567,982 397,000 610,064 1,192,067 938,814 287,500 6,371,664 8,404,428 3,633,135 73,237,278 252,048,893 164,978,188 50,000,000 30,000,000 80,000,000 172,048,893 25,000,000 25,000,000 50,000,000 114,978,188 51,016,293 12,927,069 63,943,362 32,236 34,341,920 34,341,920 (414,295) 108,073,295 81,050,564 0.60 0.45 Profit/(Loss) before provision (C)= (A-B) Less: Provisions for unreazilesed losses (D) Provision against unrealized loss in portfolio Provision against unrealized loss in margin loan accounts Profit/(Loss) before tax (E)= (C-D) Less: Provision for income tax Current tax: Current year Prior year Deferred tax Net Profit/(Loss) after tax : Earnings Per Share The annexed notes from 1 to 39 form an integral part of these financial statements. Mohammad Ali EVP & COO Emranul Huq Acting Managing Director Altaf Hossain Sarker Director Reshadur Rahman Chairman This is the Statement of Profit or Loss and Other Comprehensive Income referred to in our separate report of even date. Dhaka, 04 April 2018 228 Dhaka Bank Limited Annual Report 2017 Hoda Vasi Chowdhury & Co Chartered Accountants www.dhakabankltd.com
  229. Dhaka Bank Securities Limited Statement of Cash Flows For the year ended 31 December 2017 2016 Taka A . Cash flow from operating activities Net income Adjustments for: Depreciation and amortization expenses Cash generated from operating activities before changes in operating assets and liabilities: Net cash flow from operating activities B. Cash flow from investing activities Purchase of property, plant & equipment Encashment of/(Investment) in shares/securities (Increase)/Decrease in margin loan Net cash flow from investing activities C. Cash flows from financing activities Enhancement/(repayment) of loan from DBL Enhancement/(repayment) of loan from UFL Net cash flows from in financing activities Net surplus/(use) in cash & bank balances for the period (a+b+c) Cash & bank balance at beginning of the period Cash & bank balance at the end of the period 114,978,188 2,113,740 174,162,633 3,633,135 118,611,323 43,260,605 (18,198,168) 80,586,931 (73,075,681) (38,246,310) 50,657,251 (46,930,390) (61,927,446) 21,843,153 18,634,685 (28,381,037) (46,857,164) (30,881,901) (166,784,842) 192,797,318 (48,173,518) (877,708) (381,189,229) (30,686,428) (412,753,365) (1,487,036) (203,681,983) 345,262,263 140,093,244 324,151,108 (100,000,000) 224,151,108 (145,656,257) (145,656,257) 4,195,061 184,381,826 188,576,887 (53,736,532) 238,118,358 184,381,826 The annexed notes from 1 to 39 form an integral part of these financial statements. Dhaka, 04 April 2018 www.dhakabankltd.com Mohammad Ali EVP & COO Emranul Huq Acting Managing Director Altaf Hossain Sarker Director Reshadur Rahman Chairman Dhaka Bank Limited Annual Report 2017 229 Dhaka Bank Securities Limited Increase/(Decrease) in operating liabilities: Accounts payable Accrued expenses & other liabilities Provision for unrealized losses (Increase)/Decrease in operating assets: Accounts receivable Income Tax Paid Advances & prepayments 172,048,893 Auditor’s Report 2017 Taka
  230. Dhaka Bank Securities Limited Statement of Changes in Equity For the year ended 31 December 2017 Dhaka Bank Securities Limited Auditor ’s Report (Amount in Taka) Particulars Balance as on January 01, 2017 Net profit/(loss) For the Period Transfer to investment fluctuation fund Share Capital Investment Fluctuation Fund Retained Earnings Total Equity 1,716,000,000 - 25,900,000 - 206,566,042 108,073,295 1,948,466,042 108,073,295 Bonus shares issued Balance as at 31 December 2017 85,800,000 1,801,800,000 7,800,000 33,700,000 7,800,000 (85,800,000) 221,039,337 2,056,539,337 Balance as on 01 January 2016 Net profit for the year Transfer to Investment Fluctuation Fund Bonus shares issued Balance as on 31 December 2016 1,560,000,000 156,000,000 1,716,000,000 20,200,000 5,700,000 25,900,000 287,215,479 81,050,564 5,700,000 156,000,000 206,566,042 1,867,415,479 81,050,564 1,948,466,042 The annexed notes from 1 to 39 form an integral part of these financial statements. Dhaka, 04 April 2018 230 Mohammad Ali EVP & COO Dhaka Bank Limited Annual Report 2017 Emranul Huq Acting Managing Director Altaf Hossain Sarker Director Reshadur Rahman Chairman www.dhakabankltd.com
  231. Dhaka Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2017 License / Registration No. Purpose Basis of Presentation of Financial Statements These financial statements have been prepared in accordance with Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs) and no adjustment has been made for inflationary factors affecting the financial statements. The accounting policies, unless otherwise stated, have been consistently applied by the Company. Basis of Measurement The financial statements have been prepared based on historical cost convention basis. The accounting policies, unless otherwise stated, have been consistently applied by the Company and are consistent with those of the previous years. Regulatory compliance In preparation of the Financial Statements, Dhaka Bank Securities Limited complies with the applicable provisions of the following major laws/ statutes: - The Companies Act, 1994 - The Income Tax Ordinance, 1984 - The Income Tax Rules, 1984 - Negotiable Instruments Act, 1881 - Securities and Exchange Rules, 1987 - Securities and Exchange Commission Act, 1993 - Securities and Exchange Commission (Stock-Dealer, Stock-Broker and Authorized Representatives) Rules, 2000; and - Other applicable laws and regulations. Dhaka Bank Securities Limited Name of Authority Significant Accounting Policies Auditor’s Report 1. Company and its Activities 2. 2.1 1.1 Legal Status of the Company Dhaka Bank Securities Limited (the name of company has been changed from DBL Securities Limited to Dhaka Bank Securities Limited with effect from 27 April 2014) was incorporated with the Registrar of Joint Stock Companies and Firms (RJSCF) vide registration no. C-85857/10 dated 19 July 2010 as a Private Company limited by Shares having its registered office at Adamjee 2.2 Court (1st Floor), 115-120, Motijheel C/A, Dhaka -1000 which was converted as a Public Company Limited by Shares in May 2016 . The company is the Trading Right Entitlement Certificate (TREC) holder of both of the stock exchanges of the country (TREC No. 193 in DSE and TREC No. 081 in CSE). The Company commenced its business operations from 13 February 2011 as a wholly owned subsidiary of 2.3 Dhaka Bank Limited. 1.2 Principal Activities of the Company The principal activities of the company are to act as a TREC Holder of Dhaka Stock Exchanges Limited and Chittagong Stock Exchange Limited to carry on the business of brokers in stocks, shares and securities, commercial papers, bonds, debentures, debentures stocks, foreign currencies, treasury bills and/or any financial instruments. The company has six branches in Bangladesh located at Adamjee Court-Motijheel, DSE Building-Motijheel, Dhanmondi, Uttara, Agrabad and Sylhet. Dhaka Bank Securities Limited posseses following licenses from regulatory authorities 2.4 Presentation and Functional Currency and Level of Bangladesh Securities 3.1/DSEand Exchange 193/2011/453 Commission (BSEC) Stock Broker Business Bangladesh Securities 3.1/DSEand Exchange 193/2011/454 Commission (BSEC) Stock Dealer Business Precision The financial statements have been presented in Bangladesh Taka (BDT) currency, which is the Company’s functional currency. All financial information presented in BDT has been rounded off to the nearest integer. 2.5 Use of Estimates and Judgments Bangladesh Securities 3.2/CSEand Exchange 081/2011/260 Commission (BSEC) Stock Broker Business Bangladesh Securities 3.2/CSE and Exchange -081/2011/261 Commission (BSEC) Stock Dealer Business Bangladesh Securities and Exchange CDBL- DP 17 Commission (BSEC) Depository Functions with Central Depository Bangladesh Limited (CDBL) Dhaka Stock Exchange Limited (DSE) TREC NO. 193 Trading with DSE Chittagong Stock Exchange Limited (CSE) TREC NO. 081 Trading with CSE www.dhakabankltd.com The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. It also requires disclosures of contingent assets and liabilities at the year end. Provisions and accrued expenses are recognized in the financial statements in line with Bangladesh Accounting Standard (BAS) 37: “Provisions, Contingent Liabilities and Contingent Assets” when - the Company has a legal or constructive obligation as a result of past event; and i. It is probable that an outflow of economic benefit will be required to settle the obligation. ii. A reliable estimate can be made for the amount of the obligation. 2.6 Going Concern The Company has adequate resources to continue in operation for the foreseeable future. For this reason the directors continue to adopt going concern basis in preparing the financial statements. The current credit facilities and adequate resources of the company provide sufficient funds to meet the present requirements. Dhaka Bank Limited Annual Report 2017 231
  232. Auditor ’s Report 2.7 Statement of cash flows Statement of Cash Flows is prepared in accordance with Bangladesh Accounting Standard (BAS) 7: “Statement of Cash Flows” and the cash flows from operating activities are presented under the indirect method as prescribed by the Securities and Exchange Rules, 1987. 2.11 Intangible Assets and Amortization of Intangible assets 2.8 Cash and Cash Equivalents Cash and cash equivalents include cash in hand and cash at bank which are held and are available for use by the Company without any restriction. There is insignificant risk of change in the value of the above items. 2.12 Provision for Tax 2.9 Investment in Shares of Stock Exchanges Dhaka Bank Securities Limited In accordance with section 8 of the Exchanges Demutualization Act 2013, both stock exchange membership has been converted into shares through the issuance of two completely de-linked assets to the former members in the Exchange, namely (a) fully paid-up shares and (b) trading right. Exchanges shall have the authority to issue Trading Right Entitlement Certificate (TREC), as per the Exchanges Demutualization, Act 2013 and as outlined in the scheme, to provide the right to trade any securities enlisted in CSE to eligible brokers and dealers. Such TRECs will be totally separate from the ownership of the Exchange as there is no obligation for TREC holders to be or remain shareholders of the exchange. 2.10 Property, Plant and Equipment 2.10.1Recognition and Measurement All Property, Plant and Equipment are stated at cost less accumulated depreciation as per BAS-16 “ Property, Plant and Equipment”. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use Name of the Assets Rate Furniture and fixtures 10%p.a Office Appliance and Equipment 20%p.a Computer Equipments20%p.a Software 20%p.a Motor Vehicles 20%p.a Current Tax Provision for current tax is made on the basis of the profit for the year as adjusted for taxation purpose in accordance with the provision of Income Tax Ordinance, 1984 and amendments made thereto from time to time. Deferred Tax Deferred Tax is calculated as per Bangladesh Accounting Standard (BAS)-12 “Income Taxes”. Deferred Tax is recognized on differences between the carrying amount 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 recognized for all taxable temporary differences. Deferred Tax assets are generally recognized for all deductible temporary differences. Deferred Tax is measured at the tax rate that is expected to be applied to the temporary differences when they reverse based on the laws that have been enacted or substantively enacted by the reporting date. 2.13 Revenue Recognition Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the enterprise and in accordance with the Bangladesh Accounting Standard (BAS)18 “Revenue Recognition”: 2.10.2Depreciation and Amortization Property, Plant and Equipment are stated at cost less accumulated depreciation. Depreciation is charged using the straight-line method on the acquisition cost of PPE and such cost is written off over the estimated useful lives of assets, in accordance with BAS 16. Depreciation for full month is charged on additions irrespective of date when the related assets are put into use and no depreciation is charged for the month of disposal. The rates of depreciation used to write off the amount of assets are as follows: The main item included in intangible asset is computer software. Intangible assets are recognized if it is probable that future economic benefits that are attributable to the asset will flow to the Company and the cost of the asset can be measured reliably in accordance with BAS 38: “Intangible Assets”. Accordingly, these assets are stated in the Statement of Financial Position at cost less accumulated amortization. Intangible assets are amortized over a period of fuve (05) years. i. Brokerage Commission Brokerage commission is recognized as income when selling or buying order executed. ii. Interest Income from Margin Loan Interest Income from margin loan is recognized on accrual basis. Such income is calculated on daily margin loan balance of the respective parties. Income is recognized on monthly basis and applied to the customers’ account on quarterly basis. In case of negative equity margin loan account, interest is credited to suspense account instead of income account where the negative equity fall below 80% iii. Dividend Income and Profit/ (Loss) on Sale of Marketable Securities Dividend income is recognized when right to receive payment is established whereas profit or loss arising from the sale of securities is accounted for only when shares are sold in the market and profit is realized or loss is incurred. 2.14 Investment fluctuation As per the decision of the Board of Directors, 5% of capital gain during a year is transferred to Investment fluctuation fund account to manage the Company’s future own portfolio risk. 232 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  233. Auditor ’s Report 2.15 Earnings Per Share The Company calculates earning per share in accordance with Bangladesh Accounting Standard (BAS)-33 “Earning Per Share” which has been shown in the face of the Statement of Profit or Loss and Other Comprehensive Income. 2.16 Provision against Unrealized Loss in Margin Loan As Per Bangladesh Securities and Exchange Commission (BSEC) Circular No. SEC/CMRRCD/2009-193/181 dated 28 December 2017, the company may keep 20% Provision against Unrealized Loss in the Portfolio accounts of Margin Loan Clients as on 31 December 2017. 2.17 Related Party Disclosure Dhaka Bank Securities Limited As per Bangladesh Accounting Standards (BAS)-24 “Related Party Disclosures”, parties are considered to be related if one of the parties has the ability to control the other party or exercise significant influence over the other party in making financial and operational decisions. The Company carried out transactions in the ordinary course of business on an arm’s length basis at commercial rates with related parties. 2.18 Branch Accounting The Company has 6 (six) Branch Offices (excluding Head Office), with no overseas branch as on 31 December 2017. Accounts of the branches are maintained at the head office which are included in the accompanying financial statements. 2.19 Reporting Period The company’s reporting period is January to December. 3. Application of Bangladesh Accounting Statndards (BASs) Name of the BAS BAS No. Status Presentation of Financial Statements 1 Applied Statements of Cash Flow 7 Applied Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied Events after the Balance Sheet Period 10 Applied Income Taxes 12 Applied Property, Plant and Equipment 16 Applied Revenue 18 Applied Employee Benefits 19 Applied Borrowing Costs 23 Applied Related Party Disclosures 24 Applied Financial Instruments: Presentation 32 Applied Earnings per share 33 Applied Provisions, Contingent Liabilities and Contingent Assets 37 Applied Intangible Assets 38 Applied Financial Instruments: Recognition and Measurement 39 Applied www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 233
  234. Auditor ’s Report 4. Property, Plant and Equipment A. Purchased during the year Dhaka Bank Securities Limited 33,376,753 31,889,717 877,708 1,487,036 Closing balance (A) Accumulated Depreciation: 34,254,461 33,376,753 Opening balance 25,652,482 22,063,553 2,113,740 3,588,929 27,766,222 6,488,239 25,652,482 7,724,271 4,831,461 - 4,831,461 - Charged during the year Closing balance (B) Written Down Value (A-B) Details are given on Annexure - A 5. 31.12.2016 Taka Cost: Opening balance B. 31.12.2017 Taka Intangible assets A. B. C. Cost: Opening balance Add: Purchased during the year Closing balance (A) Accumulated Amortization: Opening balance Add: Charged during the year Closing balance (B) Written Down Value (A-B) 4,831,461 4,831,461 - 4,787,255 44,206 - - 4,831,461 4,831,461 4,831,461 Details are given on Annexure - A 6. Investment in un-quoted shares Investment in shares of DSE 700,000,000 700,000,000 Investment in shares of CSE 250,000,000 250,000,000 Investment in shares of CDBL 18,277,770 18,277,770 Energypac Power Gen. Company Ltd. 8,800,000 8,800,000 977,077,770 977,077,770 100,000 109,500 Bal. in SND A/C with DBL ( 201.150.2960) 4,135,030 4,887,121 Bal. in Dealer A/C with IFIC (1090-358447-001) 8,595,002 2,650,955 1,315,119 117,147,279 2,542,725 77,279,728 47,685,021 43,736,225 8,189,934 5,956,069 553,434 546,515 6,070 46,472,989 850,000 200,000 188,476,888 188,576,888 184,272,326 184,381,826 Total 7. Cash & bank balances Cash in hand Balance with bank SND/Current deposit account: Bal. in UCB Dealer A/C ( 72-111-16472) DBL Sec. Trading A/C (SND A/C # 201.150.2972) Bal. in C/A with IFIC( No. 1090-358002)-Broker Bal. in C/A with UCBL (72-111-16443) Bal. with SCB A/C ( No. 01-1183892-01) Bal. in IPO Application A/C ( 201.150.3444) Cheque in hand Total 234 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  235. 8 . 9. 10. 11.1 12. Investment in marketable securities Investment in own portfolio/dealer account Total 1,881,629,593 1,881,629,593 1,500,440,363 1,500,440,363 Margin loan Margin loans -General clients Rescheduled margin loans to affected clients Total margin loans Less: Closing balance of interest suspense A/C Net margin loan outstanding 2,446,217,072 2,446,217,072 358,006,835 2,088,210,237 2,752,429,241 5,982,024 2,758,411,265 700,887,456 2,057,523,809 2,937,451 90,397,892 438 93,335,781 2,559,079 43,640,553 205,759 46,405,391 112,325,964 49,000,377 65,468,800 46,857,164 161,326,341 112,325,964 21,780,847 66,665 14,650,606 12,502,259 10,738,968 50,656 25,963,455 10,104,086 49,000,377 46,857,164 13,545,000 24,386 1,000 586,932 25,503 5,200 850,000 20,657,761 10,626 35,088,774 850,000 25,350,048 30,000,000 114,245 56,931,927 (2,170,618) 32,236 (2,138,382) (1,756,323) (414,295) (2,170,618) 5,000,000,000 5,000,000,000 1,716,000,000 85,800,000 1,801,800,000 1,560,000,000 156,000,000 1,716,000,000 Account receivables Receivable from non-margin clients Receivable from Dhaka Stock Exchange (DSE) Receivable from Chittagong Stock Exchange(CSE) Advance Income Tax Opening Balance Add: Addition during the year (Note 11.1) Advance income tax (Addition) AIT/TDS on brokerage commission - DSE AIT/TDS on brokerage commission - CSE Advance income tax paid TDS/ AIT (Interest income, dividend income, etc) Advance, prepayments & other receivables Non-interest bearing block A/C (small investors scheme) Prepaid rent -premises Prepaid insurance - fire & burglary Prepaid non-judicial stamp Advance - purchase of floor space @ DSE Tower Receivable against cash dividend Advance-IPO application for dealer A/C Suspense account (Adj) Total 13. Deferred Tax liability/(asset) Opening balance Add: Addition during the year 14. Share capital Authorized capital 500,000,000 ordinary shares @ Tk. 10 each Paid up capital Opening balance Add: Stock dividend www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 235 Dhaka Bank Securities Limited 11. 31.12.2016 Taka Auditor’s Report 31.12.2017 Taka
  236. Auditor ’s Report 15. 16. Investment fluctuation fund Opening balance Add: Addition during the year Retained earnings Opening Balance Add: Net profit for the period Dhaka Bank Securities Limited Less: Bonus shares issued Transfer to Investment fluctuation fund 17. 18. Short-term Loan from bank and NBFI Loan from Dhaka Bank Ltd. Loan from United Finance Ltd. Total Accounts Payable Payable to clients IPO application money Payable to DSE Payable to CSE Payable to CDBL Provision for income tax Opening balance Add: Provision made during the period Closing balance as on date 20. Provision for unrealized losses Provision for unrealized loss in portfolio Provision for unrealized loss in margin loan A/C Provision for small affected margin clients Total 20.1 Provision against unrealized loss in portfolio Opening balance Add: Addition during the year 31.12.2017 Taka 31.12.2016 Taka 25,900,000 7,800,000 33,700,000 20,200,000 5,700,000 25,900,000 206,566,042 108,073,295 314,639,337 85,800,000 7,800,000 93,600,000 221,039,337 287,215,479 81,050,563 368,266,042 156,000,000 5,700,000 161,700,000 206,566,042 2,237,592,550 100,000,000 2,337,592,550 1,913,441,442 200,000,000 2,113,441,442 190,769,559 27,716,262 245,046 109,401,738 46,330,000 19,519,135 307 219,081 218,730,867 175,470,262 129,878,773 51,016,293 180,895,067 95,536,853 34,341,920 129,878,773 200,000,000 375,000,000 150,000,000 345,000,000 8,760,904 8,173,972 583,760,904 503,173,972 150,000,000 50,000,000 200,000,000 125,000,000 25,000,000 150,000,000 345,000,000 30,000,000 320,000,000 25,000,000 375,000,000 345,000,000 8,173,972 586,932 8,760,904 7,516,721 657,251 8,173,972 19. 20.2 Provision against unrealized loss in margin loan accounts Opening balance Add: Addition during the year 20.3. Provision for small affected margin clients Opening balance Add: Adjustment during the year 236 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  237. Liabilities for other accrued expenses Accrued interest expenses - Loan from Banks & NBFIs Audit fees Accrued expenses-Others VAT current A/C Withholding tax liabilities Total 22. Less: Direct expenses Laga charges Howla charges CDBL Exp.-Daily settlement (Pay in/Pay out) Net brokerage commission 23. 24. 25. 25.1. Income from own portfolio Gain/(Loss) on sale of shares Dividend on shares Net interest income Interest income charged on margin loan Interest income on bank deposit A/C Interest income for the period Less: Interest expenses on borrowed funds Net interest income Fees & other income Account opening fees BO renewal fees IPO processing fees Other income Central Depository Bangladesh Limited (CDBL) Income (Note: 25.1) Central Depository Bangladesh Limited (CDBL) income CDBL income (A) CDBL income-Transfer In/Out CDBL income-Bonus/Right/IPO/Split/Demat CDBL Income-Pledge/Unpledge Less: CDBL expenses (B) CDBL exp.-Transfer In/Out CDBL exp.-Bonus/Right/IPO/Split/Demat CDBL exp.-Pledge/Unpledge CDBL exp.-Monthly connection fees www.dhakabankltd.com 55,444,623 72,861,233 287,500 193,500 273,453 154,205 56,353,280 287,500 714,862 498,398 189,455 74,551,448 2017 Taka 2016 Taka 136,998,666 407,283 137,405,949 77,574,067 374,115 77,948,181 (11,322,488) (2,522) (5,811,425) (17,136,435) 120,269,514 (5,370,335) (5,924) (2,808,445) (8,184,704) 69,763,477 156,364,428.27 54,064,332 210,428,761 114,293,649 52,455,591 166,749,241 139,770,626 7,769,919 147,540,545 (146,833,391) 707,154 154,569,293 4,662,325 159,231,618 (158,403,128) 828,490 70,703 480,700 7,810 195,906 304,681 1,059,799 45,639 484,000 9,310 125,406 209,903 874,258 246,592 102,298 310,653 659,542 50,034 307,340 102,400 459,774 137,373 36,858 174,630 6,000 354,861 304,681 29,981 159,808 54,083 6,000 249,872 209,903 Dhaka Bank Limited Annual Report 2017 237 Dhaka Bank Securities Limited Brokerage commission income Brokerage - DSE Brokerage - CSE 31.12.2016 Taka Auditor’s Report 21. 31.12.2017 Taka
  238. Auditor ’s Report 26. Dhaka Bank Securities Limited 27. 28. 29. 30. 31. 32. 33. 238 Salary and allowances Basic salaries Allowances Leave fare assistances Employer’s contribution to Provident Fund Bonus 2017 Taka 2016 Taka 15,052,941 18,717,362 2,738,901 1,485,860 4,153,576 42,148,640 12,196,022 13,701,378 2,149,426 1,221,700 3,566,098 32,834,624 Rent, rates ,taxes, insurance, lighting etc Rent expenses - Adamjee Court (1st Flr) Insurance expense Electricity bill-Adamjee Court Fuel exp. - Generator/Pool car Renewal of registration certificates, trade license etc Total 10,721,072 74,988 1,945,516 1,303,533 938,926 14,984,035 14,950,390 80,592 2,315,455 1,221,545 1,024,683 19,592,665 Legal & professional fees expenses Professional fees & Legal Expenses Total 1,429,750 1,429,750 397,000 397,000 41,297 35,140 195,316 539,690 811,443 25,853 28,385 162,440 393,386 610,064 808,824 163,879 624,475 315,025 1,912,203 464,915 242,882 466,090 18,180 1,192,067 478,400 694,906 1,173,306 524,400 414,414 938,814 287,500 287,500 287,500 287,500 1,734,200 792,932 255,020 823,853 831,452 590,469 795,518 41,896 5,865,340 1,896,000 793,945 105,375 724,026 674,392 449,880 679,651 23,713 6,371,664 Postage, stamp, telecom etc Postage & courier Stamps-Judicial/Non-Judicial Telephone/Fax/PABX expenses Mobile/Internet/Cable Tv bills Stationary, printing, advertisement etc Stationeries exp.- (Printed Materials) Stationeries - General (Table/Petty stationeries) Stationeries- Computer consumable (Paper & Accessories) Publicity expenses (Leaflet, Banner, Bill board etc) Directors' fee & meeting expenses Director's fees Meeting, seminar & conference expenses Statutory audit fee Audit fee for the year Repair & maintenance of assets Network connectivity expense Repair, replacement & maintenance - Office premises Repair, replacement & maintenance - Furnitures & fixtures Repair, replacement & maintenance - Office & electric appliances Rep., replacement & maint.- Computer, software, printer, UPS etc Repair, replacement & maintenance - Vehicles Water and sewerage Contribution to investors' protection fund Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  239. 34 . 36. 36,105 97,000 921,100 1,287,100 442,871 56,724 1,893,806 2,305,152 47,667 279,254 1,704,463 70,940 445,554 80,130 22,512 9,690,378 25,419 85,500 575,400 1,039,129 795,433 110,859 1,378,195 2,135,174 18,333 344,049 1,516,921 165,975 120,576 80,360 13,105 8,404,428 1,275,716 297,920 540,104 2,113,740 1,226,665 593,474 1,170,692 598,098 44,206 3,633,135 108,073,295 180,180,000 0.60 81,050,564 171,600,000 0.47 Depreciation and amortization expenses Depreciation-Furniture and fixtures Depreciation-Office appliances & equipments Depreciation-Computer Depreciation-Motor vehicles Amortization expense-Software Earning Per Share (EPS) a) Net profit after tax b) Total number of ordinary shares outstanding Earning Per Share (EPS) (a ÷ b) 0.45 Earning Per Share (EPS) - Restated 37. 38. Related party transaction Name of the related party Relationship Dhaka Bank Limited Parent Company Mr. A. T. M. Spouse of Director Hayatuzzaman Khan Nature of transaction Transacton during year Loan 324,151,108 Advance Rent for 2,241,000 Leased Premises Balance as at 31.12.17 2,237,592,550 Balance as at 31.12.16 1,913,441,442 11,205,000 - Issuance of Bonus Share To be declared in next Board Meeting and AGM 39. Date of authorisation The Board of director has authorised these financial statements for issue on 04 April 2018. Dhaka, 04 April 2018 www.dhakabankltd.com Mohammad Ali EVP & COO Emranul Huq Acting Managing Director Altaf Hossain Sarker Director Reshadur Rahman Chairman Dhaka Bank Limited Annual Report 2017 239 Dhaka Bank Securities Limited 35. Other expenses Bank charges Excise duty expense Commission expenses- Bank guarantees Cleaning & maintenance services Contractual service charges Staff uniform expenses Support staff expense Security guard expenses Training & development Executives Conveyance expense-Local Regular Canteen expense Entertainment Expense Business promotion expenses Newspapers Miscellaneous - ( Others ) 2016 Taka Auditor’s Report 2017 Taka
  240. Auditor ’s Report Dhaka Bank Securities Limited Fixed Assets For the Period ended on December 31, 2017 A. Properties, plant & equipment Annexure-A Cost Particulars Dhaka Bank Securities Limited Furnitures & fixtures Balance as on 01.01.2017 Depreciation Addition during the Period Balance as on 31.12.2017 Charges/ Addition during the period Rate % Balance as on 01.01.2017 Balance as on 31.12.2017 Written down value as on 31.12.2017 12,757,154 - 12,757,154 10% 6,920,113 1,275,716 8,195,829 4,561,325 6,996,020 153,208 7,149,228 20% 6,198,722 297,920 6,496,642 652,585 10,633,074 724,500 11,357,574 20% 9,543,141 540,104 10,083,245 1,274,329 2,990,505 - 2,990,505 20% 2,990,505 - 2,990,505 - Total 33,376,753 877,708 34,254,461 25,652,482 2,113,740 27,766,222 6,488,239 As on 31 December 2016 31,889,717 1,487,036 33,376,753 22,063,553 3,588,929 25,652,482 7,724,271 Office appliances & equipments Computer Motor vehicles Dhaka Bank Securities Limited Fixed assets schedule For the Period ended on December 31, 2017 B. Intangible assets Cost Particulars Balance as on 01.01.2017 Amortzation Addition during the Period Balance as on 31.12.2017 Software 4,831,461 - 4,831,461 Total 4,831,461 - As on 31 December 2016 4,831,461 - 240 Dhaka Bank Limited Annual Report 2017 Rate % Balance as on 01.01.2017 20% Charges/ Addition during the period Balance as on 31.12.2017 Written down value as on 31.12.2017 4,831,461 - 4,831,461 - 4,831,461 4,831,461 - 4,831,461 - 4,831,461 4,787,255 44,206 4,831,461 - www.dhakabankltd.com
  241. Dhaka Bank Investment Limited Auditor ’s Report Dhaka Bank Investment Limited www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 241
  242. Auditor ’s Report Auditor’s Report to the Shareholders of Dhaka Bank Investment Limited We have audited the accompanying financial statements of Dhaka Bank Investments Limited which comprise the Statement of Financial Position as on 31 December 2017 and the related Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended and a summary of significant accounting policies and other explanatory information. Dhaka Bank Investment Limited Management’s Responsibilities for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 242 Dhaka Bank Limited Annual Report 2017 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above give a true and fair view of the financial position of Dhaka Bank Investments Limited as on 31 December 2017 and of the results of its operations and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS). Report on Other Legal and Regulatory Requirements We also report that the financial statements comply with the Companies Act 1994, the Securities and Exchange Act 1993, the Securities and Exchange Rules 1987, conditions for Registration issued by Bangladesh Securities and Exchange Commission and other applicable laws and regulations; and a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; b) in our opinion, proper books of accounts as required by law have been kept by the Company so far as it appeared from our examination of those books; c) the financial statements dealt with by this report are in agreement with the books of account and returns; and d) the expenditure incurred was for the purpose of business of the Dhaka Bank Investments Limited. Dhaka, 24 April 2018 Hoda Vasi Chowdhury & Co Chartered Accountants www.dhakabankltd.com
  243. Dhaka Bank Investment Limited Statement of Financial Position As at 31 December 2017 ASSETS 31 .12.2017 Taka 31.12.2016 Taka Non Current Assets 4 1,107,825 1,107,825 Current Assets Cash and Bank Balance Advance Income Tax 5 6 286,821,899 4,092,946 290,914,845 292,022,670 279,366,635 3,263,995 282,630,630 283,738,455 7 8 250,000,000 26,096,065 276,096,065 250,000,000 20,786,075 270,786,075 - - 14,407,880 1,518,725 15,926,605 15,926,605 11,548,655 1,403,725 12,952,380 12,952,380 292,022,670 283,738,455 Total Assets EQUITY AND LIABILITES Equity Paid up Capital Retained Earnings Total Equity Liabilities Non-Current Liabilities Current Liabilities Provision for Income Tax Other Liabilities 9 10 Total Liabilities Total Equity and Liabilities These Financial Statements should be read in conjunction with the annexed notes 1 to 12. Emranul Huq Managing Director Md. Amirullah Director Khondoker Jamil Uddin Chairman This is the Statement of Financial Position referred to in our separate report of event date. Dhaka, 24 April 2018 www.dhakabankltd.com Hoda Vasi Chowdhury & Co Chartered Accountants Dhaka Bank Limited Annual Report 2017 243 Dhaka Bank Investment Limited Preliminary Expenditure Auditor’s Report Notes
  244. Dhaka Bank Investment Limited Statement of Profit or Loss and Other Comprehensive Income Auditor ’s Report For the year ended 31 December 2017 Notes Operating Income Interest income Other Income 2016 Taka 8,289,515 8,289,515 8,276,649 8,276,649 (120,300) 8,169,215 (120,300) 8,156,349 (2,859,225) 5,309,990 (2,854,722) 5,301,627 Other comprehensive Income - - Net Profit for the period 5,309,990 5,301,627 11 Operating Expense General & administrative expenses Profit Before Tax 12 Provision for Income Tax (Current Tax) Net Profit after Tax Dhaka Bank Investment Limited 2017 Taka These Financial Statements should be read in conjunction with the annexed notes 1 to 12. Emranul Huq Managing Director Md. Amirullah Director Khondoker Jamil Uddin Chairman This is the Statement of Profit or Loss and Other Comprehensive Income referred to in our separate report of event date. Dhaka, 24 April 2018 244 Dhaka Bank Limited Annual Report 2017 Hoda Vasi Chowdhury & Co Chartered Accountants www.dhakabankltd.com
  245. Dhaka Bank Investment Limited Statement of Cash Flows For the year ended 31 December 2017 Cash Flows from Operating Activities Other Income Operating Expenses Cash generated from operating activities before changes in operating assets and liabilities 2016 Taka 8 ,289,515 (120,300) 8,169,215 8,276,649 (120,300) 8,156,349 (828,952) 115,000 7,455,264 (827,665) 115,000 7,443,684 - - 7,455,264 279,366,635 286,821,899 7,443,684 271,922,951 279,366,635 286,821,899 286,821,899 279,366,635 279,366,635 Auditor’s Report a. 2017 Taka Changes in Operating Assets and Liabilities Advance Income Tax Provision for Audit Fees Net Cash Flow from Operating Activities Cash Flows from Investing Activities c. Cash Flows from Financing Activities Proceeds from Issue of Shares Net Cash Flow from Financing Activities Net cash surplus for the period (a+b+c) Cash & Bank Balance at Beginning of the year Cash & Bank Balance at the end of the year* *Cash & Bank Balance Cash in Hand Cash at Bank These Financial Statements should be read in conjunction with the annexed notes 1 to 12. Dhaka, 24 April 2018 www.dhakabankltd.com Emranul Huq Managing Director Md. Amirullah Director Khondoker Jamil Uddin Chairman Dhaka Bank Limited Annual Report 2017 245 Dhaka Bank Investment Limited b.
  246. Dhaka Bank Investment Limited Statement of Changes in Equity Auditor ’s Report For the year ended 31 December 2017 Particulars Opening Balance Paid up Share Capital Add: Adjustment for prior year* Net profit for the year Balance as on 31 December 2017 Share Capital 250,000,000 - 20,786,075 5,309,990 26,096,065 - 250,000,000 Dhaka Bank Investment Limited These Financial Statements should be read in conjunction with the annexed notes 1 to 12. Dhaka, 24 April 2018 246 Emranul Huq Managing Director Dhaka Bank Limited Annual Report 2017 (Amount In Taka) Total Equity 270,786,075 5,309,990 276,096,065 Retained Eanings Md. Amirullah Director Khondoker Jamil Uddin Chairman www.dhakabankltd.com
  247. Dhaka Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2017 Company and its Activities 1 .1 Legal Status of the Company Dhaka Bank Investment Limited was incorporated with the Registrar of Joint Stock Companies and Firms (RJSCF) vide registration no. C-112730/13 dated 02 December, 2013 as a Private Company Limited by Shares having its registered office at Biman Bhaban (1st Floor), 100, Motijheel C/A, Dhaka -1000. The company is yet to obtain registration certificates from Securities and Exchange Commission. 1.2 Auditor’s Report 1. Principal Activities of the Company The principal activities of the company are to carry on the business of Merchant Banking in all its aspects and to act as Issue Managers in order to issue and offers, whether by way of public offer or otherwise of shares, stocks, debentures, bonds, units, notes, bills, warrants or any other instruments, to carry on the business of securities management and brokerage, Custodian service, Investment and Asset Management, Portfolio Management, Capital Market operations etc. Significant Accounting Policies a. The Financial Statements, namely, Statement of Financial Position, Statement of Profit or Loss and Other Comprehensive Income, Cash Flow Statement & Statement of Changes in Equity and relevant notes thereto, of Dhaka Bank Investment are prepared on a going concern and accrual basis under the historical cost convention and in accordance with Bangladesh Accounting Standards (BAS) and other applicable laws and regulations. b. Preliminary expenditure is recognized for formation, registration and capital raising of the company including legal and other professional services. Amortization of preliminary expenditure is recognised in statement of profit or loss and other comprehensive income on a straight line basis over 5 (five) years from the date of recognition. c. The figures appearing in these Financial Statements have been rounded off to the nearest integer. 3. Directors’ Responsibility Statement The Board of Directors takes the responsibility for the preparation and presentation of these financial statements. 31.12.2017 Taka 4. Preliminary Expenditure Preliminary Expenditure Less: Amortization for the year 5. 5.1 31.12.2016 Taka Cash & Bank Balance Cash in Hand Cash at Bank Cash at Bank Name of Bank Dhaka Bank Limited Dhaka Bank Limited LankaBangla Finance Limited www.dhakabankltd.com (Note: 5.1) Branch Local Office Gulshan Circle-2 A/C # 201.150.3401 102.150.0018 0005 22800000571 1,107,825 1,107,825 1,107,825 1,107,825 286,821,899 286,821,899 279,366,635 279,366,635 68,027,817 118,794,082 100,000,000 286,821,899 114,971,897 164,394,738 279,366,635 Dhaka Bank Limited Annual Report 2017 247 Dhaka Bank Investment Limited 2
  248. Auditor ’s Report 31.12.2017 Taka 6. Advance Income Tax Opening Balance Add: Addition during the year (Note: 6.1) 6.1 Addition during the year Tax deducted at source 7. 7.1 Share Capital Authorized Capital 200,000,000 ordinary shares @ Tk. 10 each 7.2 Paid up Capital 31.12.2016 Taka 3,263,995 828,952 4,092,946 2,436,330 827,665 3,263,995 828,952 827,665 2,000,000,000 2,000,000,000 Dhaka Bank Investment Limited The Issued, Subscribed and Paid-up Capital is Tk.250,000,000 divided into 25,000,000 ordinary shares of Taka 10 each fully paid. The Shareholding position of the company as on 31 December 2015 is as follows: Number of Shares held Sl. No. Name of Shareholders 1. % Of Shareholding Dhaka Bank Limited, Represented by 31.12.2017 Amount in Taka 31.12.2016 Amount in Taka 249,999,940 249,999,940 Mr. Khondoker Jamil Uddin Mr. Md. Amirullah Mr. Tahidul Hossain Chowdhury 24,999,994 99.999976 Mr. Mirza Yasser Abbas 8. 2. Mr. Shafiqul Islam Sarker 1 0.000001 10 10 3. Mr. Mohammad Ashiqur Rahman 1 0.000001 10 10 4. Mr. Hasanuzzaman 1 0.000001 10 10 5. Mr. Asif Hanif 1 0.000001 10 10 6. Mr. Latiful Bari 1 0.000001 10 10 7. Ms. Nabila Mirza 1 0.000001 10 10 25,000,000 100 250,000,000 250,000,000 20,786,075 5,309,990 26,096,065 15,484,448 5,301,627 20,786,075 Retained Earnings Opening Balance Add: Net Profit for the Period Add: Adjustment for prior year* * Dhaka Bank Investment Limited amortized Tk.221,565 for preliminary expenditure during the year 2014 but DBIL has not yet started operation. Amortization of preliminary expenditure will be charged after starting of operation. So, amount amortized in 2014 was restated in 2015. 9. Provision for Income Tax Opening Balance Add: Addition during the year 10. Other Liabilities Payable to Dhaka Bank Limited Provision for Audit Fees 11. 12. 248 Other Income Interest on SND A/C General & administrative expenses Audit Fees Bank Charges & Other Dhaka Bank Limited Annual Report 2017 11,548,655 2,859,225 14,407,880 8,693,933 2,854,722 11,548,655 1,173,725 345,000 1,518,725 1,173,725 230,000 1,403,725 2017 Taka 2016 Taka 8,289,515 8,276,649 115,000 5,300 120,300 115,000 5,300 120,300 www.dhakabankltd.com
  249. Disclosures On Risk Based Capital (under Pillar-3 of Basel-III framework) Notes to the Financial Statements For the year ended 31 December 2017 Annexure - M The Disclosure on Risk Based Capital (under pillar 3 of Basel III framework) has been prepared in accordance with the Guidelines on ‘Risk Based Capital Adequacy’ published by Bangladesh Bank on December 2014. These disclosures are purported to affirm the information on Minimum Capital Requirement (MCR) under Pillar 1 and Supervisory Review Process (SRP) under Pillar 2 and ensure transparency about the capital adequacy of the Bank, capital adequacy framework, risk assessment and mitigation methodologies, risk exposure in various spectrum so that the stakeholders of the industry can examine the risk related compliance of the Bank. 1. Scope of Application: 1.1 a) Qualitative Disclosure: b) Brief Description of the Subsidiaries: Auditor’s Report Background: The Risk Based Capital Adequacy and related disclosures are applicable for Dhaka Bank Limited which is the top corporate entity of the group which has 2 (two) subsidiaries- Dhaka Bank Securities Limited and Dhaka Bank Investment Limited. 1. Dhaka Bank Securities Limited: 2. Dhaka Bank Investment Limited: Dhaka Bank Investment Limited was incorporated with the Registrar of Joint Stock Companies and Firms (RJSCF) vide registration no. C-112730/13 dated 02 December, 2013 as a Private Company Limited by Shares having its registered office at Biman Bhaban (1st Floor), 100, Motijheel C/A, Dhaka -1000. The company is yet to obtain registration certificates from Securities and Exchange Commission. Basis for Consolidation: The quantitative disclosures are made on the basis of consolidated financial statements (provisional) of the bank and its subsidiaries as at and for the year ended December 31, 2017. The consolidated financial statements have been prepared in accordance with Bangladesh Accounting Standard-27 “Consolidated and Separate Financial Statements”. The consolidated financial statements are prepared to a common financial year ended 31 December 2017. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Profit and loss resulting from transaction between Groups is also eliminated on consolidation. c) Any restrictions, or other major impediments, on transfer of funds or regulatory capital within the group: Not applicable. 1.2 Quantitative Disclosure: a) The aggregate amount of surplus capital of insurance subsidiaries (whether deducted or subjected to an alternative method) included in the capital of the consolidated group: Not applicable 2. Capital Structure 2.1 Qualitative Disclosure Under Basel-III Accord regulatory capital of a bank will be categorized into three tiers: (a) Tier – 1 Capital/Core Capital, (b) Tier-2 Capital/Supplementary Capital, and (c) Tier-3 Capital/Additional Supplementary Capital. Total eligible regulatory capital of Dhaka Bank Limited consists of partly Tier-1 Capital and partly Tier-2 Capital. Almost 66.44% (Solo basis) of total eligible capital is Tier-1 or core capital, which comprises of Paid-up Capital, Statutory Reserve, Retained Earnings, General Reserve, etc. On the other hand, Tier-2 or supplementary capital (comprises of Non-convertible Subordinated Bond, General Provision, Asset Revaluation Reserve, and Revaluation Reserves for Securities) is 33.56% of total eligible capital and almost 50.51% of Tier-1 capital. Non-convertible Subordinated Bond Dhaka Bank Limited issued Redeemable Non Convertible 2nd Subordinated Bond of BDT 3,000,000,000 for a term of 7 years to strengthen the capital base of the bank on the consent of SEC vide letter no. SEC/CI/DS-34/2015/643 dated 28.12.2015. As per BRPD Circular No. 10/2002 and BRPD Circular No. 13/2009 issued by Bangladesh Bank, the total BDT 3,000,000,000 of 2nd Subordinated Bond i.e. 20.63% of Tier-I capital has been considered as a component of Supplementary Capital (Tier-2) of the Bank. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 249 Disclosures On Risk Based Capital Dhaka Bank Securities Limited (the name of company has been changed from DBL Securities Limited to Dhaka Bank Securities Limited dated 27 April 2014) was incorporated with the Registrar of Joint Stock Companies and Firms (RJSCF) vide registration no. C-85857/10 dated 19 July 2010 as a Private Company Limited by Shares having its registered office at Adamjee Court (1st Floor), 115-120, Motijheel C/A, Dhaka -1000. The company is the Trading Right Entitlement Certificate (TREC) holder of both the stock exchanges of the country (TREC No. 193 in DSE and TREC No. 081 in CSE). The Company commenced its business operations from 13 February 2011 as a wholly owned subsidiary of Dhaka Bank Limited.
  250. Auditor ’s Report 2.2 Quantitative Disclosure Sl. No. Particulars Amount (in crore BDT) Consolidated A. Tier-1 Capital (Going-Concern Capital): Common Equity Tire- 1 Capital (CET- 1) Fully Paid-up Capital Statutory Reserve General Reserve Retained Earnings Minority Interest in Subsidiaries Disclosures On Risk Based Capital Less : Regulatory Adjustment: Book value of Goodwill and value of all other Intangible Assets** Deferred Tax Assets (DTA) Sub-Total: Sub-Total: Total Common Equity Tire- 1 Capital (CET 1) Additional Tire- 1 Capital (AT- 1) Total Tier-1 Capital (A): B. Tier-2 Capital (Gone Concern Capital): General Provision (including provision for Off-Balance Sheet Exposure) Assets Revaluation Reserves up to 80% Revaluation Reserve for HTM & HFT Securities (up to 80%) Non-convertible Subordinated Bond Sub Total: Less : Regulatory Adjustment Total Tier-2 Capital (B): C. Total Eligible Regulatory Capital (A+B): **Written down value of Software which is treated as Intangible Assets Solo 722.30 641.82 0.66 150.23 0.01 1,515.02 722.30 641.82 0.66 95.35 0.00 1,460.13 3.98 2.39 6.37 1,508.65 0.00 1,508.65 3.98 2.18 6.16 1,453.97 0.00 1,453.97 420.26 12.97 1.23 300.00 420.26 12.97 1.23 300.00 734.46 0 734.46 0 734.46 734.46 2,243.11 2,188.43 3. Capital Adequacy 3.1 Qualitative Disclosure As per the Guidelines on Risk Based Capital Adequacy (RBCA) for Banks under Basel-III Accord each banks have to maintain Capital to Riskweighted Asset Ratio (CRAR) on solo basis and consolidated basis as per instructions given by Bangladesh Bank from time to time. The minimum CRAR for the year ended December, 2017 was 11.25% of total Risk Weighted Assets. Dhaka Bank Limited strictly follows the guidelines of Bangladesh Bank regarding capital adequacy and its policy is to maintain regulatory capital at a level higher than the minimum required capital. 3.2 Quantitative Disclosure: Sl. No. Particulars 1. Risk Weighted Assets: Amount (in crore BDT) Consolidated Solo For Credit Risk: On-Balance Sheet Off-Balance Sheet For Market Risk For Operational Risk Total: 250 Dhaka Bank Limited Annual Report 2017 14,619.27 2,213.70 14,473.78 2,213.70 685.39 370.17 1,281.29 1,237.70 18,799.65 18,295.35 www.dhakabankltd.com
  251. Annexure - M 2 . 3. 4. Minimum Capital Required: For Credit Risk For Market Risk For Operational Risk Total: Total Eligible Regulatory Capital: Tier-1 Capital/Core Capital Total Tier-2 Capital/Supplementary Capital Amount (in crore BDT) Consolidated Capital Adequacy Ratio: Tier-1 Capital to RWA Tier-2 Capital to RWA Total: Solo 1,893.71 77.11 144.15 2,114.97 1,877.34 41.64 139.24 2,058.22 1,508.64 734.47 2,243.11 1,453.96 734.47 2,188.43 8.02% 3.91% 11.93% 7.95% 4.01% 11.96% Credit Risk 4.1 Qualitative Disclosure Exposure to Credit Risk Credit risk is the risk of financial loss resulting from failure by a client or counterparty to meet its contractual obligations to the Bank. Bank is exposed to credit risk from its dealing with or lending to corporate, individuals, and other banks or financial institutions. Past due Claims Special mention: These assets have potential weaknesses thus deserve management’s close attention. If left uncorrected, these weaknesses may result in a deterioration of the repayment prospects of the borrower. Sub–standard: These are the loans where bank has reason to doubt about the repayment of the loan although recovery prospect is encouraging. Doubtful: Full repayment of principal and interest is unlikely and the possibility of loss is extremely high. Bad /Loss: These are the loans that have a bleak recovery possibility. Capital Requirement for Credit Risk The capital requirement for credit risk is based on the risk assessment made by external credit assessment institutions (ECAIs) recognized by BB for capital adequacy purposes. Banks are required to assign a risk weight to both on-balance sheet and off-balance sheet exposures based on external credit rating (solicited) which mapped with the BB rating grade or a fixed weight specified by BB. Minimum regulatory capital for credit risk is calculated by multiplying the Risk Weighted Assets (RWA) for both on balance sheet and off-balance sheet exposure with a certain percentage (11.25% for 2017). Credit Risk Management System Dhaka Bank is managing Credit Risk through a robust process that enables the bank to proactively manage loan portfolios in order to minimize losses and earn an acceptable level of return for shareholders. Credit risk is controlled and monitored by establishing appropriate limits and operational controls to constrain credit exposure to individual counter parties and counterparty groups. There are specific policies and procedures applicable to different business segments. Credit Risk Mitigation Banks use a number of techniques to reduce their credit risk to which they are exposed. Guidelines on Risk Based Capital Adequacy (RBCA) consider two aspects of credit risk mitigation: www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 251 Disclosures On Risk Based Capital 4. Particulars Auditor’s Report Sl. No.
  252. Annexure - M Auditor ’s Report a) Collateral for Credit Risk Mitigation Taking collateral is the most common way to mitigate credit risk. The Bank generally takes collaterals in the form of pledges of sufficient eligible marketable securities or cash, mortgages over the property etc. All of the collaterals taken do not necessarily qualify for availing capital relief under the Basel-III Accord on capital adequacy. Where a transaction is secured by eligible financial collateral and meets the eligibility criteria and minimum requirements, banks are allowed to reduce their credit exposure or potential credit exposure by taking into account the risk mitigating effect of the collateral for the calculation of capital charge. Disclosures On Risk Based Capital To ensure with a high degree of certainty that the collateral value will cover the exposure, discounts (“haircuts”) are generally applied to the current market value. These reflect the quality, liquidity, volatility and, in some cases, the complexity of the individual instruments. Exposures and collateral values are continuously monitored, and margin calls or close-out procedures are enforced, when the market value of collateral falls below a predefined trigger level. Concentrations within individual collateral portfolios and across clients are also monitored where relevant and may affect the discount applied to a specific collateral pool. Dhaka Bank has developed stringent process on collateral management. The collaterals considered by Dhaka Bank for credit risk mitigation (for capital calculation under standardized approach) comprise of financial collaterals (Bank deposits, Gold, Debt securities, equities, units of mutual funds etc). Majority of financial collaterals held by Dhaka Bank are in the form of own deposits and thus are not exposed to any uncertainty in realization in case of default by counterparty. As such, there is no risk concentration on account of nature of collaterals. b) Guarantee for Credit Risk Mitigation To reduce credit risk transaction may be secured by guarantees. Where guarantees are direct, explicit, irrevocable and unconditional banks may consider such credit protections in calculating capital requirements through a substitution approach. Only guarantees issued by entities with a lower risk weight than the counterparty will lead to reduced capital charge, whereas the uncovered portion retains the risk weight of the underlying counterparty. In Dhaka Bank only those guarantees that are direct, explicit, irrevocable and unconditional, are taken into consideration for calculating capital requirement. Use of such guarantees for capital calculation purpose is strictly as per Bangladesh Bank Guidelines on Risk Based Capital Adequacy. 4.2 Quantitative Disclosure: 4.2.1 Total gross credit risk exposures broken down by major types of credit exposure Particulars Cash and Cash equivalents Claims on Bangladesh Government and Bangladesh Bank Claims on Banks & NBFI Claims on Corporate Credit Risk Mitigation Claims included in retail portfolio & Small Enterprise Claims on Consumer Loan Claims fully secured by residential property Claims fully secured by commercial real estate Past due claims Capital market exposure Unlisted equity investments and regulatory capital instruments issued by other banks (other than those deducted from capital) held in banking book Investments in premises, plant and equipment and all other fixed assets All other assets: I) Claims on GOB & BB ii) Staff Loan / Investment iii) Other Assets Total: 252 Dhaka Bank Limited Annual Report 2017 Consolidated 183.99 3,155.12 1,499.31 9,110.95 642.00 2,044.54 97.46 79.08 1,209.09 479.03 208.82 (Amount in Crore BDT) Solo 183.98 3,155.12 1,482.35 9,125.89 642.00 2,044.54 97.46 79.08 1,209.09 479.03 248.51 653.50 504.93 426.94 426.29 306.18 130.50 1,849.87 22,076.37 306.18 130.50 1,825.85 21,940.79 www.dhakabankltd.com
  253. Annexure - M Types of Loan Secured Overdraft /Quard Cash Credit/Murabaha 2017 3,490.70 687.15 2016 3,168.60 681.98 100.98 188.09 House Building Loan Transport Loan 118.09 56.35 5,194.90 4,405.76 622.21 423.10 15.62 11.06 0.20 0.19 Loan Against Accepted Bills 22.83 140.47 Packing Credit 63.17 39.65 Term Loan Loan Against Trust Receipt Payment Against Documents Loan Against Imported Merchandize Lease Finance / Izara 223.31 35.07 29.52 Retail Loan 275.62 49.99 Bills Purchased and discounted Other Loans (Including Bai-Muajjal) Grand Total 321.08 312.63 4,119.28 3,738.24 15,401.70 13,468.93 4.2.2 Geographical Distribution of Exposure (Region Based): (Amount in Crore BDT) Particulars Urban Dhaka Region Chittagong Region 2017 2016 10,609.94 9,068.96 2,743.84 2,414.97 South Region 415.71 234.07 North Region 329.13 240.33 Sylhet Region 202.11 87.28 Other 62.41 511.75 14,363.15 12,557.34 Dhaka Region 720.59 451.90 Chittagong Region 118.34 111.59 Sub. Total Rural South Region - 0.00 North Region 187.86 166.60 Sylhet Region 11.76 12.82 - 168.68 Sub. Total Other 1,038.56 911.59 Grand Total 15,401.70 13,468.93 www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 253 Disclosures On Risk Based Capital 334.82 Credit Card Auditor’s Report (Amount in Crore BDT)
  254. Annexure - M Auditor ’s Report 4.2.3 Industry or counterparty type distribution of exposures: (Amount in Crore BDT) Industry 2017 Agriculture 196.20 166.04 Pharmaceuticals 209.60 85.69 4,245.55 3,701.47 615.30 141.80 1,056.50 913.52 543.55 227.08 96.82 3.53 Textile & Garment Chemical Food & allied Transport & Communication Electronics & Automobile Disclosures On Risk Based Capital 2016 Housing & Construction 1,699.96 1,640.72 Engineering & Metal Industries including Ship Breaking & Building 1,399.33 1,238.09 525.77 422.00 Energy & Power Service Other Grand Total 504.47 571.23 4,308.66 4,357.76 15,401.70 13,468.93 4.2.4 Residual contractual maturity of credit exposure: (Amount in Crore BDT) 2017 Particulars 2016 On demand 1,966.90 1,406.58 Up to one month 1,767.13 1,689.09 Not more than three months 2,347.72 2,487.56 More than three months but not more than six months 3,033.92 2,917.52 More than six months but not more than one year 1,897.33 1,920.45 More than one year but not more than five years 3,292.07 2,534.44 More than five years Total 1,096.63 513.30 15,401.70 13,468.93 4.2.5 Major Industry type amount of impaired loans: (Amount in Crore BDT) Industry Name Agricultural Pharmaceuticals DF 0.83 BL 0.36 Total 3.84 5.03 - - - - Textile & Garment 2.26 0.35 56.02 58.63 Chemical 0.29 0.17 19.57 20.03 Food & allied 2.15 173.05 46.90 222.10 - - 12.16 12.16 Transport & Communication Electronics & Automobile Housing & Construction Engineering & Metal Industries including Ship Breaking Energy & Power Service Others Grand Total 254 SS Dhaka Bank Limited Annual Report 2017 - - - - 15.62 - 160.88 176.50 0.00 - 110.97 110.98 - - 3.08 3.08 3.37 0.62 55.67 59.67 7.64 6.41 238.66 252.71 32.15 180.98 707.75 920.89 www.dhakabankltd.com
  255. Annexure - M (Amount in Crore BDT) 2017 5. Equities: Disclosures for Banking Book Positions 5.1 Qualitative Disclosures 920.89 5.98% 540.29 4.01% 540.29 439.14 58.55 920.89 549.06 271.22 279.99 540.29 240.91 261.40 (51.11) (10.48) 440.72 190.27 95.40 5.05 (46.05) (3.76) 240.91 Dhaka Bank has considerable investment in equity shares of various companies and mutual funds and has active participation in the secondary market through Dhaka Bank Securities Ltd. The bank also participates in the primary market by the purchase of shares and securities from IPOs. In the investment process Dhaka Bank Ltd. strictly follow the internal policies and procedures put into place in this respect. Valuation of Equity Securities Shares and securities are valued as per the prescribed guideline of Bangladesh Bank and adequate provision is maintained accordingly for unrealized losses (if any). Capital Charge for Equity Position Risk Capital charge for equities are calculated on the basis of their current market value in the bank’s trading book. This capital charge is calculated taking into account both the specific risk and the general market risk factor by applying the same rate of minimum capital adequacy ratio (11.25% for 2017). www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 255 Disclosures On Risk Based Capital Gross Non Performing Assets (NPAs) Non Performing Assets (NPAs) to Outstanding Loans & Advances Movement of Non Performing Assets (NPAs): Opening Balance Additions Reductions Closing Balance Movement of specific provisions for NPAs: Provision held at the beginning of the year Specific provision Recoveries from written off loans Fully provided debt written off Provision no longer required Provision held at the end of the year 2016 Auditor’s Report 4.2.6 Gross Non Performing Assets (NPAs)
  256. Annexure - M Auditor ’s Report 5.2 Quantitative Disclosure Disclosures On Risk Based Capital 5.2.1 Equity Position Sl. No. Particulars 1. Investment in Equity Securities: Amount (in Crore BDT) Consolidated Solo Cost price 208.08 22.61 Market Price 184.36 25.78 Difference (23.72) 3.17 2. The cumulative realized gains (losses) arising from sales and liquidation 3. Total unrealized gains (losses) 4. 5. 6. 15.64 0.11 (23.72) 3.17 Total latest revaluation gains (losses) - - Any amount of the above included in Tier 2 capital Capital requirements broken down by appropriate equity grouping, consistent with the bank’s methodology, as well as the aggregate amounts and the type of equity investments subject to any supervisory provisions regarding regulatory capital requirements (10% on market value). • Specific Market Risk - - 16.34 0.58 • 16.34 0.58 General Market Risk 6. Interest Rate Risk in the Banking Book (IRRBB) 6.1 Qualitative Disclosures Interest rate risk is the risk where changes in the market interest rates might adversely affect a bank’s financial condition. The immediate impact of changes in interest rates is on the Net Interest Income (NII). A long term impact of changing interest rates is on the bank’s net worth since the economic value of banks’ assets, liabilities and off-balance sheet positions get affected due to variation in market interest rates. In Dhaka Bank the responsibility of interest rate risk management rests with the bank’s Assets Liability Management Committee (ALCO). The bank periodically computes the interest rate risks in the banking book that arises due to re-pricing mismatches in interest rate sensitive assets and liabilities. For the purpose of monitoring such interest rate risk, the bank has in place a system that tracks the re-pricing mismatches in interest bearing assets and liabilities. For the computation of the interest rate mismatch the guidelines of the Bangladesh Bank are followed. 6.2 Quantitative Disclosures (for 1% change in interest rate for both asset and liability portfolio of the bank) The Increase (decline) in earning or economic value (or relevant measure used by management) for upward and downward rate shocks according to management’s method for measuring IRRBB broken down by currency (as relevant): Particulars 1 - 3 months 3 - 12 months Rate Sensitive Assets 3,434.78 3,701.82 5,438.41 4,492.75 1,824.03 Rate Sensitive Liabilities 2,635.12 4,538.22 3,916.73 2,803.86 903.37 GAP 799.66 (836.40) 1,521.69 1,688.89 920.66 Cumulative GAP 799.66 (36.74) 1,484.95 3,173.84 4,094.50 Adjusted Interest Rate Changes 1.00% 1.00% 1.00% 1.00% 1.00% Quarterly Earnings Impact 2.00 (2.09) 3.80 4.22 2.30 Accumulated Earnings Impact 2.00 (0.09) 3.71 7.93 10.24 2.05% (2.14%) 3.90% 4.33% 2.36% Earning Impact/Avg. Quarterly Net Profit 256 Dhaka Bank Limited Annual Report 2017 1 - 5 years More than 5 years Up to 1 month www.dhakabankltd.com
  257. Annexure - M Market Risk 7 .1 Qualitative Disclosure Views of Board of Directors (BODs) on trading/investment activities: Market risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate due to changes in different market variables, namely: • • • • Auditor’s Report 7. Interest Rate Risk Equity Position Risk Foreign Exchange Risk Commodity Risk All these risks are monitored by the Treasury. The foreign exchange risk is managed by setting limits on open foreign exchange position. Market Risk & Liquidity Risk Management Policies and System The objective of investment policy covering various facets of Market Risk is to assess and minimize risks associated with treasury operations by extensive use of risk management tools. Broadly it encompasses policy prescriptions for managing systematic risk, credit risk, market risk, operational risk and liquidity risk in treasury operations. For market risks arising out of various products in trading book of the Bank and its business activities, the bank sets regulatory internal and ensure adherence thereto. Limits for exposure to counter-parties, industries and countries are monitored and the risks are controlled through Stop Loss limits, Overnight limit, Daylight limit, Aggregate Gap limit, Value at Risk (VAR) limit for forum, inter-bank dealing and investment limit etc. For the Market Risk Management of the bank, it has a mid-office with separate Desks for Treasury & Asset Liability Management (ALM). Asset Liability Management Committee (ALCO) is primarily responsible for establishing the market risk management, asset liability management of the bank, procedures thereof, implementing core risk management framework issued by regulator, best risk management practices followed globally and ensuring that internal parameters, procedures, practices/polices and risk management prudential limits are adhered to. Liquidity risk of the bank is assessed through Gap analysis for maturity mismatch based on residual maturity in different time buckets as well as various liquidity ratios and management of the same is done within the prudential limit fixed thereon. Further bank is also monitoring the liquidity position through various stock ratios. The bank is proactively using duration gap and interest rate forecasting to minimize the impact of interest rate changes. Interest Rate Risk in the Trading Book Dhaka Bank uses maturity method in measuring interest rate risk in respect of securities in the trading book. However, the capital charge for entire market risk exposure is calculated under the standardized approach using the maturity method and guideline of Bangladesh Bank in this respect. 7.2 Quantitative Disclosure: Capital Requirement for Market Risk Particulars Amount (in Crore BDT) Consolidated Solo The capital requirements for: Interest Rate Risk 0.00 0.00 Equity position risk 32.68 1.16 Foreign exchange risk 35.86 35.86 - - Total 68.54 37.02 www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 Commodity risk 257 Disclosures On Risk Based Capital Methods Used to Measure Market Risk To measure of market risk the Bank uses Value-at-Risk (VaR).
  258. Auditor ’s Report Annexure - M 8. Operational Risk 8.1 Qualitative Disclosure Operational Risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems (for example failed IT systems, or fraud perpetrated by a DBL employee), or from external causes, whether deliberate, accidental or natural. It is inherent in all of the Bank’s activities. Disclosures On Risk Based Capital Views of Board of Directors (BODs) to Operational Risk Dhaka Bank’s approach to operational risk is not designed to eliminate risk altogether but rather, to contain risks within levels deemed acceptable by senior management. Operational risks are monitored and, to the extent possible, controlled and mitigated. All functions, whether business, control or logistics functions, must manage the operational risks that arise from their activities. Operational risks are pervasive, as a failure in one area may have a potential impact on several other areas. The Bank has therefore established a cross-functional body to actively manage operational risk as part of its governance structure. The foundation of the operational risk framework is that all functions have adequately defined their roles and responsibilities. The functions can then collectively ensure that there is adequate segregation of duties, complete coverage of risks and clear accountability. All the functions use their controls to monitor compliance and assess their operating effectiveness in several ways, including self-certification by staff, tracking of a wide range of metrics (for example, the number and characteristics of client complaints, deal cancellations and corrections, un-reconciled items on cash and customer accounts, and systems failures), and the analysis of internal and external audit findings. Performance Gap of Executives and Staffs Dhaka Bank always tries to be the best pay master in the sector and ensure best workplace safety for its employees to avoid inconsistent employment practices and unsound workplace safety caused by way of discrimination regarding employee’s compensation, health and safety. Potential External Events Dhaka Bank has invested heavily in IT infrastructure for better automation and online transaction environment. The bank also has huge investment on alternative power supply (both UPS & generators) and network links to avoid business description and system failure. Its IT system does not allow any kind of external access to avoid external fraud by way of theft/ hacking of information assets, forgery etc. Dhaka Bank has also invests considerable on security from terrorism and vandalism to avoid damage to physical assets. Approach for Calculating Capital Charges for Operational Risk For calculating eligible regulatory capital under Basel-II Capital Accord, Dhaka Bank follows the Basic Indicator Approach. 8.2 Quantitative Disclosure Capital requirement for Operational Risk exposure of Dhaka Bank is as below: Particulars The capital requirements for Operational Risk Amount (in Crore BDT) Consolidated Solo 128.13 123.77 9. Liquidity Ratio 9.1 Qualitative Disclosure Qualitative Disclosures (a) Views of Board of Directors on system to reduce liquidity Risk: The Board reviews and approves the Assets Liability Management Policies and ensures that senior management manages liquidity risk effectively in the context of the Bank’s business plan, long term funding plan and economic and financial position. DBL uses liquidity ratios and stressed liquidity gaps as key metrics to establish its liquidity risk tolerance levels. These metrics measures the Bank’s ability to fulfill all its payment obligations stemming from ongoing business operations under various stress scenarios. The tolerance levels are defined either in the form of limits or management action triggers (MAT) and are part of the Bank’s overall liquidity management framework which is approved and reviewed by the Board on an annual basis. 258 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  259. Annexure - M Auditor ’s Report (b) Methods used to measure Liquidity risk: (c) Liquidity risk management system: Asset Liability Management Committee (ALCO) of DBL sets the direction for the Bank’s liquidity management. ALCO meets at least once in every month and more as and when required. ALM desk of the Treasury Division closely monitors and controls liquidity requirements on regular basis by proper coordination of funding activities. It also monitors market developments, understanding their implications for the Bank’s liquidity risk exposure and recommends appropriate risk management measures to ALCO. Another strategy of liquidity risk management is to develop a diversified funding base. It aims to align sources of funding with their use. (d) Policies and processes for mitigating liquidity risk: Dhaka Bank Ltd. has Contingency Funding Plan and Treasury Policy as a policy support to mitigate liquidity risk. The Board and the management of DBL put into operation the following check points and mechanisms for superior liquidity risk management: • • • • • • • 9.2 Liquidity risk tolerance: Bank set liquidity risk tolerance like Maximum Cumulative Outflow at 19%; Maintaining adequate levels of liquidity considering the average daily withdrawal by the customers; Identification and measurement of contingent liquidity risks arising from unseen scenarios. Contingency funding plan: Contingency funding plans incorporate events that could rapidly affect the bank’s liquidity arising from sudden inability to call back long-term loans and advances, or the loss of a large depositor or counterparties. Public disclosure in promoting market discipline under Pillar 3 of Basel III. Maturity ladder of cash inflows and outflows are effective tool to determine banks cash position; that estimates cash inflows and outflows with net deficit or surplus (GAP) both on a day to day basis and over a series of specified time periods. A bucket wise (e.g. call, 2-7 days, 1 month, 1-3 months, 3-12 months, 1-5 years, over 5 years) maturity profile of the assets and liabilities is prepared to understand mismatch in every bucket. Quantitative Disclosure: Particulars Liquidity Coverage Ratio Net Stable Funding Ratio (NSFR) Stock of High quality liquid assets Total net cash outflows over the next 30 calendar days Available amount of stable funding Required amount of stable funding www.dhakabankltd.com Amount (in Crore BDT) 100.06% 101.52% 3,308.00 3,306.07 17,239.50 16,980.67 Dhaka Bank Limited Annual Report 2017 259 Disclosures On Risk Based Capital There are different tools prescribed by Bangladesh Bank to measure and monitor liquidity risks. Following ratios are used by DBL as indicators for liquidity risks: i. Statutory Liquidity Requirement (SLR); ii. Cash Reserve Ratio (CRR); iii. Asset to Deposit Ratio (ADR); iv. Structural Liquidity Profile (SLP); v. Maximum Cumulative Outflow (MCO); vi. Medium Term Funding Ratio (MTF); vii. Liquidity Coverage Ratio (LCR); viii.Net Stable Funding Ratio (NSFR); ix. Volatile Liability Dependency Ratio; x. Liquid Asset to Total Deposit Ratio; xi. Liquid Asset to Short Term Liabilities; In addition to the above, DBL uses Stress Testing report and Liquidity mismatch profile as the methods to measure Liquidity risk.
  260. 10 . Leverage Ratio 10.1 Qualitative Disclosure Qualitative Disclosures (a) Views of Board of Directors on system to reduce liquidity Risk: An underlying cause of the global financial crisis was the build-up of excessive on- and off-balance sheet leverage in the banking system. At the height of the crisis, financial markets forced the banking sector to reduce its leverage in a manner that amplified downward pressures on asset prices. This deleveraging process exacerbated the feedback loop between losses, falling bank capital and shrinking credit availability. To defuse the crisis, the Basel III framework introduced a non-risk-based capital measure, the leverage ratio, as an additional prudential tool to complement minimum capital adequacy requirements. Leverage ratio is the relative amount of Tier 1 capital to total exposure of the Bank (not risk-weighted) which has been set at minimum 3%. Under Basel III, a simple, transparent, non-risk based regulatory leverage ratio has been introduced to achieve the following objectives: • Disclosures On Risk Based Capital Auditor’s Report Annexure - M • Restrict the leverage in the banking sector, thus helping to mitigate the risk of the destabilizing deleveraging processes which can damage the financial system and the economy Reinforce the risk-based requirements with a simple, transparent, independent measure of risk The Board Risk Management Committee regularly reviews the leverage ratios and advice the management to strictly monitor the ratio in addition to the Pillar 1 Minimum Capital Requirement. (b) Policies and processes for managing excessive on and off-balance sheet leverage: The bank reviews its leverage position as per the Guidelines on Risk Based Capital Adequacy (revised regulatory capital framework for banks in line with Basel III). In addition, the bank has Risk Appetite as per Credit Risk Management Policy. Bank also employs Annual Budget Plan and Capital Growth Plan for managing excessive on and off-balance sheet leverage. (c) Approach for calculating exposure: The bank calculates the exposure under standardized approach as per the Guidelines on Risk Based Capital Adequacy (revised regulatory capital framework for banks in line with Basel III). 10.2 Quantitative Disclosure: Particulars Amount (Consolidated) Leverage Ratio On balance sheet exposure Off balance sheet exposure Total exposure *Leverage ratio come into effect from March 31, 2015 as per RBCA Guidelines. 11. Remuneration 11.1 Qualitative Disclosure Qualitative Disclosures 5.41% 22,642.13 5,269.24 27,905.00 (in Crore BDT) Amount (Solo) 5.24% 22,504.57 5,269.24 27,767.65 (a) The remuneration committee provides assistance to the Board in relation to the remuneration arrangements of the Bank. The Board makes all final decisions in relation to those arrangements. The current members of the Committee are as follows: 1. Syed Mahbubur Rahman, Managing Director & CEO 2. Darashiko Khasru, SEVP & CFO 3. M Rezaur Rahman, SVP & Head, Human Resources Division The committee is responsible to give input into the total risk framework in relation to remuneration risk, in particular, recommending to the Board the remuneration arrangements. The Committee’s remuneration responsibilities include conducting reviews of, and making recommendations to the Board on, the remuneration policy taking into account the Bank’s strategy, objectives, risk profile, shareholder interests, regulatory requirements, corporate governance practices and employee interests. 260 Dhaka Bank Limited Annual Report 2017 www.dhakabankltd.com
  261. Annexure - M The Board has approved a remuneration policy which applies to the Bank . The policy does not apply to service contracts with third parties. The policy deals with base remuneration and performance based remuneration including the deferral of short-term incentive payments. As on 31 December 2017, we have 100 branches, 3 SME service centers, and 2 Offshore Banking Unit in different areas of Bangladesh. The Bank has no foreign subsidiaries and branches. Auditor’s Report The Committee may consult a professional adviser or expert, at the cost of the Bank, if the committee considers it necessary to carry out its duties and responsibilities. No remuneration recommendations were obtained from external consultants during the reporting period. For the purposes of the accompanying remuneration disclosures, the “senior managers” of the bank comprise of Managing Director, the heads of appropriate big branches, the heads of operation, corporate, and credit risk functions and the company secretary. There were 46 senior managers as at the end of the reporting period. 1. To ensure market driven pay and benefits, 2. To retain bright professionals of the bank; 3. To take the advantage over other banks in terms of attracting prospective employees due to less advantageous pay and benefits compared to the competitors. Dhaka Bank reviewed its employee remuneration during last year. Accordingly, changes were made. Technical allowance has given to IT employee for highly technical professional. Managers to manage the branch and employees to handle the cash are remunerated by charge allowance and risk allowance respectively. Risk and control personnel are still eligible to receive an annual bonus payment under the performance bonus plan. (c) The remuneration framework includes the following arrangements and processes designed to ensure that remuneration outcomes appropriately take into account the impact of business risk. The Board has discretion, having regard to the recommendation of the Committee, to provide variable remuneration to reflect the following: i. The outcomes of business activities; ii. The risk related to the business activities taking into account, where relevant. iii. Unexpected or unintended consequences that are not foreseen by the Board. On recommendation of the Management, the Board at its discretion may approve the performance/incentive bonus for the employees of the bank as a financial measure to minimize the risk. Risk and Compliance requirements represent a gateway to whether a bonus payment is made and the size of the payment. Notwithstanding financial performance and an individual’s contribution and performance, if the individual does not meet, or only partially meets, risk and compliance requirements, no award or a reduced award may be made. There were no changes to the nature and type of measures used during the reporting period. (d) The remuneration framework includes the following arrangements designed to ensure that remuneration outcomes are linked to performance: Fixed base: There is an annual review for all eligible employees. Performance ratings for the performance period are taking into consideration as well as individual circumstances for annual increment. Performance base: Performance bonus or incentive bonus are given to all eligible employees as per performance ratings for a performance period. Amounts of individual remuneration are linked to individual performance as per their performance ratings for the performance period. In addition, amounts of individual remuneration also linked to bank’s growth. In determining the payment of a bonus to individuals, the factors taken into account include: 1. Team financial and strategic performance; 2. Individual contribution to team performance; 3. Individual performance including alignment with corporate values and meeting performance objectives. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 261 Disclosures On Risk Based Capital (b) The policy establishes a remuneration framework designed to attract, retain, and motivate employees to achieve the objectives of the bank. The framework is structured to provide the desired flexibility and reward arrangements to support the Bank’s strategy. The main features of the remuneration framework are: simplicity, fairness, alignment with values, appropriate risk behavior and transparency. Salary & benefits structure implemented with effect from 1 July 2016. The major objectives of the remuneration policy includes:
  262. Annexure - M Auditor ’s Report Long term incentives are designed to link a component of remuneration with key performance measures that underpin sustainable longer term growth in shareholder value. (e) The remuneration framework describes short term and long term benefits. Short term benefits include salary, festival bonus, Travel Passage and Performance Bonus as variable payments. Long term benifits include Gratuity, Provident Fund, Superannuation Fund and Leave and encashment . (f) Dhaka Bank Limited has no variable remuneration like cash, shares and share-linked instruments and other forms. Disclosures On Risk Based Capital 11.2 262 Quantitative Disclosure: Number of meeting held by the main body overseeing remuneration during the financial year and remuneration paid to its member. (g) The Committee met twice during the financial year. No additional fees are paid for serving on board committees. Number of employees having received a variable remuneration award during the financial year. Number and total amount o guaranteed bonuses awards made during the financial year. Number and total amount of sign-on awards made during the financial year. Number and total amount of severance payments made during the financial year. (h) Performance bonuses/Incentives: 1413 employees Number of total guaranteed bonus(festival bonus): 2 Total amount of guaranteed bonus (festival bonus): BDT 10,71,04,364.00 Number of severance payments: 64 employees Total amount of severance payments: BDT. 14,77,77,727.00 which includes Provident Fund, Gratuity Fund and Superannuation Fund. Total amount of outstanding deferred remuneration, spilt into cash, shares and share-linked instruments and other forms. Total amount of deferred remuneration paid out in the financial year Breakdown of amount of remuneration awards for the financial year to show: - Fixed and variable. -Deferred and non-deferred. -Different forms used (cash, shares, and share linked instruments, other forms). (i) Not applicable for Dhaka Bank Limited (j) • • • • • Quantitative information about employees’ exposure to implicit (e.g. fluctuations in the value of share or performance units) and explicit adjustments (e.g. claw backs or similar reversals or downward revaluations of awards) of deferred remuneration: Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and/or implicit adjustments. Total amount of reductions during the financial year due to ex post implicit adjustments. (K) Not applicable for Dhaka Bank Limited Dhaka Bank Limited Annual Report 2017 Fixed: BDT 216,56,81,055.00, Variable: BDT 860,00,000.00 Deferred: BDT 121,317,240.00 Non-deferred: Nil Different forms used: Nil www.dhakabankltd.com
  263. Registered Office : Biman Bhaban, 100 Motijheel C/A, Dhaka-1000 Notice of the 23rd Annual General Meeting Notice is hereby given to all the members of Dhaka Bank Limited that the 23rd Annual General Meeting of the members of the Company will be held on Thursday, June 28, 2018 at the Grand Ball Room, Pan Pacific Sonargaon, 107, Kazi Nazrul Islam Avenue, Dhaka at 11:00 a.m. to transact the following business: 1. To receive, consider and adopt the Profit and Loss Account of the Company for the year ended 31st December, 2017 and Balance Sheet as of that date together with the Reports of the Directors and Auditors thereon. 2. To declare dividend for the Shareholders for the year ended 31st December 2017 as recommended by the Board of Directors. 3. To re-elect Directors who shall retire by rotation as per the Articles of Association of the Company. 4. To re-appoint the Auditors of the Company for the term until the next Annual General Meeting and to fix their remuneration. 5. Any other matter with the permission of the Chair. By order of the Board June 05, 2018 Sd/ Arham Masudul Huq SEVP & Company Secretary NOTES 1. The ‘Record Date’ was on Monday, May 21, 2018. The Shareholders whose names would appear in the CDS/Register of Members of the Company on the Record Date shall be entitled to the dividend and attend the AGM. 2. A member eligible to attend the Annual General Meeting may appoint a proxy to attend on his/her behalf. Proxy Form/Power of Attorney must be submitted at the Corporate Office of the Company situated at 71, Purana Paltan Lane, Kakrail, Dhaka not later than 48 hours before the time fixed for the Annual General Meeting. Revenue Stamp of Tk.20/-(Taka Twenty) only shall have to be affixed on the Proxy Form. 3. Shareholders and proxies are requested to record their entry in the AGM well in time. No entry will be recorded after 10: 30 a.m. 4. Merchant Banks and Depository Participants (DPs) are requested to provide the list of their margin clients who held the shares of the Company as on ‘Record Date’ to the Share Department of the Company situated at 71, Purana Paltan Lane (Level-6), Kakrail, Dhaka well ahead of AGM for facilitating payment of sale proceeds of fractional bonus shares. 5. No gift or benefit in cash or kind shall be offered to the shareholders in the 23rd Annual General Meeting of the Company in compliance with the Bangladesh Securities and Exchange Commission’s Circular No.SEC/CMRRCD/2009-193/154 dated 24.10.2013. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 263
  264. 264 Dhaka Bank Limited Annual Report 2017 www .dhakabankltd.com
  265. Registered Office : Biman Bhaban, 100 Motijheel C/A, Dhaka-1000 Corporate Office: 71, Purana Paltan Lane, Kakrail, Dhaka Attendance Slip I/We hereby record my attendance at the 23rd Annual General Meeting of Dhaka Bank Limited being held on Thursday, June 28, 2018 at 11:00 a.m. at Grand Ball Room, Pan Pacific Sonargaon, 107, Kazi Nazrul Islam Avenue, Dhaka. Name of the Shareholder(s) …………………………………………………………………………………………………… Folio/BO ID No. Signature of Shareholder(s) Note: Honorable Shareholders attending the Meeting in person are requested to complete the Attendance Slip and deposit the same at the ‘Registration Counter’ of the AGM venue. Signature in the Attendance Slip must tally with the signature recorded with the Company. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 265
  266. 266 Dhaka Bank Limited Annual Report 2017 www .dhakabankltd.com
  267. Registered Office : Biman Bhaban, 100 Motijheel C/A, Dhaka-1000 Corporate Office: 71, Purana Paltan Lane, Kakrail, Dhaka Proxy Form I/We ……………………………………………………………………………………………………….………………………... Folio/BO ID No. Address: ………..…………………………………………………………………………………………….……..……………... , being a Shareholder of Dhaka Bank Limited, do hereby appoint Mr./Ms. ………………………………………………………………………………………………………………….…..……… of …………………………………………………………………………………………………………..…………….………… as my/our Proxy in my/our absence to attend and vote for me/us on my/our behalf at the 23rd Annual General Meeting of the Company scheduled to be held on Thursday, June 28, 2018 at 11:00 a.m. at Grand Ball Room, Pan Pacific Sonargaon, 107, Kazi Nazrul Islam Avenue, Dhaka and at any adjournment thereof. In witness whereof I/we set my/our hand(s) on this the………………………….............................day of........................................ , 2018. Signature of the Proxy…………………………………………………………………… Signature of the Shareholder(s) …………………………………………………………. No. of Shares held ……………………………… Revenue Stamp Tk. 20.00 Note: 1. The Proxy Form, duly stamped and completed in all respect, must be deposited at least 48 (Forty Eight) hours before the appointed time of the Meeting at the Share Department of the Company located at Level-6 of Corporate Office. 2. Signature of the Shareholder(s) must tally with the signature recorded with the Company. 3. No gift or benefit in cash or kind shall be offered to the shareholders in the 23rd Annual General Meeting in compliance with the Bangladesh Securities and Exchange Commission’s Circular No.SEC/CMRRCD/2009-193/154 dated 24.10.2013. …………………………………………………………………………………………………..……………………………………… Registered Office: Biman Bhaban, 100 Motijheel C/A, Dhaka-1000 Corporate Office: 71, Purana Paltan Lane, Kakrail, Dhaka Attendance Slip For Proxy-Holder I hereby record my attendance at the 23rd Annual General Meeting of Dhaka Bank Limited being held on Thursday, June 28, 2018 at 11:00 a.m. at Grand Ball Room, Pan Pacific Sonargaon, 107, Kazi Nazrul Islam Avenue, Dhaka. Name of the Shareholder(s): ………………..…………………………………..……………………………..................…………………. Folio/BO ID No. No. of Shares held ………………………………………………………………………………………….... Signature of the Shareholder(s) ...……………………………………………………………………………… Signature of the Proxy ..............……………………………………………………………………………...... Name of the Proxy ……………………………… Note: The Proxy-Holder attending the Meeting is requested to deposit the Attendance Slip at the “Registration Counter” of the AGM venue. www.dhakabankltd.com Dhaka Bank Limited Annual Report 2017 267
  268. Corporate Office Biman Bhaban , 100 Motijheel Commercial Area, Dhaka 1000, Bangladesh Phone: +8802 955 4514, 957 1006-10 Fax: +8802 955 6584 71, Purana Paltan Lane, Kakrail, Dhaka Phone: +8802 5831 4424-30, 5831 4624-8, Fax: +8802 5831 4419 Email: info@dhakabank.com.bd, SWIFT: DHBLBDDH Paper Rhyme Registered Head Office