Standard Bank Limited: Annual Report 2020

Transcription

2. Embracing the Future Financial sector is marching towards a paradigm shift in line with changing business dynamics emanating from stringent local and global requirements . Sustaining in the ever changing business environment requires forward looking approach keeping the core competencies, ethical values and commitments intact. Standard Bank Limited always strives to facilitate country’s growth as a major development partner. Keeping that objective in view, it prioritize financial supremacy driven by innovative solutions for inclusive growth and widening business horizon.
3. Introduction TABLE OF CONTENTS Corporate Governance 4 Risk Governance Introduction Management Retrospection Letter of Transmittal 05 Notice of the 22nd AGM 06 Vision , Mission, Core Values 07 Code of Conduct 08 Strategic Priorities 09 Strategic Management Model 10 Statement Regarding Forward Looking Approach 11 Corporate Profile 12 Group Corporate Structure 13 Corporate Organogram 14 Product Portfolio 15 Our Value Driven Business Model 17 SBL Highlights 2020 18 20 Corporate Governance Stakeholders’ Information • • • • • • • • • • • • • • • • • • • • • • • • • • • Board of Directors 22 Directors’ Profile 23 Sponsors of the Bank 32 Risk Management Team 33 Shariah Supervisory Committee 33 Executive Committee 34 Audit Committee 34 Management Committee 35 Management Team 37 gvbbxq †Pqvig¨vb g‡nv`‡qi e³e¨38 Managing Director & CEO’s Round up 44 Directors’ Responsibility Statement 48 Directors’ Report 50 Statement of Corporate Governance 93 Board of Directors, Chairman and CEO 97 Report of the Audit Committee 112 Directors’ Statement on Internal Control 116 Report of the Board Risk Management Committee 117 Report of the Shari’ah Supervisory Committee 119 BB Guidelines for Corporate Governance 120 BSEC Code for Corporate Governance 128 Certificate on Compliance of Corporate Governance140 MD & CEO and CFO’s Statement of Responsibilities141 Report of Management Credit Committee 143 Report of Compensation Review Committee 144 Report on Going Concern 145 Statement on Ethics and Compliance 146 147 Risk Governance • Chief Risk Officer’s Report on Risk Management 148 • Risk Management Framework 150 • Risk Mitigation Strategy 156 • Disclosure on Risk Based Capital (Basel-III) 168 • Capital Planning & Management 186 • Statement of Non-Performing Loan 188 Sustainability 190 Management Retrospection Financial Information • • • • • • • • • • • • • • • 2 | Standard Bank Ltd Annual Report 2020 Management Discussion & Analysis Report on Human Resource Management Report on Human Capital Report on Management Remuneration Committee Report on HR Accounting SBL Sustainability Report On Human Resources Vertical Analysis (Financial Position) Horizontal Analysis (Financial Position) Vertical Analysis (Comprehensive Income) Horizontal Analysis (Comprehensive Income) How We Create Value Value Added Statement Economic Value Added (EVA) Statement Market Value Added (MVA) Statement Statement on Contribution to Government Exchequer 191 195 196 171 199 201 204 206 208 209 210 211 212 213 214
4. Financial Information • • • • • • • • • • • • • • • • • • • • • 5 Years Financial Highlights 216 Graphical Presentation 219 Segment Reporting 225 Credit Rating Report 226 Distribution of Shareholding 227 Redressal of Investors’ Grievances 228 Communication to Stakeholders 229 Photo Gallery 230 Project Financed By Standard Bank Ltd. 232 Awards234 Independent Auditor’s report Consolidated Balance Sheet Consolidated Profit and Loss Account Consolidated Cash Flow Statement Consolidated Statement of Changes in Shareholders’ Equity Balance Sheet Profit and Loss Account Cash Flow Statement Statement of Changes in Shareholders’ Equity Liquidity Statement (Assets and Liability Maturity Analysis) Notes to the Financial Statements 255 260 262 263 264 265 267 268 269 270 271 Risk Governance Stakeholders’ Information Corporate Governance 254 Introduction 215 Islami Banking Wing Financial Information 236 • Balance Sheet • Profit & Loss Account • Selected Notes to the Financial Statements • Financial Statement Sustainability Report Environment Related Initiatives Environmental & Social Obligations Corporate Social Responsibility (CSR) Initiatives • Integrated Reporting Management Retrospection Off-Shore Banking Unit Sustainability • • • • 353 355 356 364 Standard Bank Securities Ltd. 237 242 245 248 252 • Financial Statement 369 SBL Capital Management Ltd. • Financial Statement 388 PROXY FORM BRANCH NETWORK434 • Financial Statement Stakeholders’ Information 439 Standard Exchange Company (UK) Limited 415 Standard CO (USA) INC • Financial Statement 425 Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 3
5. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 4
6. Introduction LETTER OF TRANSMITTAL Corporate Governance All Shareholders , Bangladesh Bank Bangladesh Securities and Exchange Commission Financial Reporting Council Registrar of Joint Stock Companies & Firms Dhaka Stock Exchange Limited Chittagong Stock Exchange Limited Sub: Annual Report of Standard Bank Ltd, for the year ended on December 31, 2020 Dear Sir(s), Risk Governance Thank you for being with us in the year 2020. It is our immense pleasure to present before you a copy of the Bank’s Annual Report 2020 along with the audited financial statements including consolidated and separate balance sheet as at 31st December 2020, profit and loss account, cash flow statement, statement of changes in equity, liquidity statement for the year ended 31st December 2020 with the notes thereto of Standard Bank Limited and its subsidiaries for your kind information and record. We hope that the report will be of use to you today and glorious tomorrow. Management Retrospection Best Regards, Md. Ali Reza, FCMA, CIPA Acting Company Secretary Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 5
7. Introduction NOTICE OF THE 22nd ANNUAL GENERAL MEETING Notice is hereby given to all the members that the 22 nd (Twenty Second) Annual General Meeting (AGM) of the honorable shareholders of Standard Bank Ltd. will be held on Thursday, the 29 th July, 2021 at 11:00 am virtually by using digital platform through the link https://sbl.bdvirtualagm.com to transact the following business and to adopt necessary resolutions: Corporate Governance ORDINARY BUSINESS AGENDA Risk Governance i. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended 31st December, 2020 along with the Auditors’ Report and the Director’s Report thereon. ii. To declare dividend for the year ended 31st December, 2020 as recommended by the Board of Directors. iii. To retire/elect/re-elect of Directors in accordance with the provision of the law and the Articles of Association of the company. iv. To appoint External Auditor of the Company for the term until conclusion of the next AGM and fix their remuneration. v. To appoint Corporate Governance Compliance Auditors for the year 2021 and to fix up their remuneration. vi. To consider and approve the loan proposals of the Directors as recommended by the Board. vii. To transact any other business with the permission of the chair. SPECIAL BUSINESS: viii. To consider and, if thought fit, pass the following resolution as a Special Resolution: Management Retrospection Resolved that “the issuance of 1st Standard Bank unsecured, conditional convertible, floating rate Mudaraba Perpetual Bond (Debt) of Tk. 500.00 Crore (Five Hundred Crore) as Additional Tier- I Capital as per Guidelines on Risk based Capital Adequacy (Revised Regulatory Capital Framework for banks in line with Basel-III) of Bangladesh Bank, subject to obtainment of No Objection Certificate (NOC) from Bangladesh Bank and BSEC as well as compliance with the relevant laws and regulatory requirements and also adherence to the conditions imposed by BSEC under Section 20A of the Securities and Exchange Ordinance, 1969 (XVII of 1969). The purpose of the proposed bond is to strengthen the capital base of the Bank All the shareholders of the company are requested to join the meeting on date, time by using the digital platform through the link https://sbl.bdvirtualagm.com Dated: June 29, 2021 Dhaka By order of the Board of Directors Stakeholders’ Information Md. Ali Reza, FCMA, CIPA Acting Company Secretary NOTES: i. Sustainability The Board of Directors has recommended 5% Dividend in the form of 2.5% Cash Dividend & 2.5% Stock Dividend for the year ended 31st December, 2020 subject to approval in the 22nd AGM. The Record date for the 22nd AGM was Sunday, June 06, 2021. The shareholders whose name was appeared in the Register of members ii. of the Company or in the Depository (CDBL) on record date are eligible to attend/join the 22nd AGM and entitle for dividend as mentioned above. iii. Pursuant to the Bangladesh Securities & Exchange Commission’s Order No: SEC/SRMIC/94-231/91 dated 31.03.2021 to avoid health risk of pandemic Covid 19, the AGM will be virtual meeting of the Members which will be conducted via live telecast by using Digital platform. iv. The Shareholders will join the virtual AGM through the link https://sbl.bdvirtualagm.com and able to submit their questions/comments electronically before 24 (twenty Four) hours of commencement of the AGM through this link and also during the Annual General Meeting. In order to login for the virtual AGM, the shareholders need to click on the link https://sbl.bdvirtualagm.com and provide their 16 digit Beneficiary Owners (BO) account number or 5 digit folio number, name of shareholders and their number of shares. v. A Member entitled to attend and vote at the AGM may appoint a Proxy to attend in his/her stead. The scanned copy of “Proxy Form” duly filled, signed and affixed with BDT 20 revenue stamp must be sent through email to Standard Bank Ltd, Share Division at share@ standardbankbd.com no later than 72 hours before commencement of AGM. vi. As per Bangladesh Securities and Exchange Commission Notification No: BSEC/CMRRCD/2006-158/208/Admin/81, dated June 20, 2018 soft copies of the Annual Report 2020 along with the Attendance Slip, Proxy Form and the Notice will be forwarded to all the members at their respective email address available with their respective email addresses through their respective Depository Participant (DP). The soft copy of the Annual Report 2020 will also be available in the website of the Bank: www.standardbankbd.com vii. Merchant Bank and Depository participant (DP’s) are requested to email the soft copy of their margin list (in MS Excel Format) as on record date at share@standardbankbd.com by Monday, July 19, 2021 for facilitating the payment of cash dividend. viii. In compliance with the Bangladesh Securities and Exchange Commission Circular No: SEC/CMRRCI)/2009-193/154 dated October 2013, No benefit in cash or kind shall be paid/offered in the 22nd AGM of the Bank. Financial Information 6 | Standard Bank Ltd Annual Report 2020
8. Introduction Risk Governance MISSION Management Retrospection To be the best private commercial bank in Bangladesh in terms of efficiency , capital adequacy, asset quality, sound management and profitability. Corporate Governance VISION To be a modern bank having the object of building a sound national economy and to contribute significantly to the Public Exchequer. OUR CUSTOMER: Stakeholders’ Information CORE VALUES To become most caring bank by providing the most courteous and efficient service in every area of our business. COMMUNITY: Assuring our socially responsible corporate entity in a tangible manner through close adherence to national policies and objectives. OUR EMPLOYEE: Sustainability By promoting the well being of the members of the staff. OUR SHAREHOLDERS: By ensuring fair return on their investment through generating stable profit. Financial Information Standard Bank Ltd Annual Report 2020 | 7
9. Introduction CODE OF CONDUCT Corporate Governance Values of SBL are defined in line with what we stand for everywhere we do business . They are reflected in our behavior and the way we build relationships and deliver value to all our stakeholders, clients, employees, shareholders, communities and others we deal with. In striving for outstanding performance and results, we do not compromise our ethics or principles. SBL places great importance on honesty, integrity, quality and trust. In doing this, we follow a well-set of code of conduct. SBL’s Code of Conduct incorporates SBL’s Values, and in particular our Value of Integrity, to guide our day-to-day actions and decisions so we can always do the right thing. The Code provides a practical set of guiding principles to help us make decisions in day to day work, whatever we do and wherever we do it. It, basically, aligns the behavior or conduct of employees to the standard as desired by the management in achieving common goal of the bank. All employees of SBL are required to display the highest standard of conduct in all dealings within and outside the bank. The success of the Bank is dependent on maintaining a high level of public trust. The following Code of Conduct Guiding Principles of SBL is in place: Risk Governance PERSONAL RESPONSIBILITIES: Management Retrospection Stakeholders’ Information • Maintain high level of integrity and ethics • Be punctual, well dressed and placid mannered • Stick to company policies, instructions and guidelines of the bank • Do not submerge bank’s interest with personal interest Workplace Responsibilities: • Ensure appropriate use and safeguarding bank’s property • Behave with decorum and decency with other colleagues • Do not harass and be not be ill-mannered to female colleagues • Do not engage in any kind of business, gambling, racing, betting or wagering contracts • No insider trading, workplace violence is allowed • Follow proper procedures in raising grievance and disciplinary action Marketplace RESPONSIBILITIES: Sustainability • Report all sorts of fraud, anti-money laundering and terrorist financing, theft or illegal activities to concerned authority • Be ever responsive to all requirements of customers • Maintain customers ‘confidentiality • Maintain utmost secrecy and confidentiality in dealing with bank’s affairs • Report all records, accounts or books accurately abiding by law Financial Information CORPORATE CITIZENSHIP: 8 | • Respond to all public or corporate enquiries timely • Extend all-out assistance for business communities • Emphasize on green banking to save environment Standard Bank Ltd Annual Report 2020
10. Introduction STRATEGIC PRIORITIES a ) To strive for sustainable business growth by ensuring customer satisfaction through quality and timely services. Corporate Governance b) To ensure capital stewardship by Preservation and enlargement of multiple forms of capital; like intellectual, natural, financial, organizational, social; all of which contribute to longterm value creation. c) To give strong focus on extremely cost-efficient and green services through Internet banking, electronic fund transfer, automated cheques clearing, e-bank statement, SMS alert etc. d) To ensure effective and efficient risk management for sustainable business growth e) To ensure well diversified loan portfolio through structured finance and expansion of Corporate, SME, Agriculture and Retail businesses. f) To mount state-of-the-art technologies and adopt innovative ideas for financial inclusion. Risk Governance g) To endeavor synergies between new knowledge and human capital for sustainable economic growth. h) To increase brand visibility by creating positive image of the Bank. i) To be a trend-setter in serving the society and remain responsive to the environment. J) To ensure sound corporate governance. Management Retrospection k) To accelerate progress towards financial inclusion with technology by up-gradation of internet, Mobile Banking and Agent banking. l) To add value for all stakeholders. Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 9
11. Introduction STRATEGIC MANAGEMENT MODEL Strategic management is a systems approach to identifying and making the necessary changes and measuring the organization ’s performance as it moves toward its vision. It has been defined as a Management system that links strategic planning and decision making with the day-to-day business of operational management” Corporate Governance The following model depicts the five processes of strategic management which are pre-planning, strategic planning, deployment, implementation, and measurement and evaluation. Risk Governance Strategic Planning Pre-Planning Pre-Planning Organizational Activities Assessment Mission Gap Strategic Analysis Goals Management Retrospection Vision Strategies Guiding Measurement and Evaluation Principles Communicate Strategic Foundations Results Objectives Develop Measurement Plan Stakeholders’ Information Analyze and Evaluate Collect Resource Data Allocation Implementation Communicate Sustainability Progress Track Status Financial Information 10 | Standard Bank Ltd Annual Report 2020 Take Action Deployment Develop Action Plans Phase II: Communicate the Plan Phase I: Complete the Plan
12. Introduction STATEMENT REGARDING FORWARD LOOKING Corporate Governance The material in the Annual Report includes certain forward looking statement concerning current goals of the Bank and its future plans , strategies and policies. We wish to caution you that these statements are based on managements expectations, estimates, projections and assumptions. Words such as “expects,” “anticipates” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of revenues earnings, cash flows. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, which are: Risk Governance a) The possibility of adverse economic and business conditions that may increase the default and delinquency risk in loan portfolio; b) Changes in monetary & fiscal policies and action of government or regulatory authorities; c) Increase in rate of Tax and VAT on corporate and Bank’s services; d) Increase in regulatory capital requirement, CRR and SLR of the Banks; e) Increase in competition within the financial industry; Management Retrospection f) Changes in technology and evolving banking industry standards; g) Unfavourable movement of foreign exchange rates and interest rates; h) Rise in price of essential products in the local and international market; i) Effect on remittance flow due to political and economic unrest in different countries around the world; j) Volatility in Capital Market and Money Market; k) Increase in inflationary pressure; Stakeholders’ Information l) Constraints in access to external funding to meet liquidity requirement; m) Changing demographic developments including changing consumer spending, saving and borrowing habits; n) Changes in accounting standards or practices; o) Underutilization and change of different Risk Management tools. Sustainability The preceding list of important factors is not exhaustive. When relying on forward looking statements to make decisions with respect to the Bank and its securities, investors and others should carefully consider the preceding factors, other uncertainties and potential events. The Bank does not undertake to update any forward looking statements, whether written or oral, that may be made from time to time by or on its behalf. Financial Information Standard Bank Ltd Annual Report 2020 | 11
13. Introduction CORPORATE PROFILE Corporate Governance Risk Governance Management Retrospection 01 Name of the Company 02 Chairman of the Bank 03 Managing Director & CEO Standard Bank Limited Ln. Kazi Akram Uddin Ahmed Khondoker Rashed Maqsood 08 Barrister-at-Law 09 Tax Consultant 10 Auditor 11 Legal Advisor 12 Rating Agency Dr. Kamal Hossain & Associates Alhaj Md. Serajul Islam Legal Form 04 Stakeholders’ Information 05 Sustainability 06 Financial Information 07 12 | A public limited company incorporated in Bangladesh on 11th May, 1999 under the Companies Act 1994, Subsequently listed in Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. Commencement of Business 3rd June, 1999 Registered Office Metropolitan Chamber Building (3rd floor) 122-124, Motijheel C/A, Dhaka-1000 Web Page www.standardbankbd.com Standard Bank Ltd Annual Report 2020 M/s. Shafiq Basak & Co. (Chartered Accountants) Barrister Ashraful Hadi ARGUS Credit Rating Services Ltd.
14. Introduction GROUP CORPORATE STRUCTURE Corporate Governance SBL GROUP Risk Governance In Bangladesh Standard Bank Ltd . Standard Bank Securities Ltd. Management Retrospection SBL Capital Management Ltd. SBL Islami Banking Wing Stakeholders’ Information Overseas Standard Exchange (UK) Ltd. Standard Express (Bronx) Standard Express (Jamaica) Sustainability Standard Express (Brooklyn) Standard Co. (USA) Inc. Standard Express Standard Express Standard Express (Los Angeles) (Ozon Park) (Buffalo) Financial Information Standard Bank Ltd Annual Report 2020 | 13
15. Introduction CORPORATE ORGANOGRAM Corporate Governance Board of Directors Risk Governance Management Retrospection Managing Director & CEO Executive Committee Audit Committee Risk Management Committee Board & Share Division MD’s Secretariat Human Resources Management Division Disciplinary & Appeal Department Complaint Cell Internal Control & Compliance Division International Division Informational Technology Division Treasury Division Public Relation & Brand Communication Division SME Business Corporate Business Division Agri & Retail Business FAD & MIS ADDITIONAL MANAGING DIRECTOR Stakeholders’ Information Corporate CRM Anti-Money Laundering & CFT Division Sustainability Risk Management Division Customer Complaint Center Credit Information Bureau Branch Management & Operations Division Card Operations General Services Division Overseas Operations (Exchange House) and Remittance Department International Division Agent Banking Operations Credit Administration Division Treasury Division (Mid Office & Back Office) IT Division IT Business Team Financial Information Standard Bank Training Institute Special Asset Management Division | DEPUTY MANAGING DIRECTOR Legal Division Agri& Retail CRM 14 Standard Bank Securities Ltd. Sustainable Finance Division Credit Risk Management SME CRM SBL Capital Management Ltd. Standard Bank Ltd Annual Report 2020 Research and Development Wing Alternate Delivery Channel Centralized Trade Operations Reconciliation Unit MIS
16. Introduction PRODUCT PORTFOLIO Asset Products • Syndication, Consortium, Club & Structured Finance ¤ Short Term Finance »CC (Hypo) »Time Loan »SOD (Gen) »SOD (FO) » Long Term Finance »Term Loan »Lease Finance (Machineries, Vehicles) »Hire Purchase • Foreign Trade Finance ¤ Export Finance »BTB L/C »EDF Loan »Packaging Credit »SOD (Export) »LDBP & FDBP »Import Finance »Import L/C (Sight/Deferred/UPAS) »LTR • Industrial Project Finance ¤ Project Implementation Finance »L/C (Sight/deferred) »LTR »Term Loan »Lease Finance »Bai-Murabaha »Bai-Muajjal »Bai-Salam »Hire Purchase under Shirkatul Melk »Quard against MTDR • Small & Medium Enterprise (SME) Financing • FI 10 Taka Account Loan • Agriculture Credit • Green Banking Products • Social and Environmental Stakeholders’ Information • Islami Banking Investment Products Management Retrospection »CC(H) »L/C (Local-sight/deferred) »L/C (Foreign-sight/deferred) »L/C (UPAS) »LTR »Term Loan »Lease Finance »Hire Purchase Risk Governance • Infrastructure Finance ¤ Working Capital Finance »CC (H) »L/C (Local/Foreign) »LTR • Work Order Finance »Bid Bond »BG/PG »APG »SOD(EM) »SOD(WO) Sustainability Corporate Governance • General Corporate Finance • Housing/Real Estate Finance Financial Information »House Building Loan (Commercial) »House Building Loan (Residential) Standard Bank Ltd Annual Report 2020 | 15
17. Technology Products Introduction Liability Products Corporate Governance • Conventional Banking • Internet Banking ¤ Savings Deposit • SMS Banking ¤ Current Deposit ¤ Short Notice Deposit (SND) •DigiBanking Risk Governance ¤ Fixed Term Deposit •Spotcash ¤ SBL Savings Deposit Products: • ATM Banking • POS Banking » » » » » » » SBL Bondhon Savings SBL Savings Premium SBL Savings Premium Plus SBL Super Savers Savings SBL Women Savings SBL Classic Savings SBL Golden Age Savings • “SBL Express” Booth • NPS Connectivity ¤ SBL Scheme Deposit Products: Management Retrospection » » » » » » » » » » SBL DPS (Sarbojonin) SBL DPS (Projonmo) SBL DPS (Ghoroni) SBL Lakhopati Plus SBL Millionaire Plus SBL Kotipoti Plus SBL DPS (Bondhon) SBL Monthly Income PROTTASHA SBL Monthly Income SHRODDHA SBL DIGUN SHOMRIDDHI ¤ School Banking Stakeholders’ Information ¤ SBL -Garments Workers –SHOFOL ¤ SBL-Leather & Footwear SHEBA Card Products • Visa Credit Card ¤ Visa Platinum ¤ Visa Gold » Zero Pay (EMI) » Credit Shield Premium » Balance Transfer » 2FA ¤ SBL-10 Taka Account • Visa Prepaid Card ¤ NFCD Accounts ¤ RFCD Accounts » Visa Travel Card » Visa Hajj Card ¤ Private Foreign Currency Account • Debit Card ¤ Convertible Taka Account Sustainability ¤ Non-Convertible Taka Account ¤ Non Resident Block Account ¤ Exporter FC Deposit Other Products ¤ SBL Off Shore Banking • Islamic Banking Financial Information 16 | » » » » » » » » » Al-Wadiah Current Account Mudaraba Savings Account (MSA) Mudaraba Special Notice Deposit Account (MSND) Mudaraba Term Deposit Receipt Account (MTDR) Mudaraba Monthly Savings Scheme (MMSS) Mudaraba Regular Income Program (MRIP) Mudaraba Hajj Savings Scheme (MHSS) NFCD Accounts RFCD Accounts Standard Bank Ltd Annual Report 2020 • Agent Banking SBL
18. Introduction OUR VALUE DRIVEN BUSINESS MODEL Corporate Governance Key Stakeholders Financial capital Human capital Intellectual capital Social & relationship capital Natural capital Interest expenses Human resource compensation Other administrative expenses Tax expense Infrastructure and technology cost Delivering consistently to shareholders Innovative customer services Customized products Partnering with regulators Growing business network Investing in human capital Social contribution Environmental awareness Q Our Clients One-to-one meetings Customer reward Over the phone &SMS service On site visits Conference Websites Newspaper Reports Branches Agent Banking ATM Internet banking Mobile banking Customer Relationships Channels Interest income Investment income Other operating income Commission, exchange and brokerage income Financial Information Revenue Streams Corporate borrowers Corporate depositors Small & Medium Enterprise (SME) Individuals borrower Individual depositors Consumer Suppliers Traders Investors Sustainability Value Propositions Key Activities Stakeholders’ Information Cost Structure Management Retrospection  Cross border trade services Grow, develop and maintain client relationship Attract and manage investment Create brand awareness Commit to social and environmental responsibilities Key Resources Risk Governance Shareholders Regulators Clients Suppliers Employees Society Environmental groups Other Banks and Financial Institutions Standard Bank Ltd Annual Report 2020 | 17
19. Introduction SBL Highlights 2020 Corporate Governance Risk Governance Management Retrospection Profit After Tax Operating Profit 1 ,082 3,115 million taka million taka Paid-up capital Loans & Advances Stakeholders’ Information 10,060 162,397 million taka Sustainability Financial Information 18 | Standard Bank Ltd Annual Report 2020 million taka
20. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Achievement (in Crore Amount) SME Performance Financial Information 19 | Standard Bank Ltd Annual Report 2020
21. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 20
22. BOARD OF DIRECTORS Introduction Corporate Governance 01 Risk Governance Management Retrospection 02 05 06 07 08 09 10 11 12 13 14 15 16 17 Sustainability 04 Stakeholders ’ Information 03 Mr. Kazi Akram Uddin Ahmed, Chairman Mr. Md. Zahedul Hoque, Vice Chairman Mr. Kamal Mostafa Chowdhury, Director Mr. Ashok Kumar Saha, Director Mr. Ferozur Rahman, Director Mr. Md. Monzurul Alam, Director Mr. S.A.M. Hossain, Director Mr. Mohammed Abdul Aziz, Director Al-Haj Mohammed Shamsul Alam, Director 10. 11. 12. 13. 14. 15. 16. 17. Financial Information 01. 02. 03. 04. 05. 06. 07. 08. 09. Mr. Gulzar Ahmed, Director Al-Haj Md. Yousuf Chowdhury, Director Mr. Ferdous Ali Khan, Director Mr. Kazi Khurram Ahmed, Director Mr. Md. Abul Hossain, Director Mr. Najmul Huq Chaudhury, Independent Director Mr. Md. Nazmus Salehin, Independent Director Mr. Khondoker Rashed Maqsood, Managing Director & CEO Standard Bank Ltd Annual Report 2020 | 21
23. Introduction Corporate Governance Risk Governance Management Retrospection DIRECTORS ’ PROFILES Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 22
24. Introduction Trader (Overseas), Chattogram. He is one of the Former Directors of Padma Oil Co. Limited, the largest subsidiary enterprise of Bangladesh Petroleum Corporation for two terms for 6 years. Corporate Governance He held many key positions in different local and international organizations including Former President of The Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) (20122015), the apex trade body representing all Business Chambers and Associations of Bangladesh consisting of 30 million business people, former Chairman of Bangladesh Association of Banks (BAB) and during his tenure he has made immense contribution in turning this organization into a very lively and vital forum of the Chairman and Directors of Private Commercial Banks in Bangladesh. Risk Governance In the arena of Social Service, presently he is the International Director for the period of three consecutive years from 2018 to 2021 of Lions Clubs International (LCI), the largest Voluntary Service Organization of the world as declared by the UN. He is also the Chairman of Technology Committee of LCI and was the Chairman of Planning Committee of the just concluded 47th ISAME (India, South Asia and Middle East) Forum at Chennai, India. He is also the Chairman of 48th ISAME Forum 2021 to be held in Dhaka, Bangladesh, which is unique in the history of Lionism to be Chairman of consecutive forums. Moreover, he is the Area Leader of Campaign 100 of Constitutional Area 6A of Lions Clubs International Foundation (LCIF) and Second Century Ambassador of LCI. A resplendent lion leader PMJF Kazi Akram Uddin Ahmed has served LCI as the District Governor of District 315B4 in 1993-94 and Council Chairman of MD315, Bangladesh in 1994-95. He is the recipient of numerous Presidential Medals and Accolades from International Presidents of LCI for his splendid contributions towards this great organization. Management Retrospection In the political arena, he is the Member of Advisory Council of the ruling party of Bangladesh Awami League since long & Chairman, Industry & Commerce Sub Committee of the said party. Ln. Kazi Akram Uddin Ahmed Chairman He is the Chairman, founder, donor, patron & trustee of so many educational institutions, Madrasha and charitable hospitals of the country. He was the Senate Member of Dhaka University for two terms of 6 years. He was also the former Regent Board Member of the Gopalgonj University of Science & Technology. He is a valiant freedom fighter who actively participated in the liberation war in 1971 and made significant contributions. During his course of journey to training camp in India, he lost his beloved son who died on the way. Sustainability He was awarded with the UNESCO Gold Medal, Scientist Sir Jagadish Chandra Bose National Smrity Memorial Gold Medal, Shahid Suhrawardi National Gold Medal, World Quality Commitment Award in Gold Category from Paris, France in 2009 as outstanding banker. A top leader of the business delegation, he accompanied the Honorable Prime Minister of Bangladesh and visited numerous countries including India, Germany, Japan, China, Italy and USA. As an entourage of the Honorable Prime Minister of Bangladesh he attended 65th, 67th, 68th & 69th (2014) UN General Assembly at New York, USA. Financial Information As a Chairman of Standard Bank Limited he has brought along with him a vast wealth of experience and expertise of managing a number of Industries of his own and of Bangladesh Steel and Engineering Corporation, prominent business houses and enterprises of diversified nature. Stakeholders’ Information A tremendous energetic and an outstanding charismatic personality with amiable disposition Mr. Kazi Akram Uddin Ahmed is the founder Chairman of Standard Bank Limited. He is a man with distinctive vision, dynamism, commitment and innovative ideas. He comes from a very prominent and respectable Kazi family of Kotalipara, Gopalgonj. Mr. Akram Uddin Ahmed did his MSc. in Physics from Dhaka University in 1963 and thereafter received several local and foreign professional diplomas and training. He did Diploma in Personnel Management from Oxford University (UK) in 1973 and Higher Training in Industrial Management from Switzerland in 1980. Initially, he started his career as a lecturer in the then Jagannath College, Dhaka and after a short spell of teaching profession, he switched over to administrative career in the Industrial Sector, in Mohammodi Steel Chattogram in 1964. He left his service life in 1981 while he was General Manager of Bangladesh Steel and Engineering Corporation for embarking upon as an entrepreneur in the field of Industrial Manufacturing, Banking and other businesses. He is the Founder & Life Member of Dhaka and Lions Blood Bank, Former Chairman of Chattogram Lions Foundation, Eye Hospital, the biggest Lion Eye Hospital of the Country, Life Member of Bangladesh Lions Foundation, Advisor of Chattogram Diabetes Association, Life Member of Bangladesh Red Crescent Society. Bangladesh Family Planning Samity, Bangladesh Diabetic Samity, Chattogram Shishu Hospital and Permanent Member of Chattogram Club Ltd. He is one of the Trusty Board Members of Dhaka Shishu Hospital. Today he is a very successful entrepreneur and an eminent industrialist of the country. He is the Managing Director of Eastern Engineering Group, Bright Steel Wire Rope Mfg. Co. Ltd., Chattogram, Bright Standard Bank Ltd Annual Report 2020 | 23
25. Introduction Corporate Governance Risk Governance Management Retrospection MD . ZAHEDUL HOQUE Vice Chairman Stakeholders’ Information Mr. Md. Zahedul Hoque a young & promising professional and well established business man was born in a renowned family. He completed his Bachelors of Business Administration majoring in Industrial Management in December, 1992 from Northeast Louisiana University, Monroe, Louisiana, USA. His father Al-Haj Md. Nurul Hoque Sowdagar was also a prominent and well established businessman both at home and abroad. He was one of the Sponsor Directors of the Bank and is the founder of Hazi Mohammed Nurul Hoque Degree College, Shakpura, Boalkhali, Chattogram and Amenia Forkania and Nuria Madrasha, West Shakpura, Boalkhali, Chattogram. Sustainability Mr. Zahedul Hoque is the proprietor of M/S Zahed Brothers (import of food grains, spices, betel nut, sugar & vegetable oil) and M/S NLZ Fashion (computerized embroidery unit). He is also the Managing Director of M/S NLZ Fashion Limited (100% export oriented readymade garments in Chattogram Export Processing Zone) and Director of M/S Noor Oil and Food Products Limited, M/S Arafat Limited (Iodized Salt Industries). Mr. Md. Zahedul Hoque is associated with many renowned social organizations and also devoted to social works as well as involved with the following institutions in different capacities: Financial Information 24 | • Vice Chairman of the Khatungonj Trade and Finance Industries • Director of the Chittagong Chamber of Commerce and Industries (CCCI) • Member of the governing body of Hazi Mohammed Nurul Hoque Degree College, Shakpura, Boalkhali, Chattogram. • Life Member of Army Golf Club, Dhaka • Permanent Member of Chittagong Boat Club • Permanent member of Chittagong Club Ltd. • Permanent Member of Chittagong Seniors Club Limited, Chittagong • Permanent member of The Chittagong Collegiate School ‘85 • Life member of Maa o Shishu Hospital, Agrabad, Chittagong • Member of Bangladesh Garments Manufacturing & Export Association (BGMEA) Standard Bank Ltd Annual Report 2020
26. Introduction KAMAL MOSTAFA CHOWDHURY Director Corporate Governance Mr . Kamal Mostafa Chowdhury, a distinguished business personality comes of a respectable Muslim family of Kazim Chowdhury Bari at Gunagari, Banshkhali in Chattogram district. While Mr. Chowdhury was studying in Chittagong University, he started his business career in import-export and shipping sector. He has taken part in establishing a good number of business entities including bank. He is the Founder Vice Chairman & Chairman of Executive Committee of Standard Bank Ltd., former Managing Director of Raja Securities Ltd., Proprietor of Raja Corporation and KMC International, Director of Holy Crescent Hospital in Chattogram. He is a highly experienced professional with successful track record in international trading. Risk Governance Mr. Chowdhury is well-known in various social and philanthropic activities in addition to his business arena. He is the founder of Ahamadia Sunni Madrasha, Banshkhali, Gunagari and former member of Kokdandi Gunagari High School Committee at Banshkhali in Chattogram, Member of Chittagong Club Limited, Chittagong Seniors Club Limited, Chittagong Boat Club Limited, Mainamati Golf and Country Club, Cumilla, Army Golf Club, Dhaka and Life Member of Chittagong Press Club, Rifles Club, Chittagong Diabetic Hospital, Chittagong Maa-O- Shishu Hospital, Lion Blood Bank, former Vice Chairman of advisory committee for Chattogram Samity in Dhaka. He is the former President of Banshkhali Samity in Dhaka. Management Retrospection Mr. Chowdhury, a vibrant business leader is associated with a number of trade bodies and associations devoted to business development of the country. He is the Senior Director of Chittagong Chamber of Commerce and Industries, former Director of Bangladesh Malaysia Chamber of Commerce & Industry, Member of International Business Forum of Bangladesh (IBFB) and former member of Federation of Bangladesh Chambers of Commerce & Industry (FBCCI). Mr. Chowdhury is a widely traveled person across the globe. As a business representative, he extensively visited many countries including India, Malaysia, Saudi Arabia, United States of America, United Kingdom, China, Thailand, Bhutan, Japan and Taiwan. By virtue of religious devotion, he has performed holy Hajj thrice. Stakeholders’ Information ASHOK KUMAR SAHA Director Financial Information Standard Bank Ltd Annual Report 2020 Sustainability Mr. Ashok Kumar Saha, a thorough professional and prominent Industrialist, was born in a renowned Hindu family at Ghatforhadbegh, Chattogram. He completed his post graduation in Chemistry from University of Chattogram, B.Sc. Engineering (Electrical) from Ohio University, Ohio, USA and Master of Business Administration from University of New Haven, Connecticut, USA. He became as a Director of Standard Bank Limited on 12.10.2009 in place of his father Late Nani Gopal Saha who was a Sponsor Director of the Bank and well known Industrialist of the country as well as declared CIP (Commercially Important Person) by the Government & was the highest Taxpayer of Chattogram region twice. Mr. Ashok Kumar Saha is widely known in the business arena in Chattogram who is a Chairman of A. K. Saha Steel Industries (Pvt.) Limited, Director of NG Saha Steel Industries (Pvt.) Limited & NGS Cement Industries Limited and Managing Director of NGS Industries Limited & Uttam Oil Limited. He gained phenomenal experience regarding Marketing Survey Reports of various companies in USA during MBA Degree and accomplished some logical Digital projects for Electrical and Computer Engineering in Ohio, USA. He is well connected with various social and religious activities specially served as host Leader in Bangladesh Special Olympic Team, New Heaven, Connecticut, USA and contributed for Sports of Bangladesh Olympic Association, Dhaka on 2009. | 25
27. Introduction FEROZUR RAHMAN Director Corporate Governance Mr . Ferozur Rahman, an eminent business personality comes of a reputable Muslim family. Mr. Rahman, is a dynamic and visionary leader of banking and other business arena. He is cheerful, good-humored and exuberant character. He established himself as a star, flamboyant hotel businessman in Bangladesh. He has a wide range of experience in several businesses. He is the sponsor shareholder of Sonali Insurance Company Limited, Director of Hotel Golden Dragon Limited, Hotel Eram International Limited and Hotel Peacock Limited. He is also the proprietor of Olio Enterprise and Hotel Oli Dream Heaven. Mr. Rahman has been involved with many prominent social organizations and is a dedicated social worker. He is very popular Upazilla Chairman of B.Baria. He is an angelic face to the society and forward footstep for the wellbeing of his neighbor since he has been discernible with the following institution: Risk Governance Management Retrospection • Upazilla Chairman of B.Baria • Vice-Chairman and Chairman of New Model Bohumukhi High School, Dhanmondi, Dhaka for 37 years • Former Vice-Chairman and Former EC Chairman of Standard Bank Ltd. • Past District Governor, District 315 B2 as well as PMJF LCI • Former Chairman of Sultanpur Union Parishad, Brahmanbaria for about 23 years • Founder Chairman of Ferozur Rahman Fund and Foundation • Founder and Chairman of Ferozur Rahman Residential Academy School and College in B’baria Stakeholders’ Information MD. MONZURUL ALAM Director Sustainability Mr. Md. Manzurul Alam is a renowned Industrialist having over 37 years of business experience. He is the Chairman of H. M. Steel & Industries. Limited, Alhaj Mostafa Hakim Bricks Limited & Managing Director of Golden Ispat Ltd, Golden LPG Ltd.Jaher & Co. Limited, Golden Brickworks Limited, Golden Steel Alloy Works Limited, Al-Haj Mostafa Hakim Housing & Real Estate Limited, Golden Oxygen Limited, Al-Haj Mostafa Hakim Cement Ind. Limited and Golden Iron Works Limited, Eagle Star Textile Mills Limited and Mutual Jute Spinners Ltd. He is also the Proprietor of M/s. Monzur Alam. Besides, he is a General Member of Chattogram Chamber of Commerce & Industry. Mr Alam is also actively associated with several distinguished educational and socio cultural organizations. He is a philanthropist and does a lot of charity to variety of organizations. He is the founder of Mostafa Hakim College and Alhaj Mostafa Hakim Welfare Foundation. He was elected as Mayor of Chattogram City Corporation. Financial Information 26 | Standard Bank Ltd Annual Report 2020
28. Introduction S .A.M. HOSSAIN Director Corporate Governance Mr. S.A.M. Hossain is a prominent, innovative and successful businessman of the country. He holds a Bachelor Degree in Commerce. He was born in a glorious and highly respectable Muslim family of Noapara, Raozan Thana under Chattogram district. He has started his glorifying business career in the Field of Electronics around 37 years ago and excels in this field like a star. Now his organization Victor Electronics and Victor International have become the trusted names across the country. He has expanded his business into many dimensions. He is the Chairman of Hotel Victory Ltd., Link Up Steel Mills Ltd., Eastern Metal Ind. (Ctg.) Ltd., and A & B Pumps Ltd. He is the Director of Standard Bank Securities Ltd. and SBL Capital Management Ltd., Prime Insurance Co. Ltd., Central Hospital Ltd., Eastern Paper and Board Mills (Ctg.) Ltd., Intercontinental Securities Ltd., Human Resource Development Co. Ltd., and Surprise Industrial Corporation. He is the Proprietor of Victor Electronics, Victor International and Samira Electronics. He is actively associated with several distinguished educational and socio-cultural organizations. He is the life member of Army Golf Club Dhaka and Chattogram Club. Risk Governance He is a philanthropist and does a lot of charity to variety of organizations. He is the founder of Aslam Smriti Foundation at Noapara, Chattogram. He has been relentlessly contributing in the field of education and holds very key post in many institutions. He is the founder member of Noapara Muslim High School and Executive member of Noapara University College. He has been working for the improvement of the downtrodden at his village in Noapara. Management Retrospection With his brilliance and prudence, he has been contributing in Standard Bank to reach its vision through providing best banking services. MOHAMMED ABDUL AZIZ Director Stakeholders’ Information A man of pleasant personality with strong determination Mr. Mohammed Abdul Aziz is the Sponsor Director of Standard Bank Limited. He is a man with a sterling vision & commitment and a selfless social Leader. Sustainability Ln. Aziz completed his SSC examination from renowned Galimpur Rahmania High School in the year 1968. Later he completed his HSC from Govt. Dhaka College in the year 1970. He was a valiant freedom fighter who participated in the Liberation War of 1971. He successfully obtained graduation in Commerce in the year 1972 from Dhaka College. After completing his education instead of joining any service, he started his own business. By dint of his untiring efforts and hard work, sincerity he established himself as a successful entrepreneur of Dhaka city. He is one of the pioneer importers of industrial, commercial raw materials till date. In 1998 he joined Midland Credit Cooperative Society as Managing Director & Chairman. By his effort & leadership skills he made it a top leading cooperative society in Bangladesh. Furthermore, he focused on different business ventures including hotel industry, garments sector and so on. He is a former Vice Chairman of Moon Lux Knit Composite Garments Ltd. He is also the founder member of Board of trustee of Fareast International University. • Major donor & member of governing body of Arambagh Girls’ High School • Vice Chairman of Dhaka Progressive Lions Eye Hospital • Former Vice Chairman 1st division Arambagh Football Club • Donor of Ln. Ferozur Rahman Residential Academy, Brahmanbaria Financial Information Ln. Aziz joined Lionism in the year 1985 as a member of Lions Club of Dhaka Progressive. Since then his service towards the distressed humanity made him reach the different positions of Lions Clubs International District 315B2, Bangladesh. He was elected unopposed District Governor for the term 2005-06. He made his call Light the Blind as a District Governor for the year 2005-06 where he has completed 4500 cataract operations of the needy and poor patients free of cost throughout the country. Besides being an active humanitarian and social worker, Ln. Aziz devoted himself into many other social and welfare works with the following that include: He is a widely travelled person who travelled SAARC region, USA, UK, Australia and Morocco. As a Lion and a reputed business personality, Lion Aziz received numerous awards and recognitions. Standard Bank Ltd Annual Report 2020 | 27
29. Introduction AL-HAJ MOHAMMED SHAMSUL ALAM Director Corporate Governance A man of pleasant personality with strong determination Mr . Al-Haj Mohammed Shamsul Alam was born in 1953 at Noapara, Raozan, Chattogram and he is in business since 1972. His father and grandfather Late Haji Abul Bashar Sowdagar and Late Abdur Rouf Sufi respectively were also the renowned businessmen at their own domain. Mr. Mohammed Shamsul Alam in his first business life belonged to his family business “Trading of Clothes” at Kurbanigong, Chattogram. Mr. Alam is a Sponsor Director of Standard Bank Limited. He is also the Managing Partner of M/s Radio Vision, Managing Director of PAM Complex (Pvt.) Ltd. which is the manufacturer of Garments poly bag and others accessories, CIDER Education Services Ltd., Chattogram and Partner of AB Electronics. He was also Ex-Director and Ex-member of Executive Committee of MIDAS Financing Limited. Recently he involved with Telecommunication business and became the partner of the “G” Telecom, “G” Distribution, “GNET” Digital Communications Center, Chattogram, etc. Risk Governance Mr. Mohammed Shamsul Alam is also a devoted social worker and involved with the following institutions: • Founder President of “Amena Bashar Boyoshka Punarbashan Kendra” an exclusive self-financial project in Noapara Raozan, Chattogram • Member of the Lions Clubs of Chattogram • Associate Member of the Chattogram Chamber of Commerce & Industry Management Retrospection MR. GULZAR AHMED Director Mr. Gulzar Ahmed is a renowned business personality in Bangladesh. He is the Proprietor of APAN Jewellers, Gulshan Avenue, Dhaka. Apan Jewellers has been in the jewellary business since 1982 and it has expanded 7 branches in Dhaka city. Mr. Gulzar Ahmed has got practical experience of over 35 years in different business sectors. He is the Director and Ex Vice Chairman of Standard Bank Ltd. Stakeholders’ Information Sustainability AL-HAJ MD. YOUSUF CHOWDHURY Director Financial Information Al-Haj Md.Yousuf Chowdhury, a renowned and well established business personality comes from a respectable Muslim family at Chittagong who has more than 35 years of proven business experience in different kinds. He has got vast experience in hotel business and is the Chairman of Hotel Royal Palace Limited, Dhaka. He is also the Chairman of Chittagong Board & Paper Mills Limited. He owned the 100% Proprietorship of M/s. Lucky Traders, M/s. Lucky Trading and Royal Tower. He is the Director of Central Insurance Co. Limited. Mr. Chowdhury is actively associated with many renowned social organizations and is a dedicated social worker and member of Army Golf Club, Dhaka. He contributes in many educational institutions, madrasha and different charitable organizations. He is continuously helping the disaster people around the country. 28 | Standard Bank Ltd Annual Report 2020
30. Introduction FERDOUS ALI KHAN Director Corporate Governance Mr . Ferdous Ali Khan is a reputed businessman hails from a very respectable Muslim family of Dinajpur. All of his brothers, sisters are highly educated and well placed in the society. His father late Siddique Ali Khan was an educated businessman of Dinajpur. In order to gain expertise in Tailoring, Mr. Khan started his career as a maker in a Tailoring Factory in Dhaka in the year 1972. After five years, he worked as a Cutting Master and worked till 1980. In the year 1980, September 18th he started his own Tailoring shop at Jahan Mansion, 29 Mirpur Road, Dhaka-1205. His devotion and dedication, helped him gaining far and wide reputation as an Iconic Tailoring House in the city. In September 1986, he opened his 2nd branch at the diplomatic area of Gulshan. Since then, he has been marching forward and opened branches in Chattogram port city, Hotel Isha Kha Market, VIP Road, Kakrail, Panthapath Dhanmondi & Kuril. Risk Governance For his proposed factory & branch, he already purchased floor spaces for another branch at Kazi Shopping Center, Progoti Sharani (Bishwa Road), Badda, Dhaka- 1229 in June, 2006. He has already started a world class central factory & showroom. He is a sponsor Director of Standard Bank Ltd., member of Uttara Club Ltd., Army Golf Club and BCI, Dhaka. Mr. Khan is married and a proud father of two daughters and one son. Management Retrospection KAZI KHURRAM AHMED Director Stakeholders’ Information Mr. Kazi Khurram Ahmed is a Computer Engineering alumnus of Purdue University, USA. He is a Fellow of National Defense College. He is also the honorary consul of Gambia in Bangladesh. Mr. Ahmed is the author of Amazon.com’s number one best seller book “The Dark Science of Logical Fallacies” which is now part of the syllabus at University of Dhaka and Canadian University of Bangladesh. Sustainability He was recognized as one of the “Leading Professionals of the World” by International Biographical Centre of UK in 2010. American Biographical Institute named him “Man of the Year” in the same period.Prior to his induction into the Board of Standard Bank Limited, Mr. Ahmed has been serving as a Director of SBL Capital Management Limited and Member of Shariah Supervisory Committee of Standard Bank Limited and left his mark on different policy aspects of the Bank since long. As the only son of Mr. Kazi Akram Uddin Ahmed, honorable Chairman of the Bank & International Director of Lions Clubs International, Mr. Kazi Khurram Ahmed also embraced Lionism at a very early stage of his life and has been involved in a host of humanitarian activities. Financial Information He has been involved in multifarious business activities for more than 17 years. Presently, he is the Director of Eastern Engineering Works Limited, Proprietor of Ahmed & Sons and Chairman & Managing Director of EMX Limited. He was also the Chairman of Standing Committee on International Affairs of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI). Mr. Ahmed has keen interest in global financial markets with particular focus on global foreign exchange and commodity markets. He has in-depth knowledge of the operational mechanics of commodity market, forex market and exchange- traded financial products. He is married with a son. Standard Bank Ltd Annual Report 2020 | 29
31. Introduction MD . ABUL HOSSAIN Director Corporate Governance Md. Abul Hossain has joined as Managing Director of Investment Corporation of Bangladesh (ICB) on 21 August, 2019. He started his career as a System Analyst/Senior Principal Officer in ICB on 19-02-1998 and served different position in the same organization. Before his joining he acted as Managing Director at Karmasangsthan Bank (KB), During his service life, he served different Banks and Financial Institutions. He served as Managing Director (Additional Charge) and Deputy Managing Director at Bangladesh Krishi Bank (BKB). In addition to that Md. Abul Hossain served as System Manager/Deputy General Manager and General manager at Investment Corporation of Bangladesh (ICB). He completed his B.Sc (Hon’s) and M.Sc degree in Statistics from Jahangirnagar University. He has over 30 years of diversified experience in investment banking, specialized and commercial banking, Islamic banking, Asset management and ICT works. He were always instilled by the changed and research oriented, dynamic management that focused innovations, creativity and organizational increased efficiency and effectiveness, resulted in higher value addition to the organizational, stakeholders and the society as well. Risk Governance During the long journey, he served 16 (sixteen) organizations with different capacities. He served as a chairman of 03 (three) organizations before of which two are the subsidiaries of ICB (ICB Asset Management Company Limited & ICB Securities Trading Company Limited) and the others is Aziz Pipes Limited. In addition to this, he served as a Director to a number of organizations like Islami Bank Bangladesh Limited, The Farmers Bank Limited (Now Padma Bank), Nitol Insurance Company Limited, AllTex Industries Limited, ICB Securities Trading Company Limited, Aramit Limited, Kay & Que (Bangladesh) Limited, Business Automation Limited, DNS Satcomm Limited and Upload Yourself Systems Limited. Management Retrospection He has been contributing his professional expertise as the Chairman of ICB Capital Management Ltd. Apart from that he is now serving as the Director of British American Tobacco Bangladesh Co. Ltd. (BATBC), GlaxoSmithKline Bangladesh Ltd. (GSK), National Tea Company Limited(NTC), Apex Tannery Limited, Apex Footwear Limited, United Power Generation & Distribution Company Limited (UPGDCL), Aramit Limited, The Peninsula Chittagong Limited, Ratanpur Steel Re-rolling Mills Limited (RSRM), Heidelberg Cement Bangladesh Limited. Stakeholders’ Information NAJMUL HUQ CHAUDHURY Independent Director Sustainability Ln. Najmul Huq Chaudhury MJF. son of Late Alhaj AminuI Huq Chaudhury comes of a very respectable Muslim Zaminder family of Chattogram, Nazir’s Family in North-Kattali. He obtained his graduation in Commerce (B.com) from St. Xaviers College of Calcutta. He undertook a number of training courses on Business Administration and Industrial Management. He attended number of seminars & symposium on Business Administration and Industrial Management in the country and abroad. Ln. Chaudhury played a vital role during the Liberation war in 1971 and after Liberation of Bangladesh, he joined as Managing Director of 2 (two) joint venture Companies viz. Van Ommeren Tank Terminal Bangladesh Ltd.(VOTT-B) & International Oil Mills Ltd. (IOM), North Patenga, Chattogram as a nominee of Foreign Shareholders (USA & Dutch). Financial Information At present he has been serving as • Honorary Chairman, Chittagong Lions Foundation & Lions Charitable Eye Hospital since 2009 • Resident Director & Advisor, SKM Jute Mills Limited, Sitakund, Chattogram, since 2004 • General Secretary, Anjumane Mufidul Islam, Chattogram, since 2013 • Governing Body Member of Latifa Siddiqi Degree College, Chattogram, since 2014, Latifa Siddiqi Girls’ High School, Chattogram, since 2014, Imdad Sitara Khan Lions Kidney Center, CLF Complex, Chattogram, since 2014 & Lions service complex, Chattogram, since 1990 • Vice Chairman & Member of Trustee Board, Lions Anowara Taher Physiotherapy Clinic CLF Complex, Chattogram, since 2009 • EC Member, Chattogram Rifles Club, since 2008 • Permanent Member of Chattogram Club Ltd. since 1993 and Donor Member of Kattali Nurul Huq Chy High School Chattogram, since 1985. • Ex-Administrator, Bangladesh Tank Terminal Limited, Patenga, Chattogram, (1975 & 1976) 30 | Standard Bank Ltd Annual Report 2020
32. Introduction MD . NAZMUS SALEHIN Independent Director Corporate Governance Mr. Md. Nazmus Salehin, a top notch public sector banker of the country, who has been active in banking service for the last 39 years, has joined in Standard Bank Limited as Deputy Managing Director. Because of his extra ordinary services and distinctive contributions to the bank he was promoted to Additional Managing Director. He was the honorable Managing Director of Standard Bank Limited. Risk Governance Mr. Salehin started his career with Sonali Bank in 1979 as a Probationary Officer after receiving his MSc in Physics from Dhaka University. He held various Senior and Top Management Executive Positions in many high profile branches, Zonal Offices and Head Offices of the 3 (three) major Nationalized Commercial Banks i.e. Sonali, Agrani and Janata Bank. Because of his outstanding performance and distinctive competence in banking career, he became the Deputy Managing Director of Janata Bank. Prior to this he was the General Manager of Sonali and Agrani Bank respectively. He participated in many training programs on different areas of banking in different institutions both at home and abroad. He is actively associated with many sociocultural organizations and traveled many countries on personal and professional trips. Mr. Salehin hailed from Khoksha Upazila of Kushtia, bears an amiable and pleasant personality and blessed with one daughter Dr. Dilshad Afroze and one son Musfeq-usSalehin a BBA graduate from DU now serving in Bangabandhu Medical University & settled in Canada respectively. Management Retrospection KHONDOKER RASHED MAQSOOD Managing Director & CEO Stakeholders’ Information Mr. Khondoker Rashed Maqsood, a prominent banker with 29 years of proven experience in banking both in Bangladesh and abroad, has been appointed as Managing Director & CEO of Standard Bank Limited. A prudent banker by virtue of possessing diverse knowledge, deep insight into the financial sector, Mr. Rashed completed his MBA in Finance from IBA of University of Dhaka and started his career with AMERICAN EXPRESS BANK as a Management Trainee in 1992. Prior joining SBL, he was the Managing Director of NRBC Bank Limited and also worked as the Managing Director & Citi Country Officer of Citibank N. A. Bangladesh. Sustainability Throughout his illustrious banking career, Mr. Rashed has held senior management positions in different capacities in Corporate Banking Group and Financial Institutions Group Head at Citibank N. A. For his charismatic leadership and quality, he became the Director & Head of Global Transaction of the same bank in Bangladesh. Then he became Managing Director of Citibank N. A. Jakarta office, Indonesia. In 2011, Mr Rashed had been appointed as Managing Director & Citi Country Officer of the Citibank, Bangladesh. He was also an Advisor to the Board of Directors of MIDAS Finance Ltd., Dhaka, Bangladesh. Standard Bank Ltd Annual Report 2020 Financial Information His imaginative sense, all round knowledge, inspiring leadership and innovative ideas led him to continuous and sustainable growth in every organizations he worked for. Mr. Rashed passed SSC from Saint Joseph High School, Dhaka in 1983 and HSC from Notre Dame College in 1985. Then he completed his B.Com from Dhaka University. During his long career, Mr. Rashed attended innumerable seminars, workshops and training programs both at home and abroad. Mr. Rashed is happily married and blessed with two daughters. | 31
33. Introduction SPONSORS OF THE BANK Corporate Governance Ln . Kazi Akram Uddin Ahmed Sponsor & founder Chairman Harun Rashid Chowdhury Sponsor Late Al-haj Md. Nurul Haque Sowdagar Sponsor Risk Governance Kamal Mostafa Chowdhury Md. Monzurul Alam Ferdous Ali Khan Sponsor Sponsor Management Retrospection Mohammad Nurul Islam S.A.M. Hossain Harun-Or- Rashid Sponsor Sponsor Sponsor Late Nani Gopal Saha Mohammed Abdul Aziz Late Mahabub Uddin Molla Sponsor Sponsor Sponsor Al-haj Mohammad Ayub Al-haj Mohammed Shamsul Alam Sponsor Farzana Yousuf Sponsor Ferozur Rahman Late Abdul Ahad Sponsor & Founder Vice Chairman Stakeholders’ Information Sustainability Financial Information Sponsor 32 | Standard Bank Ltd Annual Report 2020 Sponsor Sponsor
34. Introduction COMMITTEES OF THE BOARD OF DIRECTORS RISK MANAGEMENT COMMITTEE Corporate Governance Mr . Mohammed Abdul Aziz Mr. Ferdous Ali Khan Member Member Mr. Md. Nazmus Salehin Member Mr. Md. Ali Reza Member Secretary Risk Governance Mr. S.A.M. Hossain Member Management Retrospection Mr. Kazi Akram Uddin Ahmed Chairman SHARIAH SUPERVISORY COMMITTEE Stakeholders’ Information Janab Kazi Khurram Ahmed Member Financial Information Mr. Kazi Akram Uddin Ahmed Chairman Sustainability Janab Hafiz Kazi Muhammad Ibrahim Member Janab Dr. Muhammad Saifullah Mr. Md. Ali Reza Member Member Secretary Standard Bank Ltd Annual Report 2020 | 33
35. Introduction EXECUTIVE COMMITTEE Corporate Governance Mr . Ashok Kumar Saha Member Mr. Ferozur Rahman Member Mr. Mohammed Abdul Aziz Member Mr. Md. Zahedul Hoque Member Mr. Md. Ali Reza Member Secretary Risk Governance Mr. Kamal Mostafa Chowdhury Member Management Retrospection Mr. S.A.M. Hossain Chairman AUDIT COMMITTEE Stakeholders’ Information Sustainability Financial Information Mr. Md. Nazmus Salehin Chairman 34 | Standard Bank Ltd Annual Report 2020 Al-haj Mohammed Shamsul Alam Member Mr. Ferdous Ali Khan Member Mr. Najmul Huq Chaudhury Member Mr. Md. Ali Reza Member Secretary Mr. Kazi Khurram Ahmed Member
36. Name Corporate Governance SL Introduction MANAGEMENT COMMITTEE Designation Additional Managing Director , CRO & CAMLCO 3 Mr. Mohammad Rafiqul Islam Deputy Managing Director & COO 4 Mr. Md. Mohon Miah Coordinator, Islami Banking Conversion Project 5 Ms. Haider Nurun Naher SEVP & Coordinator, Investment Risk Management 6 Ms. Alkona K. Choudhuri SEVP & Head of HRD 7 Mr. Bidyut Kumar Das EVP & Head of IAD 8 Mr. Sufi Tofail Ahmed EVP & CITO 9 Mr. Md. Tariqul Islam EVP & Head of SAMD 10 Mr. Syed Murtaza Hassan EVP & Head of Corporate Business Division 11 Mr. Md. Bahar Mahmud EVP & Head of Investment Risk Management 12 Mr. Mohammed Tarekuzzaman EVP & Regional Manager, Chattogram 13 Mr. Md. Ali Reza, FCMA, CIPA SVP & CFO, Head of FAD & Acting Company Secretary 14 Mr. Mesbah Ul Alam SVP & Head of ICCD (Acting) 15 Mr. A.T.M. Jamal Uddin SVP & Head of SME 16 Mr. Sk. Tareq Nawaz VP & Head of Legal 17 Mr. Mominul Abedin VP & Head of AML & CFT 18 Mr. Shah Rahat Uddin Ahmed VP & Head of Treasury 19 Major Md. Saiful Islam (Retd.) Head of General Services Division Standard Bank Ltd Annual Report 2020 Financial Information Mr. Md. Touhidul Alam Khan, FCMA Sustainability 2 Stakeholders’ Information Managing Director & CEO Management Retrospection Mr. Khondoker Rashed Maqsood Risk Governance 1 | 35
37. Introduction MANAGEMENT TEAM Vice President Managing Director & CEO Mr. Khondoker Rashed Maqsood Mr. Md. Rafiqul Islam Corporate Governance Mr. Golam Rahman Additional Managing Director Mr. Md. Touhidul Alam Khan, FCMA Deputy Managing Director Mr. Mohammad Rafiqul Islam Mr. Md. Shafiqul Hassan Mr. Tapas Kumar Mandal Mr. Md. Moyeedul Islam Mr. M. S. Shahriar Mr. Shah Rahat Uddin Ahmed Mr. Ashek Abedin Mr. Md. Nayeem Bhuiya Risk Governance Coordinator-IBCP Mr. Md. Mohon Miah Sr. Executive Vice President Alkona K. Choudhuri Ms. Haider Nurun Naher Mr. Syed Mosnoon Ali Mr. Md. Rezaul Hoque Mr. Md. Zahidul Hassan Mr. Munir Hossain Ms. Rubina Khan Ms. Rebeka Sultana Mr. Md. Abu Hena Nazim Uddin Management Retrospection Mr. Muhammad Golam Mustafa Executive Vice President Mr. Md. Suruj Ali Mr. Sk. Sirajul Kabir Mr. Mohammad Ali Mr. Md. Forhad Hossain Mr. Md. Mahbubur Razzak Mr. Bidyut Kumar Das Mr. S. M. Nazrul Islam Mr. Sufi Tofail Ahamed Mr. Md. Farhad Hussain Mr. Md. Tariqul Islam Mr. Syed Murtaza Hassan Mr. Mohammed Tarekuzzaman Stakeholders’ Information Mr. Md. Ramiz Uddin Miah Mr. Md. Bahar Mahmud Sr. Vice President Mr. Muhammad Muzibur Rahman Mr. Md. Mahmudul Haque Mr. Mohammad Shohrab Hossain Mr. Mohammad Faisal Ms. Quamrun Nahar Hasmi Mr. A.K.M. Manjur Alam Mr. Md. Hamidul Haque Mr. Md. Miganur Rohman Sustainability Mr. Md. Ali Reza, FCMA, CIPA Mr. Mominul Abedin Mr. Md. Ibrahim Khalil Mr. Shabbir Ahmad Chowdhury Mr. Mohammad Mahmud Alam Mr. Shuvra Chakraborty Mr. Md. Iqbal Mr. Mohammed Azharul Islam Khan Mr. Ali Mohammad Nurul Huda Major Md. Saiful Islam (Retd.) Mr. Mohammad Iklas Uddin Mr. M.A. Goffer Daria Mr. Mesbah Ul Alam Mr. Sk. Tareq Nawaz Mr. A.T.M. Zamal Uddin General Manager (Cont.) Financial Information Mr. Nesar Ahmed Mridha 36 | Standard Bank Ltd Annual Report 2020
38. Senior Assistant Vice President Mr . Shahnur Md. Oleul Hassan Mr. Md. Khorshed Alam Mr. Mohammad Jahangir Alam Mr. Mrinal Kanti Sutradhar Ms. Sultana Jahan Mr. Md. Touhidul Huq Mr. Rafique Mahmud Ms. Farida Parvin Mr. Md. Saiduzzaman Chowdhury Mr. Abu Nayem Md. Ibrahim Mr. Mohammad Shafiqul Islam Mr. Parvez Mahfuz Mr. Khan Md. Zahurul Haque Mr. Sk. Mustafizul Islam Mr. Md. Abu Sayeed Mr. Sharif Zahirul Islam Mr. Md. Hasibul Hasan Mr. Md. Jaynul Abedin Mr. Nur Mohammad Rahat Hossain Mr. Mohammad Zakir Hossain Mr. Khandaker Amir Entezam Mr. Saiful Islam Manik Mr. Md. Habibullah Sayed Mr. Mir Md. Abbas Ali Mr. Shakh Anwar Hossain Mr. Md. Munir Hassan Mr. Pijush Kanti Dey Assistant Vice President Financial Information Standard Bank Ltd Annual Report 2020 Sustainability Mr. Joarder Elias Rahman Mr. Yakub Md. Shahjahan Mr. Md. Touhid Hossain Ms. Aliya Sultana Mr. Augustin Sardar Mr. Md. Golam Mostafa Bhuiyan Mr. Mohammed Idrich Mr. Bazal Ahmed Ms. Syeda Sanjida Parveen Mr. Mohammed Forman Elahi Mr. Mohammed Khurshed Alam Mr. Md. Mezbaul Kashem Mr. Muhammad Masud Meah Mr. Md. Shah Alam Khan Chowdhury Mr. Mohammad Rajib Ahsan Ms. Nur-Un-Nahar Begum Ms. Shahina Momtaj Mr. Md. Abdul Halim Mr. A K M Mahiuddin Alamgir Mr. Mohammed Shohid Ullah Stakeholders’ Information Mr. Kawsar Ahamad Management Retrospection Mr. Mohammad Amzad Hossain Fakir Risk Governance Mr. Md. Shahjalal Khan Mojlish Corporate Governance Mr. Aziz Ahmed Introduction Mr. Mir Mohammad Emrul Kayes Ms. Nargis Akter Mr. Sanjoy Kumar Datta Mr. Badiuzzaman Sharif Mr. Md. Wahidul Huda Ms. Papia Chameli Ms. Sabitri Rani Karmaker Mr. Kayum Mahmud Mr. Mohammad Shafiullah Mr. Abu Hena Mostofa Kamal Ms. Nila Dey Mr. Golam Mostafa Mr. Pintu Kumar Saha Ms. Taoheeda Islam Mr. Md. Masum Billah Mr. Md. Mostafa Kamal Mr. Md. Saiful Hasan Mr. Md Emdadul Haque Mr. Md. Arifur Rahman Ms. Sania Noor Suchi Mr. Hasan Mahmud Mr. Molla Mahbub Al Hossain Mr. Mohammad Ataur Rahman Mr. Sayed Md. Abdullahel Quafi Mr. Md. Mahmudur Rahman Mr. Ratan Kumar Saha Ms. Aklima Begum Hera Mr. Ashraf Uddin Ahmed Mr. Md. Billal Hossain Mr. Md. Iftekharul Alam Mr. Md. Abdul Khaleque Mr. S.M. Zahid Hossain Mr. Syed Waliduzzaman Mr. Margub Ahmed Mr. Nurul Murshid Rajee Mr. Mohammed Anisur Rahman Mrs. Mahmuda Begum Mr. Khandoker Didarul Islam Mr. Md. Shahadat Hossain Mr. Md. Shafiqul Islam Mr.Md. Kazi Shahed Ali Mr. Monjur Morshed Khan Mr. Mohammed Anisuzzaman Chowdury Mr. Sheikh Mohammed Mohsin Mr. Syed Abdullah Al Mamun Mr. Mohammad Humayun Kabir Mr. Fachihul Alam Chowdhury Mr. Kazi Rayhanul Haque Mr. Md. Kamal Uddin Mr. Abul Bashar Md. Atikul Islam Mr. Mohammed Showkat Osman Haidor Mr. Md. Ramzan Ali Mr. Md. Mafidul Islam Mr. A T M Khairul Islam Ms. Elora Abedin Mr. Mohammad Mafujur Rahman Bhuiyan Mr. Mohammad Badruzzaman Mr. Mohammed Faisal Abedin Mr. Farhadur Reza Mr. Mollah Asaduzzaman Mr. Md. Maksodur Rahman ACA Mr. K.M. Rahmatullah Mr. Sohel Ahmed Rahmani | 37
39. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 38
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41. m ¤§vwbZ †kqvi‡nvìvie„›`, Introduction †`‡ki mKj ¯Í‡ii RbmvaviY‡K AvaywbK e¨vswKs myweav cÖ`vb Ges ¯^”QZv, Revew`wnZv I AvšÍte¨vsK cÖwZ‡hvwMZvi gva¨‡g DbœZZi-MÖvnK †mev cÖ`vb I GKwU kw³kvjx K‡c©v‡iU my-kvmb cÖwZôvi j¶¨ wb‡q 1999 mv‡j Avgv‡`i e¨vs‡Ki hvÎv ïiæ n‡qwQj| Avgv‡`i mwµq Kg©ZrciZvi gva¨‡g, `ªæZ cwieZ©bkxj Ges cÖwZK‚j A_©‰bwZK I mvgvwRK cwiw¯’wZi g‡a¨I Avgv‡`i e¨vs‡Ki m‡šÍvlRbK cÖe„w×i aviv Ae¨vnZ i‡q‡Q, hvi Rb¨ Avgiv gnvb m„wóKZ©vi Kv‡Q ïKwiqv Av`vq KiwQ| Corporate Governance Risk Governance 2020 mv‡j †KvwfW-19 gnvgvix‡Z eû †jv‡Ki cÖvYnvwb N‡U‡Q Ges GiB weiƒc cÖfv‡e wek^ A_©bxwZ wech©¯Í n‡q c‡o‡Q, A‡bK gvbyl Zv‡`i RxweKv nvwi‡q‡Q, eû e¨emv cÖwZôvb †`Dwjqv †NvwlZ n‡q‡Q| †KvwfW-19 gnvgvix AmsL¨ gvbyl†K `vwi`ª mxgvi wb‡P wb‡q †M‡Q| Avgiv Avkv ivwL Rbm‡PZbZv, e¨vcK Vaccination I Ab¨vb¨ cÖwZ‡ivag~jK e¨e¯’v MÖn‡Yi d‡j GB gnvgvix `ªæZ wbqš¿‡b P‡j Avm‡e Ges A_©bxwZi PvKv cybivq mPj n‡e| Management Retrospection wek¦e¨vs‡Ki c~e©vfvm Abymv‡i, 2021 mv‡j wek¦ A_©bxwZ cybivq Ny‡i `vov‡e 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42. Corporate Governance ¶z`ª I gvSvwi D‡`¨v³viv A_©bxwZi cÖvYkw³| Zv‡`i‡K A_©bxwZi g~j‡mªv‡Z wb‡q Avmvi j‡¶¨ cÖavb Kvh©vjq I kvLv ch©v‡q GmGgB I K…wl FY bv‡g ¯^Zš¿ wefv‡Mi gva¨‡g ¶z`ª e¨emvqx I K…lK‡`i cÖwZwbqZ †mev cÖ`vb Kiv n‡”Q| Avgiv wek¦vm Kwi, †`k I RvwZi Dbœq‡bi Rb¨ GmGgB I K…wl Lv‡Zi Dbœqb Ab¯^xKvh©| ZvB Avgv‡`i cÖwZwU kvLv‡K GmGgB I K„wlLv‡Z A_©vq‡bi Rb¨ j¶¨gvÎv wba©viY K‡i w`‡qwQ, hv‡Z K‡i D³ Lv‡Z Avgiv Av‡iv D‡jøL‡hvM¨ Ae`vb ivL‡Z m¶g nB| K…lK‡`i‡K e¨vswKs P¨v‡b‡ji AvIZvq Avbvi j‡¶¨ Avgv‡`i e¨vsK MÖvgxY, GmGgB /K…wl kvLv‡Z 10 UvKv K‡i Rgv MÖn‡Yi gva¨‡g wnmve †Lvjvi wbqg Pvjy Av‡Q| Risk Governance Management Retrospection †`‡ki A_©bxwZi g~j PvwjKv kw³ n‡”Q ˆe‡`wkK gy`ªv| ZvB Avgv‡`i †`‡ki ˆe‡`wkK gy`ªv fvÛvi mg„×kvjx Kivi j‡¶¨ †iwgU¨vÝ Avbq‡bi cvkvcvwk Avg`vwb/ißvwb-LvZ‡K AMÖvwaKvi w`‡qwQ Ges Uª¨vwWkbvj AvB‡Ug †hgb; ˆZwi †cvkvK, Pvgov, Pv, KuvPv cvU I cvURvZ `ªe¨ Ges bb-Uª¨vwWkbvj AvB‡Ug †hgb: UvBjm, evBmvB‡Kj, wPswo, n¯Íwkí, cvb-mycvwi, awbqv exR, †evZj, KuvPv kvKmewR I KuvKovmn ißvwb Lv‡Z A_©vqb Ae¨vnZ †i‡LwQ| RvZxq A_©bxwZ‡Z AMÖYx f~wgKv cvj‡bi cvkvcvwk miKvix †KvlvMv‡i cÖwZ eQi wecyj cwigvY U¨v· cÖ`vb K‡i AvmwQ, hvi ¯^xK…wZ¯^iƒc MYcÖRvZš¿x evsjv‡`k miKv‡ii RvZxq ivR¯^ †evW© Avf¨šÍixY m¤ú` wefvM A_©-gš¿Yvjq ÒRvZxq U¨v·KvW© bxwZgvjv, 2010Ó Abyhvqx 2013-2014 Ki-e‡l© †Kv¤úvwb ch©v‡q 8g m‡e©v”P Avq Ki`vZv wn‡m‡e ÷¨vÛvW© e¨vsK wjwg‡UW †K U¨v· KvW© m¤§vbbv w`‡q‡Q| AbjvBb e¨vswKs mvwf©m cÖeZ©‡bi ci ciB e¨vsK-Gi †WweU I †µwWU Kv‡W©i gva¨‡g †mevi gvb‡K AvaywbKvqb Kiv n‡q‡Q| B‡Zvg‡a¨ AÎ e¨vs‡Ki †µwWU KvW© †`k-we‡`‡ki wewfbœ ¯’v‡b e¨envi Kiv n‡”Q| †mR‡b¨ Ab¨vb¨ e¨vsK I ms¯’vi m‡½ Pzw³i gva¨‡g Avgiv GKwU kw³kvjx †bUIqvK© M‡o Zz‡jwQ Ges Avgv‡`i KvW©‡nvìviMY hv‡Z wbijm †mev †c‡Z cv‡ib †m j‡¶¨ Avgiv AZ¨vaywbK hš¿cvwZ w`‡q KvW© I AvBwU wefvM-Øq‡K ¯^qswµq K‡iwQ| Avgiv B‡Zvg‡a¨ MÖv‡g I kn‡i †hŠ_fv‡e GwUGg ey_ Ly‡j wWwRUvj evsjv‡`‡ki AMÖhvÎv ïiæ K‡iwQ| ch©vqµ‡g GwUGg Gi myweav Avgiv me©¯Í‡ii MÖvn‡Ki Kv‡Q mnRjf¨ Ki‡Z PvB| mviv‡`‡k Avgv‡`i 120wU GwUGg ey_ †Lvjv n‡q‡Q| Avcbviv †R‡b Lywk n‡eb MZ 2015 mv‡j ÷¨vÛvW© e¨vsK b¨vkbvj †c‡g›U myBP wm‡÷‡gi mv‡_ hy³ n‡q‡Q, hvi d‡j wewfbœ e¨vs‡Ki K¨vk †bUIqv‡K©i AvIZvq Avgv‡`i m¤§vwbZ MÖvnKiv cÖvq 10,961 wUi †ewk GwUGg ey_ e¨env‡ii my‡hvM cv‡”Qb| b¨vkbvj †c‡g›U myBP Sustainability Financial Information Standard Bank Ltd Annual Report 2020 Stakeholders’ Information Abvevmx evsjv‡`wk‡`i KóvwR©Z ˆe‡`wkK gy`ªv `ªæZ †`‡k Avbq‡bi j‡¶¨ AvšÍR©vwZK L¨vwZ m¤úbœ cÖwZôvb gvwb MÖvg mn wewfbœ G·‡PÄ nvD‡Ri mv‡_ Pzw³ m¤úv`b Kiv n‡q‡Q| hy³iv‡R¨i jÛ‡b ÷¨vÛvW© G·‡PÄ (BD‡K) wjwg‡UW Gi cvkvcvwk we‡`‡k Ae¯’vbiZ evsjv‡`wk fvB‡evb‡`i †`‡ki cÖwZ †h ggZ¡‡eva I †`k‡cÖg j¶¨ K‡iwQ, Zv‡Z Avgiv AbycÖvwYZ n‡q 2013 m‡b Avgiv e¨vs‡Ki kZ fvM gvwjKvbvq hy³iv‡óªi wbDBq‡K©i R¨vKmb nvBUmG ÷¨vÛvW© †Kv¤úvwb BDGmG BbK‡c©v‡ikb Ò÷¨vÛvW© G·‡cÖmÓ †Lvjvi ci wbDBq‡K©i R¨vgvBKv, I‡Rvb-cvK©, eªæKwjb, †eªvb·, jm G‡Äjm I ev‡d‡jv-G †gvU 7 wU kvLv Ly‡jwQ| ch©vqµ‡g ev½vjx Aay¨wlZ we‡k¦i Ab¨vb¨ ¯’v‡b †hgb- †¯úb, `w¶Y †Kvwiqv, ga¨cÖvP¨, KvbvWv, BZvwj, gvj‡qwkqv I wm½vcy‡i Av‡iv G·‡PÄ nvDR †Lvjv n‡e| we‡`kMvgx I cÖZ¨vMZ‡`i †mev m¤úÖmvi‡Yi j‡¶¨ nRiZ kvnRvjvj(it) AvšÍR©vwZK wegvb e›`i, XvKv‡Z `yBwU Ôd‡ib Kv‡iwÝ G·‡PÄÕ ey_ †Lvjv n‡q‡Q| weMZ eQ‡i d‡ib †iwgU¨vÝ Lv‡Z Avgiv D‡jøL‡hvM¨ cwigv‡Y e¨emv Avni‡Y mg_© n‡qwQ| cvkvcvwk evj¨Kvj †_‡K m‡qi Af¨vm M‡o †Zvjvi j‡¶¨ QvÎ/QvÎx‡`i ¯‹zj e¨vswKs, wk¶v w¯‹g Kvh©µg cwiPvjbvi j‡¶¨ Avgv‡`i mKj kvLvq ¯‹zj e¨vswKs Kvh©µg Pvjy K‡iwQ| Rb‡mevi wel‡q AMÖvwaKvi w`‡q wewfbœ ms¯’vi AvevwmK/ evwYwR¨K/ wkí Lv‡Zi wewfbœ BDwUwjwU wejmg~n msMÖn K‡i AvmwQ| ag©xq g~j¨‡ev‡ai cÖwZ kÖ×v cÖ`k©b K‡i miKvix I †emiKvwi m¤§vwbZ n¾¡ Mg‡b”Qy‡`i n‡¾¡i wd mg~n Rgv MÖnY K‡i _vwK| evsjv‡`k †ivW Uªv݇cvU© A_wiwU (weAviwUG) hvbevnb bevqb, †iwR‡÷ªkb BZ¨vw` wd mg~n I Avgiv Rgv wb‡q _vwK| †`‡ki e¨emv evwY‡R¨ MwZkxjZv Avbq‡bi j‡¶¨ ÿz`ª I gvSvwi Lv‡Z wewb‡qv‡Mi cwigvY e„w× Kiv n‡q‡Q| †`‡ki K…wl, K…lK Z_v Avcvgi `wi`ª Rbmvavi‡Yi Rxeb gvb Dbœq‡bi j‡¶¨ K…wl Lv‡Z wewb‡qv‡Mi cwigvY e„w× Kiv n‡q‡Q| G ch©šÍ K…wl I K…wlwfwËK wkíLv‡Z wewb‡qvMK…Z F‡Yi cwigvY `uvwo‡q‡Q 1,173.64 †KvwU UvKv| weMZ 2020 m‡b GmGgB Lv‡Z wewb‡qvMK…Z F‡Yi cwigvb wQj 3,250.54 †KvwU UvKv hv 2019 mv‡j wQj 3,212†KvwU UvKv| Introduction †gUv‡bvi j‡¶¨ e¨vsK Zvi cÖvwZôvwbK KvVv‡gv hy‡Mvc‡hvMx I AvaywbKvqb K‡i‡Q| Avgiv `„pfv‡e wek¦vm Kwi, G e¨vsKwU n‡e MÖvnK †mevq wb‡ew`Z Kg©Zrci, Kg©m~Px‡Z cÖMwZkxj, †jb‡`‡b ¯^”Q, wePvi we‡ePbvq b¨vqcivqY, gb‡b fwel¨rgyLx, `„wófw½‡Z wbi‡c¶| Avgv‡`i `~i`k©x cwiKíbv mg~n, K‡c©v‡iU mykvmb, AvaywbK e¨e¯’vcbv, DbœZZi cÖhyw³i e¨envi, AwaKZi gybvdv AR©b Ges my`„p Avw_©K wfwË I e¨vs‡Ki D”P mybvg m„wói j‡¶¨ cÖYxZ| e¨vs‡Ki cwiPvjbv cl©‡`i g~j¨evb w`K wb‡`©kbv I ZË¡veav‡b Ges Avgv‡`i `¶ Rbkw³i mvwe©K mn‡hvwMZvq Avgiv ¯^”Q I `vwqZ¡kxj e¨vsK e¨e¯’vcbvq A½xKvive×| ÷¨vÛvW© e¨vsK wjwg‡UW we`¨gvb g~j¨‡eva I Pjgvb avivi mv‡_ Zvj †i‡L Ges e„nr Avw_©K cÖwZôv‡bi mvgvwRK I cwi‡e‡ki cÖwZ `vwqZ¡ I ¸iæ‡Z¡i cÖwZ m¤§vb †i‡L evwYwR¨K Kvh©µg cwiPvjbv K‡i _v‡K| MÖxbe¨vswKs Gi w`‡K e¨vsK `ªæZ AMÖmi n‡”Q| eZ©gv‡b e¨v‡mj-3 Pvjy nIqvq cÖ‡qvRbxq g~ja‡bi ch©vßZv wbiƒcY c~e©K ch©vß g~jab wfwË msi¶‡Yi j‡¶¨ me©‡gvU 1100 †KvwU UvKvi mveAwW©‡b‡UW eÛ Bmy¨ Kiv n‡q‡Q, hvi eZ©gvb w¯’wZ 855 †KvwU UvKv| GQvovI 500 †KvwU UvKvi gy`vivev cv‡c©Pyqvj eÛ Bmy¨ cÖwµqvaxb| hvi d‡j e¨vsKwU GKwU kw³kvjx g~jab wfwËi Dci `uvov‡e, ‡m †ÿ‡Î e¨vs‡Ki g~jab ch©vßZvi nvi `vov‡e 15 kZvs‡ki ‡ewk| †`‡ki cuywR evRvi‡K Av‡iv kw³kvjxI MwZkxj Kivi wbwg‡Ë GmweGj K¨vwcUvj g¨v‡bR‡g›U- Gi gva¨‡g 430 †KvwU UvKv wewb‡qvM Kiv n‡q‡Q Ges ÿz`ª wewb‡qvMKvix‡`i A_© mieivn evov‡bvi j‡¶¨ ÷¨vÛvW© e¨vsK wmwKDwiwUR wjt Gi gva¨‡g cÖvq 110 †KvwU UvKv wewb‡qvM Kiv n‡q‡Q| | 41
43. Introduction wm ‡÷‡gi AvIZvq MÖvnKMY †WweU Kv‡W©i gva¨‡g 60,474wU gv‡P©›U AvDU†jU-G †KbvKvUv Ki‡Q| GQvov Avgiv MÖvnK‡`i myweav‡_© B-Kgvm© Pvjy Kivi D‡`¨vM wb‡qwQ| Corporate Governance e¨vswKs Lv‡Z Ab¨Zg n‡jv Gm.Gg.Gm e¨vswKs ev A¨vjvU© e¨vswKs myweav| †mevi gvb AvaywbKvq‡b Avgiv cÖv_wgKfv‡e m¤§vwbZ MÖvnK‡`i GmGgGm e¨vswKs myweav cÖ`vb KiwQ, hv‡Z †gvevBj †g‡m‡Ri gva¨‡g MÖvnK‡`i wnmv‡ei †jb‡`b AewnZ Kiv hvq, 24 NÈv MÖvnK Zvi wnmv‡ei w¯’wZ Rvb‡Z cv‡ib| g~jZ MÖvgxY Rbc‡` emevm-Kvix †jvK‡`i‡K e¨vswKs †mev †`Iqvi gvb‡mB Avgv‡`i e¨vsK †gvevBj e¨vswKs Kvh©µg Pvjyi D‡`¨vM wb‡q‡Q| G †mevi AvIZvq †gvevBj †dv‡bi gva¨‡g A_© †cÖiY- Rgv I D‡Ëvjb†eZb fvZvw` cÖ`vb- BDwUwjwU wej cwi‡kva BZ¨vw` Kiv hv‡”Q| †fŠ‡MvwjKfv‡e †`‡ki `yM©g, cvnvwo, cÖZ¨šÍ I Kg NbemwZ GjvKv †hLv‡b e¨vswKs myweav GLbI †cuŠQvqwb IB me GjvKvq Qwo‡q, wQwU‡q _vKv `wi`ª gvbyl‡K mxwgZ AvKv‡i e¨vswKs †mev cÖ`v‡bi j¶¨ wb‡q G‡R‡›Ui gva¨‡g mvkÖqx e¨‡q mxwgZ AvKv‡i Avw_©K †mev †`Iqvi j‡¶¨ G‡R›U e¨vswKs Pvjy Kiv n‡q‡Q| G‡R›U e¨vswKs Gi gva¨‡g †mme cÖZ¨šÍ MÖvg ev GjvKvi evwm›`viv wbR cvov ev gnjøvq Aew¯’Z e¨vs‡Ki wbhy³ G‡R‡›Ui Kv‡Q wM‡q ¯^í e¨‡q †QvU A‡¼i AvgvbZ Rgv, F‡Yi Z_¨ msMÖn, we‡`k †_‡K Avmv †iwgU¨vÝ msMÖn, †QvU AvKv‡ii FY weZiY I F‡Yi wKw¯Í Av`vq, we`y¨r I Ab¨vb¨ BDwUwjwU wej cwi‡kva Ki‡Q| Risk Governance Management Retrospection ˆe‡`wkK e¨emv evwYR¨ cwiPvjbvi j‡¶¨ eZ©gv‡b 19wU A_ivBR wWjvi (GwW) kvLvi Kvh©µg Ae¨vnZ Av‡Q Ges †`‡ki Af¨šÍi †_‡K we‡`wk gy`ªvi MÖvnK‡`i †`vo †Mvovq e¨vswKs myweav †cuŠ‡Q w`‡Z Ad-†kvi e¨vswKs BDwbU Pvjy Kiv n‡q‡Q| Stakeholders’ Information G mKj Kvh©µg Ges KvwiMwi DrKl©Zv I cÖwZ‡hvwMZvi cUf~wg‡Z Avgv‡`i e¨vswKs †mevi gvb AwaKZi DbœZZi n‡e, BbkvAvjøvn| e¨vs‡Ki cÖZ¨vkv, AvaywbKxKi‡Yi GB cÖwµqv DbœZ MÖvnK †mev cÖ`v‡bi j¶¨ AR©‡b mnvqK n‡e Ges †`‡k we‡`‡k Ae¯’vbiZ mKj MÖvnK‡K ¯^í mg‡q Kvw•¶Z †mev cÖ`v‡b m¶g n‡e| Sustainability wek¦e¨vcx K‡ivbv gnvgvix, Avw_©K g›`v Ges cÖwZ‡hvwMZvg~jK e¨vswKs cwi‡e‡ki †cÖ¶vc‡U 2020 mv‡j Avgv‡`i e¨vs‡Ki AvgvbZ, FY I AwMÖg cÖ`vb Ges ˆe‡`wkK evwY‡R¨i cÖe„w×i †¶‡Î wKQzUv ¯’weiZv jÿ¨ Kiv †M‡Q| 2019 I 2020 mv‡j AwR©Z e¨emvi Zzjbvg~jK cwimsL¨vb wb¤œiƒc: 2020 Financial Information e¨vs‡Ki AvgvbZ 16,963 †KvwU UvKv 17,547 †KvwU UvKv FY I AwMÖg 16,240 †KvwU UvKv 16,063 †KvwU UvKv 9,283 †KvwU UvKv 13,173 †KvwU UvKv 311.51 †KvwU UvKv 331.13 †KvwU UvKv 1.08 UvKv 1.57 UvKv 1005.99 †KvwU UvKv 958.08 †KvwU UvKv ‰e‡`wkK evwYR¨ e¨vs‡Ki cwiPvjb gybvdv †kqvi cÖwZ Avq cwi‡kvwaZ g~jab 42 | 2019 Standard Bank Ltd Annual Report 2020 Avcbviv †R‡b Av‡iv Lywk n‡eb, Avgv‡`i `xN©w`‡bi jvwjZ ¯^cœ e¨vs‡Ki GKwU wbR¯^ AvaywbK K‡c©v‡iU Awdm M‡o †Zvjv| ZviB avivevwnKZvq ivRavbxi AwfRvZ GjvKv ¸jkv‡b cÖvq GK weNv RvqMv µq Kiv n‡q‡Q| eZ©gv‡b feb wbg©v‡Yi KvR cy‡iv`‡g Pj‡Q| BbkvAvjøvn, Lye Aí mg‡qi g‡a¨B AvaywbK ¯’vcbvi bv›`wbK wbg©vY‰kjxi K‡c©v‡iU Awdm wbg©v‡Yi KvR m¤úbœ n‡e| 2020 mv‡j Avgiv 5 wU kvLv †Lvjvi AbygwZ †c‡jI K‡ivbv fvBiv‡mi gnvgvix I cÖwZK~j A_©‰bwZK cwiw¯’wZi Kvi‡Y bZzb ‡Kvb kvLv †Lvjv m¤¢e nqwb| Z‡e fwel¨‡Z bZzb kvLv †Lvjvi cÖ‡Póv Ae¨vnZ _vK‡e| PjwZ eQi e¨vs‡Ki GB m¤úÖmviY Kvh©µg envj ivLvi j‡¶¨ Avgiv AwfÁ Kg©KZ©v-Kg©Pvix wb‡qvM w`‡q †gvU †jvKej 2,289 R‡b DbœxZ K‡iwQ, hv †`‡ki †eKvi mgm¨v mgvavb I A_©‰bwZK Dbœq‡b e¨vcKfv‡e Ae`vb ivL‡Z m¶g n‡q‡Q| m¤§vwbZ †kqvi‡nvìviMY, Avgv‡`i A½xKvi GB e¨vsKwU‡K GKwU AvaywbK cÖhyw³wbf©i, Av`k©, cÖMwZkxj I AvšÍR©vwZK gv‡bi BmjvwgK kwiqvn wfwËK e¨vsK wn‡m‡e M‡o †Zvjv| †`‡ki ¯^bvgab¨ I AvšÍR©vwZK L¨vwZ m¤úbœ ÔwnKgv mdU&Iq¨viÕ Gi AvIZvq Avgiv GLb wi‡qj UvBg AbjvBb Gi gva¨‡g e¨vswKs myweav w`w”Q| eZ©gv‡b e¨vs‡Ki mKj kvLvq AbjvBb Kvh©µg Pvjy i‡q‡Q| GLb Avgv‡`i GK kvLvi MÖvnK Ab¨ †h‡Kv‡bv kvLv †_‡K Zvi e¨vswKs †jb‡`b wbwe©‡Nœ m¤úbœ Ki‡Z cvi‡Q| MÖvnK‡`i e¨vswKs Kvh©µg wbiwew”Qbœfv‡e †jb‡`b wbwðZ Kivi j‡¶¨ wbR¯^ cvIqvi mvcøvB myweav m¤úbœ AvaywbK ÔWvUv †m›UviÕ ¯’vcb Kiv n‡q‡Q, hv AwaK ¶gZv m¤úbœ | †h †Kvb ai‡bi `yN©Ubv †gvKvwejv K‡i wbiwew”Qbœfv‡e †jb‡`b wbwðZ Ki‡Z Avgiv XvKvi evB‡i ÔwWRv÷vi wiKfvixÕ ev ÔwWAviÕ Pvjy K‡iwQ| f~wgK¤ú, Av¸b ev Ab¨ †h †Kvb Kvi‡Y e¨vs‡Ki †jb‡`b evavMÖ¯’ n‡j ¯^qswµqfv‡e GB ÔwWAviÕ Pvjy n‡e| d‡j †h †Kvb `y‡h©v‡M MÖvn‡Ki e¨vswKs †jb‡`‡b †Kvb cÖfve co‡e bv| AbjvBb Gi †h †Kvb mgm¨v `ªæZ mgvav‡bi Rb¨ †h weR‡bm wUg MVb Kiv n‡qwQj Zv wbijmfv‡e KvR K‡i hv‡”Q, hv‡Z K‡i kvLv¸wji KvRKg© †K›`ªxqfv‡e ch©‡e¶Y Kiv hvq Ges AvBwU wm‡÷‡gi KvRK‡g©i c×wZMZ Z`viwK ¯^”Q nq| d‡j e¨vswKs KvRK‡g©i SuzwK A‡bKvs‡k n«vm †c‡q‡Q| AbjvBb Kvh©µg hv‡Z memgq wbf©yj I Av¯’vi mv‡_ cwiPvwjZ nq, Zv AvBwU AwWU AbywefvM me mgq ch©‡e¶Y I wbix¶Y Ki‡Q| e¨vs‡Ki Kvh©µ‡g ¯^”QZv I Revew`nxZv Avbqb, Awbqg I Rvj-RvwjqvwZ wPwýZKiY Ges Zv `~ixKi‡Yi j‡¶¨ GKwU `¶ Af¨šÍixY wbix¶v I cwicvjb wefvM Avgv‡`i i‡q‡Q| e¨e¯’vcbv KZ©…c¶ Ges AwfÁ I kw³kvjx AwWU KwgwUi ZË¡veav‡b cwiKíbv gvwdK D³ wefv‡Mi Kvh©µg cwiPvwjZ n‡”Q hv‡Z fyjåvwšÍ, µzwU wePz¨wZ, Rvj-RvwjqvwZ cwinvi Kiv hvq| `¶ gvbem¤ú` †UKmB cÖe„w×i Rb¨ Acwinvh©| G Rb¨ cÖ‡qvRb Kg©KZ©v I Kg©Pvix‡`i DbœZ `¶Zv, Ávb I Drcv`bkxjZv, G K_v g‡b †i‡L bZzb cÖwk¶Y cwiKíbv MÖnY Kiv n‡q‡Q Ges mg‡qi Pvwn`vi mv‡_ msMwZ †i‡L wewfbœ ai‡bi cÖwk¶Y Kg©m~Px MÖnY Kiv n‡q‡Q| G ai‡bi Kg©m~Pxi gva¨‡g e¨vsK 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45. Introduction MANAGING DIRECTOR & CEO’S ROUND UP Corporate Governance Risk Governance Management Retrospection Stakeholders’ Information As we look forward, we are committed to build a shared prosperity for our society to continue to meet the needs of future generation. The global economy and banking industry has entered into a new era, experiencing rapid change in terms of market dynamics. Sustainability Financial Information It does give me immense pleasure and privilege to welcome our Honorable Chairman, Directors, Respected Shareholders, Distinguished Guests from the media and invited Participants on this august occasion of the 22nd Annual General Meeting of Standard Bank Limited (SBL). I am truly delighted and feel proud to be able to present the performance report of our Bank before you for the second time as the Managing Director. You are all fully aware that the outgoing year 2020 has been fraught with many unanticipated challenges brought about by the nationwide ongoing Covid-19 pandemic, which our Bank has been able to tide over on the strength of collaborative efforts of the entire Standard Bank family including the Hon’ble Board of Directors, who continued to exert their unflinching efforts against all possible odds in order to further consolidate the Bank’s position stronger than ever before. Our endless hard work under the prudent guidance of our visionary Board of Directors finally paid off enabling us to pass the year 2020 as yet another year of prosperity and progress. Thus, at this auspicious moment, I enthusiastically take the opportunity to express my heartfelt gratitude and sincere thanks to our respected shareholders, customers and wellwishers for their continued support and cooperation throughout the year which has always been a great source of inspiration that has always helped us to achieve the steady growth and greater height of prosperity. Also, we express our cordial thanks to Bangladesh Bank and BSEC for their continuous support, co-operation and advice in our progress. 44 | Standard Bank Ltd Annual Report 2020
46. of lockdown , global trade started to pick up in June where China was a major contributor. In the second half of 2020 financial condition started to ease for advanced economies and for most emerging market and developing economies. This pandemic has increased inequality globally by pushing more people below poverty line mainly those who live on daily wage and are migrant workers. It is of immense pleasure that I have been able to present before you a brief sketch of some of the remarkable successes and distinctive achievements in different fields attained by Standard Bank Limited over its widespread activities accomplished in the year 2020. It is my perception that your unstinted and unwavering support and inspiration have provided us strength to face those challenges successfully which are gradually leading us to the highest peak of success and progress. It has been the Board’s and Management’s endeavor in developing Standard Bank Limited as a global institution. Standard Bank Limited (SBL) as a trusted partner in progress is financing trade, commerce and industry and also playing an active role in various socioeconomic developments. From the financial point of view, participating in social development activities may not be seen as commercially profitable or income generating, but from the development point of views, its impact on the country’s overall development is immeasurable. Despite facing COVID-19 pandemic induced challenges in all economic sectors, Bangladesh economy managed a 5.24% GDP growth in FY 2020 while growth rates in neighboring countries like India, Pakistan, and Sri-Lanka are expected to be negative in 2020. Being suffered from substantial production loss in large and medium scale manufacturing output, industry sector growth rate sharply came down to 6.48% in FY 2020. The service sector impact was less severe than the industry sector which grew by 5.32% in FY 2020 against 6.78% in FY 2019 as most of the leading sub-sector activities decreased due to lockdown measures. However, the agriculture sector maintained a solid growth amid this pandemic aided by the timely availability of inputs, favorable weather conditions at the time of cultivation and harvesting and partial use of harvester machine. Management Retrospection The government of Bangladesh and Bangladesh Bank took a series of timely and appropriate initiatives such as stimulus packages worth more than BDT 1.21 trillion, policy relaxations, low cost refinance schemes to support weaker segments of the economy and to ensure sufficient liquidity in the banking system. These policy initiatives paved the way for the economic recovery of Bangladesh remaining at the forefront among the neighboring South Asian economies. However, CMSMEs, which is the backbone of the country’s economy, is yet to get the desired momentum due to slower fund disbursement from stimulus packages. Annual average inflation rose to 5.65% in FY 2020 compared to 5.5% in FY 2019. Broad money supply increased by 12.64% at the end of FY 2020 driven largely by public sector borrowing from banking system. Government’s revenue collection faced a large fall due to pandemic driven economic slowdown which resulted in 55.51% increase of costly borrowing at the last quarter of FY 2020. Stakeholders’ Information Country’s external trade faced disruption due to restrictions on mobility imposed to curb spread of COVID-19. Due to sharper fall of exports, current account deficit significantly widened with USD 2,439 million at the end of FY 2020. Yet, the overall balance of payment (BOP) experienced a surplus of USD 3,310 million during last quarter of FY 2020 supported by record high financial inflows. The inflow of remittance in FY 2020 was increased by 10.87% over the FY 2019. Strong growth of wage earners remittance and financial inflows in the form of assistance from multilateral institutions and development partners helped to reach a record foreign exchange reserve of USD 42.97 billion at the end of December 2020. Sustainability Financial Information The COVID-19 pandemic has triggered an unprecedented global economic crisis which is far worse than the 2008-09 global financial meltdowns. World economy is estimated to have slowed down by 3.3% in 2020. To protect financial system and economy, policymakers across the globe have taken unprecedented measures to bring it on track. Though recovery in China has been faster than expected, the global economy’s rebound to prepandemic level of activity remains prone to setbacks. After ease Risk Governance GLOBAL OUTLOOK AND OUR ECONOMY IMF projects that the global economy will grow by 6.0% in 2021. Additional policy support announced for 2021, mainly in USA and Japan, is expected to help in lifting economic activities in advanced economies with favorable spillover to trading partners. However, pace of recovery is likely to vary significantly across countries, depending on access to vaccine, effectiveness of policy support, exposure to cross-country spillovers, and structure of the crisis. Corporate Governance The activities of the Bank centered around achieving the targets of selected indicators. For this, we invested the excess liquidity into high profit-yielding sectors and put more emphasis on Retail and SME finance for increasing high-value assets. Besides, as a part of asset diversification, steps have been taken to increase credit flow to low-risk corporate sectors. On the other hand, interest-free and low-interest deposit collection has been prioritized aimed at rationalizing the cost of fund. Specially, steps have been taken to increase security measures of Treasury Department and strengthen it in a bid to make fund management more effective. Our other objective of financial inclusion is to build-up a Banking nation by providing low-cost banking services to the unbanked, backward and limited income people. SBL is providing this service for a long time by practicing mass banking. Bangladesh Bank’s encouragement and enthusiasm has added different dimensions for expansion of financial inclusive banking. Marginal farmers, cleaners, street children, social safety beneficiaries, businessman, service holders and students have opened 1,07,218 deposit accounts with SBL in 2020 amid the on-going pandemic scenario against 6,06,624 nos. of deposit accounts opened in 2019. Besides, personal saving opportunity, account holders are enjoying multiple banking facilities. Introduction Standard Bank Limited is one of the most respected banking brands in the country today. It is a matter of pride for me to be able to sit at the helm of affairs of such a bank. I will surely do my best to live up to the trust and confidence of all of you. Ever since Standard Bank Limited was established, our goal is to contribute to the national economy and at the same time maximize the shareholders’ wealth. We have also tried to be a compliant bank and it was our continuous endeavor to follow all the best practices of the industry while doing business with our valued customers, vendors and stakeholders. Standard Bank Limited is always trying to create a wide array of financial services and products to cater to the emerging needs of the market. The Bank focused on attracting new customers and retaining the loyalty of old customers through improved services at a very competitive price. Favored by the expansionary monetary policy and capital market policy supports from regulators, the capital market bounced back in 2020, which is visible in rising share prices, turnover, and market capitalization. The food production, remittance, the stimulus package, the reopening, and the uptick in domestic demand and exports put the country on the path of recovery. Standard Bank Ltd Annual Report 2020 | 45
47. INDUSTRY OUTLOOK AND OUR BUSINESS POSITION Introduction The banking industry in Bangladesh is highly fragmented into state-owned commercial banks (SCBs) and local and foreign private commercial banks (PCBs) with a marked difference in profitability Recent successful results for vaccine development against COVID-19 has raised hopes for humanity which will impact the global as well as domestic economy positively. However, renewed waves and new variants of the virus can elevate downside risk and the economic recovery could be uneven. Weaker than expected growth in the export destinations mainly in USA and EU region will directly affect the recovery of Bangladesh economy. According to World Bank’s forecast Bangladesh economy is forecasted to grow by 1.6% in 2021. All sector of the country’s economy will not be able to recover in same pace. Stimulus packages and liquidity support will help large industries and public organizations to recover at a faster pace while the CMSME enterprises will lag behind. Hence policy support is required to absorb the need of small and micro enterprises, agriculture and young and new entrepreneurs. Bangladesh Bank has issued SMESPD circular no.04 dated 29 March 2020 instructing commercial banks to constitute their own and separate “Start-up Fund” for lending to the startup companies along with government’s BDT 5 billion refinance fund. This will be collateral free fund at a very concession rate. Corporate Governance Risk Governance Management Retrospection At the backdrop, we have progressed cautiously and managed our risk profiles carefully. But I am happy to share with you that despite a difficult time, the overall performance of Standard Bank Ltd. was steady. We kept our NPL at 4.87%, which is lower than average NPL in Banking Sector, mainly by virtue of our management policy, rigorous monitoring in our credit management and ethical business practice with strong corporate governance. At Standard Bank Limited, we believe in sustainable growth instead of rapid progression. In the year 2020, we focused on maintaining our asset quality rather than the rapid growth of our portfolio. CONTRIBUTION TOWARDS THE SOCIETY Stakeholders’ Information Sustainability As a responsible corporate citizen, we are committed to creating value for the society. We believe that development should be holistic and inclusive. Standard Bank Limited is always aware of its Corporate Social Responsibility (CSR) with an aim to ensure that the bank remains as a socially responsible corporate entity contributing towards quality of life of the society at large without compromising ecological balance. Since its inception, Standard Bank has a pleasant involvement and proactive participation in benevolent activities like standing beside the marooned people during any natural or man-made disasters. To us, success not only equals economic profit, it also means commitment to values honesty, integrity, excellence, trust and dedication. At Standard Bank, we are guided by the spirit of corporate social responsibility. To have lasting relationships with the customers based on mutual trust has always been one of our topmost priorities. In line with the guidance of Bangladesh Bank, we focused on CSR by getting involved in different nation building activities apart from usual banking operations. During the year, Standard Bank spent an amount of Tk.25.04 crore covering a vast area of education, health and other under privileged sectors for overall betterment of the nation. We continued our financial assistance to meritorious but poor students particularly in rural areas under CSR initiative. Financial Information 46 | Standard Bank Ltd Annual Report 2020 OUR OUTLOOK Year 2020 was undoubtedly a challenging year for Bangladesh economy due to the onslaught of the on-going pandemic and 2021 will, no doubt offer its share of new challenges even with our excellent track record of over twenty one years of ethical and prudent banking and more as so as we will embark on our journey as a full-fledged shari’ah based Islami Bank. We want to emerge as one of the most trusted partners of progress to trade and business of the country as one of the leading Islami Banks in the country. As we look forward, we are committed to build a shared prosperity for our society to continue to meet the needs of future generation. The global economy and banking industry has entered into a new era, experiencing rapid change in terms of market dynamics. Customers are increasingly service-focused and at the same time, more demanding. New players, especially new banks, have entered into banking sector and the level of competition has significantly intensified. Our ongoing success lies in our own hands and in the willingness and capacity of every single person of our bank to make change happen. The faster we manage to respond to this change environment, the more room we have to maneuver. I am convinced that together with the support of our colleagues and other stakeholders, we will take the lead and become a fast driven organization in banking industry, and I count on our determination to achieve this too. Our industry has changed and is more competitive than ever before. At the same time, we are facing the great macroeconomic challenges of unfavorable deposits and lending rates and turbulent financial markets. We must find new and smart ways to convey a compelling value proposition to our customers. We need to ensure that we deliver on our promises. At the same time, we have to be highly flexible and adaptable in order to respond to volatile market demands. The more successful we are in integrating this approach into how we do things, the better positioned we will be to continue in our growth and future prospects. I believe our combined effort will make a difference. Once again, I should say that the Bank is growing and our results are also visible compared to the size of the bank. We are committed to make our bank into a modern and dynamic Islamic financial institution with proper corporate governance. We want to remain compliant, fair and transparent in our business deals. Our Bank would concentrate on sharpening its competitive edge by improving its business strategies and through performing the promises. STRATEGIC PRIORITIES FOR 2021 The government has targeted to implement more infrastructure projects. On the other hand, foreign exchange reserves stood at USD 41.3bn in December 2020. As per the latest reports, it equaled 9.4 months of import in November 2020. Meanwhile, regulators are taking initiatives to improve investor friendliness as well; such as, easing capital repatriation for foreign investors, allowing investments to be transferred to locations beyond the country of origin, and so on. Bangladesh is one of the few countries expected to witness positive GDP growth in FY 2021, by analysts and multilateral organizations. What we see amidst numerous hurdles, is a nation that has a lot to offer, not just to its own citizens, but to the rest of the world. No doubt, 2020 has been a difficult year for all of us, professionally and personally. However, if anything, it has taught us to show more compassion and camaraderie towards each other. It has taught us to be more resilient. And it has shown us the value of staying level-headed no matter how big the adversity. This is the thought process that is shared by all of us here at SBL.
48. 2 . Increasing of deposit focusing on financial inclusion in the unbanked areas. 3. Concerted efforts and aggressive marketing to procure more low-cost deposits with a view to reducing cost of deposits and improving Net Income Margin (NIM) of the Bank. 4. Prudent Asset Liability Management by maintaining good credit portfolio through diversification of business with focus on SME, Retail investment and Import-Export business. 6. Strengthening the recovery against rescheduled, classified and written-off investments for reducing NPIs to a large extent through intensive recovery drive and early settlement of court cases. 7. All out efforts to reduce and manage Provision requirement. 8. Effective Risk Management Practices through appropriately blending the risk reward parameters and targeting a growth driven investment portfolio expediting investment rating and maintaining strong capital base to play safe and sound as per based framework. 9. Efficient Internal Control and Regulatory Compliance System to continue to be a fully compliant Bank. Khondoker Rashed Maqsood Managing Director & CEO Stakeholders’ Information Maintaining asset quality by restricting increase of nonperforming assets through early detection, monitoring, corrective actions. Management Retrospection 5. Let there be good days ahead for all of us. We look forward to a brighter and rewarding two thousand twenty one, May the Almighty ALLAH bestow His blessing on all of us. Risk Governance As banking industry is predicted to remain highly competitive with low interest margins, fee-based income and non-funded incomes shall be a strategic priority in 2021. I express warm greetings as well as profound gratitude to the valued customers, shareholders and well-wishers who are the source of inspiration of all our activities. I reverently congratulate our Honorable Chairman and all the respected Directors of the Board for their valuable guidance, support and prudent counsel in attaining desired progress and qualitative development in different financial indicators and standards of service. I express my sincere thanks to all the members of Standard Bank for their uncompromising loyalty, relentless hard work and dynamic team sprit to take the bank forward. Above all, I convey my sincere thanks and heartfelt gratitude to our regulatory authorities specially Ministry of Finance, Bangladesh Bank, Bangladesh Securities and Exchange Commission (BSEC), National Board of Revenue (NBR), Dhaka Stock Exchange, Chittagong Stock Exchange, RJSC as well as external auditors for their continued support and cooperation. Corporate Governance 1. OUR GRATITUDE Introduction And this is why I am confident we will be able to take on the challenges in the years ahead as well. Few of the major tactical and strategic moves that have been chalked out to drive for the next year are: 10. Strictly enforcing ‘code of conduct’ for all employees and elevating standard of service to new heights of excellence for all stakeholders. 11. Effective IT platform and System through up-gradation of bank modules and strengthening of IT infrastructure and cyber security. Sustainability 12. Strengthening Agent Banking and banking booth operation to provide financial service for unbanked people. 13. Strengthening operational efficiency of subsidiaries and foreign business windows. Financial Information Standard Bank Ltd Annual Report 2020 | 47
49. Introduction DIRECTORS ’ RESPONSIBILITY STATEMENT Corporate Governance Risk Governance The Board is directly accountable to the shareholders and each year the company will hold an Annual General Meeting (AGM), at which the directors must provide a report to the shareholders on the performance of the company, what its future plans and strategies are and also submit themselves for re-election to the board. The Board of Directors is appointed to act for and on behalf of the shareholders to oversee the day to day affairs of the business. The report of the Company’s affairs and the Audited Financial Statements duly certified by is generally to be laid down before the Annual General Meeting for discussion. In preparing the Annual Report, the Board of Directors is required to ensure that: the Financial Statements of the Bank and its subsidiaries are prepared in accordance with applicable Bangladesh Financial Reporting Standards (including Bangladesh Accounting Standards), relevant provisions of the Companies Act 1994, Bank Company Act 1991 (amended up to 2018), rules and regulations of Bangladesh Bank and Bangladesh Securities and Exchange Commission (BSEC), listing rules of Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. and other applicable laws, rules and regulations. Management Retrospection In compliance with section 184 of Companies Act 1994 and BSEC Notification BSEC/CMRRCD/2006-158/207/Admin/80 dated 02 June 2018, the Annual Report which is presented in the Annual General Meeting (AGM) has a separate section as ‘Directors’ Report’ containing, among others, a review of the following issues: In compliance with BSEC Corporate Governance Notification No. BSEC/CMRRCD/2006-158/207/ Admin/80 dated 02 June 2018 the Directors of the Bank hereby declare on following issues, among others, in their report as prescribed: State of the Bank’s affairs: Industry outlook and possible future developments in the industry: Stakeholders’ Information A review of financial performance and position has been presented in the Directors’ Report and Management Discussion and Analysis (MD&A) section with relevant analytics. Any recommended reserve in the balance sheet: Segment-wise or Product-wise Performance: An amount of BDT 451 million has been transferred to ‘Statutory Reserve’ which is required to equate the same with paid up capital as per section 24 of Bank Company Act 1991 (amended up to 2013). Business-wise performance has been presented in the MD&A section. Recommended dividend: A detailed discussion regarding risks and management of the same has been presented in Chief Risk Officers’ Report on Risk Management. Sustainability The Directors has recommended @5% dividend (2.5% Cash & 2.5% Stock) equivalent to BDT 503 million for the completed year 2020. Discussion on Operating Performance: Financial Information A brief description in this regard has been presented in part of the Directors’ Report. The Board of Directors of the Bank in its 341th Board meeting held on 28.04.2021 has recommended 5% dividend (2.5% cash and 2.5% stock) for the year 2020 on Tk. 252 million which will increase the paid-up capital of the bank to Tk. 10,311 million. Discussion on continuity of any Extra-Ordinary gain or loss: No major change in strategy and actions in the Bank and Subsidiaries experienced in 2020. | Risks and Concerns: Any event after balance sheet date which may affect company’s financial condition: Any change in bank’s activities, subsidiaries’ activities etc.: 48 A brief review in this regard has been presented in the Director’s Report. Standard Bank Ltd Annual Report 2020 In last five years SBL has not experienced any extra-ordinary gain or loss. SBL’s Five Years progression presented in the “Stakeholders Information” section will provide details information in support of this.
50. The basis for related party transactions has been stated in the “Corporate Governance Report” and a statement of related party transactions has been presented in the Financial Statements 2020. Details description including disclosure of departures has been presented in the Financial Statements 2020. The system of internal control is sound in design and has been effectively implemented and monitored: Deterioration of financial results after the company goes for IPO, Rights Offer, Direct Listing, etc.: A brief description in this regard has been presented in the Internal Control and Compliance in Directors’ Report. Refer to the earlier paragraph, the bank issued IPO in 2003 and Right Share in 2007 but after that financial results of the Bank did not deteriorate. Significant doubts upon the Bank’s ability to continue as a going concern: Explanation of variances between Quarterly and Annual Financial performance: Remuneration to directors including independent directors: Remuneration provided to directors has been presented in the Corporate Governance Report, Financial Statements & Directors’ Report A brief description in this regard has been presented in Directors’ Report. Maintenance of proper books of account: A brief description in this regard has been presented in Directors’ Report. A brief description in this regard has been presented in Directors’ Report. Nothing as yet and mentioned in Directors’ Report. Summarization of last five year’s key operating and financial data: Please see in the section of Stakeholders’ Information. Declaration of dividend or not: Recommended @5% dividend (2.5% Cash & 2.5% Stock) for the year 2020. No. of Board meetings and directors’ attendance in 2020: Presented in the Directors’ Report. The pattern of shareholdings: Presented in the Directors’ Report and the Notes to the Financial Statements 2020. Brief resume of the directors and nature of their expertise in specific functional areas: Brief profile of directors and their representation in other companies have been presented in the Directors’ Profile in the Corporate Governance Report. Sustainability Consistent application of appropriate accounting policies and estimates in preparation of financial statements: Explanations to significant deviations from the last year’s operating results: Stakeholders’ Information The financial statements prepared by the management present fairly its state of affairs, the result of its operations, cash flows and changes in equity: Nothing as yet and mentioned in Directors’ Report. Management Retrospection A brief discussion along with financial information in this regard has been presented in the Directors’ Report and Management Discussion & Analysis. Risk Governance The bank has raised capital through public issues an IPO in 2003 a Right Issue in 2007. However, the raising capital has been presented in the Corporate Governance Report. Corporate Governance Utilization of proceeds from public issues, rights issues and/or through any others instruments: Following International Accounting Standards (IAS)/ Bangladesh Accounting Standards (BAS)/ International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, in preparation of financial statements and any departure there from has been adequately disclosed: Introduction Basis for related party transactions and a statement of all related party transactions: Financial Information To adhere to good corporate governance practices, the Bank has been complying with two paramount guidelines from Bangladesh Bank (BRPD Circular No 11, 18 and 19 dated 27 October 2013) and BSEC (Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 dated 03 June 2018). SBL’s compliance status to those prescribed practices is presented in Corporate Governance Report. The Directors, to the best of their knowledge and information, hereby confirm that the Annual Report 2020 together with the Directors’ Report and the Financial Statements have been prepared in compliance with applicable governing Acts, rules, regulations, guidelines and laws of various regulatory bodies including Bangladesh Bank and BSEC. Standard Bank Ltd Annual Report 2020 | 49
51. Introduction DIRECTORS ’ REPORT Respected Shareholders Corporate Governance Assalamu Alaikum It is an immense pleasure and privilege on the part of the Board of Directors to place the Directors’ Report and Auditors’ Report together with the audited financial statements of Standard Bank Limited for the year ended 31 December 2020 for your valued consideration, adoption and approval. Risk Governance The Directors Report has been prepared in compliance with the Section 184 of the Companies Act 1994, BSEC’s Notification no.SEC/ CMRRCD/2006-158/207/Admin/80 dated June 03, 2018, the Listing regulations of Dhaka and Chittagong Stock Exchanges, guidelines of Bangladesh Bank and other applicable rules and regulations. Relevant disclosures and explanations relating to certain issues have been given by the Directors, which they consider important to ensure transparency and good governance practices. The Board of Directors believe that the report will give valuable insights of the bank’s performance and continuous growth through amid stiff competition. GLOBAL ECONOMY Management Retrospection The coronavirus (COVID-19), which has emerged as a global pandemic, poses a major risk to the global economy. Protecting lives and allowing health care systems to cope with have required quarantine, isolation, lockdown etc. which in turn have severely limited economic activity. As a result of the pandemic, the global economy is anticipated to contract in a much worse way than during the 2008-2009 financial crises. In the World Economic Outlook (WEO) October 2020, International Monetary Fund (IMF) projected that the global economic growth would contract sharply by 4.4 percent in 2020 downgrading from -3.0 percent projection made in April 2020, WEO. According to IMF, the baseline scenario, which assumes that social distancing will continue into 2021 but will fade over time as vaccine coverage will expand everywhere by the end of 2022. The global economy is projected to grow by 5.2 percent in 2021 as the economic activity normalises, helped by policy support. likely to steepen the long-expected slowdown in potential growth over the next decade, undermining prospects for poverty reduction. The heightened level of uncertainty around the global outlook highlights policy makers’ role in raising the likelihood of better growth outcomes while warding off worse ones. Limiting the spread of the virus, providing relief for vulnerable populations, and overcoming vaccine-related challenges are key immediate priorities. With weak fiscal positions severely constraining government support measures in many countries, an emphasis on ambitious reforms is needed to rekindle robust, sustainable and equitable growth. Global cooperation is critical in addressing many of these challenges. In particular, the global community needs to act rapidly and forcefully to make sure the ongoing debt wave does not end with a string of debt crises in EMDEs, as was the case with earlier waves of debt accumulation. Stakeholders’ Information Sustainability Chart: Evolution of the Covid-19 pandemic Source: Global Economic Prospects of January 2021 by World Bank Group Financial Information Although the global economy is emerging from the collapse triggered by the pandemic, the recovery is projected to be subdued. Global economic output is expected to expand 4 percent in 2021 but still remain more than 5 percent below its pre-pandemic trend. Moreover, there is a material risk that setbacks in containing the pandemic or other adverse events derail the recovery. Growth in emerging market and developing economies (EMDEs) is envisioned to firm to 5 percent in 2021, but EMDE output is also expected to remain well below its pre-pandemic projection. The pandemic has exacerbated the risks associated with a decade-long wave of global debt accumulation. Debt levels have reached historic highs, making the global economy particularly vulnerable to financial market stress. The pandemic is 50 | Standard Bank Ltd Annual Report 2020 Chart: Global Growth Source: Global Economic Prospects of January 2021 by World Bank Group The global economy is projected to grow in 2021 by around 5% in market exchange rates - the fastest rate recorded in the 21st century - returning the global economy in aggregate to pre- pandemic levels of output by the end of 2021 or early 2022. The predictions published today in PwC’s Global Economy Watch for 2021 - From the Great Lockdown to the Great Rebound - highlight key themes for 2021 linked to a wider reset for economies, skills and society. Growth will return, but be uneven and be contingent on a successful and speedy deployment of vaccines and continued accommodative fiscal, monetary and financial conditions in the larger economies of the world. Another key theme will be how the push for recovery and growth could synchronize green infrastructure investment, creating a turning point in the fight against climate change.
52. Introduction affected are likely to be those at the bottom end of the earnings distribution which is likely to exacerbate income inequalities . We therefore expect governments’ focus to gradually shift from fighting the COVID-19 virus to dealing with higher unemployment rates by upskilling their workforce and creating jobs in newly emerging labourintensive sectors. Corporate Governance Chart: Contributions to global growth forecast revisions Source: Global Economic Prospects of January 2021 by World Bank Group Chart: Investment levels over 2020-22 Source: Global Economic Prospects of January 2021 by World Bank Group Risk Governance The historic year 2021 will be the first year where the three main economies or trading blocs of the world — the US, the European Union (EU) and China — will refocus their efforts to fighting climate change. The US is expected to re-join the Paris Accord and host an international climate summit early in the year. EU member states are expected to finalise their plans to accelerate the transition towards a greener (and more digital) economy by the end of April. Management Retrospection By the end of 2021 or early 2022, we expect the global economy to revert to its pre-pandemic level of output. However, this picture masks an uneven pattern. At one end of the spectrum is the Chinese economy, which is already bigger compared to its pre-pandemic size. On the other end are mostly advanced economies which are either service-based (UK, France, Spain) or more focused on exporting capital goods (Germany, Japan) and are unlikely to recover to their pre-crisis levels by the end of the year. In these economies, growing but lower levels of output is projected to lead to push up unemployment rates. In its December 2020 economic outlook, the Organisation for Economic Co-operation and Development (OECD) projects an unemployment rate of around 7% in its member states compared to pre-pandemic levels of around 5.5%. Most of the jobs GLOBAL OUTLOOK According to the IMF, the global growth may face further downward revisions. Key sources of downside risk to the outlook include: rising inequality, weak investment, rising protectionism in trade, climate change and risk from cyber security. However, the growth will be stabilised later this year if the downside risks do not materialize and the policy support put in place become effective. Table 1 highlights the global output growth as follows: Table 1: Overview of the World Output Growth Projections Estimated Forecast Forecast 2019 2020 2021 2022 2020e 2021f World 2.3 -4.3 4 3.8 0.9 -0.2 Advanced Economies -5.4 3.3 3.5 1.6 -0.6 2.2 -3.6 3.5 3.3 2.5 -0.5 Euro Area 1.3 -7.4 3.6 4 1.7 -0.9 Japan 0.3 -5.3 2.5 2.3 0.8 0 -2.6 5 4.2 -0.1 0.4 6.1 2 7.9 5.2 1 1 India 4.2 -9.6 5.4 5.2 -6.4 2.3 Pakistan 1.9 -1.5 0.5 2 1.1 0.7 Bangladesh 8.2 2 1.6 3.4 0.4 0.6 Financial Information 3.6 China Sustainability 1.6 United States Emerging market and developing economies Stakeholders’ Information Percentage point differences from June 2020 projections Actual Prospects for the global economy are uncertain, and several growth outcomes are possible. In the baseline forecast, global GDP is expected to expand 4 percent in 2021, predicated on proper pandemic management and effective vaccination limiting the community spread of COVID-19 in many countries, as well as continued monetary policy accommodation accompanied by diminishing fiscal support. Nonetheless, the level of global GDP in 2021 is forecast to be 5.3 percent below pre-pandemic projections—or about $4.7 trillion. After this year’s pickup, global growth is envisioned to moderate in 2022 to 3.8 percent—still above its potential pace, but weighed down by lasting damage from COVID-19. Standard Bank Ltd Annual Report 2020 | 51
53. Introduction Corporate Governance Risk Governance By 2022 , global GDP is still expected to be 4.4 percent below prepandemic projections with the gap in EMDEs nearly twice as large as in advanced economies as output remains dampened by lingering risk aversion on the demand side and the effects of diminished physical and human capital accumulation on labor productivity. Advanced economies are projected to recover, with growth reaching 3.3 percent and 3.5 percent in 2021 and 2022, respectively, on the back of pandemic containment aided by widespread vaccination and sustained monetary policy accommodation, which is expected to more than offset the partial unwinding of fiscal support. Although aggregate EMDE growth is envisioned to firm to 5 percent in 2021 and to moderate to 4.2 percent in 2022, the improvement largely reflects China’s expected rebound. Absent China, the recovery across EMDEs is anticipated to be far more muted, averaging 3.5 percent in 2021-22, as the pandemic’s lingering effects continue to weigh on consumption and investment. Despite the recovery, aggregate EMDE output in 2022 is expected to remain 6 percent below its prepandemic projection. Management Retrospection ECONOMIC GROWTH OF BANGLADESH Stakeholders’ Information Economic growth slowed to 5.24 percent in FY2019-20 (July, 2019 to June, 2020), according to the provisional estimates of BBS, which is the lowest since FY2008-09. Following the trend of achieving economic growth, the growth exceeded 6 percent in FY2010-11, 7 percent in FY2015-16 and 8 percent in FY2018-19. Although the economic situation of the country was normal in the first eight months of FY2019-20, the COVID-19 pandemic has had a huge negative impact on the economy of Bangladesh since March, 2020. According to the provisional estimate, the volume of GDP at current market prices reached BDT 27,96,378 crore in FY2019-20, which was BDT 25,42,483 crore in FY2018-19. In nominal term GDP growth is 9.99 percent. As per the final estimate, per capita GDP in FY2018-19 was US$1,828 up by US$ 153 from the previous fiscal year. Sustainability Financial Information According to the provisional estimate of BBS, the growth of agriculture sector has slowed to 3.11 percent in the FY2019-20, from 3.92 percent in FY2018-19. During the same period, industry sector grew by 6.48 percent, which was 12.68 percent in the previous fiscal year. The service sector grew by 5.32 percent in FY2019-20 compared to 6.78 percent in the previous fiscal year. Within the broad agriculture sector, the growth rate of agriculture and forestry sector decelerated from 3.15 percent to 2.08 percent in FY2019-20. In addition, growth in fishing sector slowed slightly to 6.10 percent from 6.21 percent of previous fiscal year. The contribution of the broad agricultural sector to 52 | Standard Bank Ltd Annual Report 2020 the GDP stood at 13.35 percent in FY2019-20 against 13.65 percent in the previous fiscal year. Of the 4 sectors of the broad industrial sector, growth in the manufacturing (large and medium scale and small scale) has slowed down significantly. According to provisional estimate, the growth of large and medium enterprises and small scale industries in GDP stood at 5.47 and 7.78 percent respectively in FY2019-20, compared to 14.84 percent and 10.95 percent in the previous fiscal year. The growth of the construction sector stood at 9.06 percent as compared to 10.25 percent over the previous fiscal year. Overall, the contribution of the broad industry sector stood at 35.36 percent in FY2019-20, as compared to 35.00 percent in the previous fiscal year. Among the broad service sector, wholesale and retail trade; hotels and restaurants; transport, storage and communication; financial intermediations; real estate and renting and business activities; health and social works etc. have decelerated significantly (about 1 to 3.1 percent) compared to FY2018-19. The contribution of broad service sector to the GDP stood at 51.30 percent in FY2019-20, which was 51.35 percent in the previous fiscal year. SAVINGS AND INVESTMENT During FY2019-20, domestic savings increased to 25.31 percent of GDP, which was 25.02 percent in the previous year. Likewise, national savings as percent of GDP increased to 30.11 percent in FY2019-20 percent from 29.50 percent of the previous fiscal year. The investment has slowed down to 10.63 percent in FY2019-20 as compared to 14.19 percent in the previous fiscal year, due to the slight stagnation in the economy in the last four months of the fiscal year caused by COVID-19 pandemic. However, both public and private investment as a percentage of GDP has accelerated slightly compared to the previous fiscal year. Gross investment stood at 31.75 percent in FY2019-20, which was 31.57 percent of the previous fiscal year. Of this, public investment and private investment accounted for 8.12 percent and 23.63 percent of GDP, respectively, up from 8.03 percent of GDP and 23.54 percent of GDP in the previous fiscal year, respectively. INFLATION In FY2018-19, the average CPI inflation was 5.48 percent, remained within the target (5.50%) and 0.30 percent lower than the previous fiscal year. Food inflation for FY 2018-19 decreased to 5.51 percent from 7.13 percent in FY2017-18, while non-food inflation increased to 5.43 percent from 3.73 percent of previous fiscal year. In FY201920, the inflation rate stood at 5.65 percent, which is slightly higher than the target (5.50%). In this case, food inflation increased to 5.56 percent and non-food inflation stood at 5.85 percent. The Coronavirus (COVID-19) has slowed global economic activity and reduced inflation globally. However, the pandemic could ignite world food production and disruption of supply chain. Therefore, food inflation is likely to increase in the coming months.
54. INTEREST RATE Import The total import payment (C&F) for FY2018-19 stood at 59,914.70 million, up 1.78 percent from the previous fiscal year. Imports in FY2019-20 stood at US$ 54,784.70 million, down 8.56 percent over the previous fiscal year. Of this, imports of food grains and consumer goods increased by 7.76 percent and 5.38 percent, respectively, while imports of intermediate commodities and capital goods declined by 5.05 percent and 23.92 percent respectively. Management Retrospection Overseas Employment and Remittance Adverse condition in the overseas employments is prevailing due to the global epidemic. The continued fall of fuel price has also limited economic activity in the oil producing Middle East countries. The total manpower export in FY2018-19 was 6.93 lakh, which is 21.26 percent less than the previous fiscal year. In the first nine months of FY201920 (July-March, 2020), the country’s labor force exports stood at 5.31 lakh people, which is 2.73 percent more than the same period of the previous fiscal year. From April 2020 to June 2020, manpower exports were virtually closed. In FY2018-19, remittance inflows increased by 9.60 percent over the previous fiscal year to US$ 16,419.63 million. In FY2019-20, remittance inflows stood at US$ 18,205.01 million, an increase of 10.87 percent over the previous fiscal year. The lion’s share of remittances comes from Middle Eastern countries. In this regard, during FY2019-20, Saudi Arabia (22.06%), the United Arab Emirates (13.58%) and the United States (13.21%) topped the list. In this regard, remittance from United States has shown a significant growth. Stakeholders’ Information Chattogram Stock Exchange (CSE) All Share Price Index declined by 31.87 percent from 13,332.56 points at the end of June 2020 from 16,634.21 in June 2019. The number of listed securities (including mutual funds and bonds) of CSE is 324 in June 2020. Market capitalisation of CSE at the end of June 2020 stood at BDT 2,44,756.71 crore, which was 25.68 percent lower than the market capitalisation of BDT 3,29,330.28 at the end of FY2018-19. Various initiatives have been taken by the government to maintain the stability of the capital market. In order to achieve the long term goal of sustainable development of the capital market by providing liquidity, a special fund of BDT 200 crore has been set up for each bank to invest in the capital market and its investment policy has also been formulated. Risk Governance Volatility has been observed in the price index of the Dhaka Stock Exchange (DSE) since the beginning of FY2019-20. In addition, trading was closed in April and May 2020 due to the novel Coronavirus pandemic. The DSE Broad Index (DSEx) decreased by 26.42 percent from 5,421.62 points at the end of June 2019 to 3,989.09 points at the end of June 2020. The number of listed securities (including mutual funds and debenture) of Dhaka Stock Exchange (DSE) stood at 589 in June 2020. Total market capitalisation of all listed securities was BDT 3,99,816.40 crore in June 2019, which decreased to BDT 3,11,967.00 crore in June 2020, representing an increase of to 21.97 percent. Corporate Governance CAPITAL MARKET Introduction Initiatives have been taken to rationalise the interest/profit rate of loans/investments with a view to creating an industry and business friendly environment for the industrial, business and service organsations. Bangladesh Bank issued a circular on 24 February 2020 fixing the interest rate on loans at a maximum of 9 percent (except credit card) which was to be effective from 1 April 2020. As part of this, the interest rate on deposits is being implemented at 6 percent from February 2020. The weighted average lending rate of commercial banks was 9.95 percent at the end of June 2018, decreased to 9.58 percent at end of June 2019 and further decreased significantly to 7.95 percent. On the other hand, the deposit rate was 5.50 percent at the end of June 2018 which decreased slightly to 5.43 percent at the end of June 2019 and further decreased to 5.06 percent at the end of June 2020. The weighted average interest rate spread on loans and deposits has come down from 4.15 percent at the end of June 2019 to 2.89 percent at the end of June 2020. 19 stood at US$ 40,535.04 million, which is 10.55 percent higher than the previous fiscal year. Total export earnings in FY2019-20 stood at US$ 33,674.09 million, down 16.93 percent from the previous fiscal year. On month-to-month basis, export growth in March 2020 declined by 18.21 percent over the same month of the previous fiscal year due to the coronavirus outbreak. Export earnings fell 82.86 percent to US$ 520.01 million in April 2020. However, the situations has been improving since May 2020. In June 2020, export earnings declined by only 2.50 percent compared to the same month of the previous fiscal year. Some of the products that have been able to sustain growth during this period are: frozen fish (17.99%), pharmaceuticals (4.49%), handicraft (2.86%), raw jute and jute products (8.10%). On the other hand, growth in the readymade garments sector slowed to 18.12 percent. Even though exports are expected to decline further in the coming months due to the global pandemic, hopefully, many foreign buyers have postponed their purchases but have not canceled them. As a result, the export sector is expected to rebound once the Corona crisis is resolved. The government has taken several steps as an incentive in the export sector. The size of the Export Development Fund (EDF) has already been increased from US$ 350 million to US$ 500 million and interest rates have been fixed at 2 percent. Balance of Payments (BoP) FOREIGN EXCHANGE RESERVE Export The surplus in the overall balance helped to maintain the foreign exchange reserve up. On 30 June 2020, the foreign exchange reserves reached US$ 36.04 billion. On 30 June 2019, the foreign exchange reserve was US$ 32.72 billion. It is noteworthy that remittances has recently gone up to a record US$ 40 billion. World trade has slowed since the beginning of 2020 due to trade disputes between the United States and China, falling oil prices and declining revenue in the oil producing countries. The economic activities came to stagnant due to the COVID-19 pandemic, which also affected country’s foreign trade. The total export earnings for FY2018- Standard Bank Ltd Annual Report 2020 Financial Information EXTERNAL SECTOR Sustainability The trade deficit widened significantly to US$ 17,861 million in FY 2019-20 from US$ 15,835 million in the previous fiscal year. During this period, the current account balance decreases as remittance flows increase. The current account deficit stood at US$ 4,849 million, compared to US$ 5,102 million in the same period of the previous fiscal year. On the other hand, capital and financial account inflow increased US$ 7,914 million in FY2019-20 from 6,146 million a year earlier. As a result, the overall balance of payments increased from US$ 179 million in FY2018-19 to US$ 3,655 million in FY2019-20. | 53
55. Introduction Corporate Governance Risk Governance EXCHANGE RATE In FY2018-19 , the weighted average exchange rate of the taka against the US dollar deprecated by 2.35 percent compared to the previous fiscal year and stood at BDT 84.03. In FY2019-20, the interbank weighted average exchange rate of taka against US$ depreciated by 0.9 percent and stood at 84.60. Management Retrospection MONEY AND CREDIT Stakeholders’ Information The projected growth of monetary aggregate and credit programme set for FY2019-20 (end June, 2020) are: broad money (M2) at 12.5 percent, reserve money (RM) at 12.0 percent, domestic credit 15.9 percent and credit to private sector 14.8 percent. Broad money growth accelerated in FY2018-19 from 9.24 percent a year earlier to 9.88 percent, but fall short of the FY2018-19 monetary programme target of 12 percent. The year-on-year growth of broad money at the end of June 2020 stood at 12.64 percent, which is slightly higher than the target. At the same period, reserve money has grown by 15.56 percent, which is 3.56 percent than the target. This growth is mainly due to the net domestic assets (NDA). At the end of June 2020, the growth of NFA and NDA are 14.82 percent and 48.30 percent respectively. MONETARY POLICY AND MONETARY MANAGEMENT The monetary policy stance and monetary programme for FY2019-20 have been drawn up with dual objective of maintaining price stability and supporting economic growth in the tune with government’s strategies and goals for sustainable growth. Monetary policy remained accommodative during FY2019-20. The monetary programme is based on the 8.2 percent real GDP growth and 5.5 percent CPI inflation ceiling targets declared for FY2019-20 in the national budget. Bangladesh Bank’s annual monetary programme made adequate room for money and credit growth for attaining the targeted nominal GDP growth. With a view to ensure the adequate liquidity in the financial system to tackle the impending financial crisis stemming the from the COVID-19 pandemic, Bangladesh Bank reduced the repo rate from 6 percent to 5.75 percent effective from 24 March 2020. The repo rate was further reduced to 5.25 percent effective from 12 April 2020. The CRR was initially reduced from 5 percent to 4.5 percent (daily-basis) and from 5.5 percent to 5 percent (bi-weekly basis), with a further reduction to 3.5 percent and 4 percent, respectively, from 15 April 2020. Bangladesh Bank has also raised the advance-deposit ratio (ADR) and investment-deposit ratio (IDR) by 2 percent to 87 percent and 92 percent respectively to facilitate credit to the private sector and improve liquidity in the banking system. STIMULUS PACKAGES To address the crisis resulting from the outbreak of COVID-19 and overcome its potential adverse effects on the economy, Hon’ble Prime Minister Sheikh Hasina has guided the formulation of an overall program with short, medium, and long-term targets. This program has four main strategic aspects. Sustainability Financial Information At the end of FY2018-19, the domestic credit increased by 12.26 percent as against 14.70 percent in the previous fiscal year. At the end of FY2019-20, domestic credit increased by 13.58 percent, which is slightly higher than the growth rate of the previous fiscal year (12.26%). At the end of FY2019-20, the growth of private sector credit stood at 8.61 percent, compared to 11.32 percent in the previous fiscal year. The net credit to the government increased by 55.51 percent at the end of June, 2020 compared to 19.37 percent increase in same period of previous fiscal year. 54 | Standard Bank Ltd Annual Report 2020 • The first strategy is to increase government spending. In this respect, priority will be given to creating jobs and discouraging luxury spending. • The second strategy is to provide low-interest credit facilities through the banking system to industries and business enterprises to revive economic activities and increase the competitiveness of entrepreneurs at home and abroad. • The third strategy is to increase the scope of the government’s social security programmes to protect the ultra-poor and the low-income groups that have suddenly become unemployed as well as the people engaged in informal sectors. • The fourth and last strategy is to increase money supply in the market. However, this strategy is being implemented with utmost caution so that the negative effects of inflation can be controlled.
56. • The working capital loan facility of BDT 33,000 crore is being given at an interest rate of 9 percent to the affected industries and service sector companies to continue their business operation. Of this 9 percent, 4.5 percent will be paid by the borrowers and the remaining 4.5 percent by the government. As a result, large industrial and service sectors have been able to continue their business activities during COVID-19. • The working capital loan facility of BDT 20,000 crore is being given at an interest rate of 9 percent to the affected micro, small and medium enterprises including the cottage industries to continue their business operation. Of this 9 percent, 5 percent will be paid by the government as subsidy and the remaining 4 percent by the borrowers. As a result, micro, small and medium enterprises including the cottage industries and service sector have been able to continue their business activities during COVID-19. • Initiatives have been taken to increase the coverage of social safety net programmes to protect the ultra-poor in the country from being jobless and prevent their loss of income due to the coronavirus outbreak. An amount of BDT 2,500 in cash each is being disbursed directly to 50 lakh selected beneficiary families from the treasury to their bank or mobile accounts across the country. • Under the social safety net programmes, the coverage of old age allowances and the widow and divorcee women allowances in 100-ultra-poor Upazilas has been increased to cent percent. As a result, the total number of beneficiaries under these two allowances, including that under the disability allowance, has been increased by a total of 11 lakh, and their livelihood has become easier during the COVID-19 outbreak. • Initiatives have been taken to build houses for all the homeless people on the occasion of the birth centenary of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman. As a result, the poor will no longer have to be homeless. • Of the activities undertaken to recover the economy in the aftermath of the coronavirus outbreak, the most prioritised one is to ensure continuation of agricultural production. To ensure food security for the people of the country, several important initiatives have been taken to maintain agricultural production at the usual level. In order to ensure that the farmers get fair price of their produce (paddy) and keep the price of rice stable in the market, the target of procuring rice in the current Irri-Boro season has been expanded by 2 lakh metric tons. An amount of BDT 3,200 crore are being allocated as an incentive to promote farm mechanisation. The amount of agricultural subsidy has • To encourage banks to disburse loans to micro, cottage and small enterprises, Bangladesh Bank has introduced a credit risk guarantee scheme of BDT 2,000 crore. BANKING SECTOR OUTLOOK 2020 After an economic fallout from the COVID-19 pandemic which had impacted the GDP growth rate of FY20 to decelerate at 5.2 percent, Bangladesh witnessed a broad-based economic recovery in Q1FY21 which strengthened further in Q2FY21, thanks to the timely and appropriate interventions by the government with a comprehensive stimulus package underpinned by expansionary fiscal and monetary policies. On the supply side, sustained activities in agriculture sector, resumption of industrial production backed by a turnaround of exports and construction activities nearing the levels of the pre-pandemic period, and restoration of service sector activities with increased mobility of people including a rush in domestic tourism destinations are suggestive of recovery in economic activities during this quarter. On the other hand, strong remittance inflows (registering growth rates of 48.6 percent in Q1FY21 and 27.47 percent in Q2FY21) and a significant growth in consumer credit (20.82 percent in this quarter) helped revitalize domestic demand. Besides, the bounce back of imports near to the pre-pandemic levels also indicated the rebound of domestic demand. Bangladesh’s economic recovery is expected to be driven by a fiscal stimulus package which is a meagre 19.29 per cent of its total COVID-19 relief funds or only 0.83 per cent of its GDP, and falls far short of the 11 per cent of GDP that is estimated to be required to mitigate the socioeconomic impacts of COVID-19. Ironically, the largest industries which are relatively more capable of dealing with shocks received the greatest support from COVID-19 relief funds. Moreover, the varying speed of implementation of the various liquidity support packages has created an unequal turnaround as bigger firms have rebounded more strongly, owing to quick access to liquidity packages, while smaller firms have been left behind. Headline CPI inflation (point-to-point), which had remained broadly stable during Q1FY21, witnessed a sharp rise from 5.97 percent in September 2020 to 6.44 percent in October 2020, but then declined gradually to 5.29 percent in December 2020, the lowest since February 2017. Standard Bank Ltd Annual Report 2020 Financial Information A total of 5 lakh metric tonnes of rice and 1 lakh metric tonnes of wheat have been distributed free of cost across the country as humanitarian aid for the poor people who have suddenly become jobless due to the coronavirus outbreak. Again, rice is being sold among the low-income people at BDT 10 per kg. As a result of all these measures, marginalised people did not face any food shortage and the chances of their falling below the poverty line were reduced. The interest collection against disbursed loans by all commercial banks for the month of April and May has been postponed. Sustainability • • Stakeholders’ Information The government has increased facilities under the Export Development Fun (EDF) and Pre-Shipment Credit Refinance Scheme of Bangladesh Bank. Allocation has been made to Karmasangsthan Bank, Prabasikallyan Bank, Palli Sanchay Bank and Palli Karmasahayak Foundation for the purpose of providing loans at a low interest rate to expatriate workers, trained youth and unemployed youth for starting business and self-employment. For this purpose, the government will provide a capital of BDT 500 crore to each of these four institutions so that they can disburse low-interest loans to suitable entrepreneurs under specific programs. As a result, self-employment opportunities have been created for poor rural farmers, expatriate workers, trained youth and unemployed youth in the agriculture sector and in agro-related production and services, small business, small and cottage industries, etc. Management Retrospection • • Risk Governance A fund of BDT 5,000 crore was provided for the purpose of ensuring continuation of payments of salaries and allowances of the workers of export-oriented industries at a service charge of only 2 percent. This initiative helped protect jobs of a large number of workers in this sector. Corporate Governance • Introduction been increased to BDT 9,500 crore. An agricultural refinance scheme of BDT 5,000 crore is being formulated to ensure easy loans of affected farmers. In addition, a refinancing scheme of BDT 3,000 crore has been created for low-income professional farmers/ small traders. All these initiatives will be helpful for agriculture in the country and will assist our farmers. The government has already announced a fiscal and stimulus package of BDT 1,20,953 crore, which is 4.3 percent of GDP, to facilitate additional expenditure in the healthcare sector, emergency humanitarian assistance, and the overall economic recovery program. Some of the key features of the program is highlighted below: | 55
57. Introduction Corporate Governance Risk Governance The recent drop in headline inflation during November and December , 2020 was mainly driven by decreasing food inflation, although nonfood inflation crept up slowly. Similarly, 12-month average CPI inflation moderated to 5.69 percent in December 2020 after nudging up to 5.77 percent in October 2020. Moreover, prevailing low demand for private credit accentuated this pile-up of liquidity and lingered the downward movements of interest rates. Consequently, interest rate in the call money market further declined to 1.79 percent in December 2020 from 2.87 percent in September 2020 and 4.64 percent in December 2019. The weightedaverage interest rate on lending declined to 7.61 percent from 7.79 percent in September 2020 and 9.68 percent in December 2019 (Chart III.6). Similarly, the weighted-average interest rate on deposit declined to 4.54 percent in December 2020 from 4.79 percent in September 2020 and 5.70 percent in December 2019. Management Retrospection To limit the economic slowdown caused by the pandemic and to ensure faster recovery of economic growth, Bangladesh Bank (BB) has been pursuing an expansionary monetary policy by setting broad money (M2) growth targets of 14.00 and 15.00 percent for December 2020 and June 2021, respectively. A surge in net foreign asset (NFA) kept M2 growing closely to its program path in Q2FY21. Although BB slashed its key policy rates in July 2020, weak private credit demand continued in Q2FY21 resulting a significant rise in excess liquidity in the banking system. Stakeholders’ Information BANKING SECTOR PROSPECTS IN 2021 Sustainability Financial Information Bangladesh Bank‘s recent downward revision of policy rates, particularly the reduction of cash reserve ratio (CRR) by 1.50 percentage points led to a significant rise in liquidity in the banking system. The ratio of total liquid asset to total demand and time liabilities (TDTL) increased to 29.52 percent in Q2FY21 as compared to 27.52 percent in Q1FY21 (Chart III.4). Similarly, liquid asset in excess of SLR to TDTL rose to 14.58 percent from 12.55 percent during the same period. The impact of rise in the excess liquidity had already been resulted in a downward movement of interest rates in both wholesale and retail money markets. 56 | Standard Bank Ltd Annual Report 2020 Banks have a crucial role to play in implementing COVID-19 related stimulus packages announced by the government since the major portion of these packages is in the form of liquidity support through the commercial banks. This is indeed a huge responsibility on the banks since the banking sector has been in weak condition during the pre-pandemic period. Indeed, during the last decade the situation of the banking sector has been deteriorating steadily which are reflected through high volume of non-performing loans (NPL), escalation of loan write-offs, major scams, irregularities and heists in banks. With the added responsibility, how the sector would manage its responsibility and how it would recover itself from the long weakness have been the two important issues that took the centre stage of discussion on the banking sector. It was emphasized on clear guidelines to determine the eligibility of commercial banks for disbursing the liquidity support and highlighted the long-standing problems of the banking. The banking sector‘s performances continued its resilience in Q2FY21 since the end of June 2020, as reflected by a fall in non-performing loans (NPLs), a moderation in capital adequacy and profitability, an improvement in liquidity condition, and betterment in provision
58. The bank ‘s deposits growth maintained a rising trend for the last three consecutive quarters and reached 13.1 percent (y/y) at the end of Q2FY21 driven by SCBs compared with 12.4 percent growth in the previous quarter. However, the growth in advances decelerated from 9.6 percent at the end of Q1FY21 to 8.2 percent at the end of Q2FY21. Consequently, advance deposit ratio (ADR) declined to 72.7 percent at the end of Q2FY21 from 74.0 percent in Q1FY21. In Q2FY21, banking sector witnessed a huge surplus of liquidity because of weak demand for loans originated from COVID-19 pandemic. Introduction maintaining. The overall NPL of the banking sector dropped further at the end of Q2FY21, facilitated by both state-owned commercial banks (SCBs) and private commercial banks (PCBs). Corporate Governance The excess liquidity- the excess of CRR and SLR as a percent of total demand and time liabilities (TDTL)- edged up to 14.6 percent at the end of Q2FY21 from 12.6 percent at the end of Q1FY21. Management Retrospection Banking sector witnessed a modest profit moderation in 2020 compared with that of 2019 as reflected in the Return on Assets (RoA) and Return on Equity (RoE), partly due to the COVID-19 pandemic. The RoA and RoE in the banking sector moderated, partly driven by regulatory forbearance not to transfer all interest receipts from loans to income account directly during moratorium era, one percent additional provision for uncollected loans and advances and reduced interest rates of loans and prevailing excess liquidity in the banking system. In 2020, RoA and RoE of the banking sector dropped to 0.25 percent and 4.28 percent compare to that of 0.43 percent and 6.83 percent respectively in 2019. The RoA and RoE of SCBs significantly declined to -1.07 percent and -29.57 percent at the end of 2020, from -0.61 percent and -13.68 percent respectively in 2019. The RoA and RoE of PCBs also declined slightly to 0.70 percent and 10.22 percent in 2020 from 0.77 percent and 11.16 percent respectively in 2019. Stakeholders’ Information PERFORMANCE OF STANDARD BANK LIMITED Standard Bank has successfully achieved improved operational results showing an impressive upward trend. Bank’s operation has achieved the confidence of its customers with sound fundamentals in respect of deposit accumulation and loans & advances. As a result the bank has been able to earn a steady after tax profit growth. Sustainability The overall capitalization of the banking system remained broadly stable although the capital to risk-weighted asset ratio (CRAR) moderated marginally at the end of Q2FY21 compared with that of Q1FY21. The CRAR of the banking sector slightly fell from 11.94 percent in Q1FY21 to 11.64 percent in Q2FY21, mostly attributed to SCBs. The CRAR of SCBs declined from 8.25 percent in Q1FY21 to 4.34 percent in Q2FY21, reflected by a large fall in Tier-1 capital. Meanwhile, the CRAR for PCBs edged up to 13.96 percent in Q2FY21 from 13.29 percent in Q1FY21. Likewise, the CRAR of FCBs also posted an improvement, increasing from 25.59 percent in Q1FY21 to 28.24 percent in Q2FY21. Risk Governance The ratio of overall NPL to total loans of the banking industry contracted to 8.06 percent (with OBU it was 7.66 percent) at the end of Q2FY21 from that of 8.88 percent at the end of Q1FY21, and 9.32 percent at the end of Q2FY20. The development partly accounted for loan moratorium facility, loan rescheduling, and loan write-off spree amid the COVID-19 pandemic. The gross NPL ratio for SCBs declined further from 22.46 percent in Q1FY21 to 21.03 percent in Q2FY21. Likewise, the gross NPL for PCBs also fell to 4.82 percent at the end of Q2FY21 from 5.56 percent at the end of Q1FY21. Also, the system-wide net NPLs ratio of the banking industry witnessed another improvement, dropping to -1.2 percent at end-Q2FY21 from -0.22 percent at the end of Q1FY21. Hence, the lower NPLs ratio led to an improvement in provision maintained against classified loans in Q2FY21. FINANCIAL RESULT OF THE BANK Financial Information To uphold the continuous growth, the management of SBL is always striking optimum balance between liquidity and profitability. The Management emphasizes on the growth of quality of assets in addition to the quantity. Our financial highlights are growing year to year mainly due to operational efficiency and an increasing customer base. The financial results of the Bank are as under: Standard Bank Ltd Annual Report 2020 | 57
59. Introduction PROPERTY AND ASSETS LOANS AND ADVANCES As on 31st December 2020 total asset of the Bank stood at Tk .219, 271.93 million with a Negative growth of 1% (One percent) in comparison with corresponding previous year of 2019. The increase in Asset was mainly driven by significant growth of customers’ deposits which were used for funding in loans & advances and holding of securities. The increase in asset is determined by loans and advances. Total Loans and Advances of the Bank has increased to BDT 162,397 million as on December 31,2020 in comparison to BDT 160,625 million as on December 31, 2019, which indicates an increase of 1% over the last year. Despite of volatile capital market, global recession declining trend of private sector credit growth, the Bank has successfully retained the progressive trend of credit portfolio of the Bank ensuring sustainable profitability to meet accountability towards the customers as well as the stakeholders. Corporate Governance Risk Governance Credit is the single largest component of the total assets of the Bank. Furthermore, during the year the Bank has put enormous emphasis to Credit Risk management since it is the main tool to ensure proper Credit Management. Quality of Credit can only be retained if prudent Credit Risk Management procedure is effective and efficiently followed. That’s why, the Bank has established CRM to analyze Credit Risks in different sectors like Telecommunication, Power Generation, Pharmaceuticals, Steel re-rolling, RMG, Textile, Ceramics, etc. and to determine the necessary strategies and policies while extending credit facilities in those sectors. Compliant as per the guidelines of Bangladesh Bank in Credit Management System and to retain its continuance; the initiative has been taken to revise the existing Credit Policy. Credit Monitoring and Recovery Department has been strengthening to ensure regular monitoring of the existing credit facilities. Concentration of credit in a single sector or group has been strongly discouraged and alternatively financing in Small & Medium Enterprise (SME), Women Entrepreneur and Agricultural Sector are given more emphasis towards contributing in GDP as well as in poverty alleviation program. Management Retrospection CASH IN HAND Stakeholders’ Information Cash in hand stood at Tk. 1,742 million in 2020 as against Tk. 1,874 million of the previous year i.e. 7% decreases that indicates the optimum retention of fund to meet current obligation in comparison to with the previous year. Sustainability BALANCE WITH OTHER BANKS/FINANCIAL INSTITUTIONS Financial Information INVESTMENTS BALANCE WITH BANGLADESH BANK AND ITS AGENTS During the year 2020, Balances with Bangladesh Bank and its agents increased by 166% (on e hundred sixty six percent) amounted to Tk. 29,088 million. During the year 2020 balances maintained with other banks and financial institutions stood at Tk. 2,127 million as against Tk. 1,933 million of the previous year which is increased by 10% from previous year. The Bank always gives emphasis on investment of Funds in high yield areas simultaneously maintaining Statutory Liquidity Requirement (SLR) as fixed by Bangladesh Bank. Besides, one of the investment activities of the bank is to maintain Statutory Liquidity Reserve (SLR) which mainly comprises Government Treasury Bill and Treasury bond of different tenure. Prize Bonds, Government approved Debenture. The Bank invested total Tk. 7008 million in 2020 as compared to Tk. 30,598million of the previous year. 58 | Standard Bank Ltd Annual Report 2020 Besides, to contribute in national economy, the Bank has extended its participation in Syndicated Financing in different prospective Greenfield and BMRE projects in the sectors like power generation, telecommunication, pharmaceuticals, textiles, manufacturing industries, etc. The total participation in Syndicated Financing at the end of the year 2020 was Tk. 2,835.10 million.
60. The Bank has strengthen the credit division to continue regular supervision and monitoring for credit facilities disbursed to different borrowers to reduce the percentage of non-performing loans . Recovery Division has been reformed with new strategy and policy to recover the non-performing loans. To sustain in the competitive market, the Management of the Bank is always dedicated to take timely and appropriate decisions to flourish its credit portfolio in different sectors. SYNDICATED FINANCE DEPOSIT Deposit is the principal source of fund invested to generate revenue in banking business. SBL always tried to give the highest return on the deposit from the customers The Bank’s deposit stood at Tk. 169,639 million as on 31 December, 2020 compared to Tk. 175,468 million in 2019, thus recording 3% percent negative growth. Competitive interest rates, attractive deposit products, deposit mobilization efforts of the Bank and confidence reposed to the customers in the Bank contributed to the growth in deposits. SBL is offering different types of deposit products for the customers. Among the products, Fixed Deposits, Scheme Deposits of different types, savings deposits, short-term deposits remained the core deposits of the Bank. SBL Regular Income program (SRIP), Double Income Plus (DI+), SBL Regular Deposit Program (SRDP), Life Secured Double Income Program (LSDIP) etc. are some attractive products, which contributed to the grow the of deposit. Stakeholders’ Information Syndicated loans allow arranging funds for large projects spreading the risk amongst the partner Banks. Clients also enjoy the benefits of having access to larger pool of funds from multiple financial institutions but have to deal with one Agent Bank and one set of documentation. The outstanding balance of loan under Syndicated Finance stands at Tk. 2,835.10 million as on 31.12.2020. The projects in which the Bank participated in syndication financing in different prospective Green field & BMRE projects in the sectors like Power Generation, Telecommunication, Pharmaceuticals, Textiles, Manufacturing industries etc. The function of the Treasury Division is borrowing and lending fund from money market. Borrowing from other Banks, financial institutions and agent including overnight borrowing stood at Tk. 12,006 million at the end of 2020 compared to Tk. 12,590 million of 2019. The Bank’s borrowing also includes borrowing against refinance from Bangladesh Bank for financing under SME scheme and financing against SME (women entrepreneurs). Management Retrospection Standard Bank Limited always adopts strategy for widespread service for the large and medium sized corporate customers and Bank’s business is focused to a considerable extent on the corporate clients by maintaining a relationship and extending financial assistance based on a deep understanding of the clients’ business environments, financial needs and internal strategies for growth. The Bank extends its financial support to the corporate clients either from own finance or by arranging syndicated/ club finance. The investment in corporate sector is the combination of a mixed and balanced allocation in various natures. Borrowings from other Banks, Financial Institutions and Agents Risk Governance CORPORATE FINANCE Total liabilities of the Bank stood at Tk. 202,507 million as of 31 December 2020 registering a negative growth of approximately 3% (three percent) over the last year. This was mainly due to increase in customers’ deposits. Corporate Governance Due to prudent initiative of the Management, it becomes possible to retain the non-performing loan within 4.87% i.e. Tk. 7,764.22 Million against the total loans and advances of BDT 162,397 million at the end of the year 2020. LIABILITIES AND SHAREHOLDERS’ EQUITY Introduction To inform about the importance and increase awareness among the employees regarding green banking, the Bank has included special module on “Green Banking: prospect in Banking Sector” in different training programs arranged by Bank’s Training Institute. Environment Risk Management has been taken as part of social responsibility for the Bank. It has financed in various environment friendly projects like CNG projects. Effluent Treatment Plant (ETP) of manufacturing industries, Auto Brick Field using Hybrid Floffman Kiln (HHK), etc. NON PERFORMING LOAN MANAGEMENT Sustainability Credit Monitoring is a continuous process to maintain and upgrade the health of assets of the Bank. The Bank continued its efforts to maintain high quality assets. Besides giving emphasis on the satisfactory business performances of the customers and collateral support, the Bank geared up loan monitoring and follows up systems through Monitoring Department to check the loans from becoming non-performing. The non-performing loans of the Bank stood at Tk. 7,764.22 million at the end of 2020 compared to Tk. 9,232.44 million in 2019 i.e. 15.90% decrease from previous year . Financial Information Standard Bank Ltd Annual Report 2020 | 59
61. Introduction SHARE CAPITAL Commission , Exchange & Brokerage Income The Authorized Capital of the Bank was Tk. 15,000 million as on 31.12 2020. The paid up capital of the Bank has been increased to Tk. 10,060 million from Tk. 9,580 million due to declaration of 5% (Five percent) stock dividend for the year 2019. The total equity of shareholders of the Bank at the end of the year 2020 stood at Tk. 16,765 million and in 2019 was at Tk. 16,248 million. In the year under review, commission, exchange and Brokerage earnings were Tk. 995 million which was Tk. 1,178 million in 2019. Corporate Governance STATUTORY AND OTHER RESERVE The Statutory and Other Reserve increased to Tk. 6,029 million during the year by registering 8% increase over Tk. 5,578 million of the last year. OTHER LIABILITIES Risk Governance During the year 2020, other liabilities of the Bank increased to Tk. 20,861 million from Tk. 17,583 million of 2019. EXPENSES INCOME Interest Expenses Interest Income Interest expenses Tk. 12,952 million in 2019 to Tk. 11,561 million in 2020 posting an decrease of 11%. The interest expenses of the Bank were decreased due to decreasing trend of deposit rates in the market. Management Retrospection During the year 2020 interest income of the Bank was Tk. 13,745 million as against Tk. 17,201 million of the previous year thus Negative growth of 20% percent due to lower interest spread. The income generated mainly from loans and advances, which remained the principal contributor. Operating Expense In the year 2020, total operating expenses stood at Tk. 4,685 million as against Tk. 4,443 million of the previous year. Stakeholders’ Information Net Interest Income TThe net interest income of the Bank for the year under review stood at Tk. 2,185 million as against Tk. 4,249 million for the previous year. Investment Income PROFIT BEFORE TAX Net profit of the Bank before tax stood at Tk. 2,156 million as against Tk. 2,854 million of the previous year. Sustainability The Bank’s investment income during the year 2020 was mostly in long term Govt. Securities which stood at Tk. 4,203 million as against Tk. 1,797 million in 2019. The Government Treasury Bonds have been purchased to cover the increased SLR arising from the growing of deposit liabilities. Financial Information NET PROFIT AFTER TAX Net profit of the Bank after tax stood at Tk. 1,082 million in 2020. 60 | Standard Bank Ltd Annual Report 2020
62. PROVISION FOR LOANS & ADVANCES The operating profit of the Bank during the year 2020 was Tk. 3,115 million as against Tk. 3,311 million in 2019. The Bank was able to earn gross income of Tk. 19,361 million during the year 2020 whereas the gross expenses were Tk. 16,246 million. For making required provision amounting to Tk. 681 million against classified and unclassified advances as per revised directives of Bangladesh Bank by December 2020, the Bank made provision for Tk. 428 million during the year under report. At present there is no shortfall in provision against classified and unclassified loans and advances and Off Balance Sheet Exposures. Introduction OPERATIONAL SUCCESS AND APPROPRIATION OF PROFIT Corporate Governance The Board of Directors of the Bank in its 341st Board meeting held on 28.04.2021 has recommended 2.5% Stock dividend & 2.5% Cash dividend for the year 2020 of Tk. 502,995,394 after keeping Tk. 177,595,889.79 and Tk.451,190,257 as retained earnings / surplus profit and Statutory Reserve respectively subject to approval from shareholders at 22nd AGM of the Bank in order to maintain satisfactory capital base of the Bank. Risk Governance DIVIDEND PROVISION FOR TAX Provision for tax for the year 2020 is Tk. 1,074 million compared to Tk. 1349 million of previous year. According to Bangladesh Accounting Standards (BAS) 12, Current Tax of the Bank has been calculated. Management Retrospection Stakeholders’ Information SEGMENT REPORTING Following table also summarizes both the stand alone performance of the Bank and its subsidiaries. Particulars Standard Bank Ltd. Subsidiaries SBL Capital SBL Management Securities Ltd Ltd Overseas UK Ex.House USA Ex. House Total 2,187,564,936 (32,815,151) 50,383,230 - 950,146 2,206,083,162 Total Operating Income 7,494,797,593 83,401,683 62,480,749 22,444,386 127,012,908 7,790,137,319 Total Non Operating Income 5,307,232,657 1,703,950 747,984 1,632,485 5,933,922 5,317,250,998 Total Operating Expenses 4,506,719,377 19,307,614 19,013,306 24,651,754 115,385,917 4,685,077,968 Profit before Provision 2,988,078,216 65,798,019 44,215,426 (574,884) 17,560,913 3,115,077,691 919,771,640 30,109,601 9,554,191 - Profit before Tax (PBT) 2,068,306,576 35,688,418 34,661,235 (574,884) Provision for Taxation 1,026,303,751 34,739,324 12,544,040 - Profit After Tax (PAT) 1,042,002,825 949,094 22,117,194 (574,884) 17,560,913 1,082,055,142 Segment Assets 217,685,387,322 991,833,221 460,499,003 34,900,728 99,309,408 219,271,929,683 Segment Liabilities 217,685,387,322 991,833,221 460,499,003 34,900,728 99,309,408 219,271,929,683 Total Provision against assets Sustainability Net interest Income 959,435,432 Financial Information 17,560,913 2,155,642,258 1,073,587,116 Standard Bank Ltd Annual Report 2020 | 61
63. CREDIT RATING OF THE BANK Introduction Surveillance rating of Standard Bank Limited was rated as on AA + on the information of 31.12.2020 by the ARGUS Credit Rating Services Ltd., which is a local renouned rating company. The Bank has achieved AA+ in long term and ST-2 in short term. The above surveillance rating has been done in consideration of Bank’s visible improvement in fundamentals such as assets quality, capital adequacy, liquidity position, profitability and limited market share. Corporate Governance RISK MANAGEMENT Risk Governance Risk Management is a dynamic process interrelated with the philosophy, culture and functionalities of the Bank. By nature, risks are extremely unpredictable. This makes it urgent for the Bank to evolve its risk management strategy in a way that best protects our interests against any insidious transactions. The management of Standard Bank Ltd. is fully cognizant to the importance of various risks involved in the banking business. Risk Management is one of the critical factors in banking. Bangladesh Bank has identified 06 (six) core risks Management of Banks and has provided necessary guidelines for prevention there from. The six core risks are: • • • • • • Credit Risk Management Asset Liability Management Foreign Exchange Risk Management Prevention of Money laundering Internal Control and Compliance Information and Communication Technology Risk Management Retrospection Effective risk management is indispensable for smooth commercial operation in all spheres of business. So Standard Bank Ltd. has implemented the following risk management system in line with the guidelines of Bangladesh Bank to prevent relevant risks. Credit Risk Management Stakeholders’ Information Credit risk is the risk of loss arising from the failure of a borrower, issuer, counterparty or customer to meet its financial obligations to the Bank. The Bank is exposed to credit risk both through direct exposures and through contingent exposures. Our endeavor in identifying, measuring, monitoring and controlling credit risk for each borrower and also at the portfolio level are working as the guiding principles of credit risk management. Standard Bank Limited always acknowledges effective Risk Management as the key to steady and stable growth for the Bank. The Bank’s own lending policy has been introduced in the Bank in line with the directives received from the Bangladesh Bank and the Government. The Branches are the business unit of the banking system. The loan application assessment process starts at branch level by the Manager Operation (MO) and ends at Credit Risk Management approval Unit. The CRM Unit analyses the proposal from different perspectives in line with lending policy of the Bank. If the proposal is found business worthy the CRM Unit places it to the Credit Committee with its recommendations. Mentionable that Credit approval authority has been delegated to the individual executives. Proposal beyond their delegation is submitted to the Board of Directors/Executive Committee and the top management. Sustainability Asset Liability Management Financial Information Asset Liability Management (ALM) is an integral part of Bank Management that manages the Bank’s on and off-Balance sheet position to offer competitively priced products and services to customers. The Asset-Liability Management Committee (ALCO) holds meetings regularly to discuss both the opportunities and threats to the Bank’s Balance Sheet & Liquidity. As per Bangladesh Bank guidelines the Bank formed Asset Liability Committee comprising with the following members: 62 | Standard Bank Ltd Annual Report 2020 • • • • • • • • • • • • Managing Director & CEO Additional Managing Director Deputy Managing Directors Head of Branch Management and Operation. Head of Credit Head of Treasury Head of IT Head of ID Head of FAD CFO Head of SME Head of IBW ALCO members sit at least once in a month to review mainly the aspects of economic and money market status risks as a whole, liquidity risks related with Balance Sheet, transfer pricing risk, risks related to interest rate on deposits and advances and various important aspects including monetary policy of Bangladesh Bank. Foreign Exchange Risk Management Foreign Exchange Risk arises from the variation in rates of exchange that prevail at domestic and international markets. The introduction of market based exchange rate of Taka has resulted in both trading opportunities and associated Foreign Exchange volatility risk. Foreign Exchange risks are the potential change in earning arising due to change in foreign currency prices. The front office of the Bank’s Treasury Division continues to determine foreign exchange rate&tries to reduce the associated risk while the Back office settles all foreign exchange transactions and reconciliation. Asa result treasury activities of the Bank are being operated smoothly and efficiently. ANTI-MONEY LAUNDERING & COMBATING FINANCING OF TERRORISM COMPLIANCE Effective prevention of Money Laundering, Combating Financing of Terrorism & Proliferation Financing regimes is essential to protect the integrity & stability of markets and global financial framework to mitigate the factors that facilitate financial abuse. A strong and effective AML & CFT system with comprehensive rules covering antimoney-laundering and combating financing of terrorism requirements for financial sector is essential to set up an adequately operational, legal and institutional or administrative framework. There is no precise measurement of the costs of regulation balanced against the harms associated with Money Laundering, Terrorist Financing (TF) and the Proliferation Financing (PF). The reputation of a financial Institution as well as a Bank can also be seriously affected by ML, TF & PF activities. Standard Bank Limited recognizes its obligation to join forces with governments, international organizations and other financial services organizations to close financial channels used by money launderers and terrorist organizations. The Board of Directors view money laundering prevention, not as a statutorily-imposed obligation, but as an integral part of its risk management strategy. To fulfill its commitment, Standard Bank Limited has developed a comprehensive policy on “Money Laundering & Terrorist Financing Risk Management Guidelines”, “Money Laundering & Terrorist Financing Risk Assessment Guidelines”, “Customer Acceptance Policy” and “Guidelines for Prevention of Trade Based Money Laundering” approved by the Board of Directors. To keep our financial system sound & stable, Standard Bank Limited is committed to take appropriate measures from its position to prevent ML, TF & PF risks in the bank. Meantime, SBL has taken the following initiatives to comply with the requirements of Bangladesh Financial Intelligence Unit (BFIU). According to BFIU Circular No. 26 dated 16/06/2020, standardized Know Your Customer (KYC) has already been introduced in the bank. It includes sources of fund and risk grading of customers.
64. SBL has been ensuring the implementation of Money Laundering Prevention Act , 2012 (amendment-2015) and adopted Anti Terrorism Act, 2009 (amendment 2012 & 2013) and circulated it to all of its branches to cope with latest AML strategies of National and Global arena. the Covid-19 Pandemic situations about 50 Officials of the bank took part in day long AML/CFT workshops. Introduction Branches have been instructed to follow the Customer Due Diligence (CDD) procedures i.e. to obtain complete and accurate information of the clients while establishing the Banking relationship. Enhanced Due Diligence (EDD) is to be performed while opening the account of PEPs, IPs, the Chief of International Organizations and other high risk A/Cs. Corporate Governance On a daily basis, In SBL every branch generates a large value cash transaction report and reviews transaction patterns & on a monthly basis, every branch generates an exception report of customers whose account transaction volume exceeds the transaction limits mentioned in the TP, for further review. If, after confirming with the client, the transaction trend continues, the dealing officer documents the reason(s) behind the changed TP and amends the KYC profile accordingly. Finally, AML & CFT issues are collective approach. We will protect Money Laundering & Terrorist Financing challenges collectively. CENTRAL CUSTOMER SERVICES & COMPLAINT MANAGEMENT CELL Cash transactions (deposits or withdrawals) that breach certain limits set by Bangladesh Bank are reported to the BFIU. Before sending the report to BFIU, Bangladesh Bank, the respective branch reviews the transactions to detect suspicious transactions. We also consider transaction monitoring to be a continuous process. High-risk accounts are reviewed by the concerned branches annually and low-risk accounts are checked in specific incidents. Transaction profiles are also reviewed and updated on justifiable grounds with appropriate documents, where applicable. SBL branch officials generate Money Laundering Monitoring Report from its Core Banking Software (CBS) to find out structuring in transactions as well as to detect Suspicious Transaction. SBL also detected Suspicious Transaction manually reported it to BFIU through goAML web portal. Risk Governance Bank is the most trusted medium to get financial services around the world and Customer Service is the prime factor in Banking Industry. Quality Customer Service not only contributes to a bank’s profit maximization but also plays a significant role in financial inclusion of mass people in countries like Bangladesh. To provide quality services to its valued client, Standard Bank family is working with utmost dedication and commitment. With a nationwide network of 138 branches, 26 Agent Banking Outlets & 120 ATM Booths Standard Bank Limited is providing services to achieve its goals. AML & CFT Division made a summary report on Self Assessment after extracting the Self assessment Report received from branches on half Yearly basis and submit it to BFIU after getting approval from Top Management Committee/Board of Directors on half yearly basis. Independent Testing Procedures is done by the ICCD officials while conducting Audit in the branches. The same is summarized and placed before the management on half yearly basis. Management Retrospection With a view to strengthening the corporate governance structure of Standard Bank Limited and also to improve the quality of customer services of the Bank as per instruction of FICSD, Bangladesh Bank, Complaint Cell of SBL has been reconstituted as Central Customer Services and Complaint Management Cell (CCS & CMC) under the direct supervision of Honorable Managing Director & CEO of the Bank. Zonal Customer Services & Complaint Management Cell (ZCS & CMC) has been reformed under the Central Customer Services & Complaint Management Cell (CCS & CMC). Branch Level Customer Services & Complaint Management Desks (BLCS & CMD) have also been reformed under the respective Zonal Customer Services & Complaints Management Cell (ZCS & CMC) in the bank. Each ZCS & CMC and BLCS & CMD is actively working in the bank. Stakeholders’ Information Screening Mechanism is fully activated in all branches of SBL to find out black listed persons/institutions from UN/OFAC/Local Sanction List for new customers of the Bank. Initiative has already been taken to screen all existing customers to find out black listed persons/ institutions from UN/OFAC/Local Sanction List. Sanction Screening for outgoing payment & incoming remittance is going on in the International Division, Head Office. There is a Box named by Complaint Box under lock & key is kept in the following address for the customers who want to make a complaint/ dissatisfaction against any services or products of the bank to the CCS & CMC. Any customer can make a complaint to the following address or to the following numbers: Preservation of KYC of Walk-in/One-off and Online Customers are mandatory for banks as per instruction of BFIU, Bangladesh Bank. To bring the Walk-in/One-off and Online customers under due diligences, AML & CFT Division has issued circulars and circulated it to all branches about making a seal drawing a format of KYC to draw the seal on the back of the Cheque/Deposit slip of Walk-in/One-off and Online customers to preserve the KYC of those customers. Address: Head of Central Customer Services & Complaint Management Cell, Standard Bank Ltd, Head Office, Islam Chamber (6th floor), 125/A, Motijheel C/A, Dhaka. AML & CFT Division conducts AML/CFT training/workshop on a periodic basis with the collaboration of Standard Bank Training Institute to enrich AML & CFT knowledge of its employees. During Sustainability Email address : sbcc@standardbankbd.com Phone: +88 02 9515628, PABX: +88 02 9558375, 9577913, 9578385 (Ext: 117) There are 32 (ThirtyTwo) complaints have been received by the CCS & CMC during the period of 01.01.2020 to 31.12.2020 details of which are as under: Complainant 01 Bangladesh Bank 02 General Customer/ Other Institutions Total No. of Complaints Received No. of Complaints Settled No. of Complaints Unsettled 24 21 3 8 8 0 32 29 3 Standard Bank Ltd Annual Report 2020 Financial Information SL No. | 63
65. Introduction A . 24 Complaints out of the above 32 complaints received from FICSD, Bangladesh Bank, out of which 29 complaints have been resolved; rest 03 complaints are under settlement process. B. 08 Complaints out of the above 32 complaints received from General Customer / Other Institutions are already settled. TRAINING, RESEARCH AND DEVELOPMENT Corporate Governance Standard Bank Training Institute (SBTI) established on 16 March, 2005 is responsible for training need assessment, designing course curricula, reading materials and course contents for imparting training on deferent banking issues for enhancing professional efficiency of all officers, managers and executives of the bank. To cope with the changes and introduction of new ideas, tools, techniques and technologies in banking and also for regulatory bodies, SBTI lays emphasis on actual need-based training with a view to continue effort to contribute to the strategic capability of Standard Bank Limited in conformity with its vision by developing a skilled, committed, ethical and well-motivated human resource through in house & external training. Risk Governance Management Retrospection Mr. Khondoker Rashed Maqsood, Managing Director & CEO of Standard Bank Limited, handed over certificates to the trainees as the Chief Guest at the closing ceremony of a five- day long training on “Credit Appraisal” organized by the Training Institute of the bank. Mr. Md. Amzad Hossain Fakir, Faculty of the Training Institute were present on the occasion. Stakeholders’ Information Human Resource Development with the most effective concept and well-organized tools under the guidance & supervision of the management, the Bank has a robust plan with sufficient budget. Bank’s aims in increasing knowledge and developing skill, changing in attitude on the way to increases the rate of change management success, helps to maintain visibility and encourage belonging, finally promotes employee engagement. Training is necessary for the individual development and progress of the employee, which motivates him to work for the organization apart from just money. Training updates employees of the market trends, job diversification, the change in the policies and other things. Sustainability Financial Information Md. Touhidul Alam Khan, Additional Managing Director, CRO & CAMLCO of Standard Bank Limited inaugurated a Two days long workshop on “Excellence in Customer Service” on 24 February 2021, organized by the Training Institute of the bank. Among others MohammadMohon Miah, Coordinator, IBCP, and Mohammad Amzad Hossain Fakir, Faculty of the Training Institute were present on the occasion. 64 | Standard Bank Ltd Annual Report 2020
66. In house training (2010-2020): Year/No of Participants Introduction Corporate Governance Before designing & formulating a Course/workshop, SBTI 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 and conduct Training Need Assessment (TNA) 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. Besides internal resource persons, the bank invites external resource persons comprising experienced professionals from industry 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. SBTI has a library containing books on banking, economics and other disciplines and different local and international journals and periodicals. At present we have around 1,000 books in our library. Despite of COVID-19, during the year 2020, the bank ensured its training programs either in-house or external covering all employees of the bank using different platforms on different subject matter. In house training (2010-2020): Year/No of Training/ Courses Risk Governance In 2020, SBTI successfully organized 67 training/workshop in-house programs class room based or using virtual platform covering 4,926 participants of all level of staffs. Each employee received several training in last year. On the other hand, 163 participants received 43 external trainings at home, especially in BIBM, Bangladesh Bank, BBTA, and BAB, Other Banks & different Training Institutes and some of them received training from overseas as well. Management Retrospection Keeping pace with demand of need-based training, in 2021 the bank has taken massive training programs focusing on islamic banking & shariah compliance, banking operations, current and modern banking issues, asset & liability management, general banking, sales leadership, credit management, internal control & compliance, risk management and managerial competence enhancement aspects for exploring professional skill, update knowledge, expertise and techniques about modern banking as well as corporate behavior with changing circumstances with a view to achieving a steady and holistic growth of the bank by all-out sincere effort, endeavor and perseverance of the officials of the bank at all levels. In 2021, with accomplishing general goals, our aims at achieving the following exclusive objectives: • • • • • • Stakeholders’ Information • • To ensure adequate knowledge and skill development on Islamic banking To ensure sustainable growth, service excellence with skilled manpower To enhance managerial competence for leading the team To enhance soft skills for building better communication, relationship & negotiation To recognize potentials of future leaders of the bank To establish robust relationship banking with customers satisfaction To enhance skill on international trade To acquaint with compliance culture of Islamic Shariah SL In-house/ External Training Probable Participants 5,000 1 In-house Training Programs Islamic Banking, Customer Relationship Management (CRM), Investment, Foreign Trade & Remittance , Corporate, SME, Retail Banking, IT (CBS), ADC etc., Negotiation Skill, Emotional Intelligence, Leadership & Communication Skill, Soft Skill Development etc. 2 External Training Programs (Home) • • Advance, Foreign Trade, IT Management & Soft Skill 50 3 Overseas Training Programs • Advance, Foreign Trade, IT 20 Standard Bank Ltd Annual Report 2020 Financial Information Covering Areas of Training Sustainability Considering the organizational need for capacity enhancement of manpower of the bank in different aspects of modern banking and as a part of converting human resources into human capital as well, the horizon of training has been extended in 2021. In this backdrop, the training institute has chalked out the comprehensive Annual Training Calendar, 2021 comprising in-house and external (home & overseas) training programs as appended below: | 65
67. RESEARCH AND DEVELOPMENT (R & D): Introduction Banking industry is highly competitive and one of the major service industry in Bangladesh Economy. On the other hand, new ideas, approaches, and advances are transforming the world at an unprecedented rate. Again, the never-ending emergence of new technology is changing the way of companies behave in the finance industry. The bank’s aim to explore newer or improved avenues of products, services, line of businesses in order to consolidate and make upswing in its growth cycle, where R&D can contribute more. Corporate Governance Our objective to overcome the future innovation challenge & competition meticulously, we already formed a new department “Research and Development (R&D)” under our corporate structure that will be responsible for finding knowledge to know the industry more, to create niche-markets, to make uniqueness of our products & services, for using unblemished processes, for winning technology advantage and as well as strengthen existing ones we have with new features that are most aligned with the company’s vision, mission, strategy and business plan. Several training on ICT Security awareness has been arranged throughout the year at the Training Institute of the Bank as part of awareness build up among the employees of the Bank Secure Technological innovation to combat “COVID-19 pandemic situation” Due to COVID-19 pandemic situation, IT Division has plays vital roles for advancement of technological ideas and facilitates for smooth banking operation in such areas• • • • • Facilitating “Work From Home” for Officers and Executives of Bank Performing day-closing/ opening and month closing operations from Centralized Location Enabling more online facilities and 24X7 basis services to all clients Facilitate AGM, EGM, Board meetings, Managers’ Conferences and internal meeting through Online Platform Finally, performing software demo/ presentation, all trainings through Online Platform Risk Governance Our planning for a magazine publication focusing areas is as follows; Industry Paper, Market Study, Monetary Policy Issues, Financial & Economic Roundup, Portfolio analysis of the bank etc. INFORMATION TECHNOLOGY Management Retrospection The adoption of information technology in the banking industry has enabled banks to improve operational efficiency, reduce transaction time and operating cost for collecting, storing and processing information. The bank is dedicated towards its customer satisfaction with help of the technological advantages. Technological development of the bank tremendously increased its customer service as well as trust worthiness of the stakeholders towards the bank. Now, ICT is also playing vital role in fostering customer-bank relationship, increasing level of customer satisfaction, developing and maintaining competitive advantage and promoting attractive banking products through its various established payment channel. The customers are benefited by getting a number of options for doing banking through a different delivery channels according to their convenience. The business people are also getting benefit of faster realization of receivables from their clients and making payments to their suppliers instantly and securely. The bank is always dedicated towards its customer satisfaction with help of the technological advantages. ICT Division is not only well equipped with technology, but also with a dedicated professional ICT workforce. Moreover, to achieve competitive advantage, Bank is the pioneer in providing multi dimensional banking products and services with latest international standard and technologies Email Migration: Bank were using Ubuntu (Linux based) email solution “PostFix V-3.3.0” in Bank for day to day official email communication. To facilitate more user friendly features and new options, email solution has been migrated to state of art email solution “MicroSoft Exchange 2016” for more than 2500 users Stakeholders’ Information Anti-virus/ Malware and Ransomware Solution Bank has procured and implanted ESET Anti-virus/ Malware and Ransomware Solution after completing technical evaluation of features among branded AV software like- Sophos, Kasperasky and Trend Micro solutions. After installation of ESET solution, computing devices of end users became more secured and hacking proof. ICT INFRASTRUCTURE Sustainability The Bank has reviewed present ICT infrastructure and taken steps to procure state of the art IT solutions with optimal cost without compromising quality and security ( such as-renovation of existing computing infrastructure and engagement of new WAN connectivity providers for HO- Branches communications ) Financial Information ICT and Cyber Security Team has been formulated to minimize technological, operational and hacking related risks and comply with the latest ICT Security Guideline of Bangladesh Bank. We are also in the process of procurement of hardware and security items for secure data and email communication. As of now, connectivity to and from bank networks and external networks are carefully planned for secure operations. Bank’s ICT staffs are ensuing security policies when designing new infrastructure or upgrading existing networks taking into consideration for managing users, dividing networks into segments and restricting access to information based on different business and security policies. 66 | Standard Bank Ltd Annual Report 2020 SWIFT : CSP and GPI Tracker Bank has implemented all mandatory requirements of Customer Security Program (CSP) with implementation of 2-Factor Authentication Log-in solution in 2020. Two-FA solution enhanced addition security for SWIFT users to prevent unauthorized access of SWIFT system due to leakage of user id and PW. In addition, GPI tracker solution help Bank and customer to know about the “Confirm” status of payment which was also implemented in this year as a part of security compliance
68. Core Banking Solution : Real Time Gross Settlement (RTGS) system is the financial services of commercial Banks to ensure smoother and instant inter-bank clearing payments. Bank also connected to the BD-RTGS on the same day for its live operation i.e. on 29th October 2015 for instant settlement of high-value, local currency transactions as well as government securities. Corporate Governance Bank has always been moving with the latest technology and has adopted different advantages of the technology which has enriched its ICT infrastructure to mitigate risk that may arise from malfunction of system, failure of network, lack of knowledge of the users, virus attack, hacking etc. Bank is using state-of-art Core Banking Solution (CBS) “i-Stelar” to support its customers’ regular banking and Foreign Trade transactions. Core Banking Software (CBS) has further been upgraded to its latest release to enhance existing features and functionalities and secure online banking transaction Introduction EFT (Electronic Fund Transfer) is the fastest growing service enables to transfer of funds for our clients electronically without payment instrument. However, EFT is a good prospect for bank facilitating online fund transfer and bulk payments such as Dividend warrant, Salary payments. Bank completed preparedness for Multiple EFT implementation project as per guideline of Bangladesh Bank Bill Payment System Management Retrospection The Bank has so far established more than 120 own ATM fleet across the country and issued a substantial number of debit cards to its customers. However, the bank has taken major steps for rapid expansion of ATM channel at suitable locations to serve potential clients across the country. The Bank has also integrated its ATM Network with National Payment Switch of Bangladesh (NPSB) which is an initiative of Bangladesh Bank to bring all commercial banks under the same platform for interoperability of ATMs/Debit Cards in case of issuing and acquiring and thus giving access of ATM network of more than 6500. Risk Governance ATM Network Bank has introduced solution to collect various types of utility bills like BRTA, WASA, DPDC, and DESCO, etc. Since the some systems are automatically connected to the relevant organization’s billing system and henceforth manual input for usage unit and bill amount need not be inputted again. As a result a user can pay the utility bills, tax and fees with less time and error free manner. ICT Risk Management The adoption of technology in the Banking industry demands Bank to ensure that the ICT related risks are properly identified and mitigated through a prudent ICT risk management strategy. ACH (Automated Clearing House) is dealing with clearing cheques receipt and multifarious payment settlement services for all branches and its reconciliation. Bank participated in BACH-II project as per guideline of Bangladesh Bank. FC Cheques & DD will be processed through BACH-II in High Value Cut-Off in coming days. Treasury management of banks includes the mobilisation of funds and investing those funds in a way to maximise bank’s profitability by maintaining required liquidity. But treasury operations now have become more significant and challenging than ever before in an environment of increasing financial risks. Thus, the changing circumstance demands a greater emphasis on efficient treasury management from the viewpoint of both banks and regulatory authorities. In order to carry out treasury functions effectively and efficiently, treasury desks are segregated into front-office, mid-office and back-office. Financial Information ACH, EFT and RTGS TREASURY MANAGEMENT: Sustainability Bank is issuing VISA Classic, Gold, Platinum and Dual Currency Credit Cards - maintaining all features and facilities of international standards to compete with other peer banks. As nos of credit cards and related transactions are increasing day by day, it has a requirement to make the payment collection process fully automated to reduce errors in settlement and reconciliation on daily basis. We procured and implemented Payment Collection Module which could be accessed from all of our branches for receipt of payment. In addition, reporting of credit card information and transactions as per Bangladesh Bank guideline is also made available from the same module Stakeholders’ Information Credit Card The Bank took considerable measures from time to time to mitigate identified vulnerabilities and risks. The Bank is gradually implementing various ICT related security solutions to ensure further security of the threat factors (like: Network, Mail, ATM Operation etc.). As the ICT risk management is an ongoing process, the Bank is constantly assessing risk by analyzing threats and vulnerabilities within its risk management framework and taking appropriate actions to mitigate and maintain an acceptable level of risk. Standard Bank Ltd’s Treasury Division is focused on prudent and efficient liquidity management in both local and foreign currency, asset/liability management, structuring customers foreign and local currency requirement, and prompt support to Standard Bank Ltd’s core banking segments. Managing liquidity risk, profit rate risk and exchange rate risk is an integral part of treasury activities. Treasury tries to maintain optimum liquid fund after maintaining CRR, SLR, ID Ratio etc. properly. In case of deficit liquidity, it can source fund Standard Bank Ltd Annual Report 2020 | 67
69. Introduction from interbank market as well as from Bangladesh Bank and incase of surplus liquidity , it can deploy fund in interbank market. It also manages the Balance Sheet in such a way so that various treasury risk indicators like ID Ratio, LCR, NSFR, maturity gap between assets and liabilities, asset mix, liability mix, wholesale borrowing, commitment etc remain within regulatory and/or internal limit. Major tool in the hand of treasury to control Balance Sheet is profit rate on deposit and investment. So, another major task of treasury is to determine these rates in collaboration with Asset and Liability Management Committee (ALCO). Corporate Governance Future Outlook and 6% vs 9% Interest Rate Impact: The Banking Sector of Bangladesh is one of the hardest Risk Governance hit sectors of the economy, owing to the broad-based slowdown in the economy as a whole; combined with its exposure to the hardest hit sectors of the economy, such as foreign trade, RMG etc. The banking sector was struggling prior to the pandemic owing to the imposition of a 9% interest ceiling on all loans (except credit cards), liquidity pressures and persistently deteriorating non-performing loan (NPL) situation. However, owing to the COVID-19 pandemic and subsequent lockdown, the banking sector will face an acute crisis on multiple fronts, as banks’ asset quality is likely to deteriorate while their interest and fee-based income are all affected at the same time. Steep fall in interest and non-interest income—The COVID-19 pandemic has caused a historic fall in the operating income of banks. In an unprecedented situation, both interest income and non-interest income have been drastically hit by the economy grinding to a total halt. Management Retrospection Lending rate cap takes a heavy toll on SME and retail businesses— The implementation of lending rate cap policy is a challenge in the sector. Not being able to price loans effectively will essentially force commercial banks to turn the tap off to the segments of economy – small and medium-sized enterprises – most affected by the crisis, exactly when liquidity is much needed. Ongoing surge in the officially measured inflow of workers’ remittances, decline in import payments, large pandemic-induced foreign assistance to the government injected huge amounts of liquidity into the banking system. Stakeholders’ Information Combined with the massive slowdown in credit to the private sector, the liquidity injection has contributed to a significant liquidity overhang. For most banks, the advances to deposits ratios have come down well below the regulatory limit. Excess liquidity in the money market is generally manifested in commodity price and asset price inflation. Global liquidity expansion has already contributed to global commodity price inflation in the midst of economic recession. Sustainability In this setting, the excess liquidity is likely to end up in asset price inflation. In Bangladesh, the stock price index already increased by more than 50 per cent in the midst of the pandemic and further upward moves leading to another price bubble cannot be ruled out if the excess liquidity remains high. Remedy of 6% vs 9% Interest Rate adverse Impact: Some initiatives, in general, may be considered to reduce the adverse impact that includes: Financial Information • • • • • • 68 | Improve managerial efficiency to reduce operating cost. Ensure high credit quality to reduce non-performing loans. Reduce risk factors related to market, credit and IT related risks. Establish good governance to reduce financial scams and financial malpractices Ensure a healthy liquidity condition maintaining required flow of loanable funds. Lend more to the productive sectors to contribution to the economy’s income generating activities and to reduce default risks. Standard Bank Ltd Annual Report 2020 Interest Rate Risk Mitigation: Banks encounter interest rate risk in several ways. The primary source of interest rate risk stems from timing differences in the re-pricing of bank assets, liabilities and off-balance-sheet instruments. These re-pricing mismatches generally occur from either borrowing short-term for funding long-term assets, or borrowing long-term for funding shortterm assets. Another important source of interest rate risk arises from imperfect correlation in the adjustment of rates earned and paid on different instruments having otherwise similar re-pricing characteristics. When interest rates change, these differences can give rise to unexpected changes in the cash flows and earnings spread among assets, liabilities and off-balance-sheet instruments of similar maturities or re-pricing frequencies. It is essential that banks accept some degree of interest rate risk. However, for a bank to earn profit consistently from changes in interest rates, the ability to forecast interest rates better than the rest of the market is required. The challenge for banks is not only to forecast interest rate risk, but also to measure and manage it in such a way that the compensation they receive is adequate for the risks they shoulder. Standard Bank Ltd Treasury doing this activity very efficiently. SBL Treasury Division measure and manage interest rate risks by gap management. A traditional measure of interest rate risk is the maturity gap between assets and liabilities, which is based on the repricing interval of each component of the balance sheet. CARD OPERATIONS Standard Bank Limited (SBL) launched Islami Sariah Compliant Credit Card namely ‘’Tijarah Card’’ to facilitate the financial need of our existing & potential client base. This is a timely step to launch such credit card on Islami concept that strictly barred interest based activity and replace it by Shariah compliant fee based credit card operations system. In a country where majority of Muslims live within religious belief & customs with pre-set Islami parameters; launching Islami Credit is a way to exert an impact people’s on life-style, financial expenditure pattern & regular purchase from home-abroad through SBL ‘’Tijarah Card’’. This ultimately wield positive impact on the bottom-line/revenue flow from SBL Cards Business. Like other key players in Credit Card Industry, SBL Islami Tijarah Card have to undergo a fierce competition dominated by Large local, Multinational, Banking & Non-Banking financial instructions. From the inception, SBL card division already exert quite unique & positive brand image towards existing, prospective & preferred business segments. As per latest research indicates, more than fifty percent of the eligible credit card potential clients are still un-tapped/ not enjoying any credit card. SBL Tijarah Card seems an ideal way to penetrate this un-tapped marketfocusing on interest free concept & secure a sizable sound portfolio. The issuance of credit card seems to have a booming trend from 2010-2019 period . All credit card issuers have gained a sizable profit from this sector as among consumer financing schemes, credit card is the highest profit bearing product also most risk bearing product too. As a nature, credit card is a revolving & non-collateralized product. Hence, the regulatory bodies issue time to different directives for strict credit assessment to minimize associated risk factors.
70. Key Highlights of Card Division : Card Business Target-2021 Introduction Maximization of income & minimization of expense without compromising quality & efficiency will be our main card business target. Card Division is setting a target of achieving the double figure of Credit Card issuance with the combine efforts of Branches and employees of the SBL. Introducing Visa Contactless (NFC) Card Corporate Governance A contactless smart card is incorporated with an embedded integrated circuits can store (and sometimes process) data and communicate with a terminal via NFC. Standard Bank Card Division is going to introduce Visa Contactless Credit card which will be more convenient to use. Tijarah Card Campaigns Risk Governance Card Division will engage Cardholders through different card campaigns- Corporate Card Sales, Festival Discount, BDT/USD E-commerce campaign, Inactive card activation campaign, On the eve of Eid, Pohela Baishakh, Puja, X-mass Day, Valentine’s Day, Ramadan etc. Card Division will initiate Discount/BOGO campaign for limited time frame along with Cardholder Referral Campaign throughout year. Increase Discount and EMI Merchants Management Retrospection Card Division is continuously increasing the number of Alliance business partners and signing with different corporate houses, large merchant establishments including Fashion & Lifestyle, Restaurants, Hotel & Resorts, Health& Beauty care etc. Card Division will incorporate more Discount and EMI merchants with the existing Alliance partners. ADC DEPARTMENT Stakeholders’ Information Alternate Delivery Channels are channels and methods for providing banking services directly to the customers where they can perform banking transactions through ATM, Branch POS, Debit Card, NPSB, DigiBanking, Internet Banking, and SMS Banking. These channels have enabled the bank to reach a wide consumer-base across geographies. ADCs ensure the smooth flow of regular transactions and provide the bank with higher profits with lower operational expenses and transaction costs. (i) Banking through ATM Standard Bank Limited has a well distributed ATM network across Bangladesh. SBL has already installed 120 ATMs at different locations in Bangladesh. SBL ATMs feature the latest in security technology and antifraud mechanisms for client’s complete peace of mind and provides a quick and convenient way to withdraw funds from any owned and shared ATMs at 24/7. Sustainability ATM Transaction: The below statistics provide the no. of transactions occurred in our ATM during the year 2019 and 2020: Particulars Total No. of Transactions at SBL ATMs Total No. of Transactions (SBL Card at SBL ATMs) Total Cash Withdrawal Amount (SBL Card at SBL ATMs) Total No. of Transactions (NPSB Cards at SBL ATMs) Total Cash Withdrawal Amount (NPSB Cards at SBL ATMs) 2020 6,00,115 6,28,487 Tk. 501,03,58,000 Tk. 580,80,54,000 3,71,325 3,74,304 Tk. 318,35,65,000 Tk. 333,32,63,000 2,29,498 2,54,183 Tk. 183,27,57,000 Tk. 247,47,91,000 Standard Bank Ltd Annual Report 2020 Financial Information Total Cash Withdrawal Amount at SBL ATMs 2019 | 69
71. (ii) Debit Card Introduction SBL current/ saving account holders can enjoy the benefit of SBL Debit Card. It is a proprietary Debit card which can be used at SBL Owned ATM/POS Network & National Payment Switch of Bangladesh (NPSB) Network. Particulars As on 31st December 2019 As on 31st December 2020 Total No. of Debit Card 78,913 1,03,125 Corporate Governance Income from Debit Card: Year 2019 2020 Growth Income from Debit Card (excluding VAT) 97,04,400 1,82,11,210 88% (iii) National Payment Switch Bangladesh (NPSB) Standard Bank Limited is successfully connected with National payment System Bangladesh (NPSB). Now the customers of SBL have access over 10500+ ATM networks as well as 60000+ POS networks, allowing ATM transactions (Cash Withdrawal, Mini Statement and Balance Inquiry) and POS retail purchase service. Risk Governance NPSB Transaction Report (ATM & Retail Purchase) Particulars SBL Card at NPSB ATMs 2019 No. of Transactions Amount of Transactions 2020 2,83,343 3,07,824 Tk. 204,37,32,100 Tk. 236,53,75,800 No. of Transaction NPSB Retail Purchase Management Retrospection Amount of Transaction 27,815 27,643 Tk.16,98,99,531 Tk. 8,96,48,563 Below is the revenue growth rate of NPS transaction between 2019 & 2020 Revenue from NPSB Network (ATM & Retail Purchase) Particulars 2019 2020 Total Income from SBL ATM using NPSB Card Tk. 44,57,215 Tk. 51,47,715 NPSB Retail Purchase Income Tk. 7,00,239 Tk. 6,86,471 (iv) Branch POS Stakeholders’ Information SBL already deployed 129 units of Branch POS in different branches. POS terminals help customers carry out chequeless transactions at the branch by swiping debit cards on the POS machine and this is advantageous when ATMs are not nearby. Below is the statistics of the transactions occurred in our Branch POS during the year 2019 and 2020: Branch POS Transaction Report Particulars No. of Transactions Amount of Transactions 2019 2020 1,22,154 1,12,909 Tk. 326,23,00,373 Tk. 320,85,32,813 Sustainability (v) SBL DigiBanking With this SBL DigiBanking App, the customer can do banking at anytime from anywhere in the globe. By DigiBanking, our customer can perform Fund Transfer to any SBL Account, Other Bank Account, Bkash MFS A/C, Pay their Credit Card Bill, WASA Bill and can perform Mobile Recharge anytime and from anywhere. Apart from this, anyone can identify the contact details of our branch, can call Branch Manager, can apply for different products & services, can identify benefits & EMI facilities offered by SBL Credit Card and locate any Branch, ATM, Agent locations etc. Particulars Financial Information Total No. of Customers in Mobile Apps in DigiBanking No. of Transactions Amount of Transactions Income from Service Charge (excluding VAT) 70 | Standard Bank Ltd Annual Report 2020 2019 2020 3,487 5,257 43,109 69,931 Tk. 28,57,36,082 Tk. 65,87,23,442 Tk. 2,30,800 Tk. 4,30,600
72. (vi) SMS Banking: Total No. of Customer Income from Service Charge (excluding VAT) 6,71,739 Tk. 5,35,48,200 Introduction The SMS Banking service provides instant notifications about all transactions as and when it happens. It helps SBL clients to keep a watch on their account with around the clock service. Below are the statistics of No of SMS and earned revenue of 2020: Corporate Governance (vii) Internet Banking: We already started technology based innovative banking services like Internet Banking. By using our secured Internet Banking service anyone can check their account balance, print statement and do fund transfer quite easily from anywhere around the globe using the Internet. Particulars 2020 Total No. of Accounts No. of Transactions Amount of Transactions Income from Service Charge (excluding VAT) 12,672 870 Tk. 3,36,000 Tk. 2,72,13,711 Risk Governance PLANNING FOR 2021: By the year 2021, SBL is also planning to incorporate some security features across different delivery channels, such as; EMV Chip Based Debit Card For securing customer data at Debit Card, we are planning to incorporate EMV Chip based card in place of Magnetic striped card. Switching System up-gradation We are going to upgrade our switching system to provide more security and integrate value added services such as Merchant POS, E-wallet, Card-less ATM transaction and Recycler ATM services with real time cash deposits. Call Center Implementation For smooth customer support, we are planning to incorporate Call center. Customer service and support is crucial for the banking industry, where clients need prompt resolutions for many issues for lead generation to customer support and loyalty promotion. DigiBanking up-gradation We will upgrade our DigiBanking System to provide more security and also integrate value added services such as Self-registration, Utility payment, Tuition Fee Payment, Merchant Payment and connectivity Fintech companies for interoperability. Stakeholders’ Information Complying the Central Bank’s instruction and as well as for securing ATM transactions from skimming fraud, we are going to install anti skimming device, PIN shield and anti malware protection at all ATMs of SBL. Management Retrospection ATM Security Consequently, it can easily be concluded; developing the use of alternate channels is now seen as an important strategy for delivering significant savings for Standard Bank Limited. In the future we have plans of expanding our services significantly by adopting state of art technology in order to satisfy the needs of our clients at an optimum level GENERAL SERVICES DIVISION (GSD) General Services Division (GSD) is one of the vital and integrated organs of Standard Bank Ltd. The responsibility of this Division can be described in one sentence as to create and develop an environment both at Head Office and Branches to ensure smooth banking operation and to promote long term sustainability. Sustainability GSD is entrusted with the responsibility of providing continuous and seamless logistic support services to the Bank and ensuring high quality routine maintenance in all respects. GSD of Standard Bank Ltd is committed to provide the right kind of supports to all the bank’s Delivery Outlets and Head Office Divisions by introducing an effective procurement and delivery system. Its objective is to provide right kind of logistic support at right time, at right place, at right quality, at right price and at right quantity. Activities Financial Information Due to the outbreak of COVID-19 pandemic, 2020 was a difficult year for the bank. GSD has played a vital role to provide logistics support to the stakeholders for smooth operation of the bank and took initiatives to reduce all type of costs so that it become easy for the bank to face the challenge occurred due to pandemic situation. GSD also worked day-night to protect the employees of the bank from COVID-19 contamination. In brief, all mentionable achievements accomplished by GSD in the year 2020 are appended below: Standard Bank Ltd Annual Report 2020 | 71
73. 1 . Setup of “Mujib Corner” Introduction 2020-21 was declared as the year to celebrate the Centennial Birth Anniversary of the founding leader of Bangladesh, Father of the Nation Bangabandhu Sheikh Mujibur Rahman. To celebrate the occasion, we have successfully setup 3 “Mujib Corners”1. at our Head Office, Motijheel C/A, Dhaka, 2. at Gopalgonj Branch, Gopalgonj and 3. at Bagerhat Branch, Bagerhat. Corporate Governance 2. Protective Measures taken against COVID-19 Pandemic Risk Governance When the whole world, including Bangladesh were under lockdown due to COVID-19 pandemic, GSD acted as frontliners for the bank only to protect the executives, officers and staffs of the bank from COVID-19 contamination. We procured and provided all kind of protective equipments (i.e. Face Mask, Hand Sanitizer, Hand Gloves, disinfectant archway, hand wash etc.) to the branches and different divisions of Head Office. We also arranged and maintained transport facility provided to the employees of the bank with 6 buses around Dhaka city to protect COVID-19 contamination. 3. Cost Reduction Initiatives Due to COVID-19 pandemic, the world has faced a global recession. Bangladesh was not out of that calamity. To overcome the situation SBL, i.e. GSD took some initiatives. Those are as under: Management Retrospection Stakeholders’ Information i. Vacating 3 floors of Head Office: We have vacated 3 floors of head office (Islam Chamber) and accommodated the divisions within the rest of the occupied floors. It reduced the rent, utility bill and other service charges amounting approximate total Tk.3,36,56,386.00 (Three Crore Thirty Six Lac Fifty Six Thousand Three Hundred Sixty Eight) only. ii. Rent Reduction: We have communicated with the landlord of the Branches all over the country, negotiated with them and finally succeed to reduce the rent by 1025% which reduced a huge amount of expenditure for 1 year amounting total Tk.5,95,77,361.00 (Taka Five Crore Ninety Five Lac Seventy Seven Thousand Three Hundred Sixty One) only. iii. Other Initiatives: We have communicated with different vendors in written and requested them to reduce the rate of service. Some of the vendors have responded to us positively which also reduced the expenditure. 4. Shifting Sustainability After successful completion of interior decoration and other civil works, Foreign Exchange Branch has been shifted to new location. Interior works is going on in the new location of Narayangonj Branch which will be shifted very soon. 5. Renovation The renovation work of our Bahaddarhat Branch has been completed successfully. Financial Information 6. Team Work We have taken fruitful initiatives to maintain office premises in order, to keep Cleanliness and Security systems up to the desired level of the management and to maintain all sorts of machineries and equipments of HO and Branches by working in groups and team work. 72 | Standard Bank Ltd Annual Report 2020 7. ATM We have provided our all out logistic support to successfully set up 4 ATM Booths in different locations of the country in 2020 despite COVID-19 pandemic situation. 8. Construction of Corporate Head Office Building (Gulshan) In 2020, the progress of Gulshan project is significant. Construction of 25-storied building is under progress. Casting of 9th floor has been completed. 9. Contribution in CSR GSD has surveyed the market, selected the eligible vendors through purchase committee, purchased and handed over 75,000 pieces of blankets to the Relief Fund of Honorable Prime Minister for distribution to the distressed people of cold stricken area of the country under CSR program of the bank in 2020. We believe only in excellence in our assigned job and that is possible with the whole hearted co-operation of all the members of this organization. We intent to leave no stone unturned to provide the best support to all concerns. In this regards we humbly seek your blessing and kind cooperation. AGENT BANKING OPERATIONS Bangladesh is one of the most densely populated countries of the world with a population of 160 million out of which most of the people live in rural areas.Although they are part of the economy but dispersed due to geographic isolation and presently many are outside formal banking network. Agent banking is an additional delivery channel that can enhance the convenience to provide quality and affordable technology based real-time online banking services for the underserved & unbanked population in a cost-efficient manner without establishing branch network. Bangladesh Bank initiatives: Bangladesh Bank issued Guidelines on Agent Banking for banks vide Payment System Department circular letter no. 05 dated 9th December 2013, BRPD circular Letter No.07 dated 24th March, 2014 and subsequently Bangladesh Bank issued Guidance note for approval and operation of Agent Banking activities for banks vide GBCSRD circular letter no.02 dated 3rd June, 2014 and PrudentialGuideline for Agent Banking Operation in Bangladesh vide BRPD circular no-14, dated18 September, 2017. Standard Bank initiatives: Under the Bangladesh Bank permission vide letter No. BRPD(P-3)745(43)/2015-4907 date-30th June 2015, our bank has started operation of Agent Banking in the year 2016. For creating our service network, Bangladesh Bank has given us permission to open 50(Fifty) Agent Outlets. As of 31st December 2020, we have been providing agent banking services through 26(Twenty Six) Agent Outlets throughout the country. Since beginning 29 Agent Outlets were opened and 03 (three) Outlets were closed. SBL Agent Banking Model: Standard Bank Limited made a unique Shariah compliant Agent Banking model with technology based banking concept ensuring appropriate security with real-time banking for customers. Agent outlets are distinctly branded with Standard Bank Agent Banking logo to provide products and Services of Standard Bank Limited. All Agent outlets are equipped with Laptop/ P.C, printer,Biometric Fingerprint authentication device, Image capturing device, POS printer etc. Agent banking transactions are on real time basis and integrated with Bank’s Core Banking system. Customers get instant confirmation of transaction through Mobile SMS and system generated printed money receipts.
74. SBL Agent Banking Product & Services: Deposit in Agent Banking (Taka in Lac.) Introduction Standard Bank Agent Banking provides almost all types of Islamic Banking services including opening of different types of customer deposit accounts, online fund transfer & EFTN, Foreign remittance payment, Utility bill collection, School Banking & SBL 10Taka Account, Disbursement of salary & allowances of Govt. social safety net program. Corporate Governance Standard Bank Agent Banking business analysis in 2020: Deposit Mix in Agent Banking 336.75 Future Plan: 235.85 Standard Bank believes that each & every people has the right of getting modern banking facility. We also believe that agent banking can be a medium to ensure such right of all people including rural people of the country. In view of this objective we have a plan to appoint agent in most rural areas of the country. Particulars 104.20 1,518.11 No. of Agent Outlet in operation Total No of A/C Mudaraba Term Deposit Mudaraba Saving Deposit Mudaraba Scheme Deposit Mudaraba Short Term Deposit Deposit, Foreign Remiitance & Utility Collection 666.26 1694.89 Total Deposit Foreign Remittance Disbursed Utility Collection Number of account in Agent Banking Operating profit Growth 41 58% 13464 17113 27% 2614.29 Lac 3500.00 Lac 34% 83.99 Lac 200.00 Lac 138% F. Remittance Disburse 1694.89 Lac 2200.00 Lac 30% Collection of Utility Bill 666.26 Lac 866.00 Lac 30% In 2021 we are planning to open around 15 new outlets and enhance the business of existing outlets. We are also planning to provide Debit card, RTGS and some new products (those exists in our core banking) & services to our agent banking customers. Through these our customer base will be increased and accordingly 3650 number of fresh accounts will be increased at 27% growth, deposit will be increased by 09 crore at 34% growth and operating profit will be 02 (two) crore. In the same way Foreign Remittance disbursement and Bill Collection will be increased by 05 crore and 02 crore respectively at 30% growth. Stakeholders’ Information 2614.3 Total Deposit 26 Plan 2021 Management Retrospection Al-wadiah Current Deposit Actual 2020 Risk Governance 419.40 Standard Bank Limited believes that large rural economy outside the banking net cannot be ignored & Agent Banking will provide the future banking platform at their doorstep for those people, not limited to customer services but shall explore the hidden rural economy. Agent Banking will provide the opportunity to connect large number of rural un-banked population under the Standard Bank umbrella, who are presently outside the banking network. Sustainability CREDIT ADMINISTRATION OPERATION The functions of Credit Administration Division (CAD) are basically focused on the post approval activities and CAD always ensures that proper documentation and approval are in place prior to disbursement of loan facilities. Nevertheless, the key element toward ensuring proper credit discipline in a bank depends on smooth functioning of credit administration division. Financial Information Being segregated from Relationship Management, CAD plays an important role to avoid the possibility of controls being compromised or issues not being highlighted at the appropriate level. CAD of Standard Bank Limited has been functioning smoothly with a view to safeguard of Bank’s assets and to maximize ‘stability in assets quality’ by reducing the ‘Risk’ to an optimal level toward maximization of ‘profitability’. Standard Bank Ltd Annual Report 2020 | 73
75. Introduction CAD is responsible for the accuracy of documents provided / executed by the borrowing customers received through/from the Relationship Manager and ensuring the satisfaction of conditions precedent and conditions attached to approved facility by the Credit Risk Management Division. CIB related activities: • To input all necessary data of the CIB Inquiry Form in On-line System; • To collect credit related information from the branches through internal system and report the same to Bangladesh Bank in the form of Batch File; • To generate CIB On-line Report & check properly; • To mail the soft copy of CIB On-line Report to the branches; • To advise the branches for correctness of data in CIB Inquiry Form; • To submit the CIB Report before the Management on case to case basis as and when required; • To make correspondence with the Central Bank on different CIB related issues and to make necessary correction, if required; • To comply with Central Bank’s instructions on CIB issues. In the year 2020, CAD has performed the following jobs as usual: Corporate Governance Checking of Documentation Status relating to Credit Facilities: • To scrutinize/analyze/examine of security documents whether the documents are in order in line with the sanctioned terms and conditions against different credit facilities of different customers of the different branch(-es) for setting up limit(s)/ assigning Sanction ID in the Core Banking System (CBS) ‘istelar’; Being satisfied with the documentation status, CAD prepares Office Note having all relevant information and place the same before the management for approval as per Delegation towards assigning Sanction ID. Risk Governance Management Retrospection • To ensure compliance with internal policies and procedures and external regulatory requirements while discharging job responsibilities; • To read out BLA’s Opinion on mortgaged/ proposed mortgaged properties regarding title, chain of ownership, as well as BLA’s Satisfaction Certificate on complete documentation; • To verify and tally the schedule of the property of the mortgaged deed with the property schedule of Title Deed, Sanction Advice, BLA’s Vetting Report etc. and to get the mismatch, if any, rectified through following proper process. • To ask the branches through letter/email/ over phone for clarification/rectification of ambiguity in documentation, if any, arises while scrutinizing the documentation status; Stakeholders’ Information • To advise the branches regarding the way to mitigate the documentation related irregularities, if required; • To inform the branches about setting up limit in CBS, or, declining the proposal for assigning Sanction ID/disbursement on valid ground; • • To issue letters to the branches/inform declining the proposal for assigning Sanction ID/creation of limit on valid ground. To monitor / follow-up for regularization / improvement of the wanting documents/ irregularities/ inadequacies, if any ; Assigning Sanction ID/Limit set up in the Core Banking System(CBS) ‘istelar’: Sustainability Financial Information 74 | • To input and authorize the required information in the Core Banking System (CBS) ‘istelar’ according to the approved Office Note for assigning Sanction ID /Limit Creation toward disbursement; • To communicate with the concerned officials of IT Division on technical problem, if any, arises while assigning Sanction ID/ Modification; • To ask the respective branch manager/the concerned officer of the respective branch for clarification on mismatch, if any is found in the system while assigning Sanction ID/Modification; • To modify data in CBS relating to Loan Increase, Loan Decrease, Interest Rate change, Time extension, Rescheduling, Repayment Schedule Modification, etc. upon receipt request from the branches according to approved terms & conditions; Standard Bank Ltd Annual Report 2020 Monitoring • To monitor/follow-up for regularization/improvement of the irregularities/ inadequacies / lapses as placed in the Office Note for Assigning Sanction ID as exceptions/wanting/ deviations/ observations, which are duly approved by the management; • To monitor different types of overdue accounts toward regularization. Enlistment of Surveyor: • To enlist surveyors, third party service provider, under the guidance of the existing CRM Policy relating to Surveyor Enlistment in order to conduct survey jobs on collateral security offered against different credit facilities of different customers of the bank. Further, Investment Administration Division [Former Credit Administration Division] of Standard Bank Limited is going to take initiatives to introduce a standard process flow of IAD in the light of Islamic Shariah towards ensuring check and balance, form an equipped MIS & Monitoring Unit, and also to accommodate BB Returns Unit for smooth functioning for the division. INVESTMENT RISK MANAGEMENT Investment Risk: Investment risk refers to the risk that a borrower may not repay an investment amount and that the bank may lose the principal of the investment and profit thereon. In other way it refers to the risk of negative effects on the financial result and capital of the bank caused by customer’s default on its obligations to the bank. Generally investment made to the customer is the largest and most obvious source of overall investment risk. Investment risk arises from the direct investment dealing with individuals, corporate, banks and financial institutions or a sovereign where counter parties have repayment or other obligations to the Bank. It may arise from either an inability or an unwillingness to perform in the pre-committed contracted manner. Investment risk includes settlement risk, suitability risk and wrong way risk. Investment Risk Management: Investment exposures may arise from both the banking and trading books as well as Off-Balance sheet exposures. The risk is managed in the SBL through a framework that spell out policies and procedures covering the measurement and management of investment risk. There is a clear segregation of duties between transaction originators in the businesses i.e. Branches network and approvers in the Risk function. All investment exposure limits are approved within a defined investment approval authority framework. Investment policies and standards are considered and approved by the Board of Directors.
76. Investment Portfolio Investment Risk Measurement : 1.29% 1.09% 2.74% 7.58% 1.71% Introduction Risk measurement plays a central role, along with judgment and experience, in informing risk taking and portfolio management decisions. In SBL, Bangladesh Bank’s prescribed standard Internal Credit Risk Rating (ICRR) is used in both Corporate and SME sector financing. The grading is used to assess the client along with a range of quantitative and qualitative factors. The grades (derived from ICRRS) against Corporate & eligible SME customers are supported by, rating by grades and ratings assigned by approved external rating agencies. 8.94% 49.14% Corporate Governance Investment Risk Management Policy and Strategy: 27.50% Agriculture, Fishing and Foresty Transport & Communication Industry Consumer Financing Trade and Commerce Investment to Financial Institute Construction Miscellaneous Risk Governance SBL manages its investment exposures following the principle of diversification across products, regions, collateral types, client segments and sectors. The Investment Risk Management Policy of the Bank is approved by the Bank’s Board of Directors, which plays a central and strategic role in managing daily business activities. The policy defines clearly the criteria that incorporate client selection, due diligence, tolerable levels of concentration risk and portfolio monitoring in line with the Bank’s risk appetite. The policy and guidelines are reviewed and up dated regularly to ensure consistency with the Bank’s regular business strategy and market demand. Breakdown of Industry Concentration: Investment Division Investment Percentage 688.34 717.23 1.20 17.52 255.56 5.75 390.89 135.56 1,436.83 695.89 344.39 4.32% 4.50% 0.01% 0.11% 1.60% 0.04% 2.45% 0.85% 9.01% 4.36% 2.16% Total 7,835.99 49.14% Stakeholders’ Information Standard Bank is known for its superior service quality, brand image, strong corporate governance and corporate culture as well. Management is putting utmost effort to place the Bank in a list of toptier Bank in Bangladesh and reputed among regulators as distinctly Compliant Bank. SBL is aligned to its vision, mission, values and strategic priorities. The last business year 2020 was challenging for the banking business due to COVID-19 pandemic, fixed rate of return etc. Standard Bank has already built its expertise to in a wide area of Sharia’ah based financial services comprising of Corporate, SME and Retail, Commercial Banking, Investment Banking, Merchant banking, Offshore Banking, Lease Financing and Digital Banking. Sector Textile Food and Allied Pharmaceutical Chemical, Fertilizer, etc. Cement and Ceramic Ship Building Ship Breaking Power and Gas Other Manufacturing Service Industries Others Management Retrospection In a fast-growing economy of Bangladesh, Standard Bank Limited (SBL) is contributing immensely by providing customized services to the entrepreneurs to ensure growth of the firm and ultimately GDP growth of the country. SBL has a well-equipped Investment Division to serve its 138 no of Branches in approving investment facilities to the customers complying Bank’s internal and as well as external policies including Bangladesh Bank’s policy guidelines and directives in force. Sector Wise Portfolio Concentration in 2020 Investment (BDT Crore) Sector Fishing, and 1.71% Industry 7,835.99 49.14% Trade and Commerce 4,384.77 27.50% Construction 1,425.67 8.94% 436.52 2.74% Consumer Financing 174.37 1.09% Investment Institutions 206.01 1.29% Transport Miscellaneous Total to Financial 1,209.00 7.58% 15,945.02 100.00% Financial Information 272.69 Sustainability Agriculture, Forestry Percentage Standard Bank Ltd Annual Report 2020 | 75
77. Introduction Geographical Distribution of Investment Portfolio in 2020 : Division Investment Dhaka Percentage 11,043.57 69.26% 2,750.44 17.25% 619.67 3.89% Sylhet 75.08 0.47% Khulna 729.05 4.57% Rangpur 639.70 4.01% 41.73 0.26% Chattogram Rajshahi Corporate Governance Barisal Mymensingh Total 45.78 0.29% 15,945.02 100.00% Georgraphical Distribuion of Investment Risk Governance 3.89% 0.26% 0.29% 4.01% 4.57% 0.47% SBL puts emphasis on financial inclusion and strives to achieve excellence in this venture. At SBL, we believe in teamwork and create success stories for our stakeholders. With all these team work, innovative banking and diversified portfolio we only foresee growth of the bank in the coming years. We are always thankful to all our stakeholders for keeping trust on us. Investment Approval Process and Structure: Since, SBL deals with a moderately large and diversified investment portfolio of the country amongst the third generation private commercial banks, it has specific policies in place for inducting, dealing, processing, sanctioning and handling overdue and nonperforming investments of the Bank. The investment approval procedure is being followed in accordance with the approved policy of the Bank. The Board of Directors is the supreme approval authority of investment. However, the Board delegated its business power to the Executive Committee of the Board of Directors and different tiers of Management of the Bank. Investment Management Process 17.25% 69.26% Management Retrospection Stakeholders’ Information Dhaka Khulna Chattagram Rangpur Rajshahi Barisal Sylhet Mymensingh RMG Financing Cell SBL Investment Division is not only focuses on dominating industry sectors but also put its efforts towards exploring possible investment prospects in emerging industry sectors. SBL also has a dedicated RMG financing cell equipped with required expertise to handle the portfolio in RMG sector financing of SBL. SBL always brings innovation in the table in terms of portfolio diversification and tailor made investment products that meet up customers’ need comprehensively. Sustainability Export and Import performance in the year 2020: Export: BDT 4,363.05 Crore Import: BDT 4,919.51 Crore Export Import Performance 2020 4,919.51 Financial Information 5000 4500 4,363.05 4000 Export 76 | Standard Bank Ltd Annual Report 2020 Import Investment Risk Mitigation: Banking is about managing risk and return and it is inherent part of all types of its business. The most optimum management of risk ultimately brings success for a bank. Risk Management is one of the most fundamental functions of a banking institution. Having uncertainty directly related with regular banking operations, a sound risk management framework is a must to bring prime return to all its stakeholders. Investment risk can be defined as the possibility that borrowers will fail to meet their obligations in accordance with the agreed terms and conditions. Banks are heavily engaged in investment risk and it is considered the most crucial part of banking to assess the risk and mitigate the risk proactively to maintain healthy balance sheet and ensure sustainable profitability for the shareholders.
78. Keeping the investment risk one of the most significant , Standard Bank is stretching a vigilant concentration on mitigation of investment risk. Bank’s Investment Division is playing, among others, the following major activities: • Through proper and effective functioning of Management Investment Committee (MIC), SBL has establish a sound risk management environment. All investment proposal channel through the MIC. The investment division actively works in identification of investment risk based on its expertise and experiences under the purview of Board’s approved policies and guidelines and risk appetite statement. • Maintaining an appropriate investment administration, measurement and monitoring process. Regular investment review is done to keep the asset quality of the Bank safe. • Ensuring adequate controls over investment risk ensuring that exceptions to policies, procedures and limits are reported in a timely manner to the appropriate level of management. • In terms of ensuring compliance, investment division has satisfactorily complied with the Bangladesh Banks audit findings and related guidelines in 2020 which will have direct impact on CAMELS rating as expected. In the coming days, the bank would remain complied with the norms, rules and regulation. Management Retrospection Operating under a sound investment granting process. The investment division assessing the investment requirement and evaluate the customer under sound, well-defined investmentgranting criteria. All extensions of investment made on an arm’s length basis. In particular, investment to related companies and individuals is monitored with particular care and other appropriate steps taken to control or mitigate the risks of connected lending. Small and medium enterprises (SMEs) are the most vibrant segment of our country. SMEs are getting the highest priority from policymakers due to their already proven multidimensional contribution to the socioeconomic environment of our country. SME enterprises are easy to start, require only minimum capital, employ a comparatively higher number of people, and produce goods that meet local demands as well as contribute to export earnings. Our definition of SMEs is based mainly on indicators of replacement cost (invested amount), number of people employed, yearly revenue, etc. Size of the indicators. Bangladesh government has already identified it as a thrust sector and Bangladesh Bank, in line with the stance, has given top priority for financing in this sector. Government of Bangladesh has realized that the SMEs sector is labor intensive sector, so it is effective poverty alleviation tool. SME reduces the urban migration and develops the rural infrastructure. Since SMEs are based on comparatively small investment, so their growth and survival depends on ease access and operating excellence in the market, financial support from the Bank with easy condition. Now, Women entrepreneurs are highly stimulated to get involved in SMEs sector. In this above backdrop, Bangladesh Bank provides re-financing scheme and gives necessary instruction and guideline to the commercial Bank to keep the women entrepreneur dedicated desk. Besides, SME Foundation is providing necessary guideline, training and financial supports. Risk Governance • SME SECTOR IN BANGLADESH: Corporate Governance Establishing an appropriate investment risk environment. Introduction • Hopefully, this will help more effectively maintain sound investment portfolio of the Bank and reduce non-performing investment ratio. Finally, it is expected that as a part of continuous up gradation, Investment Division will actively and pro-actively act to uphold the position of the Bank complying with the rules and regulations. Role of Standard Bank Ltd on SME: As per directives of the Board, Investment Division continuously evaluates its focus and takes the avenues that best serves the interest of its clientele and Share Holders and other Stakeholders. With this end in view, and keeping safety of the bank in mind, the bank adopts policies and formulate procedures within the framework and guidelines of Bangladesh Bank to bring the dynamism in bank’s financing strategies. Stakeholders’ Information Since beginning, Standard Bank Ltd now has been rendering banking services by 138 branches along with 2 Islamic branches all over the country through improved customer service, creative activities & commercial integrity equipped with all modern services. As per guideline of Bangladesh Bank, Standard Bank Ltd has taken active role to increase SME Financing out of its total loan portfolio. Considering the importance of SMEs in the economy of our country, Standard Bank Limited has formed a separate SMEs Division for maintaining full scale operation of SME financing activities. All of our branches are serving SME customers through dedicated and well trained SME officers. Performance of Standard Bank Ltd at a Glance: SME Division of Standard Bank Limited has already assigned dedicated SME officers to all of the branches to have greater access to market and to unleash the potential. SME division distributional channels are shelving all possible banking solution to SME customers across the country. All branches have been advised to take all necessary action to expand credit to the SME sector with priority to women entrepreneurs. A yearly target outstanding of Tk 3275.00 Crore has been set up for the year 2020. We have been disbursed Tk 1173.64 Crore under SME sector during 2020. Sustainability Comparative Business Performance on SME financing up to 31.12.2020 are appended below: Enterprise Disbursement during the year 2020 2019 2018 2020** 2019* 2018* Outstanding as on 31.12.2020 Outstanding as on 31.12.2019 Small 740.80 882.18 813.43 1802.43 750 665 1776.73 1767.12 Medium 432.84 692.87 811.42 1472.58 750 665 1473.81 1445.35 Total 1173.64 1575.05 1624.85 3275.00 1500 1330 3250.54 3212.47 Financial Information • • Yearly Target ** Yearly target- 2020 determined on 21% total outstanding of Loans and advances. * Yearly target- 2018, 2019 determined on 10% above of previous year disbursement. Standard Bank Ltd Annual Report 2020 | 77
79. Graphical representation of SME Financing (comparative 03 years) are appended below: Challenges of SME in Bangladesh: Introduction There are some obstacles in the way of development of SME in Bangladesh. They are shown below: Corporate Governance • • ** Yearly target- 2020 determined on 21% total outstanding of Loans and advances. * Yearly target- 2018, 2019 determined on 10% above of previous year disbursement. WOMEN ENTREPRENEUR DESK: Risk Governance As per Bangladesh Bank guideline, a Women Entrepreneur’s Dedicated Unit has been set up at Head Office and Branches have already been opened a Women Entrepreneur’s Dedicated Desk to help Women Entrepreneur to make friendly relationship with them, help them to fulfill formalities and render them special service. We are lending Women Entrepreneurs @ 7% interest against refinance facility from Bangladesh Bank as per policy guideline of Bangladesh Bank. Management Retrospection REFINANCE AGREEMENT WITH BANGLADESH BANK: Stakeholders’ Information • Agreement has been executed with Bangladesh Bank on 06.04.2010 & 06.07.2010 for refinance against disbursed loan to Women Entrepreneurs (@7% interest) & for refinance against disbursed loan for setting up agro processing rural industries to get refinance against disbursed loan to support Small & Medium sized manufacturing enterprises. So far we have received good amount refinance from Bangladesh Bank for lending to Women Entrepreneurs. • In view of Govt. policy, Bangladesh Bank directives and for diversification of risk, Branch incumbents are advised to diversify their loan portfolio and enrich SME sector and Women Entrepreneurship. • Agreement has been executed with Bangladesh Bank for CMSME Stimulus investment and we achieved 30% of total BB CAP and almost 100% of trading sector CAP. Fig: Challenges of SME in Bangladesh SME Events and Fairs Participated by Standard Bank Limited: Banker-SME Nari Uddogta Somabesh & Ponya Prodorshoni Sustainability Financial Information SME Financing Fair, Rajshahi 78 | Standard Bank Ltd Annual Report 2020
80. Banker-SME Nari Uddogta Somabesh & Ponya Prodorshoni-2020 organized by BB which was held on 08-10 March at Bangladesh institute of Bank Management. 2. Banker-SME Nari Uddogta Somabesh & Ponya Prodorshoni-2019 organized by BB which was held on 08-10 March at Bangladesh Shishu Academy. 3. Banker-SME Nari Uddogta Somabesh & Ponya Prodorshoni-2018 organized by BB which was held on 08-10 March at Bangladesh Shishu Academy. Banker-SME Nari Uddogta Somabesh & Ponya Prodorshoni-2017 organized by BB which was held on 06-11 March’2017 at Bangladesh Mohila Somity, Baily Road, Dhaka. 5. Conference of Women Entrepreneur and 04 (Four) days Product Exhibition - 2016 organized by Bangladesh Bank, Head Office, SME & Special Programs Department which was held on 09-12 March’2016 in cooperation with the Banks and NBFIS at BBTA. 6. SME entrepreneurs-Bankers fair arranged by SME Foundation & Bangladesh Bank at Hotel Sonargaon. Concluding Remarks: As per Bangladesh Bank Guidelines, the loans after being classified, Special Asset Management Division starts follow-up and gives proper treatment/advice to the Branch regularly for realization/regularization of the loans and informs the position to the higher Management and Board of Directors time to time. Action taken for Recovery from Classified, Writtenoff, Rescheduled & Overdue Loans and Advances: ii. Special Asset Management Cell has been formed in Regional Offices and Officials have been deployed there. Recovery Team has been formed in each and every Branch of our Bank. iii. Officials have been increased in Special Asset Management Division of Head Office. iv. Recovery Target has been set up for Branches, Regional Offices and Head Office level and targeted amount has been distributed among the respective Officials. v. Instructions have been given to Branches so that no new loan becomes classified. xii. Visiting the Guarantor’s/Mortgagor’s business and residential addresses even on holidays along with Branch representative for persuasion. xiii. Visiting collateral security from Head Office for large borrower, verification of genuineness as well as Market Sale Values of the same and ensure hanging Signboard thereto. xiv. Request Borrower’s close relatives/friends near and dears & seek their help to exert their influences on the borrower to repay the bank liability. xv. Involving local elite persons by whom the borrowers may be guided /controlled for repayment/regularization of the loan. xvi. Intimating Regulator’s guidelines and Management’s decision/ instruction to the Branches time to time. xvii. Negotiation is continuing with the defaulter borrowers for realize maximum amount from them for the betterment of the Bank. xviii.Initiatives have been taken for arranging training of Branch Manager & Dealing Officers for recovery. xix. Latest recovery progresses are being submitted regularly to Higher Management for necessary instruction and advices. As a result, a positive response has been observed among the Officials of the Branches as well as Defaulter Borrowers. Through Team Work and Joint effort of Head Office Executives/Officials and Colleagues of Branches, a good number of classified & overdue loans & advances have turned into regular & reduced an amount of Tk.73.69 crore from Classified Loans and able to downsize percentage of Classified Loans from 5.20 to 4.87 for which credit goes to the Top Management for their dynamic leadership and all Team Members of Branch & Head Office. Financial Information 03 (three) Regional Offices have been formed in Chattogram, Khulna and Sylhet where our Officials vigorously trying to recover Bank dues from NPL & Written-off Loans. xi. Visiting borrower’s business and residential address along with Branch Officials for recovery drive and taking action accordingly. Sustainability i. Officers of Special Asset Management Division regularly visit Branches for proper follow-up of classified & overdue loan accounts. Stakeholders’ Information SPECIAL ASSET MANAGEMENT x. Management Retrospection Nowadays, SME considers as the engine of economic growth by offering large-scale employment and income earning opportunities at relatively low costs, especially in the rural areas. It also strengthens the economic growth in sustainable way which is precondition for alleviating poverty and standard of living. The significance of the SMEs is that it helps to explore opportunity to do something new with relatively low investment. It can help to create employment opportunities and continuously contribute to GDP. The emergence of the SMEs in the developed world makes economic case for fostering development of these industries. Considering significant contribution of SMEs on overall growth and sustainable economic development. Private Banks like Standard Bank Ltd are playing a major role in the development of SME sector. ix. Issuance of letters to Branch and Borrowers followed by timely reminder(s). Risk Governance 7. “2nd SME Banking Match Making Fair” of 9th International Women’s SME Expo Bangladesh- 2015 organized by Chittagong Women Chamber of Commerce & Industry (CWCCI). viii. Phone calls to the Branch Manager as well as Borrowers and Guarantors are going on regularly. Corporate Governance 4. vii. Arranging meeting in regular basis with defaulter borrowers in Head Office and all out efforts is going on for recovery. Introduction 1. vi. Regular Recovery Drive by Head Office Executives to the Branches is going on. Standard Bank Ltd Annual Report 2020 | 79
81. Recovery Performance for the period from 01 .01.2020 to 31.12.2020 is mention below: Introduction Fig. in Crore Tk. From Classified Period Cash Recovery from Written-off Cash Recovery from Rescheduled A/C Cash Recovery from Other Overdue A/C Grand Total Corporate Governance Cash Recovery Regularization by Rescheduling 1 2 3 4 5 6 7 01.01.20 to 31.12.20 29.02 44.19 2.87 44.04 179.55 299.67 Total 29.02 44.19 2.87 44.04 179.55 299.67 Position of Classified Loans & Advances Period Risk Governance 01.01.20 to 31.12.20 Figure at Opening of the Year Fig. in Crore Tk. New Addition during the Year Exit during the Year Figure at End of the Year No. of CL A/C CL Amount No. of CL A/C CL Amount No. of CL A/C CL Amount No. of CL A/C CL Amount 594 822.04 139 73.69 0 28.07* 455 776.42 * Tk.28.07 Crore is Interest Amount of SS & DF Loan during 2020 Target for 2021 Management Retrospection Top 20 Defaulter Top 20 Written-off Loan 25.00 50.00 Lastly, it may be mentioned that the profitability of the Bank largely depends on the recovery of classified, written-off and overdue loans and halt in further classification of new loans and advances. Though we are maintaining NPL rate around 4.87% recently, all of we must keep a conscious watch to minimize the NPL rate for smooth and healthy growth of the Bank. We believe by Joint Effort & Team Work we shall be able to keep the NPL at minimum level in coming days. BUSINESS TEAM Stakeholders’ Information The “IT Business Team” of Head Office is effectively organizing our day to day business operations through IT enabled solutions. In order to minimize the overall risk and strengthen our monitoring system in the centralized IT System Business Team is working round the clock to stop unauthorized and fraudulent activities. The team is directly reporting to the Management on various issues such as monitoring of branch transactions, system’s integrity, improvement, customization of software as per requirement and above all risk mitigation. Sustainability Financial Information Annual Business Conference-2020 of Standard Bank Limited was held on 30 January 2020, Thursday at Gardenia Banquets, Dhaka under the Chairmanship of Managing Director & CEO Mr. Khondoker Rashed Maqsood. Honorable Chairman of the Bank, International Director of Lions Clubs International & Former President of FBCCI Mr. Kazi Akram Uddin Ahmed graced the ceremony as the Chief Guest while Mr. Md. Zahedul Hoque, Vice Chairman of the Bank, attended the ceremony as the Special Guest. Directors Messers Ferozur Rahman, S. A. M. Hossain, Mohammed Abdul Aziz, Kazi Khurram Ahmed and Md. Nazmus Salehin were present as Guests of Honor on the occasion. 80 | Standard Bank Ltd Annual Report 2020
82. Creation of User in Core Banking Software defines user rights at Branch and Head Office level in line with job functions of desk officers . • Defining Teller Limit on the basis of transaction type, nature and branch category. • Ensure supervisory authority by “Queued Transaction Approval” and “Maker and Checker” at all levels of transaction processing. • Create Business Critical Reports to check branches data properly and as per Management instruction. Working on deployment of new products as far as business process and concerning with the security features. • User Acceptance Testing (UAT) for update or new development of Core Banking Software. • Any other requirements dim into fit with the demand of the situation. During the period of 2020, besides other running activities, Business Team has also completed the following prime assignments in cooperation with branch & Head Office: Export During the year 2020, total export volume stood at USD 518.91 million equivalent to BDT 43,630.57 million which is decreased by 22.54% with compare to the export of USD 673.94 million equivalent to BDT 56,326.43 million for the year 2019. Foreign Correspondents Scope of foreign exchange business depends on establishment of adequate correspondent banking relationship with reputed banks all over the world and sufficient Credit limits. Among others, increase of foreign exchange business is an objective of the bank. Keeping the objective in consideration, all out effort is being under process to enhance correspondent banking relationship with reputed banks globally. Presently, the bank has strong correspondent banking network with 405 Relationship Management Applications (RMA) with 194 renowned banks in 55 countries. We can cover almost all over the world for International Trades utilizing correspondent banking services of these banks. We have already established RMA arrangement under SWIFT with 55 local banks also. Segregation of SME loan accounts lying with corporate and other type • Standard Chartered Bank • Works on Loan Classification and Provision reporting automation process, security information update for existing customer • Habib American Bank-USA • Commerzbank AG-Germany • Matching of business or functional requirements for CBS by requirement analysis • Bankia, Italy • UBAE-Italy • Worked to formulate Product Program Guideline PPG for the different products to convert into Islamic banking products • UBI Banca-Italy • Banco Popolare, Italy • UBL AG, Zurich • Habib Bank AG-Zurich • Handelsbanken –Sweden • OberBank AG, Austria • Danske Bank, Denmark • Al Baraka, Turkey • Mashreqbank Psc – UAE INTERNATIONAL TRADE OPERATIONS • RAK Bank-UAE Financing in International Trade is one of the most important components of International Banking that has been playing a significant role in the overall foreign exchange business portfolio of Standard Bank since inception (1999) of the bank. The bank is contributing in country’s national economy by handling Foreign Trade business successfully by offering a broad spectrum of Trade Finance Products through its 19 Authorized Dealer (AD) Branches and OBU (Off-shore Banking Unit). • ICICI Bank Ltd, India • Axis Bank Ltd –India • State Bank of India • AB Bank Mumbai • AB Int’l Finance (HK) Ltd. • EBL Finance (HK) Ltd. • PBL Finance (HK) Ltd. • Bank Muscat-Oman • • Worked for product mapping to convert existing products to islami banking products User Acceptance Testing (UAT) new development modification of Core Banking Software modules and Development of different reports as per Bank’s requirement and others Sustainability • Stakeholders’ Information Update contents of our Web-Site for Islamic version Management Retrospection The bank has been enjoying credit limit for substantial amount from most of the renowned banks globally among which followings are notable: • • Risk Governance • Import business during the year 2020 was USD 579.39 Million equivalent to BDT 49,195.10 Million which was during the Year 2019 USD 894.23 Million equivalent to BDT 75,398.57 Million. It was decreased by 34.75% due to worldwide pandemic situation caused by COVID-19. Corporate Governance • Import Introduction The Team is also working within the fol¬lowing major areas of operation in consultation with relevant department, division & Branch In-charges in general and particularly with IT Division to reduce the risk and strengthen our monitoring system: Financial Information Most of the confirming banks are providing discounting facility against our acceptance under UPAS arrangement which plays a vital role in our foreign trade business and also to fulfill our payment commitment abroad. Standard Bank Ltd Annual Report 2020 | 81
83. Foreign Remittance Drawing Arrangement Introduction Presently , the bank has remittance drawing arrangement with following Exchange companies: Corporate Governance Risk Governance • MoneyGram Payment System Inc., USA • Western Union Money Transfer Service, USA • Ria Money Transfer, USA • BRAC Saajan Exchange Ltd, UK • Wall Street Exchange Centre LLC, UAE • Al-Ghurair Exchange LLP, UAE • Universal Exchange Centre, UAE • Instant Cash FZE, UAE • Xpress Money, UAE and • ZENJ Exchange Company, Bahrain Remittance received through different Exchange Houses as per arrangement: Management Retrospection Foreign Remittance Business of the bank stood at USD 130.29 million equivalent to BDT 11,250.61 million for the Year 2020 which is lower by 12.29% with compare to previous year-2019 of remittance USD 150.87 million equivalent to BDT 12,827.30 million in spite of COVID-19 pandemic all over the world. Bank’s Own Exchange Company We have the following two Money Transfer Companies in UK and USA, 100% owned subsidiary of Standard Bank Ltd. 1. Stakeholders’ Information 2. Sustainability Financial Information 82 | Standard Exchange Co (UK) Ltd.: The Company started its operation at 101 Whitechapel Road, London E1 1DT, UK. in the month of August 2009. The company is now working as collecting agent of BRAC Saajan Exchange UK Ltd. & Choice International. Standard Exchange Co. (UK) Ltd. has opened an MSB account with Clear Bank Ltd. in UK through which we will be able to receive remittance from UK soon. Standard Co. (USA) Inc. U/A/N “STANDARD EXPRESS”: The Company started its operation on 1st March 2011 by opening its 1st branch (Main Branch) at 37-22 73rd Street – Suite # 2B, Jackson Heights, NY 11372, U.S.A. It has now 8 branches at following locations: • Corp Office & Main Branch: Suite # 2B, 37-22 73rd Street, Jackson Heights, NY 11372, U.S.A • Jackson Heights Branch: Suite # A2, 37-22 73rd Street, Jackson Heights, NY 11372, U.S.A • Jamaica Branch: 168-16 Hillside Avenue, Jamaica, NY 11432, U.S.A • Ozon Park Branch: Ozon Park, 7515101 Avenue NY 11416, U.S.A • Brooklyn Branch: 487 McDonald Avenue, Brooklyn, NY 11218, U.S.A • Bronx Branch: 2156 Starling Avenue, Bronx, NY 10462, U.S.A • Buffalo Branch: 1105 Broadway, Suite 8, Buffalo, NY 14212, U.S.A • Los Angeles Branch: 4151 West Third Street, Unit A, Los Angeles, CA 90020, U.S.A Standard Bank Ltd Annual Report 2020 We have received remittance for USD 75.12 Million equivalent to BDT 6,494.52 Million from USA through Standard Express in the year 2020 which is 0.80% lower than the remittance of previous year (2019) for USD 75.73 million equivalent to BDT 6,503.99 Million. Foreign Currency Exchange Booth: We have opened Foreign Currency Exchange Booth at Arrival Lounge, Concourse Hall in Hazrat Shahjalal International Airport, Dhaka on 27th March 2013. We also have inaugurated another Foreign Currency Exchange Booth at Departure Lounge in Hazrat Shahjalal International Airport on 27th Dec 2017 which is another remarkable value added portfolio in the Foreign Exchange Business of our bank. Off-Shore Banking Unit (OBU): We have started operation of our Off-Shore Banking Unit from 2015 which has widened our coverage of business services. In the year 2020, USD 33.03 Million have been discounted against 674 bills through OBU. Whereas total 829 bills amounting to USD 49.46 Million were discounted through OBU in 2019. Sources of funds for OBU are SBL HO, ID and different foreign banks like Standard Chartered Bank, RAK Bank- UAE, ICICI Bank India, United Bank Limited-UAE, Mashreqbank Psc- UAE, Bank Muscat Oman etc. BRANCH MANAGEMENT & OPERATIONS DIVISION (BMOD) Branch Management & Operations Division (BMOD) of the Bank’s Head Office deals in core banking system. This Division plays a vital role in managing Branches and its operational control. Its scope of work includes obtaining permission from Bangladesh Bank on different issues, developing principles and procedures, primary products & services, standard operating procedures, corporate arrangements, branch establishment, business development, all operations, control, vigilance, preventive & corrective measures and compliance for all core banking issues. Selection of business location is of strategic importance for a bank. An effective branch location ensures more profitable customers and increases the possibility of potential sales, retain customers, and strengthen customer relationship as well as economic contribution to the country. A well-planned business network helps banks to gain a large market share. We are operating our business throughout country with our 138 branches (as on 31st December, 2020). Therefore we have 103 numbers of urban branches and 35 numbers of rural branches including 07 nos. of SME/Krishi branches. Besides that 02 Islami Banking windows (Topkhana IBW, Dhaka and Agrabad IBW, Chittagong) and 02 Islamic Banking Branch (Dhaka Udyan Islamic Banking Branch, Dhaka and Moheshkhali Islamic Banking Branch, Chittagong) are operating smoothly. The Management has planned to expand bank’s network by 05 (urban & rural) branches during the year 2021 at the important commercial hubs of the country subject to obtaining permission from Bangladesh Bank.
84. Number of Branches opened Total Branches in cumulative in the year 1999 04 04 2000 05 09 2001 01 10 2002 03 13 02 15 03 18 2005 04 22 2006 04 26 2007 03 29 2008 03 32 2009 09 41 2010 17 58 2011 10 68 09 77 10 87 2014 09 96 2015 08 104 2016 10 114 2017 11 125 2018 09 134 2019 04 138 2020 - 138 The Division has been providing continuous support for operations of the branches and has been trying to provide longer term solution for taking both operations level & long term policy level under consideration. 1. Agreement with CPTU for functioning E-Tendering through all Branches, 2. Agreement with Dhaka WASA for On-line bill collection of WASA Bills through all Branches, 3. Agreement with BRTA for collection of motor vehicles Taxes and fees through On-line Banking system, 4. Agreement with DPDC for On-line collection of Electricity Bills through all Dhaka based Branches of SBL, 5. Agreement with DESCO for On-line collection of Electricity Bills through all Branches, 6. Agreement with REB for collection of Electricity Bills at all rural Branches, 7. Agreement with BTCL for On-line collection of T&T Bills through all Branches, 8. Agreement with “Bank Compare BD”, credit card referral agency to our bank with the help of Credit Card Division, 9. Agreement with Election Commission to verify the NID information of client from their database, 10. Agreement with TITAS gas bill collection through online banking system. 11. A MoU signed with Radisson Blu Chittagong for hotel accommodations & facilities for SBL and our valued customers. The following arrangements are under process: 1. Agreement for E- Passport fees collection. 2. Agreement for collection of City Corporation’s holding & other taxes. 3. Agreement for collection of BSTI fees. Financial Information The Division has been mobilizing collection accounts for receiving Utility Bills for individual households, commercial and industrial sectors through offline & online by different branches. Besides, online Hajj fees collection through all branches is also remitted to Kingdom of Saudi Arabia every year through Sonali Bank Limited. The Division has successfully arranged agreement of E-Tendering program with CPTU, Ministry of Planning which has already been started in all of our branches successfully. For this reason the collecting branches arranged to issue Bank guarantee from which bank is gaining multiple benefits. We already started to collect WASA, DPDC, DESCO, BTCL bills through online collection along with BRTA vehicles registration fees and charges and taxes. We are also collecting TITAS & REB bills through offline by our selected branches. The Division has also arranged an agreement with US ¬Bangla Airlines and NOVOAIR for Some corporate agreements have been executed with a view to providing value added customer services. These are as follows: Sustainability The Division has launched 17 new schemes & deposit products and 2 new employee savings account (Salary accounts for the employees of a company). Recently we are planning to open some Banking Booths throughout the country to expend our network as per Bangladesh Bank guidelines. Managers’ Meeting Regional Meeting Monthly Development Meeting Annual Business Conference Town Hall Meeting Special Meeting with Head Office Executives Stakeholders’ Information The Division is engaged in marketing of corporate products by way of mobilizing deposits and extending various supports to reputed business entities and mass market throughout Bangladesh & abroad. The Division is working relentlessly with a view to growing banking relationship with different Government & semi Government bodies, NGO’s such as Titas Gas Transmission & Distribution Ltd, WASA, BTRC, DPDC, DECSO, BTCL, PDB, REB, Election Commission & Grameen Bank etc. 1. 2. 3. 4. 5. 6. Management Retrospection 2012 2013 The Division coordinates the following meeting over the year as under: Risk Governance 2003 2004 Standard Bank Limited achieved the 3rd position during the School Banking Conference & Fair 2015 at Bogra organized by Bangladesh Bank. A total of 47 banks opened their stalls at the fair to facilitate banking services among students. The marketing team is communicating with the officials of Dhaka South City Corporation, Dhaka North City Corporation, Bangladesh Road & Transport Authority, Election Commission, National Board of Revenue & they showed positive approach to move forward. These different types of approach will bring a sustainable growth. Corporate Governance Year enjoying online ticket discount through our all branches. There are some more upcoming projects like passport fees collection, NID fees collection, RJSC fees collection, RAJUK fees collection and BSTI fees collection which will be implemented soon. The Division has already arranged School Banking initiatives at all branches as per instructions & guidelines by Bangladesh Bank. Introduction The bank started its operation with only 01 branch i.e. Principal Branch on 3rd June 1999. Since inception a time line of branch expansion is presented below: Jobs performed at the Division can basically be segregated into 4 (four) broader groups: A. Business Development: Deposit Mobilization B. Operational Control C. Vigilance D. Product Development & Market Research Standard Bank Ltd Annual Report 2020 | 83
85. A . Business Development: Deposit Mobilization: Introduction Corporate Governance 1. Opening/Shifting new branches: Obtaining of BB Approval etc. Selection of Premises, 2. Business target fixation, monitoring & achieving. 3. Introduction of New Deposit Products. 4. Arranging periodical Branch Managers’ Conference. 5. Monitoring e-GP / e-tendering issues. 6. Branch performance evaluation. 7. Fixation of Bank’s Schedule of Charges. 8. Collection of Utility bills Pay-Rolls, Business Agreement etc. 9. Grading / Categorization of Branch. 10. Corporate arrangements. B. Operational Controls: Risk Governance Management Retrospection 1. Account: Opening, Operation, Procedures & Controls etc. 2. Issuance of Duplicate of all types of Lost Instruments- FDR, P0, DD & FDD etc. 3. Settlement of the Deceased Accounts. 4. Re-confirmation of LIEN of our Deposit Instruments i.e. FDR & other Deposit and Savings Scheme /Instruments to other Banks and Fls as per instruction of Bangladesh Bank. 5. Fixation of vault limit & arrangement of cash remittance etc. 6. Matters on mutilated and dirty bank notes & Coins. 7. Dealings with fake bank notes. 8. Bank’s Lockers management. 9. Vault Key maintenance. 2. Data Collection. 3. Product formulation & Pilot Run. 4. Impact Assessment The division is being formed on 3rd March 2015 constantly thriving to render best possible services to the branches and gradually integrating more functionality to its scope for better operation of the branches. ISLAMI BANKING: Following the vision of the honorable Board of directors and the Management, Standard Bank Limited is going to undertake full-fledged Islamic Banking operations from 1st January, 2021. In this regard, Bangladesh Bank had given preliminary approval for Islamic banking activities on 24.02.2020. Pursuant to the approval, Bank Management took initiatives to prepare necessary documentations, manuals and guidelines in the light of Shariah principles and under instructions of the Bangladesh Bank. As part of preparation for conversion of the bank to Islamic Banking, first of all, The Memorandum and Articles of Association had been changed incorporating required clauses of Islamic banking operations, got approval from Shariah Supervisory Committee, Board of Directors as well as hold Special EGM on 22nd October 2020, 27th June 2020 and 30th July 2020 respectively. Finally the same was approved by the honorable High court on 23rd September 2020. Meanwhile Bank’s Board of Directors formed a Project in the name and Style of `Islamic Banking Conversion Project’ (IBCP) and a coordinator appointed to successfully convert the bank to Islamic banking. 10. Dealing of Sanchayapatra/Prize Bond. 11. BACH Clearing. 12. Dealing with Blocked Accounts & Dormant Accounts. 13. Circulating General/Emergency Circulars since received from BB and other regulatory authorities to our branches and giving feedback of the same. Stakeholders’ Information 14. Changing fixed deposit and others A/C terms. Sustainability 20. Upgrading Forms and formulation/upgrading standard operating procedure. 15. Circulating bank’s circular centrally/ CMS. 16. Compliance of FATCA (Foreign A/C transaction compliance act.). 17. Preparation of Bank’s Operational Manual/Guidelines. 18. Provide New Website write-ups in regards to Deposit products, Charge Schedule, Locker, Utility bills, e-GP, different Forms Upgrade etc. 19. All other related & relevant works other than credit & foreign exchange portfolio. C. Vigilance: Financial Information 1. Issuing Circular/Instruction for prevention of fraud forgeries, monitoring & legal actions. 2. Implementation of Self-Assessment of Anti-Fraud Internal Controls checklists of Bangladesh Bank to our branches. 3. Physical visit. 4. Complaint Cell. 5. Implementation of regulations. D. Product Development & Market Research: 1. 84 | Market Research. Standard Bank Ltd Annual Report 2020 Training on “Investment Banking Under Islamic ShariÔah” at SBL Training Institute Subsequently, IBCP formally started its activities from 7th July 2020 for overall implementation of the conversion in time. The Project prepared many documents, guidelines, manuals as per requirement of Bangladesh Bank for Islamic banking operations and got approval from Shariah Supervisory Committee and the Board on 21st October, 2020 and 29th October 2020 respectively. The papers/ documents/guidelines include 1. Mapping of Conventional Loans and Advance Products with Islamic Banking Investment Products, 2. Mapping of Conventional Deposit Products with Islamic Banking Products, 3. General Banking Operation Manual, 4. Investment Operation Manual, 5. Investment Policy and IRM Guidelines, 5. Standard Bank Limited Service Rules. Meantime, HIKMA an Islamic Banking Software was selected and all required installations and training of all the officials were completed in November and December 2020 for smooth conversion of all data and information in time. To make the conversion effective and fruitful 67 training courses were planned and completed so far. 4,926 executives/officers at all levels were trained in this process. The most remarkable job the Bank completed was obtaining consent/no objection letter from all types of Deposit and Investment Clients by 15th October 2020. All the above
86. works were done as per requirement of Bangladesh Bank and to obtain final approval to start Islamic banking operation from 1st January 2021 . Introduction Alhamdulillah, all the preparations were made in time and we had been able to submit all required documents to Bangladesh Bank on 8th November 2020 and Bangladesh Bank provided final approval vide letter no BRPD (P-3)/745 (43)/2020-11591 dated 29th December 2020. SBL CAPITAL MANAGEMENT LIMITED Corporate Governance After obtaining a full fledged Merchant Banker license from the Bangladesh Securities and Exchange Commission (BSEC), Merchant Banking operations of the Standard Bank Limited (SBL) was initially launched through the Merchant Banking Wing (MBW) in the year 2009. Later on as per Directive of Bangladesh Bank, the Board of Directors of Standard Bank Limited formed a separate Subsidiary Company with authorized and paid up capital of Tk. 500.00 crore and Tk. 150.00 crore respectively under Standard Bank Limited named SBL Capital Management Limited (SCML). Thereafter the Registrar of Joint Stock Companies and Firms issued the Certificate of Incorporation and also the Certificate of Commencement of business in favor of the said company. The Bangladesh Securities and Exchange Commission (BSEC) then issued a full-fledged Merchant Banker license in the name of SBL Capital Management Limited. The operation of SBL Capital Management Limited was launched from January 2011 through taking over all activities of the erstwhile Merchant Banking Wing (MBW) of the Bank to this subsidiary. Risk Governance Management Retrospection Meeting of the Board of Directors of SBL Capital Management Limited held • Portfolio management • Underwriting public issue of companies • Issue management and • Corporate advisory services Stakeholders’ Information SCML, a subsidiary of Standard Bank Limited (owned 99.99%), its Business Office at 02 D.I.T. Avenue (Ext.), 3rd floor, Motijheel C/A, Dhaka-1000. The main objectives of the company for which it has been established are to carry out Merchant Banking activities including: Business position of SCML: Figure in crore where applicable Particulars No. of Accounts 3 Total Clients Portfolio value at cost price As on December 31, 2019 As on December 31, 2020 2110 2169 187.51 crore 259.55 crore Total Clients Portfolio value at Market price 92.16 crore 192.20 crore Total Own Portfolio value at cost price 214.45 crore 184.06 crore 6 Total Own Portfolio value at Market price 119.01 crore 112.93 crore 7 Average daily trade volume 1.95 crore 3.00 crore Financial Information 4 5 Sustainability Sl. 1 The below stated pie chart depicts the various sources of Income in the year 2020 and the bar chart shows the expenses of SCML in 2020 in comparison with 2019: Standard Bank Ltd Annual Report 2020 | 85
87. SCML EXPENSES 2020 SCML INCOME 2020 Introduction 20 % 1% 25 20 15 7% Corporate Governance 67% 10 2% 5 3% 0 Interest Income Gain on Sale of Shares Transaction/Settlement Fees DDividend on Investment in Shares Management Fees Others Income 2019 2020 2019 2020 2019 2020 Interest Expense Salary & Allowances Other Expenses Risk Governance Financial results of SBL Capital Management Ltd: Figure in BDT crore Sl. 1 Particulars 2019 2020 Increase/ (Decrease) 4.66 % Income 25.81 30.47 18.05 2 Expense 21.76 23.90 2.14 9.83 3 Operating Profit 4.05 6.57 2.52 62.22 Management Retrospection 4 Net profit before tax 3.24 3.56 0.32 9.87 5 Net profit after tax 0.04 0.09 0.05 125.00 6 Retained earnings 0.89 0.99 0.10 11.23 7 EPS (Tk.) 0.03 0.06 0.01 200.00 8 NAV (Tk.) 100.59 100.66 0.07 0.06 STANDARD BANK SECURITIES LIMITED Stakeholders’ Information Standard Bank Securities Limited a wholly owned subsidiary of Standard Bank Limited, was incorporated as a Public Limited Company under the Companies Act, 1994 vide certificate of C-105752/12 for commencement of business dated 26 November 2012. Standard Bank Securities Limited is corporate TREC holder of Dhaka Stock Exchange Limited. The company started its commercial operation in the month of June 2013. The principal place of business is the Registered Office at 2 DIT Avenue (Ext.), 1st Floor, Motijheel C/A, Dhaka-1000. The principal objectives of the company for which it was established are to carry on the business as stock broker and stock dealer in relation to shares and securities transactions, other services related to the Capital Market and other activities as mentioned in the Memorandum and Articles of Association of the company. Sustainability Financial Information Meeting of the Board of Directors of Standard Bank Securities Limited held 86 | Standard Bank Ltd Annual Report 2020
88. Total Operating Expenses : In the year 2020 SBSL’s Direct Expenses was 0.25 Crore Taka and Financial Expenses was also 2.15 Crore Taka. After these the expense for Salary & Allowance was 1.12 Crore Taka and Other Administrative Expenses was an amount of Tk. 0.53 Crore. Introduction Standard Bank Securities Limited is dedicated to providing a high level of professional and personalized services to its all clients. The company intends to offer high level of quality product and services at a competitive rate to all clients. It has proven reputation in serving customers by maintaining strong compliance practices and extreme ethical standard. TOTAL EXPENSES 2020 Now the number of clients of SBSL is more than Two Thousand Four hundred Fifteen and it comprises of local individual & institutional investors. SBSL also acts as Panel Broker of SBL Capital Management Limited. During the year 2020 the company earned operating profit of taka 4.42 Crore as against taka 4.08 Crore in 2019. 6% 13% Corporate Governance SBSL Products: • Beneficiary Owners (BO) Account as Cash Account • Beneficiary Owners (BO) Account as Margin Account. 28% 53% SBSL Services: Trade Execution through Dhaka Stock Exchange Ltd. • Full Service Depository participant • IPO Application Services Direct Expenses 6% Salary and Allowances 28% • Margin Loan Facility with affordable Interest Rate Financial Expenses 53% Other Expenses 13% • Online Trading Facility • Daily Portfolio Services through e-mail • Online banking facility at all SBL & AIBL Risk Governance • Key Financials 2020: Management Retrospection Monthwise Turnover: In the year 2020 faced a mixed trend traded value throughout the year. Turnover or the Trade Volume is the vital issue for generating a handsome Brokerage Commission. In the year 2020 the total trade of DSE stood at Tk. 134981 crore which marking a increase 18.57% than that of the previous year. Over the year the company’s total turnover was 723.77 Crore, where 2019 turnover was 437.72 Crore. The monthwise trade volume of Dhaka Stock Exchange Limited for 2019 & 2020 is shown by drawing a graph. Stakeholders’ Information Total Operating Income: SBSL shows its operating income among four basic segments. For the year 2020 the company generates 1.78 Crore Taka from Brokerage Commission. After that the Income from Investment in Shares was 1.57 Crore Taka and Interest Income was 5.04 Crore Taka, and finally there was some amount of 0.07 Crore Taka heading Other Operating Income for the year of 2020. TOTAL INCOME 2020 0.25% 21% Interest Income 59% Income from Investment 19% Other Operating Income 0.25% Financial Information Brokerage Commission 21% Sustainability 19% 59% Financial Growth: 2020 is an unprecedented year in national life. The Corona pandemic has changef the world, changed our national context. The whole country was imprrisoned in lockdown. Our stock market could not be free from the influence of National life. In the year the stock market and the contry’s economy was in a worse crisis tan ever before. So the year 2020 was a very challenging year for SBSL. But SBSL handle every situation over the year 2020 and generate an operating profit before tax and provisions of 4.42 Crore Taka, that was 4.08 Crore Taka for 2019. Standard Bank Ltd Annual Report 2020 | 87
89. Some Comparison Graph is given below for better understanding . Introduction BRANCH EXPANSION AND BUSINESS DIVERSIFICATION The year 2020 was a remarkable as well as worth noting for us because of the fact that the year had been marked by an astounding record of growth and development through multidimensional steps taken by the management. Several epochs making steps in matters of business dissemination and diversification had taken place during the year. Corporate Governance Risk Governance Here, in this graph of Operating Income Comparison (2019 & 2020), we can see that, the Brokerage Commission income for the year 2020 was 1.78 Crore Taka where as the income from same entity was 1.08 Crore Taka in 2019. Income from Investment also Decreased by 8%, in 2020 the amount was Tk. 0.70 Crore than that of the previous year. Interest Income was increased by 4.97 Crore to 5.04 Crore Taka with 1% growth rate due to fresh Margin loan disbursement to the Clients. We are operating our business throughout country with our 138 branches (as on 31st December, 2020). Therefore we have 102 numbers of urban branches and 36 numbers of rural branches including 07 nos. of SME/Krishi branches. Besides that 02 Islami Banking windows (Topkhana IBW, Dhaka and Agrabad IBW, Chittagong) and 02 Islamic Banking Branch (Dhaka Udyan Islamic Banking Branch, Dhaka and Moheshkhali Islamic Banking Branch, Chittagong) are operating smoothly. Standard Exchange Co (UK) Ltd., 100% owned subsidiary company of Standard Bank Limited is operating in London, UK since August, 2009. Besides, we have opened Standard Co. (USA) Inc. under the brand name “STANDARD EXPRESS” at U.S.A. on 1st March, 2011 with total 07 branches at Jamaica, Ozon Park, Brooklyn, Bronx, Jackson Heights and Los Angeles in California. We have also planned for opening more Exchange Companies in Italy, Spain, Singapore and other potential areas of the world in near future. As such, Bangladesh expatriates will be able to remit money with ease, comfort and confidence.. Management Retrospection CORPORATE SOCIAL RESPONSIBILITY By the graph Heading Operating Expenses Comparison (2019 & 2020). In the year 2020 the total operating expenses Tk. 4.05 crore where as the same entity was 4.29 Crore Taka in 2019 and highest expenses was Financial expenses for Interest expenses on Bank Loan. Stakeholders’ Information Performance of SBSL last Five years: Particulars/ Year No. of new Clients 2020 2019 2018 2017 2016 Sustainability 296 160 308 429 187 Margin Loan to Clients (crore) 34.82 37.67 32.18 27.36 15.91 Operating Profit (crore) 4.42 4.08 5.65 9.85 5.08 723.77 437.72 707.30 1634.26 384.73 Total Turnover– Trade (crore) CAPITAL ADEQUACY Financial Information To manage the overall risk exposure of the bank, our primary focus has always been to reinforce our risk management policy with a strong internal control system. Our Capital Adequacy Ratio has remained consistently above the threshold (10% of RWA) of Minimum Capital requirement. To meet up the compliance of BASEL-III deadline, with consent of Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, Standard Bank Limited applied to the regulatory authorities for consent to issue “1ST STANDARD BANK CONDITIONAL CONVERTIBLE MUDARABA PERPUTUAL BOND” for BDT 500.00 crore to meet up the Tier-l capital requirement of the Bank. 88 | Standard Bank Ltd Annual Report 2020 This year Corporate Social Responsibility (CSR) activities of the Bank expenses to Taka 250.4 million under Health, Education, Disaster Management, Environment, Cultural welfare, Infrastructure improvement in remote/underprivileged areas, Income generating activities for the underprivileged population, and Others program’s to reaffirm the commitments of the Bank towards society. APPOINTMENT OF AUDITOR Shafiq Basak & Co. was appointed as Auditor for the year 2020 and completed their 1st Tenure of Audit of our Bank. They were appointed as a statutory auditor for the year 2020 by the honorable Board of Directors in its 327th Board Meeting dated March 19, 2020 & by the shareholders of our Bank in its 21th Annual General Meeting (AGM) held on July 30, 2020. It was also approved by Bangladesh Bank vide letter no: BRPD (Taskforce) 748/3/2020-7614 dated September 20, 2020 and they are also eligible as per section 210 of the Company Act, 1994 to appoint as Auditors for the next term for the year 2021. Accordingly, they showed their expression of interest for the audit of the year 2021. The Audit Committee reviewed their expression of interest and recommended to the Board. The Board in its 341st meeting held on 28th April 2021 recommended to the shareholders regarding the appointment of M/s. Shafiq Basak & Co. Chartered Accountants as a statutory auditor of Standard Bank Ltd. for the 2nd year i.e. 2021 at remuneration of BDT 7,00,000/- (seven Lac) only excluding VAT. Now in the exercise of the power conferred upon Section 210 (10) of the Companies Act, 1994. The shareholders of the company will approve the appointment and fix the Auditor’s remuneration in the ensuing Annual General Meeting. In this regard, prior approval from Bangladesh Bank will be taken to appoint M/s. Shafiq Basak & Co., Chartered Accountants.
90. BOARD OF DIRECTORS Introduction The Board of the Bank consists of 16 Directors as on December 31 , 2020 of high academic caliber and excellent professional knowledge, experience and skills together with the Managing Director as Ex-officio member. All of the Directors were elected by the shareholder of the company for a terms of 3 years. 13 (thirteen) Board meetings held during the year 2020. Corporate Governance Risk Governance Management Retrospection 327th Board Meeting of Standard Bank Ltd. held The Board of Directors is the supreme authority in the Bank’s affairs. To ensure the company’s prosperity by collectively directing the company’s affairs the Board approved different loan & investment proposals and adopted policies and guidelines issued by Bangladesh Bank and gives directions for their due compliance and plans for smooth growth of business. The Board provided guidelines for technological development in consideration of requirement of time and to face the challenges and competitions. The Board also reviewed different policies & programs on monthly basis in order to establish effective risk management in credit and other key areas of operations and provides guidelines to the Management for upholding and protecting the interest of the Bank. In addition to business and financial issues, boards of directors deal with challenges and issues relating to corporate governance, corporate social responsibility and corporate ethics. COMMITTEES OF THE BOARD Stakeholders’ Information The Bank has 03(three) Board committees as set by the Bangladesh Bank namely (i) Executive Committee, (ii) Audit Committee) and (iii) Risk Management Committee with an objective to monitor and manage Bank’s operations, performance and strategy. Executive Committee The Board delegated financial, business and administrative power to the Executive Committee to decides or acts in those cases as instructed by the Board of Directors that are not specifically assigned on full board through the Bank Company Act and other laws and regulations. The Committee used to ensure the implementation of policy and guidelines of the Board and continuous efforts guides the Management to develop uniform and minimum acceptable credit standards for the Bank. The present executive committee of the Bank is comprised with 6 (six) members. Due to Covid-19 pendamic situation, during the year 2020 there was no meeting held of the Executive Committee. Sustainability Audit Committee The Audit Committee constituted as under by the Board of Directors of the Bank in accordance with the BRPD circular letter no. 12 dated 27.10.2013 issued by Bangladesh Bank: The present Audit Committee of the Bank is comprised with 5 (five) members. The Company Secretary of the Bank has been nominated as Secretary of the said Committee as per Bangladesh Bank Circular. During the year 2020, the Audit Committee conducted 7 (seven) meetings. Financial Information Risk Management Committee Risk management committee was formed 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. The Committee identifying and assessing several risk factors. The committee will scrutinize whether appropriate risk management measures are being put in place and applied and whether adequate capital and provision is being maintained against the risks identified. The present Risk Management Committee of the Bank is comprised with 5 (five) members. 03 (three) meetings of Risk Management Committee held during the year 2020. Standard Bank Ltd Annual Report 2020 | 89
91. DIRECTORS ’ HONORARIUM Introduction During the year an amount of Tk. 2,124,000 has been paid to the Directors including Independent Directors’ as honorarium for attending the meeting of Directors’. It may be mentioned here that as per Bangladesh Bank’s BRPD circular letter no. 11 dated 4th October, 2015 each Directors entitle to get maximum Tk. 8,000 (eight thousand) as honorarium for attending each meeting. COMPLIANCE OF SECTION 1.5(XXI) OF BANGLADESH SECURITIES AND EXCHANGE COMMISSION (BSEC) NOTIFICATION NO. BSEC/CMRRCD/2006-158/207/ADMIN/80 DATED 03 JUNE 2018. The pattern of shareholding position as on 31.12.2020 Corporate Governance Parent/Subsidiary/Associated Companies and other related parties: Nil i) Shareholding position of Directors SI. No. Name Position Risk Governance Management Retrospection 1 2 Mr. Kazi Akram Uddin Ahmed Mr. Md. Zahedul Hoque Chairman Vice Chairman 3 Mr.Kamal Mostafa Chowdhury 4 5 6 Mr. Ashok Kumar Saha Mr. Ferozur Rahman Mr. Md. Monzurul Alam 7 Mr. S. A. M. Hossain 8 9 10 11 12 13 Mr. Mohammed Abdul Aziz Mr. Gulzar Ahmed Al-Haj Mohammed Shamsul Alam Al-Haj Mohd. Yousuf Chowdhury Mr. Ferdous Ali Khan Mr. Kazi Khurram Ahmed ICB, represented by its Managing Director, Mr. Md. Abul Hossain Mr. Najmul Huq Chaudhury Mr. Md. Nazmus Salehin Mr. Khondoker Rashed Maqsood 14 15 16 17 No. of Shares (%) of shareholding 2,03,07,548 3,36,19,672 2.02% 3.34% Director 2,31,15,081 2.30% Director Director Director 2,18,06,449 2,08,44,334 2,01,21,044 2.17% 2.07% 2.00% Director 2,73,93,979 2.72% Director Director Director Director Director Director Managing Director, Investment Corporation of Bangladesh Independent Director Independent Director MD & Ex-Officio Director 2,01,79,695 2,01,40,211 2,55,66,242 2,01,20,199 2,27,88,744 2,01,68,480 2.01% 2.00% 2.54% 2.00% 2.27% 2.00% 4,09,00,609 4.07% NIL NIL NIL ii) Shareholding of CEO, CFO, Company Secretary & Head of Internal Audit: SI. No. Name Position Stakeholders’ Information 1. Chief Executive Officer and his spouse & minor children Nil 2. Company Secretary and his spouse & minor children 200 3. Chief Financial Officer and his spouse & minor children 200 4. Head of Internal Audit and his spouse & minor children Nil iii) Shareholding of Executives (Top five salaried persons other than CEO, CFO, CS and HIA): SI. No. Name Sustainability | Share Holdings 1. Mr. Md. Motaleb Hossain DMD Nil 2. Ms. Haider Nurun Naher SEVP Nil 3. Ms. Alkona K. Choudhuri SEVP Nil 4. Mr. Syed Anisur Rahman EVP Nil Financial Information 90 Position Standard Bank Ltd Annual Report 2020
92. BOARD MEETING AND ATTENDANCE Introduction The board meeting usually holds at least once in every month , but in an emergency the meeting holds more than one. Directors who cannot able to attend the meeting(s) leave of absence were granted by the board as per their prayer. During the year 2020 total 13 meetings were held. As per compliance of Section 1, 5 (XX) of Bangladesh Securities and Exchange Commission (BSEC) Notification No. BSEC/CMRRCD/2006-158/207/ Admin/80 dated 03 June 2018, the attendance record of Directors in 2020 are as follows: 1 Name Mr. Kazi Akram Uddin Ahmed Position Total no. of Meetings Held Attended Chairman 13 13 2 Mr. Md. Zahedul Hoque Vice-Chairman 13 13 3 Mr. Kamal Mostafa Chowdhury Director 13 13 4 Mr. Ashok Kumar Saha Director 13 12 5 Mr. Ferozur Rahman Director 13 13 6 Mr. Md. Monzurul Alam Director 13 10 Mr. S.A.M. Hossain Director 13 13 Mr. Mohammed Abdul Aziz Director 13 13 9 Al-haj Mohammed Shamsul Alam Director 13 13 10 Mr. Ferdous Ali Khan Director 13 13 Al-haj Mohd. Yousuf Chowdhury Director 13 11 Mr. Kazi Khurram Ahmed Director 13 13 12 Investment Corporation of Bangladesh represented by its Managing Director Mr. Md. Abul Hossain Director 13 13 14 Mr. Najmul Huq Chaudhury Independent Director 13 12 15 Mr. Md. Nazmus Salehin Independent Director 13 13 16 Mr. Khonodker Rashed Maqsood Ex-officio Director 13 13 17 Mr. Md. Ali Reza Member Secretary 13 13 Management Retrospection 11 12 Risk Governance 7 8 Corporate Governance SI. No. * Leave of absence was granted by the Board of Directors as per his application. AUDIT COMMITTEE MEETING 2020 Name Designation No. of Meetings Held Attended 1 Mr. Md. Nazmus Salehin Chairman 7 7 2 Al-haj Mohammed Shamsul Alam Member 7 7 3 Mr. Ferdous Ali Khan Member 7 6 4 Mr. Kazi Khurram Ahmed* Member 7 7 5 Mr. Najmul Huq Chaudhury Member 7 5 6 Mr. Md. Ali Reza Member Secretary 7 7 Stakeholders’ Information Sl. No. Sustainability EXECUTIVE COMMITTEE MEETING 2020 Due to pendemic situation, no Executive Committee meetings were held during the year of 2020. RISK MANAGEMENT COMMITTEE 2020 Name Mr. Kazi Akram Uddin Ahmed Mr. Mohammed Abdul Aziz Mr. S.A.M. Hossain Mr. Ferdous Ali Khan Mr. Md. Nazmus Salehin Mr. Md. Ali Reza Designation Chairman Member Member Member Member Member Secretary No. of Meetings Held 3 3 3 3 3 3 Attended Financial Information Sl. No. 1 2 3 4 5 6 3 3 3 3 3 3 Standard Bank Ltd Annual Report 2020 | 91
93. DIRECTOR ’S DECLARATION ON FINANCIAL STATEMENTS Introduction The Directors are responsible for the governance of the company and as part of preparation and presentation of the financial statements, the directors confirm, to the best of their knowledge and belief that: Corporate Governance • The Financial Statements prepared by the management present fairly its state of affairs the result of its operations, cash flows and changes in equity. • Proper books of accounts as required by law have been maintained. • Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment. • International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) as applicable in Bangladesh have been followed. • The system of internal control in the bank is sound in design and has been effectively implemented and monitored. • There are no doubts upon the bank’s ability to continue as a going concern. Risk Governance The Board expresses gratitude to the Almighty Allah for the success of the Bank in 2020. The Board extends thanks to the valued customers, patrons and well-wishers for their continued support and co-operation to the Bank. The Board also appreciates the dedicated services of the Senior Management Team, all executives and other employees of the Bank. The Board offers thanks to the Government of Bangladesh, Bangladesh Bank, Bangladesh Securities and Exchange Commission (BSEC), NBR, FRC, Registrar of Joint Stock Companies and Firms, Dhaka Stock Exchange Limited, Chittagong Stock Exchange Limited and Central Depository Bangladesh Limited (CDBL) for their appreciable support and co-operation to the Bank. The Board also expresses its appreciation to M/s Shafiq Bashak & Co. the Auditor of the Bank, for their efforts for timely completion of Audit. The Board of Directors also thanks both the print and electronic media personnel for giving media coverage to Bank’s different activities and events. Management Retrospection Finally, the Board thanks the respected Shareholders and assures them that it will continue to add to the Shareholders’ wealth through further strengthening and development of the Bank in which they have placed their trust and confidence. We want to continue on doing the best and ensure prolonged development in the economy, society, lifestyle and thus every sphere of our country in line with our vision. Our sustainable banking operation is attributed to our prudent Board of Directors, effective Management, enthusiastic and skillful employees and trust bestowed upon us by our valuable clients and shareholders. Sincerely On behalf of the Board of Directors. Ln. Kazi Akram Uddin Ahmed Chairman Stakeholders’ Information Sustainability Financial Information 92 | Standard Bank Ltd Annual Report 2020
94. Introduction STATEMENT OF CORPORATE GOVERNANCE Corporate Governance Str ate gy ls rt G s a Sm tive Policies and Procedures Sustainability jec oa Ob Board of Directors and Committees Transparency and Accountability gy ate Vis io n Str Legal and Regulatory Framework Monitoring and Internal Control Stakeholders ’ Information n sio Mis Management Retrospection Organizational Hierarchy Risk Governance Corporate governance is the system by which organizations are directed and controlled. In other words, corporate governance represents the set of processes, customs, policies, laws and institutions affecting the way in which an entity is directed, administered or controlled. Corporate governance serves the needs of shareholders, and other stakeholders, by directing and controlling management activities towards good businesses practices, objectivity and integrity in order to satisfy the objectives of the entity. Corporate governance represents a strategy for companies to ensure a framework of control for its administrative and management practices. This is achieved through procedures that are aligned with recognized standards that respond to the interests of shareholders and other stakeholders. Proper governance ensures fairness, transparency and accountability and safeguards the interests of all stakeholders, especially the minority shareholders. Empirical research also suggests that corporations that adhere to good governance practices are not only more sustainable but also tend to generate higher profitability.The six core areas of Standard Bank Limited emphasizes its effective corporate governance strategy as demonstrated in the diagram. The company’s corporate governance model is rigorously aligned with its wellarticulated vision, mission, goals and objectives. CORPORATE GOVERNANCE Financial Information The Company’s Board of Directors are responsible for proper governance, which includes setting out the Company’s strategic aims, providing the necessary leadership to implement such aims, supervising the management of the business and reporting to shareholders on their stewardship. The Board is collectively accountable to the Company’s shareholders for good governance to facilitate efficient and effective management towards delivering long-term shareholder value within appropriately established risk parameters. Standard Bank Ltd Annual Report 2020 | 93
95. Introduction Standard Bank Limited is committed to continually review all its corporate governance policies and guidelines to ensure transparency in its practices and the delivery of the highest ethical standards and quality information to its stakeholders on an ongoing basis . Corporate Governance The sustenance of effective corporate governance remains a key priority of the Board of Standard Bank Limited. To exercise clarity about the Directors’ responsibilities towards shareholders, corporate governance must be dynamic and remain focused on the Company’s business objectives and create a culture of openness, transparency and accountability. Keeping this in mind, clear structures and ownership supported by well- understood policies and procedures to guide the activities of the Company’s management have been instituted and institutionalized. Risk Governance Standard Bank Limited considers that its corporate governance practices comply with all the aspects of the revised Corporate Governance Guideline (CGG) Notification No. BSEC/ CMRRCD/2006-158/207/Admin/80 dated 03 June 2018, issued by the Bangladesh Securities and Exchange Commission (BSEC) and all aspects of Bangladesh Bank’s BRPD Circular No.11, dated 27 October 2013. In addition to establishing the highest standards of corporate governance, Standard Bank Limited also embraces best governance practices across all its activities. The independent role of the Board of Directors, separate and independent role of the Chairman and Chief Executive Officer, distinct roles of the Company Secretary, Chief Financial Officer and Chief Compliance Officer and different Board Committees enable Standard Bank Limited to achieve excellence in corporate governance. As a listed Company, Standard Bank Limited must comply with the BSEC’s revised CGG, which require the Company to provide a statement in the Annual Report disclosing the extent to which it has complied with the BSEC Corporate Governance circulars. The status of compliance shall be certified by a practicing Professional Accountant/ Secretary. The Board duly complies with the guidelines issued by the Bangladesh Bank regarding the responsibility and accountability of the Board, its Chairman and Chief Executive/Managing Director, vide BRPD Circular No.11 dated October 27, 2013. The Board of Directors is in full control of the Company’s affairs and is also fully accountable to shareholders. It firmly believes that the success of the Company hinges on the credible corporate governance practices embraced by it. Taking this into consideration, the Board of Directors set out its strategic focus and supervises the business and the related affairs of the Company. The Board also formulates the strategic objectives and policy framework for the Company. In discharging the above responsibilities, the Board carries out, inter alia, the following functions as per the charter of the Board and Bangladesh Bank’s BRPD Circular No.11 dated October 27, 2013: PRINCIPLES OF GOOD CORPORATE GOVERNANCE Good corporate governance stands on the following core principles: Management Retrospection Stakeholders’ Information Sustainability Financial Information 94 | Standard Bank Ltd Annual Report 2020
96. REPORT ON COMPLIANCE WITH BEST PRACTICES ON CORPORATE GOVERNANCE Introduction Principles Practices Leadership The role of the board The Bank is headed by an effective board which is collectively responsible for its long-term success of the company . Division of responsibilities There is a clear division of responsibilities at the head of the Bank between the running of the board and the executive responsibility for the running of the Bank’s business. No one individual has unfettered powers of decision. The roles of the chairman and chief executive are not be exercised by the same individual. The Chairman The chairman is responsible for leadership of the board and ensuring its effectiveness on all aspects of its role. The chairman promotes a culture of openness and ensures constructive relations between executive and non-executive directors. Corporate Governance The board meets sufficiently regularly to discharge its duties effectively. There is a formal schedule of matters specifically reserved for its decision. A chief executive does not go on to be chairman. As part of their role as members of a unitary board, nonexecutive directors constructively challenges and helps develop proposals on strategy. Risk Governance Non-executive directors Non-executive directors scrutinize management performance and the reporting of performance. They satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust. They are also responsible for determining executive director remuneration and appointing and removing executive directors. The non-executive directors appraise the chairman’s performance at least annually. Effectiveness Management Retrospection The board and its committees have the appropriate balance of skills, experience, independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively. Composition of the board The board includes an appropriate combination of executive and non-executive directors such that no individual or small group of individuals can dominate the board’s decision taking. Non-executive directors comprise at least half of the board (excluding the chairman). The board determines whether non-executive directors are independent. There is a formal, rigorous and transparent procedure for the appointment of new directors to the board. There is a nomination committee, which leads the process for board appointments and makes recommendations to the board. A majority of members on the nomination committee are independent non-executive directors. Stakeholders’ Information Appointments to the board Non-executive directors are appointed for specified terms. Any terms beyond six years are subject to rigorous review. Commitment of the Board All directors are able to allocate sufficient time to the company to discharge their responsibilities effectively. The board does not agree to a full time executive director taking on more than one non-executive directorship in neither a DSE or CSE listed company or the chairmanship of such a company. All directors receive induction on joining the board and regularly update and refresh their skills and knowledge. Information and support The board is supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties. The company secretary is responsible for ensuring good information flows and for advising the board through the chairman on all governance matters. Evaluation of the Board Performance The board undertakes a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. Re-election of the Board Member All directors submit themselves for reelection at regular intervals and at least once every three years. Sustainability Development of Knowledge & Skill Financial Information Standard Bank Ltd Annual Report 2020 | 95
97. Principles Practices Introduction Accountability The board presents a balanced and understandable assessment of the company ’s position and prospects. Financial reporting Corporate Governance Risk management and internal control The directors explain in the annual report their responsibility for preparing the annual accounts and an explanation of their business model. The board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The board maintains sound risk management and internal control systems. The board, at least quarterly, conducts a review of the effectiveness of the Bank’s risk management and internal control systems and report to shareholders that they have done so. The board established formal and transparent arrangements for considering how they should apply the corporate reporting and risk management and internal control principles and for maintaining an appropriate relationship with the company’s auditor. The board established an audit committee of at least three (two for smaller companies) independent non-executive directors. At least one member of the audit committee has recent and relevant financial experience. Audit committees and auditor The main role and responsibilities of the audit committee is set out in written terms of reference. Risk Governance The audit committee monitors and reviews the effectiveness of internal audit activities. The audit committee has primary responsibility for making a recommendation on the appointment and removal of the external auditor. Remuneration Management Retrospection Levels of remuneration are sufficient to attract, retain and motivate directors of the quality needed to run the company successfully, but the Bank avoids paying more than is necessary for this purpose. A significant proportion of the remuneration of the executive director is structured so as to link rewards to corporate and individual performance. The level and components of remuneration Assessing executive remuneration in an imperfect market for executive skills may prove problematic. Performance conditions are relevant, stretching and designed to promote long-term success. Remuneration for non-executive directors reflects the time commitment and responsibilities of the role and does not include performance-related elements. Procedure for developing policy There is a formal and transparent procedure for developing policy on executive remuneration and for fixing remuneration packages of individual directors. No director is involved in setting their own remuneration. Stakeholders’ Information The board should determine the remuneration of non-executive directors. Relations with shareholders Dialogue with shareholders There is dialogue with shareholders based on the mutual understanding of objectives. The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place. The Board uses the AGM to communicate with investors and encourage their participation. Notice of the AGM and related papers are sent to shareholders at least 14 working days before the meeting. Constructive use of the AGM The Chairmen of the key sub-committees (audit, remuneration) are available to answer questions and all directors attend. Sustainability Shareholders are able to vote separately on each substantially separate issue. The Bank counts all proxies and announce proxy votes for and against on all votes on a show of hands. Financial Information 96 | Standard Bank Ltd Annual Report 2020
98. BOARD OF DIRECTORS , CHAIRMAN AND CEO The composition of the Board embraces diversity. The Directors possess a wide range of local and international experience, expertise and specialized skills to assist in decision-making and leading the Company for the benefit of its shareholders. NOMINATION COMMITTEE The Board is committed to the Company to achieve superior financial performance and long-term prosperity, while meeting stakeholder expectations of sound corporate governance practices. The Board determines the corporate governance arrangements for the Company. As with all its business activities, the Board is proactive with regards to corporate governance and puts in place those arrangements that it considers are in the best interest of the Company and its shareholders and consistent with its responsibilities to other stakeholders. Composition of the Board of Directors – Nonexecutive Directors and Independent Directors All the directors of the Board are non-executive directors and almost one-fifth is Independent. Currently, there are two independent directors appointed by the Board and approved by the BSEC, Bangladesh Bank and the shareholders in the AGM. The Board, as a whole, decides on the nomination of any Board member and composition of the Board and its committees. SELECTION AND APPOINTMENT OF NEW DIRECTORS POLICY ON APPOINTMENT OF DIRECTORS With regards to selection and appointment of new directors, the existing Board of Directors has the following obligations and duties: Regularly review the size and composition of the Board and the mix of expertise, skills, experience and perspectives that may be desirable to permit the Board to execute its functions; Identify any competencies not adequately represented and agree to the process necessary to be assured that a candidate nominated by the shareholders with those competencies is selected; The CEO & Managing Director is appointed by the Board subject to the consent of the shareholders in the Annual General Meeting (AGM) and approval of Bangladesh Bank; BOARD INDUCTION ADEQUATE NUMBER OF INDEPENDENT DIRECTORS IN THE BOARD AND THEIR INDEPENDENCE As per the revised Corporate Governance Guideline of Bangladesh Securities and Exchange Commission (BSEC), at least one-fifth of the total directors of the Board shall be Independent Directors. Thus, in compliance with the guideline, two (02) Directors out of Recognize any capabilities not sufficiently represented and approve the procedure necessary to be certain that an applicant designated by the shareholders with those capabilities is nominated. • Casual posts, if any, are filled up by the Board in accordance with the conditions in the Companies Act and Articles of the Company. Appointments of the Directors are also endorsed in the AGM by the Shareholders. RETIREMENT AND RE-ELECTION OF DIRECTORS As per Companies Act, each year one-third of the Directors retire from office at the AGM and if eligible, may offer themselves for reelection by shareholders at the Annual General meeting. In line with the requirement of Bank Company Act 1991 amended up to 2018, no Director should serve more than 3 years without seeking re-election at shareholders meeting. CRITERIA FOR APPOINTMENT OF INDEPENDENT DIRECTOR As per Bank Companies Act 1991 (Amended 2013) at least 2 of the total directors should be Independent when total number of directors in a Bank is less than 20. As per the BSEC guidelines on Corporate Governance at least one fifth of the total Directors should be Independent Directors. Therefore, in compliance with BCA 1991 and BSEC Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 dated 03 June 2018, Board of SBL nominated two independent directors (1/5th of total number of Directors) so that the Board contains core skills considered appropriate in the framework of the company. The two independent directors are Mr. Najmul Huq Chowdhury and Mr. Md. Nazmus Salehin. The Board of Standard Bank affirms that the Independent Directors appointed by the Board are in compliance with the clauses of corporate governance guidelines released by the BSEC on Independent Directors. Standard Bank Ltd Annual Report 2020 Financial Information A formal letter of appointment setting out the director’s duties and obligations is provided to every new director. Comprehensive and tailored induction is provided to incoming directors joining the Board. The induction program allows the director to assimilate into his or her new role as soon as possible. • Sustainability Any change in the members of the Board requires intimation to the Bangladesh Bank, all scheduled banks and Financial Institutions (FIs), Bangladesh Securities and Exchange Commission (BSEC) and the stock exchanges. Frequently assess the size and structure of the Board and the mix of knowledge, skills, experience and perceptions that may be necessary to allow the Board to perform proficiently. Stakeholders’ Information The Directors are appointed by the shareholders in the Annual General Meeting (AGM). Casual vacancies, if any, are filled by the Board in accordance with the stipulations of the Companies Act, 1994, Bank Companies Act 1991 (amended up to 2018) and the Articles of Standard Bank Limited; • Management Retrospection In relation to the selection and appointment of new Directors, the existing Board of Directors possesses the following duties and responsibilities: Risk Governance The Nomination Committee is responsible for composition, balance and expertise of the Board as a whole and appraising the contribution of individual Directors, including a review of their time commitment and attendance records. ROLE AND RESPONSIBILITIES OF THE BOARD Corporate Governance The Board of Standard Bank Limited considers that its constitution should comprise Directors with an appropriate mix of skill, experience and personal attributes that allow the Directors individually and the Board collectively to discharge their responsibilities and duties under the law efficiently and effectively understand the business of the Company and assess the performance of the management. Introduction BOARD OF DIRECTORS the total fifteen (15) Directors are independent, having no share or interest in Standard Bank Limited. Independence of the respective Independent Directors is confirmed during selection and appointment of the Directors and they remain committed to continue with such independence throughout their tenure. | 97
99. INDEPENDENT DIRECTOR ’S INDEPENDENCE Introduction In order for a Director to be eligible as an Independent Director, the Board establishes that the Director has no substantial relationship with SBL either as a partner, shareholder or officer of an organization that has a relationship with SBL that would prevent that nominee from becoming an Independent Director. For the purpose of true independence, Board decided that its Independent Director do not hold any share of the Company; not associated with the Company’s Promoters or Directors or Shareholders who maintains one percent or more of the total paid up share of the Company; not related with the existing Directors or families; does not have any other relationship, whether monetary or otherwise with the company or its subsidiary/associate companies; not a member, Director or officer of any Stock exchange and who is not a shareholder, Director or officer of any stock exchange or an intermediary of the capital market. The Independent Director is appointed for a period of three years which may be extended by one term only. A person cannot be appointed Independent Director who has already been appointed such Director of three other listed companies. The Board ensures that all these guidelines are strictly followed by the Independent Directors appointed by them. Corporate Governance Risk Governance ROLE AND RESPONSIBILITIES OF THE BOARD The Standard Bank Board is responsible for the periodic review and approval of the overall strategies, business and significant policies of the Bank. The Board also sets the Bank’s core values, adopts proper standards to ensure that the Bank operates with integrity, and complies with the relevant rules and regulations. Management Retrospection The Board’s responsibilities are, but are not limited to: Stakeholders’ Information • Sustainability The Board duly complies with the guidelines issued by Bangladesh Bank, BSEC, Bank Company Act and Company Act regarding the responsibility and accountability of the Board, its Chairman and Managing Director. • • • • • • • • Reviewing and approving the strategies and business plans for the Bank. Approving the Bank’s annual budget and carrying out periodic review of the achievements by the various operating divisions against their respective business targets. Prescribing the minimum standards and establishing policies on the management of credit risks and other key areas of the Bank’s operations. Ensuring that the operating infrastructure, systems of control, systems for risk identification and management, financial and operational controls, are in place and properly implemented. Reviewing the adequacy and integrity of the Bank’s internal control systems. Overseeing the conduct and performance of the Bank’s businesses. Reviewing succession planning and talent management plans for the Bank and approving the appointment and compensation of senior management staff. Approving changes in the corporate organization structure. Approving policies relating to corporate branding, public relations, investor relations and shareholder communication program. Financial Information BOARD OF DIRECTORS’ RIGHT TO ACCESS TO RELEVANT INFORMATION AND CONFIDENTIALITY ACCORDING TO CODE OF CONDUCT The Board of Directors follows a Code of Conduct which was adopted to provide guidance to directors to carry out their duties in an honest, responsible and business-like manner and within the scope of their authority, as set forth in the laws of the country as well as in the Memorandum and Articles of Association of the Company. 98 | Standard Bank Ltd Annual Report 2020 THE CODE OF CONDUCT STATES: • The Members shall act honestly, in good faith and in the best interests of the shareholders and the company. • The members shall not make improper use of information acquired as a director. • The members shall not take improper advantage of the position as a director. • The members will be obligated to be independent in judgment and actions and take all reasonable steps to be satisfied as to the soundness of decision taken by the Board of Directors. • Confidential information acquired by the members in the course of exercise of directorial duties shall remain the property of the company and it will be improper to disclose or allow it to be disclosed, unless that disclosure has been authorized by the company, or the person from whom the information has been received. • Members shall make every effort to attend all Board and Committee Meetings during their tenure. They will not absent themselves without good reasons or confirming leave of absence. • To maximize effectiveness of the Board/Committee Meetings, contribution of individual director shall be monitored and appraised on an annual basis. • Board members having interest of any nature in the agenda of the meeting, shall declare beforehand the nature of their interest and withdraw from the room, unless they have a dispensation to speak. • Training opportunities/orientation/workshops will be arranged for the members (especially for the newly inducted members) to make them acquainted with the international best practices, their fiduciary obligations, Code of Conduct etc. • Members shall always maintain ‘Fit and Proper Test Criteria’, clean CIB status and other obligations declared by the Primary and other Regulators. • Members shall be judicious about their entitlement of benefit/ privileges as per Banking Companies Act -1991 and all circulars issued by Bangladesh Bank and shall be willing to produce supporting documents, if required. • Members shall comply with the Bank’s Memorandum and Articles of Association of the Company while making Sale-Buy of Company’s share and shall refrain from making such transaction without formal declaration. Every Director will assure annually signing a confirmation that they have gone through, have complied with and will continue to comply with the set of codes approved by the Board of Directors. DIRECTORS’ REMUNERATION Directors are not eligible for any remuneration other than attendance fee for the Board and its Committee Meeting. As per BRPD Circular letter No.11, dated October 04, 2015, directors are eligible for remuneration of BDT 8,000 for attending each meeting but numbers of such Meeting are also prescribed in the said circular determining the numbers with or without remuneration. CHAIRMAN OF THE BOARD The Chairman of the Bank is elected by the Board of Directors and the Board considers the Chairman independent.
100. The role and responsibilities of the Chairman are : • The Chairman may conduct on-site inspection of any branch or financing activities under the purview of the oversight responsibilities of the Board. He may call for any information relating to bank’s operation or ask for investigation into any such affairs; he may submit such information or investigation report to the meeting of the Board or the Executive Committee and if deemed necessary, with the approval of the Board, he shall take necessary action thereon in accordance with the set rules through the CEO. However, any complaint against the CEO shall have to be apprised by the Bangladesh Bank through the Board along with the statement of the CEO. Besides this, the Chairman may/shall assume any other responsibility if the Board assigns within the purview of the Rules, Regulations, Acts and Articles of the Bank. The Chairman’s responsibility is defined by the Board as directed by Bangladesh Bank and BSEC’s notification on Corporate Governance Guidelines. As per BRPD Circular no.11 dated October 27, 2013, the Bank has already formed 1 (one) executive committee, 1 (one) audit committee and 1 (one) risk management committee with the Directors. However, the Board did not form any other permanent, temporary or sub-committee except the above-mentioned three committees. Chairmen of each of the afore-said 3 (Three) committee exercises complete independence in discharge of their responsibilities. CHAIRMAN AND CEO NON-EXECUTIVE DIRECTOR’S INDEPENDENCE All the Directors except the Managing Director are non-executive Directors in the Board. None of the Directors takes part in the day to day affairs of the Company. They attend only the Board/Committee meetings to discuss the agenda reserved for the Board/Committees. A Code of Conduct has been also adopted by the Board to be followed by its Members and annual compliance of the Code is ensured. Besides, all relevant regulations promulgated/ circulated time to time by the concerned authorities are placed to the Board Meeting on a regular basis to keep the members updated. DIRECTORS AND CLOSE RELATIVES ARE NOT INVOLVED IN ANY PURCHASE The Bank has its standard “Procurement Policy” approved by its Board of Directors. The policy guideline delineates standard procurement procedures in order to protect the interest of the Bank. Therefore, there is no involvement of Directors and Close Relatives in any kind of purchase. However, the Board frames the policies and procedures for bank’s purchase and procurement activities and accordingly approves the distribution of power for making such expenditures. The maximum possible delegation of such power of expenditures shall rest on the CEO and his subordinates. The decision on matters relating to infrastructure development and purchase of land, building, vehicles etc. for the purpose of bank’s business, however, be adopted with the approval of the Board. Financial Information Standard Bank is fully committed to maintain highest standards of Corporate Governance & professionalism in driving the Bank’s progress on the principles of transparency and openness. For this purpose, training at home and abroad especially on the Corporate Governance is encouraged by the Board. As such, whenever opportunities arise, bank utilizes the same to train and orient its members. Last year, member of the Board of Directors along with the Chairman attended a workshop on Anti-money Laundering. The Bank has in place policies and procedures governing related party transactions. The Board approves all related party transactions and ensures that these transactions with the Company are undertaken on an arm’s length basis. The Audit Committee reviewed all material related party transactions and kept the Board informed of such transactions. During the year, the Company had collected deposits from its Directors and their related parties. No preferential treatment had been extended to the Directors and their related parties for these deposits. Disclosure of related party transactions during the year is shown on notes to the financial statements. Sustainability POLICY ON TRAINING OF BOARD OF DIRECTORS RELATED PARTY DISCLOSURE Stakeholders’ Information The Chairman is independent of the CEO, and this has been in practice since inception of the Bank. This also complies with Section 1.4 of the BSEC’s notification on Corporate Governance Guidelines. In Financial Institution like Bank, there exists high possibility of arising conflicts of interest between Board of Directors and the management of the company. To avoid such unwanted situation, Standard Bank has segregated the responsibility/authority of these two interest groups of the bank. To avoid conflict of interest and also to make accountable the bank has already taken the a number of measures such as (i) Loan to the directors is restricted subject to fulfilling certain terms and conditions of regulatory guidelines. (ii) If there is any related party transaction, the management discloses the matter in the Annual Report and it is also approved by the general shareholders in AGM. (iii) Executive committee of the Board can approve loan to anyone up to a limited portion. (iv) Audit committee regularly reviews the financial and other related statements and gives recommendation to the management regarding any changes in policy and also presents to the Board for further evaluation. Board of directors’ approval is needed for loan re-scheduling. Management Retrospection INDEPENDENCE OF THE CHAIRMAN OF ALL BOARD COMMITTEES REPORT OF THE BOARD OF DIRECTORS REGARDING CONFLICTS OF INTEREST Risk Governance As the Chairman of the Board of Directors (or Chairman of any Committee formed by the Board of Directors) does not personally possess the jurisdiction to apply policy making or executive authority, he shall not participate in or interfere into the administration or operational and routine affairs of the bank. Standard Bank Limited doesn’t have a scheme for annual appraisal of the Board’s performance till date, but the Bank is abiding by the Code of Conduct prescribed by the regulators and formulated by the Board. The Board members have always taken decisions that have benefitted the Bank as a whole and they have always performed their duties accordingly. Another way of appraising the Board’s performance is conducted by analyzing the execution of the projects and proposals sanctioned by it. A quarterly evaluation of classified and non-performing loans is continuously made by the Board. In addition, evaluation of the Board also takes place at the AGM by the Shareholders. Corporate Governance • APPRAISAL OF THE BOARD’S PERFORMANCE Introduction ROLE AND RESPONSIBILITIES OF THE CHAIRMAN ANNUAL EVALUATION OF THE CEO BY THE BOARD There is a five year Strategic Priorities & Capital Adequacy Plan for the evaluation of the CEO/Management on an annual basis and it is revised from time to time by the Board. Standard Bank Ltd Annual Report 2020 | 99
101. Introduction The CEO is also evaluated on an annual basis and is also given KPI ’s for the years ahead. The Board has the capability to evaluate the CEO whenever it wishes so. All CEOs are evaluated after their term, and on the basis of their evaluation, reappointment for another term is considered by the Board. Corporate Governance At the start of each year, the Board participates in extensive discussions with the Managing Director and decides on financial and non-financial objectives. The annual financial budget are considered and decided by the Board at the beginning of the financial year. The business and financial goals are assessed each quarter with actual accomplishments by the Board. The non-financial successes are also evaluated by the Board in each quarter. Furthermore, a yearly appraisal and assessment of the accomplishments of goals are made at the end of the year along with deviations. Risk Governance A few mentionable KPIs for the CEO are to meet the annual budgetary targets of the Bank which was approved by the Board, maximize shareholders value through desired ROA, ROI, ROE and EPS as per expectation of the Board, sustainable growth on investment and revenue for the Bank, gradually reducing the NPL ratio and improvement in the score for CAMELS rating. Board contains members with expert knowledge and responsibility for informing board of corporate regulatory roles and responsibilities and implications. Management Retrospection The Board of Directors of Standard Bank Limited comprises of members who boast a wide diversity of knowledge and experience in finance, economics, management, business administration, marketing etc. This is to ensure that together, they can devise the appropriate policy for the growth of the bank while having expertise, ability to perceive matters in a bigger perspective and adequate independence to review the management in a sensible manner. Mr. Kazi Akram Uddin Ahmed, the Hon’ble Chairman of Bank, has Diploma in Personal Management in UK and Industrial Management Training from Switzerland. The Bank’s Independent Director, Mr. Md. Nazmus Salehin has vast knowledge in banking sector as a senior banker having over 39 years of different public and private banks in Bangladesh including Standard Bank Limited. Besides, two (2) of the Directors of the bank namely Mr. Ashok Kumar Saha and Mr. Md. Zahedul Hoque have advanced degrees in Business Administration from USA. Stakeholders’ Information ROLE AND RESPONSIBILITIES OF THE CEO The responsibilities and authorities of the Managing Director are as follows: A. Sustainability In terms of the financial, business and administrative authorities vested upon him by the Board, the CEO shall discharge his own responsibilities. He shall remain accountable for achievement of financial and other business targets by means of business plans, efficient implementation thereof and prudent administrative and financial management. Financial Information B. The CEO shall ensure compliance of the Bank Companies Act, 1991 and/or other relevant laws and regulations in discharge of routine functions of the bank. C. The CEO shall include information on violation of any law, rules, regulation including Bank Company Act, 1991 while presenting memos before the Board or the committee formed by the Board. D. CEO will provide all sorts of information to Bangladesh Bank about the violation of Banking Companies Act, 1991 and/ or any violation of Laws, rules and regulations. 100 | Standard Bank Ltd Annual Report 2020 E. The recruitment and promotion of all staff of the Bank except those in the two tiers below him shall rest on the CEO. He shall act in such cases in accordance with the approved service rules on the basis of the human resources policy and sanctioned strength of employees as approved by the Board. The Board or the Chairman of any committee of the Board or any director shall not get involved or interfere into such affairs. F. The authority relating to transfer of and disciplinary measures against the staff, except those at one tier below the CEO, shall rest on him, which he shall apply in accordance with the approved service rules. Besides, under the purview of the human resources policy as approved by the Board, he shall nominate officers for training Besides, the Managing Director shall assume any other responsibility if the Board assigns within the purview of the Rules, Regulations, Acts and Articles of the Bank. BOARD MEETINGS The Board meets as required to discuss business strategy, financial performance, matters pertaining to compliance and governance as well as reports on matters deliberated by the respective committees. The Board reviews, amongst others, the financial performance of the Bank and subsidiaries, risk management and compliance reports and approve the quarterly results of the Bank at its meeting. In addition, Special Board meetings are held when necessary, to deliberate on major transactions and ad-hoc matters that require the Board’s urgent attention and decisions. A Board meeting is held at the beginning of the year to discuss the Bank’s Business plan and budget. Meeting papers on the proposals and reports are delivered to the Directors prior to the meetings, giving them sufficient time to evaluate the proposals. Paperless meeting has been introduced using in-house developed software. This enables the Board to function and discharge their responsibilities effectively. The minimum information required for the Board to make an informed and effective decision includes background, objective, key issues, rationale, financial and non-financial impact of the proposal. Directors who are unable to attend a meeting due to unavoidable circumstances are encouraged to provide feedback to the Chairman on matters to be deliberated for their views to be given due consideration at the meetings. ROLE OF THE COMPANY SECRETARY Company Secretary is responsible for advising the Board on issues relating to compliance with the relevant laws, rules, procedures and regulations affecting the Board and the Bank, as well as best practices of governance. He is also responsible for advising the Directors of their obligations and duties to disclose their interest in securities, disclosure of any conflict of interest in a transaction involving the Bank, prohibited to deal in securities and restricted to disclose any price-sensitive information. The responsibilities of the Company Secretary comprises of: I. Ensuring the compliance of the Bank in relation to financial and legal practices, as well as issues of corporate governance. He acts as a point of communication between the management, Board of directors, company shareholders, reporting in a timely and accurate manner on company procedures and developments. II. Ensure the Bank complies with its governing document, policies, company law and any other relevant legislation i.e. regulations with Bangladesh Bank, Securities and Exchange Commission (BSEC) and Registrar of Joint Stock Companies etc. Support and advise the Chair by ensuring the smooth functioning of the Board. Work in partnership with the Chief Executive and other Trustees to ensure the activities & operations of the Bank.
102. VISION , MISSION AND STRATEGY APPROVED BY THE BOARD IV. In line with Bangladesh Bank guidelines the company secretary has to act as the Secretary to the Audit Committee, Risk Management Committee and Executive Committee of the Board of Directors. In this area of risk mitigation, the Company Secretary has a pivotal role to play in support of the members of the Audit Committee, Risk Management Division, Audit & Inspection Division and Internal Control & Compliance Division. The Board of Directors has approved the vision and mission statements of Standard Bank and strictly adheres to it. They strongly believe in the vision and mission set for the Bank and try to apply those in every business context possible. The Vision and Mission statements can be found in this report. V. Act as a custodian of Banks governing documents and policies. Ensure the Bank pursues its objects as defined in its governing document. He acts as a custodian of the interests of the Bank. So it is his primary duty to protect and safeguard such interests of the Bank at all levels: statutory, administrative, and arbitrational and in other policy matters. He should also ensure that Board meeting minutes are signed by the Chair once they have been confirmed and copies filed and kept at the Bank. SBL’s Board always sets business objectives and areas for focus in consistency with the market. The latest business objectives and areas of business focus can be found in the “Statement Regarding Forward Looking Approach” section of the annual report. VI. Ensure the appointment of Bank’s board members, that those appointed are not disqualified in law and are eligible to be members under the provisions of the governing documents and policies, and that the appointment procedure laid down in the governing document and policies is followed. SBL always sets up a Strategic Action Plan in the beginning of the year to align with the business objectives and strategies for the year. The Board always gives direction to the management of the Bank on how to steer the Bank forward for the upcoming year. Strategies set to achieve the business objectives can be found in the “Strategic Priority” section of the annual report. VII. Make sure that the Directors have information to enable them to comply with the decisions and fulfill their responsibilities. This includes organizing the induction of new Directors also. AUDIT COMMITTEE STRATEGIES TO ACHIEVE THE BUSINESS OBJECTIVES Chairman is an independent Non-Executive Director The Chairman of the Audit Committee is a BSEC approved independent non-executive director, who is not involved in the day to day operations of the Bank. He is an experienced individual and qualified to be the Chairman of the Audit Committee. The Chairman, Mr. Md. Nazmus Salehin is one of the most highly respected bankers of the country having over 39 years of experience in the banking sector. DISCLOSURE REGARDING COMPLIANCE OF ICSB SECRETARIAL STANDARD Support and Policy OBJECTIVE Compliance Review Operations and Results Financial Information Institute of Chartered Secretaries of Bangladesh (ICSB) has so far issued 4 (Four) Secretarial Standards in Bangladesh which are (i) Secretarial Standard on meetings of the Board of Directors, (ii) Secretarial Standard on General Meetings, (iii) Secretarial Standard on Minutes and (iv) Secretarial Standard on Dividend. As a listed banking organization, Standard Bank Limited has been meticulously following all of the afore-said standards of ICSB. Strategy Sustainability XII. Maintain and liaise with various corporate bodies viz. BAB, ABB, BAPLC, CSBIB, Chambers/other bodies, regulators. Stakeholders’ Information File the annual list of members and summary of share capital together with the authenticated Balance Sheet and the Profit and Loss account, Issue Dividend Warrants, bonus share certificates and make arrangement for disposal of fractional shares, if any. XI. Maintain strict confidentially of information, manage situations like conflict of interest, identify problems and implement or recommend solutions. Management Retrospection X. Business objectives and areas of business focus Risk Governance IX. Confirms that Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) are run effectively and in accordance with the provisions of Bank’s governing document. This includes checking that a quorum is present. Also make sure that agendas and minutes of AGMs and EGMs are circulated timely. Vision/Mission approved by Directors Corporate Governance VIII. Ensure that Board meetings are held in compliance with Bank’s governing documents and arrangements for the meetings are made. Introduction III. Support the Chairman in the smooth functioning of the Board. Receive agenda items from other Directors/staff and ensure appropriate agenda items are tabled at Board meetings. This is done in consultation with the Chief Executive Officer and the Chair who is responsible for preparing Board meeting agendas. INTERNAL AUDIT ACTIVITY CHARTER The Audit Committee established a terms of reference (TOR) so that it could function effectively and smoothly. The TOR was created to define the roles and responsibilities of the Audit Committee. The committee is also empowered to investigate/question employees and retain external counsel when required. Standard Bank Ltd Annual Report 2020 | 101
103. COMPOSITION OF THE AUDIT COMMITTEE Introduction As per BRPD Circular No .11 dated October 27, 2013 of Bangladesh Bank; the current Audit Committee consists of 5 members including 2 Independent Directors. All members of the Audit Committee are non-executive directors. ALL MEMBERS SUITABLY QUALIFIED Corporate Governance All members of the Audit Committee are qualified and have years of experience in banking and financial sectors reforms. They are also very competent and come from a variety of educational backgrounds, which brings diversity in the committee. A member of the audit committee brings a high level of expertise in the areas of finance and accounting to the committee. REPORTING OF INTERNAL AUDITOR (ICC & INTERNAL AUDIT) TO THE AUDIT COMMITTEE Risk Governance The Internal Auditor of the Bank regularly reports to the Audit Committee of the Board in compliance of Bangladesh Bank’s BRPD Circular no.11 dated 27 October 2013 and Bangladesh Securities and Exchange Commission (BSEC) Notification No. BSEC/ CMRRCD/2006-158/207/Admin/80 dated 03 June 2018. The details of the reporting activity have been furnished in separate section namely “Report of the Audit Committee”. Management Retrospection HEAD OF INTERNAL AUDIT’S ACCESS IN THE AUDIT COMMITTEE The Head of Internal Audit always has access to the audit committee and can raise his concerns whenever required. The Committee will act independently to ensure that the interests of shareholders are properly protected in relation to financial reporting and internal control, always within the principle of all directors having a duty to act in the interests of the Bank and all directors remaining equally responsible for the Company’s affairs. 2.0 Authority The Audit Committee is an assistive committee of the Board of the Company. The Committee is authorized by the Board to: i. Investigate any activity within its terms of reference and have such direct access to the resources of the Bank as it may reasonably require ii. Report on conflicts of interests; iii. Seek any information that it requires from any employee, and all employees are directed to co-operate with any request made by the Committee iv. Report on suspected infringement of laws, including securities related laws, rules and regulations; v. Report on suspected or presumed fraud or irregularity or material defect in the internal control system; vi. Report on any other matter which shall be disclosed to the Board of Directors immediately. vii. Engage outside legal or other independent professional advisers and obtain appropriate funding for the payment of relevant fees and expenses. Where the Committee is not satisfied with any aspect of the proposed financial reporting by the Company it shall report its views to the Board of the Company. In the event of any disagreement between the Committee; members and the rest of the Board, such matters will be resolved at Board level. TERMS OF REFERENCE 3.0 Responsibilities To steer the Audit Committee forward, a terms of reference (TOR) has been established. According to the TOR for the Audit Committee, some of the roles and responsibilities are as follows: Financial Affairs of the Group i. To monitor the integrity of the financial statements of the Bank (and any discussion or analysis thereof including annual and interim reports), and any formal announcements relating to the Bank’s actual and forecast financial performance, reviewing significant financial reporting judgments contained in them. ii. To review any unusual items or matters brought to its attention requiring the exercise of managerial judgment affecting the preparation of the statements and announcements iii. To provide a forum for the discussion and resolution of areas of disagreement in relation to the statements and announcements, e.g. between management and the External Auditor 1.0 Purpose Stakeholders’ Information To monitor and review the formal arrangements established by the Board in respect of: Sustainability vi. Review along withthemanagement, the quarterly and half yearly financial statements before submission to the board for approval. To review, and challenge where necessary, the actions, estimates and judgments of management (and any changes in them), in relation to the interim and annual financial statements before submission to the Board, paying particular attention to: vii. Review the adequacy of internal audit function. i. Oversight of the financial reporting process. ii. Monitoring choice of accounting policies and principles. iii. MonitoringInternalControlRisk management process. iv. Oversight of hiring and performance of external auditors. v. Review along withthe management, the annualfinancialstatementsbefore submission to the board for approval. Accounting, Financial Reporting and Regulatory Compliance i. Financial Information 1. viii. Review statement of significant related party transactions submitted by the management. Significant accounting policies and practices, and any changes in them 2. ix. Review Management Letters/Letter weakness issued by statutory auditors. Disclosures and estimates requiring a major element of judgment 3. The extent to which the financial statements are affected by any unusual transactions in the year, the methods used to account for any significant or unusual transactions where different approaches are possible, and how such transactions are disclosed 4. The clarity and completeness of disclosures, and the context within which financial statements are made 5. Compliance with accounting standards x. of Internal Control The financial reporting and narrative reporting of the Bank xi. The effectiveness of the internal controls and the risk management framework xii. Whistle blowing xiii. Internal audit process xiv. External auditors’ appointment/reappointment. 102 | Standard Bank Ltd Annual Report 2020
104. 7 . The going concern assumption 8. The representation letter to the auditors; and 9. All material information presented with the financial statements including the business review, and corporate governance statements relating to the audit and risk management. To review the controls and procedures established by management for compliance with regulatory and financial reporting requirements and with the requirements of external regulators ADVERSE REMARKS OF AUDITORS’ REPORT Review the existing risk management procedures for ensuring an effective internal check and control system • Evaluate whether management is setting the appropriate compliance culture by communicating the importance of internal control and the management of risk and ensuring that all employees have understanding of their roles and responsibilities • Review the corrective measures taken by the management as regards the reports relating to fraud-forgery, deficiencies in internal control or other similar issues detected by internal and external auditors and inspectors of the regulatory authority and inform the Board on a regular basis The Group’s Relationship With Its External Auditors • Make recommendations to the Board, to be put to shareholders for approval at the Annual General Meeting, on the appointment, reappointment and removal of the external auditor. The Audit Committee shall oversee the process for selecting the external auditor • Oversee the relationship with the external auditor, including: Approving the terms of engagement (and the engagement letter) of the external auditor, including the remuneration to be paid SEPARATE INTERNAL AUDIT DEPARTMENT DISCLOSURE b. Assessing the external auditor’s effectiveness, independence and objectivity, ensuring that key partners are rotated at appropriate intervals There is a separate section in annual report namely Report of the Audit Committee where there is detailed disclosure on the activities of the Audit Department during 2019. c. Agreeing the policy for, and where required by that policy, approving the provision of non-audit services by the external auditor and the related remuneration WRITTEN POLICY OF INTERNAL AUDITOR d. Agreeing with the Board a policy on the employment of former employees of the Bank’s auditor, and monitoring the implementation of this policy There is no adverse remark in Auditors’ Report regarding any issue whatsoever. In light of the Guidelines on Internal Control & Compliance in Banks issued by Bangladesh Bank, Standard Bank Limited has already prepared its own core risk guideline delineating operational aspects of Internal Audit Department. The Bank also has different checklists for compliance of the instructions set out in the said guidelines. • • INTERNAL AUDIT To review the arrangements of the Bank’s systems of internal controls in relation to financial management, compliance with laws and regulations and safeguarding of assets, and the procedures for monitoring the effectiveness of such controls To monitor any significant deficiencies and material weaknesses in internal controls and disclosure controls and procedures, as reported by Internal Audit and the External Auditor, and the implementation by management of appropriate remedial action Reporting Cycle Risk Management System Past Blame and Learning Oresent Performance and Compliance Future Strategic Direction RISK MANAGEMENT AND INTERNAL CONTROL • Review and approve the annual audit plan, and ensure that it is consistent with the scope of the audit engagement, and coordinated with the activities of the Internal Audit function • Discuss with the external auditor, before the audit commences, the nature and scope of the audit and review the auditor’s quality control procedures and steps taken by the auditor to respond to changes in regulatory and other requirements • To monitor and review in broad terms the scope, nature of the work and effectiveness of Internal Audit and to receive and review its reports, findings and recommendations covering key operating risks. • Review the findings of the audit with the external auditor, considering the external auditor’s management letter and management’s responsiveness to the auditor’s findings and recommendations • Review the arrangements made by the management for building a suitable Management Information System (MIS) including computerization system and its application • Review reports prepared by the external auditor as the Audit Committee shall require, considering management’s response to any major external audit recommendations Standard Bank Ltd Annual Report 2020 | Financial Information To review arrangements for the receipt, retention and treatment of complaints including those regarding accounting, internal accounting controls or auditing matters. To review procedures by which employees may, in confidence and with anonymity, raise concerns including those of questionable financial reporting, accounting or auditing matters. Aims Accountabilities Arrangements Achievements Sustainability • STAKEHOLDERS Stakeholders’ Information STANDARDS OF INTERNAL CONTROL Management Retrospection a. Risk Governance To review the content of the annual report and accounts and advise the Board on whether, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy. The review undertaken by the Committee should assess whether the narrative is consistent with the accounting information. • Corporate Governance iii. Compliance with legal and regulatory requirements Introduction ii. 6. 103
105. • Introduction Review annually and report to the Board on the qualification, expertise and resources, and independence of the external auditors and the effectiveness of the audit process, with a recommendation on whether to propose to the shareholders that the external auditor be re-appointed. The assessment should cover all aspects of the audit service provided by the audit firm, and include obtaining a reporting on the audit firm’s own internal quality control procedures and consideration of the audit firm’s annual transparency report where available Corporate Governance • Ensure that the Audit Committee section of the annual report should include an explanation of how the Committee has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external auditor, including length of term • Review the audit representation letters before signature, giving particular consideration to any non-standard issues within the representations. OTHER RESPONSIBILITIES Risk Governance Place compliance report before the Board on quarterly basis regarding regularization of the errors & omissions, fraud and forgeries and other irregularities as detected by the internal and external auditors and inspectors of regulatory authorities Perform other oversight functions as requested by the Board and evaluate the committee’s own performance on a regular basis Management Retrospection AUDIT COMMITTEE’S REVIEW ON INTERNAL CONTROLS SBL being a part of the banking industry in Bangladesh is obliged to act in accordance with applicable laws and regulations. There are several regulatory authorities, primarily Bangladesh Bank, who are associated with the company’s operation and performance. The Audit Committee supervises and guarantees the Board, that the company obeys all the applicable laws, rules and regulations of various regulatory authorities. The Audit Committee takes all measures to ensure that SBL complies with all laws and regulations and that all statutory dues are being settled timely. AUDIT COMMITTEE’S CONTRIBUTION IN THE EXTERNAL AUDIT FUNCTION The Audit Committee analyses the audited financial statements with management and the external auditors to ensure that the Company’s financial statements are objectively presented in compliance with the relevant Bangladesh Financial Reporting Standards, International Financial Reporting Standards and Bangladesh Accounting Standards in all substantial aspects, based on its review and consultations with management and the external auditors. External Auditors’ are requested to attend the Audit Committee meeting where Financial Statements of SBL is placed for review and recommendation. The Committee also implements an annual assessment of the efficiency of the Company’s Internal Audit function and certifies that Internal Audit has sufficient resources to accomplish its duties. The Audit Committee has quite a few roles regarding the external audit functions: Stakeholders’ Information The Internal Audit Division of the Bank reviews the internal control systems of the Bank and ensures that internal controls are considered properly managed and satisfactorily supervised. 1. Ensure effective coordination of external audit function The Internal Audit Division reviews internal controls throughout all divisions/branches of the Bank and then reports to the Audit Committee on their findings. The Audit Committee then reviews the report submitted by the Internal Audit Division, and provides feedback on the lapses found. The Audit Committee also guides the Internal Audit Division on how to properly monitor internal control and ensure that internal controls are being correctly administered throughout the Bank. The Audit Committee is committed that internal controls are well conceived, properly administered and satisfactorily monitored by the Bank in 2020. Frequent and open interaction between the Audit Committee and the auditor is necessary to acquire the information it needs to accomplish its responsibilities to administer the company’s financial reporting processes. The quality of communications also provides opportunities to assess the auditor’s performance. The auditors should correspond with the audit committee as noteworthy issues develop. Such communications will emphasis on the key accounting or auditing issues that, in the auditor’s finding, give rise to a greater risk of material misstatement of the financial statements, as well as any questions or concerns of the Audit Committee. Through proper communication, the Audit Committee ensures the effective coordination of the external audit function. SHAREHOLDERS 2. Ensure independence of external audit function Board Sustainability FORMAL AUDIT REVIEW Business Performance MANAGEMENT Back Office Financial Information Front Office INITIAL AUDIT REVIEW 104 AUDIT COMMITTEE’S ROLE IN COMPLIANCE WITH LAWS AND REGULATIONS | Standard Bank Ltd Annual Report 2020 Compliance Adherence The auditor must be independent of Standard Bank Limited. Audit committee is familiar with the statutory and regulatory independence requirements for auditors. The technical competency of the auditor alone is not appropriate to ensure a high-quality audit. The auditor also must exercise a high level of objectivity and professional skepticism. The Audit Committee’s interactions with the auditor during the audit provide numerous opportunities to evaluate whether the auditor demonstrated integrity, objectivity and professional skepticism. 3. Review the external auditors’ findings Review the external auditors’ findings in order to be satisfied that appropriate action is being taken. There are many reviews that happen throughout the entire process during the Audit Committee meetings held. The Audit Committee extensively reviews all findings of the external auditors and ensures that management is informed and is taking action for resolving any discrepancies. Before the financial statements are signed, the audit committee reviews all the findings and ensures that they are satisfied with the actions that management has taken.
106. 4 . Review and approve non-audit 5. Recommend external auditor for appointment/ reappointment AUDIT COMMITTEE’S INVOLVEMENT IN THE REVIEW OF ANNUAL AND INTERIM FINANCIAL REPORTS The Audit committee ensures that the management information used for computation in the financials is true and fair. In order to ensure reliability of the information, the Audit Committee always has an extensive meeting with management regarding issues of the financial statements. The Audit Committee queries management on issues that they find material to the financial statements and makes sure that management has a proper response to their queries. 3. Performance objectives for internal controls pertain to the effectiveness and efficiency of the Bank in using its assets and other resources and protecting the bank from loss. Information objectives address the preparation of timely, reliable, relevant reports needed for decision-making within the banking organization. They also address the need for reliable annual accounts, other financial statements and financial related disclosers and reports to shareholders, supervisors and other external parties. Compliance objectives ensure that all banking business complies with applicable laws and regulations, supervisory requirements and organization’s policies and procedures. This objective must be met in order to protect the Bank’s reputation. Internal control mechanism refers to a set of tools aimed at the achievement of organizational overall objectives. It helps an organization to safeguard its assets, check the accuracy and reliability of data. As per the instruction of Bangladesh bank the bank has set Internal Control & Compliance (ICC) division at head office to ensure that the internal control process are in place through establishment of Audit Committee of the Board. The Committee reviews the internal & external audit reports without any intervention of the Bank management and ensures that management takes effective measures in case of any deficiencies/lapses are found in the reports of internal control system. The senior management team (SMT) / management committee (MANCOM) of the bank monitors the effectiveness of internal control system time to time. The SMT/ MANCOM provides certificate on overall adequacy and effectiveness of internal control system based on Bank’s policy and procedure to the Board of Directors. Financial Information RELIABILITY OF MANAGEMENT INFORMATION USED FOR COMPUTATION IN FINANCIALS 2. Efficiency and effectiveness of activities (performance objectives); Reliability, completeness and timeliness of financial and management information (information objectives); and Compliance with applicable laws and regulations (compliance objectives) Sustainability As per the Corporate Governance guideline of BSEC, the Audit Committee is expected to assess alongside with management, the interim and annual financial statements before proposing to the Board for consent. SBL’s Audit Committee appraises the interim and annual financial releases whether audited or unaudited and places it before the Board for approval. The Audit Committee always ensures that the financial statements reflect a true and fair view of the company and analyzes the financials for any discrepancies. 1. Stakeholders’ Information The Audit Committee shall support the Board of Directors in certifying that the financial statements reflect a true and fair view of the company and is maintaining a good supervising system within the Bank. The Board delegates the duty to the Audit Committee to decide on the appropriate accounting policies that are in line with applicable accounting standards as applicable and adopted by the ICAB, IFRS, IAS and Bangladesh Securities and Exchange Commission. After choosing the appropriate accounting policies, the Audit Committee recommends the Board concerning implementation of the selected accounting guidelines. The Board subsequently accepts the selected accounting policies for implementation. Internal control is a process established by the Board of Directors, senior management and all levels of personnel. It is not solely a procedure or policy that is performed at a certain point of time, but rather it is continually operating at all levels within the Bank. The Board of Directors and senior management are responsible for establishing the appropriate culture to facilitate an effective internal control process and for monitoring its effectiveness on an ongoing basis. The main objectives of the internal control process can be categorized as follows: Management Retrospection AUDIT COMMITTEE’S INVOLVEMENT IN SELECTION OF APPROPRIATE ACCOUNTING POLICIES A system of effective internal controls is a critical component of bank management and a foundation for the safe and sound operation of the organization. A system of strong internal controls can help ensure that the goals and objectives of a banking organization will be met, that the Bank will achieve long-term profitability targets, and maintain reliable financial and managerial reporting. Such a system can also help ensure that the Bank will comply with laws and regulations as well as policies, plans, internal rules and procedures, and decrease the risk of unexpected losses or damage to the Bank’s reputation. Risk Governance The Audit Committee does an extensive review on the audit work done by the auditors after the audited financial statements have been signed. The Audit Committee evaluates the auditors on a very detailed level, and ensures that there were no threats to independence or any other issues with the auditors. The Audit Committee scrutinizes the applications of the auditors and recommends for appointment/ reappointment for the next year/AGM as per law. INTERNAL CONTROL Corporate Governance External auditors should not carry out work that does not relate directly to the discharge of audit functions, if it would impair the auditors’ independence, or might give rise to a reasonable perception that their independence could be impaired. The Audit Committee must ensure that external auditors do not undertake any work that might compromise their independence. If any work is being done by the external auditors, the Audit Committee must approve before the work commences. In short, the Audit Committee is responsible that the independence of the external auditors is not comprised under any circumstance. Introduction Review and approve non-audit work assigned to the external auditor and ensure that such work does not compromise the independence of the external auditor Through meetings with management, the Audit Committee is able to understand the reliability of the information used for computation in the financials. Management always assures that the information presented is fair and true and that all the information is derived from the system of the Bank. Internal Control & Compliance (ICC) promotes operational efficiency and encourages compliance with managerial policies and procedures, laws and regulations and supervisory requirement. The ICC comprises the following three units: i. ii. iii. Internal Audit Department Monitoring Department and Compliance Department Standard Bank Ltd Annual Report 2020 | 105
107. Introduction The Bank has introduced Risk Based Internal Audit (RBIA) to assess the business risk as well as the control risk associated with the branches and determine how much care, monitoring & periodicity of comprehensive internal audit would be required to reposition the branches. Corporate Governance Internal Control & Compliance (ICC) Division sets out a Risk Based Internal Audit Program each year. The Risk Based Internal Audit Program for the year 2020 was chalked out by ICC Division which was duly approved by the Management as well as the Audit Committee of the Board of Directors. The Audit program included the timing and frequency of audit of branches. Accordingly comprehensive audit has been conducted on 84 (Eighty Four) branches, 03 (three) Agent Banking outlets & 9 (nine) Divisions of Head Office, Surprise Inspection has been conducted on 06 (Six) branches and 29 (Twenty Nine) Special Investigation has been conducted during the year 2020. Moreover, in 2020 ICT Audit has been conducted on 46 (Forty Six) Branches & 04 (Four) Divisions/Departments of Head Office. Major irregularities or lapses of the reports were presented to the Management and the Audit Committee of the Board of Directors. As per directions/suggestions of the Board Audit Committee as well as the higher Management, corrective measures have been taken so as to stop recurrence of such lapses or irregularities in future. MANAGEMENT OVERSIGHT AND THE CONTROL CULTURE The Board of Directors provides governance, guidance and oversight to senior management. It is responsible for approving and reviewing the overall business strategies and significant policies of the organization. The Board of Directors has the ultimate responsibility for ensuring that an adequate and effective system of internal controls is established and maintained. Senior management is responsible for carrying out the directives of the Board of Directors, including the implementation of strategies and policies and the establishment of an effective system of internal control. Risk Governance An essential element of an effective system of internal control is a strong control culture. It is the responsibility of the Board of Directors and senior management to emphasize the importance of internal control through their actions and words. This includes the ethical values that management displays in their business dealings, both inside and outside the organization. CORPORATE GOVERNANCE ARRANGEMENTS Besides above, Bangladesh Bank Inspection team also conducted 33 (Thirty Three) different inspections in the year 2020 on different Branches and Departments of Head Office. Details are as under: Head Office/ Division Branches Special Inspection on Core Risk 04 02 Comprehensive 01 22 Foreign Exchange Transaction - 01 Special Inspection - 01 Nature of Inspection Management Retrospection Surprise Inspection - Stakeholders’ Information DIRECTOR’S RESPONSIBILITY TO ESTABLISH APPROPRIATE SYSTEM OF INTERNAL CONTROL Sustainability The Board of Directors has always been extremely active in establishing appropriate systems of internal control. The Board of Directors has no sympathy for any type of fraud in the Bank, and always promotes a sound and strong internal control system inside the Bank. The Board of Directors has always appreciated the internal controls that have been set up by management and have also given advice on any matters when required. The Board has always been very responsible and active in establishing an appropriate system of internal control. Financial Information KEY FEATURES OF INTERNAL CONTROL SYSTEM AND THE MANNER IN WHICH THE SYSTEM IS MONITORED Key features of Internal Control System are as follows: 1. Management oversight and the control culture 2. Risk recognition and assessment 3. Control activities and segregation of duties 4. Information and communication 5. Monitoring activities and correcting deficiencies 106 | Standard Bank Ltd Annual Report 2020 INTERNAL CONTROL FRAMEWORK Risk Management System INTERNAL CONTROL KPIs One-Off Decisions 02 To comply with the directives of Bangladesh Bank, ICC Division of the bank takes proper initiative to comply the observations/suggestions of Bangladesh Bank and also sent the Compliance Report in time. Business Performance Process Governance Disclosures Operational Processes Project and Venture ANNUAL REPORT RISK RECOGNITION AND ASSESSMENT An effective internal control system requires that the material risks that could adversely affect the achievement of the Bank’s goals are being recognized and continually assessed. This assessment should cover all risks facing the Bank (which are credit risk, country and transfer risk, market risk, interest rate risk, liquidity risk, operational risk, legal risk and reputational risk). Internal controls may need to be revised to appropriately address any new or previously uncontrolled risks. CONTROL ACTIVITIES AND SEGREGATION OF DUTIES Control activities should be an integral part of the daily activities of a bank. An effective internal control system requires that an appropriate control structure is set up, with control activities defined at every business level. These should include: top level reviews; appropriate activity controls for different departments or divisions; physical controls; checking for compliance with exposure limits and follow-up on non-compliance; a system of approvals and authorizations and, a system of verification and reconciliation.
108. INFORMATION AND COMMUNICATION The overall effectiveness of the Bank ’s internal controls should be monitored on an ongoing basis. Monitoring of key risks should be part of the daily activities of the bank as well as periodic evaluations by the business lines and internal audit. Banking industry is unique in many ways and one of the features that set it apart from other business is the diversity and complexity of the risks it is exposed to. Deregulated regimes along with globalization of business have opened new frontiers that warrant risk management an even greater priority. The failure to adequately manage these risks exposes banks not only to business losses but also may result in circumstances that they cannot remain in business. Following are the core risk areas of banking: 1. Credit Risk including Environment Risk 2. Asset and Liability/Balance Sheet Risk Foreign Exchange Risk 4. Internal Control and Compliance risk 5. Money laundering Risk • Periodic discussions with management effectiveness of the internal control system. 6. Information and Communication Technology Security Risk • Timely review of evaluations of internal controls made by management, internal auditors, and external auditors. • Periodic efforts to ensure that management has promptly followed up on recommendations and concerns expressed by auditors and supervisory authorities on internal control weaknesses. the Periodic review of the appropriateness of the bank’s strategy and risk limits. Through the establishment of the Audit Committee, the Board of Directors monitors the effectiveness of internal control system. The Audit Committee evaluates whether management is setting the appropriate compliance culture by communicating the importance of internal control among the employees. They also review the corrective measures taken by the management relating to operational lapses. The Audit Committee places all the compliance reports before the Board of Directors and regulators on a timely basis and has performed all other oversight functions in relation to Internal Control System of the Bank. In this way, the Directors review the adequacy of the system of internal controls. • Market risk (including interest rate risk in the banking book, foreign exchange risk and equity market risk) • Liquidity Risk • Operational Risk • Strategic Risk • Reputation Risk STRATEGIES ADOPTED TO MANAGE AND MITIGATE THE RISKS: Standard Bank adopted the following strategies to mange and mitigate the risk: • Setting targets for capital ratios and capital composition • Managing the balance sheet • Managing the funding structure • Determining general principles for measuring, managing, and reporting the bank’s risks • Developing risk policies for business units • Determining the overall investment strategy • Identifying, monitoring, and managing the Bank’s current and potential operational risk exposures • Handling “critical risks” (risks that require follow-up and further reporting) • Following up on reviews by and reports from Bangladesh Bank and informing the Board of issues affecting the Bank’s operational risks • Following up on reports prepared by Internal Audit and informing the Board through Audit Committee of unusual circumstances • Preparing management information on issues such as IT security, physical security, business continuity, and compliance. Financial Information In almost every Audit Committee meeting, the issue of adequacy of the system of internal controls is a factor that is taken into consideration. The Audit Committee is responsible to the Board of Directors to ensure that the system of internal controls is adequate to protect against any type of fraud. The Committee has reviewed the corrective measures taken by management relating to fraud-forgery and deficiencies in internal control. Credit risk also includes concentration risk, country risk, transfer risk, and settlement risk Sustainability REVIEW OF THE ADEQUACY OF THE SYSTEM OF INTERNAL CONTROLS BY DIRECTORS • Stakeholders’ Information Senior management of Standard Bank develops processes that identify, measure, monitor and control risks incurred by the Bank; maintains an organizational structure that clearly assigns responsibility, authority and reporting relationships; ensures that delegated responsibilities are being carried out effectively; sets appropriate internal control policies; and monitors the adequacy and effectiveness of the internal control system. They ensure proper control through techniques such as top level reviews, activity controls, physical controls, compliance with exposure limit, approvals & authorizations and verification & reconciliation of transactions of the Bank. Banking companies in Bangladesh, while conducting day-to-day operations, may face some other risks both internally and externally: Management Retrospection • concerning Risk Governance 3. The Board of Directors of Standard Bank performs the following activities to monitor the Internal Control System: Corporate Governance MONITORING ACTIVITIES AND CORRECTING DEFICIENCIES Introduction An effective internal control system requires there are adequate and comprehensive internal financial, operational and compliance data, as well as external market information about events and conditions that are relevant to decision making. Information should be reliable, timely, accessible, and provided in a consistent format. IDENTIFICATION OF RISKS TO WHICH SBL IS EXPOSED INTERNALLY AND EXTERNALLY More information regarding Risk management techniques used by management to identify and mitigate risk can be found in the Risk Management Report. Standard Bank Ltd Annual Report 2020 | 107
109. Introduction Corporate Governance Risk Governance ETHICS AND COMPLIANCE CONFLICT OF INTEREST Standard Bank is always committed to establishing the highest level of business compliance and ethical standard . The Bank has an ‘Employee Code of Ethics and Business Conduct’ – a framework of ethical behavior for all the employees of the organization. The Code of Ethics and Business Conduct aware employees to avoid situations where their personal interests conflict, or may appear to conflict, with those of the Bank. Employees are advised to take particular care when they are responsible for dealing with customers, suppliers, agents on behalf of the Bank. Any failure to disclose a conflict of interest leads to a disciplinary action. The leaders/managers are required to exemplify the highest standards of conduct and ethical behavior. The leaders/ managers are expected to: COMPLIANCE WITH THE LAWS AND REGULATIONS • Lead according to Standard Bank standards of ethical conduct, in both words and actions. • Create and maintain an environment where employees feel comfortable asking questions or reporting concerns. Standard Bank maintains its reputation as a law-abiding organization and a good corporate citizen. It complies with all the prevailing laws and regulations of the country. Employees are trained and guided to conduct business in compliant manner. The policy and procedures regarding Standard Bank’s business process are prepared in adherence to the laws and regulations. • Be diligent in enforcing the Bank’s ethical standards and taking appropriate action if violations occur. • Contact the Human Resources Division when in need of assistance. The Employee Code of Ethics and Business Compliance also specify the grounds of punishment to refrain employees from any unwanted behavior. For instances, an employee shall be liable to disciplinary actions, if he/she: Management Retrospection • Is convicted of any offence involving moral turpitude; or • Is corrupt or may reasonably be considered to be corrupt; or • Assumes a style of living beyond his/her ostensible means; or • Is engaged or is reasonably suspected of being engaged in subversive activities, or is reasonably suspected of being associated with others engaged in subversive activities, and whose retention in service is therefore considered prejudicial to national security; or Stakeholders’ Information • Is in possession of pecuniary resources or property disproportionate to his/her known sources of income etc. The code of employee ethical behavior gives focus on the followings: Sustainability • Protecting Privacy of Customers’ and Confidential Company Information, • Preventing Money Laundering and/or Fraud, • Avoiding Drug/Substance/Alcohol Abuse in the Workplace • Protecting Bank’s assets • Avoiding any conflict of interest etc. Each of the above stated issue is properly explained as separate section in the ‘Employee Code of Ethics and Business Conduct’. INTEGRITY Financial Information The ‘Employee Code of Ethics and Business Conduct’ starts with the phrase “Uncompromising integrity”. Employees of Standard Bank are judged not only in terms of competencies, but also with their integrity. The reputation and continued success of Standard Bank largely depend on a shared commitment to the core value of integrity. Respecting this value is the responsibility of each and every member of the organization. 108 | Standard Bank Ltd Annual Report 2020 COMMUNICATION OF THE STATEMENT OF ETHICS & BUSINESS PRACTICES All employees are properly inducted to comply with Code of Ethics and conform to the relevant laws and regulations. HR Division makes sure that during joining employees read, understand the ‘Code of Ethics and Business Conduct’ and acknowledge the same by signing. HR continuously raises awareness on regular interval among employees to ensure that business decisions and actions undertaken by employees are completely in compliance with the prevalent rules and regulations. The leaders/managers of the Bank are mandatorily required to communicate and help their employees to understand how ethics apply to their positions and everyday behavior. The Board of Directors of Standard Bank has approved the ‘Employee Code of Ethics and Business Conduct’ with a commitment to setting high ethical standards so that customers’ expectations and interests are protected in a compliant manner THE BOARD’S COMMITMENT TO ESTABLISHING HIGH LEVEL OF ETHICS AND COMPLIANCE WITHIN THE ORGANIZATION The Board of Director has always been committed to establishing a high level of ethics and compliance among all employees of the organization. They have always encouraged management to ensure that everyone maintains a high ethical standard within the Bank. The Board guides management on principles that should be adopted and followed by everyone in the Bank. WHISTLE BLOWING Whistle blowing about bad practices can help ensure that problems are identified before it is too late. This helps prevent disasters ranging from customer mistreatment to huge financial loss. Standard Banks whistle blowing procedures encourage employees to disclose concerns using appropriate channels before these concerns become a serious problem which might jeopardize Bank’s reputation through negative publicity, regulatory investigation, fines and/or compensation. Whistle blowing is increasingly recognized as an important tool in the prevention and detection of corruption and other malpractice. The clandestine nature of corrupt behavior means that it may never come to light unless cases are reported by people who discover them in the course of their work. Employees are encouraged to report any wrong-doing within the Bank. The Head of Internal Control and Compliance and Human Resources Divisions are the primary channel to report any incident.
110. REMUNERATION COMMITTEE Standard Bank Ltd . has a Management Committee which comprises of senior management team (SMT) of the bank to review, discuss and decide on important business issues. In addition to the regular roles and responsibilities, the Committee assist in formulation of remuneration related policies and practices in alignment of the Bank’s short and long-term business objectives. The roles and responsibilities of the committee are the followings: • Ensure that an effective remuneration policy, procedure and practice are in place, aligned with the Bank’s strategy, and is applied consistently for all employee levels Ensure that the structure and mix of fixed and variable pay and other elements are in alignment with the overall business objectives • Guide and give suggestion to HR team during preparation and review of any policy or process related to compensation and benefits • Ensure that all benefits, including retirement benefits and other financial arrangements, are justified, appropriately valued and promoting the performance based reward & recognition etc. All employees including the Senior Management employees are paid competitive remuneration package. The structure and level of remuneration are reviewed time to time based on Bank’s performance and affordability. The remuneration also stresses on ensuring internal and external pay equity. MEETINGS AND WORK PERFORMED Disclosure Of Remuneration Of Directors, Chairman, Chief Executive And Senior Executives Ensuring adequate learning & development opportunities through effectively designed training programs and on-the-job experience. SBL continuously thrives to transform Human Resources to Human Capital through appropriate learning and development initiatives in every aspects of work area. HR Division regularly undertakes effectively designed training programs targeting the right group of employees through proper training need assessment. The Bank has a separate HR Training & Development Centre. Well-crafted compensation & benefits package to have a positive impact on employees’ overall wellbeing SBL has a flexible compensation and benefits system that helps ensure pay equity, is linked with performance that is understood by employees, and keeps in touch with employee desires and what’s coveted in the market, while maintaining a balance with the business affordability. All employees are paid competitive remuneration package. The structure and level of remuneration are reviewed time to time based on Bank’s performance and affordability. Ensuring Horizontal And Vertical Career Growth Financial Information The Directors of the Board are paid only honorarium for attending Board or Committee meetings. On the other hand, the Managing Director is paid salary and allowances as fixed by the Bangladesh Bank (HR Report). The total cost related to employee compensation is shown in the Human Resources Accounting. The recruitment and selection in Standard Bank follows the ‘best fit’ approach. As per Bank’s requirement, Human Resources Division ensures that the potential candidates are properly assessed, selected and placed on-time as per required competencies (KSA – Knowledge, Skill & Attributes) and experience. Standard Bank has a recruitment policy that clearly states the criteria and procedures to recruit fresh and lateral entrants. The Bank has a Management Trainee Program which is aimed to recruit outstanding fresh graduates and develop them as the future leaders of Standard Bank Ltd. Sustainability The committee holds meeting on a regular interval throughout the year. So, if any remuneration related issue needs committee’s attention, it is placed as agenda for necessary review. However, if required, the meeting is held on need basis to review and discuss any remuneration related issue exclusively. Recruitment and selection process with ‘bestfit’ ethos followed by clearly defined policy and procedures Stakeholders’ Information Disclosure of key policies with regard to remuneration of directors, senior management and employees To ensure long term sustainability, Standard Bank has a special focus on skill and merit based recruitment and selection process, highly competitive remuneration package, adequate training and development programs, career growth with succession planning, high-performance culture and pleasant working atmosphere where employees are able to escalate their grievance and receive counseling. Management Retrospection • A group of motivated and engaged employees with diverse talents are the key asset of Standard Bank. Standard Bank is highly reputed in the market as an employer of choice. The Bank has positioned itself with a performance-driven rewarding work culture; where employees are treated with respect and receive widened opportunities to realize their diverse potentials fully as well as benefit the organization by demonstrating value creating behaviors. Risk Governance • Review the effectiveness of remuneration policy to ensure that whether the Board’s set objectives and expectations are being met Employees are the key driving force of Standard Bank’s continuous success Corporate Governance Composition and Charter HUMAN CAPITAL Introduction The Reporting channels offer the employees the opportunity to report while maintain their identity confidential. However, from experience, Standard Bank understands that an effective whistle blowing policy demands for a shift in the culture. The Bank has a division named Internal Control and Compliance Division which dedicatedly works to ensure effective controls mechanism in the entire business entity. SBL always plans for employees so that they can advance their career goals. This includes advancement into more responsible positions. The company supports career opportunities internally so that talented employees are placed in upgraded positions and thereby enables them to deliver their greatest value to the organization. In addition to vertical career growth, employees may also grow horizontally. Whenever possible Human Resources Division mobilizes employees across different functions and branches; thus assisting them to progress with varied skills and experience. Standard Bank Ltd Annual Report 2020 | 109
111. Introduction Succession Planning For The Talents In Different Layers Of The Organizational Hierarchy Corporate Governance Besides encouraging individual employee growth and development , SBL also gives effort to identify and retain the human resources who can potentially be the successors of mission critical roles. SBL acknowledges that Succession Planning & Management is vital to the continued success of the Bank. SBL continuously assesses organizational, divisional and team capability gaps to identify, develop and retain the successors in a timely manner to meet the demands of the future. Comprehensive Performance Management Program To Reward Employees And Drive Further Development Risk Governance SBL has a comprehensive performance management program that evaluates employees’ yearly performance against business targets at the year-end. This performance appraisal system is considered as crucial for the Bank as this is a very important tool to identify and distinguish the performers and non-performers. Standard Bank believes that a well-executed performance appraisal system can help reward the deserving employees, as well as help ensure further development program for the rest. Reward & Recognition Program To Meet Employees’ Intrinsic Psychological Need For Appreciation Management Retrospection SBL has a well-designed Reward & Recognition program that gives special attention to employees’ actions, efforts, behavior and performance. It meets the intrinsic psychological need for appreciation of employees’ efforts and supports business strategy by reinforcing certain behaviors (e.g., extraordinary accomplishments) that contribute to Bank’s success. Grievances And Counseling Stakeholders’ Information Since employee’s behavior affects work discipline, HR Division always encourages employees to report if they have any work related grievance. In SBL, there is formal procedure to address the employee grievance. Time to time HR Division also counsels employees as part of its job as people’s advocate. Ensuring A Decent Workplace Where Employees Can Participate In Work With Respect Sustainability Standard Bank believes that the business can grow favorably if the organization enables employees through creating and maintaining a decent workplace. In SBL, there is a decent work environment where employees can work with dignity, have the freedom to express opinions, can participate in the decision making process that affect their lives, and receive equal treatment and opportunity. SBL ensures security in the workplace and social protection for employees’ families, better prospects for their personal development and social integration. COMMUNICATION TO SHAREHOLDERS & STAKEHOLDERS Financial Information Company’s policy/strategy to facilitate effective communication with shareholders and other stakeholders Standard Bank ensures that all shareholders are notified at least 2 weeks before the AGM so that all shareholders may attend on the day. Also all other types of accounts (Quarterly and Half yearly) or information are updated on the website and notified to all stakeholders 110 | Standard Bank Ltd Annual Report 2020 on a duly basis. The Bank tries to maintain liaison with all major shareholders as much as possible and ensures that all stakeholders are informed about the bank’s activities on a routine basis. SBL also engages with all types of stakeholders as much as possible to ensure that information is effectively communicated. The Directors appreciate the importance of general shareholders of the Bank and use the Bank’s AGM as further opportunities to communicate with them. SBL provides copies of the annual report in order that these are made available to them well in advance for detail and constructive discussion. It is the company’s policy to give the shareholders the opportunity to ask questions about its activities and prospects at the AGM. The Board also structures these meetings so that shareholders can vote separately on each matter, by proposing separate resolutions for each item to be considered. Company’s Policy On Ensuring Participation Of Shareholders In The Annual General Meeting And Providing Reasonable Opportunity For The Shareholder Participation In The Agm SBL tries its utmost to ensure that all shareholders can participate in the AGM. Annual Reports are sent at least 2 weeks before the AGM to ensure all shareholders are notified about the event date, place and time. Also, SBL always ensures that AGM is held at a convenient place where all shareholders may attend. Notices to shareholders are made by publication in the daily newspapers and through the digital media as well. To ensure compliance with regulatory bodies, SBL ensures that it publishes in two widely circulated newspapers in English and Bangla and sent to the stock exchanges and BSEC. SBL ensures effective communication with the shareholders and encourages shareholder participation at the AGM. SBL connects with the investors through AGM, EGM, Annual Report and Company’s website. All of the Bank’s publications to the market may be retrieved through the Company’s website. Shareholders are offered the chance to interrogate the Board regarding the operation of the Bank. They are also presented the ability to query the Company’s auditors concerning topics linked to the audit of the Company’s financial statements at the AGM. Foreign And Local Investors’ Disclosure The total number of investors of the Bank stood at 1,005,990,788 out of which 1,000,750,555 number of investors (99.47%) are local investors while the remaining 5,240,233 number of investors are foreign investors (0.53%). Investors’ Relation Desk (Officers’ Name) There is a separate section namely Redressal of Investors’ Grievances which clearly sets out detailed information on how an aggrieved investor can sort out any pending issues regarding his/her share in Standard Bank Limited. It also has details on the desks dedicated to addressing such grievances and the persons who will provide the service over the counter. 10% Above Shareholding Name Details As of December 31, 2020, there is no individual shareholder in the shareholding of the Bank having ownership of 10% or more shareholding. Information Circulation On Unclaimed Dividend The share division of the Bank regularly and repeatedly sends letters to the respective owners of unclaimed dividend holders.
112. Employee Participation In The Management Introduction The Board of Directors of Standard Bank Limited is involved only in the policy-making functions of the Bank . The day-to-day operations of the Bank are carried out by the Management. Therefore, there are different management level committees in the bank namely Management Committee, Management Credit Committee, Asset Liability Management Committee, Executive Risk Management Committee and so on. Each of these committees has clearly specified terms of references. Corporate Governance Vendor Payment In Time Standard Bank Limited believes that it will entail reputation risk for the bank if it fails to make timely payment to its vendors when the good and services are accepted by the Bank. Government Tax Pending Risk Governance There is no major pending issue with National Board of Revenue (NBR) regarding the tax liability of the Bank. ENVIRONMENTAL AND SOCIAL OBLIGATION Description of the company’s policies and practices relating to social and environmental responsibility of SBL Management Retrospection A natural and fresh environment, efficient use of reserves and appreciation for people’s well-being and safety are what SBL has always believed in. In harmony with this, SBL is constantly working towards decreasing consumption of energy (especially electricity, water and gas) at its branches, removal of use of hazardous substances from its practices and reducing waste generation. The importance is on diminishing paper transactions to the extent that the Credit Committee has already been made paperless, and SBL is moving forward and thinking about implementing it more through the branches. Board and its Committee Meetings are also made paperless through using in-house built software. One of the key objectives for financing manufacturing companies is to ensure that they try to lessen their carbon footprint. Stakeholders’ Information Bangladesh Bank has taken steps to inspire green banking in Bangladesh through the issuance of guidelines on green banking and Environmental Risk Management (ERM). It is always inspiring banks in lessening paper communications and fitting solar power system in branches and giving refinance to the solar energy, bio-gas and effluent treatment plant (ETP) sectors at eased interest rates. SBL has always been committed to the environment and also been active in social activities throughout the year 2020, and will remain to do so in the future. Sustainability Specific activities undertaken by the SBL regarding environmental and social responsibilities Financial Information SBL has always been active regarding its activities for the environment. It is also in the process of issuing a green manual for how to make all branches and divisions more environmental friendly. Also, solar panels have been set up in quite a few branches as well, and the initiative has been taken to install more solar panels in branches in the future. Environmental activities during the year can be found more in details in the Green Banking Report. SBL has always been an active member of society and has tried to enhance people’s lives and its employees as well. Standard Bank Foundation was solely initiated for the purpose of Corporate Social Responsibility. SBLs social activities can be found on the Standard Bank Foundation chapter and its commitment to its employees can be found in the CSR Report. Standard Bank Ltd Annual Report 2020 | 111
113. Introduction REPORT OF THE AUDIT COMMITTEE Corporate Governance In compliance with Bangladesh Bank ’s BRPD Circular No.11 dated 27 October 2013 and Bangladesh Securities and Exchange Commission (BSEC) Notification on Corporate Governance dated 03 June 2018, the Audit Committee (AC) of the Board of Directors of Standard Bank Limited (SBL) was formed by the Board to provide independent oversight of the company’s financial reporting, non-financial corporate disclosures, internal control systems and compliance to governing rules and laws etc. Following are the major objectives of the Audit Committee: • To review the financial reporting process, the system of internal control and management of financial risks, the audit process, and the bank’s process for monitoring compliance with laws and regulations and its own code of business conduct, compliance status of inspection report from Bangladesh Bank. • To assist the Board in fulfilling its oversight responsibilities including implementation of the objectives, strategies and overall business plans set by the Board for effective functioning of the bank. Risk Governance The Audit Committee was reconstituted by the Board in the 319th meeting of the Board of Directors held on 30.10.2019. Thus the committee stands as follows; Sl. No. Name Meeting/ Attendance Management Retrospection Mr. Md. Nazmus Salehin Independent Director Chairman M.Sc 7/7 02 Al-haj Mohammed Shamsul Alam Director Member B.A (Hon’s) 7/7 03 Mr. Ferdous Ali Khan Director Member M.Com 7/6 04 Mr. Kazi Khurram Ahmed Director Member BSc. Egg. (USA) (Computer Science) 7/7 05 Mr. Najmul Huq Chaudhury Independent Director Member M.Com 7/5 06 Mr. Md. Ali Reza Acting Company Secretary Member Secretary MBA, FCMA, CIPA 7/7 Stakeholders’ Information Bangladesh Bank suggested banks to hold at least 4 meetings in a year. The Audit Committee of SBL held 07 (seven) meetings in the year 2020 and had detailed discussions and review session with the Head of Internal Control & Compliance, External Auditors etc., regarding their findings, observations and remedial suggestions on issues of bank affairs that need improvement. The Audit Committee instructed management to follow those remedial suggestions and ensure monitoring accordingly and effectively. Meeting dates are as follows: Sustainability Sl. No. 01 Financial Information | Educational Qualification 01 MEETINGS OF THE AUDIT COMMITTEE 112 Status with the Committee Status with the Bank Meetings 95 Audit Committee Meeting Date of Meeting 06.02.2020 02 96 Audit Committee Meeting 18.03.2020 03 97 Audit Committee Meeting 20.04.2020 04 98 Audit Committee Meeting 27.07.2020 05 99 Audit Committee Meeting 27.10.2020 06 100 Audit Committee Meeting 27.12.2020 Standard Bank Ltd Annual Report 2020 MAJOR AREAS FOCUSED BY AUDIT COMMITTEE IN 2020 The major issues, amongst others, were reviewed and discussed by the Audit Committee of the Bank during the year 2020 are mentioned below: • Bangladesh Bank comprehensive inspection report & external audit report of the Bank and the recommendation made thereon. • The compliance status of the audit objections and the recommendations made by the Bangladesh Bank inspectors, External auditors and the Internal Auditors of the bank in their respective reports. • Actions and corrective measures taken by the Management in regard to deficiencies in Bangladesh Bank inspection report, internal audit report and the Internal Control and Compliance Division (ICCD) report and by other regulatory authorities report on the Bank. • Implementation of Core Risk Management Guidelines including Internal Control and Compliance Risk along with compliance thereof. • The review of status of recovery of classified loans and providing with the necessary guidelines, advices and recommendations to the management to reduce the Non-performing Loans (NPLs). • Audit and Inspection reports of the branches, divisions and departments of the Head Office prepared by the Internal Control and Compliance Division (ICCD) of the Bank.
114. Review of serious irregularities in the audit report of the branches prepared by Internal Control & Compliance Division (ICCD) for the year 2019 & 2020. • Review of the audit ratings of all branches and departments for the year 2020. • Review of Bangladesh Bank, DOS Circular Letter No. 17 dated 7 November 2012 regarding Report of Self-Assessment of AntiFraud Internal Controls on Quarterly basis through specific format to be signed by the MD & CEO of the Bank and countersigned by the Chairman of the Audit Committee. • Review of the process of strengthening Internal Control Systems and Procedures of the Bank. • Review of the annual financial statements of the bank for the year ended 31 December 2020 as certified by the external auditors, M/S Khan Wahab Shafique Rahman & Co., Chartered Accountants, before submission to the Board of directors for approval. • Review of Corporate Governance Compliance Report of SBL for the year ended 31 December 2020 as submitted by Mahfel Haq & Co. • Review of the Management Report on the Bank for the year ended 31 December 2020 as submitted by the External Auditors and subsequent compliance by the management thereof. • Review of the First Quarter (Q1), half-yearly, Third Quarter (Q3) & Annual Financial Statements (Un-Audited) of Standard Bank Limited and Its Subsidiaries for the year 2020 before submission to the Board of Directors for approval in compliance with the BSEC’s Corporate Governance Guidelines 2018. • Review of the Bangladesh Bank Comprehensive Inspection Report on SBL Head Office as on 31 December 2020 and subsequent compliance by the management there of. • Review of AML rating of all Branches for the year 2020 & 2021. • Review of compliance and related risk level of Branches, various Departments and Subsidiaries. • Review of Annual Report on the Financial Health of the Bank, 2019. Standard Bank Ltd. has a defined internal control policy and guidelines for providing reasonable assurance that the Board’s objectives are attained in terms of operational activities, financial reporting, and compliance with prevailing laws and regulations. The Audit Committee through its oversight activities ensures that Management has put in place appropriate policies and procedures on internal control. iii) Statement on Review of Internal Audit Functions The Audit Committee monitors whether internal audit division of the Bank is working independently from the management. The Committee reviews the activities of the internal audit and the organizational structure and ensures that no unjustified restriction or limitation hinders the internal audit process. The Committee examines the efficiency and effectiveness of internal audit function. Besides, the Committee also examines whether the findings and recommendations made by the internal auditors are duly considered by the management or not. Standard Bank Ltd Annual Report 2020 | Financial Information i) Statement on Review of Internal Control: The Audit Committee is aware that the selection and application of the company’s accounting policies must be appropriately analyzed. The Committee is aware that investors increasingly demand full transparency of accounting policies and their effects. In line with this, the Committee always encourages management to disclose trends, events, or uncertainties that would materially affect the reported financial statements. The Committee is always apprised of the evaluation criteria by Management in their selection of the accounting principles and methods. Proactive discussion between the Audit Committee and Management always takes place before signing of the annual report regarding critical accounting policies. Sustainability The committee in the meetings has taken particular notes of lapses detected by the Internal Audit Team in their audit report and the actions taken by the management towards correction, helped improving the recovery of classified loans and initiating measures for lowering the quantum of NPLs. The committee advised and recommended to the management and the board for instituting adequate recovery mechanisms, close and effective monitoring, constituting a robust credit administration and, carefully reviewed the internal control system and procedures specially focusing on IT operation to secure the Bank from foreseeable shocks. The process of continuous monitoring was established for avoidance of errors and omissions and, repetition of lapses as are detected by the internal and external auditors. The Audit Committee is a vital Committee of the Board of Directors assigned with the responsibilities of oversight of the financial reporting and disclosure process. The Audit Committee, as such, has a large degree of responsibility regarding selection of appropriate accounting policies for the Bank, and evaluation of the annual and quarterly financial statements. In addition, members of the Committee often discuss complex accounting figures, issues, and decisions made by the Management and the application of new accounting principles or regulations. Should significant complications with regard to accounting practices or personnel arise, a special investigation is instructed by the Audit Committee using outside consulting resources, if deemed necessary. External auditors are also expected to inform the Committee about a range of issues, such as their views on management’s selection of accounting principles, accounting adjustments arising from their audits, discrepancies or complexities faced in working with management, and any identified acts of fraud or illegal activities. Stakeholders’ Information Review of Bangladesh Bank’s BRPD Circular No. 4 dated 23 February 2015 on the Rules and Regulations in making transactions with people related with Board and Management of the Bank. The Audit Committee checks whether the financial statements reflect the complete and concrete information and determine whether the statements are prepared according to existing rules & regulations and standards enforced in the country and as per relevant prescribed accounting standards set by Bangladesh Bank. Besides, the Committee discusses with management and the external auditors to review the financial statements before its finalization. Management Retrospection • ii) Statement on Review of Financial Reporting Risk Governance • The Audit Committee evaluates whether management is setting the appropriate compliance culture by communicating the importance of internal control and the management of risk and ensuring that all employees have clear understanding of their roles and responsibilities. The Committee also reviews management’s actions in building computerization of the bank and its applications and bank’s Management Information System (MIS). The Committee considers whether internal control strategies recommended by internal and external auditors have been implemented by the management. As part of its mandate, the Committee consider reports relating to fraud, forgery, deficiencies in internal control or other similar issues detected by internal and external auditors and inspectors of the regulatory authority and place it before the board after reviewing whether necessary corrective measures have been taken by the management. Corporate Governance Review and approve ‘Annual Audit Plan 2020’ and ‘Risk Based Audit Plan 2020’ of bank’s ICC divisions of Head office. Introduction • 113
115. Introduction iv ) Statement on Review of External Audit Functions The Audit Committee reviews the performance of the external auditors and their audit reports. The Committee also examines whether the findings and recommendations made by the external auditors are duly considered by the management or not. Besides, the Committee also makes recommendations to the board regarding the appointment of the external auditors. Corporate Governance The Audit Committee focuses on the financial management and reporting of the Bank. The Committee provides specific expertise in this critical area as effective financial management and reporting determines creditworthiness to outsiders and confirms the growth trend and successes to the insiders. These are the key determinants in establishing market value of Standard Bank – the ultimate scorecard of management’s success. Risk Governance • Reviews the performance of the external auditors and exercises final approval on the appointment of the auditors. • Reviews the external auditors’ proposed audit scope and approach, including coordination of audit efforts with internal audit team. The Audit Committee undertakes the following responsibilities regarding review of the external auditors’ functions: In performing this review, the Committee: Management Retrospection At least annually, obtains and reviews a report by the independent external auditor describing the firm’s internal quality- control procedures; material issues raised by the recent internal qualitycontrol review, and assesses the auditor’s independence in all relationships between the external auditor and the Bank. Stakeholders’ Information • Takes into account the opinions of Management and Internal Audit Division. • Reviews and evaluates the findings and recommendations of the independent external auditors. • Presents conclusions with respect to the external auditors to the Board. • Reviews and approves any non-audit work assigned to the external auditors and ensures that such work does not compromise the independence of the external auditors. • Presents its conclusion with respect to the independence of the auditors to the Board. Meets separately with the external auditors to discuss any matters that the Committee or auditors believe should be discussed privately. Understands management’s judgment estimates applied in financial reporting. and accounting • Confers with both management and the external auditors about the financial statements. • Assesses whether financial statements are complete and fairly presented in all material aspect. • Verifies that the financial position of the company and disclosures are clear and transparent. • Reviews financial statements and other information presented with it prior to release. It is to be noted that it is management’s responsibility to prepare complete and accurate financial statements and disclosures in accordance with financial reporting standards and applicable rules and regulations. The Audit Committee assures itself that the external auditors are satisfied that the accounting estimates and judgments made by management, and that management’s selection of accounting principles reflect an appropriate application of IFRS and IAS. The appropriateness, including the degree to which management bias, if any, is evident, of the Bank’s accounting principles and underlying estimates, and the transparency of the financial disclosures in reflecting financial performance, would be the core discussion between the Committee and external auditors. The Committee is always interested in discussing and understanding the auditor’s views on accounting issues and actively seeks to develop a relationship with the external auditor that allows a full, frank and timely discussion of all material issues. With regard to interim reports, the Committee always has an extensive discussion with management regarding material issues before approval of the interim accounts. The Audit Committee of Standard Bank Limited has always been extensively involved in the review of the financial statements and has provided recommendations whenever needed. The Committee has duly carried out such responsibilities throughout the year 2019, to the best of their ability. vi) Statement on ensuring compliance with Laws and Regulations The Board, Audit Committee and the Management, all play critically important roles in promoting a compliance culture in the operation and management of the banking affairs. As per the directives of the regulators, the Board sets the policy guidelines for Management compliance and it’s the Audit Committee that ensures those are strictly complied with through its oversight functions. As part of the responsibility, the Audit Committee, among others, also undertakes the following regular measures for ensuring compliance: • Reviews effectiveness of the system of monitoring compliance with the laws and regulations upon receiving investigations reports which are again followed up for regularization through appropriate actions including disciplinary ones, where warranted. • Establishes procedures for: • The receipt, retention, and treatment of the complaints by the Bank regarding accounting, internal controls or auditing matters; and • The confidential and anonymous submission by the employees of the Bank of any concerns regarding questionable accounting or auditing matters. The Audit Committee assumes the following responsibilities with regards to annual and interim financial statements: • Reviews the findings of the examination by the regulatory agencies or other auditors. • Understands management’s responsibilities and representations with regard to annual and interim financial statements. • Reviews the process for communicating code of conduct to the Bank personnel and monitoring compliance therewith. • Understands and assesses the appropriateness of management’s selection of accounting principles and policies. • Obtains regular updates from the Management and Bank’s legal counsel regarding compliance matters. Sustainability v) Statement on the review and recommendation of the Annual and Interim Financial Releases Financial Information The annual and interim financial statements released by the Bank contain sensitive financial information that needs to be addressed carefully. The Audit Committee, therefore, always actively involves itself in reviewing these releases and recommends to the Management on ways to improve these financial statements. The Committee reviews and discusses with management all significant correction/adjustments (whether or not made) to ensure that all material adjustments are properly reflected in the financial reports. 114 • | Standard Bank Ltd Annual Report 2020
116. THE AUDIT COMMITTEE IS SATISFIED THAT : Introduction The rules and regulations of the Bangladesh Bank and all other regulatory authorities and Bank’s own policy guidelines approved by the Board of Directors are duly complied with. Corporate Governance Internal control and security measures have been undertaken by the Bank towards facilitating Information Technology (IT) based banking including generation of proper Management Information System (MIS). The system of internal control and the business processes have been strengthened including development of human resources towards creation of a compliance culture in the Bank. The efforts have been made to keep assets of the Bank safe along with liabilities and commitments are made transparent. The Financial Statements of the Bank have been prepared in accordance with International Financial Reporting Standards (IFRS) and Bangladesh Bank’s guideline which contained full disclosure. Risk Governance The Minutes of the Audit Committee meetings containing various advices, suggestions and recommendations to the Management and for perusal, consideration and approval of the Board of directors placed subsequently in the meetings of the Board of directors for ratification and approval on regular basis. Management Retrospection In addition, the Audit Committee ensures that legal fees are settled on a timely basis and that the Bank does not have to bear any penalties in this regard. It can, therefore, be stated that the Audit Committee supervises and assures the Board that the Bank complies with all the applicable laws, rules and regulations, and also takes measures to ensure that all statutory dues are being settled on time. On behalf of the Audit Committee, Stakeholders’ Information Md. Nazmus Salehin Chairman of the Audit Committee of the Board Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 115
117. Introduction DIRECTORS ’ STATEMENT ON INTERNAL CONTROL Corporate Governance RESPONSIBILITY Risk Governance As per the Bangladesh Bank Circular BRPD Circular No. 11, dated; 27-10-2013 which clearly define the Responsibility of the Board of Directors on Internal Control of the Company. The Board of Directors is responsible for the adequacy and effectiveness of Standard Bank Limited (SBL) system of internal controls. However, such a system is designed to manage the SBL’s key areas of risk within an acceptable risk profile, rather than eliminate the risk of failure to achieve the business objectives and policies of the Company. Accordingly, the system of internal controls can only provide a reasonable but not absolute assurance against material misstatement of management and financial information and records or against financial losses or fraud. The Board has established an on-going process for identifying, evaluating and managing the significant risks faced by the Company and this process includes enhancing the system of internal controls as and when there are changes to business environment or regulatory guidelines. The process is regularly reviewed by the Board in accordance with the guidance for Directors of Bank’s on the BRPD Circulars on Internal Control issued by the Bangladesh Bank. As per the said guidance, significant processes affecting significant accounts of the Company were assessed along with the key risk areas of the Company. The management assists the Board in the implementation of the Board’s policies and procedures on risk and control by identifying and assessing the risks faced by the Company, and in the design, operation and monitoring of suitable internal controls to mitigate and control these risks. The Board is of the view that the system of internal controls in place is sound and adequate to provide a reasonable assurance regarding the reliability of financial reporting, and that the preparation of financial statements for external purposes is in accordance with relevant accounting principles and regulatory requirements. Management Retrospection Stakeholders’ Information SIGNIFICANT INTERNAL CONTROL PROCESSES The key processes that have been established in reviewing the adequacy and integrity of the system of internal controls include the following: • Sustainability • Financial Information 116 | The Board Sub Committees are established to assist the Board in ensuring: • the effectiveness of the SBL’s daily operations. • that the SBL’s operations are in accordance with the corporate objectives and strategies. • that the operations of the Company are in line with the annual budget as well as the policies and business directions that have been approved by the Board. The Internal Audit Division of the Company checks for compliance with policies and procedures and the effectiveness of the internal control systems and highlights significant findings in respect of any non-compliance. Audits are carried out on majority of units and branches, the frequency of which is determined by the level of risk assessed by the internal audit, to provide an independent and objective report on operational and management activities of these units and branches. The annual audit plan is reviewed and approved by the Audit Committee and the findings of the audits are submitted to the Audit Committee for review at their periodic meetings. Standard Bank Ltd Annual Report 2020 • The Audit Committee of the Company reviews internal control issues identified by the Internal Audit Division, the external auditors, regulatory authorities and management; and evaluates the adequacy and effectiveness of the risk management and internal control systems. They also review the internal audit function with particular emphasis on the scope of audits and quality of the same. The minutes of the Audit Committee meetings are tabled for the information of the Board on a periodic basis. Further details of the activities undertaken by the Audit Committee of the Company are set out in the Audit Committee Report. • The Risk Management Forum (RMF) is established to assist the Board to oversee the overall management of principal areas of risk of the Bank. The Risk Management Forum which includes representation from all key business and operating units of the Bank, assists the Board with the implementation of policies advocated at the Board Audit Committee. • Board Executive Committees have also been established with appropriate empowerment to ensure effective management and supervision of the SBL’s core areas of business operations and investments. In assessing the internal control system over financial reporting, identified officers of the Bank collated all procedures and controls that are connected with significant accounts and disclosures of the financial statements of the Bank. These in turn were observed and checked by the internal audit department for suitability of design and effectiveness on an ongoing basis. The Bank adopted the new International Accounting Standards Comprising IAS & IFRS. Since adoption of such Bangladesh Accounting Standards, progressive improvements on processes to comply with new requirements of recognition, measurement, classification and disclosure are being made whilst, further strengthening of processes will take place pertaining to impairment of loans and advances and financial statement disclosures. They also recognized the need to introduce an automated financial reporting process to more effectively comply with the requirements of recognition, measurement, classification and disclosures of financial instruments. The assessment did not include subsidiaries of the Bank. The recommendations made by the external auditors in connection with the internal control system in previous years were reviewed during the year and appropriate steps have been taken to implement and rectify them. The recommendations made by the external auditors in 2020 in connection with the internal control system are being addressed at present. CONFIRMATION Based on the above processes, the Board satisfied that Internal Control Policy, Practice & Procedure of the Bank are effective and these provide a reasonable assurance in achieving objectives of the Bank with the standards , i.e. (i) reliability of the financial information; (ii) effectiveness and efficiency of operations; (iii) compliance with applicable laws and regulations; (iv) adherence to management policies; (v) safeguarding of Bank’s Assets; (vi) prevention and detection of fraud and errors; and (vii) accuracy and completeness of the accounting records.
118. Introduction REPORT OF THE BOARD RISK MANAGEMENT COMMITTEE SL No Name Status with the Bank Status with the Committee Chairman Chairman 02 Mr . S.A.M. Hossain Director Member 03 Mr. Mohammed Abdul Aziz Director Member 04 Mr. Ferdous Ali Khan Director Member 05 Mr. Md. Nazmus Salehin Independent Director Member 06 Mr. Md. Ali Reza FCMA, CIPA Acting Company Secretary QUALIFICATIONS OF THE MEMBERS: Management Retrospection Mr. Kazi Akramuddin Ahmed Risk Governance 01 Risk Management Committee of the Board has been made mandatory to ensure proper risk management practice in the bank. The Committee is to assist the Board to perform their related duties and responsibilities to mitigate the various risk arises while conducting day to day operation of the banking business. Corporate Governance In compliance with the Sub-section (3) of Section 15Kha of the Bank-Company Act-1991, (Amended-2013) and the subsequent BRPD Circular No. 11, dated 27 October, 2013 issued by Bangladesh Bank, the Board of Directors of Standard Bank Ltd has formed a committee named ‘Risk Management Committee of the Board’ by its 304th Board meeting held on 24.12.2018 for the term of 03 (three) years as follows: Member Secretary 2) Construction of organizational structure To ensure an adequate organizational structure for managing risk within the bank. ii. To supervise formation of separate management level committees To monitor their activities for the compliance of instructions of lending risk, foreign exchange transaction risk, internal control & compliance risk, money laundering risk, information & communication risk including other risk related guidelines. iii. 2. Each member should be capable of making valuable and effective contributions in the functioning of the committee; 3) Analysis and approval of Risk Management policy 3. To perform his or her role effectively each committee member should have adequate understanding of the detailed responsibilities of the committee membership as well as the bank’s business, operations and its risks. i. To review Risk Management Policy & guidelines of the Bank annually. ii. To recommend Board of Directors regarding any propose amendments if necessary ROLES AND RESPONSIBILITIES OF THE RISK MANAGEMENT COMMITTEE: iii. To review limit including lending limit at least once annually and amend if necessary 1) Risk identification & control policy 4) Storage of data & Reporting system i. To formulate and implement of appropriate for risk assessment and its control i. To approve adequate record keeping and reporting system developed by the bank management. ii. To monitor risk management policies & methods and amend it if necessary ii. To ensure proper use of the system (record keeping & reporting system). iii. To review the risk management process to ensure effective prevention and control measures iii. Minutes its proposal, suggestions & summary and inform it to the Board of Directors. Standard Bank Ltd Annual Report 2020 | Financial Information Integrity, dedication, and opportunity to spare time in the functions of committee will have to be considered while nominating a director to the committee; Sustainability 1. Stakeholders’ Information i. 117
119. Introduction 5 ) Monitoring the implementation of overall Risk Management Policy i. To monitor proper implementation of overall risk management policies ii. To monitor whether proper steps have been taken mitigate all risks including lending risk and management risk. Corporate Governance Deliberation of the Risk Management Committee in 2020: During the year 2020, the Risk Management Committee carried out its functions in areas relating to its responsibilities. The issues it discussed and the decisions it took for improvement of risk management scenario in the Bank are enumerated below: 2. Information memo regarding Capital Requirement of Standard Bank Limited under Pillar-1 of Basel-III based on March 31, 2020. Analysis of Stress Testing Report of Standard Bank Limited based on March 31, 2020. 4. Submission of Entity/Corporate Rating (Credit Rating) Report of our Bank done by ARGUS Credit Rating Services Ltd. (ACRSL) based on financial statements for the year ended on December 31, 2019 for kind information and permission to publish the same in the daily news paper and at the same time sending the same to Bangladesh Bank for regulatory compliance. 3. Management Retrospection Summary of ‘Risk Management Report’ of Standard Bank Ltd based on 31/03/2020. Risk Governance 1. 5. CAMELS Rating of Standard Bank Limited based on 31.12.2019 6. Summary of ‘Risk Management Report’ of Standard Bank Ltd based on 30/06/2020. 7. Information memo regarding Capital Requirement of Standard Bank Limited under Pillar-1 of Basel-III based on June 30, 2020. 8. Analysis of Stress Testing Report of Standard Bank Limited based on June 30, 2020. 9. Summary of ‘Risk Management Report’ of Standard Bank Ltd based on 30/09/2020. Stakeholders’ Information 10. Information memo regarding Capital Requirement of Standard Bank Limited under Pillar-1 of Basel-III based on September 30, 2020. 11. Analysis of Stress Testing Report of Standard Bank Limited based on September 30, 2020. 12. Advised for diversification of Bank’s loan portfolio as far as possible and practicable. 13. Advised the management to persuade the existing good corporate and SME borrowers for their credit rating to reduce charge on Bank’s capital. Sustainability 14. Effective measures be geared up for recovery of Bank’s dues from the top-20 defaulters. 15. Loans to RMG and Textile sectors be regularly monitored to keep them within the sectoral allocation. 16. The large loans of the Bank be closely and regularly monitored to ensure that they continue to be performing. Financial Information 17. Reviewed the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) of the Bank from time to time against minimum requirement set by the regulator. 18. Reviewed Stress Testing reports and endorsed the same for onward submission to the Bangladesh Bank. 118 | Standard Bank Ltd Annual Report 2020 REPORTING TO THE BOARD The decisions and recommendations of the Risk Management Committee were submitted before the Board of Directors for review and the Board closely reviewed them. Minutes of the Risk Management Committee to Bangladesh Bank The minutes of meetings o f the Risk Management Committee were submitted to Bangladesh Bank for their information. MEETINGS OF THE RISK MANAGEMENT Committee of the Board: According to Bank Company Act-1991 (Amended- 2013) and BRPD Circular No. 11, dated 27 October, 2013 of Bangladesh Bank, the Risk Management Committee of the Board held 03 (Three) meetings during the year 2020. Meeting dates are as follows: SL Meetings Date of Meeting 1 20th Risk Management Committee Meeting-2020 23.07.2020 2 21st Risk Management Committee Meeting-2020 25.10.2020 3 22nd Risk Management Committee Meeting-2020 24.11.2020 The committee would like to extend thanks to all the members of the Risk Management Committee for their valuable time and support for facilitating to carry forward the objectives of the Board. The Committee also likes to express their gratitude thanks to the Board of Directors, Management & the Risk Management Team of the Bank for their sincere cooperation to discharge its due role. With thanks and best regards. Kazi Akram Uddin Ahmed Chairman Risk Management Committee of the Board
120. Introduction REPORT OF THE SHARI ’AH SUPERVISORY COMMITTEE Corporate Governance Risk Governance Management Retrospection SBL Shari’ah Supervisory Committee is primarily responsible for framing Islamic Sunnah based banking practices for the Islamic Banking wing. Islamic Banking is a banking system based on Islamic law (Shariah). It follows the Shariah called Fiqh Muamalat (Islamic rules on transactions). The rules and practices of Fiqh Muamalat came from the Quran, the Sunnah, and other secondary sources of Islamic law, such as, opinions collectively agreed among shariah scholars (Ijma’), analogy (Qiyas) and personal reasoning (Ijtihad). Standard Bank Limited caters to both Conventional and Islamic banking services. Islamic Banking services are rendered in strict compliance with the rules and regulations of Bangladesh Bank and the principles of Islamic Shariah. The concept and practices of Islamic Banking is founded on profit instead of interest. The Islamic Banking operation is run strictly following the guidelines on Islamic Banking. The Islamic Banking operations are completely segregated from the operation of conventional banking activities. Sl. Name Designation Stakeholders’ Information The Bank started its Islamic Banking operation in 2009. Out of 138 Branches of the Bank, 02 (two) branches are designated as Islamic Banking windows namely Topkhana Road Branch, Dhaka and Agrabad Branch, Chittagong. In the year 2020 SBL opened two (02) Islami Banking Branch namely Dhaka Uddan Islamic Banking Branch, Dhaka and Moheshkhali Islami Banking Branch, Cox’s Bazar. Besides, the Bank is providing Islamic Banking facilities to the customers on behalf of any of the two windows through all conventional branches of the Bank in the country by utilizing the online banking software. The bank uses completely separate Islamic banking software package namely HIKMA for its Islamic Banking branches. The Bank is maintaining separate CRR/SLR with Bangladesh Bank for Islamic Banking operations. In fact, the entire gamut of its activities including banking books & accounts, deposits, investments, profit & loss, balance sheet and so on are completely is separate from its conventional banking activities. With a view to further streamlining Islamic Banking operations, the Bank considers its Islami Banking wing as one of its high priority Strategic Business Units with separate Strategic Business Plan for expansion of its operations. In fact, the long term vision of the entire Bank is its full immersion into this Islami Banking model subject to approval from relevant regulatory authorities. The Bank constituted a Shariah Supervisory Committee with experienced and knowledgeable persons in Islamic jurisprudence to advise and provide guidance on Islamic Banking operations. Under the guidance of Bank’s Shariah Supervisory Committee, the Bank designed all deposits and Investment products and services of the Islamic Banking Branches. It formulated policy guidelines and working procedure. The Bank obtained membership of the Central Shariah Board for Islamic Banks of Bangladesh and the Islamic Banks’ Consultative Forum. It has also been maintaining a close relationship with Islamic Banks in Bangladesh and abroad since inception of Islamic banking operations in the Bank. The members of Shariah Supervisory Committee are as under: Description Janab Kazi Akram Uddin Ahmed Chairman Honorable Chairman, Standard Bank Limited 2 Janab Hafiz Kazi Muhammad Ibrahim Member Head Mohaddis, Hadis Department, Jameah Qasemiah Kamil (MA) Madrasha. Gabtauli, Norsinghdi 3 Janab Kazi Khurram Ahmed Member Honorary Consul of Gambia in Dhaka, Bangladesh Chairman & Managing Director, EMX Limited Director, Standard Bank Ltd & SBL Capital Management Ltd 4 Janab Dr. Muhammad Saifullah Member Islamic Scholar & Associate Professor, Dept. of Islamic Studies, Asian University of Bangladesh 5 Janab Khondoker Rashed Maqsood Ex-Officio Member Managing Director & CEO, Standard Bank Ltd 6 Janab Md. Ali Reza Member Secretary Acting Company Secretary, Standard Bank Ltd Sustainability 1 Financial Information Three meetings of Standard Bank Shariah Supervisory Committee were arranged where different operational issues were reviewed and the Internal Auditors of the Bank conducted Shariah audit and inspection at the Islamic banking branches and submitted reports thereon. Some of the major activities performed by the Shariah Supervisory Committee include the following: 1. Review of Financial Performance of Islami Banking Wings 2. Review of Business Position of Islamic Banking Wings 3. Recommendation on diversification of investment, optimum deposit and prudent cost-control 4. Review of Operational Efficiency It is expected that Islamic branches will perform even better and achieve targets in coming years under the guidance and prudent leadership of the Management of Standard Bank, In Sha Allah. Standard Bank Ltd Annual Report 2020 | 119
121. Introduction BB GUIDELINES FOR CORPORATE GOVERNANCE : OUR COMPLIANCE STATUS Corporate Governance In Standard Bank Ltd. Corporate Governance means increasing stakeholders value by being efficient and professional to the organization, transparent and accountable to the shareholder and responsible to the society as well as the environment. To ensure good corporate governance in bank management, Bangladesh Bank (BB) issued three Circulars in 2013 covering three broad areas are as follows: Risk Governance 1. BRPD Circular No.11 dated 27 October 2013: Formation and responsibilities of Board of Directors (BoD). 2. BRPD Circular Letter No. 18 dated 27 October 2013: Appointment and responsibilities of Chief Executive Officer (CEO). 3. BRPD Circular Letter No. 19 dated 27 October 2013: Contractual appointment of Advisor and Consultant. The summary of the BB guidelines and SBL’s compliance thereto are presented below: 1. FORMATION AND RESPONSIBILITIES OF BOARD OF DIRECTORS (BOD) Management Retrospection Sl. No. Particulars Compliance Status 1 Formation of BoD: Prior approval from BB to be taken before appointment of new Directors, as well as dismissal, termination or removal of any Director from the post. Qualification and competency of Directors, maximum number of Directors of the Board, appointment of independent Directors, appointment of maximum 02 (two) members from a family as Director. Complied. No such instance so far. 1.1 Stakeholders’ Information Complied b. Declaration of nominated person Complied c. Declaration for confidentiality by the nominated person Complied d. In case of independent director, the approval letter from BSEC Complied e. CIB report of the nominated person Complied f. Updated list of Directors Complied Vacancy of office of a Director (a) The office of a Director shall be vacated as per the provision of Section 108(1) of Companies Act 1994. Besides, provision of Section 17 of Bank Company Act 1991, providing false declaration at the time of appointment or observing shortfall of qualification as a Director. Sustainability Financial Information (c) 1.3 | a. Personal information of the nominated person 1.2 (b) 120 Appointment of New Directors: Every bank company, other than specialized banks, at the time of taking prior approval from BB while appointing Directors should furnish the following information along with the application: If the office of a Director is vacated as per Section 17 of Bank Company Act 1991, s/he will not be eligible to become Director of that bank company or any other bank company or financial institutions within one year from the date of repayment of the total dues to the bank. The dues can be adjusted with the shares held by the Director in that bank company and he cannot transfer his shares of that bank company until he repays his all the liabilities of that bank company or financial institutions. BB can remove Directors or Chairman of a bank company other than the state-owned banks for doing any activity that is detrimental to the interest of the banks depositors or against the public interest under Section 46 and can also dissolve the Board of a bank company under Section 47 of Bank Company Act 1991. Removal of Directors from office: With the prior approval of Bangladesh Bank, any Director of a bank company other than specialized banks can be removed from his office for the reasons specified in its Articles of Association. The reason and grounds of the dismissal/removal and the copy of such decision taken by BoD and a list of Directors shall be submitted to Bangladesh Bank. Such removal shall be effective from the date of BB’s approval. Standard Bank Ltd Annual Report 2020 No such case No such incident No such instance as yet No such instance as yet
122. Appointment of Alternate Director : An alternate director can be appointed to act for a director during his absence for a continuous period of not less than three months from Bangladesh by fulfilling following instructions: No such Director in SBL Bank has to collect and properly maintain the documentary evidences relating to departure and arrival of the original director while traveling abroad. If there is any exception, the CEO should immediately inform it to BB. N/A The copy of the decision of the BoD regarding appointment of alternate director, with original director’s probable returning date from abroad should be sent to BB within 7 days of taking the decision and the director’s arrival date must be intimated to BB immediately after his/her return. N/A (c) Any loan defaulter or any person who is not eligible to become a director as per any relevant guiding rules and regulations will not be appointed as an alternate director. N/A (d) As an alternate director is appointed temporarily; therefore, he/she will not be included in any kind of committee constituted by the BoD. N/A (e) The alternate director or his/her affiliated organization will not get any kind of loan facilities from the bank. In case of previous loan, enhancement of limit or extension of time period or any kind of exemption or interest waiver will not be allowed. Moreover, all restrictions applicable to directors according to rules and regulations will also be applicable to the alternate director. N/A Director from Depositors: As per Bank Company Act 1991 (amended in 2013) appointment of Directors from depositors is no longer required. But, in compliance with the provision of section 15(9) of Bank Company Act 1991 (amended up to 2013), bank company may consider the tenure of existing Directors from depositors or may appoint them as the Independent Director of the company. Complied. No Depositor Director in SBL (a) (b) 2 3 Information regarding Directors: Banks are advised to take the following steps regarding directors information: (a) Every bank should keep an updated list of bank directors. Complied (b) Banks should send a directors’ list to other banks or financial institutions immediately after the appointment or release of director. Complied (c) Banks should display a list of directors on the website and update it on a regular basis. Complied 4 Responsibilities of the Board of Directors (BoD) Responsibilities and Authorities of the BoD: (a) Work planning and strategic management The BoD shall determine the objectives and goals and to this end shall chalk out strategies and work plans on annual basis. It shall analyze/monitor at quarterly rests the development of implementation of work plans. The BoD shall have its analytical review presented in the Annual Report as regard to success/ failure in achieving the business and other targets as set out in its annual work plan and shall apprise the shareholders of its opinions/recommendations on future plans and strategies. It shall set the Key Performance Indicators (KPIs) for the CEO and executives immediate two tiers below the CEO and have it evaluated at times. Loan and Risk Management: The policies, procedures, strategies, etc. in respect of appraisal of loan/investment proposal, sanction, disbursement, recovery, re-scheduling and write-off thereof shall be made with the BoD’s approval under the purview of the existing laws, rules and regulations. The BoD shall specifically distribute the power of sanction of loan/investment and such distribution should desirably be made among the CEO and his subordinate executives as much as possible. No director, however, shall interfere, directly or indirectly, into the process of loan approval. Complied Complied Financial Information The board shall frame policies for Risk Management and get them complied with and shall monitor the compliance at quarterly rests and review the concerned report of the risk management team and shall compile in the minutes of the board meeting. The BoD shall monitor the compliance of the guidelines of BB regarding key risk management. Complied Sustainability (b) Stakeholders’ Information 4.1 Management Retrospection 1.4 Risk Governance Compliance Status Corporate Governance Particulars Introduction Sl. No. Complied Standard Bank Ltd Annual Report 2020 | 121
123. Introduction Corporate Governance Sl . No. Particulars Compliance Status (c) Internal Control Management: The Board shall be vigilant on the internal control system of the bank in order to attain and maintain satisfactory health or grade of its loan/investment portfolio. The board will establish such an internal control system so that the internal audit process can be conducted independently from the management. It shall review at quarterly rests the reports submitted by its audit committee regarding the compliance of recommendations made in internal and external audit reports and the BB inspection reports. Complied Human Resources (HR) Management and Development: Policies relating to recruitment, promotion, transfer, disciplinary and punitive measures, human resources development etc. and service rules shall be framed and approved by the BoD. The chairman or the directors shall in no way involve themselves and interfere into or influence over any administrative affairs including recruitment, promotion, transfer and disciplinary measures as executed under the set service rules. No member of the BoD shall be included in the selection committees for recruitment and promotion to different levels. Recruitment, promotion, transfer and punishment of the executives immediate two tiers below the CEO shall, however, rest upon the BoD. Such recruitment and promotion shall have to be carried out complying with the service rules i.e., policies for recruitment and promotion. Complied. SBL BoD approves HR policy from time to time which guides all actions or decisions related to HR of SBL. (d) Risk Governance The BoD shall place special attention to the development of skills set of bank’s staff in different fields of its business activities including prudent appraisal of loan/investment proposals, and to the adoption of modern electronic and information technologies, and the introduction of effective Management Information System (MIS). The BoD shall get these programs incorporated in its annual work plan. The BoD will compose Code of Ethics for every tier of employees and they will follow it properly. The BoD will promote healthy code of conducts for developing a compliance culture. Management Retrospection (e) Stakeholders’ Information (f) Sustainability Financial Information 122 | Financial Management: The annual budget and the statutory financial statements will be prepared with the approval of the BoD. It will at quarterly rests review/monitor the positions in respect of bank’s income, expenditure, liquidity, non-performing assets, capital base and adequacy, maintenance of loan loss provision and steps taken for recovery of defaulted loans including legal measures. Complied Complied Complied The BoD will frame the policies and procedures for bank’s purchase and procurement activities and shall accordingly approve the distribution of power for making such expenditures. The maximum possible delegation of such power shall rest on the CEO and his subordinates. The decision on matters relating to infrastructure development and purchase of land, building, vehicles etc. for the purpose of bank’s business shall, however, be taken with the approval of the BoD. Complied. SBL follows a Board approved ‘Procurement and disposal policy’. The BoD will review whether an Asset-Liability Committee (ALCO) has been formed and it is working according to BB guidelines. Complied Appointment of Chief Executive Officer (CEO): In order to strengthen the financial base of the bank and obtain confidence of the depositors, one of the major responsibilities of the BoD is to appoint an honest, efficient, experienced and suitable CEO or Managing Director. The BoD will appoint a competent CEO for the bank with the approval of BB. Complied (g) Other responsibilities of the BoD: In accordance to BB Guidelines issued from time to time. 4.2 Meetings of the Board of Directors: Board of Directors may meet once or more than once in a month upon necessity and shall meet at least once in every three months. Excessive meetings are discouraged. 4.3 Responsibilities of the Chairman of the BoD: (a) As the Chairman of the BoD or Chairman of any committee formed by the BoD or any director does not personally possess the jurisdiction to apply policy making or executive authority, he/ she shall not participate in or interfere into the administrative or operational and routine affairs of the bank. Standard Bank Ltd Annual Report 2020 Complied. The BoD will do so as and when required by BB. Complied. Usually SBL holds two Board Meetings in a month. Complied
124. (b) The Chairman may conduct on-site inspection of any bank branch or financing activities under the purview of the oversight responsibilities of the BoD. He may call for any information relating to bank’s operation or ask for investigation into any such affairs; he may submit such information or investigation report to the meeting of the BoD or the executive committee and if deemed necessary, with the approval of the BoD, he shall effect necessary action thereon in accordance with the set rules through the CEO. However any complaint against the CEO shall have to be apprised to BB through the BoD along with the statement of the CEO. (c) 5 5.1 Formation of Supportive Committees of the Board: The BoD of every Bank Company can form only three supporting committees of the BoD i.e. Executive Committee (EC), Audit Committee (AC) and Risk Management Committee (RMC). Complied Executive Committee (EC): EC is to be formed for taking decision on urgent and day-to-day or routine activities between the intervals of two BoD meetings. The EC will perform according to the terms of reference set by the BoD. The EC will be formed with maximum of 07 (seven) members for a period of 03 (three) years. The Chairman of the BoD can also be the member of the EC. The company secretary of the bank shall act as the secretary of the EC. EC members, besides being honest and sincere, should have reasonable knowledge on banking business, its operations and risk management and be capable of making valuable and effective contributions in the functioning of the Committee. The committee shall discharge responsibilities and take decision on the matters as instructed by the BoD except discharging of those responsibilities and taking decisions that are specifically assigned to the full BoD by the Bank Company Act 1991 or other related laws and regulations. The decisions taken by the Committee shall be ratified in the next BoD meeting. Upon necessity the Committee can call meeting at any time. The Committee may invite CEO, Chief Risk Officer or any executive to attend the committee meeting. Audit Committee (AC): The AC should have maximum five members and two of them shall be Independent Directors. It should be constituted of such members who are not members of the EC of the BoD. The members of the Committee may be nominated for three years and the company secretary of the bank shall act as the secretary of the Committee. Please see ‘Report of the Audit Committee’ for details. Complied Complied Complied The RMC is to be formed with maximum five members who will be appointed for 03 (three) years. Each member should be capable of making valuable and effective contributions in the functioning of the Committee. The company secretary of the bank shall act as the secretary of the Committee. RMC shall review the risk management policy and guidelines of the bank at least once in a year, make necessary modifications as per requirement and submit the same to the BoD for approval. Besides, lending limits and other limits should be reviewed at least once in a year and should be amended, if necessary. Please see ‘Report of the Risk Management Committee’ for details. Complied Training of the Directors: The Directors of the Board will acquire appropriate knowledge of the Banking laws and other relevant laws, rules and regulations to effectively discharge the responsibilities as a Director of the bank. Complied Intimation of the Circular to the Board and related persons by CEO: The CEO will inform about this Circular to the directors and other related persons. Complied Standard Bank Ltd Annual Report 2020 Financial Information Risk Management Committee (RMC): The RMC is to be formed to mitigate impending risks which could be arisen during implementation of BoD approved policies, procedures and strategies. This committee is entrusted to examine and review whether management is properly working on identifying and mitigation of credit risk, foreign exchange risk, internal control and compliance risk, money laundering risk, information and communication technology risk, operation risk, interest rate risk and liquidity risk and keeping adequate capital and provision against the risks identified. Sustainability 7. Complied Stakeholders’ Information 6 The Chairman may be offered an office room, a personal secretary/assistant, a peon/MLSS, a telephone at the office, a mobile phone usable inside the country and a vehicle in the business interest of the bank subject to the approval of the BoD. Management Retrospection 5.3 Complied Risk Governance 5.2 Compliance Status Corporate Governance Particulars Introduction Sl. No. | 123
125. 2 . APPOINTMENT AND RESPONSIBILITIES OF CHIEF EXECUTIVE OFFICER (CEO) Introduction Sl. No. Corporate Governance Risk Governance Management Retrospection Stakeholders’ Information Financial Information | Compliance Status A Rules and regulations for appointment of the CEO 1 Moral Integrity: In case of appointment to the post of CEO, satisfaction in respect of the concerned person should be ensured to the effects that: He has not been convicted by any Criminal Court of Law. He has not been punished for violating any rules, regulations or procedures/ norms set by any Complied regulatory authority. He was not associated with any such company/organization; registration or license of which has been cancelled. 2 Experience and Suitability: For appointment as a CEO, the concerned person must have experience in banking profession for at least 15 (fifteen) years as an active officer and at least 02 (two) years experience in a post immediate below the CEO of a bank. He must have a Master’s degree at minimum from any recognized university. Higher academic education in the field of Economics, Banking and Finance or Business Administration will be treated as Complied additional qualification for the concerned person. In respect of service, the concerned person should have excellent track record of performance. Satisfaction should be ensured that the concerned person was not dismissed from service when he was chairman/director/official of any company. Any director of any bank or financial institution or any person who has business interest in the concerned bank will not be eligible for appointment to the post of the CEO. 3 Transparency and financial integrity: Before making appointment as a CEO, satisfaction should be ensured to the effects that: The concerned person was not involved in any illegal activity while performing duties in his own or banking profession. Complied He has not deferred payment to creditors or has not compromised with his creditors to be relieved from debts or he is not a loan defaulter. He is not a tax defaulter. He has never been adjudicated a bankrupt by the Court. 4 Age Limit: No person crossing the age of 65 years shall hold the post of CEO of a bank. 5 Tenure: The tenure of the CEO shall not be more than 03 (three) years, which is renewable. If the candidate has less than 3 years left to attain 65 years, he/she can be appointed for that Complied shorter period. 6 Banks are required to follow the guidelines stated below while determining the salary and allowances of the CEO and submitting such proposal to BB: In fixing the salary and allowances of the CEO, financial condition, scope of operation, businessvolume and earning capacity of the bank; qualifications, achievement of the candidate in the past, age and experience and the remuneration paid to the persons occupying same position in the peer banks shall have to be taken into consideration. Total salary shall be comprised of direct salary covering ‘Basic Salary’ and ‘House Rent’ and allowances as ‘Others’. The allowances (e.g., provident fund, utility bill, leave-fare assistance) in ‘Others’ head should be specified in amount/ceiling. Besides, other facilities (e.g., car, fuel, driver etc.), as far as possible, shall have to be converted in the monetary value and thus determining monthly total salary, it shall have to be mentioned in the proposal submitted to BB. In the proposal, Basic Salary, House Rent, Festival Allowance, other allowances and other facilities shall have to be specified in Taka amount. Without improving the bank’s major financial indicator like- CAMELS, annual salary increment will not be payable. Terms of salary-allowances and other facilities as specified in the terms and conditions of appointment cannot be changed during the tenure. In case of renewal, proposal may be made for re-fixation of the salary considering the work performance of the current CEO. The CEO so appointed shall not get any other direct or indirect facilities (e.g., dividend, Complied commission, club expense, etc.) other than the salary-allowances and other facilities as enumerated in clause (b) above. The CEO so appointed shall not get any other direct or indirect facilities (e.g., dividend, commission, club expense, etc.) other than the salary-allowances and other facilities as enumerated in clause (b) above. 7 Incentive Bonus: The CEO will get incentive bonus subject to paying incentive bonus to all executives/officers/workers of the bank and the said bonus amount will not exceed BDT Complied 1,000,000 in a year. Sustainability 124 Particulars Standard Bank Ltd Annual Report 2020 Complied
126. Sl . No. Particulars Compliance Status 9 Evaluation Report: For reappointment of the CEO, the Chairman of the bank shall have to Complied submit a Board approved evaluation report to BB. 10 Prior Approval from Bangladesh Bank: Prior approval from Bangladesh Bank is mandatory before appointing CEO as per section 15(4) & (5) of Bank Company Act 1991 (amended up to 2013). For processing such approval, along with the proposal signed by the Chairman Complied of the BoD, the selected person’s complete resume, offer letter (mentioning the direct & indirect remuneration and facilities) and copy of Board’s approval must be submitted to BB. The selected person must also submit declarations as per Annexure A & Annexure B to BB. 11 Decision of Bangladesh Bank is final: The decision of BB for appointment of the CEO will be treated as final and the CEO such appointed cannot be terminated, released or removed from Complied his/ her office without prior approval from BB. B Responsibilities and Authorities of the CEO: The CEO of the bank, whatever name called, shall discharge the responsibilities and exercise the authorities as follows: Corporate Governance Honorarium for attending the Board Meeting: Being a salaried executive, CEO will not get any Complied honorarium for attending the Board meeting or Board formed Committee meeting. Introduction 8 Risk Governance In terms of the financial, business and administrative authorities vested upon him by the BoD, the CEO shall discharge his own responsibilities. He shall remain accountable for achievement Complied of financial and other business targets by means of business plan, efficient implementation thereof and prudent administrative and financial management. The CEO shall ensure compliance of the Bank Company Act 1991 and other relevant laws and Complied regulations in discharging of routine functions of the bank. Management Retrospection The CEO shall include clearly any violation from Bank Company Act 1991 and/or other relevant laws and regulations in the “Memo” presented to the meeting of the BoD or any other Complied Committee (s) engaged by the BoD. The CEO shall report to Bangladesh Bank of issues in violation of the Bank Company Act 1991 Complied or of other laws/regulations. The recruitment and promotion of all staffs of the bank except those in the two tiers below him/her shall rest on the CEO. He/she shall act in such cases in accordance with the approved service rules on the basis of the human resources policy and approved delegation of employees Complied as approved by the BoD. Stakeholders’ Information The authority relating to transfer of and disciplinary measures against the staff, except those at two tiers below the CEO, shall rest on him/her, which he/she shall apply in accordance with the approved service rules. Besides, under the purview of the human resources policy as Complied approved by the BoD, he/she shall nominate officers for training etc. Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 125
127. 3 . CONTRACTUAL APPOINTMENT OF ADVISOR AND CONSULTANT Introduction Sl. No. Experience and Suitability: For appointment as advisor, the concerned person will have to fulfill the following requirements with regard to experience and qualifications: a. Experience in Banking or Administration for at least 15 (fifteen) years or have a long experience in social activities. b. Higher academic education in the field of Economics, Banking and Finance or Business Administration will be treated as additional qualification for the concerned person. c. Satisfaction should be ensured that the concerned person was not dismissed from his service when he was Chairman/ Director/ Executive of any company. d. The person who is working in any bank or financial institution or who has business interest in that bank will not be eligible for appointment to the post of Advisor. e. Satisfaction should be ensured that the concerned person is not a loan defaulter or tax defaulter and has never been adjudicated a bankrupt by the Court. N/A Responsibilities of the Advisor: The roles and responsibilities of the Advisor should be defined specifically. The Advisor can advise the Board of Directors or CEO only on those matters specified in the appointment letter. The routine and general activities of the bank will not be included in his terms of reference. He will not be entitled to exercise any power or involved himself in the decision making process of financial, administrative, operations or other activities of the bank. N/A Corporate Governance Rules and regulations for appointment of an Advisor 1 Risk Governance 3 Management Retrospection 4 5 Stakeholders’ Information 6 Prior approval from Bangladesh Bank: Prior approval from BB is mandatory before appointing an Advisor. For such appointment, the justifications of the post of advisor, responsibilities or terms of reference, complete resume of the concerned person, terms of appointment (mentioning remuneration and facilities) and copy of BoD’s approval shall be submitted to BB. The nominated person has to make a declaration as per Annexure A. This declaration shall also be submitted to BB. Remuneration and other facilities of Advisor: The post of Advisor is not a fixed or substantive post in the bank’s organization structure. Advisor will not be entitled to salaries and allowances as regular employee except gross amount of remuneration, transport and telephone facilities. Remunerations inconsistent with the terms of reference of the advisor will not be considered as acceptable to BB. No such advisor in SBL N/A N/A Tenure of Advisor: The tenure of the Advisor shall be maximum 01(one) year, which is renewable. An evaluation report (by the Chairman that is approved by the BoD) of previous tenure should be submitted to BB along with the re-appointment proposal. N/A Appointment of Ex-executive: For ensuring good governance, any former Director, CEO or any other Executive of the bank will not be eligible to become an Advisor in the same bank immediately after their retirement or resignation. However, after one year from such retirement or resignation, he/she will be eligible for appointment as Advisor. N/A Sustainability B Rules and regulations for appointment of a Consultant 1 Terms of reference of Consultant: Consultant can be appointed for specialized tasks like tax, law and legal procedures, engineering and technical works, information technology, etc. Consultants’ appointment should be avoided as much as possible for those works that could be done by regular employees of the bank. Complied Responsibilities of a Consultant: The responsibilities or term of reference of a Consultant should be specified. He/she should not be involved in any activities beyond his/her terms of references and he/she cannot exercise any kind of power in bank operation or cannot participate in the decision making process. Complied Appointment of a Consultant: A Consultant can be appointed with the approval of the BoD. After such appointment the bank shall send the Consultant’s complete resume, terms of reference and details of remuneration to BB immediately. Complied 2 3 Financial Information | Compliance Status A 2 126 Particulars Standard Bank Ltd Annual Report 2020
128. 4 Complied Remuneration /honorarium of a Consultant: The Consultant’s remuneration should be in the form of monthly or single lump-sum payment, and he is not entitled to any other facilities. Complied 6 Appointment of Executive: For ensuring good governance, any former Director, CEO or any other Executive of the bank will not be eligible for appointment as a Consultant in the same bank immediately after their retirement or resignation. However, after one year from such retirement or resignation, he/ she will be eligible for appointment as a Consultant. No such case Rules and regulations for appointment of a Consultant 1 Terms of reference of Consultant: Consultant can be appointed for specialized tasks like tax, law and legal procedures, engineering and technical works, information technology, etc. Consultants’ appointment should be avoided as much as possible for those works that could be done by regular employees of the bank. Complied Responsibilities of a Consultant: The responsibilities or term of reference of a Consultant should be specified. He/she should not be involved in any activities beyond his/her terms of references and he/she cannot exercise any kind of power in bank operation or cannot participate in the decision making process. Complied 3 5 Remuneration/honorarium of a Consultant: The Consultant’s remuneration should be in the form of monthly or single lump-sum payment, and he is not entitled to any other facilities. Appointment of Executive: For ensuring good governance, any former Director, CEO or any other Executive of the bank will not be eligible for appointment as a Consultant in the same bank immediately after their retirement or resignation. However, after one year from such retirement or resignation, he/ she will be eligible for appointment as a Consultant. Complied Complied Stakeholders’ Information 6 Tenure of a Consultant: The tenure of a Consultant should be consistent with the terms of reference, but would not exceed 02 (two) years. Generally the Consultant will not be eligible for re-appointment. But to complete the unfinished tasks, his contract may be extended for maximum period of 01 (one) year with the approval of BB. The Chairman of the bank upon approval of the BoD shall have to submit the extension proposal to BB with the evaluation report of his previous tenure. Complied Management Retrospection 4 Appointment of a Consultant: A Consultant can be appointed with the approval of the BoD. After such appointment the bank shall send the Consultant’s complete resume, terms of reference and details of remuneration to BB immediately. Risk Governance B Corporate Governance 5 2 Introduction Tenure of a Consultant: The tenure of a Consultant should be consistent with the terms of reference, but would not exceed 02 (two) years. Generally the Consultant will not be eligible for re-appointment. But to complete the unfinished tasks, his contract may be extended for maximum period of 01 (one) year with the approval of BB. The Chairman of the bank upon approval of the BoD shall have to submit the extension proposal to BB with the evaluation report of his previous tenure. No such case Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 127
129. Introduction BSEC CODE FOR CORPORATE GOVERNANCE : OUR COMPLIANCE STATUS Corporate Governance Risk Governance Status of Compliance with the conditions imposed by the Bangladesh Securities and Exchange Commission’s (BSEC) through Notification No. BSEC/CMRRCD/2006-158/ 207/Admin/80 dated 03 June 2018 issued under Section 2CC of the Securities and Exchange Ordinance, 1969 is as follows (as per Annexure-C): Condition No. Compliance Status (Put √ in the appropriate column) Title Complied 1 Board of Directors   Management Retrospection Size of the Board of Directors Stakeholders’ Information Financial Information | √   1(1) The total number of members of the Company’s Board of Directors shall not be less than 5 (five) and more than 20 (twenty). 1(2) Independent Directors 1(2) (a) At least one-fifth (1/5) of the total number of Directors in the Company’s Board shall be Independent Directors. √   1(2) (b) Independent Director means a Director -     1(2)(b)(i) Who 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)(b)(ii) Who is not a Sponsor of the Company or is not connected with the Company’s any Sponsor or Director or Nominated Director or Shareholder of the Company or any of its Associates, Sister Concerns, Subsidiaries and Parents or holding entities who holds one percent (1%) or more shares of the total paid-up shares of the Company on the basis of family relationship and his or her family members also shall not hold above mentioned shares in the Company: Provided that spouse, son, daughter, father, mother, brother, sister, son- in-law and daughter-in-law shall be considered as family members; √   1(2)(b)(iii) Who has not been an executive of the Company in immediately preceding 2 (two) financial years; √   1(2)(b)(iv) Who does not have any other relationship, whether pecuniary or otherwise, with the Company or its Subsidiary or Associated Companies. √   1(2)(b)(v) Who is not a member or TREC (Trading Right Entitlement Certificate) Holder, Director or Officer of any Stock Exchange; √   1(2)(b)(vi) Who is not a Shareholder, Director excepting Independent Director or officer of any member or TREC Holder of Stock Exchange or an Intermediary of the Capital Market; √   Sustainability 128 Remarks Not complied Standard Bank Ltd Annual Report 2020  
130. Title Complied Remarks Not complied 1 (2)(b)(viii) Who is not Independent Director in more than 5 (five) listed Companies. √   1(2)(b)(ix) Who has not been convicted by a Court of competent jurisdiction as a defaulter in payment of any loan or any advance to a Bank or a Non-Bank Financial Institution (NBFI). √   1(2) (b) (x) Who has not been convicted for a Criminal Offence involving moral turpitude. √   1(2)(c) The Independent Director(s) shall be appointed by the Board and approved by the Shareholders in the Annual General Meeting (AGM); √   1(2) (d) The post of Independent Director(s) cannot remain vacant for more than 90 (ninety) days; and √   1(2)(e) The tenure of office of an Independent Director shall be for a period of 3 (three) years, which may be extended for 1 (one) tenure only. √   1(3) Qualification of Independent Director 1(3)(a) Independent Director shall be a knowledgeable individual with integrity who is able to ensure compliance with financial laws, regulatory requirements and corporate laws and can make meaningful contribution to the business. √   1(3)(b) Independent Director shall have following qualifications:     1(3)(b)(i) Business Leader who is or was a Promoter or Director of an unlisted Company having minimum paid-up capital of Tk.100.00 million or any listed Company or a member of any national or international chamber of commerce or business association; or 1(3)(b)(ii) Corporate Leader who is or was a top level executive not lower than Chief Executive Officer or Managing Director or Deputy Managing Director or Chief Financial Officer or Head of Finance or Accounts or Company Secretary or Head of Internal Audit and Compliance or Head of Legal Service or a candidate with equivalent position of an unlisted Company having minimum paid up capital of Tk.100.00 million or of a listed Company; or   N/A 1(3)(b)(iii) Former official of the Government or Statutory or Autonomous or Regulatory Body in the position not below 5th Grade of the National Pay Scale, who has at least educational background of Bachelor Degree in economics or commerce or business or law; or   N/A 1(3)(b)(iv) University Teacher who has educational background in Economics or Commerce or Business Studies or Law; or   N/A Management Retrospection   Risk Governance √ Corporate Governance 1(2)(b)(vii) Who is not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of the concerned Company’s Statutory Audit firm or Audit Firm engaged in Internal Audit Services or audit firm conducting special Audit or Professional certifying compliance of this Code.   Introduction Condition No. Compliance Status (Put √ in the appropriate column)   Stakeholders’ Information N/A Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 129
131. Introduction Condition No . Compliance Status (Put √ in the appropriate column) Title Complied Remarks Not complied   N/A 1(3)(c) The Independent Director shall have at least 10 (ten) years of experiences in any field mentioned in clause (b); √   1(3)(d) In special cases, the above qualifications or experiences may be relaxed subject to prior approval of the Commission.   N/A 1(4) Duality of Chairperson of the Board of Directors and Managing Director or Chief Executive Officer 1(4)(a) The positions of the Chairperson of the Board and the Managing Director (MD) and/or Chief Executive Officer (CEO) of the Company shall be filled by different individuals; √   Management Retrospection 1(4)(b) The Managing Director (MD) and/or Chief Executive Officer (CEO) of a listed Company shall not hold the same position in another listed Company; √   1(4)(c) The Chairperson of the Board shall be elected from among the nonexecutive Directors of the Company; √   1(4)(d) The Board shall clearly define respective Roles and Responsibilities of the Chairperson and the Managing Director and/or Chief Executive Officer; √   Stakeholders’ Information 1(4)(e) In the absence of the Chairperson of the Board, the remaining Members may elect one of themselves from non-executive Directors as Chairperson for that particular Board’s Meeting; the reason of absence of the regular Chairperson shall be duly recorded in the Minutes of the Board Meeting. √   1(5) The Directors’ Report to Shareholders 1(5)(i) An industry outlook and possible future developments in the industry; √   1(5)(ii) The segment-wise or product-wise performance; √ Please refer to MD&A Section Sustainability 1(5)(iii) Risks and concerns including internal and external risk factors, threat to sustainability and negative impact on environment, if any; √   1(5)(iv) A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin, where applicable; √ Discussion on interest income, expense, operating and net profit provided. 1(5)(v) A discussion on continuity of any extraordinary activities and their implications (gain or loss); √ N/A 1(5)(vi) A detailed discussion on related party transactions along with a statement showing amount, nature of related party, nature of transactions and basis of transactions of all related party transactions; √ Corporate Governance 1(3)(b)(v) Professional who is or was an advocate practicing at least in the High Court Division of Bangladesh Supreme Court or a Chartered Accountant or Cost and Management Accountant or Chartered Financial Analyst or Chartered Certified Accountant or Certified Public Accountant or Chartered Management Accountant or Chartered Secretary or equivalent qualification; Risk Governance Financial Information 130 | Standard Bank Ltd Annual Report 2020    
132. Title Complied Introduction Condition No . Compliance Status (Put √ in the appropriate column) Remarks Not complied N/A 1(5)(ix) An explanation on any significant variance that occurs between Quarterly Financial performances and Annual Financial Statements; √   1(5)(x) A statement of remuneration paid to the Directors including Independent Directors; √ Please refer to Note of FS. 1(5)(xi) A statement that the financial statements prepared by the Management of the issuer Company present fairly its state of affairs, the result of its operations, cash flows and changes in equity; √   1(5)(xii) A statement that proper books of account of the issuer Company have been maintained; √   1(5)(xiii) A statement that appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment; √   1(5)(xiv) A statement that International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there from has been adequately disclosed √ Departure has been adequately explained in Note to the Financial Statements. 1(5)(xv) A statement that the system of internal control is sound in design and has been effectively implemented and monitored; √   1(5)(xvi) A statement that minority Shareholders have been protected from abusive actions by, or in the interest of, controlling Shareholders acting either directly or indirectly and have effective means of redress; √ Please refer to Directors’ Responsibility Statement 1(5)(xvii) A statement that there is no significant doubt upon the issuer Company’s ability to continue as a going concern, if the issuer Company is not considered to be a going concern, the fact along with reasons there of shall be disclosed; √ No doubts upon SBL’s ability to continue as a going concern. 1(5)(xviii) An explanation that significant deviations from the last year’s operating results of the issuer Company shall be highlighted and the reasons thereof shall be explained; √   1(5)(xix) A statement where key operating and financial data of at least preceding 5 (five) years shall be summarized; √   1(5)(xx) An explanation on the reasons if the issuer Company has not declared dividend (cash or stock) for the year; 1(5)(xxi) Board’s statement to the effect that no bonus share or stock dividend has been or shall be declared as interim dividend; Financial Information √ Sustainability 1(5)(viii) An explanation if the financial results deteriorate after the Company goes for Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Share Offer, Direct Listing, etc.; Stakeholders’ Information   Management Retrospection √ Risk Governance A statement of utilization of proceeds raised through public issues, rights issues and/or any other instruments; Corporate Governance 1(5)(vii) N/A   N/A Standard Bank Ltd Annual Report 2020 | 131
133. Introduction Condition No . Title Compliance Status (Put √ in the appropriate column) Complied Corporate Governance Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information 132 | Remarks Not complied 1(5)(xxii) The total number of Board meetings held during the year and attendance by each Director; √ 1(5)(xxiii) A Report on the pattern of Shareholding disclosing the aggregate number of Shares (along with name-wise details where stated below) held by:   1(5)(xxiii)(a) Parent or Subsidiary or Associated Companies and other related parties (name-wise details); √   1(5)(xxiii)(b) Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and Compliance and their spouses and minor children (name-wise details); √ Please refer to Note of the FS. 1(5)(xxiii)(c) Executives; and √ Please refer to Note of the FS. 1(5)(xxiii)(d) Shareholders holding ten percent (10%) or more voting interest in the Company (name-wise details); √ 1(5)(xxiv)(a) A brief Resume of the Director; √   1(5)(xxiv)(b) Nature of his or her expertise in specific functional areas; and √   1(5)(xxiv)(c) Names of companies in which the person also holds the Directorship and the membership of committees of the Board; √ 1(5)(xxv) A Management’s Discussion and Analysis signed by CEO or MD presenting detailed analysis of the Company’s position and operations along with a brief discussion of changes in the financial statements, among others, focusing on: √ Please refer to Managing Director & CEO’s Review and MD & A Section 1(5)(xxv)(a) Accounting Policies and estimation for preparation of Financial Statements; √   1(5)(xxv)(b) Changes in accounting policies and estimation, if any, clearly describing the effect on financial performance or results and financial position as well as cash flows in absolute figure for such changes; √   1(5)(xxv)(c) Comparative analysis (including effects of inflation) of financial performance or results and financial position as well as cash flows for current financial year with immediate preceding five years explaining reasons thereof; √   1(5)(xxv)(d) Compare such financial performance or results and financial position as well as cash flows with the peer industry scenario; √   1(5)(xxv)(e) Briefly explain the financial and economic scenario of the country and the globe; √   1(5)(xxv)(f) Risks and concerns issues related to the financial statements, explaining such risk and concerns mitigation plan of the Company; and √   1(5)(xxv)(g) Future Plan or Projection or forecast for Company’s operation, performance and financial position, with justification thereof, i.e., actual position shall be explained to the Shareholders in the next AGM; √   1(5)(xxvi) Declaration or Certification by the CEO and the CFO to the Board as required under condition No. 3(3) shall be disclosed as per Annexure-A; √   Standard Bank Ltd Annual Report 2020  
134. Title Complied Remarks Not complied 1 (6) Meetings of the Board of Directors 1(6) The Company shall conduct the Board Meetings and record the Minutes of the Meetings as well as keep required Books and records in line with the provisions of the relevant Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) in so far as those standards are not inconsistent with any condition of this Code. 1(7) Code of Conduct for the Chairperson, other Board members and Chief Executive Officer 1(7) (a) The Board shall lay down a Code of Conduct, based on the recommendation of the Nomination and Remuneration Committee (NRC) at condition No. 6, for the Chairperson of the Board, other Board Members and Chief Executive Officer of the Company; - 1(7)(b) The Code of Conduct as determined by the NRC shall be posted on the website of the Company. - 2 Governance of Board of Directors of Subsidiary Company 2(a) Provisions relating to the composition of the Board of the holding Company shall be made applicable to the composition of the Board of the subsidiary Company; √ 2(b) At least 1 (one) Independent Director on the Board of the holding Company shall be a Director on the Board of the subsidiary Company; √ 2(c) The Minutes of the Board meeting of the subsidiary Company shall be placed for review at the following Board meeting of the Holding Company; √ 2(d) The Minutes of the respective Board meeting of the holding Company shall state that they have reviewed the affairs of the subsidiary Company; √   2(e) The Audit Committee of the holding Company shad also review the Financial Statements, in particular the investments made by the subsidiary Company. √   3 Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal Audit and Compliance (HIAC) and Company Secretary (CS) 3(1) Appointment 3(1)(a) The Board shall appoint a Managing Director (MD) or Chief Executive Officer (CEO), a Company Secretary (CS), a Chief Financial Officer (CFO) and a Head of Internal Audit and Compliance (HIAC); √ 3(1)(b) The positions of the Managing Director (MD) or Chief Executive Officer (CEO), Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal Audit and Compliance (HIAC) shall be filled by different individuals; √   3(1)(c) The MD or CEO, CS, CFO and HIAC of a listed Company shall not hold any executive position in any other Company at the same time; √   √   √   Corporate Governance 1(5)(xxvii) The Report as well as certificate regarding compliance of conditions of this Code as required under condition No.9 shall be disclosed as per Annexure-B and Annexure-C. Risk Governance Management Retrospection Stakeholders’ Information Sustainability   Introduction Condition No. Compliance Status (Put √ in the appropriate column)   Financial Information Standard Bank Ltd Annual Report 2020 | 133
135. Introduction Condition No . Compliance Status (Put √ in the appropriate column) Title Complied Corporate Governance Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information 134 | Remarks Not complied 3(1)(d) The Board shall clearly define respective Roles, Responsibilities and Duties of the CFO, the HIAC and the CS; √   3(1)(e) The MD or CEO, CS, CFO and HIAC shall not be removed from their position without approval of the Board as well as immediate dissemination to the Commission and Stock Exchange (s). √   3(2) Requirement to attend Board of Directors’ Meetings 3(2) The MD or CEO, CS, CFO and HIAC of the Company shall attend the meetings of the Board: Provided that the CS, CFO and/or the HIAC shall not attend such part of a meeting of the Board which involves consideration of an agenda item relating to their personal matters. √   3(3) Duties of Managing Director (MD) or Chief Executive Officer (CEO) and Chief Financial Officer (CFO) 3(3)(a) The MD or 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:  √ 3(3)(a)(i) Financial Statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; and √ 3(3)(a)(ii) Financial Statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards and applicable laws; √ 3(3)(b) The MD or CEO and CFO shall also certify that there are, to the best of knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the code of conduct for the Company’s Board or its members; √ 3(3)(c) The certification of the MD or CEO and CFO shall be disclosed in the Annual Report. √ 4 Board of Directors’ Committee 4(i) Audit Committee; and √ 4(ii) Nomination and Remuneration Committee. - 5 Audit Committee 5(1) Responsibility to the Board of Directors 5(1)(a) The Company shall have an Audit Committee as a SubCommittee of the Board; √   5(1)(b) The Audit Committee shall assist the Board 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; √   5(1)(c) The Audit Committee shall be responsible to the Board; the duties of the Audit Committee shall be clearly set forth in writing. √   5(2) Constitution of the Audit Committee 5(2)(a) The Audit Committee shall be composed of at least 3 (three) members; √   5(2)(b) The Board shall appoint members of the Audit Committee who shall be non- executive Directors of the Company excepting Chairperson of the Board and shall include at least 1 (one) Independent Director; √   Standard Bank Ltd Annual Report 2020     √  
136. Title Complied Introduction Condition No . Compliance Status (Put √ in the appropriate column) Remarks Not complied √   5(2)(d) When the term of service of any Committee member expires or there is any circumstance causing any Committee member to be unable to hold office before expiration of the term of service, thus making the number of the Committee members to be lower than the prescribed number of 3 (three) persons, the Board shall appoint the new Committee member to fill up the vacancy immediately or not later than 1 (one) month from the date of vacancy in the Committee to ensure continuity of the performance of work of the Audit Committee; √ No such instance as yet 5(2)(e) The Company Secretary shall act as the secretary of the Committee; √   5(2)(f) The Quorum of the Audit Committee meeting shall not constitute without at least 1 (one) Independent Director. √   5(3) Chairperson of the Audit Committee 5(3)(a) The Board shall select 1 (one) member of the Audit Committee to be Chairperson of the Audit Committee, who shall be an Independent Director ; √   5(3)(b) In the absence of the Chairperson of the Audit Committee, the remaining members may elect one of themselves as Chairperson for that particular meeting, in that case there shall be no problem of constituting a quorum as required under condition No.5(4)(b) and the reason of absence of the regular Chairperson shall be duly recorded in the Minutes. √   5(3)(c) Chairperson of the Audit Committee shall remain present in the Annual General Meeting (AGM): √   5(4) Meeting of the Audit Committee 5(4)(a) The Audit Committee shall conduct at least its four meetings in a financial year: √   5(4)(b) The Quorum of the meeting of the Audit Committee shall be constituted in presence of either two members or two third of the members of the Audit Committee, whichever is higher, where presence of an Independent Director is a must. √   5(5) Role of Audit Committee 5(5)(a) Oversee the financial reporting process; √   5(5)(b) monitor choice of accounting policies and principles; √   5(5)(c) Monitor Internal Audit and Compliance process to ensure that it is adequately resourced, including approval of the Internal Audit and Compliance Plan and review of the Internal Audit and Compliance Report; √   5(5)(d) Oversee hiring and performance of external auditors; √   5(5)(e) Hold meeting with the external or statutory auditors for review of the annual financial statements before submission to the Board for approval or adoption; √   Risk Governance All members of the Audit Committee should be ‘Financially Literate’ and at least 1 (one) member shall have accounting or related financial management background and 10 (ten) years of such experience; Corporate Governance 5(2)(c)   Management Retrospection Stakeholders’ Information   Sustainability   Financial Information Standard Bank Ltd Annual Report 2020 | 135
137. Introduction Condition No . Title Compliance Status (Put √ in the appropriate column) Complied Corporate Governance Risk Governance Management Retrospection Stakeholders’ Information 5(5)(f) Review along with the management, the annual financial statements before submission to the Board for approval; √   5(5)(g) Review along with the management, the quarterly and half yearly financial statements before submission to the Board for approval; √   5(5)(h) Review the adequacy of internal audit function; √   5(5)(i) Review the Management’s Discussion and Analysis before disclosing in the Annual Report; √   5(5)(j) Review statement of all related party transactions submitted by the management; √   5(5)(k) Review Management Letters or Letter of Internal Control weakness issued by statutory auditors; √   5(5)(l) Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate the performance of external auditors; and √   5(5)(m) Oversee whether the proceeds raised through Initial Public Offering (IPO) or Repeat Public Offering (RPO) or Rights Share Offer have been utilized as per the purposes stated in relevant offer document or prospectus approved by the Commission. √   5(6) Reporting of the Audit Committee 5(6)(a) Reporting to the Board of Directors   5(6)(a)(i) The Audit Committee shall Report on its activities to the Board. √   5 (6)(a) (ii) The Audit Committee shall immediately Report to the Board on the following findings, if any: - No such instance as yet 5(6)(a)(ii)(a) Report on Conflicts of Interests; √ Do 5(6)(a)(ii)(b) Suspected or presumed fraud or irregularity or material defect identified in the Internal Audit and compliance process or in the Financial Statements; √ Do 5(6)(a)(ii)(c) Suspected infringement of Laws, Regulatory compliances including Securities related Laws, Rules and Regulations; and √ Do 5(6)(a)(ii)(d) any other matter which the Audit Committee deems necessary shall be disclosed to the Board immediately; √ Do 5(6)(b) Reporting to the Authorities If the Audit Committee has reported to the Board about anything which has material impact on the financial condition and results of operation and has discussed with the Board and the Management that any rectification is necessary and if the Audit Committee finds that such rectification has been unreasonably ignored, the Audit Committee shall Report such finding to the Commission, upon reporting of such matters to the Board for three times or completion of a period of 6 (six) months from the date of first reporting to the Board, whichever is earlier. √ No such instance as yet Sustainability Financial Information 136 | Remarks Not complied Standard Bank Ltd Annual Report 2020
138. Title Complied Remarks Not complied 6 . Nomination and Remuneration Committee (NRC) 6(1)(a) The Company shall have a Nomination and Remuneration Committee (NRC) as a sub- committee of the Board; -   6(1)(b) The NRC shall assist the Board in formulation of the nomination criteria or policy for determining qualifications, positive attributes, experiences and independence of Directors and top level executive as well as a policy for formal process of considering remuneration of Directors, top level executive; -   6(1)(c) The Terms of Reference (ToR) of the NRC shall be clearly set forth in writing covering the areas stated at the Condition No. 6(5) (b). -   6(2) Constitution of the NRC 6(2)(a) The Committee shall comprise of at least three members including an independent director; -   -   -   -   -   -   -   6(2)(f) All members of the Committee shall be non-executive Directors; Members of the Committee shall be nominated and appointed by the Board; The Board shall have authority to remove and appoint any member of the Committee; In case of death, resignation, disqualification, or removal of any member of the Committee or in any other cases of vacancies, the board shall fill the vacancy within 180 (one hundred eighty) days of occurring such vacancy in the Committee; The Chairperson of the Committee may appoint or coopt any external expert and/or member(s) of staff to the Committee as advisor who shall be non-voting member, if the Chairperson feels that advice or suggestion from such external expert and/or member(s) of staff shall be required or valuable for the Committee; The Company secretary shall act as the secretary of the Committee; The quorum of the NRC meeting shall not constitute without attendance of at least an independent director; -   6(2)(i) No member of the NRC shall receive, either directly or indirectly, any remuneration for any advisory or consultancy role or otherwise, other than Director’s fees or honorarium from the Company.  -   6(3) 6(3)(a) Chairperson of the NRC The Board shall select 1 (one) member of the NRC to be Chairperson of the Committee, who shall be an independent director; Financial Information 6(2)(h) Sustainability 6(2)(g)   Stakeholders’ Information 6(2)(e) Unresolved issue. [Could not be complied due to BRPD Circular Letter No.11, dated 27 October 2013 of Bangladesh Bank] Management Retrospection 6(2)(d)   Risk Governance 6(2)(c) √ Corporate Governance 5(7) Reporting to the Shareholders and General Investors Report on activities carried out by the Audit Committee, including any report made to the Board under condition No. 5(6)(a)(ii) above during the year, shall be signed by the Chairperson of the Audit Committee and disclosed in the annual report of the issuer Company. 6(2)(b) Introduction Condition No. Compliance Status (Put √ in the appropriate column)   -   Standard Bank Ltd Annual Report 2020 | 137
139. Introduction Condition No . Title Compliance Status (Put √ in the appropriate column) Complied 6(3)(b) Corporate Governance 6(3)(c) 6(4) 6(4)(a) 6(4)(b) Risk Governance 6(4)(c) 6(4)(d) 6(5)   -     -   -   -   -   Management Retrospection NRC shall be independent and responsible or accountable to the Board and to the Shareholders -   6(5)(b) NRC shall oversee, among others, the following matters and make report with recommendation to the Board:  -    -   -   Stakeholders’ Information 6(5)(b)(i)(a) Sustainability 6(5)(b)(ii) Financial Information 6(5)(b)(iv) Formulating the criteria for determining qualifications, positive attributes and independence of a Director and recommend a policy to the Board, relating to the remuneration of the directors, top level executive, considering the following: the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate suitable Directors to run the Company successfully; 6(5)(b)(i)(b) The relationship of remuneration to performance is clear and meets appropriate performance benchmarks; -   6(5)(b)(i)(c) Remuneration to Directors, top level executive involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals; -   -   -   6(5)(b)(iii) | - 6(5)(a) 6(5)(b)(i) 138 In the absence of the Chairperson of the NRC, the remaining members may elect one of themselves as Chairperson for that particular meeting, the reason of absence of the regular Chairperson shall be duly recorded in the minutes; The Chairperson of the NRC shall attend the annual general meeting (AGM) to answer the queries of the Shareholders: Meeting of the NRC   The NRC shall conduct at least one meeting in a financial year; The Chairperson of the NRC may convene any emergency meeting upon request by any member of the NRC; The quorum of the meeting of the NRC shall be constituted in presence of either two members or two third of the members of the Committee, whichever is higher, where presence of an independent director is must as required under condition No. 6(2)(h); The proceedings of each meeting of the NRC shall duly be recorded in the minutes and such minutes shall be confirmed in the next meeting of the NRC. Role of the NRC   Remarks Not complied Devising a Policy on Board’s diversity taking into consideration age, gender, experience, ethnicity, educational background and nationality; identifying persons who are qualified to become Directors and who may be appointed in top level executive position in accordance with the criteria laid down, and recommend their appointment and removal to the Board; Formulating the criteria for evaluation of performance of Independent Directors and the Board; -   6(5)(b)(v) Identifying the Company’s needs for employees at different levels and determine their selection, transfer or replacement and promotion criteria; -   6(5)(b)(vi) Developing, recommending and reviewing annually the Company’s human resources and training policies; -   Standard Bank Ltd Annual Report 2020
140. Title Complied 6 (5)(c) 7 a) 7(1)(i) - External or Statutory Auditors   The issuer Company shall not engage its external or statutory auditors to perform the following services of the Company, namely: Appraisal or valuation services or fairness opinions; Remarks Not complied       √   √   √ √     7(1)(vi) Internal Audit services or special audit services; √   7(1)(vii) Any service that the Audit Committee determines; √   7(1)(viii) Audit or certification services on compliance of corporate governance as required under condition No. 9(1); and √   7(1)(ix) Any other service that creates conflict of interest. √   7(2) No partner or employees of the external audit firms shall possess any share of the Company they audit at least during the tenure of their audit assignment of that Company; his or her family members also shall not hold any shares in the said Company. √   7(3) Representative of external or statutory auditors shall remain present in the Shareholders’ Meeting (Annual General Meeting or Extraordinary General Meeting) to answer the queries of the Shareholders. √   8. Maintaining website by the Company 8(1) The Company shall have an Official Website linked with the website of the Stock Exchanges. √   √   √   √   9 (2) The Professional who will provide the certificate on compliance of this Corporate Governance Code shall be appointed by the Shareholders in the Annual General Meeting. √ To be appointed in the upcoming AGM. 9 (3) The Directors of the Company shall state, in accordance with the Annexure-C attached, in the Directors’ report whether the Company has complied with these conditions or not. √   8(3) 9. The Company shall keep the website functional from the date of listing. The Company shall make available the detailed disclosures on its website as required under the listing regulations of the concerned stock exchange(s). Reporting and Compliance of Corporate   Governance The Company shall obtain a Certificate from a practicing Professional Accountant or Secretary (Chartered Accountant or Cost and Management Accountant or Chartered Secretary) other than its statutory auditors or audit firm on yearly basis regarding compliance of conditions of Corporate Governance Code of the Commission and shall such certificate shall be disclosed in the Annual Report. Financial Information Standard Bank Ltd Annual Report 2020 Sustainability 9(1)   Stakeholders’ Information 8(2) Management Retrospection 7(1)(iv) 7(1)(v) 7(1)(iii) Risk Governance √ Financial Information Systems design and implementation; Book-Keeping or other services related to the accounting records or financial statements; Broker-Dealer Services; Actuarial Services; 7(1)(ii) Corporate Governance 7 The Company shall disclose the nomination and remuneration policy and the evaluation criteria and activities of NRC during the year at a glance in its annual report. Introduction Condition No. Compliance Status (Put √ in the appropriate column) | 139
141. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 140
142. Introduction MANAGING DIRECTOR & CEO AND CHIEF FINANCIAL OFFICER’S STATEMENT OF RESPONSIBILITIES Corporate Governance Date: 28 April, 2021 The Board of Directors Standard Bank Limited 122-124 Motijheel C/A Dhaka-1000 Risk Governance Subject: Declaration on Financial Statements for the year ended on 31st December, 2020 Dear Sirs, Pursuant to the condition No. 1(5)(xxvi) imposed vide the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/ Admin/80 dated 3 June 2018 under section 2CC of the Securities and Exchange Ordinance, 1969 and based on our internal and external auditors report, we do hereby declare that: 2. The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view; 3. The form and substance of transactions and the Company’s state of affairs have been reasonably and fairly presented in its financial statements; 4. To ensure above, the Company has taken proper and adequate care in installing a system of internal control and maintenance of accounting records; 5. Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed; and 6. The management’s use of the going concern basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. Stakeholders’ Information The Financial Statements of Standard Bank Limited for the year ended on 31st December, 2020 have been prepared in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed; Management Retrospection 1. In this regard, we also certify that:i. a. these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; b. these statements collectively present true and fair view of the Company’s affairs and are in compliance with existing accounting standards and applicable laws. Sustainability ii. We have reviewed the financial statements for the year ended on 31 December, 2020 and that to the best of our knowledge and belief: There are, to the best of knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board of Directors or its members. Sincerely yours, Financial Information Khondoker Rashed Maqsood Chief Executive Officer (CEO) Mr. Ali Reza FCMA, CIPA Chief Financial Officer (CFO) Standard Bank Ltd Annual Report 2020 | 141
143. Introduction REPORT OF MANAGEMENT CREDIT COMMITTEE Corporate Governance MANAGEMENT INVESTMENT COMMITTEE (MIC) As a part of Investment Risk Management, Management Investment Committee (MIC) reviews the investment proposal as per investment norms of the bank and requirement of regulatory authorities. Investment proposal goes through the screening test by MIC. The investment proposal received from the Branches is primarily screened through Investment Division of Head Office and is placed before the MIC. The MIC, following its review process as per regularity guidelines and Bank’s norms, either recommenced to the approval authorities or declined. However, there is an appeal process in case of declined case subject to eliminating or upward changes of declining reasons. COMPOSITION OF MANAGEMENT INVESTMENT COMMITTEE (MIC) Risk Governance The MIC is headed by the Additional Managing Director & Chief Risk Officer (CRO) of the Bank. Other members is nominated by the Managing Director in consultation with the Chairman of the Committee. Present members of the committee as detailed in the table below: Sl. No. Name Position in the Committee Management Retrospection Stakeholders’ Information Sustainability 1 Additional Managing Director & CRO 2 Deputy Managing Director & COO 3 Head of Investment Division Member 4 Head of Corporate Business Division Member 5 Head of Investment-1 Member 6 Head of Investment-2 Member 7 Chief Financial Officer (CFO) Member 8 Head of Special Asset Management (SAM) Member 9 Head of International Davison (ID) Member 10 Head of Treasury Member 11 Head of SME Member 12 Head of Rural & Agri Investment Member 13 Mr. Tapas Kumar Mandal, VP Chairman Co-Chairman Member Secretary MODUS OPERANDI OF THE COMMITTEE: Financial Information 142 a. (a) All investment proposals received form the branches is placed to the Committee i.e. MIC. b. (b) The Committee is the recommending authority, subject to proper justification, to the approval authority of the Bank or declined the investment proposal which are not found financially viable or contrary to the existing investment policy guidelines of the Bank/regulatory instructions of Bangladesh Bank. c. (c) The Branch is free to make appeal for the declined investment proposal(s) provided that they are genuinely convinced about the merit of the case. | Standard Bank Ltd Annual Report 2020
144. TERMS OF REFERENCE (TOR) OF THE MIC: Conducting its meeting as per schedule date and time. ii. Reviewing and recommending the investment proposals to the approval authority for approval/decline in line with the prevailing Delegation of Business Power (DBP) taking into cognizance the observation made by Investment Division and regulatory/legal compliance issues and its mitigations made by the respective division, prudential limit of large Investment exposure, standard and acceptable collateral offered, portfolio management, risk concentration, pricing, provisioning etc. iii. Examining whether the investment proposals are being prepared complying with the laws, investment norms & standards, policies, regulation laid by the Bangladesh Bank and the internal policies of Standard Bank Limited. iv. Reviewing the investment proposals, restructuring, rescheduling the investment if required so, and settlement of investment complying with regulatory norms and in accordance with Banks policies/standards. v. While recommending the proposals, the Committee evaluates the business track record and performance, credit worthiness of the investment customer, resilience with due diligence and proper justification. Corporate Governance i. Introduction The Committee is responsible for: vi. Assessing an investment based on Internal Credit Risk Rating (ICRR), actual requirement of business, repayment capacity of the customer. Risk Governance vii. Making recommendation to the Board of Directors of the Bank for its perusal and approval; clear polices and standards for presentation of investment proposals, financial covenants, rating standard and benchmark. viii. Identification of other risks related to the subject investment proposals, sector, industry, micro and macro-economic trend and suggesting probable way out to mitigate those. ix. Reviewing the investment concentration as per approved budget, risk appetite statement, and recommend for its up-gradation, if required so. Management Retrospection x. Monitoring the investment risk on bank’s domain perspective and ensure the compline with limits approved by the Board of Directors of the Bank. xi. Monitoring investment deposit ratio of the Bank from time to time so that the ratio does not cross the regulatory boundary. xii. Conforming that the transaction is consistent with investment policy/strategy of the Bank in line of approval of Board of Directors and Bangladesh Bank’s guideline. xiii. Ensuring that the “Exception/Deviation”, if any, to the policy are clearly mentioned in the investment proposal and recommendation of “Exception/Deviation” if required so or may suggest the respective division to bring changes in the Policy. Stakeholders’ Information xiv. Reviewing and taking into consideration the issues raised by Audit Committee, Executive Committee and Board of Directors of the Bank and regulatory bodies on regular basis. xv. Discussing the “Early Alert” accounts on regular interval as per approved policy. xvi. Maintaining register to have record on all investment proposals discussed in MIC. xvii. Maintaining record of minutes of MIC. Any other issues related to investment proposal. Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 143
145. Introduction REPORT OF COMPENSATION REVIEW COMMITTEE Corporate Governance Risk Governance To make compensation package time proven and attuned to pay packages offered by different banks , SBL usually revises its scale of pay on a regular interval. Besides, revision of pay packages has become indispensable due to government approval of last National Pay Scale with effect from July 01, 2015. Moreover, the necessity of revise of pay scale is also justified as there has been a considerable change in the economic situation as well as people’s standard of living due to inflation and continuous price spiral. Keeping this view in mind, a Compensation Review Committee was formed. The Committee is delegated with the authority from the management to review, and make recommendations on pay package ensuring guidelines as set by the management. It will ensure that all employees of the bank are appropriately remunerated in the track of competition with other peer banks. In commensurate with market trend, salaries of all employees of SBL have been revised from October 01, 2018. PROMOTION & APPRECIATION Define Work Management Retrospection Set Measurable Targets Perform Work Assess Performance Against Target Stakeholders’ Information Promotion and appreciation are the tokens of contribution (performance) against targets as set by the management of the Bank. SBL always distinguishes the performers with increment, promotion and appreciation in laudable manner. In 2020, 04 (four) employees were awarded special promotion to next higher grade in recognition of their outstanding performance to create a rewarding and competitive culture within the bank. Sustainability Financial Information 144 | Standard Bank Ltd Annual Report 2020
146. CREDIBILITY IN PAYMENT OBLIGATIONS OPTIMISTIC KEY FINANCIAL RATIOS The key financial ratios of Standard Bank Ltd . for the year 2020 indicate a very positive picture as evident from financial highlights and graphical presentation of financial position given separately in this annual report. Financial ratios indicate Standard Bank Ltd.’s sound financial strength and good prospects. BUSINESS EXPANSION SBL has expanded its segment geographically by opening new branches in different places considering the economic significance. Initiatives have been taken to open new branches in 2020 at different places in Bangladesh. As on 31 December 2020, Standard Bank MAINTENANCE OF ADEQUATE CAPITAL As per BASEL-III, a Bank should maintain capital at least 10.00% of its Risk Weighted Asset. SBL maintains its capital above the threshold level consistently even though growth of RWA is significant. As on 31 December 2020, Capital to Risk Weighted Asset Ratio (CRAR) of Standard Bank Ltd. stands at 13.00% on solo basis and 12.86% on consolidated basis. To fulfill its capital requirement in the future as per BASEL-III requirements, Standard Bank Limited is already in process of raising BDT 500.00 Crore through issuance of Mudaraba Perpetual Bond. SATISFACTORY CREDIT RATING ARGUS Credit Rating Services Limited has rated the Bank on 30 June 2020 with “AA+” in the long term and ST-2 for the Short Term based on audited financial statements of 2018 and other available information up to the date of rating declaration. The validity of the rating will be expired on 30th June 2020. The outlook on the rating is Stable. The rating reflects the strengths of the bank which is backed by a strong team of management, growth in the non-interest income, deposits and investments, adequate capital coverage with high Tier-1 capital, improved asset quality and well controlled liquidity position. CHANGES IN GOVERNMENT POLICY Financial Information SBL’s cash flow analysis represents its strengths about its ability to repay its obligations, ability to adapt in changing circumstances and generate sufficient cash and cash equivalents, which will lead the organization to a sustainable future growth. Consolidated Operating Cash Flow before changes in operating assets and liabilities in 2020 was BDT 1,874 million. Net Operating Cash Flow after changes in operating assets and liabilities shows impressive growth of net inflow of BDT 7,032 million, which was BDT 9,498 million in previous year. There exists a very good corporate working environment in the bank. Standard Bank Ltd. is an excellent work place with a friendly working environment. Communication among the employees is excellent. The organization endeavors to be honest and practices fair treatment to all employees, which ensures healthy corporate environment. The company pays a very competitive compensation package and there exists a good number of employee benefits like provident fund, gratuity fund, home and personal loan for employees at a reduced rate, employees’ health insurance, incentive bonus, transport facility to the eligible employees. Pay scale are frequently revised to give effect of inflation as well as to align with the industry level. These factors are instrumental for employee satisfaction. Sustainability POSITIVE CASH FLOW WORK ENVIRONMENT AND EMPLOYEES’ SATISFACTION Stakeholders’ Information Standard Bank Ltd. has strong credibility in terms of payment of its obligations to the lenders and suppliers. Standard Bank Ltd. is very particular in fulfilling the terms of payment or repayment agreements without any exception. This has resultant from our effective liquidity management plan. Standard Bank Ltd. has been paying consistent dividend to its shareholders over many years, which reflects company’s long term vision and firm commitment to its shareholders. Management Retrospection Standard Bank Ltd. has excellent growth in its operating performance. Bank’s Consolidated Total Asset has increased from BDT 219,272 Million in 2020 to BDT 221,890 Million in 2019, decreased 1.18% over last year. The Bank achieved 1.10% growth in investment with a total investment portfolio of BDT 162,396 million in 2020 compared to BDT 160,625 million in 2019. Import business of the Bank stood at BDT 49,195 million in 2020 with 35% decreased over the previous year BDT 75,399 million, while Export business of the Bank stood at BDT 43,631 million in 2020, which is decreased by 23% than that of previous year i.e. BDT 56,326 million. Consolidated Operating Revenue for the year 2020 amounted to BDT 7,800 Million, which is 0.60% higher than last year’s BDT 7,754 million. All through the year 2020, the interest rate was in a declining state, the Net Interest of Standard Bank Ltd. decreased by 49% over last year. Consolidated Net Interest for the year 2020 amounted to BDT 2,185 Million compared to BDT 4,249 million of 2019. CONSISTENT PAYMENT OF DIVIDENDS Risk Governance FINANCIAL PERFORMANCE Ltd. has 138 Branches. Standard Bank Ltd. gives due importance on product diversification a key strategy to achieve customer satisfaction by tailoring the need of customers. It is the impact of our sound organizational structure, skilled and dedicated work force and business strategies that in the year 2020, Loans and Advances has increased by 1.00% and Term Deposit has idecreased by nearly 8.00% compared to that of 2019. SBL’s Management has positive intent to maintain this growth in future years which represent bank’s intention to perpetuity. Corporate Governance Going concern is a basic underlying assumption in accounting. The assumption is that a company or entity will be able to continue operating for a period of time that is sufficient to carry out its commitments, obligations, objectives, and so on. Every company requires assessing its ability to continue as a going concern. The Board of Directors of Standard Bank Ltd (SBL) has made annual assessment about whether there exists any material uncertainty which may cast significant doubt upon the Company’s ability to continue as going concern. This assessment involves making appropriate inquiries including review of budget and future outcome of inherent uncertainties in existence. The Directors are convinced from the following indications, which give reasonable assurance as to Company’s continuance as a going concern for the foreseeable future. Introduction REPORT ON GOING CONCERN Standard Bank Ltd. Management anticipates no significant change in legislation or government policy, which may materially affect the business of Standard Bank Ltd. Based on the above mentioned indications, Directors feel that it is appropriate to adopt going concern assumptions. Adequate disclosures have been made in the financial statements and different sections of the annual report to understand the appropriateness of going concern basis in preparing the financial statements of Standard Bank Ltd. Standard Bank Ltd Annual Report 2020 | 145
147. Introduction STATEMENT ON ETHICS AND COMPLIANCE Corporate Governance We are steadfast in our commitment to living up to our Core Values of Trust , Respect, Belief, Humility and Integrity. As Standard Bank Ltd., we live by these values and know that by doing so we promote: Risk Governance • An environment of Trust and openness that encourages telling the fact always; • Respect for one another, our Representatives, customers, stakeholders and public servants who regulate and enforce the law; • Sufficient Belief in ourselves and one another to pursue our mission in accordance with our values; • The Humility to let our performance speak for itself and admit our mistakes; and • Integrity in all situations, whatever the pressures or temptations, wherever we may be and no matter the potential consequences. Management Retrospection Standard Bank Ltd. pays close attention to the moral concerns in order to make the right ethical decisions on a day-to-day basis over and above observing the law, one of the basic professional requirements for the banking sector. We at Standard Bank Ltd believe that the upholding of an ethical culture in financial sector is of critical interest to the customers, employees, regulators alike and to the banking sector itself as a secured, reliable and efficient financial sector system in one of the pillars of economic stability of any country. Hence, nurturing an ethical culture is of utmost importance for banking institutions, like any other organization. Our core ethical values include honesty, integrity, fairness, responsible citizenship, and accountability. Enforcing a corporate code of ethics requires understanding and active participation by everyone in Standard Bank Ltd. since the Code spells out the expected standards of behavior and sets the operating principles to be followed. Every official should ensure that the bank at all times maintains high ethical standards and adequate internal control measures are in place guarding against unethical practices and irregularities. Stakeholders’ Information CODE OF ETHICS & PRINCIPLES OF CONDUCT Sustainability True spirit of ethical practices is at the core of what Standard Bank Ltd. secures in the course of business. We fondly believe that our achievement can only be sustained by creating effective corporate governance, professionalism among its staff and strictly adhering to rules and regulations designed in high ethical standard. Principles of conduct at Standard Bank Ltd. govern each employee to act ethically in daily activities. Our employee Code of Ethics & Principles of Conduct applies to everyone who works at Standard Bank Ltd., including employees (both permanent and contractual), contractors and consultants. The Code is supported by a number of more detailed policies that form part of the Conduct and Ethics Policy Framework. These cover issues such as anti-bribery, fraud and corruption, equal opportunity, bullying and harassment, conflicts of interest and work expenses. Our ethical acts eventually turns to the commitments we make to our stakeholders. Financial Information 146 | Standard Bank Ltd Annual Report 2020 In a nutshell, our business ethics means, Choosing the good over the bad, the right over the wrong, the fair over the unfair and the truth over the untruth¨. Strict compliance, confidentiality, avoidance of conflicts of interest, encouraging the reporting by the Officers of the Company on illegal and unethical behaviour is also amongst the guiding principles of the banks Code of Ethics. MONITORING COMPLIANCE Compliance with our Code of Conduct and Ethics is embedded in our employment contracts, recruitment and performance management activities. We have set explicit targets for compliance, commencing at executive management level. All employees are required to comply with our Code of Conduct and Ethics and report conduct that may be in breach of the law, the Code or policy. Advice on Standard Bank Ltd. policies, practices and management systems is available via our Human Resources department. Any employee, contractor or consultant can confidentially report concerns about conduct, practices or issues to our HR department. To help our employees in applying the principles of our Code of Conduct and Ethics and the Conduct and Ethics Policy Framework, we have developed a training course regularly for the newly appointed employees, Case studies are provided to assist staff in translating the Code and related policies into real-life situations. All employees are required to complete this training course each year. Declarations within the course require each employee to confirm whether they understand the Code’s principles, have complied with them over the previous 12 months and agree to comply with them in the future. Compliance is a Key Result Area examined as part of our Performance Management Process and failure to complete required compliance training can be a factor in determining the employee’s entitlement to performance-based remuneration and could lead to termination of employment in serious cases. Additionally, employees are required to undertake issue-specific training for topics such as money laundering, counter terrorist activity, fraud, corruption and privacy. Our HR Manual covers our Code of Conduct and Ethics, standards and behaviors, and important policies and procedures such as our Anti-Bribery Policy and Fraud and Corruption Policy. All Management Cadres must complete an annual attestation that they have read and understood these ground rules and failure to complete this may result in a flag being raised in an individuals performance review. REPORTING COMPLIANCE We have reported breaches of our Code of Conduct and Ethics framework yearly. Breaches of operational, regulatory and compliance requirements are tracked and case management, with corrective action closely monitored until closed. All breaches of the Code are reported annually to our Management Committee and form part of regular risk reporting to the Management Credit Committee. Compliance with our Code of Conduct and Ethics is monitored by Internal Audit, who ensures processes are in place to appropriately investigate alleged breaches of the Code. We also conduct annual testing of the controls that support our Code of Conduct and Ethics, which forms part of our financial reporting governance program and the results are made available to External Auditors in connection with their external audit of the Group’s consolidated financial statements.
148. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information 147 | Standard Bank Ltd Annual Report 2020
149. Introduction CHIEF RISK OFFICER ’S REPORT ON RISK MANAGEMENT Corporate Governance Risk Governance The COVID-19 pandemic poses a significant threat to the sustainability of banks globally. It will most likely be worse in developing and emerging economies, where financial systems are weak. The Bangladesh banking sector already has a high level of NPLs and is crippled with many systemic problems. Research findings suggest that all banks are likely to see a fall in their risk-weighted asset values, capital adequacy ratios, and interest incomes. The decline in all three dimensions will be disproportionately greater for larger NPL shocks. Management Retrospection At the sectoral level, the NPL shocks will generate a sector-wide decline in all three dimensions. However, findings suggest that larger banks are relatively more vulnerable. Findings further indicate that the loss in RMG exports has a multiplier effect of ‘three’ on NPL ratios. A 10% NPL shock could force all banks to lose their minimum capital adequacy requirement and a shock of 13% or more will force sectoral CAR down to zero or negative; which is possible due to the just over 3–5% loss in RMG export order values. Given that the value of the cancelled RMG export orders are already three times larger than the sectors’ total outstanding loan taken from the banking sector and that overall economic recovery remains uncertain, NPL shocks could realistically be well over 10%. If this happens and persists, it may trigger bank-runs and systemic banking sector crises. Overall, findings call for immediate, phase-wise, and innovation-driven policy measures with a longterm approach to prevent an imminent banking sector crisis in Bangladesh. The findings could be considered as a warning sign for other emerging and developing countries where banks have high lending exposure to COVID-19-sensitive sectors and traditionally suffer from poor asset quality, high rates of NPLs, and weaker policy and regulatory frameworks. Stakeholders’ Information Sustainability Practicing sound risk management is crucial for banking sector. As also clearly pointed out in the OECD’s sixth peer review based on the OECD Principles of Corporate Governance, it is now admitted on all hands that sound enterprise risk management presupposes sound corporate governance practice in banking organizations in particular. In recognition of this, Basel Committee on Banking Supervision (BCBS) cited Risk Management function as its 6th principle in its Guidelines on Corporate Governance Principles for Banks. To quote the Principle 6: “Banks should have an effective independent risk management function, under the direction of a chief risk officer (CRO), with sufficient stature, independence, resources and access to the board”. Financial Information In timely recognition of the need for enterprise wide risk oversight, Bangladesh Bank recently issued its revised “Risk Management Guidelines for Banks” vide its DOS circular no.04 dated October 08, 2018, which is in line with internationally accepted risk management principles and best practices. The guideline is also aligned with the revised version of Basel Core Principles (BCP) for Effective Banking Supervision published by the Basel Committee on Banking Supervision (BCBS) in September 2012. The BCP on 148 | Standard Bank Ltd Annual Report 2020 ‘Risk Management Processes’ (CP15) requires that banks have a comprehensive risk management process (including effective Board and senior management oversight) to identify, measure, evaluate, monitor, report and control or mitigate all material risks on a timely basis and to assess the adequacy of their capital and liquidity in relation to their risk profile and market and macroeconomic conditions. Therefore, the risk management process of any bank is expected to be commensurate with its risk profile and systemic importance. The revised risk management guideline also touched on major CPs such as Corporate Governance (CP14), Capital adequacy (CP16), Credit risk (CP17), Problem Assets Provisions and Reserves (CP18), Concentration Risk and Large Exposure Limits (CP19), Market risk (CP22), Liquidity risk (CP24), Operational risk (CP25), Interest rate risk (CP23), Financial Reporting and External Audit (CP27) and Disclosure and Transparency (CP28). The said guideline also recommended banks to prepare a Board-approved organogram of the risk management division (RMD) ensuring the use of information technology along with the appointment of adequate and skilled manpower. Besides, the RMD has also been entrusted with the responsibility of monitoring implementation of required corrective action, related to objections revealed in the inspections conducted on the basis of the core risk management guidelines. In view of the gravity and importance of oversight of bank-wide risk management, Standard Bank Limited has in place an independent Risk Management Division approved by its Board of Directors under the direct supervision of Chief Risk Officer, who is accountable to the Board Risk Management Committee. In line with the said guideline, the Bank has also put in place 5 (Five) nos. of desks (Credit Risk, Market Risk, Liquidity Risk, Operational Risk and Risk Research & Policy Development) for oversight of bank¬wide risks as the bank’s second line of defense. Besides, the Bank has also been following the Phase-in arrangements for Basel III implementation in Bangladesh as per Bangladesh Bank BRPD Circular no.-18 dated December 21, 2014. As part of enterprisewide risk governance framework, the Bank prepares its risk appetite statements on yearly basis in line with its long term plan and conducts its operations within the purview of its risk appetite frameworks and internal limits set by its Board of Directors. Besides, as part of its quantitative and qualitative analysis, the bank also conducts stress analysis on quarterly basis and communicates the same to the Executive Risk Management Committee (ERMC) and Board Risk Management Committee (BRMC).
150. Risk Governance An effective risk governance framework requires robust communication within the bank about risk , both across the organization and through reporting to the Board and Senior Management. Therefore, the Bank ensures that there prevail ongoing communications about risk issues including the bank’s risk strategy throughout the bank as a key tenet of its risk culture. The Executive Risk Management Committee (ERMC) and the Board Risk Management Committee (BRMC) strongly emphasize on promotion of risk awareness and encourage open communication and challenge about risk taking across the organization as well as vertically to and from the Board and Senior Management. Management Retrospection Standard Bank Limited has already completed its 22 years of journey. The Management and Board of the Bank feel and believe that, with the growth of its business, strengthening its oversight and building a strong risk management structure is a priority. The bank is well aware that its business also carries certain risk elements. Therefore, it has set its risk management policies in terms of risk appetite statement and introduced effective risk assessment procedures, monitoring and oversight in a very methodical and conscious manner in order to control the internal and external risks at an optimum level. It has been able to establish an inherent culture of continuous and gradual improvement. On a final note, we would like to reaffirm our stakeholders that the Bank has always been committed to remaining fully complied and maintaining transparency in risk mitigation so that the Bank can build its business on the concrete foundation of “sustainability” Stakeholders’ Information With Thanks and Best Regards. Sustainability . Md. Touhidul Alam Khan, FCMA, CSRA Additional Managing Director & Chief Risk Officer Financial Information The afore-said banking risks are also addressed through proactive enterprise risk management techniques including Key Risk Indicators (KRIs) developed on the basis of Comprehensive Risk Management Guideline of the Bank, Credit Risk Management Guideline, Asset Liability Management Guideline, Foreign Exchange Risk Management Guideline, Internal Control and Compliance Guideline, Money Laundering & Terrorist Financing Risk Management Guidelines and ICT Security Guideline and other circulars issued by Bangladesh Bank from time to time. Besides, the Bank has also developed its own Risk Appetite Framework, based on which, it sets Risk Appetite Statement on yearly basis with approval of the Hon’ble Board of Directors. The Bank regularly follows up with its Management Action Triggers based on its approved Risk Appetite Statements. In order to ensure that the Bank identifies, monitors and control risks on an ongoing bankwide and individual entity basis, the Bank has already developed its own risk management framework, risk identification and risk mitigation strategy, which were prepared in light of all the guidelines and circulars issued by Bangladesh Bank from time to time. The upcoming sections of this annual report (namely, Risk Management Framework, Risk Mitigation Strategy, Disclosures on Risk Based Capital based on 31.12.2020, Capital Planning & Management and Statement of Non-Performing Loan) outlines the overall bank wide and individual entity basis risk management practices followed in the bank, where mitigation of the Banking risks are ensured through proactive risk management activities and proper compliance of the core risk management guidelines of the Bank. Corporate Governance Being a banking organization, Standard Bank Limited is also not immune from inherent risks like liquidity risk, credit risk (including residual risk, dilution risk, settlement/delivery risk, and counterparty risk); interest rate risk; foreign exchange risk and other market risks; concentration risk, particularly including risks of exposure of the bank to one person or a group of related persons; bank’s investment risks; risks relating to the country of origin of the entity to which a bank is exposed (country risk); operational risk particularly including legal risk; risk of compliance of the bank’s operations; risk of money laundering and terrorist financing; and strategic risk. The entire risk profile of the Bank is constantly monitored by the Management under three (3) lines of defense framework. The risk profile of the Bank is also quantified in terms of Pillar I and Pillar II of Basel III framework. Under Pillar I, the Bank assesses its minimum capital requirement against Credit, Market and Operational Risk on quarterly basis and reports the same to Bangladesh Bank. The Bank also quantifies other risk areas as a part of Internal Capital Adequacy Assessment Process under Supervisory Review Process of Pillar II on yearly basis, which is also submitted to Bangladesh Bank. As per the Pillar III of Basel III framework, the Bank has also been making disclosures as per Basel III framework. It needs no explanation that in addition to existing risk profiles, banks are always exposed to emerging risks. The Executive Risk Management Committee (ERMC) of the Bank always deliberates on such emerging risks, oftentimes, with the aid of its internal stress testing framework. Sometimes, emerging risks are identifiable ahead of time while at other times, it comes next to impossible. For instance, Covid-19 pandemic gripped the bank off-guarded during the greater part of 2020. Be that as it may, as part of its quantitative and qualitative analysis, the bank utilizes stress tests and scenario analyses to better understand potential risk exposures under a variety of adverse circumstances. Stress test results are periodically reviewed with the Board of Directors or Board Risk Management Committee (BRMC). Test results are incorporated into the reviews of the risk appetite, the capital adequacy assessment process, the capital and liquidity planning processes, and budgets. The results are also linked to recovery and resolution planning. The Risk Management Division (RMD) also suggests if and what action is required based on results and the results of stress tests and scenario analyses are also communicated to, and given appropriate consideration by, relevant business lines and individuals within the bank. Introduction Risk simply means the unexpected situation or the deviation of the expected outcome. It is an inherent part of any business operation. It may arise from internal faults or from external factors affecting adverse result in the said business or downgrading of the image of the institution. In banking business, risk factors are generally exposed to its lending and trade-service business and other operational activities. Banks need to meet forthcoming regulatory requirements for risk measurement and mitigation thereof by arrangement of capital and provisions. However, to meet the regulatory requirements is not enough. A sound and scientific risk management system should be in place for regular monitoring, performance evaluation and corrective measures. Managing and mitigating such risks are always a prioritized concern of not only the Risk Management Division, but also the entire Management Team of the Bank under the leadership of the Hon’ble Board of Directors of Standard Bank Ltd. Standard Bank Ltd Annual Report 2020 | 149
151. Introduction RISK MANAGEMENT FRAMEWORK Corporate Governance Risks are usually defined by the adverse impact on profitability of several distinct sources of uncertainty . Risk Management system is a pro-active action in the present for the future. Business grows mainly by taking risk. It is generally understood that the greater the risk, the higher the profit. Therefore, every bank must strike a balance between the two. The goal of risk management is ensuring depositors’ interest as well as addressing the objectives of the bank’s stakeholders including Customers, Management, Employees, Boards of Directors, Shareholders, Supervisors, Rating Agencies, Investors, Creditors and Counter Parties. Risk Governance Risk-taking is an inherent element of banking and profits are, in part, the reward for successful risk taking in business. On the other hand, excessive and poorly managed risk can lead to losses and thus endanger the safety of a bank’s depositors. KEY DRIVERS OF RISK Management Retrospection EXTERNALLY DRIVEN FINANCIAL RISKS STRATEGIC RISKS INTEREST RATES COMPETITIONS FOREIGN EXCHANGE CUSTOMER CHANGES CREDIT & LIQU IDI TY S ROL NT S O M E C T G SYS N RECRUITMENT SUPPLY CHAIN INTERNALLY DRIVEN T MEN OP AL EL IT EV CAP AL Stakeholders’ Information W FLO SH A C RESEA RC INTE H & LL EC D TU INDUSTRY CHANGES CUSTOMER DEMAND M&A INTEGRATION PUBLIC ACCESS EMPLOYEES PROPERTIES PRODUCTS & SERVICES ACCO UN INFO T R M AT IN IO Sustainability CONTRACTS REGULATIONS NATURAL EVENTS CULTURE SUPPLIERS BOARD COMPOSITION ENVIRONMENT Financial Information O PER AT I ONAL RISKS HAZARD RISKS EXTERNALLY DRIVEN 150 | Standard Bank Ltd Annual Report 2020
152. RISK MANAGEMENT STRUCTURE To identify the Bank ’s material risks. • To formulate the Bank’s Risk Appetite consistent with its overall all risk profile and capital adequacy. • To optimize risk/return decisions by taking them as closely as possible to the business while establishing strong and independent review and challenge structures. To ensure that business growth plans are properly supported by effective risk infrastructure • To manage risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions. • To help executives improve the control and coordination of risk taking across the business. • Risk Management Techniques. RISK GOVERNANCE: Effective risk management begins with effective risk governance. The Bank has a well-established risk governance structure with an active and engaged Board of Directors supported by an experienced Senior Management Team, that is, independent of the business lines. Decision-making is highly centralized through a number of senior and executive risk management committees. BOARD RISK MANAGEMENT COMMITTEE: The Board of Directors, either directly or through its committee ensures that decision-making is aligned with the Bank’s strategies and risk appetite. The Risk Management Committee receives regular updates on the key risks of the Bank and approves key risk policies, limits, strategies, and risk appetite. The Risk Management Division of the Bank reports to the Board Risk Management committee on the effectiveness of the risk governance structure and risk management framework regularly. EXECUTIVE RISK MANAGEMENT COMMITTEE: The Executive management, and in particular the Managing Director and CEO as well as the Additional Managing Director and Chief Risk Officer (CRO), are responsible for risk management under the oversight of the Board of Directors. The CRO, who oversees the Risk Management Division of the Bank, reports to the CEO, is not only the Chairman of the Executive Risk Management Committee (ERMC), but also has direct access to the Board Risk Management Committee (BRMC). Stakeholders’ Information • Risk Appetite, and Management Retrospection • • Risk Governance At a strategic level, Bank’s risk management objectives are: Risk Governance, Corporate Governance RISK MANAGEMENT STRATEGY • Introduction Responsibility for risk management resides at all levels within the Bank starting from the Board of Directors, Board Risk Management Committee (BRMC) and the Executive Risk Management Committee (ERMC) down through the organization to each business manager and risk specialist. Bank distributes these responsibilities so that risk/return decisions are taken at the most appropriate level; as close as possible to the business and subject to robust and effective review and challenge. The risk management procedures are approved, monitored and mitigated at various stages of the Bank with inputs from the Board of Directors as well as Committees and divisions namely Senior Management Team (SMT), Executive Committee, Audit Committee, Executive Risk Management Committee (ERMC), Management Committee (MANCOM), Assets Liability Committees (ALCO), Risk Management Division (RMD), Management Credit Committee (MCC), Internal Control & Compliance Division (ICCD) and Central Compliance Unit (CCU). On an enterprise basis, the Bank’s overall risks are reviewed, monitored and supervised by Chief Risk Officer (CRO) of the Bank supported by Risk Management Division (RMD). the actual execution of their programs may be different. The Bank’s risk management framework is applied on an enterprise wide basis and consists of three key elements: Risk Governance RISK MANAGEMENT FRAMEWORK: Risk Management Techniques Strategic Policies & Limits Guidelines Processes & Standards Measuring, Monitoring & Reporting Risk Credit Market Liquidity Operational Reputational Environmental Strategic Insurance Financial Information This framework is subject to constant evaluation to ensure that it meets the challenges and requirements of the global markets in which the Bank operates including regulatory standards and industry best practices. The risk management programs of the Bank’s subsidiaries conform in all material respects to the Bank’s risk management framework, although Risk Appetite Governing Financial Objectives Strategic Principles Risk Management Principles Risk Monitoring & Reporting Sustainability The primary objective of risk management is ensuring that the outcomes of risk-taking activities are consistent with the Bank’s strategies and risk appetite, and that there is an appropriate balance between risk and reward in order to maximize shareholder returns. The Bank’s enterprise wide risk management framework provides the foundation for achieving these goals. Strong Risk Culture Standard Bank Ltd Annual Report 2020 | 151
153. KEY ACTORS IN RISK GOVERNANCE OF THE BANK : Introduction Particulars Roles and Responsibilities Board Risk Management Committee (BRMC) Corporate Governance • • • • • Design and implement Risk strategy and policy Review, monitor and understand risk profile of the bank Review and recommend bank’s risk appetite, limit and tolerance level Review of Management level operational risk structure Performance review and recommendation • Identifying, measuring and managing bank’s existing and potential risks through detailed risk analysis Determining general principal for measuring, managing and reporting the bank’s risk Minimizing/controlling risks through ensuring proper implementation of the decisions; Reviewing risks involved in new products and activities and ensuring that the risks can be measured, monitored, and controlled adequately; Oversee the development, implementation and maintenance of the bank’s overall risk management framework and risk appetite, strategy, principals and policies Ensure bank’s Risk Management practices are in line with regulatory benchmark and industry best practice • • Executive Risk Management Committee (ERMC) • • Risk Governance • • Supervisory Review Process Committee (SRP) • • • Management Retrospection • • • Basel Implementation Unit • • • Ensure that the bank has an internal process to identify and assess all relevant risks of the bank Vetting/recommending general principal for development of ICAAP document Ensure that capital is adequately allocated against the ICAAP outcome Error free and timely reporting of ICAAP outcome to Strategic layer and BB Implementation of the Action Plan of Basel Accords in the Bank Communicating issues related to Basel implementations to the Bank Management Attending QIS (Quantitative Impact Study) and Accountability for the compliance with Basel Accords. Arranging customized training programs according to Training Need Assessment. To place the requirement of new policies of the bank To monitor the adoption of Policy of the bank ORGANOGRAM OF RISK MANAGEMENT DIVISION (RMD): Stakeholders’ Information The organogram of the Risk Management Division (RMD) of the bank follows the structure of the revised Risk Management Guidelines for banks issued vide DOS Circular Letter no. 04 dated October 01, 2018 as detailed follows: Board of Directors CEO/MD Board Risk Management Committee Sustainability Executive Risk Management Committee Chief Risk Officer (CRO) (Head of RMD) Financial Information Desk-1 Desk-2 Desk-3 Desk-4 Desk-5 BASEL Implementation Unit 152 | Standard Bank Ltd Annual Report 2020
154. Effective risk management requires a strong , robust, and pervasive risk management culture. The Business Lines are responsible for the development and execution of business plans that are aligned with the Bank’s risk management framework, and are accountable to the risks they pose. Understanding and managing these risks is a fundamental element of each business plan. Provide qualitative benchmarks to guide the Bank in its pursuit of the Governing Financial Objectives and to gauge broad alignment between new initiatives and the Bank’s risk appetite. Strategic principles include: RISK APPETITE: Effective risk management requires clear articulation of the Bank’s risk appetite and how the Bank’s risk profile will be managed in relation to that appetite. The Bank’s risk appetite framework governs risk taking activities on an enterprisewide basis. RISK APPETITE FRAMEWORK • Focusing on core businesses by leveraging competitive advantages, and • Making disciplined and selective strategic investments. GOVERNING FINANCIAL OBJECTIVES: Key focus lies on long-term shareholder value. These objectives include sustainable earnings growth, maintenance of adequate capital in relation to the Bank’s risk profile, and availability of financial resources to meet financial obligations on a timely basis at reasonable prices. RISK APPETITE MEASURES: Strategic Principle Provide objective metrics that gauge risk and articulate the Bank’s risk appetite. They provide a link between actual risk taking activities and the risk management principles, strategic principles and governing financial objectives described above. These measures include capital and earnings ratios, market and liquidity risk limits, and credit and operational risk targets. Management Retrospection Governing Financial Objectives Placing emphasis on the diversity, quality and stability of earnings, Risk Governance Risk Management Principle • Corporate Governance STRATEGIC PRINCIPLES: Introduction RISK MANAGEMENT CULTURE: RISK MANAGEMENT TECHNIQUES: Strategic, Policies & Limits The Bank’s Risk Appetite Framework consists of four components and combines qualitative as well as quantitative terms of reference to guide the Bank in determining the amount and types of risk it wishes to prudently undertake. Measurement, Monitoring & Reporting RISK MANAGEMENT TECHNIQUES Sustainability RISK MANAGEMENT PRINCIPLES: Stakeholders’ Information Risk Appetite Measures Effective risk management includes techniques that are guided by the Bank’s Risk Appetite Framework and integrated with the Bank’s strategies and business planning processes. Guidelines, Processes & Standards Provide the qualitative foundation of the risk appetite framework. These principles include: Promotion of a robust risk culture, • Accountability for risk by the business lines, • Independent oversight exercised by Risk Management Division, • Avoidance of excessive risk concentrations, and • Ensuring risks are clearly understood, measured, and managed. Stress Testing Financial Information • Risk management techniques are regularly reviewed and updated to ensure consistency with risk-taking activities and relevance to the business and financial strategies of the Bank. Standard Bank Ltd Annual Report 2020 | 153
155. STRATEGIES , POLICIES AND LIMITS Introduction Strategies: Provide quantitative and qualitative guidance. This guidance is, in turn, used to set limits and guidelines on the types of risk taking activities the Bank is prepared to assume in pursuit of its strategic and financial objectives. Corporate Governance Policies: Apply to specific types of risk or to the activities that are used to measure and control risk exposure. They are based on recommendations from risk management, audit, business lines, and senior executive management. Industry best practices and regulatory requirements are also factored into the policies. Policies are guided by the Bank’s risk appetite, and set by the limits and controls within which the Bank and its subsidiaries can operate. Risk Governance • Key risk policies are approved by the Board of Directors, either directly or through the Board Risk Management Committee. • Executive Risk Management Committee level risk policies associated with processes such as model development and stress testing are approved by the Board of Directors through Board Risk Management Committee. Limits: Control risk-taking activities within the tolerances established by the Board and senior executive management. Limits also establish accountability for key tasks in the risk-taking process and establish the level or conditions under which transactions may be approved or executed.. Management Retrospection GUIDELINES, PROCESSES AND STANDARDS Guidelines: Guidelines ensure that the Bank has the appropriate knowledge of clients, products, and markets and that it fully understands the risks associated with the business it underwrites. Guidelines may change from time to time, due to market or other circumstances. Risk taking outside of guidelines usually requires approval of the Board. Stakeholders’ Information Processes: The activities are associated with identifying, evaluating, documenting, reporting and controlling of risk. Identify Risks Assess Risks Quantify Risk Decide Risk Responses Implement Risk Management Plan Monitor Risk Management Process Sustainability Financial Information The context element in the Risk Management Process sets the stage for the decision or activity requiring risk management. Risk assessment identifies, analyzes and evaluates the risks. Risk treatment enhances the probability of positive outcomes and reduces the incidence of negative outcomes to within acceptable levels. Monitoring, reviewing and keeping close watch over the risks and the controls are implemented to mitigate the risk. Finally, the process includes a permanent and ongoing effort at communication and consultation to ensure that the stakeholders are engaged and contribute to the management of risks. 154 | Standard Bank Ltd Annual Report 2020
156. Commit & Mandate RISK REPORTS: Communicate & Train Strategic Process Strategic Process Analyze Risk Evaluate Risk Strategic Process Monitor & Review Identify Risk Communicate & Consult Risk Assessment Risk Management Process Review & Improve Management Information System Strategic Process Structure & Accountability Define the breadth and quality of information required to make a decision and set the expectations in terms of quality of analysis and presentation. Processes and standards are developed on an enterprise wide basis and documented in a series of policies, manuals and handbooks under the purview of RMD. 2. Banks shall entrust in the RMD the responsibility of monitoring implementation of required corrective action related to objections revealed in the inspections conducted on the basis of the core risk management guidelines. Management Retrospection Standards: 1. The RMD shall report high-risk related matters identified by the Executive Risk Management Committee, directly to the Board Risk Management Committee and shall provide a copy to the Managing Director & Chief Executive Officer for acknowledgement. Risk Governance Treat Risk Corporate Governance Establish Context Through the Revised Risk Management Guidelines for Banks issued by Department of Offsite Supervision (DOS) vide its DOS Circular Letter no. 04 dated October 01, 2018, Bangladesh Bank instituted greater expertise in the area of risk management activities of the bank through exercise of international best practices. Accordingly, the Bank conducts risk reporting as per one Bangladesh Bank reporting format namely ‘Comprehensive Risk Management Report (CRMR)’ for the month of June and December and another reporting format namely ‘Monthly Risk Management Report (MRMR) for all other months of the year. In addition to the above issues, the bank also complies with the following instructions of Bangladesh Bank: Introduction COMPATIBLE RISK MANAGEMENT FRAMEWORK AND RISK MANAGEMENT PROCESS In today’s economy, banks are faced with critical challenges in finding new and better ways of increasing top-line revenues, maintaining necessary capital ratios, improving margins, strengthening balance sheets and enhancing efficiencies. Regulatory changes, compliance, economic volatility, and issues involving data security, distressed lending and troubled assets add even other more concerns. ROLE OF RISK MANAGEMENT DIVISION: Stakeholders’ Information RMD is responsible for developing and maintaining an appropriate suite of risk management techniques to support the operations of the various business lines, and for supporting the measurement of economic capital on an enterprisewide basis. The risk sections explain the application of these techniques. Sustainability Risk measurement techniques include the use of models and stress testing. The Bank uses models for a range of purposes including estimating the value of transactions, risk exposures, credit risk ratings, parameters and economic and regulatory capital. The use of quantitative risk methodologies and models is balanced by a strong governance framework and includes the application of sound and experienced judgment. REGULAR MONITORING: Financial Information Ensure that business activities are within approved limits or guidelines, and are aligned with the Bank’s strategies and risk appetite. Breaches, if any, of these limits or guidelines are reported to the Senior Management, and/or the Board depending on the limit or guideline. Standard Bank Ltd Annual Report 2020 | 155
157. Introduction RISK MITIGATION STRATEGY Corporate Governance KEY RISK ISSUES TO ADDRESS : When it comes to Risk Assessment and Risk Mitigation, Standard Bank Limited always adheres to some cardinal values which include ethics, planning, review, disclosure, competence and KPIs. Standard Bank Limited firmly believes that sustainability of risk management framework cannot be meaningful in absence of the said values as depicted in the following: Risk Governance Ethics Review Planning balance sheet commitments such as guarantee, acceptance, letter of credit etc. Similar to most other banking institutions, in the case of Standard Bank Limited, loans are the largest and most obvious source of credit risk. Bank’s credit risk management (CRM) specifically addresses the following areas as the CRM is mainly responsible for: Management Retrospection • Implementation of the credit risk policy/ strategy approved by the Board. • Ensure compliance with limits approved by the Board • Makings recommendations to the Board, for its approval, clear policies on standards for presentation of credit proposals, financial covenants, rating standards and benchmarks. • Deciding on delegation of credit approving powers, prudential limits on large credit exposures, standards for loan collateral, portfolio management, loan review mechanism, risk concentrations, risk monitoring and evaluation, pricing of loans, provisioning, regulatory/legal compliance, etc. Risk Management Disclosure KPIs A. Operating Under Sound Credit Granting Procedure The Bank strictly followed specified policy standards for granting credit by way of evaluating borrower: • Internal credit rating assessment in combination with Internal Credit Risk Rating System (ICRRS); • External credit rating assessment by ECAI; • Analysis of specific borrower repayment capacity, review of financial statements by way of analysis of five key financial indicators - Balance Sheet, Income Statement, Net worth and Fixed Assets reconciliation as well as Key ratios and Cash flows statements; In consideration of its overall risk profile and in light of the guidelines of Bangladesh Bank, Standard Bank Limited formulated its core risk and integrated risk management policies. The onus of integrated risk management policy is mainly vested with its Risk Management Division as the operational arm. Besides, business level risk management is carried out by respective 6 core risk-owing divisions. Therefore, the key risk management framework of the Bank encompasses both integrated and business level risk management strategies. On the whole, the major risk areas addressed by the Bank are as under: • Risk based loan pricing; • Credit growth increase after ensuring optimum asset quality and without compromising bank’s standard of excellence; • Credit facilities are allowed after consideration of absolute due diligence; • Inherent risk in credit proposal are being identified and mitigation steps are taken; • Collateral is properly valued and verified by concerned officer on periodic basis; 1. Credit Risk: • Credit risk primarily triggers either from unwillingness or inability of a credit borrower to serve its obligation, resulting in economic loss to the bank. Credit risk arises from on balance sheet claims such as loan and overdrafts as well as off Risk grading is being done in line with the Bangladesh Bank guideline and bank’s own policy • Credit delegations are specified for new/fresh limit, renewal or enhancement of limit, consumer/retail loan, personal loan etc. Stakeholders’ Information Competence Strategy Projects Partners Sustainability Financial Information 156 | Operations Support Reputation Standard Bank Ltd Annual Report 2020
158. • The Bank established an appropriate credit administration, measurement and monitoring process to mitigate credit risk; • Borrower follow-up and corrective action; • Internal loan review; • Timely identification of problem assets as well as Documentation Weakness; • Failing to file collateral agreements/security agreements with appropriate public departments; 2.2 Equity risk is defined as losses due to changes in market price of equity held by the Bank. To measure and identify this risk, marks-to-market valuations of the equity instruments that are traded in secondary market are made. The minimum capital standard for equities is expressed in terms of two separately calculated charges for the “specific risk” of holding a long or short position in an individual equity and for the “general market risk” of holding a long or short position in the market as a whole. • Transferring the collateral to another country/state; • Guaranties with expired date changes in legal status; • Unauthorized corporate/partner signatures; • Collateral Deterioration; • Changes of value in the marketplace; • Rising interest rates; • decrease real estate and investments; • Technological advances; • Rapid depreciation of equipment or inventory; • Tax law changes (real estate); • Natural disasters; • Spoilage or mishandling of collateral; Failure to meet financial covenants in loan agreement; • Delays in payment of principal and interest; • Use of overdrafts/low balances in current account; • Credit inquiries from other lenders; • Change of accountants; • Other Indications of Problem Loans; • Delay in receipt of financial statements; • Delay in management promises; or • Adequate provision maintenance 2.1 Interest Rate Risk arising from mismatches in the interest rate profile of assets, liabilities and capital instruments Reference Tool for Assessment Key Risk MAT, Mgt. Strategy & capital allocation VaR (FX & Equity), Sensitivity, interest rate risk, Duration Gap, Portfolio analysis Market Sensitivity Regulatory Compliance Investment limit Concentration Risk HHI, Gini, SEI, SI Macro-Economic Review Industry Outlook Financial Information Market risk is defined as the risk of losses against expected (fair) value of financial assets, liabilities and off-balance sheet items resulting from absurd market condition (e.g. macroeconomic factors). The underlying risk is also considered as non-diversifiable risk, i.e. risk that cannot be avoided. In general, market risk is often triggered by other forms of financial risks such as credit and market liquidity risks. For example, a downgrade of the credit standing of an issuer (e.g. share) could lead to a drop in the market value of the securities issued by the issuer. Furthermore, a major sale of security by another holder could depress the price of the security. Risk Concerns & Mitigation Plan at Operational Level Sustainability 2. Market Risk: Stakeholders’ Information Borrower is at the top of line each month; • 2.4 Commodity risk is the risk of loss due to changes in spot and forward prices and the volatility of precious and base metals, and energy products. A commodity is defined as a physical product which is or can be traded on a secondary market, e.g. agricultural products, minerals (including oil) and precious metals. The price risk in commodities is often more complex and volatile than that associated with currencies and interest rates. Commodity markets may also be less liquid than those for interest rates and currencies and, as a result, changes in supply and demand can have a more dramatic effect on price and volatility. These market characteristics can make price transparency and the effective hedging of commodities risk more difficult. For spot or physical trading, the directional risk arising from a change in the spot price is the most important risk. However, banks using portfolio strategies involving forward and derivative contracts are exposed to a variety of additional risks, which may well be larger than the risk of a change in spot prices. In the year ended 2020, Bank had no Risk Weighted Assets for Commodity Risk. Management Retrospection • 2.3 Foreign exchange risk arising mainly from our strategic investments which are denominated in currencies other than the BDT. Foreign exchange position is managed by treasury division. Risk Governance Extended Credit and High Use of Lines of Credit: Corporate Governance including basis risk arising from different interest rate benchmarks, interest rate re-pricing risk, yield curve risk and embedded optionality. Introduction B. Maintaining and Appropriate Credit Administration Measurement and Monitoring Process 3. Liquidity Risk: Liquidity risk is the potential for loss to an institution arising from either its inability to meet its obligations as they fall due or to fund increases in assets without incurring unacceptable cost or losses. An institution short of liquidity may have to Standard Bank Ltd Annual Report 2020 | 157
159. Introduction undertake transaction at heavy cost resulting in a loss of earning or in worst case scenario ; the liquidity risk could result in bankruptcy. Corporate Governance Banking organization like Standard Bank Ltd., where off-balance sheet exposure is significant or has strong dependency on corporate deposit or experiencing steep asset (i.e. primarily credit portfolio or investment book) growth is exposed to high level of Liquidity risk. Liquidity risk should not be seen in isolation because financial risks are not mutually exclusive and liquidity risk is often triggered by consequence of other financial risks such as credit risk, interest rate risk, foreign exchange risk etc. 4. Operational Risk: Operational Risk refers to the risk of loss resulting from inadequate or failed internal process, people and system or from external events. This definition includes legal risk but excludes strategic and reputational risk. Unlike other risk as faced by the bank, the operational risk is inherent in most of the process and operations of the bank and cannot be separated from other risks. Operational risks in a bank are the functions of the bank’s overall environment and culture, employee competence and integrity, management strategies and philosophies, extent and degree of process centric approach to business, etc. Risk Governance A. Funding liquidity risk when bank will be unable to meet its current and future cash flow and collateral needs without affecting its daily operations or its financial condition. Key Risk Reference Tool (example) B. Market liquidity risk generates when bank cannot easily offset or sell a position without incurring a loss because of inadequate depth in the market. Corporate Governance & Strategic risk Assessment of Corp. Governance Status & Strategic Risk Control Lapses in Opr. Process Attachment, Risk Control Self-Assessment Incident reporting, internal audit, Key Risk Indicator (KRI) Risk Concerns & Mitigation Plan at Operational Level Standard Bank Limited assesses liquidity risk in ICAAP document under Pillar-2 by considering following key indicators: Fraud & all other opr. risks Management Retrospection Regulatory Liquidity Indicators (RLIs): 5. Reputation Risk: Stakeholders’ Information • Cash Reserve Requirement (CRR) • Statutory Liquidity Ratio (SLR) • Medium Term Funding Ratio (MTFR) • Maximum Cumulative Outflow (MCO) • Advance Deposit Ratio (ADR)/Investment Deposit Ratio (IDR) • Liquidity Coverage Ratio (LCR) • Net Stable Funding Raito (NSFR) • Wholesale Borrowing and Funding Guidelines, • Liquidity Contingency Plan, Reputation risk is the current or prospective risk to earnings and capital that arise from decline in the customer base, costly litigation due to adverse perception of the stakeholders. It originates from the lack of compliance with industry service standards or regulation, failure to meet commitments, inefficient and poor quality customer service, lack of fair market practices, unreasonably high costs and inappropriate business conduct. In a nutshell, “reputation risk arises from the failure to meet stakeholders’ reasonable expectation of bank’s performance and behavior”. Reputation risk is a subset of operational risk which can adversely affect the capital base if the driving forces of the risk turn worse. The Bank assesses reputational risk in ICAAP document under Pillar-2 by considering following key indicators: • Management Action Trigger (MAT) • Credit Rating conducted by ECAIs • Internal fraud • External fraud • Non-payment or delayed payment of accepted bills (foreign & domestic) • Quality of customer service. Bank’s own liquidity monitoring tools: Through computation of capital charge against above key liquidity indicators, the Bank maintained additional capital. Sustainability Risk Concerns & Mitigation Plan at Operational Level Key Risk Reference Tool (example) Mitigation Process Sensitivity Stress Testing, LCR, NSFR MAT, Escalation to senior mgt. and ALCO Financial Information Liquidity Ratio Maturity Mismatch 158 Mitigation Process MAT, Escalation and Capital allocation | CRR, SLR, MTF, MCO, AD Duration Gap, Structured Liquidity Profile Standard Bank Ltd Annual Report 2020 By assessing the above key indicators for all aspects, the Bank maintains additional capital for that/those risk(s). 6. Strategic Risk: Strategic risk means the current or prospective risk to earnings and capital arising from imperfection in business strategy formulation, inefficiencies in implementing business strategy, non-adaptability/less adaptability with the changes in the business environment and adverse business decisions. Strategic risk induces operational loss that consequentially hampers the capital base.
160. In this context , strategic risk possesses a significant space in the ICAAP of the banks, the following aspects are considered: • Operating expenses as % of operating income - optimum level up to 45% • Classified loans as % of total outstanding loans - optimum level up to 5% • Classified loan recovery as % of total classified loans optimum level minimum 20% • Written-off loans as % of total classified loans - optimum level up to 15% • Interest waiver as % of total classified loans - optimum level up to 5%. Internal control is the process, affected by a company’s Board of Directors, Management and other personnel designed to provide reasonable assurance regarding the achievement of objectives in the effectiveness and efficiency of operations, the reliability of financial reporting and compliance with applicable laws, regulations, and internal policies. 8. Money Laundering Risk: 9. Environmental and Climate Change Risk: Environmental and climate change risk refers to the uncertainty or probability of losses that originates from any adverse environmental or climate change events (natural or manmade) and/or the non-compliance of the prevailing In order to mitigate Credit Risk on standalone basis, the Bank has taken the following steps: • Formulation of Credit Risk Policy, which clearly defines our objectives, criteria, credit approval process and clear-cut responsibilities of individuals associated with approving and administering the credit portfolio of the bank; • Credit proposals are exhaustive and contains security etc. to enable the credit approving authority to make well-informed decisions; • Centralized setting up of credit limits to ensure accuracy and control; • Customers are actively encouraged to rate themselves through approved credit rating agencies which is a good indicator of the financial health of the customers; • System based monitoring of credit limits, maturity etc.; • Periodic credit portfolio review; • Industry and business segment focus including lending caps; • Types of credit facilities; • Industry and Business segment focus - grow, maintain & shrink; • Single borrower exposure limit including syndication of loans; • Discouraged business types; • Large loan -10% or more of Bank’s total capital is considered and the maximum limit set according to net classified loans of the bank; • Loan facility parameters (Loan size, tenor, margin & security etc.); Standard Bank Ltd Annual Report 2020 | Financial Information The convergence of several remarkable changes in the world markets propelled Money Laundering to become a worldwide problem. Standard Bank Limited considers Money Laundering and Terrorist Financing Risk not only a compliance requirement of the regulatory bodies but also as one of its core business values. The Board of Directors and the Management are firmly committed to combating Money Laundering activities. Credit risk may arise from the banking book, trading book even from non-funded exposures. Sustainability Money Laundering Risk can be defined as the loss of reputation and expenses incurred as penalty for being negligent in prevention of money laundering. The bank has a designated Chief Compliance Officer at Head Office and Compliance Officers at branches who independently review the transactions of the accounts to verify suspicious transactions. A. Credit Risk Management: Stakeholders’ Information The Board and Management are accountable for the bank’s compliance, the compliance function has an important role in supporting corporate values, policies and processes that help ensure that the bank acts responsibly and fulfils all applicable obligations. In order to address the afore-said risks at both enterprise level and business, level, Standard Bank Limited prepared its own comprehensive and core risk management guidelines, which were prepared in light of the prescriptions of Bangladesh Bank. Key aspects of the guidelines regarding the risk mitigation strategies of the bank include, inter alia, the following prudential aspects: Management Retrospection Bank’s senior management is responsible for establishing a compliance policy that contains the basic principles to be approved by the Board and explains the main processes by which compliance risks are to be identified and managed through all levels of the organization. RISK MITIGATION MEASURES UNDERTAKEN: Risk Governance 7. Internal Control & Compliance Risk: Corporate Governance CAMELS rating – optimum level (satisfactory) Introduction • national environmental regulations. This is a facilitating element of credit risk arising from environmental issues. These can be due to environmental impacts caused by and/or due to the prevailing environmental conditions. Environmental and climate change risk can hamper the business stability of the borrowers in respect of both - i) profitability and ii) reputation. Consequentially, the extent of risk for the banks will be higher. Sector Environmental Due Diligence (EDD) Check List specified in Guidelines on Environmental Risk Management (ERM) issued vide BRPD Circular No. 01/2011 dated 30/01/2011 is used to determine this risk. For the loans under the sectors specified in the guidelines and which will have EnvRR of ‘High (H)’ are considered for the capital charge against this risk. 159
161. Introduction Corporate Governance • Acceptable securities with quality and value; • Internal Credit Risk Rating System (ICRRS) is followed; • Insurance coverage (on goods/machineries etc financed by the bank) policy; • Loan pricing strategy; • Loan Approval Process is clearly defined; • The Early Alert Reporting system is in place; • Cross-border risk; • Credit assessment and credit risk grading; • Environmental Risk Rating; • NPL Account Management and Credit Recovery policy is in place; • Audit & Inspection is done on CRM annually; • Periodic stress testing etc; Risk Governance The Bank has segregated duties of the officers/executives involved in credit related activities. Credit approval, administration, monitoring and recovery functions have been segregated. For this purpose, two separate units have been formed within the credit functions namely Credit Division and Credit Administration Division. Credit Division is entrusted with the duties of maintaining asset quality, assessing risk in lending to a particular customer, sanctioning credit, formulating policy/strategy for lending operation, etc. A thorough assessment is performed by Credit Division before sanctioning of any credit facility. The risk assessment includes borrower’s risk analysis, industry analysis, historical performance of the customer, security of the proposed credit facility, etc. The assessment process starts at the branch level by the relationship manager/officer and ends at Credit Division when it is approved/declined by the Competent Authority. Credit approval authority has been delegated to the Credit Committee. Management Retrospection In determining Single Borrower Exposure/Large loan limit, the instructions of Bangladesh Bank are strictly followed. Internal audit is conducted at periodic intervals to ensure compliance of Bank’s internal and Regulatory policies. Loans are classified as per Bangladesh Bank’s guidelines. Interest accrued on classified loan is suspended and adequate provision is maintained thereagainst as per Bangladesh Bank Guidelines. In order to mitigate Credit Risk on portfolio basis, the Bank has taken the following steps: Key Risk Reference Tool (example) Stakeholders’ Information Sustainability Portfolio Growth Reason for growth MAT Credit Concentration HHI, Gini, SEI, SI Sectoral Lending Allocation Security/ Collateral/Margin Status Coverage Assessment, Stress Testing MAT Loan Categorization & Classification Transition Matrix, Reason for Classification, Stress MAT, Escalation, Crash program Testing, Foundation IRB approach Documentation Lapses Audit report review Continuous allocation Unplanned conversion & undrawn Separate product and periodic review Management Strategy & Capital Allocation Regulatory Adherence Single borrower limit, Env. Risk rating Financial Information 160 | Mitigation Process Standard Bank Ltd Annual Report 2020 Cap, follow-up, Capital Capital
162. B . Asset Liability Risk Management To comply with corporate policies on hedging capital; • To comply with all regulatory requirements and review regulatory reporting; • To establish and monitor relevant liquidity ratios and balance sheet targets; • To ensure that the Head of Treasury has the necessary support to perform his/her job. Introduction Corporate Governance The Bank’s assets and liabilities are managed in order to maximize stakeholder’s value, to enhance profitability and increase capital, to serve customer and community needs, and to protect the bank from any disastrous financial consequences arising from changes in interest rate/liquidity. The responsibility of managing the asset/liability management procedures are monitored by the Asset Liability Management Committee (ALCO). • LIQUIDITY RISK MANAGEMENT Liquidity Risk is the potential for loss to a bank arising from either its inability to meet its obligations as they fall due or to fund increases in assets without incurring unacceptable cost or losses. Liquidity risk is often triggered by the consequences of other financial risks such as credit risk, interest rate risk, foreign exchange risk, etc. Risk Governance Management Retrospection Asset Liability Risk Management is an integral part of risk management in our bank. There is a structured and systematic process to manage the asset liability risk as well as the Balance Sheet. Asset Liability Management (ALM) Desk is an independent unit within the Treasury Division. The desk meticulously monitors and analyzes cash flows and cash positions, balance sheet gaps, daily profit and loss, economic trends, investment options, arbitrage opportunities, business growth, liquidity and places the facts and findings before the ALCO with its recommendations on a regular basis. Stakeholders’ Information A committee named Asset Liability Committee (ALCO) comprising Senior Management of the Bank has been established to make important decisions relating to liquidity, interest rate and balance sheet management of the bank. ALCO meeting is held once or more in every month to analyze, review and formulate strategies in order to manage the same. However, the main functions of the ALCO are: • To ensure adequate capital to meet business and regulatory requirements; • To diversify funding sources; • To manage balance sheet and ensure business strategies consistent with liquidity requirements; • To establish asset and liability pricing policies to protect liquidity structure; • To recommend the aggregate volume of all the Bank’s standby liquidity commitments; • To prepare Liquidity and Capital Plans and Contingency Funding Plans and recommend liquidity limits; • To review and approve assumptions used in Maximum Cumulative Outflows and Contingency Funding Plans; • To approve revenue targets related to Earnings at Risk limits; The intensity and sophistication of liquidity risk management processes depend on the nature, size and complexity of a bank’s activities. Sound liquidity and controlling liquidity risk is critical to the viability of the Bank. Our liquidity risk management procedures are comprehensive and holistic. Responsibility of managing and controlling liquidity of the bank lies with Asset Liability Committee (ALCO) and the Committee meets at least once in every month. Asset Liability Management (ALM) desk of the treasury function closely monitors and controls liquidity requirements on a daily basis by appropriate coordination of funding activities and they are primarily responsible for management of liquidity in the Bank. A monthly projection of fund flows is received in ALCO meeting regularly. Standard Bank Ltd Annual Report 2020 | Financial Information To ensure adequate liquidity at all times; Sustainability • 161
163. INTEREST RATE RISK MANAGEMENT Introduction Interest rate risk has the potential impact on a bank ’s earnings and net asset values due to changes in market interest rates. Interest rate risk arises when a bank’s principal and interest cash flows (including final maturities), both on-and off-balance sheet, have mismatched re-pricing dates. Corporate Governance However, the Bank has segregated both the interest rate sensitive assets and liabilities into different time buckets to find the asset liability mismatch. The duration gap analysis is also being carried out on quarterly basis. value may change adversely incurring loss due to changes in exchange rates. Treasury Division of the bank measures and monitors the foreign exchange risks. The Bank has formulated a treasury manual, which has been implemented for managing foreign exchange risks as per directives of Bangladesh Bank. The functions of treasury front office, mid office and back office have been segregated. The operational guidelines have also been formulated specifying the roles and responsibilities of front, mid and back office so that various foreign exchange transactions can be conducted according to the policy guidelines of the Bangladesh Bank and the risks can be measured, monitored and mitigated. Existing structure of risk assessment and control system of Foreign Exchange Risk of the Bank are as follows: Risk Governance • All exchange trading positions are conducted and maintained by Treasury Front Office within the limits approved by Board of Directors and Bangladesh Bank. The following limits are in place: Management Retrospection Stakeholders’ Information • Intraday Spot Trading Limit Existing Interest Rate Risk assessment structure and control system of the Bank are as follows: • Per Deal Limit • Individual Dealer’s Limit • Duration Gap Analysis: Calculate net GAP per time period and the cumulative GAP. Determine maximum tolerated GAP as determined by the ALCO policy; • Forward and Swap Trading Limit • Overnight Trading Limit • Market Value Analysis; • Open Position Limit • The following ratios are good indicators of Interest Rate Risk analysis and these are calculated on regular basis : • Per Deal Stop-loss Limit • Daily Stop Loss Limit • Trigger Limits • Limit for Cover Operations • Corporate Limits • Off Premises Limit • After Hour’s Limit • Counter Party Limits • From time to time, dealers are monitoring dealing limit and the dealers are maintaining and keeping record of their Foreign Currency Transactions; • Treasury Back Office is in place, which monitors and settles all foreign currency dealings. The Back Office is maintaining all accounting entries of foreign exchange deals originated by Front Office as also entries originated by the branches. The Back Office is also maintaining Daily Exchange Positions to assess and monitoring FEX risks; • Treasury Middle Office is in place to check whether the deals are being struck within the limits. • Net Interest Income • Net Interest Margin • Interest Earning Asset to Total Assets • Average Interest Rates of Loan • Average Interest Rates of Deposit etc. • Sensitivity Analysis; • Maturity profile Analysis; • Stress Testing is conducted; Sustainability Moreover, most of the bank’s assets and liabilities are on floating interest rates as per amendment clauses of loan sanction letters and therefore, the bank is less exposed to interest rate risk due to mismatch between floating and fixed rate. Financial Information However, due to market wide downward trend of interest rate, the Bank is likely to be exposed to lower income due to lower interest spread. To manage this risk, the Bank is actively planning to reduce its administrative expenses and increase fee-based income. C. Foreign Exchange Risk Management Foreign Exchange risk is the risk to earning arising from adverse movements in currency exchange rate. It refers to the impact of adverse movement in currency exchange rates on the value of open foreign currency position. An investment’s 162 | Standard Bank Ltd Annual Report 2020 D. Internal Control and Compliance Risk Management Internal Control refers to policies, plans and processes effected by the Board of Directors of the Bank and performed on continuous basis by the Senior Management and all levels of employees within the Bank. These internal controls are used to provide reasonable assurance regarding the achievement of organizational objectives. The system of internal controls includes financial, operational and compliance controls.
164. work performance of the Bank towards achieving its ultimate objectives . The internal control system of the bank ensures that all the necessary policies, guidelines and manuals are in place and all concerned are following the same strictly and meticulously including Departmental Control Function Check List (DCFCL). To monitor the overall effectiveness of the internal control system, the Management Committee (MANCOM) regularly reviews the policies & procedures as well as the structure assigning clear responsibility, authority and reporting relationship. Effective anti-money laundering and combating the financing of terrorism regimes are essential to protect the integrity of markets and of the global financial framework as they help mitigate the factors that facilitate financial abuse. Money laundering risk is a risk of incurring loss due to inadequate due-diligence resulting in reputational, operational, legal and concentration risks involving significant cost. E. Money Laundering Risk Management Good Competition External Risks Terrorism Threat Social Factors External Fraud Need for Stability Market Shif ts Economic Climate Corporate Process Employee Morale Internal Risks Cash Holdings Perf ormanc e Management Marketin g Strategy New IS New Products Staff Competence New Ventures Strategic Realignment The bank has so far ensured compliance with all the rules and regulations on Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) issues. Existing Risk Assessment structure and control system of AML of the Bank are as follows: Corporate Performance Weak The Chief Anti-Money Laundering Compliance Officer (CAMLCO) regularly submits status report to the Competent Authorities as per regulatory requirement in respect of hundi activities, abnormal transactions, Suspicious Transaction/ Activity Report (STR/SAR), Cash Transaction Report (CTR), Know Your Customer (KYC) Procedure, Transaction Monitoring Report, Structuring Monitoring Report, Half Yearly Report on Self Assessment Reports of branches & independent testing procedure conducted by ICC Division and similar other areas. Management Retrospection Need for Change Natural Disaster Politica l Stance Risk Governance Social Factors Corporate Governance “Guidelines on Prevention of Money Laundering” and “Policy for Combating Financing of Terrorism” have been formulated for strict compliance as per directives of Bangladesh Bank. Corporate Reputation Poor Introduction For safeguarding the organization’s assets, internal controls primarily aim to support the management in the identification and mitigation of those risks, which the Bank may encounter in the fulfillment of its business objectives. Strong By enforcing effective & sound Internal Control System, ICC is performing its activities for further improving overall Cash Transaction Reporting System is in place and the concerned department regularly submitted CTRs to Bangladesh Bank. • Suspicious Transaction/Activity Reporting system is in place and the concerned department is regularly submitting the report to Bangladesh Bank. • Hundi Activities and Abnormal Transaction/Activity monitoring system are in place. • Self Assessment Process & Independent Testing Procedure as per ‘Guidance Notes on Prevention of Money Laundering’ of Bangladesh Bank is in operation. • ICC division regularly conducts Audit & Inspection to the Branches on AML. The Bank is regularly arranging Training Programs on Prevention of Money Laundering & Combating Financing of Terrorism for all categories of Executives/Officers of the Bank. F. Information & Communication Technology Risk Management Financial Information Risk Based Internal Audit (RBIA) is being carried out annually for risk profiling/categorization of the branches based on the level of its various risks. Strong monitoring & close supervision ensure functional efficiency of the branches & different divisions/departments of Head Office by maintaining control environment at operational level. Compliance culture is developed by strict adherence to statutory & regulatory requirement and also bank’s own policy & procedures. • Sustainability The Division reviews the activities of branch’s Internal Control Unit (ICU) continuously through different control processes to minimize irregularities/lapses, to prevent fraud/forgery and to control existing/emerging risks. The significant deficiencies identified by the audit team are placed before the Senior Management as well as the Audit Committee of the Board. Audit Committee of the Board regularly monitors the functions of Internal Control & Compliance Division with their necessary suggestions/recommendations and also reports to the Board of Directors from time to time. Each Branch has a Branch Anti-Money Laundering Compliance Officer (BAMLCO) to assess and monitor Money Laundering Risk. Stakeholders’ Information The Internal Control & Compliance (ICC) Division is working independently to evaluate the Internal Control System of the Bank so as to ensure good governance, transparency & accountability. The ICC Division is conducting comprehensive internal audit of the branches as well as different divisions/ departments of Head Office on an ongoing basis. • ICT risk management is embedded with organizational internal control system which is used as part of the management control for risk management in the organization. This management control emphasizes both business control and technological control which support business requirement and governance. Business and technological controls are involved Standard Bank Ltd Annual Report 2020 | 163
165. Introduction Corporate Governance in the policies , processes and systems. Internal control and the audit process control the entire range of interactive transactions and internal transactions across organization as well as monitor and manage risks including business risks and ICT risks. Internal control and audit have played a vital role of risk management which can be used to: • Fall-back plan of technical persons are in place; • Hot Categorized Disaster Recovery Site (DRS) has been established and is being properly maintained to ensure the data protection of Data Center (DC) environment as well as to ensure business continuity during any disaster situation; • Provide risk management and control advice to relevant personnel. • • Provide independent assurance to the authority about the adequacy and effectiveness of controls and other risk management activities. Data backup procedure is being maintained properly and one copy of daily data backup is being kept in a secured locker at Data Center; • Fire detection and auto suppression system in Server Room are in place; • Access Control (i.e., User ID/Password/ Token) procedure are strictly controlled centrally; • Anti-virus software is installed in each server and computer; • Effective risk management & Control system is in place. Risk Governance The Bank has integrated technology for its business operation and is continuously upgrading its technological aspects to keep pace with modern banking practice. With its centralized online banking solution, the Bank is now able to serve its customers from anywhere at any time. The Bank has already launched debit card, credit card, prepaid card, SMS banking, web-based remittance facility and automated emailing customer’s statement. Bangladesh Automated Cheque Processing System (BACPS) and Bangladesh Electronic Fund Transfer Network (BEFTN) have also been established as per guidelines of Bangladesh Bank. Management Retrospection The Bank has upgraded its data centre during the previous year with high-end servers and networking equipments to accommodate growing business transactions with adequate security. Besides the data and network securities, various physical security measures like data center access control, environmental security, fire prevention, etc. have been maintained adequately. The bank has also set-up disaster recovery site with advanced technology which can be readily accessed in case of any disaster of the data centre so that the customer services are not hampered. Stakeholders’ Information Existing Risk Assessment structure and control system for ICT operations of the Bank are as follows: Sustainability Financial Information 164 • Centralized ICT Operation; • The entire computer Terminals/PC/Servers locating inside the infrastructure of the Bank are connected to each other through secure network communication; • Internal Information System audit is done once in every year by Internal Control and Compliance Division (other than IT Division); • Adequate insurance coverage or risk coverage fund is being maintained; • Mission critical equipments & applications are being kept under Service Level Agreement; • Record keeping of inventory details of computing assets is in place; • Operating procedures for all applications / systems / modules etc. are documented and maintained; • Redundancy at each level of Network, Server, Power system, has been placed to ensure high-availability of data center; | Standard Bank Ltd Annual Report 2020 STATUS OF IMPLEMENTATION OF BASEL-III Basel III refers to the latest capital and liquidity standards prescribed by the Basel Committee on Banking Supervision (BCBS). Bangladesh has entered into the Basel III regime effective from January 01, 2015. Bangladesh Bank (BB) amended its capital standard which was based on Basel II and circulated new regulatory capital and liquidity guidelines in line with Basel III of BCBS. These new global regulatory and supervisory standards mainly focused on the following areas: • Raising of the quality and level of capital to ensure that banks are better able to absorb losses on both goingconcern and a gone-concern basis; • Increase of the risk coverage of the capital framework; • Introduction of leverage ratio to serve as a backstop to the risk-based capital measure; • Introduction of Liquidity Standard including two liquidity ratios such as Liquidity Coverage Ratio (LCR) & Net Stable Funding Ratio (NSFR); • Raising of the standards for the Supervisory Review Process (Pillar 2) and; • Enhanced public disclosures (Pillar 3). The Banking Regulation & Policy Department (BRPD) of Bangladesh Bank, vide BRPD circular no.-18 dated December 21, 2014, issued an Action Plan/Roadmap for implementation of Basel-III in Bangladesh, which came into force with effect from January 01, 2015. In this connection, Bangladesh Bank circulated its “Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for Banks in line with Basel-III)”, which replaced “Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for Banks in line with Basel-II)” issued vide BRPD circular No.-35/2010. On the other hand, the Department of Offsite Supervision of Bangladesh Bank, vide DOS circular no.01 dated January 01, 2015, published a Guidance Note on Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), which came into force with effect from January 01, 2015.
166. Introduction Standard Bank Limited formed a Basel Unit with a Committee as well as a competent working team for robust operation of Basel-III framework also known as Basel Accords . The Basel Accords implementation Committee is constituted of a working team with the Managing Director & CEO in the chair. As per Bangladesh Bank guidelines, the year-end Minimum Capital Requirement as well as Capital Adequacy position is given below: SOLO BASIS (ONLY BANK) Sl As on Capital Maintained Maintained CRAR (%) Required CRAR Corporate Governance (BDT in Crore) Required (CRAR + CCB) 01. 31.12.2019 1,962.14 11.45% 10.00% 12.50% 02. 31.12.2020 2,309.15 13.00% 10.00% 12.50% CONSOLIDATED BASIS (WITH SUBSIDIARIES) Risk Governance (BDT in Crore) Sl As on Capital Maintained Maintained CRAR (%) Required CRAR Required (CRAR + CCB) 01. 31.12.2019 1,953.25 11.32% 10.00% 12.50% 02. 31.12.2020 2,302.94 12.86% 10.00% 12.50% Management Retrospection LIQUIDITY RATIOS: The year-end Liquidity Ratio requirements for Basel III are as follows: Particular Maintained Ratio Required Ratio Liquidity Coverage Ratio (LCR) 114.65% ≥100.00% Net stable Funding Ratio (NSFR) 111.97% >100.00% BDT 3,532.56 crore Total net cash outflows over the next 30 calendar days BDT 3,088.56 crore Available amount of stable funding BDT 17,918.37 crore Required amount of stable funding BDT 15,860.33 crore Stakeholders’ Information Stock of High quality liquid assets LEVERAGE RATIO: Sustainability The year-end Leverage Ratio for Basel III is as follows: Particular Leverage Ratio Solo Consolidated 6.14% On balance sheet exposure BDT 21,431.48 crore BDT 21,590.14 crore Off balance sheet exposure BDT 2,072 crore BDT 2,072 crore BDT 232.89 crore BDT 238.48 crore BDT 23,270.56 crore BDT 23,423.62 crore Total Deduction Total exposure 3.00% Standard Bank Ltd Annual Report 2020 Financial Information 6.21% Required Ratio | 165
167. Introduction Corporate Governance Risk Governance SUPERVISORY REVIEW PROCESS (SRP): SOUND CAPITAL ASSESSMENT: Supervisory Review Process, the Second Pillar of Basel-III of Risk Based Capital Adequacy Framework, is intended not only to ensure that banks have adequate capital to support all the risks in their business, but also to encourage banks to develop and use better risk management techniques in monitoring and managing their risks. The key principle of the Supervisory Review Process (SRP) enjoins that banks should have a process for assessing overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital at an adequate level. The main aspects of a rigorous SRP are as follows: The Bank has a board approved manual namely Manual of Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP manual includes • Board and senior management oversight, iv. A process of internal control, review and audit to ensure the integrity of the overall management process. • Sound capital assessment, • Comprehensive assessment of risks, • Monitoring and reporting and • Internal control review. BOARD AND SENIOR MANAGEMENT OVERSIGHT: Management Retrospection As per Bangladesh Bank guidelines, SRP of the Bank is being implemented under the following structure of three layers:Strategic Layer: The Risk Management Committee is responsible on behalf of the Board of Directors for implementation of SRP in banks. The agenda of each meeting of the committee includes the SRP implementation in bank. Stakeholders’ Information a. Strategic Layer: The Board Risk Management Committee is responsible on behalf of the Board of Directors for implementation of SRP in banks. The agenda of each meeting of the committee includes the SRP implementation in bank. Sustainability b. Managerial Layer: The Bank has an exclusive body namely SRP team constituted by the concerned departmental heads of the bank and headed by Managing Director. The formation and modification of SRP team and its terms of reference (ToR) are approved by the Board of Directors and notified to Bangladesh Bank. The SRP meets at least bimonthly to monitor the implementation of SRP. Financial Information c. Operational Layer: The bank has an operational unit in this respect, which is responsible for collecting information from concerned departments and branches, regulatory correspondences, compiling the required calculations of ICAAP reporting and the tasks assigned by the SRP team. i. Policies and procedures designed to ensure that the bank identifies, measures, and reports all material risks; ii. A process that relates capital to the level of risk; iii. A process that states capital adequacy goals with respect to risk taking account of the bank’s strategic focus and business plan; and COMPREHENSIVE ASSESSMENT OF RISKS IN SRP: All material risks faced by the bank are addressed in the adequate capital assessment process except credit risk, market risk and operation risk. Therefore, SRP considers all risks of the banks, not considered under pillar 1 of Basel III namely,: 1. Residual risk: Error in documentation and error in valuation of collateral security. 2. Concentration Risk: Credit concentration in groups, sectors or regions. 3. Interest Rate Risk in the Banking Book: Probable loss due to poor asset liability management and volatile movement of marketable instruments like bills, bond, debentures. 4. Liquidity Risk: Inability to fulfill the commitments on time as payment falls due. The indicators tracked for identification of the risks include CRR, SLR, Medium Term Funding Ratio (MTFR), Maximum Cumulative Ratio, Advance Deposit Ratio (ADR), Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NFSR). 5. Reputation Risk: Internal & External Fraud, Non-payment of ABP, Credit Rating and Bad customer service. 6. Strategic Risk: CAMELS rating falling below 2, operating expenses exceeding 45% of operating income, classified loans exceeding 5% of total loan, recovery rate falling below 20%., write-off loan recovery falling below 15%., interest waiver exceeding 5% of total classified loans, cost of fund, strategic plan (deposit growth plan, loans growth plan, profit growth plan), rescheduling of loans and advances (rescheduled more than three times are where capital charge are considered). 7. Settlement Risk: The risks posed to the banks when it fulfills its contractual obligations (payment or delivery), but the counterparty fails or defaults to do the same. Non receiving or delayed receiving of receivable bills (foreign & domestic) are evaluated to assess settlement risk. 166 | Standard Bank Ltd Annual Report 2020
168. Terms of reference (ToR) of the Team: 1. To conduct dialogue with Bangladesh Bank for determining the adequate level of capital requirement for the Bank; The Bank assessed combined shock by aggregating the results of credit shock, exchange rate shock, equity shock & interest rate shock. In case of credit shock, increase in NPLs, results of increase in NPLs due to default of top large borrowers, fall in the forced sale value (FSV) of mortgaged collateral, negative shift in the NPL categories & increase of NPLs in particular 2 sectors were taken into consideration. The outcome of the stress tests indicated that the bank was well within its risk tolerance levels in all of the scenarios. This process finally produces a numerical estimate of the change in the value of risk exposed positions. To interpret the result, the Bank used a series of consideration to evaluate bank’s overall positions; deterioration in quality of asset resulting in stress losses that affect bank’s profitability and finally bank’s capital adequacy. Management Retrospection In order to address the SRP issues under Basel-III in Standard Bank limited, an exclusive body namely SRP team headed by Managing Director is in place with the following terms of reference: More specifically, stress testing may reveal a reduction in surplus capital or a shortfall in capital under specific scenarios. This may then serve as a leading indicator to the bank to raise additional capital, reduce capital outflows, adjust the capital structure and/or reduce its risk appetite. Risk Governance 10. Other Material Risk: In the context of an institution’s activities, all risks which affect the achievement of business objectives are considered to be material. Other risks (such as Accounting Risk, Human Resources Risk, Natural Disaster Risk) are usually difficult or impossible to quantify and thus their measurement and management typically call for qualitative methods. Stress tests are used in proactively managing the bank’s risk profile, capital planning & management, strategic business planning and setting of capital buffers. Stress testing is an integral component of the bank’s internal capital adequacy assessment process (ICAAP) and is used to assess and manage the adequacy of regulatory and economic capital. Corporate Governance 9. Environmental and Climate change Risk. To evaluate this risk, Sector Environmental Due Diligence (EDD) Check List is specified in Guidelines on Environmental Risk Management (ERM) issued vide BRPD Circular No. 01/2011 dated 30/01/2011. For the loans under the sectors specified in the guidelines and which have EnvRR of ‘High (H)’ are considered for the capital charge against this risk. Stress Testing: Introduction 8. Appraisal of Core Risk Management Practice. BB identified 6 (six) risk areas which are termed as core risks through issuing an industry best practice framework. The Bank developed its own methodology for assessing each core risk separately. No capital charge is imposed for risk rating Strong and Satisfactory. Additional capital charge is imposed for Fair, Marginal and unsatisfactory. 2. To meet at least bimonthly to monitor the implementation status of SRP in the Bank; Stakeholders’ Information 3. To formulate policies and procedures in order to address all existing/probable material risk of the bank (through risk avoidance, reduction, transfer and retention); 4. To set standard for capital requirement of the bank depending on degree of risk of the borrower; 5. To monitor and follow-up the comprehensive assessment of risk in the Bank; 6. To prepare and review the capital planning of the Bank. Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 167
169. Introduction DISCLOSURES ON RISK BASED CAPITAL (BASEL-III) Corporate Governance BASED ON 31.12.2020 Risk Governance (A) SCOPE OF APPLICATION Qualitative Disclosure Management Retrospection (a) The Revised Risk Based Capital Adequacy (RBCA) framework which is called Basel-III guideline issued by Bangladesh Bank in December-2014 duly applies to Standard Bank Limited. (b) Standard Bank Limited prepared its RBCA report on ‘Solo Basis’ as well as ‘Consolidated Basis’ where four (04) subsidiaries belong to Standard Bank Ltd. (c) No incidence occurred which may cause for imposing any regulatory restriction or impediment for transferring fund within the Standard Bank group. Quantitative Disclosure (d) No Capital deficiency in solo or consolidated assessment. Stakeholders’ Information Sustainability Financial Information 168 | Standard Bank Ltd Annual Report 2020
170. B ) CAPITAL STRUCTURE Introduction Qualitative Disclosure (a) The regulatory capital of bank has been classified into two tiers which is consisted of sum of the following categories: Tier 1 Capital (going-concern capital) Common Equity Tier 1 Additional Tier 1 Tier 2 Capital (gone-concern capital) Corporate Governance 1) a) b) 2) Risk Governance a) Common Equity Tier 1 Capital Common Equity Tier 1 (CET1) capital consists of sum of the following items: 1. Paid up capital 2. Non-repayable share premium account 3. Statutory reserve 4. General reserve 5. Retained earnings 6. Dividend equalization reserve 7. Minority interest in subsidiaries 8. Others Less:Regulatory adjustments applicable on CET1 capital: 1. Shortfall in provisions against NPLs and Investments 2. Goodwill and all other Intangible Assets 3. Deferred tax assets (DTA) 4. Defined benefit pension fund assets 5. Gain on sale related to securitization transactions 6. Investment in own CET-1 instruments/shares 7. Reciprocal crossholdings in the CET-1 Capital of Banking, Financial and Insurance Entities 8. Any investment exceeding the approved limit under section 26 ka(1) of Bank Company Act-1991 (50% of investment) 9. Investment in Subsidiaries which are not consolidated (50% of investment) 10. Other if any Management Retrospection Stakeholders’ Information b) Additional Tier 1 Capital (AT-1) Additional Tier 1 (AT1) capital consists of the following items: 1. Non-cumulative irredeemable preference shares 2. Instruments issued by the banks that meet the qualifying criteria for AT1 as specified in the guideline. 3. Minority Interest i.e. AT1 issued by consolidated subsidiaries to third parties (for consolidated reporting only) 4. Others Less:Regulatory adjustments applicable on AT1 Capital: 1. Investment in own AT-1 instruments/shares 2. Reciprocal crossholdings in the AT-1 Capital of Banking, Financial and Insurance Entities 3. Other if any | Financial Information Standard Bank Ltd Annual Report 2020 Sustainability 2) Tier 2 Capital (T-2) Tier 2 capital, also called ‘gone-concern capital’, represents other elements which fall short of some of the characteristics of the core capital but contribute to the overall strength of a bank. Tier 2 capital consist of the following items: 1. General Provisions (Eligible for inclusion in Tier 2 will be limited to a maximum 1.25 percentage points of credit risk-weighted assets calculated under the standardized approach) 2. All other preference shares 3. Subordinated debt / Instruments issued by the banks that meet the qualifying criteria for Tier 2 capital as specified in the guideline. 4. Minority Interest i.e. Tier-2 issued by consolidated subsidiaries to third parties as specified in the guideline. 5. Revaluation Reserves as on December 31, 2014 (50% of Fixed Assets and Securities and 10% of Equities) 6. Others Less: Regulatory adjustments applicable on Tier-2 capital: • Revaluation Reserves for Fixed Assets, Securities and Equity Securities (followed phase-in deductions as per Basel-III). • Investment in own T-2 instruments/shares • Reciprocal crossholdings in the T-2 Capital of Banking, Financial and Insurance Entities. • Any investment exceeding the approved limit under section 26 ka(1) of Bank company Act-1991 (50% of investment). • Investment in Subsidiaries which are not consolidated (50% of investment) • Others if any 169
171. Introduction The calculation of Common Equity Tier-1 , Additional Tier-1,Tier-1 and Tier-2 capital shall be subject to the following conditions: 1. 2. 3. 4. Corporate Governance Common Equity Tier 1 of at least 4.5% of the total RWA. Tier-1 capital will be at least 6.0% of the total RWA. Minimum CRAR of 10% of the total RWA. Additional Tier 1 capital can be admitted maximum up to 1.5% of the total RWA or 33.33% of CET1, whichever is higher. 5. Tier-2 capital can be admitted maximum up to 4.0% of the total RWA or 88.89% of CET1, whichever is higher. 6. In addition to minimum CRAR, Capital Conservation Buffer (CCB) of 2.5% of the total RWA is being introduced which will be maintained in the form of CET1. Quantitative Disclosure The quantitative disclosure of Capital Structure are as follows: Tier 1 Capital (going-concern capital) Common Equity Tier 1 Capital (CET1) Risk Governance Management Retrospection 1.1 Fully Paid-up Capital 1.2 Non-repayable Share premium account 1.3 Statutory Reserve 1.4 General Reserve 1.5 Retained Earnings 1.6 Dividend Equalization Reserve 1.7 Minority interest in Subsidiaries 1.9 Other if any (if any item approved by BB) 1.10 Sub-Total: (1.1 to 1.9)   Less: Regulatory adjustments applicable on CET1 1,005.99 1,005.99 - - 602.93 602.93 - - 68.06 67.42 - - - 0.02 - - 1,676.98 1,676.35     Stakeholders’ Information Sustainability     229.89* Shortfall in provisions required against investment in shares - - 1.13 Remaining deficit on account of revaluation of investment in securities after netting off from any other surplus on the securities - - 1.14 Goodwill and all other intangible assets 3.00 3.16 1.15 Deferred tax assets (DTA) - - 1.16 Defined benefit pension fund assets - - 1.17 Gain on sale related to securitization transactions - - 1.18 Investment in own CET-1 instruments/shares - - 1.19 Reciprocal crossholdings in the CET-1 Capital of Banking, Financial and Insurance Entities - 5.43 1.2 Any investment exceeding the approved limit under section 26 ka(1) of Bank company Act-1991 (50% of investment) - - 1.21 Investment in Subsidiaries which are not consolidated (50% of investment) - - 1.22 Other if any - - 232.89 238.48 1,444.08 1,437.87   Shortfall in provisions required against Non Performing Loans (NPLs) 1.12 Financial Information 1.24 Total Common Equity Tier-1 ( 1.10 -1.23) | Consolidated 229.89* 1.11 1.23 Sub-Total (1.11 to 1.22) 170 SOLO Additional Tier 1 Capital   2.1 Non-cumulative irredeemable preference shares - - 2.2 Instruments issued by the bank that meets the qualifying criteria for AT1 - - 2.3 Minority Interest i.e. AT1 issued by consolidated subsidiaries to third parties (for consolidated reporting only) - - 2.4 Others - - Standard Bank Ltd Annual Report 2020
172. - - Less : Regulatory adjustments applicable on AT1 Capital     2.5 Investment in own AT-1 instruments/shares - - 2.6 Reciprocal crossholdings in the AT-1 Capital of Banking, Financial and Insurance Entities - - 2.7 Other if any - - 2.8 Sub-Total (2.5 to 2.7) - - 2.9 Total Additional Tier 1 Capital ( 2.5 – 2.8) - - 2.1 Total Eligible Tier-1 Capital (1.24 + 2.9) 1,444.08 1,437.87     160.06 160.06 - -   Corporate Governance Sub-Total (2.1 to 2.4) Introduction 2.5 Tier 2 Capital (gone-concern capital) 3.2 All other preference shares 3.3 Subordinated debt / Instruments issued by the banks that meet the qualifying criteria for Tier 2 capital as specified in the guideline. 705.00 705.00 3.4 Minority Interest i.e. Tier-2 issued by consolidated subsidiaries to third parties as specified in the guideline. - - 3.5 Revaluation Reserves as on 31 December, 2014 (50% of Fixed Assets and Securities and 10% of Equities) 1.31 1.31 3.6 Other if any (if any item approved by BB) 3.7 Sub-Total (3.1 to 3.6) 3.8 Less: Regulatory adjustments applicable on Tier-2 capital 3.9 Revaluation Reserves for Fixed Assets, Securities and Equity Securities (follow phase-in deductions as per Basel-III). 3.1 866.37     1.31 1.31 Investment in own T-2 instruments/shares - - 3.11 Reciprocal crossholdings in the T-2 Capital of Banking, Financial and Insurance Entities. - - 3.12 Any investment exceeding the approved limit under section 26 ka(1) of Bank company Act-1991 (50% of investment). - - 3.13 Investment in Subsidiaries which are not consolidated (50% of investment) - - 3.14 Other if any - - 1.31 1.31 3.15 Sub-Total (3.9 to 3.14) 3.16 Total Eligible Tier-2 Capital (3.7 – 3.15) Total Eligible Capital (Tier-1+Tier-2)(2.10+3.16) 865.06 865.06 2,309.15 2,302.94 Stakeholders’ Information 866.37 Management Retrospection General Provisions ( Eligible for inclusion in Tier 2 will be limited to a maximum 1.25 percentage points of credit risk-weighted assets calculated under the standardize approach) Risk Governance 3.1 Sustainability Note: Shortfall in provisions required against Non Performing Loans (NPLs) as in 1.11 has been deducted as per DBI1(Division-2)/111/2021-962 dated 01.04.2021. Financial Information Standard Bank Ltd Annual Report 2020 | 171
173. (C) CAPITAL ADEQUACY Introduction Qualitative Disclosure (a) Adequate capital means enough capital to compensate with Bank’s risks profile. For assessing overall risk profile and a strategy for maintaining adequate capital, Bank has followed an Internal Capital Adequacy Assessment Process (ICAAP) which is issued by Bangladesh Bank for calculating adequate capital under Supervisory Review Process (SRP) of BaselIII. Corporate Governance Bank has strengthened its risk management process and internal control system in assessing and planning of economic capital against all risks. The strategic planning process critically analyzes bank’s current and future capital requirements. The strategic plan includes the bank’s capital needs, anticipated capital expenditures, desirable capital level, and external capital sources. Quantitative Disclosure Solo Consolidated Risk Governance (b) Capital Requirement for Credit Risk 1,709.27 1,693.59 (c) Capital Requirement for Market Risk 5.07 34.38 (d) Capital Requirement for Operational Risk 61.74 63.15 (e) Total Capital, CET-1 Capital, Total Tier-1 Capital and Tier-2 Capital Ratio: • Management Retrospection • Stakeholders’ Information (f) For the consolidated group: » Total CRAR 12.86% » CET-1 Capital Ratio 8.03% » Total Tier-1 Capital Ratio 8.03% » Tier-2 Capital Ratio 4.83% For stand alone: » Total CRAR 13.00% » CET-1 Capital Ratio 8.13% » Total Tier-1 Capital Ratio 8.13% » Tier-2 Capital Ratio 4.87% Capital Conservation BufferMinimum Requirement: 2.50% of Total RWA. Sustainability (g) • For the consolidated group: 2.03% of Total RWA • For stand alone: 2.13% of Total RWA Available Capital under Pillar-2 requirement BDT 1,953.25 Crore as on 31.12.2019. Based on 31.12.2020 it is not calculated yet, it will be calculated within 31.07.2021. Financial Information 172 | Standard Bank Ltd Annual Report 2020
174. (D) CREDIT RISK Introduction Qualitative Disclosure (a) Corporate Governance Credit Risk Definitions of past due and impaired (for accounting purposes) Past dues and impaired exposures are defined in accordance with the relevant Bangladesh Bank regulations. Specific and general provisions are computed periodically in accordance with the Bangladesh Bank regulations. Special Mention Account (SMA) These assets have potential weaknesses thus deserve management’s close attention. If left uncollected, these weaknesses may result in deterioration of the repayment prospect of the borrower. Sub-Standard These are the loans where the bank has reason to doubt about the payment of the loan although recovery prospect is encouraging. Doubtful. A Continuous Loan, Demand Loan, Fixed Term Loan or any installment(s)/part of installment(s) of a Fixed Term Loan which will remain past due/overdue for a period of 09 (nine) months or beyond but less than 12 (twelve) months, the entire loan will be put into the “Doubtful (DF)”. Bad/ loss. These are the loans that have a bleak recovery possibility. Unclassified These are the loans where bank is fully satisfied about its repayment. Description of approaches followed for specific and general allowances and statistical methods; As per relevant Bangladesh bank guidelines, 0.25% to 5% provision is maintained against unclassified loans, 5% to 20% provision is maintained against sub-standard loans, 5% to 50% provision is maintained against doubtful loans and 100% provision is maintained against bad/loss after deducting value of eligible security, if any, as per Bangladesh Bank guidelines. All interest is suspended/discontinued if the loan is identified as sub-standard, doubtful or bad/ loss. Risk Governance Sustainability Financial Information | Stakeholders’ Information Standard Bank Ltd Annual Report 2020 Management Retrospection Discussion of the bank’s credit risk management policy Credit risk is the risk of financial loss if a customer or counterparty fails to meet a payment obligation under a contract. It arises principally from direct lending, trade finance and leasing business, but also from off-balance sheet products such as guarantees and credit derivatives, and from the holdings of debt securities. The failure may result from unwillingness of the counterparty or decline in his/her financial condition. Among the risks the Standard Bank Limited engages in, credit risk generates the largest regulatory capital requirement. Standard Bank Limited has standards, policies and procedures dedicated to controlling and monitoring risk from all such activities. The aims of credit risk management, underpinning sustainably profitable business, are principally: • to maintain a strong culture of responsible lending, supported by a robust risk policy and control framework; • to both partner and challenge business originators effectively in defining and implementing risk appetite, and its reevaluation under actual and scenario conditions; and • to ensure independent, expert scrutiny and approval of credit risks, their costs and their mitigation. The standardized approach is applied for risk weighting of exposure as per directive of Bangladesh Bank. It requires banks to use risk assessments prepared by External Credit Assessment Institutions (ECAIs) to determine the risk weightings applied to rated counterparties. The bank has used all customer ratings wherever available for use based on their entity rating as assigned by the approved ECAIs of Bangladesh Bank. Credit risk is one of the major risks faced by the Bank. To assess and to mitigate the credit risk, the Bank has implemented risk management manual, which is considered an important tool for retaining the quality and performance of the assets. Accordingly, the Bank’s credit risk management functions have been designed to address all these issues including risks that arise from global changes in banking, finance and related issues. The Bank has defined segregation of duties for all credit risk related activities like credit approval, administration, monitoring and recovery functions. The Bank has set policies and procedures for the controlling and monitoring of credit risks from these activities. A thorough risk assessment is done before sanction of any credit facility at risk management units. The risk assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer, security of the credit facility etc. The Bank also has established separate Credit Risk Management Services, which helps in ensuring credit compliance with the post-sanction processes/ procedures laid down by the Bank from time to time. Bank has in place a risk grading system for analyzing the risk associated with credit. The parameters, while risk grading the customers, include financial condition and performance, quality of disclosures and management, facility structure, collateral and country risk assessment where necessary. Maximum counterparty/group exposures are limited to 15% (funded) of the bank’s capital base as stipulated by Bangladesh Bank. Exposure beyond the said limit may be allowed only upon prior approval from Bangladesh Bank. Throughout the year, the Bank reviews loans and advances to assess whether objective evidence has arisen of impairment of a loan or portfolio that warrants a change in the classification of loans and advances which may result in a change in the provision required in accordance with BRPD circular No. 24 (17 November 2019), BRPD circular No.6 (19 May 2019), BRPD circular No.4 (16 May 2019), BRPD circular No. 3 (21 April 2019), BRPD circular No.1 (20 February 2018), BRPD circular No.15 (27 September 2017), BRPD circular No.16 (18 November 2014), BRPD circular no.14 (23 September 2012) as amended by BRPD circular no. 19 (27 December 2012). The guidance in the circulars follows a formulaic approach whereby specified rates are applied to the various categories of loans as defined in the circulars. 173
175. Quantitative Disclosure Introduction (b) Total gross credit risk exposures broken down by major types of credit exposure: Corporate Governance Secured overdraft/Quard against TDR Term Loan Export Development Fund (EDF) Agriculture Loan Cash credit/ Murabaha House Building loans Transport Loans Loans against trust receipt Payment against document Packing credit Demand Loan Lease Finance / Izara Syndicate/Club Finance VISA Credit Card SME/SE Green Finance Consumer Credit Scheme/Hire purchase Bills Purchased and Discounted (Local and Foreign) Risk Governance Management Retrospection Total (c) BDT in Crore 1,851.22 5,598.99 392.88 570.58 1,657.29 339.78 130.70 441.31 76.60 44.18 918.15 148.34 214.07 76.86 3,230.44 1.38 49.34 202.90 15,945.02 Geographical distribution of exposures, broken down in significant areas by major types of credit exposure: BDT in Crore Urban: Dhaka Division Chittagong Division Khulna Division 10,894.71 2,680.29 729.05 Stakeholders’ Information Barishal Division 41.73 Rajshahi Division 572.59 Rangpur Division 617.32 Sylhet Division 64.49 Mymensing Division Total 21.06 15,621.24 Rural: Dhaka Division Sustainability Chittagong Division Khulna Division - Rajshahi Division 47.09 Rangpur Division 22.38 Financial Information Sylhet Division 10.59 Mymensing Division 24.72 Grand Total (urban + rural) | 70.14 Barishal Division Total 174 148.86 Standard Bank Ltd Annual Report 2020 323.78 15,945.02
176. (d) By major industry or counterparty type : Amount of impaired loans and if available, past due loans, provided separately (g) BDT in Crore ------886.59 2,125.31 5,299.93 4,187.37 3,445.82 BDT in Crore Stakeholders’ Information Corporate SME Consumer Financing Others ( Agri, SOD Individual) Specific and general provisions; and Charges for specific allowances and charge-offs during the period Management Retrospection Residual contractual maturity breakdown of the whole portfolio broken down by all types of credit exposure including bill purchased & discounted: Payable On demand Up to one month Over one month but not more than three months Over three months but less than one year Over one year but less than five years Above five years (f) Risk Governance (e) BDT in Crore 1,435.21 333.33 240.19 433.11 3,230.44 48.38 458.18 6,178.84   272.69 575.48 1,065.90 25.87 221.25 139.84 499.78 347.59 6,617.78 9,766.18 Corporate Governance Commercial lending Export financing House building loan Consumers Credit Scheme Small and medium enterprises Special program loan Other Loans and advances/Investments Total Industrial loans: Agricultural Industries Textile Industries Food and allied Industries Pharmaceuticals Industries Leather, Chemical and Cosmetics etc Cement and Ceramic Industries Service Industries Transport and Communication Industries Other Industries Total Introduction Industry or counterparty types distribution of exposures broken down by major types of credit exposure: 5,839.10 3,250.54 239.98 6,615.40 487.92 776.42 Gross Non Performing Assets (NPAs) BDT in Crore 776.42 4.87% 923.24 28.07 174.89 776.42 Sustainability 258.90 66.24 325.14 Standard Bank Ltd Annual Report 2020 Financial Information 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 Opening balance Provisions made during the period Write-off Write-back of excess provisions Closing balance | 175
177. (E) EQUITIES: DISCLOSURES FOR BANKING BOOK POSITIONS Introduction Qualitative Disclosure (a) The general qualitative disclosure requirement with respect to the equity risk, including: Corporate Governance The Bank does not hold any value which is describes as “Differentiation between holdings on which capital gains are expected and those taken under other objectives including for relationship and strategic reasons” in RBCA Guidelines of Bangladesh bank. Therefore the Bank does not needed to narrate any “Discussion of important policies covering the valuation and accounting of equity holding in the banking book, This includes the accounting techniques and valuation methodologies used, including key assumptions and practices affecting valuation as well as significant changes in these practices”. Apart from above, the Bank has being calculated value at cost method for Quoted shares & Unquoted shares. Quantitative Disclosure (b) Value disclosed in the balance sheet of investments, as well as the fair value of those investments; for quoted securities, a comparison to publicly quoted share values where the share price is materially different from fair value. Risk Governance Quoted shares Unquoted shares (c) Management Retrospection (d) (e) BDT 15.57 crore BDT 14.09 crore BDT 266.66 crore BDT 266.66 crore Total unrealized gains (losses) – 0.00 Total latent revaluation gains (losses) - 0.00 Any amounts of the above included in Tier 2 Capital 0.00 There are no Capital requirements broken down by appropriate equity groupings, consistent with the bank’s methodology, as well as the aggregate amounts and the type of equity investments subject to any supervisory provisions regarding regulatory capital requirements. Sustainability Financial Information | Market Price The cumulative realized gain (losses) arising from sales and liquidations in the reporting period. Realized gain (losses) from equity investments Stakeholders’ Information 176 Cost Price Standard Bank Ltd Annual Report 2020
178. (F) INTEREST RATE RISK IN THE BANKING BOOK (IRRBB) Introduction Qualitative Disclosure (a) The Banking Book consists of assets and liabilities contracted basically on account of relationship or for steady income and statutory obligations and are generally held till maturity/payment by counter party. The earnings or changes in the economic value are the main focus in banking book. Corporate Governance Interest rate risk is the risk that a bank will experience deterioration in its financial position as interest rates move over time. Interest rate risk in the banking book arises from a bank’s core banking activities. Interest rate risk is the exposure of a bank’s financial condition to adverse movements in interest rates. Changes in interest rates affect a bank’s earnings by changing its net interest income and the level of other interest sensitive income and operating expenses. Quantitative Disclosure Interest Rate Risk -Increase in Interest Rate: Minor Moderate Major Magnitude of Shock 1.00% 2.00% 3.00% 7.24 14.53 21.8 2316.42 2323.68 2330.95 13.04 13.08 13.12 0.04 0.08 0.12 -0.05 -0.1 -0.15 2316.36 2323.58 2330.8 Risk Governance (b) Net Interest Income impact <12 Months Capital after shock CRAR aftershock (%) Management Retrospection Change in CAR after shock (%) Re-pricing Impact Change in the value of the bond portfolio Capital after shock CRAR aftershock (%) 13.04 13.08 13.12 Change in CAR after shock (%) 0.00 0.00 0.00 Overall change in CAR (NII & re-pricing impact, %) 0.04 0.08 0.12 Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 177
179. (G) MARKET RISK Introduction Qualitative Disclosure (a) Views of BOD on trading/investment activities: Market risk is potential for loss resulting from adverse movement in market risk factors such as interest rates, For-ex rates, and equity and commodity prices. Corporate Governance The important aspect of the Market Risk includes liquidity management, interest rate risk management and the pricing of assets and liabilities. There are three types of Market Risk such as Interest Rate Risk, Foreign Exchange Risk & Equity Price Risk. The Board will have to approve all policies related to market risk, sets limits and reviews compliance on a regular basis. Method used to measure Market Risk: In Standardized Approach, the capital requirement for various market risks (interest rate risk, equity price risk, commodity price risk, and foreign exchange risk) is determined separately. Risk Governance Market Risk Management System: The Treasury Division manages market risk covering Liquidity, interest rate and foreign exchange risk with oversight from Assets Liability Management Committee (ALCO) comprising senior executives of the Bank. ALCO is chaired by the Managing Director. ALCO meets at least once in a month. Policies and Processes for mitigating market risk: Management Retrospection There are approved limits for credit deposit Ratio, liquid assets to total assets ratio, maturity mismatch, commitments for both on-balance sheet and off-balance sheet items and borrowing from money market and exchange position. The limits are monitored and enforced on a regular basis to protect against market risk. The exchange rate committee of the Bank meets on a daily basis to review the prevailing market condition, exchange rate, exchange position and transactions to mitigate foreign exchange risks. Quantitative Disclosure (b) The capital requirement for: Stakeholders’ Information 0.33 crore 0.33 crore Equity position risk 2.76 crore 32.06 crore Foreign exchange risk 1.98 crore 1.98 crore Commodity risk 0.00 crore 0.00 crore Financial Information | Consolidated Interest rate risk Sustainability 178 Solo Standard Bank Ltd Annual Report 2020
180. (H) OPERATIONAL RISK Introduction Qualitative Disclosure (a) Views of BOD on system to reduce Operational Risk: Corporate Governance Operational risk is associated with human error, system failures and inadequate procedures and controls. It is the risk of loss arising from the potential that inadequate information system; technology failures, breaches in internal controls, fraud, unforeseen catastrophes, or other operational problems may result in unexpected losses or reputation problems. Operational risk exists in all products and business activities. In addressing Operational Risk, Bank has been strengthened its Internal Control System, and ensure sound Corporate Governance in all sphere of Management and Operation level as well. The Bank should maintain a robust CBS (Core Banking Software) and enriches its IT infrastructure in terms of demand of time. Besides, in order to ensure capacity building of its Human Resources, the Bank may take up a number of steps like training, workshop etc. Performance gap of executives and staffs: Risk Governance SBL has a policy to provide competitive package and best working environment to attract and retain the most talented people available in the industry. SBL’s strong brand image plays an important role in employee motivation. As a result, there is no significant performance gap. Potential external events: No potential external events are expected to expose the Bank to significant operational risk. Management Retrospection Policies and Processes for mitigating operational risk: To mitigate operational risk, the Bank uses basic indicator approach to calculate capital charge against operational risk. The policy for operational risks including internal control & compliance risk is approved by Board taking into account relevant guidelines of Bangladesh Bank. The Bank developed a Risk Management Division and Supervisory Review Committee for review and managing operation risk as well as evaluation of the adequacy of the capital. For mitigating operational risk, Internal Control and Compliance Division (ICCD) undertakes periodical and special audit of the branches and departments at the Head Office for review of the operation and compliance of statutory requirements. Approach for calculating capital charge for operational risk: Stakeholders’ Information The Bank followed Basic Indicator Approach (BIA) for measuring capital charges for operational risk. Under the Basic Indicator Approach (BIA), the capital charge for operational risk is a fixed percentage (denoted by alpha) of average positive annual gross income of the Bank over the past three years. Quantitative Disclosure (b) The Capital Requirement for Operational Risk (Solo) BDT 61.74 crore The Capital Requirement for Operational Risk (Consolidated) BDT 63.15 crore Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 179
181. I . LIQUIDITY RISK Introduction Qualitative Disclosure a) Views of BOD on system to reduce liquidity risk Corporate Governance The board of directors is ultimately responsible for the liquidity risk assumed by the bank and the manner in which this risk is managed and therefore should establish the bank’s liquidity risk tolerance. The tolerance, which should define the level of liquidity risk that the bank is willing to assume, should be appropriate for the business strategy of the bank and its role in the financial system and should reflect the bank’s financial condition and funding capacity. The prerequisites of an effective liquidity risk management include an informed board, capable management, staff having relevant expertise and efficient systems and procedures. It is primarily the duty of board of directors to understand the liquidity risk profile of the bank and the tools used to manage liquidity risk. The board has to ensure that the bank has necessary liquidity risk management framework and bank is capable of confronting uneven liquidity scenarios. Generally speaking, the board of a bank is responsible: a. To position bank’s strategic direction and tolerance level for liquidity risk. Risk Governance b. To appoint senior managers who have ability to manage liquidity risk and delegate them the required authority to accomplish the job. c. To continuously monitors the bank’s performance and overall liquidity risk profile. d. To ensure that liquidity risk is identified, measured, monitored, and controlled. Senior management is responsible for the implementation of sound policies and procedures keeping in view the strategic direction and risk appetite specified by board. To effectively oversee the daily and long-term management of liquidity risk senior managers should: Management Retrospection a. Develop and implement procedures and practices that translate the board’s goals, objectives, and risk tolerances into operating standards that are well understood by bank personnel and consistent with the board’s intent. b. Adhere to the lines of authority and responsibility that the board has established for managing liquidity risk. c. Oversee the implementation and maintenance of management information and other systems that identify, measure, monitor, and control the bank’s liquidity risk. d. Establish effective internal controls over the liquidity risk management process. Method used to measure Liquidity risk 1. Contractual maturity mismatch: Stakeholders’ Information The contractual maturity mismatch profile identifies the gaps between the contractual inflows and outflows of liquidity for defined time bands. These maturity gaps indicate how much liquidity a bank would potentially need to raise in each of these time bands if all outflows occurred at the earliest possible date. This metric provides insight into the extent to which the bank relies on maturity transformation under its current contracts. 2. Concentration of funding: This metric is meant to identify those sources of wholesale funding that are of such significance that withdrawal of this funding could trigger liquidity problems. The metric thus encourages the diversification of funding sources recommended in the Committee’s Sound Principles. 3. Available unencumbered assets: Sustainability These metrics provide supervisors with data on the quantity and key characteristics including currency denomination and location of banks’ available unencumbered assets. These assets have the potential to be used as collateral to raise additional HQLA or secured funding in secondary markets or are eligible at central banks and as such may potentially be additional sources of liquidity for the bank. 4. LCR by significant currency: Financial Information While the LCR is required to be met in one single currency in order to better capture potential currency mismatches, banks and supervisors should also monitor the LCR in significant currencies. This will allow the bank and the supervisor to track potential currency mismatch issues that could arise. 5. Market-related monitoring tools: High frequency market data with little or no time lag can be used as early warning indicators in monitoring potential liquidity difficulties at banks. 180 | Standard Bank Ltd Annual Report 2020
182. Liquidity risk management system Introduction The liquidity risk strategy defined by board should enunciate specific policies on particular aspects of liquidity risk management , such as: a. Composition of Assets and Liabilities b. Diversification and Stability of Liabilities. c. Access to Inter-bank Market Corporate Governance The liquidity strategy must be documented in a liquidity policy, and communicated throughout the bank. The responsibility for managing the overall liquidity of the bank should be delegated to a specific identified group within the bank. This might be in the form of an Asset Liability Committee (ALCO) comprised of senior management, the treasury function or the risk management department. However, usually the liquidity risk management is performed by an ALCO. Ideally, the ALCO should comprise of senior management from each key area of the institution that assumes and/or manages liquidity risk. Risk Governance An effective liquidity risk management includes systems to identify, measure, monitor and control its liquidity exposures. Management should be able to accurately identify and quantify the primary sources of a bank’s liquidity risk in a timely manner. To properly identify the sources, management should understand both existing as well as future risk that the institution can be exposed to. Management should always be alert for new sources of liquidity risk at both the transaction and portfolio levels. Key elements of an effective risk management process include an efficient MIS, systems to measure, monitor and control existing as well as future liquidity risks and reporting them to senior management. Policies and processes for mitigating liquidity risk An effective measurement and monitoring system is essential for adequate management of liquidity risk. Discussed below are some (but not all) commonly used liquidity measurement and monitoring techniques that may be adopted by the banks. Management Retrospection Contingency Funding Plans: In order to develop a comprehensive liquidity risk management framework, institutions should have way out plans for stress scenarios. Such a plan commonly known as Contingency Funding Plan (CFP) is a set of policies and procedures that serves as a blue print for a bank to meet its funding needs in a timely manner and at a reasonable cost. A CFP is a projection of future cash flows and funding sources of a bank under market scenarios including aggressive asset growth or rapid liability erosion. To be effective, it is important that a CFP should represent management’s best estimate of balance sheet changes that may result from a liquidity or credit event. A CFP can provide a useful framework for managing liquidity risk both for short term and in the long term. Further, it helps ensure that a financial institution can prudently and efficiently manage routine and extraordinary fluctuations in liquidity. Use of CFP for Routine Liquidity Management Stakeholders’ Information a. A reasonable amount of liquid assets are maintained. b. Measurement and projection of funding requirements during various scenarios. c. Management of access to funding sources. Use of CFP for Emergency and Distress Environments Not necessarily, a liquidity crisis shows up gradually. In case of a sudden liquidity stress it is important for a bank to seem organized, candid, and efficient to meet its obligations to the stakeholders. Since such a situation requires a spontaneous action, banks that already have plans to deal with such situation could address the liquidity problem more efficiently and effectively. A CFP can help ensure that bank management and key staffs are ready to respond to such situations. Sustainability Scope of CFP To begin, the CFP should anticipate all of the bank’s funding and liquidity needs by: a. Analyzing and making quantitative projections of all significant on-and off-balance-sheet fund flows and their related effects. b. Matching potential cash flow sources and uses of funds. Quantitative Disclosures b) Liquidity coverage ratio (LCR) 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 Financial Information c. Establishing indicators that alert management to a predetermined level of potential risks. 114.65% 111.97% BDT 3,532.56 crore BDT 3,088.56 crore BDT 17,918.37 crore BDT 15,860.33 crore Standard Bank Ltd Annual Report 2020 | 181
183. J ) LEVERAGE RATIO: Introduction Qualitative disclosures a) Views of BOD on system to reduce excessive leverage Corporate Governance In order to avoid building-up excessive on-and off-balance sheet leverage in the banking system, a simple, transparent, non-risk based leverage ratio has been introduced. The leverage ratio is calibrated to act as a credible supplementary measure to the risk based capital requirements. The leverage ratio is intended to achieve the following objectives: a) constrain the build-up of leverage in the banking sector which can damage the broader financial system and the economy; and b) reinforce the risk based requirements with an easy to understand and a non-risk based measure. Policies and processes for managing excessive on and off balance sheet leverage Risk Governance Introducing the leverage ratio as an additional prudential tool has several potential benefits. The financial crisis has illustrated the disruptive effects of procyclicality (amplification of the effects of the business cycle) and of the risk that can build up when financial firms acting in an individually prudent manner collectively creates systemic problems. There is now broad consensus that micro-prudential regulation needs to be complemented by macro-prudential regulation that smoothens the effects of the credit cycle. This has led to proposals for countercyclical capital requirements and loan loss provisions that would be higher in good times and lower in bad times. Approach for calculating exposure Management Retrospection The leverage ratio should be calculated by dividing an institution’s capital measure by the total exposure (expressed as a percentage). The ratio should be calculated as the simple arithmetic mean of the monthly leverage ratios over a quarter. For the numerator of the ratio (capital measure), the Tier 1 capital should be considered. The denominator (exposure measure) should be the sum of the exposure values of all assets and off-balance sheet items not deducted from the calculation of Tier 1 capital. Leverage Ratio = Tier 1 Capital (after related deductions)/ Total Exposure (after related deductions) A minimum Tier 1 leverage ratio of 3% is being prescribed both at solo and consolidated level. Stakeholders’ Information The bank is maintaining leverage ratio on quarterly basis. The calculation at the end of each calendar quarter is submitted to BB showing the average of the month end leverage ratios based on the following definition of capital and total exposure. Quantitative disclosures Solo Leverage ratio 6.14% On balance sheet exposure 21,431.48 crore 21,590.14 crore Off balance sheet exposure 2,071.97 crore 2,071.97 crore 232.89 crore 238.48 crore 23,270.56 crore 23,423.62 crore Regulatory adjustments Total exposure Sustainability Financial Information 182 | Consolidated 6.21% Standard Bank Ltd Annual Report 2020
184. K ) REMUNERATION Introduction The following are the main disclosure on remuneration that bank includes in their pillar-3 documents. The Bank is strongly encouraged not only to disclose the required information, but to articulate as far as possible how these factors complement and support their overall risk management framework. This requested quantitative disclosures detailed below should only cover senior management and other material risk takers and be broken down between these two categories. Corporate Governance Qualitative disclosures (a) Information relating to the bodies The Management of Standard Bank Limited for Remuneration program holds that oversee remuneration the responsibilities for overseeing the framing, reviewing and implementing of overall compensation structure and related polices over remuneration package issues payable to all or specialized employees and the Directors / MD/ any other appointed / engaged person(s)/ Material Risk Takers of the Bank. Risk Governance They also oversee performance-oriented incentives, perquisites, other financial options etc. to attract, motivate and retain employees and review compensation packages/pay structure in comparison to that of other Banks to enjoy competitive advantages in this industry. In addition, the Management of SBL also carries out the following roles and responsibilities: Review of the Compensation Policy annually or as demanded by market. • Exercise such other powers and play the roles delegated to it by the Board. • Till date, the Bank has not yet engaged any External Consultant for conducting such exercise since these have been done by the Bank’s Management. Management Retrospection (b) • Information relating to the All applicable substantive pay and other allowances including perquisites to remuneration of the processes the employees including all subordinates, officers and executives up to the rank of SEVP are designed in well accord with the prevailing competitive remuneration structure in the industry. Stakeholders’ Information The package structure of all executives above the rank of SEVP i.e. DMD, AMD & MD, the individual remuneration is fixed and approved by the Board of Directors. All the Pay Structure and perquisites payable to the employees get approved by the Board of Directors of the Bank. In order to format and design the remuneration package, the Management and the Board take into the following consideration: 1. Minimum Qualification level set during the recruitment 2. Level of Experience Sustainability 3. Level of Risk involved 4. Complexities of the job 5. Degree of creativity or productivity expected in the job 6. Business developing excellence and expertise Financial Information 7. Leadership capability 8. Corporate exposure However, the remuneration structure/package for the Managing Director (MD) of the Bank is subject to approval of Bangladesh Bank. Standard Bank Ltd Annual Report 2020 | 183
185. Description of the ways in which The Management has always been in practice of reviewing remuneration / current and future risks are taken compensation package/structure of the prime employees in top positions who into account in the remuneration are associated with high degree of risk factors, current and future position. processes The Board of Directors oversees and governs effective framing and implementation of the remuneration policy. Human Resource Management under the guidance of MD administers the compensation and benefit structure in line with the best suited practices and statutory requirements as applicable. Corporate Governance (d) Description of the ways in which the banks seeks to link performances during a performance measurement period with levels of remuneration Risk Governance (e) Introduction (c) On the way to link performances during a performance measurement period with levels of remuneration, the management takes the feedback or appraisal from head of branch (in case of branch officials) or concerned Head of Division (for Head Office) in the form of Annual Performance Appraisal (APA) previously known as Annual Confidential Report (ACR). Although all employees receive the festival bonuses irrespective of performance, yearly incentive is determined and awarded on basis of the Annual Performance Appraisal (APA). In case of hiring exceptionally deserving candidate, bank offers enhanced package program with seniority in rank. Description of the ways in The Bank follows various schemes in regard to deferred and vested variable which the banks seeks to adjust remuneration as follows: remuneration to take account of - PF (Vesting or entitlement to employer’s contribution) longer-term performance happens on completion of 03 (three) years of regular service and the Bank contributes equal amount of contribution as contributed by the employee) @ 10% of substantive pay. Management Retrospection - Gratuity as vesting or entitlement to employer’s contribution is provided on completion of 05 (five) years of regular service in the Bank) @ one substantive pay for each completed year of service -Death cum Survival Superannuation Fund (provides superannuation and other benefits to the employees of the Bank on their death, disability, retirement/or being incapacitated at any time or for any other cause that may be deemed fit as per Board’s approved policy. Stakeholders’ Information - Furniture & Fixture (the executives of the Bank are entitled to a rank-wise specific amount to meet the cost of furnishing or decoration of residence with furniture and fixture. The amount is amortized in 05 years of continuous service of the respective employee. - Staff House Building Loan (a permanent employee in the rank of Senior Executive Officer or above, after completion of 5 (five) years of service, can avail of a House Building Loan at Bank Rate as per policy and approval from the appropriate Authority). (f) Sustainability Description of the different forms of variable remuneration that the bank utilizes and the rationale for using these forms Financial Information 184 | Standard Bank Ltd Annual Report 2020 Variable pay refers to the compensation as fixed by the Board on recommendation of the Management, which is based on the performance appraisal of an employee in that role, that is, how well they accomplish their goals. It may be paid as: • Performance Linked Incentives to those employees who are eligible for incentives. • Ex-gratia for other employees who are not eligible for Performance linked Incentives. • Different awards based on extra-ordinary performance & achievement. • Employee/ Manager of the Month/Quarter award • Reimbursement/award for brilliant academic/professional achievement. • Leave Fare Compensation (LFC)
186. Quantitative Disclosures (h) Number of employees having Number of employees having received a variable remuneration award during received a variable remuneration the financial year: 2,338 award during the financial year Number and total amount of guaranteed bonuses award during the financial year: 02, BDT 10.01 crore Corporate Governance Number of meetings held by Number of meetings held by the main body overseeing remuneration during the main body overseeing the financial year: Nil remuneration during the financial year and remuneration paid to its Remuneration paid to member: Nil member Introduction (g) Number and amount of sign-on awards made during the year: 00 Total amount of outstanding Total amount of outstanding deferred remuneration, split into cash, shares, deferred remuneration, split into and share-linked instruments and other forms: BDT 298.63 crore cash, shares, and share-linked Total amount of deferred remuneration paid out in the financial year: BDT instruments and other forms 32.46 crore (j) Breakdown of amount remuneration awards for financial year to show: Risk Governance (i) of Breakdown of amount of remuneration awards for the financial year to show: the -fixed remuneration : BDT 274.09 crore variable remuneration: BDT 5.77 crore -deferred remuneration: BDT 298.63 crore Management Retrospection and non-deferred remuneration: BDT 286.71 crore -different forms used (cash, shares and share-linked instruments, other forms): All the remunerations are provided in the form of cash. (k) Quantitative information about employees’ exposure to implicit (e.g. fluctuation in the value of shares or performance units) and explicit adjustments (eg claw back or similar reversals or downward revaluations of awards) of deferred remuneration and retained remuneration: • Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and/or implicit adjustments: Nil • Total amount of reductions during the financial year due to ex post explicit adjustments: Nil • Total amount of reductions during the financial year due to ex post Implicit adjustments: Nil Stakeholders’ Information Quantitative information about employees’ exposure to implicit (e.g. fluctuation in the value of shares or performance units) and explicit adjustments (eg claw back or similar reversals or downward revaluations of awards)of deferred remuneration and retained remuneration: Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 185
187. Introduction CAPITAL PLANNING AND MANAGEMENT Corporate Governance Capital planning is a dynamic and ongoing process that , in order to be effective, is forward-looking in incorporating changes in the bank’s strategic focus, risk tolerance levels, business plans, operating environment, or other factors that materially affect capital adequacy. Capital planning assists the bank’s Board of Directors and senior management to: i. Identifying and evaluating risks ii. Setting and assessing capital adequacy goals that relate to risk Risk Governance Management Retrospection 1. identify risks, improve their understanding of the bank’s overall risks, set risk tolerance levels, and assess strategic choices in longer-term planning, iii. Maintaining a strategy to ensure capital adequacy and contingency planning 2. identify vulnerabilities such as concentrations and assess their impact on capital, iv. Ensuring integrity in the internal capital planning process and capital adequacy assessments. 3. integrate business strategy, risk management, capital and liquidity planning decisions, including due diligence for a merger or acquisition, and A) CAPITAL PLANNING: 4. a forward-looking assessment of the bank’s capital needs, including capital requirements that may arise from rapid changes in the economic and financial environment. Stakeholders’ Information Bank has been maintained some key principle for its capital framework to operate smooth banking activities. These principles are, meet regulatory requirement, maintain proper CRAR level, support implementation of development strategy planning, optimize asset structure, allocate economic capital reasonably, realize maximum return on capital, and assurance sustainable and healthy development of bank. The bank’s capital framework serves to ensure that the bank and its principal subsidiaries are adequately capitalized in line with the risk profile, regulatory requirements, economic capital standards and target ratios, at both bank and subsidiary level. The bank’s capital planning objectives are to: Sustainability Financial Information 186 The capital planning process has been included the following components: • maintain sufficient capital level to meet minimum regulatory capital requirements set by Central Bank in accordance with Basel III requirements; • maintain sufficient capital resources to support the bank’s business & risk appetite; • cover unexpected loss within the bank’s target confidence levels and support the bank’s credit rating; • allocate capital to businesses to support the bank’s strategic objectives, including optimizing returns on economic and regulatory capital; and • ensure to maintain buffer capital as excess of minimum requirements to meet ICAAP need. | Standard Bank Ltd Annual Report 2020 SBL has been forecasting capital for 5 (five) years from 2021 to 2025 for meeting ICAAP (Internal Capital Adequacy Assessment Process) requirement under SRP (Supervisory Review Process) of Basel-III guideline. Bank has already enhanced its Authorized Capital from Tk.880.00 crore to Tk.1,500.00 crore. To use of capital efficiently Bank tries to reduce Risk Weighted Asset (RWA) by its best effort. Moreover Bank issued mudaraba subordinated bond of Tk.200.00 crore in 2015, Tk.400.00 crore in 2017 and Tk.495 crore in 2020 for enhancing Tier-II capital as well as we applied to BSEC and Bangladesh Bank for issuance of 1st SBL Mudarabah Perpetual of BDT 500 crore for enhancing Tier-I capital to meet regulatory requirement. In 5 (Five) years capital planning Bank has been predicted to be required and maintained of capital which are shown in the below graphs:
188. B ) CAPITAL STRUCTURE: Introduction Bank’s Authorized Capital is now Tk.1,500.00 crore. The Paid-up Capital of the Bank has stood at Tk.1,005.99 crore and the Statutory Reserve stood at Tk.602.93 crore as on 31.12.2020. Total Regulatory Capital of the Bank stood at Tk.2,309.15 crore and Tk.2,302.94 crore on solo and consolidated basis respectively at the end of 2020. Corporate Governance Risk Governance C) CAPITAL ADEQUACY POSITION: Management Retrospection In terms of Bangladesh Banks’ revised Basel-III Guidelines, the Minimum Capital Requirement (MCR) stands at 12.50% of Risk Weighted Asset (RWA) including Capital Conservation Buffer (CCB) of 2.50%. The Tier-1 Capital of SBL on solo & consolidated basis stood at Tk.1,444.08 crore and Tk.1,437.87 crore respectively. Besides Tier-II, another part of the Capital Structure stood at Tk.865.06 crore at the end of 2020, which includes General Provision on unclassified loans & advances & off balance sheet exposure and subordinated bond. Capital Adequacy Ratio is measured by the total regulatory Capital to total Risk Weighted Asset. Capital to Risk Weighted Asset Ratio (CRAR) stood at 13.00% for solo basis and 12.86% for consolidated basis at the end of 2020. Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 187
189. Introduction STATEMENT OF NON-PERFORMING LOAN Corporate Governance Banking sector has undergone turmoil over the years due to various reasons : excess liquidity, very high NPL in Banks, slower demand for credit from private sector as well as shrink of profitability due to the stiff competition with the peer group make the overall environment difficult for business. Moreover, credit performance of few large commodity traders and importer continues to put pressure on NPL as well as profitability of banking sectors. Establishing or maintain good governance, managing NPL including collecting bad loans and increasing profitability were major challenges for 2020 since recovery from rescheduled loans was not encouraging. Risk Governance Management Retrospection From the micro prudential perspective, it is in the Standard Banks’ interest to reduce the amount and number of NPLs, as it protects solvency and liquidity, which is ultimately, aimed at protecting our clients’ interests. At the same time, resolving the issue of NPLs has a macro-prudential dimension as well, considering that the high rate of NPL’s can pose a systemic risk. Systemic risk can occur if the aggregate lending activity is lower than it would be if the NPL ratio was not that high. The evidence shows that the level of NPLs is the indication of problems faced by a country’s economy and its real sector. Which is not capable to repay its debt, but it can also be a sign of a poor economy scenario. Stakeholders’ Information Non-Performing Loan (NPL) is a debt obligation where the borrower has not paid previous agreed upon interest and principal repayments to the designated lender for an extended period of time. The non –performing Loans are therefore not yielding any income to the lender in the form of principal and interest payment. Therefore, managing Non-Performing Loan (NPL) to keep it at the lowest possible level is at the core of our business priorities. We have embedded the essence of asset quality in our business values, therefore, instituted the best local as well as international industry practices throughout our business processes. Sustainability Standard Bank has a recovery Division dedicated for management, settlement and recovery of problematic loans and advances. Major responsibility of this Division is to formulate strategy and action plans for minimize of risk, prevention of credit losses, and maximization of recoveries and /or pursuing legal actions. Financial Information The recovery process of Standard Bank Limited is defined as the set of coordinated, appropriate and timely activities aimed at full recovery of loans from clients. The process is intended to convert the receivables into liquid assets as quickly and efficiently as possible, while at the same time maintaining the good relation with the client for the sake of future business. As such, the recovery process require significant interaction with the client, beginning with a careful analysis of the client situation and continuing through timely and frequent contact over the duration of the loan. Clients should be offered payment alternatives that are timely and appropriate to 188 | Standard Bank Ltd Annual Report 2020 each situation and all recovery activities should be recorded to facilitate continuous monitoring and follow-up as well as control of client compliance with negotiated agreements. KEY PRIORITIES In order to achieve the general goal, Standard Bank has identified several key areas and decided to make improvements in regulatory framework, capacity building and implementation of laws; • Structural development of the Division all through the year; • Enhancing Bank’s capacity & strategy to deal with NPLs; • Enabling business process & structure to facilitate NPL Management; • Improving and promoting out-of-court debt settlement; • Improving in-court debt resolution ENHANCED BANKS’ CAPACITY TO DEAL UP NPLS Furthermore, banks are required to establish efficient monitoring of lending, including the system of early warning for increased credit risk, which enables timely identification of debtors with whom this increase occurred and which includes the definition of qualitative and quantitative indicators for early observation of increased credit risk. NPL management is one of the topmost priorities of Standard Bank. At Standard Bank, monitoring starts from the very beginning of the business process. The steps of NPL management work flow are as follows: • Standard Bank has promulgated self –credit policies in line with best practices which are guiding business relationship terms to involve their best business efforts towards quality business through systematic management of any potential risk for being highly judicious in selecting borrowers.
190. • Top Management of the Bank is very vigilant to monitor and review all the relevant aspects, provides necessary directions and guidance time to time; to ensure asset quality and keep the NPL ratio low . • On top of all, there are several Recovery Task forces headed the divisional head has been formulated which periodically monitors and reviews the NPL movements and performance of the NPL recovery; Provides necessary directions and guidance , there by ensure highest quality asset portfolio and maximize business and profitability growth. Strengthening of credit administration • Initiative to adopt electronic due date register & account servicing system • Review of project completion report(s) • Review of documentation completion report(s) • Weekly action plan of monitoring • Overall NPL management strengthening • Introduction of Incentive scheme for recovery of doubtful and bad loans • Deputation of bank officials in the borrower company Board of Directors • Management change of defaulted companies • Sale of goods, assets and other collaterals • Invocation of personal guarantees • Outside the court settlement of litigated loans Standard Bank believes that its intense recovery strategies and innovative approaches will lead to a transition in aspired higher growth trajectory. Financial Information • Reinforcement of cash recovery system • Sustainability Risk Management Division, Credit Risk Management division and Internal Control & compliance Division are consistently reviewing and monitoring the implementation and execution of policies, procedures, Systems; blowing whistles where necessary; updating with approval of competent authority with various stake holding Divisions. • Stakeholders’ Information • Strengthening of the operational recovery process throughout the bank Management Retrospection For Managing NPL case arising out even after all the above mentioned efforts, dedicated teams are in place to directly monitor, put into action and intensify recovery and collection drives through internal recovery and collection drives through internal recovery officers and third party recovery agents where necessary , Litigation Unit of legal Division is well organized with the assistance of internal law officers and assistance may be sought from leading law firms of the country to ensure all out legal actions for collection of Bank’s dues. • Risk Governance • Post disbursement activities like monitoring, supervision, early alerts, rescheduling of Non Performing Loan etc. are performed by credit Risk Management Division. Recovery activities are initiated by Recovery Division which continuously thrives for protection against NPLs. Overdue status , reminder through SMS, email, letter, telecommunications, meeting , discussions, visits etc. with clients are consistently carried out by the division which facilities managing NPL at lowest possible level. Standard bank has formulated well-structured recovery strategy in its credit policy covering following areas: Corporate Governance • Even after approval of credit facilities, the post approval activities like credit facilities documentations and execution are carried out by separate Division namely Credit Administration Division (CAD) are vetting of credit facility which are independent in reporting line from business units to avoid conflict of interests. Under the present overall socio economic dynamics, Standard Bank has prioritized to extend purpose -oriented credit facilities with required security/collateral support as the policy priority since diversion of fund is one of the identified causes of loan default. So, it becomes of imperative need to keep close watch on the borrower’s business operations and the movement of its financial indicators in an empirical manner. Introduction • Relationship Managers are preparing loan proposal without any interference of any third party, top management of the Bank or the client. Our Management Credit Committee of Head Office which is consist of top officials from different Division independently reviews the credit proposal, approves, recommends for onward approval where the potential risk are being screened of ensuring adequate protection against any hidden NPL. Standard Bank Ltd Annual Report 2020 | 189
191. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 190
192. Introduction MANAGEMENT DISCUSSION & ANALYSIS Corporate Governance Risk Governance Management Retrospection I take this opportunity to express my sincere gratitude to all Honorable Shareholders, Valued Clients, distinguished Patrons and Well-wishers. It is a matter of great honour and privilege to present before you the Management Discussion & Analysis on the different aspects and activities of Standard Bank Limited (SBL) in the year 2020. depositor’s money and making all-out efforts to introduce innovative banking products to the existing and prospective customers. SBL is happy that the Bank could give enough emphasis on empowering poor families by creating income opportunity and providing financial support to make them self-reliant. The Bank considers that services to be of utmost importance to improve the fate of deserving people in our society. Now, SBL has been able to extend more comfortable services to the valued clients such as any-branch- banking, ATM services. Debit and Credit Card, SMS Banking, Internet Banking, Mobile Banking, Agent Banking, Electronic Fund Transfer, Bangladesh Automated Clearing House facilities app based banking i.e. Digibanking etc. These services have surely added new dimensions and have offered new and advanced means of banking to the clients. SBL is looking forward to expand its area of operation from urban to rural by introducing new customized products and services that are tailored to different economic classes of people of the society in order to bring the un-banked people into banking channels. That is why our customer-base has been steadily expanding over the years. | Financial Information Standard Bank Ltd Annual Report 2020 Sustainability Customers are our first priority who acts as ambassadors of the Bank for image buildup. The Bank has developed a conducive organizational structure and implemented Service Excellence through appropriate blending of 4 Ps namely People, Process, Premises and Professionalism with a view to ensuring excellence in customer service. The Bank envisages conducting of promotional activities and establishes brand marketing through ensuring excellent Customer Service. Our Company philosophy is customer friendly and fully responsive to customer needs and expectations. We leverage technology and expertise to provide best services and convenience to its customers. We spend money on things that matter to them and add value to the Bank in terms of image and profit. The Bank has focused on rendering dignified, prompt and personalized services to the customers. SBL believes in developing strong interpersonal relationship. As such, the Bank is morally bound to provide high quality banking services supported by the latest technology to obtain optimum return on shareholder’s equity, ensuring safety of Stakeholders’ Information CUSTOMER SERVICE 191
193. BRANDING Introduction To increase brand visibility by creating positive image of the bank , SBL is undoubtedly gaining momentum in its day-today activities to implement the slogan “Setting a New Standard in Banking” by strengthening the Bank’s financial capability to an international standard, increasing the brand image, and practicing high degree of planned corporate good governance. Corporate Governance INFORMATION TECHNOLOGY Risk Governance Technology is considered as one of the strategic pillars and key factors of the Bank towards achieving goals of the Bank. We must keep innovating to offer our customers with new and better solutions, cut costs and reinforce risk management as staying committed to the goal of delivering excellent banking services requires continuous improvements in technological platform. The Bank has put in place a state-ofthe-art IT Infrastructure and is providing an array of various products and services through all its delivery channels. It is the combination of technology and banking knowledge that can redefine the competitive landscape of the banking industry. In an inherently digital industry, it is essential to embrace technology-driven innovation in order to flourish. We have invested on technological advancement to increase automation of our back-end systems to drive down transaction costs and to improve service quality and resilience. As a result our operations cost/income ratio would decline consistently, whilst staff productivity would rise gradually in the near future. The main objective of investment in technology is to provide our customers’ convenience and quick service at branch level. We have already established a network of one hundred twenty (120) ATMs mainly at our branch locations so that customers can have access regardless of banking hours and holidays. We have already connected with National Payment Switch under Bangladesh Bank (NPSB) where our customers can have access to more than 10,500+ ATMs & more than 60,000+ Merchant POS outlets all around the country. Management Retrospection Stakeholders’ Information Sustainability In order to cater the need of customers, SBL Introduced technology savvy services like Branch POS, Internet Banking, SMS Banking, SBL EXPRESS Booth which is incorporated with ATM & CDM etc. By using secured Internet Banking service anyone can check their account balance, printed statement and transfer fund easily from anywhere around the country through using Internet SMS Banking service provides instant notifications about all transactions as and when it happens. It helps SBL clients to keep a watch on their account with a round the clock service. Moreover, it helps know the balances and mini statements instantly through sending Push-Pull SMS. During the year with the approval of Bangladesh Bank, SBL has introduced mobile banking as a brand name “SPOT CASH” throughout the country which is completely a new addition to its existing services. The “SPOT CASH” Mobile Account model of SBL works on the fundamental principle of giving everyone an access to a bank account and adding value to lifestyle of customers irrespective of social strata in Bangladesh. SBL already deployed one hundred twenty nine (129) units of Branch POS and will incorporate all branches of SBL by the year 2021. POS terminals help customers carry out chequeless transactions at branch by swiping debit cards on the PoS machine. The Bank has given due emphasis on the continuous development of Information Technology (IT). In this regard, some young and experienced professionals Financial Information 192 | Standard Bank Ltd Annual Report 2020 are working to explore the ideas of the cutting-edge, new IT products and services so that our IT-based banking service can reach to the “banked and un-banked” people around the country. GREEN BANKING The Bank has specially focused on green banking to safeguard the mother planet. The concept of Green Banking has been adopted by reducing paper work to a great extent Multifarious Green Banking activities have efficiently been done in 2020. During the year 2020, a sum total of Taka 1,618.43 million was disbursed under ETP, Solar Plant/ Energy Renewable Plant, HKK and other Green Industry. HUMAN RESOURCES DEVELOPMENT Standard Bank always gives the highest focus on the right placement of its key resource - human resource. The bank believes in certain core values as practiced by all employees to meet the mission and the broader vision of the Bank. We strongly believe human resources are the greatest assets and recognize them as building blocks of the bank’s performance. Recognizing “Service Excellence” as the major differentiator in a market of homogeneous products and services, we continued to invest in people to enhance and upgrade their skill sets through various training programs at home and abroad. To ensure long-term sustainability, Standard Bank is relentlessly pursuing its vision to transform the human resources into human capital. Diversely talented, motivated and engaged employees have always been our key assets. The Bank has been maintaining a highly favorable employer image by creating a performance-driven rewarding work culture; where employees receive plenty of opportunities to realize their diverse potentials fully as well as benefit the bank by demonstrating value creating behaviors. The Recruitment & Selection team works dedicatedly as per organization’s ‘best fit’ philosophy to fill up the vacancies and ensure that the additional human resources are being assessed, selected and placed on time as per required competencies. The Bank has systematic recruitment policies which are reviewed and updated periodically in the light of changing economic scenario and guidelines received from Bangladesh Bank time to time. In most part of 2020, our 2,353 employees worked together to make possible the technological advancement expansion and modernization plan that were set for achievement. Our efforts are focused on the delivery of quality services in all areas of activities with the aim to add increased value to shareholders’ investment and offer highest possible convenience and benefits to our customers. I am content that the sewing together of, firstly, our bank’s vision and, secondly, the strategies along with the KPIs and roll out plan of the models-occurred one after the other in a natural succession flow, giving the employees readiness to the changes. We always pay due attention to retain professional human capital by providing competitive fringe benefits and better working environment to excel further. Competent and quality workforce is a precondition for continuous growth and success of the bank. As a bank, we always focus on attracting, developing and motivating the very best individuals and encouraging our internal talents. Building a robust and productive workforce is crucial to our technology oriented work environment.
194. CAPITAL ADEQUACY OUTLOOK 2021 From the very beginning of the year 2021 , due to the unrest capital market, and above all the banking scandal, the overall economic condition of the country looks unstable. Moreover, the global economy has drastically disrupted due to pervasive COVID-19 pandemic from the end of 1st quarter of 2021. Our RMG export and inward remittance, which is the backbone of our economy, has significantly degraded due to this pandemic. Our Government has already announced emergency stimulus package and Bangladesh Bank has issued various circular time to time. To adopt with the changing world we have to foresee with a clear vision abiding Government Monetary and Fiscal Policy. Despite such limitation, financial sectors still expect to record a steady growth. Operating profit of the 1st quarter of Standard Bank Limited is expected to keep Rowing. To make the year 2021 another success, SBL is ready to accept the challenges of 2021 with new visionary zeal to achieve the common objectives of the Bank and, hence, the year 2021 will definitely be a challenge for every individual of SBL Considering the stands and commitments towards stakeholders, SBL has prepared financial budget for the year 2021, which is realistic and challenging. To achieve success in the year, SBL has undertaken the following shortterm strategies with the mid-term and long-term strategies: Stakeholders’ Information Sustainability Financial Information (i) 36 Branches achieved 100% Deposit Target, (ii) 31 Branches achieved 100% Investment Target, and (iii) 5 Branches achieved 100% Profit Target as set out for the year 2020. 21 Branches which incurred loss during the year are expected to be brought under profit club by June 2021. Capital of the Bank stood at Tk. 16,765 million compared to Tk. 16,248 million in 2019. Total Deposit and total Asset of the Bank stood at Tk. 169,639 million and Tk. 219,272 million respectively in 2020 compared to Tk. 175,468 million and Tk. 221,890 million in 2019. The Bank achieved 1% growth in investment with a total investment portfolio of Tk. 162,397 million in 2020 compared to Tk. 160,626 million in 2019. Import business of the Bank stood at Tk. 49,195 million in 2020 with 35% Negative growth over the previous year Tk. 75,399 million in 2019, while Export business of the Bank stood at Tk. 43,631 million in 2020 which is decreased by 23% than that of previous year i.e. Tk. 56,326 million. Total Foreign Remittance was Tk.8,407 million in 2020 with 19% negative growth over the previous year Tk. 10,364 million. Total Foreign Exchange business of the Bank was Tk. 101233million in 2020 which is increased 5% than that of the previous year Tk. 1,42,089 million. The classified loans and advance of the Bank decreased to 4.92% from 5.29% in 2020 and finally registered an operating profit of Tk. 3,115 million in the year 2020 which was decreased by 6% compared to Tk. 3,311 million in 2019. Total manpower of the Bank is 2289. Operating Profit Ratio of 2020 was 16%. In the year under review, country’s money market was soft Financial infusion remains a necessity for providing access to financial services to all the unbanked and under-banked people in a fair, transparent and equitable manner at an affordable cost. Financial services include, inter alia, credit delivery to micro and SME enterprises, agricultural and other rural and urban farm and non-farm productive activities. Retail and SME have been recognized by Bangladesh Bank as a major thrust of economic growth. Consequently we have deepened our stake in both the areas. All of our branches are now ready to provide SME services across the country at strategically important locations. In agriculture and non-farm sectors, we have taken new Initiatives to make lending collateral free as much as possible. Standard Bank has also initiated for ‘Agent Banking ‘operation to provide financial service for unbank people. Management Retrospection The country experienced slower investment demand in 2020 resulting in substantial amount of surplus liquidity in the banking industry. Despite such scenario, the year 2020 SBL maintained and achieved a stable position in all key areas of its operations overcoming manifold challenges. Out of 138 Branches, Operating Performance of 2020 of some Branches may be mentioned as under: FINANCIAL INCLUSIONS Risk Governance This year Corporate Social Responsibility (CSR) activities of the Bank expenses to Taka 250.40 million under Health, Education, Disaster Management, Environment, Cultural welfare, Infrastructure improvement in remote/ underprivileged areas, Income generating activities for the underprivileged population, and Others program’s as against Budget of Taka 120.00 million in 2020 to reaffirm the commitments of the Bank towards society. Corporate Governance CORPORATE SOCIAL RESPONSIBILITY Introduction To manage the overall risk exposure of the bank, our primary focus has always been to reinforce our risk management policy with a strong internal control system. Our Capital Adequacy Ratio has remained consistently above the threshold (10% of RWA) of Minimum Capital requirement which stood at 13.00% as on 31 December 2020. To meet up the compliance of BASEL-III deadline, with consent of Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, Standard Bank Limited has already raised Tk.495.00 Crore through issuance of “3rd Standard Bank Coupon Bearing Non Convertible Mudaraba Subordinated Debt” for BDT 500.00 Crore to meet up the Tier II capital requirement of the Bank. Besides, the bank has also submitted its application to the regulatory authorities for issuance of Mudaraba perpetual bond of BDT 500.00 Crore. and domestic lending rates have fallen. Return on equity was 6.45% in 2020 against 9.26% in 2019. Current ratio for the year 2020 was 1.21 times which has been almost steady since long. The Bank was less levered in 2020 (Debt equity ratio 12.08 times) compared to 2019 (ratio 12.66 times). Cost of Deposit was 6.20% in 2020 compared to 7.37% in 2019. Return on Average Assets was 0.49% in 2020 against 0.76% in 2019. At the end of year 2020, EPS and PE Ratio was Taka 1.08 and 7.72 times respectively compared to Taka 1.50 and 5.95 times in 2019. Standard Bank Ltd Annual Report 2020 | 193
195. Introduction Corporate Governance Risk Governance • To strengthen the automation procedures of the Bank. • To control and reduce the cost at optimum level. • To increase the profitability. • To enhance non-funded business. • To undertake special recovery drive and reduce the NPL. • To explore the investments. • To present innovative deposit and investment products to the customers. • To conduct special program for business. • To take strong initiative for launching ‘Agent Banking operation to provide financial service for nonbank people. • To enhance the CSR activities in line with the Bank’s CSR policy business opportunities in SME Some factors may cause the actual results to differ and some may significantly cause to deviate from the outlook 2020. Some of the factors that may affect the business environment are given below: Changes in government policy Issues • Changes in the general economic condition resulting from natural calamities and political disturbances. • in international prices of essentials which may result to volatility in Foreign Exchange Market • Compliance issues raised by the international forums which are likely to affect the export growth. Stakeholders’ Information • International embargo/unrest may affect remittances and trade. • Increase in corporate tax rate, • Volatility in interest rate • Increase in CRR and SLR of the banks. • Directives to reduce the lending rates to finance essential items. • Increase In provisioning requirement may reduce the ROA and ROE. • Reducing the margin ratio for investment accounts. • Volatility in capital market arising from speculations • Withdrawal of incentive given to some thrust sectors which may make the projects slowly moving. Sustainability Management Retrospection • Financial Information 194 | Standard Bank Ltd Annual Report 2020 Nevertheless, the successes of Standard Bank Ltd. (SBL) In 2020 dearly affirm that this bank is ready to accept challenges of the future. We hope, SBL’s momentum of growth of business and profitability will be maintained definitely in 2021 and the years to come. We will always be responsive to the needs of our communities and ultimately our customers. To show our commitment to all our stakeholders and Increase their trust on Standard Bank Ltd., we have embraced a business principle called Creating Shared Value (CSV), which is for us to be successful in the long-term. We have to create value not only for our shareholders but also for people in the communities where we do business. We look forward to a brighter and rewarding two thousand twenty one. May the Almighty ALLAH bestow His choicest blessings on all of us. Khandaker Rashed Maqsood Managing Directors CEO
196. Identify Sources of Competitive Advantage HR will nourish and create an environment which will enable to motivate , develop and retain the right people in order to achieve qualitative productivity. Scanning the Environment Implementing HR Strategies Management Retrospection HRM is a strategic process because management of human resources plays a decisive role in determining the future success or failure of employee performance and the business as a whole. It is important that the HR strategy has to be aligned with the organizational strategy; otherwise a healthy strategic fit cannot be achieved. HR planning must link back to the organization’s strategic plan. Current strategic HRM trends suggest that firstly, there is a relationship between HR systems and organizational performance. Secondly, strategic HRM is more likely to be adopted in privately owned companies rather than state owned or public sector organizations, especially in the case of emerging economics. Thirdly, in the case where there are parent and subsidiary organizations. Stakeholders’ Information It aims at all HR processes and activities to build the competitive advantage for the organization. The organization has to identify the strategic HR areas that will be used as a basis for a competitive advantage. No organization can excel in all areas because it would be no cost effective. The organization has to choose the right mix of different HR processes, and it has to develop them as the best practice for competitors. The approach focuses on longer-term people issues, matching resources to future needs, and macro-concerns about structure, quality, culture, values and commitment. SHRM PROCESS Monitor and Evaluation HUMAN RESOURCE MANAGEMENT AS A STRATEGIC FUNCTION Strategic human resource management is the practice of attracting, developing, rewarding, and retaining employees for the benefit of both the employees as individuals and the organization as a whole. It manages human resources that support long-term business goals and outcomes with a strategic framework. Identify HRM Strategies Risk Governance If we think an organization as a tree then, people working with it are the roots on which it is spreading its branches for future growth. Actually, Human Resource isn’t a thing we do, it’s the thing that runs an organization. It is the catalyst to give the organization a strong footing for unfaltering headway to success. Standard Bank Limited recognizes the necessity of HR and inculcates congenial culture as such to make them change agent to bring about a positive and rewarding environment in the bank. Corporate Governance HR MISSION STATEMENT Introduction REPORT ON HUMAN RESOURCE MANAGEMENT LINKING ORGANIZATIONAL STRATEGY TO HUMAN RESOURCE PLANNING Demand for Labor Establish Corporate Goals and Objective Outcomes Demand Exceeds Supply Recruitment Supply Exceeds Demand Decruitment Financial Information Define Organization Mission Assess Current Human Resources ------------------------HRM Job Analysis Sustainability Empowerment Planning and the Strategic Planning Process Compare Demand for and Supply of Human Resources Supply of Human Resources Standard Bank Ltd Annual Report 2020 | 195
197. Introduction REPORT ON HUMAN CAPITAL TRANSFORMATION OF HUMAN CAPITAL Corporate Governance Human capital refers to the intangible aspect of human resources . It enhances the value of employees by striking a win-win goal for employers and employees. It focuses on the intrinsic value of each employee, where any expenditure on employees is regarded as an investment rather than an expense. The varying talents and motivations of employees are given cognizance so that incentives and working arrangements can be created to enhance each employee’s contributions to organizational performance. Risk Governance Human capital now accounts for approximately 70% of a company’s operating expenses and is responsible for creating 85% of a company’s value; its people are its profits. How its workforce is recruited, hired, aligned, educated, developed, managed and inspired is the key to successfully implementing a company’s strategy and driving its best results. Activating these success factors are now the roles of the company’s HR professionals. through an organized process of assessment and training. SBL also has a well-defined & thorough succession plan for its employee for some form of job vacancy arising in future due to attrition or people retiring from their jobs. It serves as contingency planning and motivation factors for key employees to a great extent. COMBINATION OF HUMAN CAPITAL: Standard Bank Ltd. always tries to ensure right number of people in right place in right time. For ensuring smooth operations, Standard Bank Ltd. has divided the total employees into four levels in which 8.26% employees are in senior level, 24.12% are in mid-level, 41.76% are in junior level and rest of 25.86% are in ancillary level. Senior Level 8.26% Management Retrospection CAREER PROGRESSION: KNowing yourself explore your options Stakeholders’ Information CAREER PLANNING moving on Sub-staff 25.86% making decisions Sustainability Financial Information SUCCESSION PLANNING: Every organization has its own Succession Planning in place to coach, develop prospective successors or people within a firm or from outside to take up key positions in an organization | Junior Level 41.76% Figure: Employees at various levels of SBL Needless to say that career development is one of the key points in attracting and retaining employees. It is therefore significant to both employees, in terms of their individual progression, and also to the organization, in terms of retaining vital critical resource for competitive advantage. In order to gain employees trust, improve their commitment and motivation and prolong their stay in the organization, SBL HR provides opportunities for them to develop their careers. Standard Bank Ltd. has completed its successful business year i.e. 2020 with 2289 employees. Every year SBL recruits number of efficient employees to achieve organizational goals. 196 Mid Level 24.12% Standard Bank Ltd Annual Report 2020 PEOPLE IN ORGANIZATIONS: Organizations are created by the rules and resources drawn upon and enacted by people; and the nature of organizations is a result of people’s actions. Thus an organization’s behavior reflects people’s psychological, ethnic, racial, cultural, political and social make-up. People are the most important assets of an organization. The importance of people in organization is immense it is the people that plan, design, implement, sustain and end an organization’s life. From this simplistic but vital point, we can assume that one of the most important functions in an organization in the management of the human resource function. To achieve the desired goals and to hold values, SBL management focuses managing an efficient human capital inventory. The changes in employee level over the last 3 years are as follows:
198. Particular 2019 2018 Total Employee at the beginning Number of Newly Recruited Employee Departures (Retirement/ Resignation etc.) 2353 2386 2076 101 147 452 165 180 142 Total Employee at the end 2289 2353 2386 Status quo attitude is the main bottleneck in bringing new ideas, innovations. Organizations, that is why, are keen to hire new minds to bring about a change in thinking, methods or approaches along with its existing experienced employees. SBL is fortunate enough to have significant blend of young and experienced employees to run the Bank. 1200 1026 1000 Number of Training Programs Number of Participants 67 0 4926 0 27 8 0 0 8 98 15 0 0 50 43 163 0 110 0 5089 External BIBM BBTA BAB FIN EXCEL Others Total (In Bangladesh) Foreign Grand Total Risk Governance Age Distribution of Executives & Officers in 2020 Training Programs in 2020 Name of Institution Internal  SBTI HRD Corporate Governance AGE WISE EMPLOYEES banking issues apart from different soft skills throughout the year.The training scenario over the last 3 years is as follow: Introduction 2020 800 600 400 Management Retrospection 200 351 233 85 2 51-60 Years 61-65 Years 0 01-30 Years 31-40 Years 41-50 Years MOTIVATION AND COMMITMENT AT WORK TRAINING AND DEVELOPMENT Investment on Training and Development (in taka) 12,000,000 Tk. 12,061,269 10,000,000 Tk. 8,845,709 8,000,000 6,000,000 4,000,000 Financial Information Standard Bank Training Institute focuses to research and planning for analytical review of bank’s operational achievement and performances to review the management and set strategy to sustain and improve bank’s qualitative growth to build up public image and prestige. Since, the training institute is mainly entrusted with the responsibility of imparting training, a tailor-made training courses have been designed to equip employees with required knowledge, skills and virtue so that they can translate bank’s dream into a reality. Since its inception, SBL Training Institute has been working relentlessly to train and retrain employees on various Standard Bank Ltd. always emphasizes on actual need based training to enhance the efficiency and to ensure the necessary knowledge, skills and competencies for carrying out the individual responsibilities. It invested a lot to its employees on training and development for the development of its existing talents. The investment on training & development over the last 3 years is as follows: Sustainability All organizations today face rapid and often unexpected changes. Giving employees the skills, knowledge and attitudes to cope with such change is a primordial factor to survival and success, both personal and business. INVESTMENT ON TRAINING & DEVELOPMENT: Stakeholders’ Information An organization always aspires to get motivated and committed work force for continuous organizational growth and thus keeps trying to gear up their morale and energy in intrinsic and extrinsic means. SBL also believes the same and relentlessly tries by promoting, rewarding cash incentives & certificate of appreciation, arranging foreign trips or training for performing employees of the bank. Even at the time of pandemic-COVID 19, the management of SBL promoted 541 employees to next higher grade in 2020 to keep them motivated and to uphold their highest spirit to work. Tk. 3,160,556 2,000,000 0 2018 2019 2020 Standard Bank Ltd Annual Report 2020 | 197
199. Introduction REPORT ON MANAGEMENT REMUNERATION COMMITTEE Corporate Governance COMPENSATION REVIEW COMMITTEE To make compensation package time proven and attuned to pay packages offered by different banks , SBL usually revises its scale of pay on a regular interval. Besides, revision of pay packages has become indispensable due to government approval of 8th National Pay Scale with effect from July 01, 2015. Moreover, the necessity of revise of pay scale is also justified as there has been a considerable change in the economic situation as well as people’s standard of living due to inflation and continuous price spiral. Keeping this view in mind, a Compensation Review Committee was formed. Risk Governance The Committee is delegated with the authority from the management to review, and make recommendations on pay package ensuring guidelines as set by the management. It will ensure that all employees of the bank are appropriately remunerated in the track of competition with other fellow banks. In commensurate with market trend, salaries of all employees of SBL have been revised from October 01, 2018. PROMOTION & APPRECIATION Define Work Management Retrospection Set measurable targets Perform work Assess performance against targets Stakeholders’ Information Promotion and appreciation are the tokens of contribution (performance) against targets as set by the management of the Bank. SBL always distinguishes the performers with increment, promotion and appreciation in laudable manner. In 2020, 541 (Five Hundred Forty One) employees were awarded promotion to next higher grade in recognition of their outstanding performance to create a rewarding and competitive culture within the bank. Sustainability Financial Information 198 | Standard Bank Ltd Annual Report 2020
200. Introduction REPORT ON HR ACCOUNTING HUMAN RESOURCE ACCOUNTING : Corporate Governance Human Resource Accounting involves measuring the costs incurred by organizations to recruit, select, hire, train, and develop human assets. It also involves measuring the economic value of people to the organization. It is the measurement of the cost and value of people to organizations. Nowadays this concept has been used to measure the cost incurred on human resources should be capitalized as it yields benefits measurable in monetary terms. Human Resource accounting is highly important for an organization to assess the overall strength of the organization. That’s why; the management keeps record and prepares some reports based on the HR accounting data to analyze and to take strategic decisions for the betterment of the organization. Some key HR accounting information of Standard Bank Ltd is as follows: Particulars 2018 2019 2020 2353 2289 Operating Revenue Per Employee (Million in Tk.) 2.99 3.30 3.54 Net Profit before Taxes per Employee (Million in Tk.) 0.90 1.21 1.40 Net Income Per Employee (Million in Tk.) 0.57 0.64 0.80 82.63 94.30 95.64 2,069.86 2750.75 2881.08 1,20,61,269.00 88,45,709.00 31,60,556.00 5055 3759 1381 Asset Per Employee (Million in Tk.) Direct Investment in Human Capital (Million in Tk.) Training & Development Expenditure (Tk.) Training & Development Expenditure Per Employee (Tk.) Management Retrospection 2386 Risk Governance Total Employees GRAPHICAL PRESENTATION OF SOME HUMAN CAPITAL ISSUES: Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 199
201. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information STANDARD BANK TRAINING INSTITUTE: Sustainability SBL has a full-fledged training institute that aims at imparting hands-on training as well as sharpening skills, attitudes and gaining professional knowledge to improve performance of employees. Since inception in 2005, the training institute has arranged various training on different topics conducted by in-house & external facilitators to enhance the professional efficiency in banking to compete in this era of knowledge-based economy. In 2020, SBTI conducted 67 training & development programs for 4926executives/officers on Cash Management, Credit & Advances, Foreign trade, General Banking, leadership and managerial skills. On the other hand, as the bank will transform its operations into fully Islamic Bank from 2021, it has arranged significant number of training programs on virtual platform to its employees to get them well acquainted with Islamic Banking Operations. Financial Information 200 | Standard Bank Ltd Annual Report 2020
202. Introduction SBL SUSTAINABILITY REPORT ON HUMAN RESOURCES Consumer Credit Schemes (Staff) at concessional interest rates SBL always cherishes to build a work environment with full of satisfied, loyal and performing employees by creating performance driven rewarding culture. Here, it is believed that, employees are the most intriguing but valuable resources that keep the voyage of the bank afloat even in stormy journey. SBL nurtures its employees with proper training & development programs and boosts up the morale by various motivational approaches. • Staff House Building Loans at concessional interest rates • Major surgical (Medical )treatment expenses borne by the bank • Honorarium for passing Banking Diploma • Crest, Certificate and Cash Incentives for Performing Employees • Arranging Foreign Training for Employees. PAY PACKAGE POLICY END SERVICE BENEFITS End Service Benefits are valuable benefits that impact the present and future lives of employees. End service benefits are important catalysts that increase employees appeal to job, minimize turnover rate, enhance job performance etc. Following end service benefits are offered at SBL: • Gratuity Facilities and Benefits • Provident Fund • Welfare Fund • Leave Encashment • House Maintenance Allowance • Conveyance Allowance for Non Executives • Medical Allowance • Entertainment • Cook & Servant • Residence Security Guards • Extra Allowance • Car Maintenance Allowances for Executives There are 2289 employees out of which 292 employees are female and 1997 are male. Among the employees, there are permanent, contractual and daily basis employees at SBL. Particular 2018 2019 2020 Total Employee 2386 2353 2289 TOTAL EMPLOYEES DISTRIBUTION Significant number of employees is working at Head Office and Branches/Other locations as illustrated below: Sustainability House Rent Allowance TOTAL EMPLOYEES Stakeholders’ Information • Management Retrospection Standard Pay Package is the prerequisite for retaining and attracting smart, vibrant and performing employees. A fair and comprehensive compensation policy can gear up the spirit of employees to contribute more for the development of the organization. Keeping this view in mind, SBL has a market tested pay package policy to bring in discrimination free workforce in the bank. Compensation includes basic and other facilities/allowances which are paid on monthly basis and disbursed on 25th day (or any other day if 25th is holiday or weekend) of every month. Facilities and benefits are illustrated below: Risk Governance • Corporate Governance EMPLOYEE PROFILE Apart from the above SBL is also providing benefits & rewards which are given below: Incentive Bonuses • Festival Bonuses • Boishakhi Allowances • Car Loan for Executives • Maternity Benefits for Employees • Leave Fare Compensation • Charge Allowance for Branch Managers • Risk Allowances for Officers of Cash Department Financial Information • Standard Bank Ltd Annual Report 2020 | 201
203. GENDER POSITIONING Introduction SBL believes in gender equality and balancing and it strives to recruit sufficient female employees alongside male to enrich its workplace . Honorable Board of Directors and Management of the bank are also very compassionate regarding proper gender positioning. Present scenario of gender positioning is given below: Year Gender Corporate Governance 2018 2019 2020 Male 2076 2051 1997 Female 310 302 292 GENDER POSITIONING BY GRADE SBL has enriched its working environment with diverse workforce. It has employees of permanent, contractual and daily basis nature. There are 2011, 242 & 36 employees of permanent, contractual and daily basis nature at SBL. Risk Governance Type Gender Executive Officer Management Retrospection Sub-staff Male Permanent Contractual Daily Basis Total 2020 2019 2020 2019 2020 2019 2020 2019 160 145 9 6 0 0 169 151 Female 19 19 1 0 0 0 20 15 Male 1223 1297 13 7 0 0 1236 1304 Female 268 280 4 7 0 0 272 287 Male 341 357 215 207 36 32 592 596 Female Total 0 0 0 0 0 0 0 0 2011 2098 242 227 36 32 2289 2353 PERFORMANCE MANAGEMENT SYSTEM: Performance management system is the systematic approach to measure the performance of employees. SBL inculcates a rewarding culture for performing employees through a fair and equitable evaluation process. There is KPI Based Performance Appraisal System for employees through which performance of all employees is measured against a number of KPIs as set by the management every year. Stakeholders’ Information In the performance appraisal, there are 70% marks are distributed for core business areas and 30% for behavioral traits. TRAINING & DEVELOPMENT: Training & development is the most important factor that increases the efficiency and the effectiveness of both employees and the organization.SBL has separate wing–Standard Bank Training Institute (SBTI) for training & developing its human resources. SBTI prepares its training calendar every year considering Training Needs Analysis (TNA). A number of training programs are arranged in the areas of general banking, credit/investment, foreign trade and others to serve the purposes of customers and other stakeholders of the bank in the best possible ways. MATERNITY LEAVE: Sustainability SBL has a maternity leave policy that allows regular female employeessix-month maternity leave (pre-natal and post-natal) with full pay at a time. However, it is not granted more than twice during the entire period of service. Besides, bank also reimburses maternity benefits to male or female employees up to birth of two children. Maternity Leave in 2020 Financial Information Female No. of Female Employees Days of Leave at a time Total Days 19 180 3420 CHILD CARE CENTER FACILITIES: SBL is one of the founder members for establishing and operating Puspita Day Care Centre, Dilkusha C/A, Dhaka along with other commercial banks as guided by Bangladesh Bank. The bank also pays about four lac subscription for the Child Care Center every year. 202 | Standard Bank Ltd Annual Report 2020
204. HUMAN RIGHTS , GENDER EQUALITY, CHILD LABOR ISSUES: Introduction SBL is committed to providing a safe & equitable environment for all its employees free from gender inequality, child laborand other adverse human rights related issues at work. The benevolent Board of Directors and veteran Management are sensible in these regards and express stance of zero tolerance for any form of such issue in the workplace. GRIEVANCE HANDLING POLICY: Corporate Governance SBL always stands with the aggrieved employees and takes the prompt action if any allegation is reported. On the other hand, the management arranges various awareness creation session through training/workshop to create awareness about any harassment or to help them learn the prevention procedure of any harassment/offence take place at Workplace. ANTI-MONEY LAUNDERING WORKSHOP: SBL is one of the most compliant banks in the banking arena of Bangladesh. It tries to comply with all circulars, directives and guidelines of regulatory authorities. To combat with Money Laundering (ML) and Terrorist Financing (TF), SBL arranges adequate number of workshops to familiarize with the pros and cons of ML & TF and to prevent the problem from every sphere of banking channels. Risk Governance CUSTOMER SERVICE: The management of SBL believes “Customer is the king of the market, thus, satisfaction of every customer matters”. At SBL, every customer is valued and gets more than he/she perceives. To keep track of consistent customer service quality, it has a cell named as Central Customer Services & Complaint Management Cell. STATEMENT OF COMPLIANCE: Management Retrospection As a compliant bank, SBL strictly follows all instructions given from time to time by the regulatory authority. Besides, the Board of Directors and the management of the bank are also keen and loyal to the prevailing guidelines, rules, regulations and laws of the land. Therefore, no fines/penalties was reported in the year 2020. Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 203
205. Introduction VERTICAL ANALYSIS FOR THE LAST 5 YEARS Corporate Governance CONSOLIDATED STATEMENT OF FINANCIAL POSITION Particulars Amount in Taka 31 .12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 CASH 5.54% 5.55% 4.91% 5.77% 14.06% Cash in Hand (including foreign currencies) 0.63% 0.69% 0.78% 0.84% 0.79% Balance with Bangladesh Bank & its agent Bank (including Foreign Currencies) 4.91% 4.86% 4.13% 4.93% 13.27% 0.81% 1.83% 0.84% 0.87% 0.97% In Bangladesh 0.36% 1.57% 0.78% 0.49% 0.14% Outside Bangladesh 0.44% 0.26% 0.05% 0.38% 0.83% MONEY AT CALL AND ON SHORT NOTICE 0.12% 0.26% 0.08% 0.05% 0.00% INVESTMENTS 16.71% 11.52% 12.48% 13.79% 3.20% Government 10.28% 9.26% 10.51% 12.03% 1.62% 6.44% 2.25% 1.97% 1.76% 1.57% LOANS AND ADVANCES / INVESTMENTS 68.75% 72.98% 74.09% 72.39% 74.06% Loans, Cash Credits, Over Draft etc./ Investments 67.21% 71.09% 71.65% 70.64% 73.14% 1.54% 1.89% 2.43% 1.75% 0.93% 2.30% 2.10% 1.89% 1.72% 1.76% 5.77% 5.76% 5.72% 5.41% 5.95% 100.00% 100.00% 100.00% 100.00% 100.00% PROPERTY & ASSETS Risk Governance BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONS Management Retrospection Stakeholders’ Information Others Bills Purchased and Discounted Sustainability FIXED ASSETS INCLUDING FURNITURE & FIXTURE PREMISES, Financial Information OTHER ASSETS NON-BANKING ASSETS TOTAL ASSETS 204 | Standard Bank Ltd Annual Report 2020
206. Amount in Taka 31 .12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 3.46% 7.64% 6.13% 5.67% 5.48% 80.21% 76.68% 78.60% 79.08% 77.36% Current / Al-Wadeeah Deposits & Other Deposits 9.76% 10.08% 9.19% 9.57% 9.61% Bills Payable 1.90% 1.52% 1.47% 1.78% 1.21% Savings Bank / Mudaraba Savings Deposits 5.26% 5.89% 5.62% 6.08% 7.42% Short Term Deposits / Mudaraba Short Term Deposits 3.02% 2.71% 3.14% 3.44% 4.82% 54.35% 51.47% 54.69% 53.10% 48.10% Deposits Under Schemes / Mudaraba Deposit Schemes 5.91% 5.01% 4.49% 5.11% 6.21% OTHER LIABILITES 8.10% 8.04% 7.75% 7.92% 9.51% TOTAL LIABILITIES 91.77% 92.37% 92.48% 92.68% 92.35% Paid-up Capital 4.94% 4.51% 4.42% 4.32% 4.59% Statutory Reserve 2.73% 2.62% 2.54% 2.51% 2.75% General Reserve 0.00% 0.00% 0.00% 0.00% 0.00% Revaluation Reserve on Investment 0.02% 0.00% 0.08% 0.04% 0.00% Surplus in Profit and Loss Account/ Retained earnings 0.55% 0.51% 0.47% 0.45% 0.31% TOTAL SHAREHOLDERS' EQUITY 8.23% 7.63% 7.52% 7.32% 7.65% Minority Interest 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% Introduction Particulars LIABILITIES & CAPITAL Liabilities banks, financial DEPOSITS AND OTHER ACCOUNTS Risk Governance Fixed Deposits / Mudaraba Term Deposits Corporate Governance Borrowings from other Institutions and agents Management Retrospection CAPITAL / SHAREHOLDERS' EQUITY Stakeholders’ Information Sustainability TOTAL LIABILITIES & SHAREHOLDERS' EQUITY Financial Information Standard Bank Ltd Annual Report 2020 | 205
207. Introduction HORIZONTAL ANALYSIS FOR THE LAST 5 YEARS CONSOLIDATED STATEMENT OF FINANCIAL POSITION Corporate Governance Particulars Amount in Taka 31 .12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 CASH 233.70% 239.26% 223.13% 484.46% 145.16% Cash in Hand (including foreign currencies) 116.21% 125.27% 127.92% 144.14% 107.58% Balance with Bangladesh Bank & its agent Bank (including Foreign Currencies) 117.49% 113.99% 95.22% 340.31% 37.58% 214.05% 564.17% 79.58% 410.58% 392.13% 29.10% 497.08% 55.86% 11.38% 345.49% 184.95% 67.09% 23.72% 399.20% 46.63% MONEY AT CALL AND ON SHORT NOTICE 17.76% 236.84% 33.33% 1.11% 2348.00% INVESTMENTS 16.71% 11.52% 12.48% 3.20% 13.79% Government 107.97% 103.67% 127.32% 21.87% 749.80% Others 215.27% 40.25% 98.29% 87.13% 113.36% LOANS AND ADVANCES / INVESTMENTS 269.01% 263.21% 257.50% 189.45% 288.68% Loans, Cash Credits, Over Draft etc./ Investments 114.14% 121.63% 113.10% 128.39% 97.74% Bills Purchased and Discounted 154.87% 141.57% 144.40% 61.06% 190.93% 101.23% 104.95% 100.76% 104.60% 98.77% 113.88% 114.81% 111.34% 128.90% 91.98% 115.43% 114.99% 112.21% 124.80% 101.19% PROPERTY & ASSETS Risk Governance BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONS Management Retrospection In Bangladesh Outside Bangladesh Stakeholders’ Information Sustainability FIXED ASSETS INCLUDING FURNITURE & FIXTURE PREMISES, Financial Information OTHER ASSETS NON-BANKING ASSETS TOTAL ASSETS 206 | Standard Bank Ltd Annual Report 2020
208. Amount in Taka 31 .12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 473.51% 254.08% 90.08% 89.43% 104.87% DEPOSITS AND OTHER ACCOUNTS 843.46% 648.78% 667.39% 868.54% 599.96% Current / Al-Wadeeah Deposits & Other Deposits 112.11% 118.77% 102.27% 118.93% 100.76% Bills Payable 233.72% 91.85% 108.18% 99.15% 149.05% Savings Bank / Mudaraba Savings Deposits 132.08% 128.79% 107.12% 157.11% 82.98% Short Term Deposits / Mudaraba Short Term Deposits 148.62% 102.97% 129.98% 221.89% 72.21% Fixed Deposits / Mudaraba Term Deposits 111.25% 108.90% 119.23% 116.63% 111.71% Deposits Under Schemes / Mudaraba Deposit Schemes 105.69% 97.51% 100.62% 154.82% 83.26% OTHER LIABILITES 96.35% 114.17% 108.10% 147.60% 84.29% TOTAL LIABILITIES 115.98% 115.74% 112.35% 124.78% 101.55% Paid-up Capital 115.00% 105.00% 110.00% 127.05% 95.24% Statutory Reserve 111.24% 110.06% 109.18% 131.21% 92.52% General Reserve - - - - - 144.59% 11.14% 5869.66% 64.97% 4918.95% 72.65% 107.39% 104.51% 75.39% 148.99% TOTAL SHAREHOLDERS' EQUITY 109.58% 106.66% 110.49% 125.02% 96.91% Minority Interest 102.99% 105.27% 102.02% 104.17% 98.42% TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 115.43% 114.99% 112.21% 124.80% 101.19% Introduction Particulars LIABILITIES & CAPITAL Liabilities banks, financial Corporate Governance Borrowings from other Institutions and agents Risk Governance Management Retrospection CAPITAL / SHAREHOLDERS' EQUITY Surplus in Profit and Loss Account/ Retained earnings Stakeholders’ Information Revaluation Reserve on Investment Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 207
209. Introduction VERTICAL ANALYSIS FOR THE LAST 5 YEARS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Corporate Governance Particulars 31 .12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 Interest Income / Profit on Investment 78.64% 75.03% 80.51% 71.00% 83.07% Interest / Profit paid on Deposits & Borrowings etc. 71.09% 70.36% 73.63% 71.16% 74.46% Net Interest / Net Profit on Investments 25.13% 21.27% 21.05% 11.28% 20.52% Investment Income 12.07% 14.47% 10.47% 21.71% 8.68% 7.01% 8.14% 6.45% 5.14% 5.69% Commission, Exchange Earnings & Brokerage Risk Governance Other Operating Income Management Retrospection 2.28% 2.37% 2.57% 2.16% 2.56% TOTAL OPERATING INCOME ( A ) 46.49% 46.24% 40.54% 40.29% 37.45% Salary & Allowances 17.25% 17.41% 14.98% 18.12% 16.14% Rent, Taxes, Insurance, Electricity etc. 4.71% 4.75% 4.33% 3.78% 4.02% Legal Expenses 0.17% 0.17% 0.18% 0.11% 0.15% Postage, Stamp, Telecommunication etc. 0.31% 0.23% 0.21% 0.14% 0.15% Stationery, Printing, Advertisement etc. 0.63% 0.76% 0.69% 0.38% 0.69% Managing Director's salary & fees 0.08% 0.10% 0.07% 0.09% 0.04% Directors' Fee & Other benefits 0.09% 0.10% 0.06% 0.03% 0.05% Audit Fees 0.02% 0.01% 0.01% 0.01% 0.01% Charges on loan losses 0.00% 0.00% 0.00% 0.00% 0.00% Depreciation and Repair of Bank's Assets 1.79% 1.69% 1.77% 2.28% 1.72% Other Expenses TOTAL OPERATING EXPENSES ( B ) Stakeholders’ Information Profit / (Loss ) Before Provision ( C ) = ( A - B ) 4.43% 4.08% 3.91% 2.57% 29.64% 26.37% 28.84% 25.54% 24.73% 23.60% 19.24% 16.09% 15.99% Specific Provision 7.15% 8.08% 7.59% 4.08% 1.85% General Provision 1.29% 0.15% 0.80% 0.11% 0.62% Provision for Off-Balance Sheet items 0.44% 0.78% 0.10% -0.49% -0.04% Provision for diminution in value of investments 0.35% 0.06% 0.11% 0.11% 0.15% Provision for impairment of client margin loan 0.96% 0.62% 0.08% 0.14% 0.07% Other Provision Sustainability Financial Information 208 3.87% 28.91% 0.00% 0.00% 0.00% 0.00% 0.00% Total Provision ( D ) 10.18% 9.68% 8.68% 3.95% 2.63% Total Profit / (Loss) before Taxes (E)=( C - D ) 17.06% 12.23% 12.78% 13.78% Provision for Taxation 11.58% 16.20% Current Tax 9.69% 6.33% 6.61% 7.76% 11.49% 9.52% 6.22% 7.96% 7.67% Deferred Tax 0.09% 0.18% 0.10% -1.35% 0.08% Net Profit / (Loss) after Taxation : 8.35% 8.79% 7.12% 7.23% 7.27% | Standard Bank Ltd Annual Report 2020
210. Introduction HORIZONTAL ANALYSIS FOR THE LAST 5 YEARS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 97 % 89% 8% 103% 109% -5% 134% 138% -4% 130% 153% -23% 125% 112% 13% Investment Income Commission, Exchange Earnings & Brokerage Other Operating Income TOTAL OPERATING INCOME ( A ) 82% 102% 107% 103% 130% 125% 112% 108% 90% 99% 136% 110% 206% 87% 125% 120% 43% 118% 127% 99% Salary & Allowances Rent, Taxes, Insurance, Electricity etc. Legal Expenses Postage, Stamp, Telecommunication etc. Stationery, Printing, Advertisement etc. Managing Director's salary & fees Directors' Fee & Other benefits Audit Fees Charges on loan losses Depreciation and Repair of Bank's Assets Other Expenses TOTAL OPERATING EXPENSES ( B ) Profit / (Loss ) Before Provision ( C ) = ( A - B ) 104% 119% 248% 107% 118% 91% 130% 260% 0% 113% 139% 110% 98% 111% 111% 110% 82% 132% 137% 112% 51% 0% 104% 126% 112% 103% 114% 120% 136% 119% 120% 100% 81% 117% 0% 138% 122% 118% 102% 157% 120% 98% 89% 75% 132% 43% 215% 0% 203% 133% 147% 94% 95% 114% 142% 117% 195% 54% 183% 140% 0% 81% 70% 95% 106% Specific Provision General Provision Provision for Off-Balance Sheet items Provision for diminution in value of investments Provision for impairment of client margin loan Other Provision Total Provision ( D ) 156% 395% 221% 48% 0% 0% 155% 124% 13% 197% 18% 70% 0% 104% 124% 721% 16% 248% 17% 0% 118% 76% 117% -94% 276% 34% 0% 61% 48% 578% 9% 147% 51% 0% 71% Total Profit / (Loss) before Taxes (E)=( C - D ) Provision for Taxation Current Tax Deferred Tax -56% 241% 110% 131% -1% 318% 91% 227% -16% 162% 86% 76% 32% -1012% 126% -1138% 35% 97% 103% -7% 68% 114% 101% 113% 107% 687% 46% 133% 57% 141% 77% 105% 103% 110% 108% Statutory Reserve Proposed Bonus Shares Retained Earnings carried forward 89% 0% 72% 100% 0% 108% 100% 0% 105% 107% 0% 111% 124% 0% 101% Earning per Share (EPS): 65% 103% 92% 76% 139% Interest Income / Profit on Investment Interest / Profit paid on Deposits & Borrowings etc. Net Interest / Net Profit on Investments Net Profit / (Loss) after Taxation : Retained earnings brough forward from previous year Net Profit available for distribution Appropriations : Standard Bank Ltd Annual Report 2020 Financial Information 31.12.2020 Sustainability 31.12.2019 Stakeholders’ Information 31.12.2018 Management Retrospection 31.12.2017 Risk Governance 31.12.2016 Corporate Governance Particulars | 209
211. Introduction HOW WE CREATE VALUE Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information BALANCED SCORECARD Financial Perspective Sustainability Learning Growth Perspective Financial Institution Balanced Scorecard Customer Perspective Market share Target number of obtaining Customer attention Complaints rate Financial Information Internal Process Perspective Product and service innovation Number of internal regulation Responsibility for accident New products and services 210 | Standard Bank Ltd Annual Report 2020
212. Introduction VALUE ADDED STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 Particulars Non-banking income Provision for loans & other assets Total wealth creation Taka 19,360,929,033 (12,992,063,768) 6,368,865,266 919,771,640 7,288,636,906 20,706,322,217 (14,337,945,508) 6,368,376,709 420,772,851 6,789,149,560 2,957,566,616 4,407,998 4,099,044,225 1,027,707,986 2,792,678,688 278,657,550 2,815,853,026 8,048,728 3,927,417,735 933,053,360 2,749,445,426 244,918,950 502,995,394 958,086,465 171,209,623 291,812,961 8,027,036,816 46,378,701 233,146,365 7,988,931,020 Stakeholders’ Information Taka Management Retrospection Wealth distribution: Employees & Directors Employees as salaries & allowances Directors as remuneration & fees Government Corporate tax Service tax/ Value added tax Excise duties Shareholders Dividend to shareholders Retention for future business growth Retained earnings Depreciation and amortization Total Wealth Distribution 31.12.2019 Risk Governance Wealth creation: Revenue from Banking services Less: Cost of services & supplies 31.12.2020 Corporate Governance Value added statement shows exactly how much value (wealth) has been created by the bank during 2020 through its banking activities i.e. utilization of its capacity, capital, manpower and other resources and how it is allocated among different stakeholders i.e. employees, directors, shareholders, government in the form of salaries & allowances, remuneration, dividend, duties & taxes respectively and also indicates value of use of fixed assets through depreciation.Now a days the most complex and modern business environment does not earn profit for itself only rather it cares to the society and thus is committed to contribute to the economic growth. Such value is being added due to spill over economic impact due to operation of the business houses.SBL as a commercial bank, has a large scale of spill over economic impact side by side its financial impact through creating values for distributions to the society year to year.The Statement shows how the total wealth has been created and distributed among the stakeholders of the Bank in the year. Wealth Distribution-2019 Wealth Distribution-2020 Directors as remuneration & fees Directors as remuneration & fees Government Government Dividend to shareholders Dividend to shareholders Retained earnings Financial Information Employees as salaries & allowances Sustainability Employees as salaries & allowances Retained earnings Standard Bank Ltd Annual Report 2020 | 211
213. Introduction ECONOMIC VALUE ADDED (EVA) STATEMENT Corporate Governance FOR THE YEAR ENDED 31ST DECEMBER 2020 Risk Governance EVA statement indicates the true economic profit of a company. EVA is an estimate of the amount by which earnings exceed or fall short of required minimum return for shareholders at comparable risk. It is based on the principle that since a company’s owner employs equity capital to earn a profit, it must pay for the use of this equity capital. This management tool is useful to shareholders in particular and other stakeholders in general to take decision for increasing wealth. As a commercial bank, SBL is deeply concerned for distribution of value to all of its Shareholders. EVA of SBL has stood at Tk 825 million as of December 31, 2020 as against Tk 634 million in 2019. EVA is equal to Profit after Tax (PAT) plus the provision for loans & other assets less written off during the year minus cost of equity where cost of equity is the opportunity cost that the shareholders forego. This cost of equity is calculated considering the risk free rate based on weighted average rate of 10 years treasury bond issued by Bangladesh Government plus 2% risk premium. Particulars Management Retrospection Shareholders equity Add: Accumulated provision for loans & advances and other assets Capital Employed Average Capital Employed / Shareholders' equity 31.12.2020 31.12.2019 Taka Taka 16,765,238,028 16,247,876,352 4,756,887,270 3,888,288,718 21,522,125,298 20,136,165,069 16,506,557,190 15,532,138,719 1,082,055,142 1,504,433,637 959,435,432 457,733,835 - 3,027,673 2,041,490,575 1,959,139,799 7.37% 8.53% 1,216,533,265 1,324,891,433 824,957,310 634,248,366 Earnings: Profit after tax Add:Provision for loans & advances and other assets charged during the year Less: Written off loans during the year Stakeholders’ Information Net earnings Cost of equity: Average cost of equity (Based on weighted avergae rate of 10 years treasury bond issued by the Bangladesh Government) Plus 2% risk premium Capital charge (Cost of average equity) Economic Value Added Sustainability Financial Information 212 | Standard Bank Ltd Annual Report 2020
214. Introduction MARKET VALUE ADDED (MVA) STATEMENT Corporate Governance FOR THE YEAR ENDED 31ST DECEMBER 2020 Market Value Added (MVA) is the difference between the current market value of the Bank and the capital contributed by shareholders. It reflect the banks performance which is evaluated on market price of its own shares. This amount is derived from the difference between market capitalization and book value of the shares outstanding. It signifies the enhancement of financial solvency as perceived by the market. Positive and higher MVA indicate that the bank has created substantial wealth for its shareholders. On the other hand negative MVA indicate that wealth of the bank is lower than the capital contributed by the investors. Face value per share (BDT) Market value per share (BDT) Total market capitalization (BDT million) 31.12.2019 10.00 10.00 8.30 8.90 1,005,990,788 958,086,465 8,350 8,527 Book value of paid up capital (BDT million) 10,060 9,581 Market value added (BDT million) (1,710) (1,054) Management Retrospection Number of shares outstanding 31.12.2020 Risk Governance Particulars Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 213
215. Introduction STATEMENT ONCONTRIBUTION TO GOVERNMENT EXCHEQUER Corporate Governance FOR THE YEAR ENDED 31 DECEMBER 2020 Management Discussion and Analysis Statement on Contribution to Government Exchequer Government is considered as one of the most important stakeholders which play a critical role in the economic development of the country . Being a legitimate and ethical company, Standard Bank contributes to the Government Exchequer when the necessary amounts fall due. For the year 2020,Standard Bank and its subsidiaries made a handsome contribution to Government Exchequer of an amount equal to BDT 3071 million, composed of income tax, withholding tax, VAT, withholding VAT and excise duty. This is in comparison to BDT 2994 million in 2019, reflecting its fair and consistent commitment towards national contribution. Risk Governance Particulars 31.12.2020 31.12.2019 2,609,485,744 2,515,434,789 81,633,420 71,822,227 1,184,915,188 1,102,040,849 Payment on Supplier 16,131,119 29,550,650 House rent 16,626,451 17,394,346 IT on subordiate bond 23,100,000 24,900,000 7,623,983 11,348,275 939,434,688 1,150,000,000 Return for Professional & Technical Service 1,316,923 2,113,181 IT on Local LC 5,488,192 4,652,578 Others 333,215,780 101,612,683 VAT 183,192,945 234,010,637 House rent 52,367,133 55,200,324 LC Commission 30,792,621 48,277,036 Procurement of goods and Service 38,146,301 60,283,101 1,630,040 3,602,104 319,687 274,430 59,915,331 66,373,642 21,832 - 278,657,550 244,918,950 3,071,336,238 2,994,364,376 Income Tax Salary Interest on deposit Management Retrospection Advance IT on LC commission Advance Corporate Tax Stakeholders’ Information Legal , Professional & Technical Fees Sustainability Director Fees VAT on Banking Service Indenting Financial Information Excise duty Total Paid to Government Exchequer 214 | Standard Bank Ltd Annual Report 2020
216. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information 215 | Standard Bank Ltd Annual Report 2020
217. Introduction 5 YEARS FINANCIAL HIGHLIGHTS (Figure in million Taka) Income Statement Corporate Governance Interest Income 2016 2017 2018 2019 2020 10,252 10,572 14,190 17,201 13,745 Interest Expenses 6,976 7,575 10,479 12,952 11,561 Net Interest Income 3,276 2,998 3,710 4,249 2,185 Investment Income 1,574 2,039 1,844 1,797 4,203 Commission, Exchange Earnings & Brokerage 912 1,147 1,137 1,178 995 Other Operating Income 300 333 452 530 417 Non-Interest Income 2,785 3,519 3,434 3,505 5,616 Non-Interest Expense 2,837 3,192 3,753 4,443 4,685 -52 327 -319 -938 930 Profit before Provision & Tax 3,224 3,325 3,391 3,311 3,115 Provision for Loans & Assets 999 1,043 1,236 458 959 Profit after provision before Tax 2,224 2,282 2,156 2,854 2,156 Provision for Tax (Including Deferred Tax) 1,136 1,044 900 1,349 1,074 Profit after Tax 1,088 1,238 1,256 1,504 1,082 15,000 15,000 15,000 15,000 15,000 Risk Governance Net Non-Interest Income Management Retrospection Balance Sheet Authorised Capital Paid-up Capital Shareholders' Equity (Capital & Reserve) Borrowings Deposits 7,541 7,918 8,710 9,581 10,060 12,573 13,410 14,816 16,248 16,765 5,284 13,425 12,092 12,591 12,006 122,554 134,731 154,961 175,468 169,639 Other Liabilities 12,379 14,134 15,279 17,583 20,861 Liquid Assets 35,419 33,661 36,101 45,454 39,971 Stakeholders’ Information Money At Call & On Short Notice 190 450 150 117 5 105,039 128,228 146,061 160,626 162,397 Investments 25,533 20,234 24,614 30,598 7,008 Fixed Assets 3,516 3,690 3,718 3,812 3,859 Other Assets 8,815 10,120 11,268 11,998 13,045 Loans & Advances Total Assets (Excluding off-balance sheet items) 152,789 175,699 197,148 221,890 219,272 Net Asset Value (NAV) 12,573 13,410 14,817 16,248 16,765 Off-Balance Sheet exposure 33,487 41,920 49,442 48,747 38,902 Import Business 55,684 66,510 74,464 75,399 49,195 Export Business 38,506 43,807 51,884 56,326 43,631 5,764 7,563 9,579 10,364 8,407 121,009 146,144 169,828 172,584 179,112 10,404 13,337 10,138 13,070 14,379 3,369 7,066 6,790 6,462 8,651 Sustainability Others Business Foreign Remittance Capital Measures Total Risk Weighted assets Financial Information Core Capital (Tier I) Supplementary Capital (Tier II) Total capital 13,773 20,404 16,927 19,533 23,029 Tier I Capital Ratio 8.60% 9.13% 5.97% 7.57% 8.03% Tier II Capital Ratio 2.78% 4.84% 4.00% 3.74% 4.83% 11.38% 13.96% 9.97% 11.32% 12.86% Risk Weighted CAR 216 | Standard Bank Ltd Annual Report 2020
218. 2016 2017 2018 2019 2020 6 .93% 6.88% 6.82% 6.77% 4.08% Levearge Ratio 6.21% 6.72% 6.74% 6.74% 5.94% 3,799 10,451 11,349 9,232 7,764 Introduction Internal Capital Generation Ratio Credit Quality Volume of Non-performing loans SMA loan outstanding 246 201 3,915 4,288 8.44% 7.42% 5.29% 4.92% 49.87% 20.96% 20.01% 28.04% 41.88% 0.42% 0.19% 0.14% 2.44% 2.64% Provision for Unclassified Loans 1,026 1,042 1,156 1,263 1,282 Provision for Classified Loans 1,894 2,191 2,271 2,589 3,251 335 419 433 426 346 754 792 871 958 1,006 Gross NPL Coverage SMA to Credit Portfolio Provision for Off-Balance Sheet Items Corporate Governance 440 3.62% % of NPLs to Total Loans & Advances Share Information Number of Share Outstanding Earning Per Share (Taka) 1.31 1.50 1.08 10.00 10.00 10.00 10.00 Market Price Per Share (Taka) 11.90 15.60 15.60 8.90 8.30 8.25 10.97 11.90 5.95 7.72 16.67 16.94 17.01 16.96 16.67 5% 2.5% 5% 2.5% Price Earning Ratio (Times) Net Asset Value Per Share (Taka) Cash Dividend ('%) Bonus Share ('%) Rights Share Issue 10% 10% 10% Management Retrospection 1.42 10.00 Risk Governance 1.44 Book Value Per Share (Taka) - Operating Performance Ratio 3.11% 2.51% 2.74% 2.81% 1.26% -0.05% 0.27% -0.24% -0.62% 0.54% Total operating expenses to average total assets 2.08% 1.94% 2.01% 2.24% 2.12% Net operating income to average total assets 2.36% 2.02% 1.82% 1.67% 1.41% Credit / Deposit Ratio(%) 85.71% 82.09% 83.89% 83.89% 87.17% Return On Equity(ROE) % 8.66% 9.24% 8.47% 9.26% 6.45% Return On Average Equity(ROAE) After Tax 9.69% 9.53% 8.90% 10.15% 6.56% Return On Assets (ROA)% 0.80% 0.75% 0.67% 0.76% 0.49% Return On Average Assets(ROAA) Before Tax 1.63% 1.39% 1.16% 1.44% 0.98% Return On Investment (ROI) 6.93% 8.91% 8.22% 7.07% 22.35% 8.25 10.97 11.90 5.95 7.72 12.28% 9.59% 10.46% 11.54% 8.82% 0.90% 0.85% 0.74% 0.87% 0.60% Price Earning Ratio (times) Yield on average advance (%) Return On Average RWA 1.08 1.12 1.14 1.14 1.16 Loan to Deposit Ratio 85.71% 82.09% 83.89% 83.89% 84.55% Efficiency Ratio 75.27% 76.40% 80.76% 84.01% 83.91% 11.15 12.10 12.31 12.66 12.08 8% 9% 7% 7% 6% Debt to Equity Ratio Net Income Ratio Debt to Total Assets Ratio Asset Turnover ratio Times Interest Earned Ratio Debt Service Coverage Ratio Quick Ratio 46% 46% 41% 37% 40% 91.77% 92.37% 92.48% 92.68% 92.35% 9.56% 8.58% 9.45% 10.42% 8.78% 1.87 1.86 1.68 1.60 1.67 3% 2% 2% 2% 2% 2.07 1.75 1.08 1.34 1.21 Standard Bank Ltd Annual Report 2020 Financial Information Operating Income Ratio Sustainability Liquid Assets Ratio Stakeholders’ Information Net Interest Margin on average earning assets Net Non-Interest Margin on average earning assets | 217
219. 2016 Introduction Average Branch wise Manpower 2017 2018 2019 2020 18 17 18 17 17 Total Operating Profit to Total Income 25 % 24% 19% 16% 16% Interest expense to Total Expenses 71% 70% 74% 74% 71% Interest Income to Total Income 79% 75% 81% 83% 71% Operating profit per branch Corporate Governance 28.78 27.25 25.31 24.00 22.57 Operating profit per employee 1.62 1.60 1.42 1.41 1.36 Per employee Income 6.54 6.79 7.38 8.80 8.46 Per employee expenses 4.93 5.19 5.96 7.39 7.10 Per employee Advances 52.73 61.77 61.14 68.26 70.95 Per employee Assets 76.70 84.63 82.52 94.30 95.79 Per employee Deposit 61.52 64.90 64.86 74.57 74.11 Burden Coverage Ratio 43% 46% 42% 38% 30% NFI to Total Operating Income 21% 25% 19% 17% 29% Risk Governance Cost income ratio 47% 49% 53% 57% 60% Operating profit as % of working funds 2.70% 2.49% 2.30% 1.91% 1.73% Net interest income as % of working funds 2.75% 2.24% 2.51% 2.45% 1.21% Total cost of Fund 8.52% 8.00% 8.85% 9.73% 8.82% Cost of Deposit(%) 6.32% 5.71% 6.63% 7.37% 6.20% Administrative cost (%) 2.20% 2.29% 2.22% 2.36% 2.62% 112 122 134 138 138 Urban 69 75 81 83 83 Rural 36 40 46 48 48 7 7 7 7 7 Management Retrospection Other Information Number of Branches Number of SME & Agriculture Branches Number of Employees Number of Shareholders Number of Foreign Correspondents Stakeholders’ Information 2076 2389 2353 2289 22650 24124 20847 20017 21 21 21 21 21 Average earning assets 105,188 119,456 135,215 151,168 173,424 Average Total assets 136,360 164,244 186,424 198,795 220,581 Average Deposits 109,928 128,642 144,846 155,099 172,554 Average Advance 92,744 116,634 137,144 144,427 161,511 Average Investment 22,693 22,883 22,424 25,416 18,803 Average Equity 11,229 12,991 14,113 14,829 16,507 Sustainability Financial Information 218 1992 29633 | Standard Bank Ltd Annual Report 2020
220. Introduction GRAPHICAL PRESENTATION Corporate Governance SME /SE 19.89% Green Finance 0.01% VISA Credit Card 0.47% Risk Governance Loan Portfolio Mix-2020 Consumer Credit Scheme 0.30% Bills purchased and discounted 1.25% Syndicate/Club Finance 1.32% Lease Finance / Izara 0.91% Secured overdraft/Quard against TDR 11.40% Management Retrospection Demand Loan 5.65% Packing credit 0.27% Payment against document 0.47% Term Loan 36.29% Loans against trust receipt 2.72% Transport Loans 0.80% House Building loans 2.09% Cash credit/ Murabaha 10.21% Export Development Fund (EDF) 2.42% Stakeholders’ Information Agriculture Loan 3.51% Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 219
221. Assets Mix-2020 Introduction Other As sets 6 % Fi xed Assets 2% Assets Funding Mix-2020 Ca s h 14% Ba l ance with Bank 1% Money a t Ca ll & Short Noti ce 0% Sha reholders Equi ty 8% Investments 3% Borrowi ns 6% Corporate Governance Other Li a bilities 9% Deposits 77% Risk Governance Loa n & Adva nces 74% Cash Money at Call & Short Notice Loan & Advances Balance with Bank Investments Fixed Assets Borrowins Deposits Other Liabilities Shareholders Equity Types of Shareholding (Million ) Management Retrospection Sponsors/Promoters 35% General Public 38% Investment Corporation of Ba ngladesh 4% Stakeholders’ Information ICB Uni t Fund,ICB Mutual Fund & ICB Investors Account 3% Fi nancial Institutions 20% Sponsors/Promoters Investment Corporation of Bangladesh ICB Unit Fund,ICB Mutual Fund & ICB Investors Account Financial Institutions General Public Sustainability Tier -I Capital Tier -II Capital Reta ined Earnings 4% Sta tutory Reserve 36% General Provision 14.50% Financial Information Pa i d up ca pital 60% Subordinate Bond 81.50% Paid up capital 220 | Statutory Reserve Retained Earnings Standard Bank Ltd Annual Report 2020 Provision for OffBalance sheet 4.00%
222. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information 221 | Standard Bank Ltd Annual Report 2020
223. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 222
224. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information 223 | Standard Bank Ltd Annual Report 2020
225. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 224
226. Introduction SEGMENT REPORTING Following table also summarizes both the stand alone performance of the Bank and its subsidiaries . Particulars Subsidiaries SBL Capital SBL Management Securities Ltd Ltd (32,815,151) 50,383,230 Net interest Income 2,187,564,936 Total Operating Income 7,087,392,710 83,401,683 407,404,883 1,703,950 Total Operating Expenses 4,506,719,377 Profit before Provision Overseas UK Ex.House USA Ex. House Total - 950,146 2,206,083,162 62,480,749 22,444,386 127,012,908 7,382,732,436 747,984 1,632,485 5,933,922 417,423,223 19,307,614 19,013,306 24,651,754 2,988,078,216 65,798,019 44,215,426 (574,884) 919,771,640 30,109,601 9,554,191 - 2,068,306,576 35,688,418 34,661,235 (574,884) Provision for Taxation 1,026,303,751 34,739,324 12,544,040 - Profit After Tax (PAT) 1,042,002,825 949,094 22,117,194 (574,884) Total Non Operating Income Total Provision against assets 4,685,077,968 3,115,077,691 959,435,432 17,560,913 2,155,642,258 17,560,913 1,082,055,142 Risk Governance Profit before Tax (PBT) 115,385,917 17,560,913 Corporate Governance Standard Bank Ltd. 1,073,587,116 Segment Assets 217,685,387,322 991,833,221 460,499,003 34,900,728 99,309,408 219,271,929,682 Segment Liabilities 217,685,387,322 991,833,221 460,499,003 34,900,728 99,309,408 219,271,929,682 Management Retrospection Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 225
227. Introduction CREDIT RATING REPORT Corporate Governance Risk Governance Credit Rating 2020 2019 Long Term Rating AA + AA Short Term Rating ST-2 ST-2 Outlook Stable Stable Validity 30 June, 2021 30 June, 2020 Management Retrospection Stakeholders’ Information Sustainability Financial Information ARGUS Credit Rating Services Limited reaffirms surveillance rating of Standard Bank Limited to “AA+” (Pronounced as double A) in the Long Term and “ST-2” in the Short Term. The rating has been conducted through an in-depth analysis of the operational & financial performance of the Bank along with all its relevant quantitative and qualitative factors. The basis of the evaluation was financials of the Bank up to December 31, 2019 and other prevailing factors up to the date of rating. Long Term Rating: The Bank rated “AA+” (High Safety) in Credit rating is adjudged to be of high quality, offers higher safety and has high credit quality. This level of rating indicates a corporate entity with sound credit profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions. Short Term Rating: The Bank rated ST-2 (High Grade) in short term in credit rating is considered to have high certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small. 226 | Standard Bank Ltd Annual Report 2020
228. 1 Designation Sponsors /Directors No. of Share 31.12.2020 31.12.2019 397,232,765 379,689,280 ICB Unit Fund, ICB Mutual Fund & ICB Investors Account Other Institutions 4 General Public 34,725,348 31.12.2020 31.12.2019 39.49 39.63 34,924,062 3.45 3.64 196,615,404 180,805,943 19.55 18.87 362,667,180 37.51 37.86 1,005,990,788 958,086,465 100 100 377,417,271 Total No. of Share in (%) Risk Governance 2 3 Corporate Governance S.L No. Introduction DISTRIBUTION OF SHAREHOLDING Management Retrospection Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 227
229. Introduction REDRESSAL OF INVESTORS ’ GRIEVANCES Corporate Governance Standard Bank Limited is fully committed to ensuring equitable treatment of every shareholder irrespective of whether they are majority shareholders, minority shareholders, institutional investors or foreign shareholders. With a view to ensuring equal treatment of all shareholders, the bank resorts to a number of means such as the following: Risk Governance The bank provides proxy forms to shareholders who are unable to attend the shareholders’ meeting allowing them cast their vote on each agenda. The proxy forms, which are prepared in accordance with the standard format, are sent along with the annual report. Management Retrospection The shareholders’ meetings are conducted according to the order of the agenda, without adding new and uniformed agenda, in order to give the opportunity to shareholders to study the information on the given agenda before embarking on a decision. Moreover, no abrupt changes to the important information are proposed in the shareholders’ meeting. Stakeholders’ Information The bank evaluates the importance of the consideration of transactions, which may have conflicts of interest or may be connected or related transactions. Besides, the bank religiously abides by good corporate governance principles including the rules and regulations of the Bangladesh Securities and Exchange Commission, the Dhaka Stock Exchange and the Chittagong Stock Exchange transactions. The Directors or the Management do not entertain any consideration to approve such transactions. The bank provides a channel for minority shareholders to propose issues deemed important and appropriate to include in the agenda of the bank’s annual general meeting of shareholders and to nominate candidates with appropriate knowledge, abilities and qualifications to be considered for the position of Director. Complaint redressal is supported by a review mechanism to minimize the recurrence of similar issues in future. WAY OF REDRESSAL OF INVESTOR COMPLAINTS • Investor can complain standardbankbd.com; through email • An Investor can make a written complaint through letter; • The bank maintains investor grievance file in which full detail of every written complaint enters; • There are 2 designated persons looking after the investor grievances in due time; • The full detail of the written complaints are passed to the concerned departments and the compliance officer of the bank is informed as soon as it is received; • A letter or an email is written to all the investors who submits written complaints by the designated persons or the Compliance Officer acknowledging receipt of the complaint informing them that it will be dealt with; • Audit & Compliance Department obtains all information available on the complaint, which is considered necessary for a proper investigation and subsequently look into all the necessary information for resolving them soon as possible; The bank continues to have regular communication with the shareholders through periodic updates of performance and at any other time when it believes it to be in the best interest of shareholders generally. INVESTORS’ INQUIRIES/COMPLAINT Any queries relating to shareholdings, for example, transfer of shares, changes of name and address, and payment of dividend should be sent to the following address: Sustainability SBL FOLLOWS THE FOLLOWING PRINCIPLES Mr. Md. Sahriaz Hossain Khan, SEO • Investors must be treated fairly at all times; Mr. Farhad Bin Amin, AO • Complaints raised by investors must be dealt with courtesy and in a timely manner; Financial Information • Investors are informed of avenues to raise their complaints within the organization; Share Department Metropolitan Chamber Building (Mezzanine floor) 122-124, Motijheel C/A, Dhaka-1000 Phone: 9578385, 9577913 • Complaints are treated efficiently and fairly; • SBL employees work in good faith and without prejudice, towards the interests of the investors. 228 | Standard Bank Ltd Annual Report 2020 sblho@
230. Introduction COMMUNICATION TO STAKEHOLDERS Corporate Governance Annual Report 2020 and other information about SBL may be viewed on SBL ’s website www.standardbankbd.com. SBL provides copies of Annual Reports to the Bangladesh Securities and Exchange Commission, Bangladesh Bank, Dhaka Stock Exchange and Chittagong Stock Exchange for their reference. Investors may read them at their public reference room or library. Mr. Md. Sahriaz Hossain Khan, SEO Mr. Farhad Bin Amin, AO Risk Governance Contact Numbers: PABX : +88-02-9578385,9577913,9558375,9552981 Fax : +88-02-9577898 SWIFT Code : SDBLBDDH E-mail : share@standardbankbd.com Management Retrospection Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 229
231. Introduction PHOTO GALLERY Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Limited Arranged rally to celebrate birth centenary of the father of the nation Bangabandhu Sheikh Mujibur Rahman at Gulshan Branch Premises on 18 March 2020, Wednesday at 10:00 am. Honorable Chairman of the Bank Mr. Kazi Akram Uddin Ahmed was present the rally as chief guest. It was attended by Directors Mr. Kamal Mostafa Chowdhury, Ferozur Rahman, S. A. M. Hossain, Al-Haj Mohammed Shamsul Alam, Mohammed Abdul Aziz, Kazi Khurram Ahmed, Md. Nazmus Salehin and Managing Director & CEO Khondoker Rashed Maqsood. Furthermore all executives, officers and supporting stuffs participated at the rally. Similarly, a rally was held in the presence of all the employees of the bank in front of all the branches and head office of Standard Bank across the country. After the rally, the cake was cut in the boardroom of the bank and in all the branches on the centenary of the birth of Bangabandhu Sheikh Mujibur Rahman. 230 | Standard Bank Ltd Annual Report 2020
232. Introduction Corporate Governance Risk Governance Management Retrospection 21ST ANNUAL GENERAL MEETING (AGM) OF STANDARD BANK LIMITED HELD THROUGH DIGITAL PLATFORM Stakeholders’ Information Sustainability Financial Information 28TH EXTRAORDINARY GENERAL MEETING (EGM) OF STANDARD BANK LIMITED HELD THROUGH DIGITAL PLATFORM Standard Bank Ltd Annual Report 2020 | 231
233. Introduction PROJECTS FINANCED BY STANDARD BANK LTD . Corporate Governance Risk Governance Standard Bank Limited (Foreign Exchange Branch) Financed Noman Home Textile Mills ltd., Gazipur Management Retrospection Stakeholders’ Information Standard Bank Limited Khulna Branch Financed Glory Engineering Ltd., Khulna Sustainability Financial Information Standard Bank Limited Khulna Branch Financed Glory Jute Ltd., Khulna 232 | Standard Bank Ltd Annual Report 2020
234. Introduction Corporate Governance Standard Bank Limited Khulna Branch Financed Glory Poles & Concrete Ltd., Khulna Risk Governance Management Retrospection Stakeholders’ Information Standard Bank Limited Khulna Branch Financed Glory Poles & Concrete Ltd., Khulna Sustainability Financial Information Standard Bank Limited (Foreign Exchange Branch) Financed Anwar Cement Limited, Meghna Ghat, Narayangonj Standard Bank Ltd Annual Report 2020 | 233
235. Introduction Awards Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability STANDARD BANK LIMITED GETS “19TH ICAB NATIONAL AWARD FOR BEST PRESENTED ANNUAL REPORTS” Financial Information Standard Bank Limited has been adjudged “Joint Third Position” under the Category: Corporate Governance Disclosures in 19th ICAB National Award for Best Presented Annual Reports 2018 based on independent evaluation of the Review Committee for Published Accounts & Reports (RCPAR) of Council-ICAB and due recommendation of the Jury Board. The honorable Managing Director Mr Md. Tariqul Azam & Md. Ali Reza FCMA, Chief Financial Officer of Standard Bank Limited received the Award from the Chief Guest Mr Tipu Munshi MP & Minister, Ministry of Commerce, Government of the People’s Republic of Bangladesh at an award giving ceremony held at Hotel Pan Pacific Sonargaon in the capital on November 30, 2019. 234 | Standard Bank Ltd Annual Report 2020
236. Introduction STANDARD BANK LIMITED HAS WON THE SOUTH ASIAN FEDERATION OF ACCOUNTANTS (SAFA) AWARD 2018 Standard Bank Limited has won the South Asian Federation of Accountants (SAFA) Award 2018 for Best Presented Annual Report and SAARC Anniversary Award for Corporate Governance Disclosure 2018. Corporate Governance STANDARD BANK LIMITED GETS FIRST PRIZE OF “NATIONAL PRODUCTIVITY AND QUALITY EXCELLENCE AWARD 2018” LARGE INDUSTRY (OTHERS) CATEGORY Risk Governance Standard Bank Limited achieved the 1st Position in Large Industry (others) category in the “National Productivity and Quality Excellence Award 2018” by National Productivity Organization (NPO) under the Ministry of Industries of the Government of Bangladesh for its significant contribution to the development of productivity and quality of products in the national industrial sector. Mr Mamun-UrRashid, Managing Director and CEO of SBL received award & certificate from honorable Industries Minister of the People’s Republic of Bangladesh Mr Nurul Majid Mahmud Humayun at an event at Institution of Diploma Engineers in Dhaka on July 28, 2019. Mr Kamal Ahmed Majumder, Hon’ble State Minister of the Ministry of Industries was present as the special guest and Mr Md Abdul Halim, Honorable Secretary of the Ministry of Industries chaired the program. Management Retrospection STANDARD BANK LIMITED OBTAINED CAMELS RATED BEST BANK AWARD Stakeholders’ Information Sustainability Financial Information STANDARD BANK LIMITED OBTAINED NATIONAL TAX CARD AWARD FROM NBR STANDARD BANK LIMITED GETS WORLD QUALIRY COMMITMENT AWARD Standard Bank Ltd Annual Report 2020 | 235
237. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 236
238. Introduction SUSTAINABILITY REPORT Corporate Governance We want to be profitable complying Shari ’ah in doing business ensuring the environmental and social aspects to support achieving the Sustainable Development Goals (SDGs) of United Nations. Also committed to ensuring the future life on earth and its endless endeavor to create values on economic, environmental, social, ethical perspective for overall social benefit in line with the objective of Shari’ah. Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 237
239. OVERVIEW Introduction Sustainability is the combination of two words ; ‘Sustain’ and ‘Ability’ i.e. Sustainability. The simplest and most fundamental meaning of sustainability is: “the ability to sustain” or “the capacity to sustain”. Other way, sustainability means “able to be maintained at a certain rate or level” i.e. sustainable economic growth. Sustainability is the state of global system, which includes economic, environmental, and social subsystems, in which the needs of the present are met without compromising the ability of future generations to meet their own needs. Corporate Governance Risk Governance Sustainable development has been recognized as a potential roadway to build resilient societies, reduce poverty and safeguard the natural environment. This represents a demand for greater social and environmental responsibility as well as a new landscape of business opportunity for the private sector. Standard Bank Ltd (SBL) has made sustainability as an integral part of day-to-day work, and is continuously improving the environmental and social performance of operations which we commonly refer to as our corporate footprint Sustainability is not an only an environmental issue, it also takes into account economic & social issues, labor practices, human rights, economic performance, community, society, corruption, corporate governance and responsibility of product & services. And a sustainable global economy is not a luxury. Without a sustainable business model, environmental and social issues will continue to badly impact our economy and compromise for our future needs. The planet and society need a sustainable global economy and an organization needs at first a long time strategy and success. How does it get started? The change to a sustainable economy requires organizational change. To drive change, the organization needs to set goals and measures on how the organization will forward. Management Retrospection Stakeholders’ Information Sustainability For many years, the international community has been looking for answers on how to create economic growth in a socially just and environmentally safe way. But all previous approaches fell short. They were not comprehensive enough, neglected certain connections and put down an emphasis on activities in developing countries. On September 18, 2015, the United Nations’ General Assembly finally adopted the 2030 Agenda, an agreement of all 193 member states which includes 17 global Sustainable Development Goals (SDG) and 169 sub-goals. It has been effective since January 01, 2016 and serves as a kind of instruction manual for a better world. Financial Information With this agreement, the international community achieved something great: a plan for all people in all countries, aiming to create sustainable development including all of its social, ecological and economic aspects. The Agenda names five dimensions that need to be equally addressed: the people, the planet, prosperity and peace and a global partnership (the five Ps). The ultimate vision of the 2030 Agenda is a healthy mankind, living in a peaceful, fair society and a sound 238 | Standard Bank Ltd Annual Report 2020 environment – everywhere in the world. SUSTAINABILITY REPORTING Sustainability reporting is the practice of measuring, disclosing and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable developments. It is a key tool to help the organization to set goals, measure progress and manage sustainability within the organization. Reporting on the organization’s sustainability performance will give internal and external stakeholders a clear idea of its impact and can increase the efficiency and improve the performance. And reporting enables the organization to move forward into a successful sustainable future. As per Bangladesh Bank’s guideline of ‘Guidelines for Green Banking’ dated February 27, 2011, all commercial banks are supposed to produce their sustainability reporting for their stakeholders under Independent Annual Sustainability Report
240. Comparing performance within an organization and between different organizations over time . Capacity building: There is an urgent need to develop in house capabilities, as mitigation strategies are implemented. Now, the educational institutions are expected to customize their programs to include sustainability as a discipline and Bangladesh should focus on industry-university linkages to develop an institutionalized knowledge base. Sustainability Industry commitment: Industry has to demonstrate a long term commitment both at a strategic and operational level Civil society: It is well accepted that the competitiveness of a company and the well-being of the communities around it are inseparable. A Successful Communities can create demand for products and can also provide a supportive environment to business. Sustainability operating is being emerged as a common practice of 21st century business. Where once sustainability disclosure was the province of a few unusually green or community-oriented companies, today it is the best practice employed by companies worldwide. A focus on sustainability helps organizations manage their social & environmental impacts and improve operating efficiency and natural resources stewardship, and it remains a vital component of shareholder, employee and stakeholder relations, Peter F, Drucker-a writer, professor and management consultant told, “what you can’t measure, you cannot manage. What you can’t manage, you cannot change”. Sustainability reporting is therefore a vital step for managing change towards a sustainable global economy- one that companies long term profitability measuring social justice and environment care and a dedicated sustainability report is a reflection of company’s commitment to the issue of sustainability, which helps companies and their stockholders identify comprehensive reference point for reporting, thereby aligning many of their CSR initiatives with goals that can be measured and monitored. Stakeholders’ Information The followings are the recommendations to move forward on sustainability reporting: Government’s initiatives: The government can be a catalyst for ensuring speedy adoption of sustainability through policy for sustainable society committed to sustainable development. Management Retrospection Demonstrating how the organization influences and is influenced by expectations about sustainable development; and Synchronizing reporting guideline with local conditions: It is very sensitive to describe materiality disclosure including some other indicators of the company as per GRI guidelines within the present local corporate structure in Bangladesh. It requires synchronization in Bangladesh’s context based on GRI framework, which is globally acceptable framework, in all sectors including small and medium enterprises. Risk Governance Benchmarking and assessing sustainability performance with respect to laws, norms, codes, performance standards, and voluntary initiatives. Increasing awareness: Awareness building initiatives need to be undertaken for various stakeholder communities, both at the firm level as well as sector level. This would lead to useful stakeholder engagement and strategic commitment of the top management, making sustainability an imperative and ensuring reliable and transparent disclosures. Corporate Governance Sustainability reports based on the Global Reporting Initiatives (GRI), Reporting framework disclose outcomes and results that occurred within the reporting period in the context of the organization’s commitments, strategy and management approach. Reports can be used for the following purposes, among others: to sustainable business practices. This is essential for them to realize the potential benefits as they refine their business process and merits for performance measurement and success. Introduction (IASR) following the standards issued by the Global Reporting Initiative (GRI) which is an internally accepted format of sustainability reporting. As per definition of Global Reporting Initiative (GRI), “A sustainability report enables companies and organizations to report sustainability information in a way that is similar to financial reporting. Systematic sustainability reporting gives comparable data, with agreed disclosure and metrics.” Sustainability reporting complements financial reports with forward-looking information and the understanding of key value drivers, such as human capital formation, corporate governance, management of environmental risks and liabilities. It shows an understanding of the external environments (products, labor, and capital markets and regulatory structures) in which the company conducts its business. Besides, it assesses the elements that emphasize in the company’s competitive advantage (through cost leadership and product/service differentiation and the formation of intellectual capital). Sustainability reporting also discloses known future uncertainties (risks) and trends that may materiality affect financial performance. MATERIALITY Standard Bank Ltd Annual Report 2020 | Financial Information As the Bank aims to advance its position in sustainable business operations, and in order to increase our positive impact on the community, we have identified the most material sustainability aspects based on understanding of our stakeholders’ needs and priorities. Comprehensive assessment takes place on an annual basis to identify and categorize the sustainability topics that are most relevant to our operations. The main material aspects have been outlined below are in alignment with our six sustainability focus areas. 239
241. Introduction Transparency and long-term approach in customer relationships Corporate Governance Ensuring the best long-term outcome for customers and doing so in an open and comprehensive manner . Responsible investments Social responsibility Environmental responsibility Long-term employer Responsible investment of customer’s capital to promote favorable returns while taking consideration for the environment, social responsibility and ethics. Helping to improve society in a positive direction by preventing ill-health and social segregation. Reducing our environmental impact. Creating a workplace and culture distinguished by health, development and diversity. Business Ethics Building trusted relationships with suppliers and partners by adhering to laws and regulations, and acting in an honest and fair manner in general complying the principles of Islamic Shari’ah. Risk Governance MOVEMENT TOWARDS SUSTAINABLE DEVELOPMENT GOALS (SGDS) Management Retrospection Stakeholders’ Information Sustainability The United Nations Sustainable Development Goals (SDGs) set the global agenda for action on improving the wellbeing of present & future generations. The 17 goals aim to tackle the world’s most pressing challenges through the promotion of sustainable development to 2030. As we respond to our most material issues, The Bank’s actions in focus areas are supporting the achievement of these priority goals. Financial Information An outline of our contribution to the SDGs is illustrated below: Transparency relationships and long-term approach in customer Ensuring the best long-term outcome for customers and doing so in an open and comprehensive manner. 240 | Standard Bank Ltd Annual Report 2020 Related to SDGs number-1, 8, 10, 11, 17
242. Responsible investments Introduction Responsible investment of customer ’s capital to promote Related to SDGs number- 1, 4, 6, 7, 9, 11, 13, 17 favorable returns while taking consideration for the environment, social responsibility and ethics. Social responsibility Environmental responsibility Reducing our environmental impact. Corporate Governance Helping to improve society in a positive direction by preventing Related to SDGs number-1, 3, 4, 15, 17 ill-health and social segregation. Related to SDGs number- 6, 7, 12, 13, 14, 15, 17 Long-term employer Risk Governance Creating a workplace and culture distinguished by health, Related to SDGs number- 1, 4, 5, 8, 17 development and diversity. Business Ethics Building trusted relationships with suppliers and partners by Related to SDGs number- 16,17 adhering to laws and regulations, and acting in an honest and fair manner in general complying the principles of Islamic Shari’ah. Management Retrospection SUSTAINABLE BANKING: Sustainable development is such development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainable banking policy defines the Bank’s general sustainable banking principles, and its voluntary commitments to its main stakeholders, through principles and commitments focused on creation of lasting value At SBL, we always believes that growth should be both inclusive and environmentally sound to reduce poverty and build shared prosperity for our society to continue to meet up the needs of future generations. Stakeholders’ Information SBL’s aim is to be one of the best practices Bank in the sector on corporate social responsibility and good governance. Our aim is to take a leadership position in sustainable finance. POLICY FORMULATION AND GOVERNANCE Standard Bank Limited is following the regulations and guidelines issued by the Sustainable Finance Department of Bangladesh Bank and already formed a ‘Sustainable Finance Department’ as per instructions stated in Bangladesh Bank’s SFD Circular No. 02 dated December 01, 2016 to work on the areas specified therein. Since beginning of its journey, the department is working hard to ensure due diligence in environmental and social issues in every investment of SBL. Sustainability Standard Bank has a ‘Sustainable Finance Committee’ headed by the Additional Managing Director & CRO and comprises of heads of different divisions following the instruction Bangladesh Bank. This Committee meets at least once a quarter and proposes, coordinates and promotes the Bank’s sustainability initiatives. Financial Information Standard Bank Ltd Annual Report 2020 | 241
243. Introduction ENVIRONMENT RELATED INITIATIVES Corporate Governance GREEN BANKING Risk Governance “Green Banking” is a form of banking taking into account the social and environmental impacts and their main objects are to safe-guard and conserve the environment. As the intermediary of financial sector, banks can ensure that business entities adopt environment-friendly practices. The main objective is to reduce carbon footprint from banking operations as well as from financed projects. Management Retrospection The banking sector in Bangladesh is considered to be in a relatively environmentally friendly industry (in terms of emissions and pollution). However, environmental impact of banks is not physically related to their banking activities but with the activities of the customers. Banking sector is one of the major sources of financing investment for commercial projects, which is one of the most important economic activities for economic growth and encouraging environmentally responsible investments and prudent lending. Stakeholders’ Information Sustainability Financial Information 242 | Standard Bank Ltd Annual Report 2020
244. Introduction Under green banking initiatives , banks are involved in two pronged approaches: firstly, green banking focuses on the green transformation of internal operations of all banks/FIs. It means all the banks/FIs should adopt appropriate ways of utilizing renewable energy, automation and other measures to minimize carbon footprint Secondly, all banks should adopt environmentally responsible financing; weighing up environmental risks of projects before making financing decisions and in particular supporting and fostering growth of upcoming ‘green’ initiatives and projects. Standard Bank Limited has already started to take necessary initiatives to incorporate this aspect in its daily business & operational activities. Corporate Governance Bangladesh is one of the emerging economics of the world and has witnessed rapid industrial growth over the last two decades that has contributed significantly to the rise in the country’s GDP. On the other hand, we are vulnerable to risks related to environmental pollution and climate impacts in the form of natural & man-made disaster. Some of the common environmental & social concerns include land degradation, water pollution and scarcity, air pollution, biodiversity resources and impacts of natural disasters. Rapid population growth, improper use of land, poor resource management and uncontrolled discharge of pollutants are the major causes. Bangladesh is one of the most climate change vulnerable countries and floods, tropical cyclones, storm, surges, drought are likely to become more frequent and severe in the coming years. We need to protect our financing from the risks arising out of the deteriorating environment scenario and climate change. As per conversation of environment and Sustainable Development Goals and social protection, credit operations of banks must be conducted by addressing of environmental and social issues through Environmental and Social Risk Management. Bangladesh Bank advised to banks/financial institutions to finance eco-friendly products/initiatives to make eco-friendly finance more familiar to the all stakeholders including clients and banks/financial institutions as well as to facilitate for implementing various development plans of Bangladesh Govt. such as Perspective Plan of Bangladesh: 2010-2021, National Sustainable Development Strategy 20162030, Bangladesh Delta Plan 2100, Eight Five Years Development Plan and Sustainable Development Goals (SDG). Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 243
245. STANDARD BANK LIMITED ON THE ROAD TO GREEN BANKING Introduction Apprehended the importance of Green Banking and Policy Guideline from Bangladesh Bank , Standard Bank Limited has formulated Product Program Guideline for Green finance. Standard Bank has established a separate Sustainable Finance Department. The Green Banking products specified by Bangladesh Bank can directly or indirectly contribute to the reduction of carbon emissions. A Participation Agreement signed on 12th July 2017 between Bangladesh Bank & Standard Bank Limited for disbursement of Tk.400.00 Crore under Refinance Scheme for Green Products/Initiatives. As on 31 December 2020, Standard Bank Limited financed BDT.1,618.43 million in ETP, Bio-gas and other renewable energy projects under Green Products/Initiatives. At end of the year 2020 receivable principle amount BDT.39.39 million is under Bangladesh Bank refinance facilities. Corporate Governance GREEN BANKING REPORT 2020: Total A. Introducing Green Finance 1 Effluent Treatment Plant (Project Finance Having ETP) 06 8,866.51 Risk Governance 2 Bio-gas Plant 0 0.00 Solar Panel/Renewal Energy Plant 59 1,036.45 4 Hybrid Hoffman Kiln (Brick Filed) 03 20.44 5 Others 06 1,360.81 6 Green Finance at reduced rate of interest 0 0 Total 74 11,284.21 Management Retrospection 6 No. of accounts facilitated with SMS Banking Stakeholders’ Information 7 No. of accounts facilitated with Mobile Banking C. Awareness Building 1 Training Programs on Green Banking (In-house) 2 Participants in the training D. Disclosure Sustainability Online Banking 1 No. of ATMs (own ATM & CDM) 2 Shared ATMs (NPSB Network) 3 No. of Branches with online coverage 4 No. of total accounts transaction through ADC Channel 5 No. of accounts facilitated with internet Banking 1 Website 2 Annual Report 3 Preparation of Green Banking & Sustainability Report Financial Information | Amount (Million) 3 B. 244 No. of Projects Standard Bank Ltd Annual Report 2020 124(121+3) All over Bangladesh (59 Banks connected with NPSB) 138 11,47,664 12,672 6,71,739 1,079 Uploaded on the website on the onset up to 2020 Green Banking Focus provided in Annual Report 2015, 2016, 2017, 2018, 2019 & 2020 Yes
246. Introduction ENVIRONMENTAL & SOCIAL OBLIGATIONS Carbon Footprint Reduction: Standard Bank has taken following measures to reduce the carbon footprint: In light of Green Banking Policy of Standard Bank Limited, a general instruction has been issued on the followings green activities/practices as part of in-house environment management and to promote Green Banking within the bank: a. b. c. Ensure economic use of electricity • Use energy saving lights in bank premises • Shutdown the computer properly and switch off the computer monitor before leaving office each day • Ensure that light, fans, air conditioner have been switched off before leaving office each day and • Use energy efficient electronic equipments • Fuel Consumption: • Ensure economic use of fuel • Buy energy efficient cars to reduce gas and petroleum consumption Paper Consumption: Where possible use online communication (e-mail, IP message etc.) instead of printed communication • Think twice before taking a print • Take print on the both side of paper to save paper consumption • Use scrap paper for taking draft print and as note pads Water Consumption • Do not misuse drinking water • Ensure economic use of water in all other cases • Avoid use of disposable cups/glasses to become more eco- friendly Green Mortgages: Standard Bank Ltd Annual Report 2020 | Financial Information Standard Bank Ltd. has planned to offer special discount to the borrowers who provide mortgage of land and buildings which are greener. This initiative will induce use of more energyefficient materials and building plans. Standard Bank will not allow the land as mortgage that is prone to environmental impacts by virtue of its geographical location and polluted by the operation business activities. As mortgaged, preference will be given to the buildings which are designed and constructed with energy efficient items such as solar panels and improved insulation. Bangladesh since its birth developing gradually based on agriculture mostly. Bangladesh in predominantly an agricultural country where agriculture sector plays a vital role in accelerating the economic growth. Among the economic sector in Bangladesh agriculture is the most important economic sector. So agriculture sector influences the development of national economy. Majority percent people depend on agriculture directly or indirectly in Bangladesh. The most significant part of gross domestic income comes from the agriculture sector. It is therefore important to have a productive, sustainable and environment-friendly agricultural system in order to ensure long-term food security for people. Moreover, this sector provides raw material for micro, medium and small industries. Although the Coronavirus outbreak in Bangladesh has halted almost all economic activities and disrupted the supply chain, the agriculture sector continued playing a key role in saving the lives and livelihoods of people. Standard Bank Limited feel proud being a part of developing Bangladesh. Standard Bank Limited is doing it’s best for the progress of Bangladesh by the agricultural investment. The Management of Standard Bank Limited always enthusiastic to contribute to achieve Sustainable Development Goal (SDG) by financing the poor farmers and also for the development of Bangladesh. Standard Bank Limited has started a separate division by the name of Agriculture & Rural Credit Division in Head Office level & fixed up a target in every fiscal year to all it’s Branches for financing, to provide best service & an easy access of the poor farmers. Sustainability TOWARDS A SAFE & ECO FRIENDLY HABITAT Agriculture in Bangladesh: Stakeholders’ Information • The Environmental Risk Rating of projects is being carried out to assess its impact on the environment at large. Standard bank Limited incorporated Environment Risk Rating (EnvRR) into its core Banking Policy since 2016. SBL assess total 890 nos of accounts, under EnvRR guideline of which High rating accounts are nil, 766 accounts rating as Low category and 124 accounts rated as Moderate category. SBL Financed under Rated project 15,292.36 Million in 2020. Management Retrospection • Paperless banking Energy consciousness Establishment of green building for its own use etc. Environmental Risk Rating: Risk Governance Electricity Consumption: Corporate Governance IN-HOUSE AWARENESS PROGRAMME 245
247. Introduction Role of Government of Bangladesh in Agricultural Sector : Corporate Governance Government slogan ÒgywRee‡l©i Aw½Kvi, K…wl n‡e `yev©iÓ is the reflection of the importance of agriculture sector. It was a dream project of the Father of the Nation, we will be able to build up dreamt Golden Bangladesh with the aim of building Bangladesh as a hunger and poverty-free middle-income country. Government of Bangladesh has undertaken various programs for the improvement of agriculture. Government objectives in agriculture, food and nutrition security. Now, Bangladesh is self–sufficient in food production and it is possible due to strong motivation and devotion from the government to grass-root level farmers along with every stakeholder in the agriculture sector. There is no way to deny the appreciation to our agriculturists here, by utilizing their knowledge and experience, several unemployed youths have turned their backs on employment and keep the country’s economy in a significant role. In the case of livestock rearing, we see progressive impressions. Poultry and dairy industries have flourished throughout the country, especially the increase of beef fattening program, rearing of goats and sheep is highly promising. Risk Governance Management Retrospection In line with the Bangladesh Government, Bangladesh Bank are making proactive policy and support to boost up agricultural production along with the help of different Banks and private sectors. Considering the growing demand for agricultural products every year the central bank fixed up target to provide agricultural & rural investment to attain the Sustainable Development Goals (SDG), poverty alleviation and remove hunger from the country. To facilitate farmers and to go ahead the existing progress of agriculture sector, Bangladesh Bank has been playing a leading role and making up-to-date ‘Agricultural and Rural Credit Policy and Program’ in every fiscal year. Stakeholders’ Information Bangladesh Bank has taken many initiatives with the support of Government of Bangladesh to resolve the crisis due to the outbreak of the coronavirus.Earlier Bangladesh Bank has announced special refinance scheme for Tk.5,000.00crore for the agricultural sector with a view to boosting up agricultural production to support farmers during the corona virus crisis. Target and Achievement: As agriculture & Rural Investment is a priority sector, Standard Bank Limited started financing from the Fiscal Year 2009-2010 as per instruction of Bangladesh Bank. The trend of achieving target fixed by Bangladesh Bank is the reflection of close attention of Standard Bank Limited. We are very delighted to poster that our bank achieved the target set by Bangladesh Bank from the begging. We achieved the stipulated targets by Bangladesh Bank in last 07 (seven) Fiscal Years (FY: 2009-2010, 2013-2014, 2014-2015, 2015-2016, 2016-2017, 2017-2018 & 2018-2019). Consequently, the Governor of Bangladesh Bank appreciated Standard Bank Limited by awarding “Letter of Appreciation” for achieving target under Agri/Rural credit in 02 (Two) fiscal years 2013-2014 & 2014-2015. Unique feature of Agricultural & Rural Investment: • Fiscal Year wise target fixed up by Bangladesh Bank highest @2.5% of total investment amount on 31st March of previous fiscal year. • Branch wise separate disbursement target are allocated as per target fixed up by Bangladesh Bank. • Disbursement to be made at least 60% in crops sector, at least 10% in fisheries & at least 10% in livestock sector from the total target. • At least 30% of Agriculture & Rural investment target to be provided through own network. • Investment also provide through Microfinance Institution (MFI) registered with Microcredit Regulatory Authority (MRA). • Moreover agricultural support sectors, income generating, irrigation & agricultural tools, crops storage & marketing & poverty alleviation in rural area also included in Agricultural and Rural investment. • Highest rate of profit/rent is 9%; which may be reframed time to time by Bangladesh Bank. • Provide investment for cultivating pulse, oilseed, spices, maize & salt (Import Substitute Crops) at 4%. • 03 (Three) core sectors (i.e. crops, fisheries &livestock) get priority in Agricultural investment. • Providing large investment in Dairy farm, Beef fattening, Poultry, Fishery& Hatchery etc. • Agriculture & Rural Investment Division (ARID) is a separate division in Head Office level to accelerate agricultural investment by the help of trained & experienced Officers in the Branches. Standard Bank’s Initiatives: Sustainability Standard Bank Limited is dedicated to contribute to Sustainable Development (SDG) for achieving the goal by eradicating poverty and hunger from the country. Agriculture is the backbone of our national economy, top-priority should be given for the development of this sector, considering the fact Honorable Board of Directors and Management of Standard Bank Limited have been showing notable eagerness in any issue related to Agriculture and Rural Investment Division to ensure agricultural productivity. It may be mentioned here that the Honorable Chairman of Standard Bank Limited has emphasized to disburse Agriculture & Rural Credit through own network instead of MFI/NGOs Linkage. Standard Bank Limited has been providing direct investment to the farmers for sustainable growth of the country. Financial Information 246 | Standard Bank Ltd Annual Report 2020
248. Introduction Graphical presentation of Agricultural and Rural Credit Performance for consecutive 06 (Six) years & up to December 2020 i.e. from FY 2014-2015 to FY 2019-2020&2020-2021 (31 December 2020): Graphical presentation of Agricultural and Rural Credit disbursement in the year 2020: Corporate Governance Risk Governance Graphical presentation ofAgricultural and Rural Credit disbursement in the year 2020: Financing through a woman Borrower“M/S. SwassoKrishiKhamar”, Proprietor: Mst. AnjumanAra Begum,a Dairy & Beef Fattening farm under Agricultural finance of Standard Bank Limited, Pirgonj Branch, Rangpur. Management Retrospection Romana Agro Fisheries, a fishery project under Agricultural finance of Standard Bank Limited, Sultanpur Branch, Brahmanbaria. Stakeholders’ Information Agriculture Projects under SBL Own Financing: Sustainability M/s Islam MatshoKhamar, a fishery project under Agricultural financing of Standard Bank Limited, TungiparaBranch, Gopalgonj. MFIs/NGOs Linkage: Standard Bank Ltd Annual Report 2020 | Financial Information Mr. Mohammad Idrich, In-charge of ARCD and Mr. DipokSarker, Officer of ARCD, Head Office has visited the business premises of M/S. Uzzaman Robin Poultry Khamar, a poultry farmunder Agricultural financing of Standard Bank Limited, MalibagBranch, Dhaka. Micro Finance Institutions (MFIs)/Non-Government Organizations (NGOs) plays a significantrole in association with Banks for the alleviation poverty in rural area of Bangladesh. Considering the limited area coverage of Bank’s Branches & to ensure the finance under Agriculture sector, these MFIs/NGOs work as media to reach the borrowers in remote territory. Standard Bank Limited has financed a substantial amount under NGO linkage investment program some renowned Microfinance Institution (MFI). 247
249. Introduction CORPORATE SOCIAL RESPONSIBILITY (CSR)INITIATIVES Corporate Governance CSR is about (i) taking stock of the economic, social and environmental impacts of the business, (ii) mitigating the negative impact and bolstering the benign impacts (iii) taking up action programs and community investment to reduce social exclusion and inequality and to address the key sustainable development challenges. Risk Governance The 03 Approach- People, Planet and Profit are the model of sustainability of Standard Bank Limited. The Bank believes that a responsible and sustainable business organization does its business responsibility by keeping in mind the interests of its stakeholders- both internal and external. We believe our conscious choice of protecting the environment today will lead to a better and sustainable in future. Management Retrospection In line with the conformity SBL involves in various activities apart from usual banking. As guided by Bangladesh Bank, Standard Bank Ltd. has enthused itself into a broad range of direct and indirect CSR engagements including advancement of education for all the poor and underprivileged community, preventive and curative health support for the under privileged population segment, humanitarian relief and disaster response including warm cloth/Blanket, widening of greening initiatives arresting environmental degradation and so forth. The endowment of Standard Bank Foundation has growth to a significant size since its inception in 2010. Standard Bank takes part to eliminate the impropriety in the society, to create fellow feeling among the citizens of the country, motivate people to do good works and conserve nature. Thus education, health care, creation of social awareness, rehabilitation of destitute, standing beside the victim caused by natural disasters, preserve the art & culture of the country and address human sufferings arising out of different causes are some of the important areas where SBL has been carrying out its social and philanthropic representation. Summary of CSR contribution during the year 2020 is here in under Stakeholders’ Information Sectors/Initiatives (Social project + Community Investment) SL No. Sustainability Financial Information 248 | Figure in Crore Budget Actual 01 Education 3.60 0.25 02 Health 2.40 5.31 03 Disaster Management 2.65 8.89 04 Environment 1.20 0.00 05 Cultural Welfare 0.50 10.54 06 Infrastructure improvement in remote/underprivileged area 0.05 0.00 07 Income generating activities for the underprivileged Population 0.20 0.00 08 Others 0.20 0.05 09 Climate Risk Fund 1.20 0.00 Total 12.00 25.04 Standard Bank Ltd Annual Report 2020
250. SOME OF THE CSR ACTIVITIES OF SBL IN 2020 Introduction Investment in Education Standard Bank Ltd . stands beside the meritorious students of low income family in reputed academic and vocational training institutions by granting scholarships/stipends. We also support for upgrading of facilities in academic and vocational training institutions subsequently engaged with students and trainees from the under privileged rural & urban population. Corporate Governance Our commitment to education helps the poor and meritorious students to discover their potentiality in the area of academic development. Recognizing education as a focus area of the bank’s CSR activities, the bank has donated BDT 2.50 million in the focus of scholarship/stipend to the poor and meritorious with education sector in social intervention and supplementing initiatives to the community in the year 2020. Donation to Honorable Prime Minister’s Relief and Welfare Fund. Standard Bank Ltd. donates BDT 100.00 million to Honorable Prime Minister’s Relief and Welfare Fund in 2020 to mitigate impact of COVID-19 outbreak and helping to flood affected people in Bangladesh. Risk Governance Management Retrospection Stakeholders’ Information Standard Bank Ltd donated BDT FiveCrore to Prime Minister’s Relief & Welfare Fund.Honorable Prime Minister & Leader of the People Sheikh Hasina joined the program through video conferencing on 20 September 2020. Chairman of the Board of Directors of Standard Bank Ltd. Mr. KaziAkram Uddin Ahmed handed over the chequeof grant to Dr. Ahmad Kaikaus, Principal Secretary of Honorable Prime Minister. Disaster management Sustainability Disaster management is a collective term encompassing all aspects of planning for and responding to emergencies and disasters, including both pre-and post-event activities. It refers to the management of both the risk and the consequences of an event. It is also a systematic process aimed at reducing the negative impact and/or consequences of adverse events. Standard Bank Limited donated BDT 50.00 million to Honorable Prime Minister’s Relief and Welfare Fund to helping flood affected people in Bangladesh. Financial Information Standard Bank Ltd Annual Report 2020 | 249
251. Donation of Blankets to Hon ’ble Prime Ministers Relief Fund Introduction As a part of Corporate Social Responsibility (CSR), Standard Bank is distributing blankets among the distressed people of cold stricken areas in Bangladesh every year. On the base of 30.12.2020, Bank donated 75,000 pcs blankets to Hon’ble Prime Minister’s Relief Fund for winter-affected people in the country. Corporate Governance Risk Governance Standard Bank Limited donated 75,000 pcs blankets for the cold stricken people to the Honorable Prime Minister’s Relief Fund. Honorable Prime Minister & Leader of the People Sheikh Hasina joined the program through video conferencing on 28 October 2020.Chairman of the Board of Directors of Standard Bank Ltd. Mr. KaziAkram Uddin Ahmed handed over the blankets to Dr. Ahmad Kaikaus, Principal Secretary of Honorable Prime Minister. Management Retrospection Art, Cultural Welfare and Sports Art is a creative work generally, or its principles; the marking or doing to things that have form and beauty: art includes painting, sculpture, architecture, music, literature, drama, dance etc. Culture is among other things, the products of the training and refining of the mind, emotions, manners, tasks etc. Art and culture plays an important role for development of a nation. Standard Bank always promotes Bangladeshi art & culture. During the year 2020 the Bank contributes BDT 105.40 million for some creative activities in this area. Donation to Bangabandhu Memorial Trust. Stakeholders’ Information Standard Bank Ltd. donates BDT.100.00 million to Bangabandhu Memorial Trust for celebrating Mujib Year & establishing Bangabandhu Corner in 2020. Sustainability Financial Information Standard Bank Limited has donated BDT Ten Crore to the “Bangabandhu Memorial Trust” for celebration of Mujib Year on the occasion of birth centenary of the Greatest Bengali of all time, Father of the Nation Bangabandhu Sheikh Mujibur Rahman. Mr. KaziAkram Uddin Ahmed, Chairman of the Bank, handed over the cheque on behalf of the Bank to the Honorable Prime Minister Sheikh Hasina at her official residence Ganabhabanon 06 January 2020. Vice Chairman of the Bank Mr. Md. Zahedul Hoque were present on the occasion. 250 | Standard Bank Ltd Annual Report 2020
252. Health Care Introduction Preventive and curative healthcare support for underprivileged people the next aim of Standard Bank ’s CSR initiatives. Supporting in this regard are direct grants i.e., incurring the costs of curative treatment of patients, costs of existing service rendering hospitals/diagnostic centres, costs of preventive public health and hygiene initiatives like provision of pure drinking water, hygienic toilet facilities etc. for poor and floating population. In the year 2020 the bank has expensed BDT 53.10 million in this sector including BDT 50.00 million to Prime Minister’s Relief and Welfare Fund donate for purchasing of PPE, Testing Kit, Respiratory Equipment and Financial Aid to jobless people for recently effected Corona Virus (COVID-19) in the country. Corporate Governance Risk Governance Management Retrospection Standard Bank Limited distributed Hand Sanitizer among the mass people at free of cost to prevent Coronavirus on 25 March 2020. Managing Director & CEO of the Bank Mr. Khondoker Rashed Maqsood and Dean, Faculty of Pharmacy, University of Dhaka, Dr. S. M. Abdur Rahman inaugurated the distribution program at Department of Pharmacy, Curzon Hall, University of Dhaka and then distributed sanitizers among the people at main gate of Curzon Hall. Professor of Pharmacy Department Dr. Firoz Ahmed, Teachers, Senior Officials of Standard Bank and a large number of students were present at that moment. OTHERS CSR ACTIVITIES Stakeholders’ Information Since its inception Standard Bank takes a move to promote humanity, moral values and patriotism as well as for well being of society and country. During the year 2020, bank donates BDT.0.50 million to individuals for assisting education, treatment etc. and operating Day Care Centre. Financial Inclusion through Financial Literacy Sustainability Standard Bank emphasis for financial inclusion especially among the students and street children towards educate them about financial literacy. We have arranged/participated many School Banking Conferences/Fairs all over the country in the year 2020 under the supervision of Bangladesh Bank for making familiar the students, teachers and guardians about school banking and financial literacy. Standard Bank opens the accounts of students (Rising Star). There are 15,143 nos. school banking account are running with credit balance BDT.9.97 crore as on 31st December 2020. Among these 7,858 male students accounts and 7,285 female students accounts are running with credit balance BDT.5.12 crore and BDT.4.85 crore respectively. Financial Information Without its Partnership Agreement for disbursement of Tk.10.00 Crore under Refinance Scheme under Financial Inclusion Program of 10 Taka account holder between Bangladesh Bank & Standard Bank Limited was signed on 21st August 2014 for financing in small/marginal/ landless farmer, poor income generating people, affected people by natural disaster & marginal/ small business. Standard Bank Limited has financed Tk.77.79 million among the 1612 nos. of client (Male 1,319 & Female 293) as on 31.12.2020 under this program. In the year-2020 the Bank has financed Tk.10.25 million among the 206 nos. of individual client (Male 173 & Female 33). Sustainability is the issue never ever be compromised with anything. Where ever we go, where ever we may be, if we are there, if we exist, if anything persists it is because of sustainability. It is our struggle, it is our untiring effort, the best we can do for the survival on earth- the contribution we can minimize pollution, environmental threats, resilience to climate change with respect to climate change mitigation and climate change adaption; resilience to inequality, imbalance, fight against all evils, inconsistency, corruption, fight for helpless, distressed, underprivileged, the CSR community investment with a view to preserving the basic rights of human being, addressing gender equity for women empowerment Standard Bank Ltd Annual Report 2020 | 251
253. Introduction INTEGRATED REPORTING Corporate Governance Integrated reporting is a process that results in communication to its stakeholders about value creation by the Company over the period of time . An integrated report is a concise communication about how an organization s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term. It means the integrated representation of a company s performance in terms of both financial and other value relevant information. Risk Governance We face a time of substantial and all encompassing change. Amid the excitement and managing great change we are careful about the success of our clients and the trust and support of our stakeholders, strengthening our commercial sustainability. Annual Report for the year 2020 of Standard Bank Limited has been presented as an ‘Integrated Report’ with the aim to utter how Standard Bank Limited, as a growing organization, has effectively managed its business to deliver consistent value to its stakeholders. It incorporates ‘efforts’ the company has undertaken towards contributing towards economic prosperity, environmental sustainability and social wellbeing for a brighter future. Management Retrospection Our 2020 annual integrated report covers the period between 1st January 2020 and 31 December 2020. All materials that matters, up to board of directors approval, are included here. The annual integrated report reflects operations of Standard Bank Limited and its subsidiaries. Unless indicated otherwise, all data pertains to the group, which includes our financial operations and subsidiaries. In presenting the Annual Integrated Report, we have consistently followed the guidelines issued by the Institute of Chartered Accountants Stakeholders’ Information Sustainability Financial Information 252 | Standard Bank Ltd Annual Report 2020 of Bangladesh (ICAB) in the form of ‘Integrated Reporting Checklist’, which is in congruence with the integrated reporting framework prototype issued by the International Integrated Reporting Council (IIRC).In explaining the Company’s operations and financial performance, financial information has been extracted from the Audited Financial Statements for the year ended 31 December 2020 with relevant comparative information. The financial statements consistently comply with the requirements of: • International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs), • Relevant rules & regulations of Bangladesh Bank (The Central Bank); • Companies Act 1994; • Bank Companies Act 1991 (Amended upto 2018) ; • Securities and Exchange Rules 1987; • The Income Tax Ordinance 1984; • and other applicable laws and regulations of the land
254. Introduction The Sustainability requirements , as elaborated separately in our Sustainability Report, adhere to the guidelines issued by the Global Reporting Initiative (GRI)-G4 Framework. To report our corporate governance practices, we have followed the revised Corporate Governance Guidelines (CGG) issued by Bangladesh Securities and Exchange Commission (BSEC).The scope of our Annual Report comprises of activities that have been carried out within the geographical boundaries of Bangladesh, as we do not have operation or subsidiary in other countries. Corporate Governance Our annual integrated report aims to present a balanced and concise analysis of our strategy, performance, governance and prospects. In determining the content to be included in this report, we considered the issues that are material to maintain the commercial viability and social relevance required to achieve our vision in the medium term. We show the process of determining material issues as a business tool that facilitates integrated thinking. The materiality determination process undertaken in 2020 complemented our day to-day stakeholder engagements, going beyond these engagements We show the process of determining material issues as a business tool that facilitates integrated thinking. The materiality determination process undertaken in 2020 complemented our day to-day stakeholder engagements, going beyond these engagements and placing particular emphasis on aspects that are likely to influence the social, economic and physical environments in which we operate. Based on our leadership engagement, governance processes and our formal and informal stakeholder engagement initiatives, particularly with investors, we are confident that all material matters have been identified and disclosed in this report. Management of group functions and the business units approved the relevant content in the annual integrated report. Risk Governance EXTERNAL ASSURANCE Sl. Particulars Assurance Provider Consolidated and Separate Financial Statements of Standard Bank Limited Shafiq Basak & Co. Chartered Accountants 2 Financial Statements of Standard Bank Limited Shafiq Basak & Co. Chartered Accountants 3 Financial Statements of Standard Bank Capital Management Limited Shafiq Basak & Co. Chartered Accountants 4 Financial Statements of Standard Exchange (UK) Limited 5 Financial Statements of Standard Co (USA) Inc 6 Corporate Governance 7 Financial Statements of Standard Bank Foundation Shafiq Basak & Co. Chartered Accountants 8 Provident Fund Shafiq Basak & Co. Chartered Accountants 9 Gratuity Fund Shafiq Basak & Co. Chartered Accountants 10 Welfare Fund Shafiq Basak & Co. Chartered Accountants 11 IT Security compliance & Gap review Shafiq Basak & Co. Chartered Accountants Management Retrospection 1 Jahan & Co. Chartered Management Accountants United Financial CPA,PC Stakeholders’ Information Mahfel Huq & Co. Chartered Accountants Sustainability Standard Bank Ltd Annual Report 2020 | Financial Information The Management as well as Managing Director of Standard Bank Limited acknowledges the responsibility to ensure the integrity of the disclosure contained in the Integrated Report presented herewith that comprises the discussion and analysis, disclosures pertaining to stewardship, which should be read in conjunction with the audited financial statements. In his opinion, the integrated report, incorporated in this annual report has been prepared in accordance with the IIRC’s international integrated reporting framework and addresses all material issues and fairly presents the group’s integrated performance. 253
255. Introduction Corporate Governance Risk Governance Management Retrospection Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 254
256. Introduction INDEPENDENT AUDITOR ’S REPORT TO THE SHAREHOLDERS OF STANDARD BANK LIMITED Corporate Governance REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS OPINION Risk Governance We have audited the consolidated financial statements of Standard Bank Limited and its subsidiaries (the “Group”) as well as the separate financial statements of Standard Bank Limited (the “Bank”), which comprise the consolidated and separate balance sheets as at 31 December 2020 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 notes to the consolidated and separate financial statements, including a summary of significant accounting policies. Management Retrospection In our opinion, the accompanying consolidated financial statements of the Group and separate financial statements of the Bank give a true and fair view of the consolidated balance sheet of the Group and the separate balance sheet of the Bank as at 31 December 2020, and of its consolidated and separate profit and loss accounts and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note 2.00. BASIS FOR OPINION Stakeholders’ Information We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group and the Bank in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. OTHER MATTERS The financial statements of the year ended 31 December 2019, were audited by another auditor who expressed an unmodified opinion on those statements on March 24, 2020. Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 255
257. KEY AUDIT MATTERS Introduction Key audit matters are those matters that , in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Corporate Governance DESCRIPTION OF KEY AUDIT MATTERS OUR RESPONSE TO THE KEY AUDIT MATTERS 1. Measurement of Provision for Loans and Advances : The process for estimating the provision for loans and advances • portfolio associated with credit risk is significant and complex. We tested the design and operating effectiveness of key controls focusing on the following: For the individual analysis, these provisions consider the • estimates of future business performance and the market value • of collateral provided for credit transactions. Tested the Credit monitoring and provisioning process; Risk Governance For the collective analysis, these provisions are manually processed that deals with voluminous databases, assumptions • and calculations for the provision estimates of complex design • and implementation. Identification of loss events, including early warning and default warning indicators; Reviewed quarterly Classification of Loans (CL); Followed Bangladesh Bank’s Circulars and Guidelines. Management Retrospection Stakeholders’ Information At year end 2020 the Bank reported total gross loans and • advances of BDT 159,450.21 million (2019: BDT 158,079.99 million) and provision for loans and advances of BDT4,533.02 million (2019: BDT 3,852.07 million). • Our substantive procedures in relation to the provision for loans and advances portfolio comprised the following: • Assessed the methodologies on which the provision amounts based, recalculated the provisions and tested the completeness and accuracy of the underlying information; and • Finally assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines. Reviewed the adequacy of the general and specific provisions in line with related Bangladesh Bank’s Guidelines. See Note No. 7 and 12.00 to the financial statements 2. Valuation of Treasury Bills and Treasury Bonds: Sustainability The classification and measurement of treasury bills and treasury We tested the design and operating effectiveness of key bonds require significant judgment and complex estimates. controls focusing on the classification and measurement of treasury bills and treasury bonds. In the absence of a quoted price in an active market, the fair value of treasury bills and treasury bonds is determined using We tested a sample of the valuation models and the complex valuation techniques which takes into consideration of inputs used in those models, using a variety of techniques direct or indirect unobservable market data and complex pricing applicable in the circumstances. models. Finally, we have assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines. Financial Information See Note No.6 and 15.1to the financial statements 256 | Standard Bank Ltd Annual Report 2020
258. 3 . Legal and Regulatory Matters : We obtained an understanding of the Bank’s key controls over the legal provision and contingencies process. Introduction We focused on legal and regulatory matters because the Bank operates in a legal and regulatory environment that is exposed to significant litigation and similar risks arising from disputes and regulatory proceedings. Such matters are subject to many uncertainties and the outcome may be difficult to predict. We enquired to those charged with governance to obtain their view on the status of all significant litigation and regulatory matters. Corporate Governance These uncertainties inherently affect the amount and timing of potential outflows with respect to the provisions and other We enquired of the Bank’s internal legal counsel for all significant litigation and regulatory matters and inspected contingent liabilities. internal notes and reports. We also received formal confirmations from external counsel. We assessed the methodologies on which the provision amounts are based, recalculated the provisions, and tested the completeness and accuracy of the underlying information. Risk Governance We also assessed the Bank’s provisions and contingent liabilities disclosure. 4. IT Systems and Controls : We tested the design and operating effectiveness of the Bank’s IT access controls over the information systems that are critical to financial reporting. Management Retrospection Our audit procedures have a focus on IT systems and controls due to the pervasive nature and complexity of the IT environment, the large volume of transactions processed in numerous locations daily and the reliance on automated and IT dependent manual controls. We tested IT general controls (logical access, changes management and aspects of IT operational controls). Our areas of audit focus included user access management, This included testing that requests for access to systems developer access to the production environment and changes to were appropriately reviewed and authorized. We tested the IT environment. These are key to ensuring IT dependent and the Bank’s periodic review of access rights. We inspected application based controls are operating effectively. requests of changes to systems for appropriate approval and authorization. Stakeholders’ Information See Note No. 3.15.6 to the financial statements 5. Carrying Value of Investments in Subsidiary by the Bank : The Bank has investment in equity shares of its subsidiary namely “Standard Exchange Co.(UK) Ltd.”,“Standard Express(USA) Ltd.”, “SBL Capital Mgt. Ltd.”, and “SBL Securities Ltd.”. As at 31 December 2020, the carrying value of this investment is BDT 2,463.85 million. We have analyzed the appropriateness of the value in use model, the key assumptions used in the model, the reasonably possible alternative assumptions, particularly where they had the most impact on the value in use calculation. Sustainability The Bank is required to perform impairment test of Investment in subsidiary when impairment indication exists. The impairment testing is considered to be a key audit matter due to the complexity and judgements required in determining the assumptions to be used to estimate the recoverable amount. We have reviewed Management’s analysis of impairment assessment and recoverable value calculation of subsidiaries in accordance with IAS 36: Impairment of Assets. Financial Information Management has conducted impairment assessment and calculated recoverable value of its subsidiaries in accordance with IAS 36 (Impairment of Assets) as there was no existence of impairment indication. See Note No. 6.3 to the financial statements Standard Bank Ltd Annual Report 2020 | 257
259. OTHER INFORMATION Introduction Management is responsible for the other information . The other information comprises all of the information in the Annual Report other than the consolidated and separate financial statements and our auditors’ report thereon. The Annual Report is expected to be made available to us after the date of this auditor’s report. Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Corporate Governance In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS AND INTERNAL CONTROLS Risk Governance Management is responsible for the preparation and fair presentation of the consolidated financial statements of the Group and also separate financial statements of the Bank in accordance with IFRSs as explained in note 2.00, and for such internal control as management determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 and the Bangladesh Bank Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Group. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries. Management Retrospection In preparing the consolidated and separate financial statements, management is responsible for assessing the Group’s and the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Bank or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s and the Bank’s financial reporting process. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS Stakeholders’ Information Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: • • • Sustainability • • Financial Information • 258 | Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Bank to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. Standard Bank Ltd Annual Report 2020
260. We communicate with those charged with governance regarding , among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Introduction We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Corporate Governance From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the Companies Act, 1994, the Securities and Exchange Rules 1987, the Bank Company Act, 1991 and the rules and regulations issued by Bangladesh Bank, we also report that: we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; b. to the extent noted during the course of our audit work performed on the basis stated under the Auditor’s Responsibilities for the audit of the consolidated and separate Financial Statements 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 antifraud internal controls and instances of fraud and forgeries as stated under the Responsibilities of Managementand Those Charged with Governance for the Consolidated and Separate financial statements and internal controls for the financial statements and internal control: internal audit, internal control and risk management arrangements of the Group and the Bank as disclosed in 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. financial statementsfor the year ended 31 December 2020 of subsidiaries including foreign operation have been audited(except Standard Exchange Co.(UK) Ltd. being exempted)and properly reflected in the consolidated financial statements; d. in our opinion, proper books of accounts 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 records and statements submitted by the branches have been properly maintained and consolidated in the financial statements; f. the consolidated balance sheet and consolidated profit and loss account together with the annexed notes dealt with by the report are in agreement with the books of account and returns; g. the expenditures incurred by the Bank were for the purpose of the Bank’s business for the year; h. 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 related guidance issued by Bangladesh Bank; i. adequate provisions have been made for loan & advance and other assets as per Bangladesh Bank letter DBI-1(division-2)/111/2021-962 dated April 01, 2021 and DOS(RMMCMS)1154/161/2021-1829 dated April 22, 2021; j. the information and explanations required by us have been received and found satisfactory; k. we have reviewed over 80% of the risk weighted assets of the Bank and spent over 6,632 person hours; and l. Capital to Risk-weighted Asset Ratio (CRAR) as required by Bangladesh Bank has been maintained adequately during the year. Stakeholders’ Information c. Management Retrospection i. Risk Governance a. Place, Dhaka April, 28, 2021 Sustainability Md. Shafiqul Islam FCA Enrolment # 595 Partner SHAFIQ BASAK & CO. Chartered Accountants DVC: 2105030595AS652035 Financial Information Standard Bank Ltd Annual Report 2020 | 259
261. STANDARD BANK LIMITED & IT’S SUBSIDIARIES Introduction CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2020 Particulars Notes Amount in Taka 31.12.2020 31.12.2019 Corporate Governance PROPERTY & ASSETS CASH 3(a) Cash in Hand (including foreign currencies) Balance with Bangladesh Bank & its agent Bank (including Foreign Currencies) BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONS 4(a) In Bangladesh Outside Bangladesh 30,831,059,554 12,806,040,024 1,742,136,632 1,874,124,644 29,088,922,922 10,931,915,380 2,126,608,682 1,932,919,549 314,946,977 1,088,123,117 1,811,661,706 844,796,432 5,000,000 117,400,000 7,008,006,959 30,598,089,070 Government 3,559,474,650 26,688,824,637 Others 3,448,532,309 3,909,264,433 162,396,783,610 160,625,510,886 160,367,802,027 156,751,507,655 2,028,981,583 3,874,003,231 MONEY AT CALL AND ON SHORT NOTICE Risk Governance INVESTMENTS LOANS AND ADVANCES / INVESTMENTS 5 6(a) 7(a) Loans, Cash Credits, Over Draft etc./ Investments Bills Purchased and Discounted Management Retrospection FIXED ASSETS INCLUDING PREMISES, FURNITURE & FIXTURES 8(a) 3,859,486,400 3,811,857,285 OTHER ASSETS 9(a) 13,044,984,478 11,998,289,825 - - 219,271,929,683 221,890,106,639 NON-BANKING ASSETS TOTAL ASSETS LIABILITIES & CAPITAL LIABILITIES Borrowings from other banks, financial Institutions and agents 10(a) 12,006,087,417 12,590,934,656 DEPOSITS AND OTHER ACCOUNTS 11(a) 169,639,336,100 175,467,924,673 21,067,840,562 21,227,212,610 2,648,739,561 3,947,844,037 Savings Bank / Mudaraba Savings Deposits 16,261,413,034 13,493,759,639 Short Term Deposits / Mudaraba Short Term Deposits 10,559,249,429 7,624,557,568 105,474,904,687 117,828,775,845 13,627,188,827 11,345,774,974 20,861,268,137 17,583,370,958 202,506,691,654 205,642,230,287 13 10,059,907,880 9,580,864,650 14(a) 6,029,256,984 5,578,066,726 Stakeholders’ Information Current / Al-Wadeeah Deposits & Other Deposits Bills Payable Fixed Deposits / Mudaraba Term Deposits Deposits Under Schemes / Mudaraba Deposit Schemes OTHER LIABILITES 12(a) Sustainability TOTAL LIABILITIES CAPITAL / SHAREHOLDERS’ EQUITY Paid-up Capital Statutory Reserve General Reserve Financial Information Revaluation Reserve on Investment Surplus in Profit and Loss Account/ Retained earnings Non-controlling Interest 15 15.1(a) 16(a) 16.1(b) TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY Net Asset Value (NAV) per share 260 | Standard Bank Ltd Annual Report 2020 48 - - 1,714,358 84,328,448 674,205,017 1,004,465,166 153,790 151,362 16,765,238,028 16,247,876,352 219,271,929,683 221,890,106,639 16.67 16.15
262. STANDARD BANK LIMITED & IT’S SUBSIDIARIES Introduction CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2020 Particulars Notes Amount in Taka 31.12.2019 Corporate Governance 31.12.2020 OFF-BALANCE SHEET ITEMS CONTINGENT LIABILITIES 17(a) 10,721,978,308 17,537,916,173 Letters of Guarantee 12,833,411,761 13,691,325,458 Irrevocable Letters of Credit 11,066,404,802 11,328,500,692 4,280,149,013 6,189,609,905 - - 38,901,943,884 48,747,352,228 Documentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - 38,901,943,884 48,747,352,228 Bills for Collection Other Contingent Liabilities TOTAL: Risk Governance Acceptances and Endorsements OTHER COMMITMENTS: Management Retrospection Stakeholders’ Information TOTAL OFF - BALANCE SHEET ITEMS These financial statements should be read in conjunction with annexed notes Director Chairman Subject to our separate report of even date Financial Information Dated, Dhaka April 28, 2021 Director Sustainability Managing Director Md. Shafiqul Islam FCA Enrolment # 595 Partner Shafiq Basak & Co. Chartered Accountants DVC: 2105030595AS652035 Standard Bank Ltd Annual Report 2020 | 261
263. Introduction STANDARD BANK LIMITED & IT’S SUBSIDIARIES CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2020 Particulars Notes Corporate Governance Interest Income / Profit on Investment Interest / Profit paid on Deposits & Borrowings etc. Net Interest / Profit on Investments Investment Income Commission, Exchange Earnings & Brokerage Other Operating Income Risk Governance TOTAL OPERATING INCOME ( A ) Salary & Allowances Rent, Taxes, Insurance, Electricity etc. Legal Expenses Postage, Stamp, Telecommunication etc. Stationery, Printing, Advertisement etc. Managing Director’s salary & fees Directors’ Fee & Other benefits Audit Fees Charges on loan losses Depreciation and Repair of Bank’s Assets Other Expenses TOTAL OPERATING EXPENSES ( B ) Profit / (Loss ) Before Provision ( C ) = ( A - B ) Provision for Loans/ investments Specific Provision General Provision Special General Provision-COVID-19 Provision for Start-up Fund Provision for Off-Balance Sheet items Provision for diminution in value of investments Provision for impairment of client margin loan Other Provision Total Provision ( D ) Total Profit / (Loss) before Taxes (E)=( C - D ) Provision for Taxation Current Tax Deferred Tax Net Profit / (Loss) after Taxation : Retained earnings brought forward from previous year Net Profit available for distribution Appropriations : Statutory Reserve Non-controlling interest General reserve Dividend Retained Earnings carried forward Consolidatd Earning per Share (EPS): Bank Earning per Share (EPS): 18.3(a) 19(a) 20(a) 21(a) 22(a) 23(a) 24(a) 25(a) 26(a) 27(a) 28 29(a) 30(a) 31(a) 32(a) 33(a) 34(a) Management Retrospection 12.1 Stakeholders’ Information 16.1(a) 14(a) 36 Amount in Taka 31.12.2020 31.12.2019 13,745,406,390 11,560,773,374 2,184,633,016 4,202,684,339 995,415,081 417,423,223 5,615,522,643 7,800,155,659 2,943,617,422 614,129,872 18,045,990 22,490,037 61,389,148 13,949,194 4,407,998 1,629,938 369,594,933 635,823,437 4,685,077,968 3,115,077,691 17,200,994,911 12,951,889,809 4,249,105,102 1,797,308,127 1,178,314,864 529,704,315 3,505,327,306 7,754,432,408 2,808,323,026 699,755,691 25,607,114 26,415,860 119,757,273 7,530,000 8,048,728 2,289,119 298,901,750 446,475,255 4,443,103,818 3,311,328,590 662,410,595 18,543,248 100,651,780 29,880,782 (79,359,475) 17,238,977 22,424,816 187,644,710 959,435,432 2,155,642,258 1,073,587,116 1,292,876,205 (219,289,089) 1,082,055,143 43,340,132 1,125,395,274 320,995,935 107,150,579 (7,373,663) 25,425,667 11,535,316 457,733,835 2,853,594,755 1,349,161,118 1,334,830,717 14,330,402 1,504,433,637 61,240,471 1,565,674,108 451,190,257 2,428 674,202,589 1.08 1.04 561,208,942 734 1,004,464,431 1.50 1.49 These financial statements should be read in conjunction with annexed notes Sustainability Managing Director Financial Information Dated, Dhaka April 28, 2021 262 | Standard Bank Ltd Annual Report 2020 Director Director Chairman Subject to our separate report of even date Md. Shafiqul Islam FCA Enrolment # 595 Partner Shafiq Basak & Co. Chartered Accountants DVC: 2105030595AS652035
264. Particulars 37 (a) 38 (a) 2.15 40(a) (18,758,361) (14,564,723,293) 244,237,687 (2,870,000,000) 22,691,723,196 498,650,131 698,742,781 6,679,872,141 9,498,309,003 (47,761,920) 160,915 (47,601,005) (94,225,056) 108,342 (94,116,714) 3,450,000,000 (1,200,000,000) (479,043,233) 1,770,956,768 (5,308,793,092) 368,365,859 (400,000,000) (400,000,000) 9,004,192,289 400,672,934 41,460,855,762 36,520,428,528 32,055,990,539 41,460,855,762 1,742,136,632 29,088,922,922 2,126,608,682 5,000,000 3,554,333,592 3,426,700 36,520,428,528 1,874,124,644 10,931,915,380 1,932,919,549 117,400,000 26,600,110,889 4,385,300 41,460,855,762 (6.99) 9.44 Sustainability 41 460,732,123 (1,771,272,724) (323,786,415) (3,070,000,000) (2,237,549,664) (2,834,847,239) 870,238,241 (8,906,485,678) (7,032,148,856) Stakeholders’ Information Net Operating Cash Flows (NOCF) per Share 18,756,529,541 (12,266,388,543) 17,981,150 777,641,930 (2,815,853,026) (119,757,273) (933,053,360) 667,185,058 (1,265,848,615) 2,818,436,862 Management Retrospection Net cash flows from operating activities (A) B) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of non-trading securities Payments for Purchase of securities Purchase of property, plant & equipment Sale of property, plant & equipment Purchase / sale of subsidiary Net cash flow from investing activities (B) C) CASH FLOWS FROM FINANCING ACTIVITIES Received from issue of loan capital and debt security Received for redemption of loan capital and debt security Receipts from issue of ordinary shares Dividends paid Net cash flow from financing activities (C) D) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) E) EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS F) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR G) CASH AND CASH EQUIVALENTS AT END OF THE QUARTER (D+E+F) CASH AND CASH EQUIVALENTS AT END OF THE QUARTER 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 Money at Call and Short Notice Govt. Security/Reverse repo (Less:Revaluation Reserve on Investment) Prize Bonds 16,182,377,237 (12,081,812,283) 12,266,714 627,049,222 (2,957,566,616) (61,389,148) (1,027,707,986) 2,601,521,314 (1,420,401,632) 1,874,336,823 Risk Governance 39(a) Amount in Taka 31.12.2020 31.12.2019 Corporate Governance A) CASH FLOWS FROM OPERATING ACTIVITIES Interest receipts in Cash Interest payments in Cash Dividend receipts Fee and commission receipts in Cash Recoveries on loans previously written off Cash Payments to employees Cash Payments to suppliers Income taxes paid Receipts from other operating activities Payments for other operating activities Cash generated from operating activities before changes in operating assets and liabilities Increase / (Decrease) in operating assets and liabilities Statutory deposits Purchase of trading securities Loans and advances to other banks Loans and advances to customers Other assets Deposits from other banks Deposits from customers Other liabilities account of customers Trading liabilities Other liabilities Notes Introduction STANDARD BANK LIMITED & IT’S SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 These financial statements should be read in conjunction with annexed notes Director Director Financial Information Managing Director Chairman Dated, Dhaka April 28, 2021 Standard Bank Ltd Annual Report 2020 | 263
265. STANDARD BANK LIMITED & IT’S SUBSIDIARIES Introduction CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020 (Amount in Taka) Particulars Corporate Governance Balance as on 01-01-2020 Paid up Capital Statutory Reserve Revaluation gain/loss on investments Minority Interest Profit & Loss surplus A/c Total 9,580,864,650 5,578,066,726 151,362 84,328,448 1,004,465,166 16,247,876,352 Prior years adjustement - - - - - - Changes in accounting policy - - - - - - Restated Balance Risk Governance Management Retrospection 9,580,864,650 5,578,066,726 151,362 84,328,448 1,004,465,166 16,247,876,352 Surplus/Deficit on revaluation of properties - - - - - - Adjustment of last year revaluation gain on investments - - - (84,328,448) - (84,328,448) Surplus/Deficit on revaluation of investment - - - 1,714,358 - 1,714,358 Currency translation difference - - - - (3,036,141) (3,036,141) Net gains and losses not recongnised in the income statement - - - - - - Addition during the period - - - - - - Adjustment of last year - - - - Net profit for the period - - - - 1,082,055,142 1,082,055,142 479,043,230 - - - (958,086,465) (479,043,236) Minority Interest - - 2,428 - (2,428) - Issue of Right Shares - - - - - - Appropriation made during the year - 451,190,257 - - (451,190,257) - Balance as on 31.12.2020 10,059,907,880 6,029,256,984 153,790 1,714,358 674,205,017 16,765,238,028 Balance as on 31.12.2019 9,580,864,650 5,578,066,726 151,362 84,328,448 1,004,465,166 16,247,876,352 Dividends (Cash & Bonus shares) - Stakeholders’ Information These financial statements should be read in conjunction with annexed notes Sustainability Managing Director Director Financial Information Dated, Dhaka April 28, 2021 264 | Standard Bank Ltd Annual Report 2020 Director Chairman
266. STANDARD BANK LIMITED Introduction BALANCE SHEET AS AT 31 DECEMBER 2020 Particulars Notes Amount in Taka 31 .12.2019 Corporate Governance 31.12.2020 PROPERTY & ASSETS CASH 3 Cash in Hand (including foreign currencies) Balance with Bangladesh Bank & its agent Bank (including Foreign Currencies) BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONS 4 In Bangladesh Outside Bangladesh 30,686,757,899 12,741,448,478 1,597,834,977 1,809,533,099 29,088,922,922 10,931,915,380 1,929,591,527 1,792,218,031 196,958,955 1,044,472,813 1,732,632,572 747,745,218 5 5,000,000 117,400,000 INVESTMENTS 6 9,609,749,434 32,688,659,016 Government 3,559,474,650 26,688,824,637 Others 6,050,274,784 5,999,834,379 159,450,205,397 158,079,995,226 157,421,223,814 154,205,991,995 2,028,981,583 3,874,003,231 LOANS AND ADVANCES / INVESTMENTS 7 Loans, Cash Credits, Over Draft etc./ Investments Bills Purchased and Discounted 8 3,845,140,563 3,792,928,634 OTHER ASSETS 9 12,158,942,503 11,265,769,251 - - 217,685,387,322 220,478,418,637 NON-BANKING ASSETS TOTAL ASSETS Management Retrospection FIXED ASSETS INCLUDING PREMISES, FURNITURE & FIXTURES Risk Governance MONEY AT CALL AND ON SHORT NOTICE LIABILITIES & CAPITAL LIABILITIES 10 12,006,087,417 12,511,022,969 DEPOSITS AND OTHER ACCOUNTS 11 169,603,542,780 175,466,124,086 21,032,047,241 21,225,412,023 2,648,739,561 3,947,844,037 Savings Bank / Mudaraba Savings Deposits 16,261,413,034 13,493,759,639 Short Term Deposits / Mudaraba Short Term Deposits 10,559,249,429 7,624,557,568 105,474,904,687 117,828,775,845 13,627,188,827 11,345,774,974 Current / Al-Wadeeah Deposits & Other Deposits Bills Payable Fixed Deposits / Mudaraba Term Deposits Deposits Under Schemes / Mudaraba Deposit Schemes OTHER LIABILITES 12 19,304,286,620 16,210,146,577 200,913,916,817 204,187,293,632 Sustainability TOTAL LIABILITIES Stakeholders’ Information Borrowings from other banks, financial Institutions and agents CAPITAL / SHAREHOLDERS’ EQUITY Paid-up Capital 13 10,059,907,880 9,580,864,650 Statutory Reserve 14 6,029,256,984 5,578,066,726 General Reserve Revaluation Reserve on Investment 16 TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY Net Asset Value (NAV) per share 48 1,714,358 84,328,448 680,591,284 1,047,865,181 16,771,470,505 16,291,125,005 217,685,387,322 220,478,418,637 16.67 16.19 Standard Bank Ltd Annual Report 2020 | Financial Information Surplus in Profit and Loss Account/ Retained earnings 15 15.1 265
267. STANDARD BANK LIMITED Introduction BALANCE SHEET AS AT 31 DECEMBER 2020 Particulars Notes Amount in Taka Corporate Governance 31 .12.2020 31.12.2019 OFF-BALANCE SHEET ITEMS CONTINGENT LIABILITIES Risk Governance Acceptances and Endorsements 17.1 10,721,978,308 17,537,916,173 Letters of Guarantee 17.2 12,833,411,761 13,691,325,458 Irrevocable Letters of Credit 17.3 11,066,404,802 11,328,500,692 Bills for Collection 17.4 4,280,149,013 6,189,609,905 Other Contingent Liabilities 17.5 - - 38,901,943,884 48,747,352,228 Documentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - 38,901,943,884 48,747,352,228 TOTAL: OTHER COMMITMENTS: Management Retrospection Stakeholders’ Information TOTAL OFF - BALANCE SHEET ITEMS These financial statements should be read in conjunction with annexed notes Sustainability Managing Director Financial Information Dated, Dhaka April 28, 2021 266 | Standard Bank Ltd Annual Report 2020 Director Director Chairman Subject to our separate report of even date Md. Shafiqul Islam FCA Enrolment # 595 Partner Shafiq Basak & Co. Chartered Accountants DVC: 2105030595AS652035
268. Particulars 20 21 22 23 24 25 26 27 28 29 30 31 32 33 13 ,746,242,808 11,558,677,871 2,187,564,936 4,090,907,649 808,920,126 407,404,883 5,307,232,657 7,494,797,593 2,867,127,923 564,916,374 13,050,844 19,980,956 58,427,033 13,949,194 3,264,323 805,000 363,010,823 602,186,907 4,506,719,377 2,988,078,216 17,183,710,895 12,948,993,307 4,234,717,588 1,705,963,533 1,022,613,963 522,397,305 3,250,974,801 7,485,692,389 2,743,218,639 631,951,069 20,548,242 23,740,487 116,578,379 7,530,000 5,983,943 1,774,750 292,677,255 414,872,061 4,258,874,825 3,226,817,563 662,410,595 18,543,248 100,651,780 29,880,782 (79,359,475) 187,644,710 919,771,640 2,068,306,576 1,026,303,751 1,245,592,840 (219,289,089) 1,042,002,825 89,778,716 1,131,781,541 320,995,935 107,150,579 (7,373,663) 420,772,851 2,806,044,712 1,306,967,516 1,292,637,114 14,330,402 1,499,077,196 109,996,927 1,609,074,123 451,190,257 680,591,284 1.04 561,208,942 1,047,865,181 1.49 Risk Governance 34 12.1 36 Stakeholders’ Information 16.1 Management Retrospection TOTAL OPERATING INCOME ( A ) Salary & Allowances Rent, Taxes, Insurance, Electricity etc. Legal Expenses Postage, Stamp, Telecommunication etc. Stationery, Printing, Advertisement etc. Managing Director’s salary & fees Directors’ Fee & Other benefits Audit Fees Charges on loan losses Depreciation and Repair of Bank’s Assets Other Expenses TOTAL OPERATING EXPENSES ( B ) Profit / (Loss ) Before Provision ( C ) = ( A - B ) Provision for Loans / Investments Specific Provision General Provision Special General Provision-COVID-19 Provision for Start-up Fund Provision for Off-Balance Sheet items Provision for diminution in value of investments Other Provision Total Provision ( D ) Total Profit / (Loss) before Taxes (E)=( C - D ) Provision for Taxation Current Tax Deferred Tax Net Profit / (Loss) after Taxation : Retained earnings brought forward Net Profit available for distribution Appropriations : Statutory Reserve General reserve Dividend Retained Earnings carried forward Earning Per Share (EPS): 18 19 Amount in Taka 31.12.2020 31.12.2019 Corporate Governance Interest Income / Profit on Investment Interest / Profit paid on Deposits & Borrowings etc. Net Interest / Net Profit on Investments Investment Income Commission, Exchange Earnings & Brokerage Other Operating Income Notes Introduction STANDARD BANK LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2020 Managing Director Director Chairman Subject to our separate report of even date Financial Information Dated, Dhaka April 28, 2021 Director Sustainability These financial statements should be read in conjunction with annexed notes Md. Shafiqul Islam FCA Enrolment # 595 Partner Shafiq Basak & Co. Chartered Accountants DVC: 2105030595AS652035 Standard Bank Ltd Annual Report 2020 | 267
269. Introduction STANDARD BANK LIMITED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 Particulars Notes Corporate Governance A ) CASH FLOW FROM OPERATING ACTIVITIES Interest receipts in Cash Interest payments in Cash Dividend receipts Fee and commission receipts in Cash Recoveries on loans previously written off Cash Payments to employees Cash Payments to suppliers Income taxes paid Receipts from other operating activities Payments for other operating activities Cash generated from operating activities before changes in operating assets and liabilities Increase / (Decrease) in operating assets and liabilities Statutory deposits Purchase of trading securities Loans and advances to other banks Loans and advances to customers Other assets Deposits from other banks Deposits from customers Other liabilities account of customers Trading liabilities Other liabilities 37 38 Risk Governance 39 40 Management Retrospection Net cash flow from operating activities (A) B) CASH FLOW FROM INVESTING ACTIVITIES Proceeds from sale of non-trading securities Payments for Purchase of securities Purchase of property, plant & equipment Sale of property, plant & equipment Purchase / sale of subsidiary Net cash flow from investing activities (B) C) CASH FLOW FROM FINANCING ACTIVITIES Received from issue of loan capital and debt security Payments for redemption of loan capital and debt security Receipts from issue of ordinary shares Dividends paid Net Cash flow from financing activities (C) D) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) E) EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS F) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR G) CASH AND CASH EQUIVALENTS AT END OF THE YEAR (D+E+F) CASH AND CASH EQUIVALENTS AT END OF THE YEAR 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 Money at Call and Short Notice Govt. Security/Reverse repo (Less:Revaluation Reserve on Investment) Prize Bonds Stakeholders’ Information Sustainability Net Operating Cash Flows (NOCF) per Share Amount in Taka 31.12.2020 31.12.2019 16,071,436,964 (12,070,825,415) 12,266,714 440,554,267 (2,881,077,117) (58,427,033) (1,011,176,690) 2,591,502,974 (1,320,501,153) 1,773,753,511 18,647,900,931 (12,263,492,042) 17,981,150 621,941,029 (2,750,748,639) (116,578,379) (908,858,645) 659,878,047 (1,149,303,163) 2,758,720,289 (50,440,405) (1,370,210,171) (276,320,517) (3,070,000,000) (2,271,542,398) (2,754,935,552) 790,924,984 (9,002,524,058) (7,228,770,546) (215,822,445) (14,349,525,915) 294,112,769 (2,870,000,000) 22,691,376,207 887,721,455 504,119,872 6,941,981,942 9,700,702,231 (69,780,065) 160,915 (69,619,150) (331,712,694) 108,342 (331,604,352) 3,450,000,000 (1,200,000,000) (479,043,233) 1,770,956,768 (5,527,432,929) 368,365,859 41,339,891,146 36,180,824,076 (400,000,000) (400,000,000) 8,969,097,879 400,672,934 31,970,120,333 41,339,891,146 1,597,834,977 29,088,922,922 1,929,591,527 5,000,000 3,556,047,950 3,426,700 36,180,824,076 1,809,533,099 10,931,915,380 1,792,218,031 117,400,000 26,684,439,337 4,385,300 41,339,891,146 (7.19) 9.64 41 These financial statements should be read in conjunction with annexed notes Financial Information Managing Director Dated, Dhaka April 28, 2021 268 | Standard Bank Ltd Annual Report 2020 Director Director Chairman
270. STANDARD BANK LIMITED Introduction STATEMENT OF CHANGES IN SHAREHOLDERS ’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020 (Amount in Taka) Particulars Paid up Capital Changes in accounting policy Restated Balance Minority Interest Revaluation gain/loss on investments Profit & Loss surplus A/c Total 9,580,864,650 5,578,066,726 - 84,328,448 1,047,865,181 16,291,125,005 - - - - - - 5,578,066,726 - 84,328,448 1,047,865,181 16,291,125,005 - - - - - - Adjustment of last year revaluation gain on investments - - - (84,328,448) - (84,328,448) Surplus/Deficit on revaluation of investment - - - 1,714,358 - 1,714,358 Currency translation difference - - - - - - Net gains and losses not recongnised in the income statement - - - - - - - - - - - - - - 1,042,002,825 1,042,002,825 - - - - - - - - - - - - 479,043,230 - - - (958,086,465) (479,043,236) Issue of Right Shares - - - - - - Appropriation made during the year - 451,190,257 - - (451,190,257) - Balance as on 31.12.2020 10,059,907,880 6,029,256,984 - 1,714,358 680,591,284 16,771,470,505 Balance as on 31.12.2019 9,580,864,650 5,578,066,726 - 84,328,448 1,047,865,181 16,291,125,005 Dividends from Management Ltd SBL Capital Dividends from SBL Securities Ltd Dividends shares) (Cash & Bonus Stakeholders’ Information - Management Retrospection Adjustment of last year Net profit for the period Risk Governance 9,580,864,650 Surplus/Deficit on revaluation of properties Corporate Governance Balance as on 01-01-2020 Statutory Reserve These financial statements should be read in conjunction with annexed notes Director Director Chairman Sustainability Managing Director Dated, Dhaka April 28, 2021 Financial Information Standard Bank Ltd Annual Report 2020 | 269
271. STANDARD BANK LIMITED Introduction LIQUIDITY STATEMENT (ASSET AND LIABILITY MATURITY ANALYSIS) FOR THE YEAR ENDED 31 DECEMBER 2020 Corporate Governance Particulars Up to 01 Month 1-3 Months 3 - 12 Months 1-5 Years More than 5 Years Total Assets: Cash in hand 1,597,834,977 - - - - 1,597,834,977 21,987,868,000 - - - 7,101,054,922 29,088,922,922 Balance with other banks and financial institutions 1,839,591,527 - 90,000,000 - - 1,929,591,527 Money at call & on short notice 5,000,000 - - - - 5,000,000 Investment 3,426,700 - 799,800,000 908,437,950 7,898,084,784 9,609,749,434 7,979,594,814 21,019,652,732 52,999,255,695 41,873,738,206 35,577,963,949 159,450,205,397 - - - - 3,845,140,563 3,845,140,563 249,615,011 2,436,470,386 2,250,157,188 7,114,560,695 108,139,224 12,158,942,503 - - - - - - 33,662,931,029 23,456,123,118 56,139,212,883 49,896,736,851 54,530,383,442 217,685,387,322 11,990,153,749 - - 15,933,667 - 12,006,087,417 7,286,868,769 21,496,937,125 54,969,835,560 43,744,488,233 42,105,413,093 169,603,542,780 - - - - - - 1,287,390,443 78,346,558 699,099,249 5,895,303,260 11,344,147,109 19,304,286,619 Total Liabilities 20,564,412,962 21,575,283,682 55,668,934,809 49,655,725,161 53,449,560,202 200,913,916,816 Net Liquidity Gap 13,098,518,067 1,880,839,436 470,278,075 241,011,690 1,080,823,240 16,771,470,507 Balance with Bangladesh Bank Risk Governance Loans and Advances Fixed assets including premises, furniture and fixtures Other assets Management Retrospection Non-banking assets Total Assets Liabilities: Borrowing from Bangladesh Bank, Other banks, financial institutions and agents Deposits Stakeholders’ Information Other Accounts Provision and other liabilities These financial statements should be read in conjunction with annexed notes Sustainability Managing Director Financial Information Dated, Dhaka April 28, 2021 270 | Standard Bank Ltd Annual Report 2020 Director Director Chairman
272. Introduction STANDARD BANK LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 Corporate Governance 1 . LEGAL STATUS AND NATURE OF THE COMPANY Risk Governance Standard Bank Limited is a scheduled commercial bank established under the Bank Company Act, 1991 and incorporated in Bangladesh as a Public Limited Company with limited liability under the Companies Act, 1994 on 11th May, 1999 and commenced commercial operation on 3rd June, 1999. The Bank went for the public issue of shares in 2003 and its shares are listed with Dhaka Stock Exchange Ltd and Chittagong Stock Exchange Ltd. The registered address of the bank is Metropolitan Chamber Building (3rd Floor), 122-124 Motijheel C/A, Dhaka. The Bank has 138 Branches, 03 (Three) Zonal offices, 120 ATMs and 26 Agent Banking outlets all over the country. Main Activities and nature of operation Management Retrospection The principal activities of the Bank encompass a wide range of services including accepting deposits, lending to retail, Small Money Enterprise (SME) and corporate customers, trade financing, lease financing, project financing, discounting bills, conducting money transfer and foreign exchange transactions and performing other related services such as safe keeping, collections, issuing guarantees, acceptances and letters of credit, inter bank borrowing and lending, dealing in government securities etc. There have been no significant changes in the nature of the principal activities of the Bank during the financial year but we are are going to migrate our bank from conventional banking to Islamic banking from 1 January 2021. As a fully operational commercial bank, we focuses on pursuing unexplored market niches in the Small and Medium Enterprises (SME) business, Corporate Business, RMG & Knitware Sector which has remained largely untapped within the country. With the view to reaching clients, the Bank has established a wide network of branches, zonal offices and agent banking outlets. a) Conventional Banking: Stakeholders’ Information The principal activities of the bank are to provide all kinds of commercial banking services to its respected customers through its branches , SME branches, ATM outlets, Agent Banking outlets and foreign currency Booths. b) 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 are presented as recommended by the Central Shariah Board for Islamic Banking in Bangladesh. c) Off-Shore Banking Unit (OBU) : Sustainability The Bank obtained Off-shore Banking Unit Permission vide Letter No. BRPD (P-3)744(110)/2010-839 dated March 11, 2010 and commenced operation on March 23, 2015. The Off-shore Banking Unit is governed under the rules and guidelines of Bangladesh Bank. The principal activities of the Unit are to provide all kinds of commercial banking services to its customers in foreign currencies approved by the Bangladesh Bank. d) Mobile Financial Services ‘Spot Cash’ & Digi banking: Financial Information With the view to bring the unbanked people to the banking facilities SBL started Mobile Banking Services under the title of ‘Spot Cash’ in 2014. The bank obtained the license from Bangladesh Bank for mobile banking business vide letter no. PSD/37(Q)/2013-1035 dated 3rd September, 2013. SBL DigiBanking is an app based solution which connects customers to bank’s core banking system securely so that customer can carry out the transaction 24/7 from any where.This documents clearly describes the day to day operational process of SBL DigiBanking System. Standard Bank Ltd Annual Report 2020 | 271
273. e ) Agent Banking: Introduction Stantard Bank obtained permission from Bangladesh Bank to commence Agent Banking services. we have 26 Agent Banking Outlets up to reporting period of 31.12.2020 across the country. Services that are currently being dispensed include account opening (savings), cash deposit and withdrawal (agent banking A/C), cash deposits in branch A/C, SME loan repayment collection, Internet and SMS banking, corporate bill/distributor fee collection etc. 1.1 Subsidiary Companies Corporate Governance 1.1(a) SBL Capital Management Ltd (SCML): The Bank obtained permission to embark upon Merchant banking from the Bangladesh Securities and Exchange Commission(BSEC) vide its certificate no. SEC/Reg/MB/SUB/13/2010/529 dated January 05, 2011 Under the Securities and Exchange Commission Act, 1993. The main objectives of the Company are to carry out the business of full fledged merchant banking activities like issue management, portfolio management, underwriting, corporate advisory services etc. The audited financial statements is enclosed. 1.1(b) Standard Exchange Company (UK) Limited : Risk Governance Management Retrospection Bangladesh Bank vide their letter No.BRPD(M) 204/15/2009-18 Dated 15th February 2009 has accorded approval to the bank for opening a fully owned subsidiary company in the name and style of Standard Exchange Company (UK) Limited. The company was incorporated 19th March, 2009 under the Companies Act 2006 of UK with the registration number 06851946 as private company limited by shares. The registered office is located at 101 whitechapel Road , London. The main activities of the exchange house are to carry on the remittance business and to undertake and participate in transactions, activities and operation commonly carried on or undertaken by remittance and exchange houses. The audited financial statements is enclosed. 1.1(c) Standard Co (USA) Inc.DBA : Standard Express: Stakeholders’ Information Bangladesh Bank vide their letter No. BRPD(M) 204/15/2009-116 Dated 27th October ,2009 has accorded approval to the bank for opening a fully owned subsidiary company in the name and style of Standard Co (USA) Inc.DBA : Standard Express, in short we presented “Standard Express (USA) Ltd”. The company was incorporated on 1st February, 2010 with the registration number 27-2118554 as private company limited by shares. The registered office is located at 37-22 73rd street #2B Jackson heights, New York. The main activities of the exchange house are to carry on the remittance business and to undertake and participate in transactions, activities and operation commonly carried on or undertaken by remittance and exchange houses. The audited financial statements is enclosed. 1.1(d) Standard Bank Securities Limited Sustainability Standard Bank Securities Limited was incorporated on November 22,2012 as a public limited company under the Companies Act ,1994 vide certificate of incorporation no. C-105725/12. Standard Bank Securities Limited become member of Dhaka Stock Exchange Limited for brokerage transaction. Standard Bank Securities Limited commenced its operation from 21 June, 2013. The main objectives of the company is to carry on the business of stock broker /stock dealer and other related business in connection with the dealing of listed securities . Other obectives of the company are to buy,sell, hold or otherwise acquire or invest the capital of the company in shares,stocks and fixed income securities etc. The audited financial statements is enclosed. 1.1(e) Summary of shareholding in subsidiaries: Name of Subsidiaries Financial Information 272 | Face Value per Share Total Number of Ordinary Share 2020 2019 No. of Ordinary Shares held by SBL 2020 SBL’s Percentage of Shareholding 2019 2020 2019 SCML Tk 100 15000000 15000000 14999400 14999400 99.996% 99.996% SBSL Tk 10 80000000 80000000 79994000 79994000 99.99% 99.99% UK Exchange Tk 100 33843240 32757960 33843240 32757960 100.00% 100.00% USA Exchange Tk 100 130122500 130122500 130122500 130122500 100.00% 100.00% Standard Bank Ltd Annual Report 2020
274. 2 . SIGNIFICANT ACCOUNTING POLICIES 2.1 Statement of compliance Introduction i) Corporate Governance The financial statements of the Bank have been prepared in accordance with “First Schedule” (section 38) of the Bank Companies Act, 1991 (amendment upto 2018) ,International Financial Reporting Standards (IFRSs) and the requirements of the Banking Companies Act, 1991 (amendment upto 2018), the rules and regulations issued by Bangladesh Bank, the Companies Act ,1994, Bangladesh Securities and Exchange Rules, 1987; Bangladesh Securities and Exchange Ordinance, 1969; Bangladesh Securities and Exchange Act, 1993 and Bangladesh Securities and Exchange Commission (Public Issue) Rules 2015 and amendments thereon, The Income Tax Ordinance, 1984, and amendments thereon, The Value Added Tax Act, 2012, The Value Added Tax Rules, 2016 and amendments thereon, Financial Reporting Act 2015. In case any requirement of the Banking Companies Act 1991 as amended, and provisions and circulars issued by Bangladesh Bank differ with those of IFRSs, the requirements of the Banking Companies Act 1991 as amended, and provisions and circulars issued by Bangladesh Bank shall prevail. Material departures from the requirements of IFRSs are as follows: Basis of Preparation for Financial Statements Risk Governance IFRS/IAS: As per IAS 1 Financial Statements shall comprise statement of financial position, comprehensive income statement, changes in equity, cash flows statement, adequate notes comprising summary of accounting policies and other explanatory information. As per para 60 of IAS 1, the entity shall also present current and non-current assets and current and non-current liabilities as separate classifications in its statement of financial position. Management Retrospection Bangladesh Bank: The presentation of the financial statements in prescribed format (i.e. balance sheet, profit and loss account, cash flows statement, changes in equity, liquidity statement) and certain disclosures therein are guided by the “First Schedule” (section 38) of the Bank Companies Act, 1991 (amendment upto 2018) and BRPD Circular no. 14 dated 25 June , 2003 and subsequent guidelines of BB. In the prescribed format there is no option to present assets and liabilities under current and non-current classifications. Bank’s Methodology: The Financial statements of the Bank are made upto 31st December 2020 and are prepared under the historical cost convention and in accordance with the “First Schedule (Sec-38) of the Bank Companies Act, 1991, BRPD Circular # 14 dated 25 June 2003, other Bangladesh Bank Circulars, International Accounting Standards and International Financial Reporting Standards adopted by the Institute of Chartered Accountants of Bangladesh, Companies Act, 1994, the Securities and Exchange Rules 1987, Dhaka & Chittagong Stock Exchange Listing Regulations and other laws and rules applicable in Bangladesh. In case of the requirement of Bangladesh Bank differs with those of IAS/IFRS ,the requirement of Bangladesh Bank have been applied”. ii) Investments in shares and Securitie Stakeholders’ Information IFRS/IAS: As per requirements of IFRS 9 investment in shares and securities generally falls either under “at fair value through profit and loss account” or under “at fair value through other comprehensive income” where any change in the fair value (as measured in accordance with IFRS 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. iii) Revaluation gains/losses on Government securities Sustainability Financial Information IFRS: As per requirement of IFRS 9 where securities will fall under the category of Held for Trading (HFT), any change in the fair value of held for trading assets is recognised through profit and loss account. Securities designated as Held to Maturity (HTM) are measured at amortised cost method and interest income is recognised through the profit and loss account. As per requirements of IFRS 9, bills can be categorised either as “Fair Value Through Profit or Loss (FVTPL)” or “Fair Value through Other Comprehensive Income (FVOCI)”. Any change in fair value of bills is recognised in the profit and loss account or other reserves as a part of other component of equity, respectively. 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. Standard Bank Ltd Annual Report 2020 | 273
275. iv ) Provision on Loans and Advances/Investments Introduction IFRS/IAS: As per IFRS 9: Financial Instruments, an entity shall recognise an impairment allowance on loans and advances based on expected credit losses. At each reporting date, an entity shall measure impairment allowance for loans and advances at an amount equal to the lifetime expected credit losses considering the three stages model of IFRS -9(Stage-1,2 & 3), if the credit risk on these loans and advances has increased significantly or have any objective evidence of default since initial recognition, whether assessed on an individual or collective basis, considering all reasonable information (including that which is forward looking). For those loans and advances for which credit risk has not increased significantly since initial recognition, at each reporting date, an entity shall measure the impairment allowance at an amount equal to 12 month expected credit losses that may result from default events on such loans and advances that are possible within 12 months after the reporting date. Corporate Governance Risk Governance Bangladesh Bank: As per BRPD Circular no. 17, Dated 28 September,2020,BRPD Circular no. 03,Dated 21 April,2019, 14 dated 23 September 2012, and BRPD Circular no. 16 dated 18 November 2014, a general provision @ 0.25% to 5% under different categories of unclassified loans (Standard/SMA loans) should be maintained regardless of objective evidence of impairment. And specific provision for sub-standard/ doubtful/ bad-loss loans should be made at 20%, 50% and 100% respectively on loans net off eligible securities (if any). Also, a general provision @ 1% should be provided for certain off-balance sheet exposures except bills for collections. Such provision policies are not specifically in line with those prescribed by IFRS 9. v) Recognition of interest in suspense IFRS/IAS: Loans and advances to customers are generally classified as ‘loans and receivables’ as per IFRS 9 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. Management Retrospection Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified (other than bad loss), 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. vi)  Other comprehensive income IFRS/IAS: As per IAS 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. Stakeholders’ Information 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. vii) Financial instruments - presentation and disclosure In several cases Bangladesh Bank guidelines categories, recognise, measure and present financial instruments differently from those prescribed in IFRS 9. As such full disclosure and presentation requirements of IFRS 7 and IAS 32 cannot be made in the financial statements. viii) Financial guarantees Sustainability IFRS/IAS: As per IFRS 9, 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. Financial Information 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) Repo transactions IFRS/IAS: Repo is calculated under IFRS-9. 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 lending), the arrangement is accounted for as a collateralized borrowing and the underlying asset continues to be recognized in 274 | Standard Bank Ltd Annual Report 2020
276. the financial statements . This transaction will be treated as borrowing and the difference between selling price and repurchase price will be treated as interest expense. Introduction Bangladesh Bank: As per BB circulars/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 lending), the arrangement is accounted for as a normal sale transaction and the financial assets should be derecognized in the sellers book and recognized in the buyer’s book. x) Cash and cash equivalent Corporate Governance IFRS/IAS: Cash and cash equivalent items should be reported as cash item as per IAS 7. Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short notice’, treasury bills, Bangladesh Bank bills and prize bond are not shown as cash and cash equivalents. Money at call and on short notice presented on the face of the balance sheet, and treasury bills, prize bonds are shown in investments. xi) Non-banking asset IFRS: No indication of Non-banking asset is found in any IFRS. Risk Governance Bangladesh Bank: As per BRPD 14, dated 25 June ,2003, there must exist a face item named Non-banking asset. xii) Cash flow statement IFRS/IAS: 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. Management Retrospection Bangladesh Bank: As per BRPD 14,dated 25 June ,2003, cash flow is the combination of direct and indirect methods. Bank’s Methodology: Cash Flow Statement is prepared in accordance with IAS-7 “Cash Flow Statement” under direct method and indirect method as recommended in BRPD circular no. 14 dated 25 June ,2003 issued by Bangladesh Bank. xiii) Balance with Bangladesh Bank: (Cash Reserve Requirement) IFRS/IAS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per IAS 7. Stakeholders’ Information Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents. xiv) Off-balance sheet items IFRS/IAS: There is no concept of off-balance sheet items in any IFRS; hence there is no requirement for disclosure of off-balance sheet items on the face of the balance sheet. Bangladesh Bank: As per BRPD 14, dated 25 June ,2003 ,off balance sheet items (e.g. Letter of credit, Letter of guarantee etc) must be disclosed separately on the face of the balance sheet. Sustainability Bank’s Methodology: Off-Balance Sheet items have been disclosed under contingent liabilities and other commitments as per Bangladesh Bank’s guidelines. BRPD circular No.7 dated 21 June, 2018 requires a general provision for Off Balance Sheet exposures except bills for collections to be calculated @ 1% which has been followed by the bank properly on the following Off Balance Sheet Items: a.    Acceptance and endorsements b.    Irrevocable letter of credit c.    Letter of guarantee Financial Information xv) Presentation of intangible asset IFRS/IAS: An intangible asset must be identified and recognised, and the disclosure must be given as per IAS 38. Bangladesh Bank: There is no regulation for intangible assets in BRPD 14 dated 25 June ,2003 hence,it is shown in fixed assets. Standard Bank Ltd Annual Report 2020 | 275
277. xvi ) Loans and advances/Investments net of provision Introduction IFRS/IAS: Loans and advances/Investments should be presented net of provision as per IFRS-9. Bangladesh Bank: As per BRPD 14, dated 25 June ,2003 provision on loans and advances/investments are presented separately as liability and can not be netted off against loans and advances. Bank’s Methodology: Loans and advances have been shown at gross amounts at 31 December 2020. Corporate Governance xvii) Disclosure of appropriation of profit IFRS/IAS: There is no requirement to show appropriation of profit in the face of statement of comprehensive income. Bangladesh Bank: As per BRPD 14, dated 25 June 2003, an appropriation of profit should be disclosed on the face of Profit & Loss Account. xviii) Provision on undrawn loan commitments: Risk Governance IFRS/IAS: As per IFRS 9 bank shall recognise credit losses on undrawn loan commitments such as Letter of Credit (L/C), Letter of Guarantee (L/G) etc. as the present value of the difference between the contractual cash flow that are due by the customer if the commitment is drawn down and the cash flows that bank expects to receive. Bangladesh Bank: As per BRPD Circular no. 07 dated 21 June 2018 and BRPD Circular no.14 dated 23 September 2012, the Bank is required to maintain provision at 1% rate against off-balance sheet exposures (which includes all types of undrawn loan commitments). xix) Name of the financial statements: Management Retrospection IFRS/IAS: As per IAS 1, complete set of financial statements consists statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and notes, comprising significant accounting policies and other explanatory information. Bangladesh Bank: The forms of financial statements and directives for preparation thereof of the bank companies in Bangladesh are guided by BRPD Circular no. 14, dated 25 June 2003 and subsequent amendments thereof from time to time. BRPD circular no. 14 states the statement of financial position as balance sheet and statement of profit or loss and other comprehensive income as profit and loss account. [Also refer to (note 2.19) Compliance of International Financial Reporting Standards (IFRS)] Stakeholders’ Information 2.2 Basis of Consolidation : The consolidated financial statements include the financial statements of Standard Bank Limited, Islamic Banking Window, Offshore Banking Units (OBU) and its subsidiaries SBL Capital Management Ltd, Standard Bank Securities Ltd, Standard Exchange Company (UK) Ltd and Standard Co (USA) Inc.DBA : Standard Express made up to the end of the financial year. A Banking software system “Stelar” consolidated all transactions of branches as well as head office and produces consolidated Balance Sheet and Profit & Loss Account . These consolidated records are maintained at the Head office of the Bank based on which these financial statements have been prepared. Sustainability The consolidated financial statements have been prepared in accordance with International Financial Reporting Standard 10: consolidated financial statements & IAS 27 Separate Financial Statements. The consolidated financial statements have been prepared to a common reporting period ending in 31 December,2020. Subsidiaries: Financial Information Subsidiaries are that enterprise which are controlled by the Bank. Control exists when the Bank has the power,directly or indirectly , to govern the financial and operating policies of an enterprise from the date that control commences until the date that control ceases. The financial statements of subsidiary are included in the consolidated financial statements from the date that control effectively commences until the date that the control effectively ceases. Subsidiary Companies are consolidated using the cost method of accounting. Transactions eliminated on Consolidation: All intra-Company balances & transactions, and any unrealised income & expenses (Except for foreign currency translation gain/losses) arising from intra-company transactions are eliminated in preparing consolidated financial statement. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment. The investments in shares of subsidiaries held by the bank in the separate Financial Statements are eliminated against the corresponding shares capital of subsidiaries in the consolidated financial statements. 276 | Standard Bank Ltd Annual Report 2020
278. 2 .3 Statement of Cash flows 2.4 Reporting Period Corporate Governance Introduction Statement of cash flows is prepared by using the ‘Direct Method’ in accordance with IAS 7 “Statement of Cash Flows” and under the guidance of Bangladesh Bank BRPD Circular No. 14 dated 25.06.2003 & BRPD Circular No. 15 dated 09.11.2009 whereby gross cash receipts and gross cash payments on Operating Activities, Investing Activities and Financing Activities have been recognized. Cash and Cash Equivalents comprise short term, highly liquid investments that are readily convertible and are subject to an insignificant risk to changes in value. These financial statements cover one calendar year from January 01 to December 31, 2020. 2.5 Statement of Changes in Equity Statement of changes in Equity has been prepared in accordance with IAS 1 “Presentation of Financial Statements” and under the guidance of Bangladesh Bank BRPD Circular No. 14 dated 25.06.2003 & BRPD Circular No. 15 dated 09.11.2009 2.6 Statement of Liquidity Risk Governance The liquidity statement of assets and liabilities as on reporting date has been prepared on residual maturity term as per following basis: Balance with other banks and financial institutions, money at call etc are on the basis of their maturity term. Investments are on the basis of their residual maturity. Loans and advances are on the basis of their repayment/maturity schedule. Fixed assets are on the basis of their useful lives. Other assets are on the basis of their realization /amortization. Borrowing from other banks, financial institutions and agents as per their maturity /repayment terms. Deposits and others accounts are on the basis of their maturity term and behavioral past trend. Others loan term liabilities are on the basis of their maturity term. Provisions and other liabilities are on the basis of their settlement. Management Retrospection a. b. c. d. e. f. g. h. i. 2.7 Significant Judgement and Estimates Stakeholders’ Information The preparation of Financial Statements in conformity with Accounting Standards and Statutory requirement which requires the use of critical accounting estimates. It also requires management to exercise its judgment in the process of applying accounting policies. The areas involving a higher degree of judgment or complexity or major areas where assumptions and estimates are significant to the Financial Statements are described in the following: 1 Income Taxes 2 Deferred Taxation 3Depreciation 4 Provisions for investment & other Assets 2.8 Going Concern Sustainability The accompanying financial statements have been prepared on a going concern basis,which contemplates the realization of assets and the satisfaction of liabilities in the normal course of busines. Key financial parameters (including liquidity, profitability, asset quality, provision sufficiency and capital adequacy) of the bank continued to demonstrate a healthy trend for a couple of years. The rating outlook of the bank, as reported by all the rating agencies is ‘Stable’. The management do not see any issue with respect to going concern threat due to recent pandemic COVID-19. Besides, The accompanying financial statements do not include any adjustments should the Bank be unable to continue as a going concern. 2.9 Functional and presentation currency Financial Information The financial statements are presented in Bangladeshi Taka (BDT), which is the bank’s functional currency. The functional currency of the Bank Off-shore Banking Unit (OBU) and our two subsidiaries, namely USA & UK exchange Limited, is in United States Dollar (USD) and Great Britain Pound (GBP), respectively. Financial statements of the above mentioned unit and subsidiary have been translated into the presentation currency, i.e. Bangladeshi Taka (BDT), following the guidelines of IAS 21: The Effect of Changes in Foreign Exchange Rates. The functional and presentation currency of other subsidiaries is in Bangladeshi Taka (BDT). Except as indicated, figures have been rounded-off to the nearest Taka. Standard Bank Ltd Annual Report 2020 | 277
279. 2 .10 FOREIGN CURRENCY TRANSACTION Introduction a) Foreign Currencies Transaction Corporate Governance i. Transaction in foreign currencies are converted into taka at the foreign exchange rates ruling on the transaction date. ii. Monetary assets and liabilities in foreign currency are expressed in taka terms at the rates of exchange ruling on the balance sheet date. iii. Forward foreign exchange contracts and foreign bills purchased are valued at forward rates applicable to their respective maturities. b) Commitments Commitments for outstanding forward foreign exchange contracts disclosed in these financial statements are translated at contracted rates. Contingent liabilities/commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in taka terms at the rates of exchange ruling on the balance sheet date. Risk Governance c) Translation gains and losses The resulting exchange transaction gains and losses are included in the profit and loss account, except those arising on the translation of net investment in foreign branches, subsidiaries and associates. 2.11 Loans write-off Management Retrospection Loans are normally written off, when there is no realistic prospect of recovery of these amounts and in accordance with BRPD Circular No.1 (6th February, 2019). A separate Special Asset Management Division (SAMD) has been set up at the Banks Head Office which monitors loans written off and legal action taken through the Arth Rin Adalat. These write -offs do not undermine or affect the amount claimed against the borrower by the bank. The SAMD maintains a separate ledger for all individual cases written off by each branch. The SAMD follow up on the recovery efforts of these written off loans and reports to management on periodic basis. Written off loans and advances are reported to the Credit Information Bureau (CIB) of Bangladesh Bank. 2.12 Earning Per Share Stakeholders’ Information The company calculates Earning Per Share (EPS) in accordance with International Accounting Standards (IAS)33”Earning 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 2.13 Retirement benefits to the employees Provident Fund Provident Fund benefits are given to the employees of the bank in accordance with the locally registered Provident Fund Rules. Separate Board of Trustee of the Bank operates it. Gratuity Sustainability The Bank operates an Employees Gratuity Fund Trust by a Board of Trustees consisting of seven members. All confirmed employees who have been in the service of the Bank should eligible to have the benefit under the gratuity schemes. The Gratuity trust rule got recognised from the National Board of Revenue(NBR). The bank has started making provision against gratuity from the year 2006. Provision for the year ended 31 December 2020 for the scheme has been made and the entire amount of the gratuity fund are transferred to a savings account under the control of the Board of trustee. Welfare Fund Financial Information Standard Bank Limited Employees’ Welfare Fund is subscribed by monthly contribution of the employees. The Bank also contributes to the fund from time to time. The fund is established to cover the accidental coverage in the event of death or permanent disabilities, retirement benefit and stipend to the employees’ children. Workers Profit Participation Fund (WPPF) Consistent with the industry practice and in accordance with The Bank Company Act. 1991, no provision has been made for WPPF. All kinds of employee benefits are calculated in accordance with International Accounting Standard (IAS)-19. 278 | Standard Bank Ltd Annual Report 2020
280. 2 .14 SBL Foundation Introduction The Bank, as part of corporate social responsibility , has established SBL Foundation for the benefit of the community in which it operates and as part of its said responsibility it commits itself to human development, poverty alleviation and overall national economic development. The Bank contributes to the fund from the annual profit of the bank on requirement basis. The fund is governed and administered by the Board of Trustees consisting of seven members. 2.15 Significant accounting policies Corporate Governance The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by group entities except otherwise instructed by the Central Bank as prime regulator. Certain comparative amounts in the financial statements have been reclassified and rearranged to conform to the current year’s presentation. Accounting policies of subsidiaries Risk Governance The financial statements of subsidiaries which are included in the Consolidated Financial Statements of the Group have been prepared using uniform accounting policies of the Bank (Parent) for transactions and other events in similar nature. The financial statements of subsidiaries have been prepared using the year ended 31 December 2020 which is also same for the Bank. There is no significant restriction on the ability of subsidiaries to transfer funds to the parent in the form of cash dividends or to repay loans and advances. A. Assets and basis of their valuation i) Cash and cash equivalents Management Retrospection Cash and cash equivalents include notes and coins in hand and at ATM, unrestricted balances held with Bangladesh Bank and its agent bank, balance with other banks and financial institutions, money at call and on short notice and prize bond which are not ordinarily susceptible to change in value. ii) Investments All investments (other than government treasury securities) are initially recognized at cost, including acquisition charges associated with the investment. Accounting treatment of government treasury securities (categorized as HFT or HTM) is made under IFRS-9 and also following Bangladesh Bank DOS Circular no. 05 dated 26 May, 2008 and subsequent clarifications on 28 January, 2009. Held to Maturity (HTM) Stakeholders’ Information Investments which are intended to be held till maturity are classified as “Held to Maturity”. These are measured at amortized cost at each year end by taking into account any discount or premium on acquisition. Premiums are amortized and discount are accredited, using the effective or historical yield method. Any increase or decrease in value of such investments is booked to equity. Held for Trading (HFT) These are investments primarily held for selling or trading. After initial recognition, investments are marked to market weekly and any decrease in the present value is recognized in the Profit and Loss Account and any increase is booked to Revaluation Reserve Account through Profit and Loss Account as per Bangladesh Bank DOS Circular no. 05 dated 28 January, 2009. Sustainability REPO and Reverse REPO Standard Bank Ltd Annual Report 2020 | Financial Information 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. 279
281. Investments –Initial recognition and subsequent measurement at a glance Value of investments has been shown as under: Introduction Items Applicable Accounting Value Government Treasury Bills and Bonds (HFT) At present value (using marking to market concept) Government Treasury Bills and Bonds (HTM) At present value (using amortization concept) Corporate Governance Bangladesh Government Islamic Bond At cost Prize Bond At cost Shares & Debentures At cost Investment in Subsidiaries Investment in subsidiaries are accounted for under the cost method of accounting in the Bank’s financial statements in accordance with IAS 27 “Separate Financial Statements and IFRS 10 Consolidated Financial Statements” and IFRS 3 “Business Combination”. Impairment of investment in subsidiaries is made as per the provision of IAS 36 “Impairment of Assets”. Risk Governance iii) Loans, advances and provisions Loans and advances are stated at gross amount. Specific provisions were made to adjust all impaired loans and advances with their expected realizable value as per instructions contained in Bangladesh BRPD Circular No.14 of 23 September ,2012 , BRPD Circular No.16 of 18 November ,2014 , BRPD Circular No.3 of 21 April ,2019 and BRPD Circular No.17 of 28 September, 2020 respectively at the following rates: Rate of provision: Management Retrospection Particulars Unclassified Classified Stakeholders’ Information Short term Agri-credit Consumer Financing Other than HF & LP HF SMEF LP Small Medium Loan to BHs / MBs/SDs All other credit Standard 1% 2% 1% 2% 0.25% 0.25% 2% 1% SMA N/A 2% 1% 2% 0.25% 0.25% 2% 1% SS 5% 20% 20% 20% 5% 20% 20% 20% DF 5% 50% 50% 50% 20% 50% 50% 50% BL 100% 100% 100% 100% 100% 100% 100% 100% iv) Fixed Assets Including Premises,Furniture & Fixtures and lease Assets. Recognition and measurement Application of Lease as per IFRS 16 along with its relevant assumptions and disclosures: IFRS 16: “Leases” has come into force on 1 January 2019,as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB).But Standard Bank Limited applied IFRS 16 from 1 January 2020 using prospective approach considering recession due to COVID-19 pandemic where the bank measured the lease liability at the present value of the remaining lease payments, discounted it using the bank’s incremental borrowing rate @ 5% at the date of initial application, and recognized a right-of-use asset at the date of the initial application on a lease by lease basis. Sustainability Right-of-use assets: The Bank recognizes right-of-use assets at the date of initial application of IFRS 16. Right-of-use assets are measured at cost, less any accumulated depreciation, and adjusted for any re-measurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the lease term. The right-of-use assets are presented under property, plant and equipment. Lease liabilities: Financial Information At the commencement date of the lease, the bank recognizes lease liabilities measured at the present value of lease payments to be made over the lease term using incremental borrowing rate at the date of initial application. Lease liabilities measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments, and re-measuring the carrying amount to reflect any reassessment or lease modifications. Interest on the lease liability in each period during the lease term shall be the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. 280 | Standard Bank Ltd Annual Report 2020
282. Exemption from Lease as per IFRS 16 : Introduction As per IFRS 16 there are some exemptions from application of lease for:Short-term leases A lease will be classified as ‘short-term’ if it covers a period of 12 months or less at its commencement date. Importantly, a lease cannot qualify as short-term if it contains a purchase option, or if it includes any optional extension periods, unless it is reasonably certain that the lessee will not exercise an option to extend the lease, resulting in the lease period being longer than 12 months. Corporate Governance Low asset-value leases Another area of exemption to IFRS 16, which will impact lessees, is that of optional accounting simplifications for lower-value assets. In these cases, the value will be assessed according to the value of the underlying stand-alone asset as if it was new, irrespective of the asset’s actual age. The IASB has stated that it considers low-value assets such as office furniture, laptops and servers would typically qualify for this exemption. Risk Governance The Standard Bank has elected not to recognize right-of-use assets and lease liabilities for leases of low value assets and short term leases, i.e. for which the lease term ends within 12 months of the date of initial application. The Bank recognizes lease payments associated with these leases as an expense. In case of low value of lease assets,the bank has set a materiality threshold of ‘BDT 10 million and above’ which is 0.058 % of total shareholders’ equity capital of the bank as of 31-12-2020.The reason behind considering the materiality threshold of BDT 10 million and above is that the bank operates many ATM booths and branches with short and single contracts. We maintain our fixed assets other than lease assets as per IAS-16 . The items of fixed assets excluding land are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Land is measured at historical cost and we do not conduct any revaluation for land. Management Retrospection Cost includes expenditure that are directly attributable to the acquisition of asset and bringing to the location and condition necessary for it to be capable of operating in the intended manner. When parts of an item of fixed asset have different useful lives, they are accounted for as separate items (major components) of fixed assets. The gain or loss on disposal of an item of fixed asset is determined by comparing the proceeds from disposal with the carrying amount of the item of fixed asset, and is recognized in other income/other expenses in profit or loss. Subsequent costs Stakeholders’ Information The cost of replacing a component of an item of fixed assets is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is recognized. The costs of the day-to-day servicing of fixed assets are recognized in profit or loss as incurred. Depreciation Depreciation is charged at the rates stated below on all fixed assets on the basis of estimated useful lives as determined in the fixed asset policy of the Bank. In all cases depreciation is calculated on the straight line method. Charging depreciation commences from the month of acquisition (for full month) and ceases at the month when the assets are disposed. No depreciation has been charged on land. Rate and method of charging depreciation/ amortization of fixed assets are mentioned below: Nil 2.50% 10.00% 20.00% 20.00% 20.00% 20.00% - Method of charging depreciation/ amortization Not applicable Straight Line Method Straight Line Method Straight Line Method Straight Line Method Straight Line Method Straight Line Method Over Lease period Financial Information Land Building Furniture & Fixtures Office Appliances Computer Software Vehicles Right of Use Asset Rate of Depreciation Sustainability Name of the Assets The contracts for premises with all branches, head office, regional offices, data centers and disaster recovery centers areconsidered for lease calculation. Standard Bank Ltd Annual Report 2020 | 281
283. v ) Intangible Assets Introduction a. An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the asset will follow to the entity and the cost of the assets can be measured reliably. Corporate Governance c. Initial cost comprises license fees paid at the time of purchase and other directly attributable expenditure that are in customizing the software for its intended use. b. Software represent the value of computer application software licensed for use of the bank, other then software applied to the operation software system of computers. Intangible assets are carried at its cost,less accumulated amortization and any impairment losses. d. Expenditure incurred on software is capitalized only when it enhances and extends the economic benefits of computer software beyond their original specifications and lives and such cost is recognized as capital improvement and added to the original cost of software. e. Software is amortized using the straight line method over the estimated useful life of 5(five) years commencing form the date of the application. Software is available for use over the best estimate of its useful economic life. Risk Governance vi) Impairment of Assets The carrying amounts of banks assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. Any impairment loss is recognized in the profit and loss account if the carrying amount of an asset exceeds its recoverable amount [IAS 36 Impairment of Assets]. No such impairment loss has been arisen and recognized during the year ended 31 December 2020. vii) Other assets Management Retrospection Other assets include investment in subsidiaries, Membership of DSE & CSE, advance for operating and capital expenditure, stocks of stationery and stamps, security deposits to government agencies etc. As per BRPD Circular No. 14 dated 25 June 2003, Income & Non-income-generating other assets item(s) have been shown separately in the relevant notes to the financial statements. viii) Contingent asset A contingent asset is possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events .Contingent asset is not recognized rather disclosed in the financial statements. Stakeholders’ Information B Liabilities & Provision i) Borrowings from other banks, financial institutions and agents Borrowings from other banks, financial institutions and agents include interest bearing borrowings which are stated in the financial statements at principal amount of the outstanding balance. Interest payables on such borrowings are reported under other liabilities. ii) Deposits and other accounts Sustainability Deposits and other accounts include non-interest bearing current deposits redeemable at call, interest bearing short term deposits, savings deposits and fixed deposits which are initially measured at the consideration received. These items are subsequently measured and accounted for at the gross value of the outstanding balance in accordance with the contractual agreements with the counter parties. iii) Other liabilities Other liabilities comprise items such as provision for loans and advances/ investments, provision for taxes, interest payable on borrowing, interest suspense and accrued expenses etc. Individual item-wise liabilities are recognized as per the guidelines of Bangladesh Bank and Bangladesh Financial Reporting Standards (IFRS). Financial Information iv) Dividend payments Interim dividend is recognized when it is paid to shareholders. Final dividend is recognized when it is approved by the shareholders in AGM. The proposed dividend for the year 2020, therefore, has not been recognized as a liability in the balance sheet in accordance with IAS 10 ‘Events after the Reporting Period’. Dividend payable to the Bank’s shareholders is recognized as a liability and deducted from the shareholders’ equity in the period in which the shareholders’ right to receive the payment is established. 282 | Standard Bank Ltd Annual Report 2020
284. v ) Provision for loans and advances Introduction Provision for classified loans and advances is made on the basis of quarter end review by the management and instructions contained in Bangladesh Bank BRPD Circular No.14 of 23 September ,2012 , BRPD Circular No.16 of 18 November ,2014 ,BRPD Circular No.3 of 21 April ,2020 and BRPD Circular No.17 of 28 September,2020. vi) Provision for investment in capital market Corporate Governance For recognition of loss suffered from investment in capital market, provision has been made on unrealized loss (gain net off) according to DOS Circular No. 04 dated 24 November ,2011 on portfolio basis. vii) Provision for off-balance sheet exposures In compliance with Bangladesh Bank guidelines, contingent liabilities have been disclosed under off-balance sheet items. As per BRPD Circular no. 7 dated 21 June, 2018 and related earlier circulars, the Bank has been maintaining provision @ 1% against off-balance sheet exposures except Bills for Collection. viii)Provision for other assets Risk Governance Provision for other assets is made as per the guidelines mentioned in the BRPD Circular No. 14 dated 25 June,2001 i.e.100% provision is required on other assets which are outstanding for one year or more. ix) Provision for liabilities and accrued expenses In compliance with IAS 37, provisions for other liabilities and accrued expenses are recognized in the financial statements when the Bank has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Management Retrospection x) Provision for Taxation The company is a publicly traded company as per the Income Tax Ordinance 1984. Provision for Current Income Tax has been made at the existing rate of 37.50% as prescribed in Finance Act 2020 of the accounting profit made by the Bank after considering some of the Taxable add backs of income and disallowances of expenditures. xi) Deferred Taxation Stakeholders’ Information 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 difference. 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 accounting policy as per International Accounting Standard (IAS)-12. xii) Contingent Liabilities Sustainability Contingent liabilities which include certain guarantees and letters of credit pledged as collateral are possible obligations that arise from past events whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not within the control of the Bank. Contingent liabilities are not recognized in the financial statements as per IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’. However, disclosure on contingent have been made on the face of balance sheet under ‘Off-balance Sheet Items’ as per guidelines of BRPD Circular No. 14 dated 25 June, 2003. C Share capital and reserves i) Authorized and issued capital Financial Information The authorized capital of the bank is the maximum amount of share capital that the bank is authorized by its Memorandum and Articles of Association to issue (allocate) among shareholders. Part of the authorized capital can (and frequently does) remain unissued. This number can be changed by shareholders’ approval upon fulfill lament of related provisions of Companies Act, 1994. The part of the authorized capital which has been issued to shareholders is referred to as the issued share capital of the bank. Standard Bank Ltd Annual Report 2020 | 283
285. ii ) Paid-up capital Introduction The paid-up capital represents the amount of bank’s capital that has been contributed by ordinary shareholders. The holders of ordinary shares are entitled to receive dividend as recommended by the Board and subsequently approved by the shareholders from time to time in the Annual General Meeting (AGM). iii) Asset revaluation reserve Corporate Governance When an assets carrying amount is increased as a result of revaluation, the increased amount is credited directly to equity under the heading of assets revaluation reserve as per IAS 16 Property, Plant and Equipment. The Bank also follows the assets revaluation guidelines issued by BSEC on 18 August 2013. iv) Statutory reserve In compliance with the provision of Section 24 of Bank Companies Act 1991, the bank transfers at least 20% of its profit before tax to “Statutory Reserve Fund” each year until the sum of statutory reserve and share premium equal to the paid up capital of the bank. v) Reserve for Amortization/ revaluation of securities Risk Governance When a Financial Asset categorized under HTM or HFT and subsequent value of the asset is increased as a result of amortisation of assets or mark to market revaluation, the net increased amount (for HTM increase or decrease of book value and for HFT loss to P&L but gain to revaluation reserve through P&L) is credited directly to equity under the heading of reserve for amortization/ revaluation of securities as per Bangladesh Bank DOS circular no. 06, dated 15 July, 2010. vi) Retained Earnings Management Retrospection The surplus amount after appropriation of yearly profit, kept in Retained Earnings. vii) Non controlling interest Non controlling interest (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 Non controlling interest in Standard Bank Securities Limited & Standard Bank Capital Management Limited ,a majority owned subsidiary (99.99%)of Standard Bank Limited is very insignificant. Non controlling interest belongs to a sponsor Director of the Bank and is reported on the consolidated balance sheet to reflect the claim on assets belonging to the other non-controlling shareholder. Also, Non controlling interest is reported on the consolidated income statement as a share of profit belonging to the Non controlling shareholder. Stakeholders’ Information D. Revenue Recognition Revenue is recognised as per IFRS 15 and also following the guidelines of Bangladesh Bank. i) Interest income Interest on unclassified loans and advances is accounted for as income on accrual basis, interest on classified loans and advances is credited to interest suspense account with actual receipt of interest there from credited to income as and when received as per instruction contained in BRPD 14 dated 23 September 2012, BRPD 16 dated 18 November, 2014 and BRPD 3 dated 21 April, 2019 of Bangladesh Bank. Sustainability ii) Fees and commission income Fees and commission income arises on services provided by the Bank and recognized as and when received basis. Commission charged to customers on letters of credit, letters of guarantee and acceptance are credited to income at the time of effecting the transactions except those which are received in advance. Financial Information iii) Interest income from investments Interest income on investments in Government and other securities, debentures and bonds is accounted for on accrual basis. iv) Income from Exchange Exchange income includes all gain and losses from foreign currency day to day transactions, conversions and revaluation of Non Monetary items. 284 | Standard Bank Ltd Annual Report 2020
286. v ) Dividend income Introduction Dividend income from investments is recognized at the time when it is declared, ascertained and right to receive the payment is established. vi) Interest paid on borrowings and deposits Interest paid on borrowings and deposits are calculated on 360 days basis (except for some treasury instruments which are calculated on 365 days basis) in a year and recognized on accrual basis. Corporate Governance vii) Management and other expenses Expenses incurred by the Bank are recognized on actual and accrual basis. viii) Taxes The expense comprises current and deferred tax. Current tax and deferred tax is recognized in profit or loss except to the extent that it relates to a business combination or items recognized directly in equity. a. Current tax Risk Governance Management Retrospection Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date and any adjustment to the tax payable in respect of previous years. Provision for current income tax of the bank has been made on taxable income @ 37.50% considering major disallowances of expenses and concessional rates on certain incomes (0% on gain on trading of govt. securities, 10% on capital gain (net off loss) of shares traded in secondary market and 20% on dividend income) as per Income Tax Ordinance (ITO) ,1984. Tax provision of the Group entities has been made on taxable income of subsidiaries at different rates applicable as per the ITO ,1984 and the tax authority of the country where it is incorporated. b. Deferred tax Deferred tax is calculated on taxable/deductible temporary differences between tax base amount and carrying amount of assets and liabilities as required by International Accounting Standard (IAS) 12 ‘Income Taxes’ and BRPD Circular no.11 dated 12 December, 2011. E. Others: i) Materiality and aggregation: Stakeholders’ Information Each materiel class of similar items has been presented separately in the financial statements. Items of dissimilar nature also have been presented separately unless they are immaterial in accordance with IAS 1 ‘Presentation of Financial Statements’. ii) Offsetting: Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. iii) Earnings per share (EPS): Sustainability The company calculates earnings per share (EPS) in accordance with IAS 33 ‘Earnings Per Share’ which has been shown on the face of Profit and Loss Account. Earning Per Share (EPS) has been calculated by dividing the net profit after tax by the total number of ordinary shares outstanding at the end of the year. Details are shown in note 36 to the financial statements. Basic Earnings per Share: Financial Information Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period. Standard Bank Ltd Annual Report 2020 | 285
287. Diluted Earnings per Share : Introduction Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. However, diluted earnings per share are not required to calculate as there are no dilution possibilities during the financial year 2020. iv) Related party transactions: Corporate Governance Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related it they are subject to common control or common significant influence Related party transaction is a transfer of resources, services, or obligations between related parties, regardless of whether a price is charged as per IAS 24 Related Party disclosures. Bangladesh Bank & BSEC guidelines. Details of the related party transactions have been disclosed in notes 44. v) Reconciliation of books and account: Risk Governance Books of account in regard to inter-bank (in Bangladesh and outside Bangladesh) as well as inter-branches are reconciled at regular intervals to keep the un reconciled balances within non-material level. vi) Events after the reporting period: Where necessary, all the material events after the balance sheet date have been considered and appropriate adjustment/disclosures have been made in the financial statements as per IAS 10 Events after the Reporting Period. The only material event after the balance sheet date is: the Board of Directors recommended 2.5% stock dividend & 2.5% cash dividend for the year 2020 in its meeting no. 341 held on 28.04.2021. Management Retrospection 2.16 Reconciliation of inter-bank /inter-branch account Books of account in regard to inter-bank (in Bangladesh and outside Bangladesh) as well as inter-branches are reconciled at regular intervals to keep the un reconciled balances within non-material level. 2.17 Core Risk Management: Stakeholders’ Information The Banking Regulation & Policy Department (BRPD) of Bangladesh Bank vide BRPD circular no.17 dated October 7, 2003 and BRPD circular no.4 dated March 5, 2007 issued guidelines on managing Core Risk in Banks to ensure sustainable performance in the Banking sector. Bangladesh Bank revised its core risk management guidelines on March-2016. There are six core risks which require banks to put in place an effective risk management system. Bangladesh Bank monitors the progress of implementation of these guidelines through its on-site inspection teams through routine inspection. The risk management systems in place at the Bank are discussed below: 2.17.1 Internal Control & Compliance Risk Internal Control Mechanism refers to a set of tools aimed at the achievement of organizational overall objectives. It helps an organization to safeguard its assets, check the accuracy and reliability of data. Internal Control & Compliance (ICC) promotes operational efficiency and encourages compliance with managerial policies and procedures, laws and regulations and supervisory requirement. The ICC comprises the following three units: Sustainability i)Internal Audit & Inspection Unit ii) Monitoring Unit and iii) Compliance Unit An effective Internal control System can assure banks to meet the following objectives: Financial Information 1. To establish an effective and efficient system to identify and detect errors, omission, fraud and forgeries and to take/suggest effective measures to protect repetition thereof. 2. To help to establish reliable, complete adequate and timeliness of financial and management information. 286 | Standard Bank Ltd Annual Report 2020
288. 3 . To ensure compliance with applicable laws and regulations. Introduction As per the instruction of Bangladesh Bank the Bank has set Internal Control & Compliance (ICC) Division at Head Office to ensure that the internal control process are in place through establishment of Audit Committee. The Committee reviews the internal & external Audit reports without any intervention of the Bank Management and ensures that Management takes effective measures in case of any deficiencies/lapses are found in the reports of Internal Control System. Corporate Governance 4. Fraud and forgery Risk Governance Fraud and forgery have become important issues in recent years. These have a major impact on our country‘s economy, impeding economic development. Standard Bank has always been focused in controlling fraud and forgery by establishing and maintaining proper control systems. To prevent fraud and forgery, Standard Bank has formed an Investigation Unit under the Compliance Department of Internal Control & Compliance Division to deal with such kind of incidents. This wing exclusively deals with all kinds of fraud and forgery and acts independently as the first contact point/information unit where internal and external fraud and forgery incidents are escalated, investigated and reviewed. As a remedial course of action, preventive measures are recommended to the business/functional unit to take necessary action relating to process improvements, recovery of misappropriated amount, adjustment of the operational loss and appropriate action initiated against the perpetrator. Investigation reports are also placed to the Board Audit Committee for their direction and guidance. The Bank has introduced Risk based Internal Audit (RBIA) to assess the business risk as well as the control risk associated with the branches and determine how much care, monitoring & periodicity of comprehensive internal audit would be required to reposition the branches. Management Retrospection Internal Control & Compliance (ICC) Division sets out a Risk based Internal Audit Program each year. The Risk based Internal Audit Program for the year 2020 was chalked by ICC Division which, was duly approved by the Management as well as the Audit Committee of the Board of Directors. The Audit program included the timing and frequency of audit of branches. Accordingly comprehensive audit has been conducted on 134 (One hundred thirty four) branches & 11 (Eleven) Divisions of Head Office, Surprise Inspection has been conducted on 15 (Fifteen) branches and 17 (Seventeen) Special Investigation has been conducted during the year 2020. Moreover, in 2020 we have examined Cash Incentive Payments made by the 10 (Ten) no of AD Branches. ICT Audit has been conducted on 62 (Sixty Two) branches & 03 (Three) Divisions/Departments of Head Office. Major irregularities or lapses of the reports were presented to the Management and the Audit Committee of the Board of Directors. As per directions/suggestions of the Board Audit Committee as well as the higher Management, corrective measures have been taken so as to stop recurrence of such lapses or irregularities in future. Stakeholders’ Information Besides above, Bangladesh Bank Inspection team also conducted 51 (fifty one) different inspections in the year 2020 on various branches and Departments of Head Office. Details are as under: Nature of InspectionHead Office/DivisionBranches Special Inspection on Core Risk52 Comprehensive121 Foreign Exchange Transaction00 Sustainability Special Inspection00 Surprise Inspection02 To comply with the directives of Bangladesh Bank, ICC Division of the bank takes proper initiative to comply the observations/suggestions of Bangladesh Bank and also sent the Compliance Report on time. Standard Bank Ltd Annual Report 2020 | Financial Information The Management Committee (MANCOM) of the Bank monitors the effectiveness of Internal Control System time to time. The MANCOM provides certificate on overall adequacy and effectiveness of Internal Control System based on Bank’s policy and procedure to the Board of Directors. 287
289. 2 .17.2 Foreign Exchange Risk Introduction Over the last few decades, the Foreign Exchange terminology & market has emerged as the largest market in the world. The behavior and risk pattern also has come forward tremendously due to its multilateral usance within cross border around the globe. Foreign Exchange risk may be defined as an event of potential financial, physical or reputational loss that can commit the business or environment even uncertain and volatile. Standard Bank Limited has a set of “Foreign Exchange Risk Management Guidelines” in compliance with the Local Regulatory Authorities and Internationally complied authorities which in every aspect mitigate the FX transaction risks covering our Export, Import and Remittance. Our motto is to achieve organizational goal within the harmonized Foreign Exchange risk management frame that comprises the revaluations, reconciliations and other everyday events, activities. Well-built monitoring and recurring follow-up by our management diminishes the risk factors in many cases. Also we have a strong preset ‘Contingency Plan’ to overcome any undue risk situation. Corporate Governance 2.17.3 Asset Liability Risk Risk Governance Asset Liability Management (ALM) is a key financial and risk management discipline. As one of the core risk areas identified by the Bangladesh Bank, ALM requires senior management responsibility in order to control both inherent and acquired risks in the balance sheet and in day-to-day operations. For better management of asset and liability risk, the Bank has an established Assets Liability Committee (ALCO) which meets at least once a month. The members of ALCO as at 31 December 2020 were as follows: Mr. Khondoker Rashed Maqsood Management Retrospection MD & CEO Chairman Mr. Md. Tohidul Alam Khan AMD & CRO Member (Invitee) Mr. Mohammad Rafiqul Islam DMD &COO Member (Invitee) Ms. Haider Nurun Nahar SEVP Head of Credit Membe Mr. Md. Ali Reza SVP CFO Member Mr. Md. Forhad Hossain VP Head of IBW Member Mr. Shah Rahat Uddin Ahmed VP Head of Treasury Member Stakeholders’ Information The ALCO’s primary function is to formulate policies and guidelines for the strategic management of the bank using pertinent information that has been provided through the ALCO process together with knowledge of the individual businesses managed by members of the committee. ALCO regularly reviews the Bank’s overall asset and liability position, forward looking asset and liability pipeline, overall economic position, the Banks’ liquidity position, capital adequacy, balance sheet risk, interest risk and makes necessary changes in its mix as and when required. The Bank has a specified liquidity and funding ratio to maintain to ensure financial flexibility to cope with unexpected future cash demands. ALCO monitors the liquidity and funding ratio on an ongoing basis and ascertains liquidity requirements under various stress situations. In order to ensure liquidity against all commitments, the Bank reviews the behaviour patterns of liquidity requirements. The Bank has an approved Liquidity Contingency Plan (LCP) which is reviewed and updated on an annual basis by the ALCO. All regulatory requirements including CRR, SLR and RWA are reviewed by ALCO. Sustainability 2.17.4 Credit Risk Financial Information Credit risk is a form of performance risk in a contractual relationship. In any contractual situation, performance risk refers to the possibility that one party in the contract will not honor its obligations to the other. Credit risk is usually defined as the performance risk associated with a financial contract (e.g. a loan, bond, or derivative contract). Hence, the potential failure of a manufacturer to honor a warranty might be called performance risk, whereas the potential failure of a borrower to make good on its payment requirements—which include both the repayment of the amount borrowed, the principal, and the contractual interest payments, would be called credit risk. A borrower or an obligor is defined as any party to a contract that has to perform a financial obligation to the other. Indeed, the Basic concepts for measuring credit risk-probability of default, recovery rate, exposure at default, expected loss, loss given default, and unexpected loss-are easy enough to understand and explain. However, even for those involved in risk management who agree on the concepts, it is not always easy to practically implement a method that is fully consistent with an original concept. 288 | Standard Bank Ltd Annual Report 2020
290. Therefore , the Bank’s credit risk management activities have been designed to address all these issues. Introduction A thorough risk assessment is done before sanction of any credit facility at risk management units. The risk assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer, security of the credit facility etc. The assessment process starts at the branch level and ends at Credit Risk Management division when it is approved /declined by the competent authority. Credit approval authority has been delegated to the individual executives. Proposal beyond their delegation are approved/declined by the Executive Committee and/or the Board of Directors of the Bank. Corporate Governance In determining Single borrower/Large loan limit, the instructions of Bangladesh Bank BRPD circular no.02, dated January 16, 2014 is strictly followed. Internal audit is conducted at yearly intervals to ensure compliance of Banks and Regulatory policies. Loans are classified as per Bangladesh Bank’s BRPD circular no. - 14, dated September 23, 2012 & amendment BRPD circular no.- 19 & 05 dated December 27, 2012 & May 29, 2013 respectively. 2.17.5 Information & Communication Technology Risk Risk Governance The Bank has successfully implemented core banking system (CBS). The Bank’s IT has gone through an enormous transformation from where it started. After several years of continuous efforts, standardization of both back-ends as well as front-end operation of bank is completed. Now through wide array of customizable products and services, IT can bring about equivalent contribution to profits. Management Retrospection Relevant hardware, software and networking gears are in place to support operations of online branches, internet banking, SMS service, call center, Tele Banking, POS and ATM network. These devices are providing superior performance resulting in better end-user satisfaction. To ensure uninterrupted and smooth customer service in all branches and SME centers, IT division continuously work on performance tuning for database and application, networking and server hardware on regular basis. Continuous investments are going on to do the necessary up gradation on hardware and software to increase the Bank’s centralized online banking and other peripheral service requirements. ICT Risk Mitigation: Stakeholders’ Information Cyberattacks are a serious threat and concern for financial institutions. Standard Bank is committed to high levels of service quality and banking security. Cyber security is a top priority for the Board and management of The Bank. For cyber security and ICT risk mitigation, the bank has aligned its ICT security policy, in line with the latest Bangladesh Bank ICT guidelines and well-established frameworks and international standards and controls. Through Mirroring Military ‘war game’ to Ethical Hacking, the bank’s information security regularly conducts application/system security assessments and vulnerability assessment and penetration testing on own infrastructure/networks by internally-certified ethical hackers to protect data assets. To protect customer and the bank’s data The Bank has implemented a comprehensive data leakage prevention solution. Moreover to ensure ethical use of technology, the bank ensures automated content scanning. The bank has also implemented email security to protect the email system from spam-based attacks. Comprehensive annual maintenance contracts (AMCs), along with service level agreements (SLAs) were signed to ensure 24x7 service for all active equipment of data centre and disaster recovery site. 2.17.6 Money Laundering Risk: Sustainability Bank’s Anti Money Laundering Division has been functioning to ensure proper compliance of overall Anti Money Laundering activities under the guidance of Bangladesh Financial Intelligence Unit (BFIU). The AML Division is to strongly implement Bank’s AML/CFT Policy to cover all latest AML issues for combating money laundering and terrorist financing maintaining international standard. Bank has adopted Money Laundering Prevention Act-2012 (Amendment-2015), Anti Terrorism Act2009 ((Amendment-2012 & 2013), BFIU Circular No.19 dated 17/09/2017 and circulated it to all of its branches to cope with latest AML strategies of national and global arena. Bank has its own standard Customer Acceptance Policy, Money Laundering & Terrorist Financing Risk Management Guidelines to provide a framework to the branches to combat money laundering & terrorist financing risk. Bank has appointed Chief Anti Money Laundering Compliance officer (CAMLCO) & Deputy CAMLCO to supervise overall anti money laundering activities of the bank. Branch Anti Money Laundering Compliance officer (BAMLCO) to comply with Anti Money Laundering issues at branch level. Financial Information In order to maintain national and international standard of AML/CFT functions Bank has policies to comply with all recommendations, accord and sanctions of United Nations (UN), Financial Action Task Force (FATF) and Asia Pacific group (APG). Apart from this, Bank is not to establish any relationship with entity listed by United Nation Security Council (UNSC) resolutions and do not maintain relationship with shell banks. Standard Bank Ltd Annual Report 2020 | 289
291. 2 .17.7 Environment Risk Management (ERM) Introduction Bangladesh Bank issued Guidelines on Environment Risk Management (ERM) to streamline solutions for managing the environmental risks in the financial sector Ref: BRPD Circular No.01/2011dated 30.01.2011 and BRPD Circular no.02 dated 27 February, 2011 respectively . Bank accordingly introduced the Guideline on Environment Risk Management which is approved by the Board of Directors in its 198th Board meeting vide memo no.-9955 held on 16.09.2012 and advised the Management to implement the same in our Bank. Corporate Governance As Environmental Risk is related to credit risk hence it has been decided to integrate the same with Credit Risk Management (CRM). As such the concerned Branches are directed to evaluate & assess environmental risks whenever a potential borrower approaches for financing. It is required to calculate the Environmental Risk Rating (EnvRR) correctly while financing to the following sectors: 1) Agri-business (Poultry & Dairy), 2) Cement, 3) Chemicals, 4) Engineering & IASic Metal, 5) Housing, 6) Pulp & Paper, 7) Sugar & Distilleries, 8) Tannery, 9) Textile & Apparels, and 10) Ship Breaking. Risk Governance Environmental Risk Rating (EvnRR) of any Credit proposal combines both the outcomes of the General and Sector specific Environmental Due Diligence (EDD) checklist & should be applied as per the following table: General EDD Sector Specific EDD Overall EnvRR Low Low Low Moderate & Low Low &Moderate If any one or both the General & Sector-Specific EDD checklist is indicated as ‘High’ Low High Management Retrospection All branches are advised to calculate & assess the EvnRR of a credit proposal (if applicable) and go through the Environmental Risk Management 2.17.8 Highlights on Bangladesh Bank’s Inspections of Core Risk Implementation Stakeholders’ Information Bangladesh Bank carried out a comprehensive inspection of SBL Head Office & 50 branches during the year 2020 & special inspection on four core risk (ALM, CRM, ICCD & ICT) based on 30-06-2020 by DBI & two core risk (AML & Foreign Exchange Risk) by BFIU & Foreign Exchange Inspection department during 2020 for assessing the implementation of the guidelines on core risk as well as to evaluate the effectiveness of risk management practices by the Bank. Major findings of the inspection were discussed in a meeting participated by the Board, Bangladesh Bank representatives and related management personnel of the Bank. The Board took the observations with utmost importance and instructed management to comply with BB suggestions for improvement. BB also conducted several other audits on different units/departments of the bank all over the year which include Treasury Division, Credit Division, Credit Administration Division, ICCD and Foreign Exchange etc. Bank already comply all the findings & observations of core risk as per stipulated time set by Bangladesh Bank. The overall core risk implementation status of the Bank is satisfactory. 2.18 Regulatory and legal compliance Sustainability The bank complied with the requirements of the following laws & regulation: a. b. c. d. e. Financial Information f. 290 | The Bank Companies Act 1991 as amended. The Companies Act 1994 Income Tax Ordinance,1984 and rules The Value Added Tax (VAT) Act & Supplementary Duty Act 2012. Bangladesh Securities and Exchanges Rules 1987, Bangladesh Securities and Exchanges Ordinance 1969, Bangladesh Securities and Exchanges Act 1993. Rules, Regulations and Circulars issued by the Bangladesh Bank and other regulatory authorities. Standard Bank Ltd Annual Report 2020
292. 2 .19 Introduction Compliance of International Accounting Standard (IASs) and International Financial Reporting Standard (IFRSs) The bank has complied the following IASs & IFRSs as adopted by ICAB up to the preparation of financial statements as at and for the year ended 31 December 2020. Name of IASs /IFRSs No. Status IAS 1 Complied Inventories IAS 2 N/A Cash Flows Statements IAS 7 Complied Accounting Policies, Changes in Accounting Estimates and Errors IAS 8 Complied Events after the Reporting Period IAS 10 Complied Income Taxes IAS 12 Complied Property, Plant and Equipments IAS 16 Complied The Effect of Changes in Foreign Exchange Rates IAS 21 Complied Borrowing Costs IAS 23 Complied Related Party Disclosures IAS 24 Complied Accounting and Reporting by Retirement Benefit Plans IAS 26 N/A Separate Financial Statements IAS 27 Complied Investments in Associates IAS 28 N/A Financial Reporting in Hyperinflationary Economies IAS 29 N/A Financial Instruments: Presentation IAS 32 Complied * Earning per share IAS 33 Complied Interim Financial Reporting IAS 34 Complied ** Impairment of Assets IAS 36 Complied Provisions, Contingent Liabilities and Contingent Assets IAS 37 Complied Intangible Assets IAS 38 Complied Investment Property IAS 40 N/A Agriculture IAS 41 N/A First-time Adoption of Bangladesh Financial Reporting Standards IFRS 1 N/A Share-based Payment IFRS 2 N/A Business Combinations IFRS 3 Complied Insurance Contracts IFRS 4 N/A Non-current Assets Held for Sale and Discontinued Operations IFRS 5 N/A Exploration for and Evaluation of Mineral Resources IFRS 6 N/A Financial Instruments: Disclosures IFRS 7 Complied * Operating Segments IFRS 8 Complied Financial Instruments: Recognition and Measurement IFRS 9 Complied * Consolidated Financial Statements IFRS 10 Complied Joint Arrangements IFRS 11 N/A Disclosure of Interests in Other Entities IFRS 12 Complied Fair Value Measurement IFRS 13 Complied Regulatory Deferral Accounts IFRS 14 Complied Revenue IFRS 15 Complied Leases IFRS 16 Complied Financial Information N/A Sustainability Complied Stakeholders’ Information 19 20 Management Retrospection IAS IAS Risk Governance Employee Benefits Accounting for Government Grants and Disclosure of Government Assistance Corporate Governance IASs/IFRSs Presentation of Financial Statements * Complied to the extent possible subject to compliance to Bangladesh Bank guidelines in this respect. ** Complied in the preparation of interim financial reports of the bank. Standard Bank Ltd Annual Report 2020 | 291
293. Reason for departure from IFRS Introduction The Central Bank of Bangladesh (’Bangladesh Bank’), as regulator of the banking industry, has issued a number of circulars/directives which are not consistent with the requirements specified in IAS/IFRS, as referred above. In such cases, the bank has followed regulatory requirements specified by Bangladesh Bank. Standards issued but not yet effective Corporate Governance A number of new standards and amendments to standards are issued but not yet effective for annual periods beginning after 1 January 2020 and earlier application is permitted. However, the Bank has not adopted early the following new or amended standards in preparing these financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group and the separate financial statements of the Bank when they become applicable. 2.20 Operating segments: Risk Governance Business segments report consists of products and services whose risks and returns are different from those of other business segments. The Bank has ten segments, as described below, which are the Bank’s strategic business units. The strategic business units offer different products and services, and are managed separately based on the Bank’s management and internal reporting structure. Each of the strategic business units of the Bank are periodically reviewed by the Management Committee. The following summary describes the operations in each of the Bankers reportable segments: Segment Name Management Retrospection Stakeholders’ Information Sustainability Financial Information 292 | Description Corporate Banking This unit Focuses on large corporate groups including structured/syndicated finance with a variety of advances & deposit products and other transactions . SME Banking Includes loans, deposits and other transactions and balances with SME customers. Consumer Banking Includes loans, deposits and other transactions and balances with retail customers. Treasury Treasury unit undertakes the Bank's funding and maintenance of SLR, Assetliability management through money market operation, Fx. Market dealings. investing in derivatives including forwards, Futures and swaps. Investment Banking Includes the Bank's trading, investment in equities and other capital market activities. Offshore Banking This unit aims to provide all kinds of commercial banking services to its customers in freely convertible currencies. Presently the Bank has one unit in Dhaka. Card and Alternate Delivery Channel This includes offering a variety of debit card and credit card to the customers according to their needs Mobile Financial Services Mobile Financial services came up the aim to cover a large number of people under banking channeI through mobile network facilitating convenient cash in/out, bill payment. POS purchase etc. SBL Capital Management Limited The objective of the company is in underwriting, managing and distributing the issue of shares, bonds and other securities, portfolio management. share transfer agent, fund management etc. SBL Securities Limited The principal activity of the Co. is to act as a TREC Holder of DSE & CSE to carry on the business of stock brokers in relation to shares and securities dealings and other services. Standard Exchange Company (UK) Limited The main activities of the exchange house are to carry on the remittance business and to undertake and participate in transactions, activities and operation commonly carried on or undertaken by remittance and exchange houses. Standard Co (USA) Inc.DBA: Standard Express The main activities of the exchange house are to carry on the remittance business and to undertake and participate in transactions, activities and operation commonly carried on or undertaken by remittance and exchange houses. Standard Bank Ltd Annual Report 2020
294. 2 .21General Introduction a. Figures appearing in the financial statements have been rounded off to the nearest Taka b. Figures and account titles of previous year have been rearranged whenever considered necessary including capital to risk weighted adequacy ratio (CRAR) as per Bangladesh Bank Letter No. BRPD (P-1)/661/13/20203370 to confirm with current year’s presentation. Corporate Governance c. Expenses irrespective of capital or revenue nature accrued but not paid have been provided for in the books of account of the Bank. Comparative information Comparative information in respect of the previous year has been presented from the financial statements audited by current year auditors for the year ended 31 December 2020. Figures of previous year have been rearranged whenever necessary to confirm the current year/period presentation. Approval of financial statements 2.22 Risk Governance The financial statements have been approved by the Board of Directors of the bank in its 341th meeting held on April 28,2021. Changes in accounting policies As per IAS 8” Accounting policies,Cahnges in Accounting Estimates and Errors” Accounting Policies are applied consistently for comparability between financial statements of different accounting periods. Changes in Accounting Policies are applied retrospectively in the financial statements . Comparative amounts presented in the financial statements affected by changes in accounting policy for each period presented. 2.23 Management Retrospection Credit Rating of Bank As per BRPD circular no. 6 dated 5 July 2006, the Bank has done its credit rating by ARGUS Credit Rating Services Limited based on the audited financial statements as at and for the year ended 31 December 2020. The following ratings have been awarded: Particulars Date of Rating 30-06-2021 Outlook Short term AA+ ST-2 Double A Plus (High quality and High Safety) (High Grade) Stakeholders’ Information Surveillance Rating Long term Stable Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 293
295. Amount in Taka 31 .12.2020 Introduction 3. CASH 3.1 Cash in hand In local Currency In Foreign Currency Total Corporate Governance 3.2 31.12.2019 Risk Governance 1,474,774,347 123,060,630 1,597,834,977 1,772,693,751 36,839,348 1,809,533,099 28,493,932,142 410,734,325 28,904,666,467 10,621,787,279 76,478,146 10,698,265,425 184,256,455 29,088,922,922 233,649,954 10,931,915,380 30,686,757,899 12,741,448,478 Balance with Bangladesh Bank and its agent bank(s) (including foreign currency) In local Currency In Foreign Currency Sonali Bank as agent of Bangladesh Bank Local currency Total 3.3 Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) Management Retrospection Cash Reserve Ratio and Statutory Liquidity Ratio have been calculated and maintained in accordance with section 33 of Bank Companies Act 1991 (amendment upto 2013), DOS Circular Letter No. 26 dated August 19, 2019 and MPD circular No. 02 dated December 10, 2013 and MPD circular No.03 dated April 09, 2020. The Cash Reserve Ratio on the Bank’s time and demand liabilities at the rate of 4.00% on bi-weekly basis and minimum 3.50% on daily basis has been calculated and maintained with Bangladesh Bank in current account and 13% Statutory Liquidity Ratio, on the same liabilities has also been maintained in the form of Treasury Bills, Treasury Bonds, Bangladesh Bank Bills, Cash in hand, Balance with Sonali Bank as an agent of Bangladesh Bank, Excess reserve of CRR and FC balance with Bangladesh Bank. Both the reverses maintained by the Bank are in excess of the statutory requirements as shown below: i) Stakeholders’ Information ii) Sustainability iii) Financial Information iv) 294 | Cash Reserve Ratio (CRR) for Conventional Banking (4% of Average Demand and Time Liabilities) Required Reserve Actual Reserve maintained (Second Bi-weekly of December-2020, as per Bangladesh Bank Statement) Surplus/(Deficit) Cash Reserve Ratio (CRR) for Islamic Banking (4% of Average Demand and Time Liabilities) Required Reserve Actual Reserve maintained (as per Bangladesh Bank Statement) Surplus/(Deficit) Statutory Liquidity Ratio (SLR) for Conventional Banking : (13% of Average Demand and Time Liabilities) Required Reserve Actual Reserve maintained Surplus/(Deficit) Statutory Liquidity Ratio (SLR) for Islamic Banking : (5.5% of Average Demand and Time Liabilities) Required Reserve Actual Reserve maintained Surplus/(Deficit) Standard Bank Ltd Annual Report 2020 6,788,088,000 28,775,956,000 9,321,795,000 9,488,529,000 21,987,868,000 166,734,000 44,044,000 68,464,000 24,420,000 41,424,000 52,753,000 11,329,000 22,075,694,000 27,095,644,000 5,019,950,000 22,033,334,000 28,685,820,336 6,652,486,336 60,560,000 103,689,000 43,129,000 41,424,000 53,849,000 12,425,000
296. Amount in Taka 31 .12.2020 3.4 Held for Statutory Liquidity Ratio Balance with Sonali Bank Excess of CRR Government Treasury Bills i. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. - 1,649,728,000 3,237,389,129 1,847,810,000 23,411,550,207 27,095,644,000 28,685,820,336 1,597,834,977 1,809,533,099 - - 144,301,655 64,591,546 - 1,874,124,644 29,088,922,922 10,931,915,380 Standard Exchange Co.(UK) Ltd. - - Standard Express(USA) Ltd. - - SBL Capital Mgt. Ltd. - - SBL Securities Ltd. - - 29,088,922,922 10,931,915,380 30,831,059,554 12,806,040,024 Balance with Bangladesh Bank and its agent bank(s) Standard Bank Limited (note-3.2) Balance with other Banks and financial institutions In Bangladesh ( note 4.1) 1,044,472,813 747,745,218 1,929,591,527 1,792,218,031 - - 101,353 114,064 In Bangladesh Current Deposits Short Term Deposit (STD) Agrani Bank Limited Dutch Bangla Bank Eastern Bank Limited Islami Bank bd Limited Janata Bank Limited 1,042 13,170 341,184 341,184 11,000 11,000 1,253 1,253 40,980 4,329,938 1,037,873 1,303,899 - 305,870 Sonali Bank Limited 86,136,136 48,071,000 Standard Chartered Bank 11,857,649 (3,206,924) The City Bank Limited 1,938,187 80,778 Trust Bank Ltd. 5,492,297 5,107,581 106,958,955 56,472,813 Standard Bank Ltd Annual Report 2020 | 295 Financial Information Southeast Bank Ltd. Sustainability Basic Bank Limited BRAC Bank Ltd. Stakeholders’ Information Outside Bangladesh ( note 4.2) 196,958,955 1,732,632,572 Management Retrospection 1,742,136,632 Risk Governance SBL Securities Ltd. 4.1 21,827,572,000 Cash in hand Standard Exchange Co.(UK) Ltd. 4. 233,648,000 Consolidated cash Standard Bank Limited (note-3.1) ii. 1,803,233,000 184,256,000 Corporate Governance Government Treasury Bonds 1,586,278,000 Introduction Cash in hand 3(a) 31.12.2019
297. Amount in Taka 31 .12.2020 Savings Deposit Introduction Corporate Governance Fixed Deposits Hajj Finance Company Ltd. IIDFC (FDR) Islamic Finance & Investment Ltd. IPDC Finance Ltd. IDLC Finance Ltd Lanka Bangla Finance Ltd. National Housing Fin. And Invest. Uttara Finance & Investment Ltd. (FRD) Jamuna Bank Ltd Islami Banking Window - Topkhana Pubali Bank Limited Risk Governance 4.2 Management Retrospection Outside Bangladesh In Current account Interest Bearing Standard Chartered Bank, New York Mashreq Bank Psc, New York AXIS Bank Limited, Mombai,India ICICI Bank Ltd., Mumbai, India A.B. Bank LTD. MUMBAI Non Interest Bearing Standard Chartered Bank Ltd., Mumbai, India Standard Chartered Bank Ltd.,Frankfurt Standard Chartered Bank Ltd., Tokyo ICICI Bank Ltd., Hongkong Nepal Bangladesh Bank Ltd, Kathmundu Bhutan National Bank, Bhutan Commerz Bank, Frankfurt Habib American Bank Ltd. New York Habib Metropolitan Bank Ltd. Karachi,Pakistan Mashreq Bank ,London Bank Aljaria, KSA Bank Aljaria,KSA, USD Commerzbank, Frankfurt(GBP) SCB, LONDON (GBP) Westpac Banking Corporation ,Sydney, AUD Alawwal Bank ,KSA,SAR (Saudi Hollandi Bank KSA) Sonali Bank (UK) Ltd Total Nostro Accounts FDR Standard Chartered Bank Ltd., Mumbai, India Others Habib American Bank Ltd, New York (OBU) Total Outside Bangladesh Stakeholders’ Information Sustainability Financial Information Total (Annexure-A for details) 296 | Standard Bank Ltd Annual Report 2020 31.12.2019 - - 90,000,000 90,000,000 163,000,000 25,000,000 100,000,000 400,000,000 300,000,000 988,000,000 196,958,955 1,044,472,813 685,014,813 256,078,556 42,461,470 79,395,713 20,789,718 133,587,264 798,147 18,131,097 13,791,071 14,751,997 1,610,441 14,611,667 374,178,569 5,635,763 21,858,747 7,875,863 534,236 14,448,568 1,705,553,700 122,476,377 76,325,044 8,034,563 15,444,602 6,847,596 7,475,037 682,047 911,595 8,065,193 14,675,992 444,778 448,137 121,696,036 7,628,673 26,275,354 7,842,839 16,927,330 207,153 442,408,347 7,352,100 7,352,100 19,726,773 1,732,632,572 297,984,772 747,745,218 1,929,591,527 1,792,218,031
298. Amount in Taka 31 .12.2020 4.3 Maturity grouping of balance with other banks and financial institutions 25,181,989 18,468,316 1,088,123,117 Outside Bangladesh Standard Bank Limited (note-4.2) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 1,732,632,572 12,836,741 66,192,392 1,811,661,706 2,126,608,682 747,745,218 5,074,317 91,976,896 844,796,432 1,932,919,549 Money at Call and Short Notice Banking Company Jamuna Bank Limited - - Non-Banking Financial Institutions MIDAS - - Short Notice Money Lanka Bangla Uttara Finance IPDC IDLC Finance Ltd Gsp Finance 5,000,000 5,000,000 100,000,000 Total 5,000,000 117,400,000 17,400,000 117,400,000 Standard Bank Ltd Annual Report 2020 | 297 Financial Information 83,455,629 34,532,393 314,946,977 Sustainability 1,044,472,813 - Stakeholders’ Information 196,958,955 - Management Retrospection (10,601,404,938) (10,601,404,938) Risk Governance (10,071,495,890) (10,071,495,890) Corporate Governance 1,792,218,031 117,400,000 12,511,022,969 (10,601,404,938) Consolidated Balance with other banks and financial institutions In Bangladesh Standard Bank Limited (note-4.1) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 5. 1,929,591,527 5,000,000 12,006,087,417 (10,071,495,890) Consolidated Net Balance with other banks and financial institutions Balance with other banks and financial institutions (note-4b) Less: Borrowing from other banks and financial institutions 4(a) 1,629,218,031 163,000,000 1,792,218,031 - Net Balance with other banks and financial institutions Balance with other banks and financial institutions (note-4) Add: Lending to other banks and financial institutions (note-05) Less: Borrowing from other banks and financial institutions (note-10) 4.5 1,839,591,527 90,000,000 1,929,591,527 - Introduction Payable on demand Up to 1 month Over 1 month but not more than 3 months Over 3 months but not more than 1 year Over 1 year but not more than 5 years Over 5 years 4.4 31.12.2019
299. Amount in Taka 31 .12.2020 5.1 31.12.2019 Maturity grouping of Money at Call and Placements: Introduction Payable on demand 5,000,000 117,400,000 Up to 1 month - - Over 1 month but not more than 3 months - - Over 3 months but not more than 1 year - - Over 1 year but not more than 5 years - - Corporate Governance Over 5 years 6. - - 5,000,000 117,400,000 3,559,474,650 26,688,824,637 Investments Government securities (note -6.a) 6,050,274,784 5,999,834,379 9,609,749,434 32,688,659,016 14 days Treasury Bills - - 91 days Treasury Bills - - Others Investment (note -6.b) Risk Governance a) Government securities Treasury Bill Management Retrospection 182 days Treasury Bills 799,800,000 1,677,125,350 364 days Treasury Bills 849,937,950 1,560,263,779 1,649,737,950 3,237,389,129 Total Treasury Bill Government Bond 1 years Government bonds - 201,399,164 2 years Government bonds - 2,542,505,446 5 years Government bonds Stakeholders’ Information 1,847,810,000 8,853,503,317 10 years Government bonds - 3,597,073,820 15 years Government bonds - 8,217,068,461 20 years Government bonds - - 1,847,810,000 23,411,550,208 Prize bonds 3,426,700 4,385,300 Total Prize bonds 3,426,700 4,385,300 1 years bonds 58,500,000 35,500,000 2 years bonds - - 58,500,000 35,500,000 3,559,474,650 26,688,824,637 Total Government Bond Government Islamic Bond Sustainability Total Government Islamic Bond Total Government Securities Financial Information b) Other Investments (note -6.3) Quoted Shares Unquoted Shares Preference share | 156,646,170 4,938,188,796 - 35,000,000 Subordinated Bonds 739,999,412 869,999,412 Bangladesh Bank Bill - - 6,050,274,784 5,999,834,379 Total Others Investment 298 155,740,426 5,154,534,945 Standard Bank Ltd Annual Report 2020
300. Amount in Taka 31 .12.2020 6.2 Maturity grouping of Investments : On demand Up to 1 month Over 1 month but not more than 3 months Over 3 months but not more than 1 year Over 1 year but not more than 5 years Over 5 years 6.3 Other Investments : a) Quoted Shares First Bangladesh Fixed Income Fund Bangladesh Steel Re-Rolling Mills Ltd The ACME Laboratories Limited Runner Automible Limited Genex Infosys Limted ADN Telecom Limited Robi Axiata Limited Kettali Textiles Ltd Silva Pharmaceuticals Limited Indo-Bangla Pharmaceuticals Limited New Line Clothings Limited Silco Pharmaceuticals Limited Coppertech Industries Limited Sea Pearl Beach Resort & Spa Limited Ring Shine Textiles Limited 150,000,000 3,520,810 109,226 676,745 1,311,880 18,171 103,594 150,000,000 4,595,375 109,226 676,744 3,779 569,040 151,270 91,940 29,450 150,260 76,411 48,576 40,505 103,594 Total Quoted Shares 155,740,426 156,646,170 156,548,164 37,500,000 5,000,000 3,003,185 33,843,240 130,122,500 1,499,940,000 799,940,000 2,488,637,856 5,154,534,945 156,548,164 37,500,000 5,000,000 3,003,185 32,757,960 130,122,500 1,499,940,000 799,940,000 2,273,376,987 4,938,188,796 - 35,000,000 35,000,000 99,999,412 400,000,000 120,000,000 100,000,000 20,000,000 739,999,412 99,999,412 500,000,000 150,000,000 100,000,000 20,000,000 869,999,412 - - 6,050,274,784 5,999,834,379 b) Unquoted Shares Central Depository Bangladesh Limited (CDBL) Central Counterparty Bangladesh Limited (CCBL) Market Stabilization Fund SWIFT Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. SBL Capital Mgt. Ltd.(Investment) Total Unquoted Shares c) Preference share Preference Share Of Star Ceramics Ltd. Total Preference share d) Subordinated Bond Zero Coupon Bond BSRM Ltd. Jamuna Bank Ltd 2Nd Subordinate Bond MTBL 3rd Subordinated Bond The City Bank 2nd Subordinated Bond Golden Harvest Agro Industries Ltd. Total Subordinated Bond Sustainability 4,385,300 1,677,125,350 4,138,269,225 26,868,879,141 32,688,659,016 Stakeholders’ Information 3,426,700 799,800,000 908,437,950 7,898,084,784 9,609,749,434 Management Retrospection 4,906,955,320 21,777,484,017 4,385,300 26,688,824,637 Risk Governance 1,649,737,950 1,906,310,000 3,426,700 3,559,474,650 Corporate Governance Government Securities classified as per Bangladesh Bank Circular: Held for trading (HFT) Held to maturity (HTM) Other Securities (Prize Bond) Introduction 6.1 31.12.2019 e) Bangladesh Bank Bill Total Other Investments (Annexure-E may kindly be seen for details) Standard Bank Ltd Annual Report 2020 | 299 Financial Information 7 days Treasury Bills 14 days Treasury Bills 30 days Treasury Bills Total Bangladesh Bank Bill
301. Amount in Taka 31 .12.2020 6(a) 31.12.2019 Consolidated Investments Introduction Government Corporate Governance Standard Bank Limited (note-6) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 3,559,474,650 26,688,824,637 - - 3,559,474,650 26,688,824,637 6,050,274,784 5,999,834,379 (3,988,577,856) (33,843,240) (130,122,500) 1,840,646,303 510,094,818 (799,940,000) (3,773,316,987) (32,757,960) (130,122,500) 2,144,527,751 501,039,750 (799,940,000) 3,448,532,309 3,909,264,433 7,008,006,959 30,598,089,070 18,512,214,330 55,989,949,302 3,928,778,277 5,705,792,553 16,572,943,928 3,397,758,643 1,307,020,916 4,413,136,639 765,962,886 441,800,356 9,181,497,781 1,483,425,511 2,140,729,789 768,637,467 32,304,395,658 13,765,299 493,414,479 19,538,859,833 46,516,019,226 3,526,381,213 5,106,105,752 16,504,624,235 3,492,875,181 1,565,231,060 6,605,132,296 501,394,017 508,243,500 13,221,383,282 1,408,464,890 2,550,763,227 727,635,190 32,118,807,373 13,966,490 300,105,231 157,421,223,814 154,205,991,995 Others Risk Governance Standard Bank Limited (note-6) Standard Capital Mgt. Ltd (Share Capital & Investment to SCML) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. SBL Securities Ltd. (Share Capital to SSL) 7. Loan and advances/Investments As per classification into the following broad categories: Management Retrospection I) Loans, cash credits, overdrafts, etc Stakeholders’ Information Inside Bangladesh Secured overdraft/Quard against TDR Term Loan Export Development Fund (EDF) Agriculture Loan Cash credit/ Murabaha House Building loans Transport Loans Loans against trust receipt Payment against document Packing credit Demand Loan Lease Finance / Izara Syndicate/Club Finance VISA Credit Card SME/SE Green Finance Consumer Credit Scheme/Hire purchase Sustainability Outside Bangladesh - - 157,421,223,814 154,205,991,995 958,039,423 1,430,296,089 ii) Bills purchased and discounted Financial Information Payable inside Bangladesh Inland bills purchased Payable outside Bangladesh Foreign bills purchased and discounted Total 300 | Standard Bank Ltd Annual Report 2020 1,070,942,161 2,443,707,143 2,028,981,583 3,874,003,231 159,450,205,397 158,079,995,226
302. Amount in Taka 31 .12.2020 7.1 7.4 Total Loans aznd advances/Investments 122,336,065,556 16,572,943,928 18,512,214,330 157,421,223,814 2,028,981,583 159,450,205,397 118,162,507,928 16,504,624,235 19,538,859,833 154,205,991,995 3,874,003,231 158,079,995,226 463,698,000 512,359,127 1,033,343,645 986,514,051 14,352,100,000 3,333,300,000 2,401,911,213 3,297,800,000 32,304,395,658 483,790,293 4,581,766,587 60,755,063,751 295,760,000 1,897,000,000 2,477,700,233 625,100,151 32,126,300,336 1,519,700,000 6,875,433,321 45,816,994,041 2,726,900,000 5,754,800,000 10,659,000,000 258,700,000 2,212,500,000 1,398,400,000 4,997,800,000 3,475,900,000 65,714,100,001 97,198,100,001 29,199,989,034 6,444,300,000 14,185,600,000 791,100,000 443,000,000 1,693,500,000 7,870,200,000 3,300,300,000 46,836,138,974 110,764,128,007 159,450,205,397 158,079,995,226 Standard Bank Ltd Annual Report 2020 | 301 Financial Information Industrial Loans/Investments i) Agricultural Industries ii) Textile Industries iii) Food and allied Industries iv) Pharmaceuticals Industries v) Leather, Chemical and Cosmetics etc vi) Cement and Ceramic Industries vii) Service Industries viii) Transport and Communication Industries ix) Other Industries 18,299,298,198 21,000,750,188 52,605,964,835 52,475,340,651 13,698,641,355 158,079,995,226 Sustainability d) 7,979,594,814 21,019,652,733 52,999,255,695 41,873,738,206 35,577,963,949 159,450,205,397 Stakeholders’ Information Loans and advances/Investments on the basis of significant concentration including bills purchased and discounted a) Loans and advances/Investments to allied concerns of Directors/Sponsors of the Bank (Annexure-D) b) Loans and advances/Investments to Chief Executive and other senior executives (including staff) c) Loans and advances/Investments to customers group : i) Commercial lending ii) Export financing iii) House building loan iv) Consumers Credit Scheme v) Small and medium enterprises vi) Special program loan vii) Other Loans and advances/Investments 9,232,447,399 762,258,699 3,852,070,115 13,846,776,212 144,233,219,014 Management Retrospection Bills purchased and discounted 7,764,228,563 1,632,466,069 4,533,023,958 13,929,718,589 145,520,486,808 Risk Governance Loans and advances/Investments under the following broad categories : Loans Cash Credit Overdraft 158,079,995,226 Corporate Governance 7.3 Residual maturity grouping of loans and advances/Investments including bills purchased and discounted Repayable on demand Up to 1 month Over 1 month but not more than 3 months Over 3 months but not more than 1 year Over 1 year but not more than 5 years Over 5 years 159,450,205,397 Introduction 7.2 Net loans and advances/Investments Loans and advances/Investments (note-7) Less: Non-performing loans and advances/Investments (note-7.9) Interest suspense (note-12.4) Provision for loans and advances/Investments (note-12.2) 31.12.2019
303. Amount in Taka 31 .12.2020 Introduction 7.5 31.12.2019 Geographical Location-wise Loans and advances/Investments: Urban: 108,947,122,450 108,081,481,842 Chittagong Division 26,802,926,394 27,407,844,343 7,290,535,555 7,343,011,461 Barishal Division 417,291,906 419,548,058 Rajshahi Division 5,725,853,887 5,340,813,704 Rangpur Division 6,173,224,609 5,478,834,338 Sylhet Division 644,856,289 595,355,583 Mymensing Division 210,599,307 209,300,707 156,212,410,397 154,876,190,035 1,488,556,061 1,464,611,117 701,429,055 683,382,224 Khulna Division - - Barishal Division - - Rajshahi Division 470,872,505 486,524,420 Rangpur Division 223,773,550 221,079,421 Sylhet Division 105,923,458 106,977,578 Mymensing Division 247,240,371 241,230,431 3,237,795,000 3,203,805,191 - - 159,450,205,397 158,079,995,226 Agriculture and SME 23,037,800,000 22,371,991,230 Manufaturing/Production 40,759,800,000 41,400,699,913 Real Estate 10,990,000,000 10,189,763,846 Service Industry 12,467,200,000 17,991,123,067 2,862,100,000 8,951,238,129 90,116,900,000 100,904,816,185 Corporate Governance Dhaka Division Khulna Division Risk Governance Rural : Dhaka Division Management Retrospection Chittagong Division Stakeholders’ Information Outside Bangladesh Total Sustainability 7.6 Details of pledged collaterals Financial Information Others 302 | Standard Bank Ltd Annual Report 2020
304. Amount in Taka 31 .12.2020 7.7 31.12.2019 DETAIL OF LARGE LOAN Number of Clients 29 24 6,717.50 6,243.20 - - Not applicable Not applicable Amount of classified advances/Investments/Investments Measures taken for recovery Name of Clients Outstanding as on 31.12.2020 Total Amount (In crore) Funded 2020 Non-Funded 2019 425.90 553.24 51.37 327.24 272.41 Saad Musa 367.92 - 367.92 343.25 Paradise 387.15 1.03 388.18 360.30 Pran RFL 260.38 92.26 352.64 373.43 Bashundhara 414.99 - 414.99 451.64 Noman 163.70 12.27 175.97 0.00 Rose Group/Pantex 150.76 77.81 228.57 164.57 29.43 262.23 291.66 398.80 Zohura Agriculture & Zohura Trading 188.07 - 188.07 134.51 Rangs 338.86 18.75 357.61 275.46 Modern 278.94 - 278.94 269.62 32.36 1.34 33.70 0.00 Nitol-Niloy Group 161.48 25.52 187.00 193.10 Abdul Monem Ltd. 193.65 98.05 291.70 296.34 Mir Akhter Hossain Ltd. 121.57 45.93 167.50 90.11 32.72 122.83 0.00 Union Group 139.52 24.60 164.12 239.84 Prime Group 318.30 2.33 320.63 367.68 Amber Group 102.66 11.67 114.33 119.37 173.02 SQ Group N.Z. Group Navana Group MSA Textiles Ltd 212.17 143.53 80.29 220.38 0.00 Karim Group 153.90 56.96 210.86 206.22 4.00 45.98 49.98 0.00 Provita Group 300.99 2.39 303.38 287.59 Anwar Group 143.39 5.74 149.13 190.30 Pretty Sweaters Limited 154.58 0.05 154.63 148.34 Glory Group 128.16 39.64 167.80 212.00 72.65 45.66 118.31 0.00 5,548.93 1,168.57 6,717.50 6,243.20 Abul Khair Group Madina Group Total Standard Bank Ltd Annual Report 2020 | 303 Financial Information 85.85 140.09 Sustainability 57.68 Nationtech-KKENT JV Stakeholders’ Information 48.13 275.87 Management Retrospection 377.77 Sinha Risk Governance Chaity Corporate Governance Amount of outstanding advances/Investments /Investments Introduction Number of clients with amount of outstanding and classified loans/Investments to whom loans and advances/Investments sanctioned exceeds 10% of total capital of the Bank. Total Capital of the Bank was Taka 2,309.15 crore as at 31 December, 2020 (Taka 1962.14 Crore in 2019)
305. Amount in Taka 31 .12.2020 7.8 Particulars of loans and advances/Investments Introduction Corporate Governance Taka 117,920,539,415 Taka 118,120,313,496 Loans/Investments considered good against which the bank holds no security other than the debtors’ personal guarantee 32,201,488,085 33,436,668,161 iii) Loans/Investments considered good secured by the personal undertaking of one or more parties in addition to the personal guarantee of the debtors 7,993,419,534 4,903,949,150 iv) Loans/Investments adversely classified; provision not maintained there against 1,334,758,362 1,619,064,419 159,450,205,397 158,079,995,226 i) Loans/Investments considered good in respect of which the Bank is fully secured ii) Risk Governance v) Loans/Investments due by directors or officers of the banking company or any of them either separately or jointly with any other persons 1,033,343,645 1,037,868,176 vi) Loans/Investments due from companies or firms in which the directors of the Bank have interest as directors, partners or managing agents or in case of private companies as members 516,239,757 560,512,818 Maximum total amount of advances/Investments, including temporary advances/Investments made at any time during the year to directors or managers or officers of the banking company or any of them either separately or jointly with any other person. 1,053,576,560 1,037,868,176 Maximum total amount of advances/Investments, including temporary advances/Investments granted during the year to the companies or firms in which the directors of the banking company have interest as directors, partners or managing agents or in the case of private companies, as members 722,746,487 560,512,818 - - 7,764,228,563 9,232,447,399 9,232,447,399 (1,468,218,836) 7,764,228,563 11,348,683,203 2,116,235,805 9,232,447,399 vii) Management Retrospection viii) Stakeholders’ Information ix) Due from banking companies x) Total amount of Classified advances/Investments on which interest is not credited to income a) Sustainability xi) Movement of Classified Loans and advances/Investments Opening Balance Increase/(decrease) during the year Financial Information b) Provision kept against loan classified as bad debts (note-7.10) 3,251,441,891 2,589,031,297 c) Interest credited to interest suspense Account (note-12.4) 1,632,466,069 762,258,699 4,733,419,819 4,733,419,819 29,264,265 4,704,155,554 4,756,099,435 3,027,673 4,759,127,108 25,707,289 4,733,419,819 21,681,685,406 20,773,986,208 Cumulative amount of written off loans/Investments Opening Balance Amount written off during the year Amount realized against loan/Investments previously written off Closing Balance The amount of written off / classified loans/Investments for which law suits have been filed 304 31.12.2019 | Standard Bank Ltd Annual Report 2020
306. Amount in Taka 31 .12.2020 7.09 Total Provision maintained (note-12.2) 72,938,177 71,461,694 11,652,880 11,256,266 2,381,737 4,949,235 15,012,611 25,880,010 - 5,282,872 7,029,044 14,196,063 27,747,373 - 27,154,361 26,437,664 44,215,510 184,962,247 3,022,264,134 3,251,441,891 39,179,807 195,438,726 2,354,412,764 2,589,031,297 4,533,023,9578 3,852,070,115 4,533,023,958 3,852,070,115 Stakeholders’ Information Required provision for loans and advances/Investments 5% to 20% 5% to 50% 100.00% 1,099,627,843 Management Retrospection 228,142,340 372,255,198 3,029,048,757 153,913,626,920 1,121,613,056 Risk Governance Classified-specific provision Sub Standard 372,969,764 Doubtful 764,399,096 Bad/Loss 6,626,859,703 159,450,205,396 148,847,547,828 144,932,336,141 3,915,211,687 9,232,447,399 412,982,885 764,646,218 8,054,818,296 158,079,995,226 - Corporate Governance Particulars of required provision for loan and advances/Investments Status Outstanding Base for % provision Un-classified -General provision: All Unclassified loans (other than Small and Medium Enterprise financing, Loan to BH/MB/SD agst shares,Consumer 112,161,305,524 111,149,342,524 1% to 5% Financing,House Finance,Agriculture Finance,Staff loan and Special Mentioned Account) Small and Medium 29,175,270,871 29,175,270,871 0.25% Enterprise financing Loan to BH/MB/SD 582,644,002 582,644,002 2.00% agst shares Consumer Financing, 119,086,840 119,086,840 2.00% Consumer Financing, 247,461,740 247,461,740 2.00% House Finance 1,501,261,074 1,501,261,074 1.00% Agriculture Finance 2,588,000,968 2,588,000,968 1.00% Staff loan 1,022,573,764 1,022,573,764 0.00% Special Mentioned 4,288,372,050 3,898,538,841 .25% to 5% Account 151,685,976,834 147,397,604,784 4,288,372,050 7,764,228,563 372,969,764 764,399,096 6,626,859,703 159,450,205,397 - Introduction 7.10 Classification of loans and advances/Investments Unclassified: Standard including staff loans/Investments Special Mention Account (SMA) Classified: Sub standard Doubtful Bad/Loss 31.12.2019 Excess/(Short) provision at 31 December 7.11 107,219,783 128,334,118 110,664,048 - - Required provision of Off-Balance Sheet Exposures Total provision maintained (note-12.3) Excess/(short) provision at 346,217,949 346,217,949 - 425,577,423 425,577,423 - 175,379,162 136,913,255 113,285,007 Standard Bank Ltd Annual Report 2020 | 305 Financial Information Particulars of required provision on Off-Balance Sheet Exposures Base for Provision Rate % Acceptance and endorsements 10,721,978,308 Letter of guarantee 12,833,411,761 1% Letter of credit 11,066,404,802 Bills for Collection - Sustainability *The Bank has maintained total provision of Tk. 453.30 crore against loans & advances/investments for the year 2020. As per Bangladesh Bank letter no. DBI-1(Division-2)/111/2021-962 dated 01.04.2021 & DOS (RMMCMS) 1154/ 161/2021-1829 dated 22.04.2021, the additional provision will be maintained equally within next four years with effect from 2021.
307. Amount in Taka 31 .12.2020 7.12 Suits filed by the bank (Branch wise details) Introduction Agrabad Branch Ashkona Branch Ashulia Branch Bahaddarhat Branch Bakshigonj Branch Banani Branch Bashurhat Branch Beanibazar Branch Benapole Branch Bhairab SME Branch Bhogeshwar Branch Bishawanath Branch Bogra Branch Brahmanbaria Branch CDA Branch CEPZ Branch Chaktai Branch Chapainawabgonj Branch Comilla Branch Cox’s Bazar Branch Dakhinkhan Branch Dhanmondi Branch Dinajpur Branch Feni Branch Faridpur Branch Foreign Exchange Branch Gazipur Branch Goalabazar Branch Green Road Branch Gulshan Branch Gulshan-1 Branch Hatikamrul Branch Imamgonj Branch Jessore Branch Jubilee Road Branch Kadamtoli Branch Kamarpara Branch Kanch Pur Branch Kansat Branch Karnapuli Branch Khatungonj Branch Khulna Branch Kustia Branch Malibag Branch Matuail Branch Moulovibazar Branch Munshikhula Branch Mymensingh Branch Narayangonj Branch Nawabgonj Branch Nawabpur Branch New Eskaton Branch Nilphamari Branch Pabna Branch Pahartali Branch Pirgonj Branch Panthapath Branch Patuakhali Branch Principal Branch Progati Sharani Branch Rajshahi Branch Ramchandrapur Branch Rangpur Branch Ring Road Branch Rohanpur Branch Sadarghat Branch Safipur Branch Saidpur SME/Krishi Branch Satkhira Branch Savar SME Branch Sibchar Branch Sunamgonj Branch Sylhet Branch Takerhat Branch Tangail Branch Topkhana Branch Uttara Branch Corporate Governance Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information 306 | Standard Bank Ltd Annual Report 2020 3,120,147,528 1,059,430 69,532,434 7,178,000 238,592,518 13,161,180 11,290,687 138,425,282 3,617,929 719,587 29,437,834 56,729,956 793,841,576 47,579,097 54,331,323 7,390,000 6,314,554 149,841,855 254,820,101 30,031,653 177,300,568 1,673,298 22,982,575 439,200,000 1,787,130,575 96,086,139 1,776,365 1,131,333,748 7,514,466 2,928,787,580 53,516,436 4,488,665 15,248,999 10,991,261 3,358,040 2,445,849,787 750,145,663 38,971,500 43,943,438 6,791,222 21,344,834 60,683,820 32,011,418 7,171,000 38,912,586 13,278,029 7,910,329 6,701,863 23,142,863 1,885,208,576 2,226,837 43,865,000 606,511 1,844,435,762 103,454,201 281,238,457 2,135,433 111,662,537 14,471,000 307,397,508 73,711,049 38,295,519 90,809,854 10,932,391 8,594,196 493,878 259,474,079 1,562,000 8,082,000 578,644,077 802,094,951 21,681,685,406 31.12.2019 3,221,341,474 929,060 1,059,430 101,436,434 9,978,000 238,592,518 30,476,928 14,229,616 126,598,880 5,576,238 719,587 30,515,142 64,737,143 2,000,000 796,609,576 59,495,376 44,850,000 14,101,554 5,846,170 379,708,796 227,231,074 36,050,073 177,300,567 1,673,298 25,458,881 441,200,000 1,754,562,178 313,386,138 1,100,923,000 18,564,465 1,925,585,634 4,688,665 24,605,000 2,007,663,152 699,648,081 34,038,286 9,394,998 9,057,180 19,825,403 60,683,820 8,317,832 195,269,000 24,569,586 137,268,704 13,910,328 21,502,419 11,312,515 1,885,971,251 43,865,000 13,335,363 1,884,422,997 39,809,076 254,028,431 2,135,433 126,351,641 14,471,000 415,073,148 64,906,734 130,741,938 1,280,000 11,535,390 693,878 263,265,863 4,317,093 397,679,596 767,610,177 20,773,986,208
308. Amount in Taka 31 .12.2020 7.13 157,421,223,814 (247,461,740) 2,845,807,426 348,232,527 160,367,802,027 154,205,991,995 (285,971,354) 2,454,802,237 376,684,777 156,751,507,655 2,028,981,583 2,028,981,583 162,396,783,610 3,874,003,231 3,874,003,231 160,625,510,886 2,373,245,825 495,535,566 831,667,985 760,097,565 329,033,957 274,244,824 133,920,717 5,197,746,439 2,373,245,825 495,535,566 801,259,888 738,302,195 320,322,998 125,055,077 4,853,721,550 Total cost 140,689,963 5,338,436,402 140,689,963 4,994,411,513 Less: Accumulated Depreciation 1,493,295,839 1,201,482,878 Net book value at the end of the year (See Annexure-B for details) 3,845,140,563 3,792,928,634 Consolidated Loans and advances/Investments Standard Bank Limited (note-7) Standard Bank Limited (Loan to SBSL) Standard Bank Limited (Loan to SCML) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Consolidated bills purchased and discounted Standard Bank Limited (note-7) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 8. Fixed assets including premises, furniture and fixture Land Land and Building Furniture & Fixture Office Appliance Computer Right of Use Assets (ROUA) as per IFRS-16 Bank’s Vehicle Total cost Intangible Assets Software Standard Bank Ltd Annual Report 2020 | 307 Financial Information 158,079,995,226 158,079,995,226 Sustainability 159,450,205,397 159,450,205,397 Sector -wise loans and advances Government & autonomous Co-operatve sector Other public sector Private sector Stakeholders’ Information 387,400,323 1,549,601,293 1,937,001,616 3,874,003,231 Management Retrospection 202,898,158 811,592,633 1,014,490,792 2,028,981,583 Maturity grouping of bills purchased and discounted Payable within one month Over one month but less than three months Over three months but less than six months Six months or more Risk Governance 7(a) 1,430,296,089 2,443,707,143 3,874,003,231 Corporate Governance 7.15 958,039,423 1,070,942,161 2,028,981,583 Introduction 7.14 Bills purchased and discounted Payable in Bangladesh Payable outside Bangladesh 31.12.2019
309. Amount in Taka 31 .12.2020 8(a) Consolidated fixed assets including premises, furniture and fixture Introduction Standard Bank Limited (note-8) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Corporate Governance 9. Other assets Stock of Stationery Stamps in hand Suspenses A/c (note-9.1) Advance Deposit Branch adjustments accounts (note-12.9) Risk Governance Sundry Assets (note-9.2) 9.1 Management Retrospection Suspense Accounts Sundry Debtors Advance Against TA/DA Advance Against Proposed Branch Advance Against Legal Expenses Encashment-PSP/BSP/WEDB Advance on against board meeting Mobile Banking Cash Remittance 9.2 Stakeholders’ Information Sundry Assets Advance Rent Interest Receivable (note - 9.4) Prepaid expenses Advance Tax (note-9.3) Sustainability Deferred Tax (note-12.1(ii) Protested Bill Account Clearing Adjustment BFTN adjustment Working Progress, Building Fx.Deal Receivable Excise duty adjustment on FDR Demand Draft without advice 9.3 Advance Tax Advance Corporate Tax Advance Income tax on L/C Commission Advance Income tax on Tr.Bill Advance Income tax on Share dividend Advance Tax On Vehicle Advance Income tax on Interest Balance with other banks Advance Income tax on Subordinated bond Financial Information 308 31.12.2019 | Standard Bank Ltd Annual Report 2020 3,845,140,563 3,792,928,634 1,581,382 8,314,576 2,243,823 2,206,056 1,930,427 11,351,925 2,424,570 3,221,729 3,859,486,400 3,811,857,285 26,403,626 5,501,461 289,569,131 23,260,433 5,426,250 400,772,803 2,382,648 119,224,420 2,374,326 - 11,715,861,216 10,833,935,439 12,158,942,503 11,265,769,251 16,016,939 676,898 74,060,000 12,031,670 83,634,554 200,000 28,808 102,920,261 9,058,063 1,090,160 108,498,472 12,003,874 106,817,507 785,000 31,508 162,488,219 289,569,131 400,772,803 294,909,532 23,517,652 258,386,035 454,329,880 10,813,922,353 8,116,542 9,802,745,663 119,102,340 - 28,737,128 (1,863,362) (19,458,893) 406,826,026 9,105,400 41,062,740 300 28,737,128 (2,063,552) (6,039,055) 240,170,507 13,658,100 35,893,890 300 11,715,861,216 10,833,935,439 10,200,950,413 111,788,982 182,062,455 203,196,058 2,425,000 95,519,906 17,979,539 9,261,516,115 104,092,117 131,342,103 200,742,715 1,515,000 88,922,930 14,614,683 10,813,922,353 9,802,745,663
310. Amount in Taka 31 .12.2020 Interest Receivable on Staff loan - 1,620 Interest Receivable on Lerm Loan - 1,505,585 Interest Receivable On Ltr - 2,858,147 746,947 (33,576) Interest Receivable on SME 1,594,405 401,488,094 Interest Receivable on SOD - 122,388 Interest Receivable on Agri & Rural Credit - 2,059 Interest Receivable Cash Credit - 1,110,373 2,187,166.3 - Capital Gain Recvble From Sale Of Share Interest Receivable on FDR & Sub-Bond 47,275,191 454,329,880 Standard Bank Limited (note-9) 12,158,942,503 11,265,769,250 Standard Exchange Co.(UK) Ltd. 20,482,606 19,391,184 Standard Express(USA) Ltd. 10,623,285 10,995,628 Consolidated other assets 328,736,420 13,044,984,478 11,998,289,826 11,573,368,657 9,514,328,628 432,718,760 2,996,694,340 12,006,087,417 12,511,022,969 Prime Bank Ltd - 200,000,000 BASIC Bank Limited - 100,000,000 Sonali Bank Limited - 400,000,000 BDBL - 200,000,000 Bank Asia Ltd - 300,000,000 IFIC - 110,000,000 Total - 1,310,000,000 15,933,667 23,303,352 3,883,818,989 3,381,025,277 Borrowings from other banks, financial institutions and agents In Bangladesh ( note-10.1) Outside Bangladesh 10.1 In Bangladesh Call Borrowings Other Borrowings Re-Finance from B Bank EDF from B Bank Financial Stimulus Fund From B. Bank Total 623,616,000 - 7,050,000,000 4,800,000,000 11,573,368,657 8,204,328,628 11,573,368,657 9,514,328,628 Outside Bangladesh FI Banks 432,718,760 2,996,694,340 12,006,087,417 12,511,022,969 Standard Bank Ltd Annual Report 2020 | 309 Financial Information SBL Subordinated Non-Convertible Bond Sustainability 373,397,343 365,433,210 Stakeholders’ Information 489,502,874 SBL Securities Ltd. Management Retrospection SBL Capital Mgt. Ltd. Risk Governance 10. 18,989,134 23,517,652 Corporate Governance Interest Receivable on Treasury Bond 9(a) 31.12.2019 Interest Receivable Introduction 9.4
311. Amount in Taka 31 .12.2020 31.12.2019 Introduction 10.1(a) SBL 1st Subordinated Non-Convertible Bond Sonali Bank Limited 160,000,000 320,000,000 Janata Bank Limited 60,000,000 120,000,000 Agrani Bank Limited 60,000,000 120,000,000 ICB 20,000,000 40,000,000 100,000,000 200,000,000 400,000,000 800,000,000 Sonali Bank Limited 800,000,000 1,000,000,000 Janata Bank Limited 400,000,000 500,000,000 Pubali Bank Limited 400,000,000 500,000,000 Eastern Bank Limited 400,000,000 500,000,000 Agrani Bank Limited 400,000,000 500,000,000 Mercantile Bank Limited 280,000,000 350,000,000 Midland Bank Limited 160,000,000 200,000,000 Uttara Bank Limited 160,000,000 200,000,000 Corporate Governance Rupali Bank SBL 2nd Subordinated Non-Convertible Bond Risk Governance United Finance Limited National Life Insurance Co. Ltd 40,000,000 50,000,000 160,000,000 200,000,000 3,200,000,000 4,000,000,000 Management Retrospection SBL 3rd Subordinated Non-Convertible Bond Agrani Bank Limited 1,000,000,000 - National Life Insurance Co. Ltd 150,000,000 - Shadharan Bima Corporation 100,000,000 - Janata Bank Limited 500,000,000 - Uttara Bank Limited 500,000,000 - Mercantile Bank Limited Dutch Bangla Bank Ltd Stakeholders’ Information Total SBL Subordinated Non-Convertible Bond - 3,450,000,000 - 7,050,000,000 4,800,000,000 - - Security against borrowing from other banks, financial institutions and agents 10.2 Secured Unsecured Sustainability 12,006,087,417 12,511,022,969 12,006,087,417 12,511,022,969 Maturity grouping of borrowing from other banks, financial institutions and agents 10.3 Repayable on demand Financial Information 310 200,000,000 1,000,000,000 | 12,006,087,417 12,511,022,969 Up to 1 month - - Over 1 month but within 3 months - - Over 3 months but within 1 year - - Over 1 year but within 5 years - - Over 5 years - - 12,006,087,417 12,511,022,969 Standard Bank Ltd Annual Report 2020
312. Amount in Taka 31 .12.2020 10(a) iii)Savings bank Deposits/Mudaraba savings deposits Total 5,630,000,000 8,700,000,000 5,630,000,000 8,700,000,000 1,500,000,000 1,500,000,000 330,000,000 300,000,000 2,000,000,000 5,630,000,000 500,000,000 2,500,000,000 1,000,000,000 1,000,000,000 300,000,000 400,000,000 3,000,000,000 8,700,000,000 8,658,899,924 4,047,073,034 8,326,074,283 8,589,516,184 3,382,587,341 9,253,308,497 21,032,047,241 21,225,412,023 2,626,332,858 600 22,406,103 2,648,739,561 3,925,437,334 600 22,406,103 3,947,844,037 16,261,413,034 13,493,759,639 99,844,904,687 10,559,249,429 13,627,188,827 124,031,342,943 109,128,775,845 7,624,557,568 11,345,774,974 128,099,108,387 163,973,542,780 166,766,124,086 Standard Bank Ltd Annual Report 2020 | 311 Financial Information iv) Term Deposits/Fixed Deposits Fixed deposits/Mudaraba Fixed Deposits (Excluding Bank Deposit) Short term deposits Deposits Under Schemes 175,466,124,086 Sustainability ii)Bills payable Pay orders issued Pay slips issued Demand draft 169,603,542,780 Stakeholders’ Information Customer Deposits i)Current deposits and other Deposits Current / Al-wadeeah current deposits Foreign Currency deposits Sundry deposits (note - 11.4) 8,700,000,000 166,766,124,086 Management Retrospection 11.3 Deposits’ from banks (Fixed Deposits) BRAC Bank Ltd Agrani Bank Limited Sonali Bank Pubali Bank Limited Trust Bank Limited Com.Bank of ceylon Shimanto Bank Ltd Uttara Bank Ltd Eastern Bank Limited Bank Asia Limited 5,630,000,000 163,973,542,780 Risk Governance 11.2 Deposits’ from banks Current deposits and other deposits Bills payable Savings bank/Mudaraba Savings deposits Short-term deposits Fixed deposits/Mudaraba Fixed Deposits (note.11.2) 12,511,022,969 79,911,687 12,590,934,656 Corporate Governance 11.1 Deposits and other deposits Deposits from banks (note-11.1) Deposits from customers (note.11.3) 12,006,087,417 12,006,087,417 Introduction 11. Consolidated Borrowings from other banks, financial institutions and agents Standard Bank Limited (note-10) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 31.12.2019
313. Amount in Taka 31 .12.2020 11.4 Sundry deposits Introduction Sundry creditors Foreign currency held against back to back L/C Margin on Letter of Guarantee Margin on Letter of Credit 296,051,395 1,000 1,000 854,064,122 921,301,879 1,061,115,174 878,620,516 Corporate Governance 141,897,570 414,952,777 Sales proceeds of PSP/BSP etc. 23,690,000 253,750,000 Risk Fund 5,065,097 5,169,814 Service charge 3,182,820 2,860,536 Security Money 32,302,838 24,069,787 SBL Employees W. Fund Interest payable on deposits Risk Governance VAT, Excise Duty and Income Tax Cash Incentive Payable Central Fund (RMG Sector) 7,568 7,568 1,017,896 1,012,996 5,365,036,330 5,886,075,239 554,084,134 549,245,765 50 50 Management Retrospection 442,481 1,089,935 33,865,636 19,099,241 8,326,074,283 9,253,308,497 Repayable on demand - - Up to 1 month - - Others 11.5 250,301,566 Margin on FDBP/IBP/Export bills etc. SBL Employees Provident Fund Maturity analysis of inter-bank deposits Over 1 month but within 3 months Stakeholders’ Information - - 5,630,000,000 8,700,000,000 Over 1 year but within 5 years - - Over 5 years but within 10 years - - Over 10 years - - 5,630,000,000 8,700,000,000 Over 3 months but within 1 year 11.6 Maturity analysis (Deposits received from other than banks) Repayable on demand 6,061,229,947 6,012,661,329 Up to 1 month 1,225,638,822 1,248,989,023 Sustainability Over 1 month but within 3 months 21,496,937,125 21,203,467,938 Over 3 months but within 1 year 49,339,835,560 46,804,761,464 Over 1 year but within 5 years 43,744,488,233 48,336,699,879 Over 5 years but within 10 years 42,105,413,093 43,159,544,453 Over 10 years 11.7 - - 163,973,542,780 166,766,124,086 Maturity analysis (Bills payable) Repayable on demand Financial Information 2,648,739,561 3,947,844,037 Up to 1 month - - Over 1 month but within 3 months - - Over 3 months but within 1 year - - Over 1 year but within 5 years - - Over 5 years but within 10 years - - Over 10 years 312 31.12.2019 | Standard Bank Ltd Annual Report 2020 - - 2,648,739,561 3,947,844,037
314. Amount in Taka 31 .12.2020 11.8 31.12.2019 Payable on Demand and Time Deposits 8,658,899,924 8,589,516,184 Savings Deposits/Mudaraba Savings deposits (10%) 1,626,141,303 1,349,375,964 Foreign Currency Deposits (non interest/profit bearing) 4,047,073,034 3,382,587,341 Sundry deposits 8,326,074,283 9,253,308,497 Bills payable 2,648,739,561 3,947,844,037 25,306,928,106 26,522,632,024 ii. Time Deposits Savings deposits/Mudaraba savings deposits (90%) Fixed deposits/Mudaraba Term Deposits 7,624,557,568 13,627,188,827 11,345,774,974 - - 144,296,614,674 148,943,492,062 169,603,542,780 175,466,124,086 - - 2,271,223,576 2,271,223,576 Fixed Deposits- Maturity wise Grouping(including Bank Deposit) 20,441,012,182 20,441,012,182 Repayable over 3 months but within 1 year 32,201,354,421 32,201,354,421 Repayable over 1 year but within 5 years 22,083,090,243 31,101,416,188 Repayable over 5 years but within 10 years 28,478,224,266 31,813,769,478 Unclaimed Deposits for 10 years and above - - 105,474,904,687 117,828,775,845 Standard Bank Regular Deposit Programme(SRDP) 6,922,409,868 6,143,253,034 Double Income Plus (DI+) 1,733,988,294 1,872,844,613 Standard Bank Regular Income Programme(SRIP) 2,715,996,067 1,875,056,730 246,500,084 230,866,902 Deposits Under Schemes Savings scheme for Tk.5.20 lac 8,083,471 55,119,286 SBL Lakhopati Plus Programme 140,003,061 92,846,339 SBL Millionaire Plus Programme 531,840,329 441,793,350 234,296,000 SBL 1.5 Times Income Program 365,821,511 308,761,511 1,592,112 890,230 13,627,188,827 11,345,774,974 Hajj Savings Scheme Government & autonomous Deposit Money Bank Other public sector Foreign Currency Private 8,116,107,612 8,015,555,837 5,630,000,000 8,700,000,000 13,492,599,237 13,593,151,012 4,047,073,034 3,382,587,341 138,317,762,897 141,774,829,895 169,603,542,780 175,466,124,086 Standard Bank Ltd Annual Report 2020 | 313 Financial Information Sector -wise deposits Sustainability 1,051,001,009 Sbl Kotipoti Plus Stakeholders’ Information Savings scheme for Tk.10.00 lac 11.11 Management Retrospection Repayable over 1 months but within 03months Risk Governance 10,559,249,429 Deposits under schemes Repayable within 01 month 11.10 12,144,383,675 117,828,775,845 Short term deposits/Mudaraba short term deposits Foreign currency deposits (interest/profit bearing) 11.9 14,635,271,731 105,474,904,687 Corporate Governance Current / Al-wadeeah current Deposits Introduction i. Demand Deposits
315. Amount in Taka 31 .12.2020 11(a) 31.12.2019 Consolidated deposits and other deposits Introduction Current deposits and other deposits Corporate Governance Standard Bank Limited (note-11.3) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 21,032,047,241 21,225,412,023 35,793,321 - 1,800,587 - 21,067,840,562 21,227,212,610 2,648,739,561 3,947,844,037 - - 2,648,739,561 3,947,844,037 16,261,413,034 13,493,759,639 - - 16,261,413,034 13,493,759,639 10,559,249,429 7,624,557,568 - - 10,559,249,429 7,624,557,568 105,474,904,687 117,828,775,845 - - 105,474,904,687 117,828,775,845 13,627,188,827 11,345,774,974 - - Bills payable Risk Governance Standard Bank Limited (note-11.3) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Savings bank/Mudaraba savings deposits Management Retrospection Standard Bank Limited (note-11.3) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Short Term Deposits Stakeholders’ Information Standard Bank Limited (note-11.3) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Term/Fixed deposits Sustainability Standard Bank Limited (note-11.3) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Deposits under schemes Financial Information Standard Bank Limited (note-11.3) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 314 | Standard Bank Ltd Annual Report 2020 13,627,188,827 11,345,774,974 169,639,336,100 175,467,924,673
316. Amount in Taka 31 .12.2020 12. 31.12.2019 OTHER LIABILITIES 1,236,601,154 27,154,361 26,437,664 Specific provision for Classified loans (note-12.2) 3,251,441,891 2,589,031,297 Provision for classified others Assets (note-12.6) 223,863,313 36,218,603 4,775,231 4,775,231 346,217,949 425,577,423 1,632,466,069 762,258,699 42,575 42,575 120,000,000 100,000,000 Provision for LFC 49,684,530 83,995,938 Provision for Start-up Fund 29,880,782 - 100,651,780 - 3,500 - 30,000,000 40,000,000 - 100,000,000 20,500,000 18,000,000 25,830 25,830 8,738,004 8,738,004 237,126 344,439 9,171,235 16,373,747 Provision for unforseen losses 11,861,284 8,041,284 Profit receivable on Bai Murabaha/Bai Muajjal 22,774,010 19,576,053 Exchange House 67,440,558 44,440,498 69,261 69,261 666 - 395,547 1,356,379 - 52,480,913 12,401,845 2,540,502 Leased Liabilities as per IFRS-16 238,037,301 - Motivational Allowance Payable For Covid 32,962,738 - Foreign Currency translation gains (note-12.10) 14,343,531 13,258,251 19,304,286,620 16,210,146,577 General Provision for SMA (note-12.2) Provision for decrease in value of investments (note-12.7) Provision for Off-Balance Sheet Items (note-12.3) Interest Suspense Account (note-12.4) Provision for Nostro A/c Provision for Bonus (note-12.5) Special General Provision-COVID-19 Uneamed Intt. On Tr Bills/Bond SBL Foundation Provision For Gratuity Provision for Green Banking Dividend Settlement A/C Provision for Incentive of good borrower Commission Payable Account Payable to OBU MFS Settlement Account Npsb Settlement A/C Islamic Settlement Account Branch adjustments accounts Swift Charge Payable A/C Total Standard Bank Ltd Annual Report 2020 | 315 Financial Information 1,254,427,705 General Provision for Unclassified Loans (note-12.2) Sustainability 48,997,484 Stakeholders’ Information 78,346,558 Accrued Expenses Management Retrospection 100,186,749 Risk Governance - Deferred Tax (note-12.1(i) Corporate Governance 10,470,778,601 Introduction 11,716,371,440 Provision for Taxation (note-12.1)
317. Amount in Taka 31 .12.2020 12.1 31.12.2019 Provision for Taxation Introduction Opening Balance Corporate Governance Closing Balance Addition during the period Adjustment during the period 10,470,778,601 9,178,141,487 1,245,592,840 1,292,637,114 11,716,371,440 10,470,778,601 - - 11,716,371,440 10,470,778,601 Provision for taxation has been made on accounting profit considering taxable allowances/disallowances as per Income Tax Ordinance 1984. Provision for current tax made during the year Income tax @ 37.50% on taxable profit (A) Add: Income tax @ 20% on dividend income Capital Gain on Share @ 10% Risk Governance Capital Gain on sale of Fixed Assets (15%) Capital Gain on Govt. securities (0%) 585,526,472 1,176,361,669 2,453,343 3,596,230 395,796 198,389 24,137 - - - 60,000,000 70,000,000 597,193,092 43,608,911 - - Add: Excess profit tax Tax on Salary Perquisite Add: Settlement/ Adjustment for the period Less: Provision already kept Management Retrospection Loan written off Benefits Estimated provision required as at 31 December, (i) - 1,128,085 1,245,592,840 1,292,637,114 2,988,078,216 3,226,817,563 12,266,714 17,981,150 3,957,961 1,983,890 160,915 - Computation of taxable profit Profit before tax Less: Dividend income Less: Capital Gain on share Less: Capital Gain on sale of Fixed Assets Stakeholders’ Information 2,180,301,045 179,230,313 Profit before tax (excluding dividend income and capital gain) Less: Capital Gain on Govt. securities 791,391,581 3,071,247,329 Add : Inadmissible expenditure 770,012,343 65,717,122 - - 1,561,403,924 3,136,964,451 11,716,371,440 10,470,778,601 - - Less : Further allowable expenditure Estimated taxable profit for the year (A) 12.1(a) Consolidated Provision for Taxation Standard Bank Limited (note-12) Sustainability Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. Opening Balance Addition during the period Adjustment during the period Financial Information Closing Balance - - 31.12.2020 31.12.2019 345,183,998 310,444,673 310,444,673 278,494,451 - - 34,739,324 31,950,222 - - - - - - 345,183,998 310,444,673 - - 69,150,712 58,033,560 SBL Securities Ltd. Opening Balance 58,033,560 49,217,067 - - Addition during the period 12,544,040 10,243,380 - - Adjustment during the period Closing Balance 316 | Standard Bank Ltd Annual Report 2020 1,426,888 1,426,888 - - 69,150,712 58,033,560 12,130,706,151 10,839,256,834
318. Amount in Taka 31 .12.2020 12.1(i) 12.1 (ii) Deferred Tax Assets: Opening Balance Additional provision made during the period Adjustment during the period Closing Balance Deferred tax liabilities/(Asset) Fixed Asset Carrying amount Tax base Taxable Temporary Difference Provision for Rebate for good borrowers Carrying amount Tax base Deductable Temporary Difference Total Taxable Temporary difference Applicable tax rate Deferred Tax Liability Opening balance Deferred tax (income)/expenses 12.2 119,102,340 - 3,610,896,781 3,594,438,933 16,457,848 3,792,928,634 3,807,729,042 (14,800,407) 321,532,564 - 273,200,000 - (321,532,564) 273,200,000 8,738,004 (8,738,004) 8,738,004 8,738,004 234,243,782 238,037,301 (3,793,520) (317,606,240) 37.50% (119,102,340) 100,186,749 (219,289,089) 267,137,597 37.50% 100,186,749 85,856,347 14,330,402 1,236,601,154 17,826,551 1,254,427,705 1,154,156,615 82,444,539 1,236,601,154 26,437,664 716,698 27,154,361 1,731,623 24,706,040 26,437,664 Provision for Loans and advances/Investments i) The movement in general provision for unclassified Loans: ii) Sustainability Provision held at the beginning of the year Additional provision made for the period Provision held at the end of the period Stakeholders’ Information Lease Assets as per IFRS 16 Right of use Assets under lease Lease Liabilities Deductible Temporary Difference - Management Retrospection Provision for gratuity Carrying amount Tax base Deductable Temporary Difference 119,102,340 Risk Governance Closing Balance 85,856,347 14,330,402 100,186,749 100,186,749 Corporate Governance Adjustment during the period 100,186,749 100,186,749 100,186,749 - Introduction Deferred Tax : Opening Balance Additional provision made during the period 31.12.2019 The movement in general provision on Special Mention Account (SMA) loans: Standard Bank Ltd Annual Report 2020 | 317 Financial Information Provision held at the beginning of the year Amount transferred to provision for bad & doubtful debts Additional provision made for the period Provision held at the end of the period
319. Amount in Taka 31 .12.2020 iii) The movement in specific provision for bad and doubtful debts: Introduction Provision held at the beginning of the Period 2,589,031,297 2,271,043,588 Amount adjusted during the Period - - Amount written off during the Period - (3,008,226) Additional amount of provision made for the Period - - Corporate Governance Amount of provision for the Period 12.3 31.12.2019 Risk Governance 662,410,595 320,995,935 Provision held at the end of the period 3,251,441,891 2,589,031,297 Total 4,533,023,958 3,852,070,115 Provision held at the beginning of the Period 425,577,423 432,951,086 Additional provision for the period (79,359,475) (7,373,663) Provision held at the end of the period 346,217,949 425,577,423 The movement in General provision for Off Balance Sheet Items: 12.4 Interest Suspense Account Management Retrospection Balance at the beginning of the Period 762,258,699 419,819,013 Amount transferred to “ Interest Suspense A/c” during the period + 953,209,637 474,440,594 Amount recovered in “ Interest Suspense A/c” during the period (-) 83,002,267 131,981,461 - 19,447 1,632,466,069 762,258,699 Amount written off during the Period Balance at the end of the period 12.5 (-) Provision for Bonus Stakeholders’ Information 12.6 Balance at the beginning of the period 100,000,000 108,411,484 Add: Additional provision for the period 120,000,000 100,000,000 Less: Disbursement during the period 100,000,000 108,411,484 120,000,000 100,000,000 28,737,128 28,737,128 - - Provision for other Assets a) Provision against protested bill Balance at the beginning of the period Add: Addition during the period 28,737,128 28,737,128 Sustainability b) Provision against suspense Balance at the beginning of the period Less: Amount written off during the Period Add: Addition during the period 7,481,475 7,481,475 - - - - 7,481,475 7,481,475 - - c) Provision against Interest Waiver Financial Information Balance at the beginning of the period Less: Amount written off during the Period Add: Addition during the period Total Provision for other Assets 318 | Standard Bank Ltd Annual Report 2020 - - 187,644,710 - 187,644,710 - 223,863,313 36,218,603
320. Amount in Taka 31 .12.2020 31.12.2019 12.6(a) Consolidated Provision for Other Assets 36,218,603 Standard Exchange Co.(UK) Ltd. - - Standard Express(USA) Ltd. - - 489,064 489,064 SBL Capital Mgt. Ltd. 12.7 - - 224,352,377 36,707,667 Provision for decrease in value of Investments Balance at the beginning of the Period - Add: Addition during the period - - 4,775,231 4,775,231 4,775,231 4,775,231 Standard Exchange Co.(UK) Ltd. - - Standard Express(USA) Ltd. - - 448,601,203 446,802,373 8,537,361 1,798,830 12.7(a) Consolidated Provision for decrease in value of Investments Standard Bank Limited (note-12.7) SBL Capital Mgt. Ltd. Add: Addition during the period SBL Securities Ltd. 37,380,166 8,701,616 23,626,837 531,622,414 514,383,437 12.8 Balance at the beginning of the period - - Less: adjustment during the period - - Provision for impairment of client margin loan Add: Addition during the period - Standard Bank Limited (note-12.7) - - Standard Exchange Co.(UK) Ltd. - - Standard Express(USA) Ltd. - - 335,097,363 328,742,994 21,572,240 6,354,368 8,866,461 3,685,513 12.8(a) Consolidated Provision for impairment of client margin loan SBL Capital Mgt. Ltd. Add: Addition during the period SBL Securities Ltd. Add: Addition during the period 5,180,948 343,963,823 Branch Adjustment Branch adjustments account represents outstanding inter branch and head office transactions originated but yet to be responded at the balance sheet date. The balance of unreconciled items has been adjusted reconciled subsequently . Standard Bank Ltd Annual Report 2020 | 319 Financial Information 12.9 852,576 366,388,639 Sustainability - Stakeholders’ Information 61,007,003 Add: Addition during the period Management Retrospection 4,775,231 - Risk Governance 4,775,231 Less: adjustment during the period Corporate Governance Add: Addition during the period Introduction 223,863,313 Standard Bank Limited (note-12.7)
321. Amount in Taka 31 .12.2020 12.10 31.12.2019 Foreign Currency translation gains/loss against investment Introduction Standard Exchange Co.(UK) Ltd. - - Adjustmentduring the period (1,085,280) (1,559,010) Corporate Governance Standard Express(USA) Ltd. 14,118,100 14,118,100 Beginning of the Period Beginning of the Period Addition during the period 225,431 (859,849) (859,849) (2,418,859) Risk Governance Management Retrospection Stakeholders’ Information 14,118,100 12,755,600 Addition during the period - 1,362,500 Adjustmentduring the period - - 14,343,531 13,258,251 Beginning of the Period - - Addition during the period - - Standard Exchange Co.(UK) Ltd. - - Standard Express(USA) Ltd. - - 14,343,531 13,258,251 Balance at the beginning of the Period - - Add: Additional provision for the Period - - Less: Disbursement during the period - - - - Balance at the beginning of the Period 30,000,000 30,000,000 Add: Additional provision for the Period 30,000,000 40,000,000 Less: Fund transfer to SBL Foundation 30,000,000 30,000,000 30,000,000 40,000,000 Total Foreign Currency translation gains Less: Foreign Currency translation loss 12.11 Provision for interest waived 12.12 Provision for SBL Foundation 12.13 Provision for Gratuity Balance at the beginning of the Period Add: Additional for the Period Less: Adjusted / transferred to Fund Sustainability 12.14 863,886,911 450,918,544 324,603,123 43,967,436 16,079,777 1,579,361,365 1,172,410,257 8,738,004 8,738,004 - - Provision for Incentive of good borrower Balance at the beginning of the Period Add: Additional provision for the Period Less: Disbursement during the period Financial Information 12.15 - - 8,738,004 8,738,004 Balance at the beginning of the Period 18,000,000 15,500,000 Add: Additional provision for the Period 2,500,000 2,500,000 Provision for Green Banking Less: Adjustment during the period 320 1,172,410,257 | Standard Bank Ltd Annual Report 2020 - - 20,500,000 18,000,000
322. Amount in Taka 31 .12.2020 12(a) 31.12.2019 Consolidated other liabilities Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Share Capital 13.1 Authorized Capital 150,00,00,000 ordinary shares of Tk.10/- each 16,210,146,577 27,733,294 18,894,355 113,479,503 80,524,547 1,227,296,728 1,136,265,571 188,471,991 137,539,908 20,861,268,137 17,583,370,958 15,000,000,000 15,000,000,000 13.2 History of Paid-up Capital Risk Governance The Bank increased it’s authorized capital from Taka 880.00 crore to Taka 1500.00 crore by passing a special resolution in the Bank’s 27th extra Ordinary General Meeting held on14th November, 2011 at Institute of Diploma Engineers of Bangladesh, 160/A,kakrail VIP Road, Dhaka, Bangladesh. All corporate formalities were duly complied by the Bank as required. Corporate Governance 13. 19,304,286,620 Introduction Standard Bank Limited (note-12) Given below the history of raising of share capital: Accounting Year Declaration Opening Capital 20% Bonus 2003 Additional Capital Initial public offer (IPO) Value in capital 20,000,000 200,000,000 200,000,000 4,000,000 40,000,000 240,000,000 9,000,000 90,000,000 330,000,000 33,000,000 330,000,000 660,000,000 2003 15% Bonus 9,900,000 99,000,000 759,000,000 2004 20% Bonus 15,180,000 151,800,000 910,800,000 20% Bonus 18,216,000 182,160,000 1,092,960,000 20% Bonus 21,859,200 218,592,000 1,311,552,000 2007 12% Bonus 23,607,936 236,079,360 1,547,631,360 Right Share (2:1) 65,577,600 655,776,000 2,203,407,360 20% Bonus 44,068,147 440,681,470 2,644,088,830 2009 20% Bonus 52,881,770 528,817,700 3,172,906,530 2010 28% Bonus 88,841,383 888,413,830 4,061,320,360 81,226,407 812,264,070 4,873,584,430 17% Bonus 82,850,935 828,509,350 5,702,093,780 2014 15% Bonus 85,531,407 855,314,070 6,557,407,850 2015 15% Bonus 98,361,117 983,611,170 7,541,019,020 2016 5% Bonus 37,705,095 377,050,950 7,918,069,970 2017 10% Bonus 79,180,699 791,806,990 8,709,876,960 2018 10% Bonus 87,098,769 870,987,690 9,580,864,650 2019 5% Bonus 47,904,323 479,043,230 10,059,907,880 660,000,000 660,000,000 8,744,131,880 8,265,088,650 655,776,000 655,776,000 10,059,907,880 9,580,864,650 Issued, subscribed and fully Paid up Capital : 66,000,000 ordinary shares of Taka 10/- each issued for cash 826,508,865 ordinary shares of Taka 10/- each issued as bonus shares 65,577,600 ordinary shares of Taka 10/- each issued as Right shares in 2007 Standard Bank Ltd Annual Report 2020 | 321 Financial Information 20% Bonus Sustainability 2011 2012 Stakeholders’ Information 2005 2006 2008 13.3 Value in capital Management Retrospection 1999 2002 No of Share
323. Amount in Taka 31 .12.2020 31.12.2019 Introduction Corporate Governance 13.4 Initial Public offer (IPO) Out of the total issued, subscribed and fully paid up capital of the Bank 3,300,000 ordinary shares of Tk.100.00 each amounting to Taka 3,30,000,000 was raised through public offering of shares in 2003. 13.5 Rights issue Bank has increased its paid up capital by issuance of 2:1 rights share at par on 8 November 2007. 13.6 Particulars of fully Paid up Share Capital : Particulars Sponsors/Promoters Investment Corporation of Bangladesh ICB Unit Fund,ICB Mutual Fund & ICB Investors Account Financial Institutions General Public Total Risk Governance 13.7 Number of shares 31.12.2019 31.12.2020 340,736,319 356,332,156 38,952,961 40,900,609 34,924,062 34,725,348 180,805,943 362,667,180 958,086,465 196,615,404 377,417,271 1,005,990,788 Management Retrospection 19% 37% 100% 20% 38% 100% No. of shares 31.12.2020 2,360,050 19,693,797 16,443,897 20,295,879 12,163,406 8,421,967 5,832,138 23,271,350 116,510,859 299,419,504 481,577,941 1,005,990,788 No. of shares 31.12.2019 1,031,447 20,509,550 16,222,042 21,226,645 11,718,955 8,348,618 6,315,754 21,442,570 107,239,856 292,305,143 451,725,885 958,086,465 Classification of Shareholders by holding as on 31 December,2020 Shareholding range Number of Share holders 01-500 501-5000 5001-10000 10001-20000 20001-30000 30001-40000 40001-50000 50001-100000 100001-1000000 1000001-10000000 10000001 and above 13.8 Number of shares in (%) 31.12.2019 31.12.2020 36% 35% 4% 4% 4% 3% 4955 9599 2304 1441 497 247 128 337 392 96 21 20017 Stakeholders’ Information Capital to Risk Weighted Assets Ratio (CRAR) under BASEL-III(Solo basis) The calculation of CRAR under Basel III (Solo basis) has been made as per “Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for banks in line with Basel III)” issued by Bangladesh Bank vide its BRPD Circular no. 18 dated December 21, 2014. The required capital as well as total maintained regulatory capital of the Bank at the close of business on 31 December 2020 is shown below: Tier-I Capital ( Goning-Concern Capital) Taka 10,059,907,880 6,029,256,984 680,591,284 16,769,756,147 Taka 9,580,864,650 5,578,066,726 1,047,865,181 16,206,796,557 Regulatory Adjustments 2,328,910,560 3,047,527,065 Total Core Capital ( Tier-I) 14,440,845,588 13,159,269,492 1,254,427,705 346,217,949 7,050,000,000 1,236,601,154 425,577,423 4,800,000,000 - 13,100,000 Sustainability Paid up Capital Statutory Reserve (note-14 ) General Reserve Surplus Profit & Loss Account/Retained Earnings Sub Total Financial Information Tier-II Capital (Gone -Concern Capital ) General Provision maintained against unclassified loan/investment (note-12.2(i+ii)) Provision for Off-Balance sheet exposure (note-12.3) SBL Subordinated Non-Convertible Bond Revaluation gain/loss on Securities 50% of revaluation reserves as on 31 December 2014 ( Tk. 26265418.00) 322 | Standard Bank Ltd Annual Report 2020
324. Amount in Taka Sub Total - 13 ,100,000 8,650,645,654 6,462,178,577 23,091,491,241 19,621,448,070 177,607,520,885 171,393,241,177 17,760,752,089 17,139,324,118 5,330,739,153 2,482,123,952 13.00% 11.45% 31.12.2020 Required 4.50% 5.50% Not specified 10.00% 31.12.2019 Required 4.50% 5.50% Not specified 10.00% Regulatory Adjustments Total Supplementary Capital ( Tier-II) A. Total Regulatory Capital B. Total Risk Weighted Assets C. Required Capital based on risk weighted assets (10% ) D. Surplus/(Deficiency) (A-C) Capital to Risk Weighted Ratio ((A/B)*100) Corporate Governance 31.12.2019 6,475,278,577 Introduction 31.12.2020 8,650,645,654 Percentage of Capital on Risk weighted Assets: have been made in accordance with DBI Letter No. DBI- 13.8(a) Capital to Risk Weighted Assets Ratio (CRAR) under BASEL-III (Consolidated basis) The calculation of CRAR under Basel III (Consolidated basis) has been made as per “Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for banks in line with Basel III)” issued by Bangladesh Bank vide its BRPD Circular no. 18 dated December 21, 2014. The required capital as well as total maintained regulatory capital of the Bank at the close of business on 31 December 2020 is shown below: Tier-II Capital (Gone -Concern Capital ) Taka 10,059,907,880 9,580,864,650 Statutory Reserve (note-14a ) 6,029,256,984 5,578,066,726 - - General Reserve Minority interest in subsidiaries 151,362 1,004,465,166 16,763,523,670 16,163,547,904 Regulatory Adjustments 2,384,812,950 3,093,176,845 Total Core Capital ( Tier-I) 14,378,710,720 13,070,371,059 1,254,427,705 1,236,601,154 Sub Total Sustainability 153,790 674,205,017 Surplus Profit & Loss Account/Retained Earnings Stakeholders’ Information Taka Paid up Capital Management Retrospection *The required regulatory provision adjusments 1(Division-2)/111/2021-962 dated. 01.04.2021 Risk Governance Capital Requirement Minimum Common Equity Tier-I Minimum Tier-I Tier-II Total Supplementary Capital ( Tier-II) Provision for Off-Balance sheet exposure (note-12.3) SBL Subordinated Non-Convertible Bond Revaluation gain/loss on Securities 50% of revaluation reserves as on 31 December 2014 ( Tk. 26,265,418.00) Sub Total 346,217,949 425,577,423 7,050,000,000 4,800,000,000 - 13,132,709 8,650,645,654 6,475,278,577 Standard Bank Ltd Annual Report 2020 | 323 Financial Information General Provision maintained against unclassified loan/investment (note-12.2)
325. Amount in Taka 31 .12.2020 Regulatory Adjustments Introduction Total Supplementary Capital ( Tier-II) Corporate Governance A. Total Capital B. Total Risk Weighted Assets C. Required Capital based on risk weighted assets (10% ) D. Surplus/(Deficiency) (A-C) Capital to Risk Weighted Ratio ((A/B)*100) 31.12.2019 Risk Governance - 13,100,000 8,650,645,654 6,462,178,577 23,029,356,374 19,532,549,637 179,112,182,724 172,584,256,397 17,911,218,272 17,258,425,640 5,118,138,101 2,274,123,997 12.86% 11.32% 31.12.2020 31.12.2019 Required Required 4.50% 4.50% Percentage of Capital on Risk weighted Assets: Capital Requirement Minimum Common Equity Tier-I Minimum Tier-I Management Retrospection 5.50% 5.50% Tier-II Not specified Not specified Total 10.00% 10.00% *The required regulatory provision adjusments 1(Division-2)/111/2021-962 dated. 01.04.2021 14 Statutory Reserve Opening balance at the beginning of the Period Addition during the period Stakeholders’ Information 14(a) 5,578,066,726 5,016,857,784 Sustainability Financial Information 451,190,257 561,208,942 6,029,256,984 5,578,066,726 5,578,066,726 5,016,857,784 451,190,257 561,208,942 6,029,256,984 5,578,066,726 Opening balance at the beginning of the Period - - Addition during the period - - Closing balance at the end of the Period - - Opening balance at the beginning of the Period 84,328,448 154,885,294 Adjustment during the Period 82,614,090 70,556,847 - - 1,714,358 84,328,448 Closing balance at the end of the Period Consolidated Statutory Reserve Opening balance at the beginning of the Period Addition during the period Closing balance at the end of the Period 15. General Reserve 15.1 Revaluation gain/loss on investments Addition during the period Closing balance at the end of the Period 324 have been made in accordance with DBI Letter No. DBI- | Standard Bank Ltd Annual Report 2020
326. Amount in Taka 31 .12.2020 1,004,465,166 1,082,055,143 (451,190,257) (3,036,141) (2,428) (958,086,465) 674,205,017 934,630,420 1,504,433,637 (561,208,942) (2,401,525) (734) (870,987,690) 1,004,465,166 Retained Earnings carried forward from previous Period Balance on 1 January Add: Net Profit after tax & statutory reserve for the previous Period Add: Transfer from SCML Add: Transfer from SBSL Less: Cash/Stock dividend Balance at 109,996,927 937,868,254 (958,086,465) 89,778,716 116,071,072 832,915,945 31,997,600 (870,987,690) 109,996,927 16.1(a) Consolidated Retained Earnings carried forward from previous Period Balance on 1 January Add: Net Profit after tax & statutory reserve for the previous Period Add/ Less: Foreign Currency translation Gain /(loss) Less: Non-controlling Interest Less: Cash/Stock dividend Balance at 61,240,471 943,224,694 (3,036,141) (2,428) (958,086,465) 43,340,132 100,903,799 833,726,621 (2,401,525) (734) (870,987,690) 61,240,471 69,634 364 69,998 69,305 329 69,634 81,728 2,064 83,792 153,790 81,323 405 81,728 151,362 16.1 16.1(b) Non-controlling Interest SBL Capital Mgt. Ltd. Balance on 1 January Add: Addition during the period Sub Total SBL Securities Ltd. Balance on 1 January Add: Addition during the period Sub Total Balance at Standard Bank Ltd Annual Report 2020 | 325 Financial Information Consolidated retained earnings/movement of profit and loss account Balance on 1 January Add: Net Profit after tax for the Period Less: Transfer to statutory Reserve Add/Less: Foreign Currency translation Gain/ loss Less: Non-controlling Interest Less: Cash/Stock dividend Balance at 16(a) Sustainability 948,987,017 1,499,077,196 31,997,600 (561,208,942) (870,987,690) 1,047,865,181 Stakeholders’ Information 1,047,865,181 1,042,002,825 (451,190,257) (958,086,465) 680,591,284 Management Retrospection Retained earnings/movement of profit and loss account Balance on 1 January Add: Net Profit after tax for the Period Add: Transfer from SCML Add: Transfer from SBSL Less: Transfer to statutory Reserve Less: Cash/Stock dividend Balance at 16. Risk Governance 84,328,448 84,328,448 Corporate Governance 1,714,358 1,714,358 Introduction 15.1(a) Consolidated revaluation gain/loss on investment Standard Bank Limited Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 31.12.2019
327. Amount in Taka 31 .12.2020 Introduction 17. CONTINGENT LIABILITIES 17.1 Acceptances and Endorsements Back to Back L/C (Foreign) Back to Back L/C (Local) Corporate Governance Letter of Credit (Others) 17.2 31.12.2019 - - 4,391,230,512 5,654,360,782 6,330,747,796 11,883,555,391 10,721,978,308 17,537,916,173 12,833,411,761 13,677,883,078 Letter of Guarantee( Foreign) - 13,442,380 Others - - 12,833,411,761 13,691,325,458 Directors - - Government - - Banks and other financial institutions - - 12,833,411,761 13,691,325,458 12,833,411,761 13,691,325,458 7,771,845,286 3,294,559,516 11,066,404,802 7,378,475,270 3,950,025,422 11,328,500,692 2,667,869,529 1,612,279,485 4,280,149,013 3,417,791,578 2,771,818,328 6,189,609,905 - - 38,901,943,884 48,747,352,228 10,721,978,308 10,721,978,308 17,537,916,173 17,537,916,173 Letter of Guarantee Letter of Guarantee( Local) Risk Governance Money for which the Bank is contingently liable in respect of guarantees given favoring: Others Management Retrospection 17.3 Irrevocable Letter of Credit Letter of Credit (Sight) Letter of Credit (Usance) Letter of Credit (Others) 17.4 Stakeholders’ Information Bill for Collection Inward local bill for collection Inward Foreign bill for collection Outward local bill for collection Outward Foreign bill for collection Sustainability Other Contingent Liabilities 17(a) Consolidated contingent liabilities Acceptances and endorsements Standard Bank Limited (note-17) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Financial Information 17.5 326 | Standard Bank Ltd Annual Report 2020
328. Amount in Taka 31 .12.2020 13,691,325,458 13,691,325,458 11,066,404,802 11,066,404,802 11,328,500,692 11,328,500,692 4,280,149,013 4,280,149,013 6,189,609,905 6,189,609,905 Risk Governance 38,901,943,884 48,747,352,228 Income Statement Income: Interest/ profit, discount and similar income (note-18.1) Dividend income (note-20) Fees, Commission and brokerage ( note-21.1) Gains Less Losses arising from dealing in securities (note-20) Gains Less Losses arising from Investment securities (note-20) Gains Less Losses arising from dealing in Foreign Currencies (Note-21.2) Income from non banking assets Other operating income (note-22) Profit less losses on interest rate changes Total Management Retrospection 13,746,242,808 12,266,714 440,554,267 3,957,961 4,074,682,973 368,365,859 407,404,883 19,053,475,465 17,183,710,895 17,981,150 621,941,029 1,983,890 1,685,998,493 400,672,934 522,397,305 20,434,685,696 Stakeholders’ Information Expenses: Interest/profit paid on deposit, Borrowings etc.(note-19) Losses on loans and advances/Investments Administrative Expenses (note-18.2) Other operating expenses (note-33) Depreciation on Banking assets (note-32) Total 11,558,677,871 3,612,719,509 602,186,907 291,812,961 16,065,397,248 12,948,993,307 3,610,856,400 414,872,061 233,146,365 17,207,868,133 2,988,078,216 3,226,817,563 Irrevocable Letters of Credit Standard Bank Limited (note-17) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Bills for Collection Standard Bank Limited (note-17) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Other Contingent liabilities Standard Bank Limited (note-17) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 18 | 327 Financial Information Standard Bank Ltd Annual Report 2020 Sustainability Operating Profit before Provision Introduction 12,833,411,761 12,833,411,761 Corporate Governance Letters of guarantee Standard Bank Limited (note-17) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 31.12.2019
329. Amount in Taka 31 .12.2020 18(a) Introduction Corporate Governance Consolidated Income Statement Income: Standard Bank Limited (note-18) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Total 19,053,475,465 24,076,871 132,946,830 87,201,136 63,228,732 19,360,929,033 20,434,685,696 21,314,622 115,416,269 62,052,130 72,853,500 20,706,322,217 Expenses: Standard Bank Limited (note-18) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Total 16,065,397,248 24,651,754 115,385,917 21,403,117 19,013,306 16,245,851,343 17,207,868,133 20,759,811 112,800,904 21,493,116 32,071,663 17,394,993,627 3,115,077,691 3,311,328,590 13,644,520,566 10,903,870 90,818,372 13,746,242,808 16,828,658,537 12,171,364 342,880,994 17,183,710,895 2,867,127,923 564,916,374 13,050,844 19,980,956 58,427,033 13,949,194 3,264,323 805,000 71,197,862 3,612,719,509 2,743,218,639 631,951,069 20,548,242 23,740,487 116,578,379 7,530,000 5,983,943 1,774,750 59,530,890 3,610,856,400 2,068,206,558 3,839,436,025 10,133,993 455,906,846 1,504,207,957 210,750,411 23,796,981 132,326,787 546,787,150 37,693,444 43,549,246 1,359,646,538 152,839,636 188,927,450 77,360,957 2,769,825,140 1,132,405 32,736,697 174,460,274 14,796,071 13,644,520,566 2,808,404,581 4,270,967,852 34,667,869 555,673,169 1,878,240,792 302,426,231 21,099,427 163,950,298 1,001,537,403 101,949,059 50,605,677 1,366,107,908 168,842,647 264,218,850 75,387,404 3,406,543,717 1,196,210 26,570,792 302,113,636 28,155,016 16,828,658,537 10,903,870 90,724,622 93,750 101,722,242 13,746,242,808 12,171,364 329,846,063 13,034,931 355,052,358 17,183,710,895 Consolidated Operating Profit before Provision Risk Governance Interest/profit , Discount and similar income Interest/profit received from Loans and advances/Investments (note-18.3) Interest/profit received from FC clearing Account Interest/profit received from Bank and other financial institutions 18.2 Administrative Expenses Salary and allowances (note-23) Rent, Taxes, Insurance, Electricity etc.(note-24) Legal expenses (note-25) Postage, stamp, telecommunication etc.(note-26) Stationery, Printings, advertisement etc.(note-27) Managing Director’s salary and fees (note-28) Directors’ Fees (note-29) Auditor’s fees (note -30) Repair of Bank’s assets (note-32) Management Retrospection 18.1 Expenses included VAT on which applicable Stakeholders’ Information 18.3 Sustainability Interest/profit received from Loans and advances/Investments Secured overdraft/Quard against TDR Term Loan Export Development Fund (EDF) Agriculture Loan Cash credit/ Murabaha House Building loans Staff Loans Transport Loans Loans against trust receipt Payment against document Packing credit Demand Loan Lease Finance / Izara Syndicate/Club Finance VISA Credit Card SME/SE Green Finance Consumer Credit Scheme/Hire purchase Inland bills purchased Foreign bills purchased and discounted Total interest on loans and advances/Investments Financial Information Interest / profit received from FC clearing account Interest/profit received from Bank and other Financial Institution Interest on Call Loans Total 328 | 31.12.2019 Standard Bank Ltd Annual Report 2020
330. Amount in Taka 31 .12.2020 31.12.2019 18.3(a) Consolidated interest income/profit on investment 19(a) 10,853,015,608 705,662,263 12,234,159,457 714,833,850 11,558,677,871 12,948,993,307 334,559,897 444,967,172 8,684,448,820 1,380,141,460 8,891,364 6,895 10,853,015,608 265,938,243 324,940,471 10,639,702,702 1,003,535,122 42,919 12,234,159,457 514,860,072 60,521,097 1,018,050 45,420,727 1,421,528 82,420,789 705,662,263 11,558,677,871 510,555,554 48,837,500 492,846 131,634,014 1,975,000 21,338,936 714,833,850 12,948,993,307 11,558,677,871 2,095,503 11,560,773,374 12,948,993,307 2,896,501 12,951,889,809 12,266,714 3,957,961 57,012,394 1,837,369,534 2,180,301,045 4,090,907,649 17,981,150 1,983,890 81,003,449 1,469,389,850 135,605,195 1,705,963,533 Standard Bank Ltd Annual Report 2020 | 329 Financial Information Income from Investment Dividend on shares Gain on shares Interest/profit received from Subordinated Bond Interest income from Government Securities Capital Gain on Government Securities 17,200,994,911 Sustainability 20. Consolidated interest / profit paid on Deposits, borrowings, etc. Standard Bank Limited (note-19) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 13,745,406,390 Stakeholders’ Information Interest / Profit paid on borrowing Interest paid on subordinated Bond Interest paid on call deposit Interest paid on Bangladesh Bank Refinance Interest paid on foreign Bank Intt Paid On Notice Money Borrowing Interest paid on ALS Interest paid on repurchase agreement(Repo) (196,133,590) (10,754,960) 552,804 173,878,671 49,741,091 Management Retrospection Interest / Profit paid on deposits ,borrowing etc of the Bank Interest / Profit paid on deposits Savings Bank / Mudaraba Savings Deposits Short Term Deposits / Mudaraba Short Term Deposits Fixed Deposits / Mudaraba Term Deposits Deposits Under Schemes / Mudaraba Deposit Schemes Interest on lease liabilities as per IFRS-16 Interest Paid on Foreign Currency (217,588,343) (21,450,146) 950,146 186,868,695 50,383,230 Risk Governance 19.1 Interest/profit paid on deposits, borrowings, etc. Interest/Profit paid on deposits ( note -19.1) Interest paid on borrowings ( note -19.1) 17,183,710,895 Corporate Governance 19. 13,746,242,808 Introduction Standard Bank Limited (note-18.3) Standard Bank Limited (Intt. Received from SCML) Standard Bank Limited (Intt. Received from SBSL) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd.
331. Amount in Taka 31 .12.2020 20(a) Consolidated Income from Investment Introduction Standard Bank Limited Corporate Governance 21. 4,090,907,649 1,705,963,533 Standard Exchange Co.(UK) Ltd. - - Standard Express(USA) Ltd. - - SBL Capital Mgt. Ltd. 96,055,031 68,567,263 SBL Securities Ltd. 15,721,660 22,777,331 4,202,684,339 1,797,308,127 Commission/Fees, Exchange and Brokerage Commission /Fees (note-21.1) 440,554,267 621,941,029 Exchange earnings (note-21.2) 368,365,859 400,672,934 - - 808,920,126 1,022,613,963 26,073,062 37,058,575 Brokerage Risk Governance 21.1 Commission Commission on Import L/Cs Commission on Export L/Cs 119,359,116 175,473,763 Commission on Back to Back L/Cs 147,660,413 238,246,756 Commission on Bank Guarantee 122,729,225 139,351,238 Management Retrospection Commission on Sanchyapatra 94 2,965,241 Commission on Remmittance 24,732,357 28,845,457 - - 440,554,267 621,941,029 Underwriting commission Brokerage Stakeholders’ Information 21.2 Sustainability - - 440,554,267 621,941,029 Gains arising from Dealing Securities - - Less: Losses - - Gains arising from Investment Securities - - Less: Losses - - Gains arising from Foreign Trade Business 591,896,794 658,771,400 Less: Losses 223,530,936 258,098,466 368,365,859 400,672,934 808,920,126 1,022,613,963 22,444,386 126,062,762 20,161,803 17,826,005 19,643,966 110,709,460 14,493,886 10,853,589 995,415,081 1,178,314,864 Exchange 21(a) Consolidated Commission, Exchange and Brokerage Financial Information Standard Bank Limited (note-21) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 330 31.12.2019 | Standard Bank Ltd Annual Report 2020
332. Amount in Taka 31 .12.2020 22. 538,703,029 87,447,533 51,511,619 39,767,333 78,830,432 2,822,798 1,757,533 60,736,173 2,508,063 50,243,259 365,500,000 14,488,770 2,937,742 1,297,254,284 492,398,920 81,279,550 49,527,853 39,251,854 74,913,290 2,528,442 1,807,930 117,622,044 2,499,583 83,470,974 273,200,000 21,794,643 582,075 1,240,877,159 Standard Bank Ltd Annual Report 2020 | 331 Financial Information 982,984,526 1,240,877,159 365,305,402 98,020,281 56,031,272 2,743,218,639 Sustainability 1,078,105,392 1,297,254,284 326,642,608 107,364,793 57,760,846 2,867,127,923 Stakeholders’ Information 522,397,305 1,670,656 4,154,005 1,245,900 236,450 529,704,315 Management Retrospection Allowances House rent allowances Conveyance allowances Entertainment allowances House maintenance & utility Medical allowances Risk allowances Washing allowances Remuneration for probationaries Charge allowances Leave Fare Compensation Gratuity Leave Encashment Extra allowances 407,404,883 1,632,485 5,933,922 1,703,950 747,984 417,423,223 Risk Governance 23.1 Salaries and allowances Basic salary Allowances (note-23.1) Bonus & ex-gratia Bank’s contribution to provident fund Casual wages 30,848,721 24,568,749 157,869,403 58,667,018 73,280,505 934,200 168,317 34,182,394 108,342 1,448,010 68,379,231 50,106 2,757,881 25,344,321 1,793,526 557,120 1,373,031 5,109,178 4,051,866 25,707,289 5,198,095 522,397,305 Corporate Governance 23. Consolidated other operating income Standard Bank Limited (note-22) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 15,963,399 17,589,997 123,668,974 46,972,170 43,889,207 1,364,767 134,739 17,515,878 160,915 1,439,882 69,774,288 83,138 2,541,814 18,710,486 2,073,458 216,720 2,620,333 5,906,988 4,354,696 29,264,265 3,158,768 407,404,883 Introduction 22(a) Other operating income SWIFT & Telex charge recoveries Postage charge recoveries Service charges Rebate on nostro a/c Handling charges on EDF Locker charges LC advising charges Loan processing/documentation fees Capital Gain on Sale of Assets Service charges agst CIB/Clearing return Debit / VISA Card Fees Stationery Charge Recovery Handling Charge On Import Lc Handling Charge On Export Lc Handling Commission On Lease Finance Handling Charge On Pe-Hsia Booth Earning on Treasury FEX NPSB Settlement Income Charges On Rtgs Recovery From Written Off Loan A/C Miscellaneous earnings 31.12.2019
333. Amount in Taka 31 .12.2020 23(a) Introduction Consolidated salaries and allowances Standard Bank Limited (note-23) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Corporate Governance 24. Rent, Taxes, Insurance, electricity, etc. Rent- Office Rent- Godown Rates and taxes Insurance Utilities Risk Governance 24(a) Management Retrospection Consolidated Rent, Taxes, Insurance, electricity, etc. Standard Bank Limited (note-24) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 25. Legal expenses Legal Charges Fees, Stamp & notary public expenses 25(a) Stakeholders’ Information Consolidated Legal expenses. Standard Bank Limited (note-25) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 26. Sustainability Postage, Stamps, Telecommunication etc. Postage Telegram, telex, fax and e-mail Telephone, Mobile (office & residence) 26(a) Financial Information Consolidated Postage, Stamps, Telecommunication etc. Standard Bank Limited (note-26) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 332 | Standard Bank Ltd Annual Report 2020 31.12.2019 2,867,127,923 6,206,850 46,713,138 12,380,170 11,189,341 2,943,617,422 2,743,218,639 6,154,347 45,276,292 11,689,622 1,984,126 2,808,323,026 321,266,610 738,675 61,069,577 117,631,213 64,210,299 564,916,374 377,683,552 207,620 72,451,129 103,095,470 78,513,298 631,951,069 564,916,374 6,278,259 39,314,289 1,811,462 1,809,487 614,129,872 631,951,069 6,208,944 35,013,424 1,972,515 24,609,740 699,755,691 9,007,840 4,043,004 13,050,844 11,018,086 9,530,156 20,548,242 13,050,844 400,478 4,594,667 18,045,990 20,548,242 174,709 4,618,513 64,400 201,250 25,607,114 11,792,974 87,436 8,100,546 19,980,956 15,326,685 93,055 8,320,747 23,740,487 19,980,956 69,379 2,200,665 35,375 203,662 22,490,037 23,740,487 102,969 2,305,102 44,156 223,146 26,415,860
334. Amount in Taka 31 .12.2020 27. Stationery, Printing, Advertisement etc. Petty stationery 9,406,130 10,726,878 Computer stationery 11,671,567 18,401,199 Publicity and advertisement 27,694,615 75,144,121 58,427,033 116,578,379 58,427,033 116,578,379 445,264 322,011 2,265,978 2,504,914 SBL Capital Mgt. Ltd. 131,948 237,262 SBL Securities Ltd. 118,925 114,707 61,389,148 119,757,273 Basic salary 8,685,484 4,500,000 House rent allowance 2,316,129 900,000 - 270,000 House maintenance & utility 579,032 360,000 Bank’s contribution to provident fund 868,548 1,000,000 1,500,000 500,000 - - 13,949,194 7,530,000 2,124,000 2,208,000 Travelling and haltage 524,438 2,176,536 Refreshment and dinner 615,885 1,599,407 3,264,323 5,983,943 Standard Bank Limited (note-29) 3,264,323 5,983,943 Standard Exchange Co.(UK) Ltd. - - Standard Express(USA) Ltd. - 335,800 SBL Capital Mgt. Ltd. 560,031 749,042 SBL Securities Ltd. 583,644 979,943 4,407,998 8,048,728 Consolidated Stationery, Printing, Advertisement etc. Standard Bank Limited (note-27) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. 28. Managing Director’s salary and fees Medical Allowances Bonus Leave Fare Compensation 29. Directors fees & meeting expenses Directors fees 29(a) Consolidated Directors fees & meeting expenses Standard Bank Ltd Annual Report 2020 | 333 Financial Information 1,966,627 Sustainability 1,919,777 Stakeholders’ Information Security stationery Management Retrospection 10,339,554 Risk Governance 7,734,945 Corporate Governance Printing stationery Introduction 27(a) 31.12.2019
335. Amount in Taka 31 .12.2020 Introduction 30. Audit fees 30 (a) Corporate Governance Consolidated Auditors fees Standard Bank Limited Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 31. Charges on loan losses Loan-written off Interest waived Risk Governance 31(a). Consolidated charges on loan losses Standard Bank Limited Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Management Retrospection 32. Stakeholders’ Information Depreciation and repair of Banks assets Depreciation on Fixed Assets Building Furniture & fixture Office appliance & equipment Computer Software Right of use assets Motor vehicle Sustainability Repair, Renovation & Maintenance of Bank’s Assets Office furniture Office appliance & equipment Computer Software Motor vehicle Total Financial Information 32(a) 334 Consolidated depreciation and repair of Banks assets Standard Bank Limited (note-32) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. | Standard Bank Ltd Annual Report 2020 31.12.2019 805,000 1,774,750 805,000 1,774,750 805,000 394,838 223,100 207,000 1,629,938 1,774,750 491,369 23,000 2,289,119 - - - - 11,530,064 63,941,535 103,186,704 44,695,925 14,191,506 40,001,043 14,266,186 291,812,961 11,530,064 55,839,716 94,826,550 38,453,325 16,774,505 15,722,206 233,146,365 187,818 10,607,190 1,680,585 45,758,976 12,963,293 71,197,862 584,205 11,810,921 1,217,431 31,384,004 14,534,328 59,530,890 363,010,823 292,677,255 363,010,823 841,117 4,072,750 600,748 1,069,494 369,594,933 292,677,255 521,834 4,055,779 579,748 1,067,134 298,901,750
336. Amount in Taka 31 .12.2020 33. Stakeholders’ Information Sustainability 414,872,061 6,783,628 18,691,080 3,236,869 2,891,617 446,475,255 Management Retrospection 602,186,907 10,015,568 16,224,429 3,564,780 3,831,754 635,823,437 Risk Governance 21,160,995 11,313,962 10,879,835 3,479,283 1,114,733 8,845,709 1,348,022 36,127,318 39,292,944 3,181,710 3,349,381 8,171,514 3,587,526 8,789,411 11,433,513 224,540 8,096,787 7,704,449 18,314,405 139,602 598,152 3,893,025 1,644,000 14,403,160 9,365,144 25,708,795 235,342 1,366,364 2,021,482 2,006,482 4,750 500,000 37,261,270 2,500,000 40,000,000 1,216,765 5,448,375 46,213,860 6,456,800 534,230 4,831,940 2,106,486 414,872,061 Corporate Governance 11,101,851 212,386,121 3,627,656 15,000 579,326 3,160,556 805,966 32,765,110 37,151,662 2,126,605 3,733,563 10,057,345 3,396,971 6,625,234 2,298,177 303,598 8,304,807 595,518 16,907,840 172,304 3,808,908 50,000 14,403,270 7,212,821 33,132,347 164,922 1,470,290 1,440,565 1,418,565 700,000 24,281,183 2,500,000 30,000,000 1,309,605 2,968,956 49,009,562 3,567,200 205,212 54,305,997 10,428,322 3,693,970 602,186,907 Introduction OTHER EXPENSES Entertainment (office) Donation & subscription Travelling Anniversary Branch /Subsidiary company opening expenses Training and seminar expenses Newspaper and periodicals Petrol, oil and lubricants Car expenses Photocopy expenses Staff uniform and liveries Cleaning and washing Premises up keeping Local conveyance Business development Freight and cartage Cook and servant Annual General Meeting Bank charges and commission paid Loss on sale of Assets On Line (ABB) expenses Managers Conference exp Performance award SBL welfare fund Generator expenses Connectivity fees CDBL Charges Visa Card Process charges Dhaka Stock Exchange Chittagong Stock Exchange Registered Joint Stock Company Membership fee to Central Shariah Board Recruitment Expenses Calender ,dairy & greeting cards etc Green Banking SBL Foundation NPSB settlement expenses Discomfort Allowances Security Service-Out Sourcing Subordinated Bond Issue Expenses Nid Verification Charge Hajj Related Expenses Motivational Allowance For Covid-19 Compensation For Covid-19 Miscellaneous 31.12.2019 Expenses included VAT on which applicable Consolidated other expenses Standard Bank Limited (note-33) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Standard Bank Ltd Annual Report 2020 | 335 Financial Information 33(a)
337. Amount in Taka 31 .12.2020 33.1 Introduction Nostro account maintenance Nostro account maintenance Bank charge Provision for loans/Investments,off balance sheet exposure & other assets Provision for bad and doubtful loans and advances/investments Provision for SMA loans and advances/investments Provision for unclassified loans & advances/Investments Special General Provision-COVID-19 Provision for Start-up Fund Provision for off balance sheet exposure Provision for other assets Provision for diminution in value of investments (note 34.1) 34 Corporate Governance Risk Governance 34.1 Management Retrospection Provision for diminution in value of investments Dealing Securities Quoted Unquoted Investment Securities Quoted Unquoted Stakeholders’ Information 34.1(a) Consolidated Provision for diminution in value of investments Dealing Securities Standard Bank Limited (note-34.1) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Investment Securities Standard Bank Limited (note-34.1) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Sustainability 34(a) Financial Information Consolidated Provision for loans/Investments,off balance sheet exposure & other assets Provision for bad and doubtful loans and advances/investments-SBL* Provision for SMA loans and advances/investments-SBL Provision for unclassified loans & advances/Investments -SBL Special General Provision-COVID-19 Provision for Start-up Fund Provision for off balance sheet exposure-SBL Provision for diminution in value of investments (SCML & SBSL) Provision for impairment of client margin loan (SCML & SBSL) Provision for others (SBL) 336 | Standard Bank Ltd Annual Report 2020 31.12.2019 - - 662,410,595 716,698 17,826,551 100,651,780 29,880,782 (79,359,475) 187,644,710 - 320,995,935 24,706,040 82,444,539 (7,373,663) - 919,771,640 420,772,851 - - - - 17,238,977 8,537,361 8,701,616 25,425,667 1,798,830 23,626,837 17,238,977 25,425,667 662,410,595 716,698 17,826,551 100,651,780 29,880,782 (79,359,475) 17,238,977 22,424,816 187,644,710 959,435,432 320,995,935 24,706,040 82,444,539 (7,373,663) 25,425,667 11,535,316 457,733,835
338. Amount in Taka 31 .12.2020 35(a) Consolidated tax expenses Current tax Standard Bank Limited (note-35) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 1,245,592,840 34,739,324 12,544,040 1,292,876,205 1,292,637,114 31,950,222 10,243,380 1,334,830,717 - 14,330,402 14,330,402 Total 1,292,876,205 1,349,161,118 Earning Per Share (EPS) Net profit after tax Number of Ordinary Share Earning Per Share * 1,042,002,825 1,005,990,788 1.04 1,499,077,196 1,005,990,788 1.49 Deferred tax Standard Bank Limited (note-35) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 36 36(a) * Earning per share calculated dividing basic earning during the Period by number of share outstanding as on reporting date complying with the provision of IAS-33. Received from other operating activities SWIFT & Telex charge recoveries 15,963,399 30,848,721 Postage charge recoveries 17,589,997 24,568,749 Service charges 123,668,974 157,869,403 58,667,018 73,280,505 934,200 168,317 34,182,394 1,448,010 68,379,231 50,106 2,757,881 25,344,321 1,793,526 557,120 1,373,031 5,109,178 34,957,250 135,605,195 1,983,890 659,878,047 Standard Bank Ltd Annual Report 2020 | 337 Financial Information 46,972,170 43,889,207 1,364,767 134,739 17,515,878 1,439,882 69,774,288 83,138 2,541,814 18,710,486 2,073,458 216,720 2,620,333 5,906,988 4,354,696 29,264,265 3,158,768 2,180,301,045 3,957,961 2,591,502,974 Sustainability Rebate on nostro a/c Handling charges on EDF Locker charges LC advising charges Loan processing/documentation fees Service charges agst CIB/Clearing return Debit / VISA Card Fees Stationery Charge Recovery Handling Charge On Import Lc Handling Charge On Export Lc Handling Commission On Lease Finance Handling Charge On Pe-Hsia Booth Earning on Treasury FEX NPSB Settlement Income Charges On Rtgs Recovery From Written Off Loan A/C Miscellaneous earnings Capital Gain on Government Securities Gain on shares Stakeholders’ Information 37 * Earning per share calculated dividing basic earning during the year by number of share outstanding as on reporting date complying with the provision of IAS-33. Consolidated Earning Per Share (EPS) Net profit after tax 1,504,433,637 1,082,055,142 Number of Ordinary Share 1,005,990,788 1,005,990,788 Earning Per Share * 1.08 1.50 Management Retrospection 1,292,637,114 14,330,402 1,306,967,516 Risk Governance 1,245,592,840 (219,289,089) 1,026,303,751 Corporate Governance Tax expenses Current tax Deferred tax Introduction 35 31.12.2019
339. Amount in Taka 31 .12.2020 37(a) Consolidated Received from other operating activities Introduction Standard Bank Limited (note-35) Standard Exchange Co.(UK) Ltd. Corporate Governance 38 2,591,502,974 659,878,047 1,632,485 1,670,656 Standard Express(USA) Ltd. 5,933,922 4,154,005 SBL Capital Mgt. Ltd. 1,703,950 1,245,900 SBL Securities Ltd. 747,984 236,450 2,601,521,314 667,185,058 - - Payments for other operating activities Rent, Taxes, Insurance, Electricity etc. 610,015,262 631,951,069 Legal Expenses 13,050,844 20,548,242 Postage, Stamp, Telecommunication etc. 19,980,956 23,740,487 3,264,323 5,983,943 Directors' Fee & Other benefits Risk Governance Audit Fees Repair of Bank's assets Other Expenses 38(a) Management Retrospection Consolidated Payments for other operating activities Standard Bank Limited (note-38) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 39 Stakeholders’ Information Changes in other assets Stock of stationery Stamps in hand Suspenses A/c Advance deposit Interest Receivable Branch adjustments accounts Advance rent Prepaid expenses Excise Duty adjustment on FDR Working Progress, Building Fx.Deal Receivable Islamic Settlement Account Interest Waived Clearing Adjustment Sustainability 39(a) Consolidated Changes in other assets Standard Bank Limited (note37) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. Financial Information 338 31.12.2019 | Standard Bank Ltd Annual Report 2020 805,000 1,774,750 71,197,862 59,530,890 602,186,907 405,773,782 1,320,501,153 1,149,303,163 1,320,501,153 18,050,066 68,672,779 6,144,313 7,033,321 1,420,401,632 1,149,303,163 14,114,095 67,188,812 6,134,950 29,107,594 1,265,848,615 - (3,143,194) (75,211) 111,203,672 (8,322) (119,224,420) (36,523,497) 8,116,542 (5,168,850) (166,655,519) 4,552,700 (82,614,066) 13,219,648 (276,320,517) (6,870,718) 7,898 331,221,759 (4,800) 113,637,674 41,536,439 4,507,589 (7,432,900) (176,911,136) (13,658,100) 4,374,461 3,510,869 193,734 294,112,769 (276,320,517) 1,091,422 (372,343) 562,691,064 36,696,790 323,786,416 (294,112,769) 761,043 (487,358) 49,029,147 572,250 (244,237,688)
340. Amount in Taka 31 .12.2020 40 870,238,241 698,742,781 1,042,002,825 1,213,948,460 732,126,931 17,025,653 (512,147,544) 291,812,961 160,915 (1,011,176,690) 1,499,077,196 1,306,967,516 420,772,851 (477,994,603) 685,501,266 233,146,365 108,342 (908,858,645) 1,773,753,511 2,758,720,289 1,082,055,142 1,073,587,116 959,435,432 5,524,365 (512,147,544) 293,429,382 160,915 (1,027,707,986) 1,504,433,637 1,349,161,118 457,733,835 (480,189,763) 685,501,266 234,741,786 108,342 (933,053,360) 1,874,336,822 2,818,436,862 Reconciliation of Net Profit after Taxation with Cash Flows from Operating Activities before changes In Operating Assets & Liabilities Standard Bank Limited Net profit after taxation Provision for taxation Provision for Loans & Off BS Exposure Changes in interest and others receivable Changes in accrual interest expense Depreciation & Amortization of Fixed Assets Proceeds from sale of fixed assets Advance Income taxes paid Consolidated Net profit after taxation Provision for taxation Provision for Loans & Off BS Exposure Changes in interest and others receivable Changes in accrual interest expense Depreciation & Amortization of Fixed Assets Proceeds from sale of fixed assets Advance Income taxes paid Standard Bank Ltd Annual Report 2020 | 339 Financial Information 2,888,877 (16,402,336) 240,259,327 (32,122,959) Sustainability 504,119,872 8,838,940 38,452,636 (430,564) 32,452,245 Stakeholders’ Information 790,924,984 Consolidated Changes in other liabilities Standard Bank Limited (note-38) Standard Exchange Co.(UK) Ltd. Standard Express(USA) Ltd. SBL Capital Mgt. Ltd. SBL Securities Ltd. 40(b) 7,543,161 52,480,913 2,435,444 (4,711,961) 2,921,510 504,119,872 Management Retrospection 40(a) (7,202,512) 3,824,140 (52,480,913) 9,861,343 32,962,738 1,085,280 790,924,984 Risk Governance Total 9,098,279 30,826,283 342,439,686 (8,411,484) 1,356,379 3,917,622 51,784,738 10,000,000 2,500,000 (60,697) Corporate Governance Payable to OBU Provision for unforseen losses Branch adjustments accounts Swift Charge Payable A/C Written-Off Loan Recovery A/C Motivational Allowance Payable For Covid Foreign Currency translation gains 29,349,074 23,000,060 870,207,370 20,000,000 (960,832) 3,197,957 (34,311,408) (10,000,000) (100,000,000) 2,500,000 (107,313) Introduction Changes in other liabilities Accrued Expenses Standard Exchange UK Interest suspenses account Provision for bonus Islamic Settlement Account Profit receivable Provision for LFC SBL Foundation Provision For Gratuity Provision for Green Banking Provision for Incentive of good borrower Commission Payable Account 31.12.2019
341. Amount in Taka Introduction 31 .12.2020 41 31.12.2019 Net Operating Cash Flows per Share (NOCFPS) Net cash flow from operating activities Number of Ordinary Share Corporate Governance Net Operating Cash Flows per Share (NOCFPS) Risk Governance (7,228,770,547) 1,005,990,788 9,700,702,231 1,005,990,788 (7.19) 9.64 (7,032,148,855) 1,005,990,788 9,498,309,003 1,005,990,788 (6.99) 9.44 **NOCFPS Solo has significantly decreased due to decrease deposit & trading liabilities and increase loan & advances. 41(a) Consolidated Net Operating Cash Flows per Share (NOCFPS) Net cash flow from operating activities Number of Ordinary Share Net Operating Cash Flows per Share (NOCFPS) **NOCFPS Consolidated has significantly decreased due to decrease deposit & trading liabilities and increase loan & advances. 42 Expenditure Incurred for employees Management Retrospection Number of employees at 31 December 2020 or that Period which in the aggregate was not less than TK 60,000 and those employed for a part of that Period who were in receipt of remuneration of not less than Tk.8,000. 43 Disclosure on Audit committee In compliance with Bangladesh Bank’s BRPD Circular No.11 dated 27 October 2013 and Bangladesh Securities and Exchange Commission (BSEC) Notification on Corporate Governance dated 03 June 2018, the Audit Committee (AC) of the Board of Directors of Standard Bank Limited (SBL) was formed by the Board to provide independent oversight of the company’s financial reporting, non-financial corporate disclosures, internal control systems and compliance to governing rules and laws etc. Following are the major objectives of the Audit Committee: Stakeholders’ Information To review the financial reporting process, the system of internal control and management of financial risks, the audit process, and the bank’s process for monitoring compliance with laws and regulations and its own code of business conduct, compliance status of inspection report from Bangladesh Bank. To assist the Board in fulfilling its oversight responsibilities including implementation of the objectives, strategies and overall business plans set by the Board for effective functioning of the bank. The Audit Committee was reconstituted by the Board in the 319th meeting of the Board of Directors held on 30.10.2019. Thus the committee stands as follows; Sustainability SL. No. 1 Mr. Md. Nazmus Salehin 2 3 Financial Information | Status with Bank Status with Committee Educational Qualification Independent Director Chairman M.Sc Al-haj Mohammed Shamsul Alam Director Member B.A (Hon’s) Mr. Ferdous Ali Khan Director Member M. Com 4 Mr. Kazi Khurram Ahmed Director Member BSc. Egg. (Computer Science) 5 Mr. Najmul Huq Chaudhury Independent Director Member B.Com Md. Ali Reza, FCMA, CIPA CFO and acting Group Company Secretary Acting Member Secretary 6 340 Name Standard Bank Ltd Annual Report 2020 MBA, FCMA
342. During 31 .12.2020, the Audit Committee discharged the following responsibilities: • Implementation of Core Risk Management Guidelines including Internal Control and Compliance Risk along with compliance thereof • The review of status of recovery of classified loans and providing with the necessary guidelines, advices and recommendations to the management to reduce the Non-performing Loans (NPLs). • Audit and Inspection reports of the branches, divisions and departments of the Head Office prepared by the Internal Control and Compliance Division (ICCD) of the Bank. • Review and approve ‘Annual Audit Plan 2020’ and ‘Risk Based Audit Plan 2020’ of bank’s audit and inspection divisions of Head office. • Reviewed annual assessment of the performance of internal audit and inspection activities. • Review of serious irregularities in the audit report of the branches prepared by Internal Control & Compliance Division (ICCD) for the year 2019 & 2020. • Review of the audit ratings of all branches and departments for the year 2020. • Review of Bangladesh Bank, DOS Circular Letter No. 17 dated 7 November 2012 regarding Report of Self-Assessment of Anti-Fraud Internal Controls on Quarterly basis through specific format to be signed by the MD & CEO of the Bank and countersigned by the Chairman of the Audit Committee. • Review of the process of strengthening Internal Control Systems and Procedures of the Bank. • Review of the annual financial statements of the bank for the year ended 31 December 2019 as certified by the external auditors, M/S Khan Wahab Shafique Rahman & Co., Chartered Accountants, before submission to the Board of directors for approval. • Review of Bangladesh Bank’s BRPD Circular No. 4 dated 23 February 2015 on the Rules and Regulations in making transactions with people related with Board and Management of the Bank. • Review of Corporate Governance Compliance Report of SBL for the year ended 31 December 2020 as submitted by Mahfel Haq & Co. • Review of the process of strengthening Internal Control Systems and Procedures of the Bank. • Review of the Management Report on the Bank for the year ended 31 December 2019 as submitted by the External Auditors and subsequent compliance by the management thereof. • Review of the First Quarter (Q1), half-yearly, third Quarter (Q3) & Annual Financial Statements (Un-Audited) of Standard Bank Limited and Its Subsidiaries for the year 2020 before submission to the Board of Directors for approval in compliance with the BSEC’s Corporate Governance Guidelines 2018. • Review of the Bangladesh Bank Comprehensive Inspection Report on SBL Head Office as on 30 June 2020 and subsequent compliance by the management there of. • Review of AML rating of all Branches for the year 2019 & 2020. • Review of compliance and related risk level of Branches, various Departments and Subsidiaries. • Review of Annual Report on the Financial Health of the Bank, 2020. Sustainability Actions and corrective measures taken by the Management in regard to deficiencies in Bangladesh Bank inspection report, internal audit report and the Internal Control and Compliance Division (ICCD) report and by other regulatory authorities report on the Bank. | 341 Financial Information The committee in the meetings has taken particular notes of lapses detected by the Internal Audit Team in their audit report and the actions taken by the management towards correction, helped improving the recovery of classified loans and initiating measures for lowering the quantum of NPLs. The committee advised and recommended to the management and the board for instituting adequate recovery mechanisms, close and effective monitoring, constituting a robust credit administration and, carefully reviewed the internal control system and procedures specially focusing on IT operation to secure the Bank from foreseeable shocks. The process of continuous monitoring was established for avoidance of errors and omissions and, repetition of lapses as are detected by the internal and external auditors Standard Bank Ltd Annual Report 2020 Stakeholders’ Information • Management Retrospection The compliance status of the audit objections and the recommendations made by the Bangladesh Bank inspectors, External auditors and the Internal Auditors of the bank in their respective reports. Risk Governance • Corporate Governance Bangladesh Bank comprehensive inspection report & external audit report of the Bank and the recommendation made thereon. Introduction •
343. 44 Introduction Related Party Disclosures i ) Particulars of Directors of the Bank as on 31 December 2020 Sl. No. Corporate Governance Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information | Designation 1 Mr. Kazi Akram Uddin Ahmed 2 Mr. Md. Zahedul Hoque 3 Mr.Kamal Mostafa Chowdhury Director 4 Mr. Ashok Kumar Saha Director 5 Mr. Ferozur Rahman Director 6 Mr. Md. Monzurul Alam Director 7 Mr. S. A. M. Hossain Director 8 Mr. Mohammed Abdul Aziz Director 9 Mr. Gulzar Ahmed Director 10 Al-Haj Mohammed Shamsul Alam Director 11 Al-Haj Mohd. Yousuf Chowdhury Director 12 Mr. Ferdous Ali Khan Director 13 Mr. Kazi Khurram Ahmed Director 14 342 Name of the Persons ICB, represented by its Managing Director, Mr. Md. Abul Hossain Chairman Vice Chairman Managing Director, Investment Corporation of Bangladesh 15 Mr. Najmul Huq Chaudhury Independent Director 16 Mr. Md. Nazmus Salehin Independent Director 17 Mr. Khondoker Rashed Maqsood Standard Bank Ltd Annual Report 2020 MD & Ex-Officio Director Present Address House # 73, Road # 6, O.R. Nizam Road R/A, Chittagong. 284/285, Khatungonj, Chittagong, “Bedura House”, 72, Bangshal Road, Firingi Bazar, Kotwali, Chittagong. 29/B, Ghatforhadbeg, Chittagong My Heart’, 8/1, Sukrabad, Dhanmondi, Dhaka. 218, D.T. Road, Dewanhat, Chittagong. Victor Electronics, 400 Bipani Bitan (3rd Floor), Chittagong. 268, Fakirapool, Motijheel, Dhaka Apan Jewellers, 65 Gulshan Avenue, Suvastu Imam Square (Ground Floor), Gulshan-1, Dhaka-1212. M/s. Radio Vision, 398, Bipani Bitan, Chittagong. 8/B, O. R. Nizam Road, Panchlaish R/A., Chittagong Jahan Mansion (1st Floor), Gha 6, 29, Mirpur Road, Dhaka House # 73, Road # 6, O.R. Nizam Road R/A, Chittagong Head Office 8 Rajuk Avenue, 14th Floor, Dhaka House # 232, Road # 9, Block-B, Chandgaon CDA R/A, Chittagong Basati Green Hamlet, Apartment # D-13, 23, Green Road, Dhaka- 1205 Head Office, Metropolitan Chamber Building, 122-124, Motijheel C/A, Dhaka % of shares as on 31.12.2020 2.02% 3.34% 2.30% 2.17% 2.07% 2.00% 2.72% 2.01% 2.00% 2.54% 2.00% 2.27% 2.00% 4.07% NIL NIL NIL
344. Reconciliation of inter Banks /Books of accounts Books of Accounts with regard to inter bank ( In Bangladesh and outside Bangladesh) are reconciled and there are no material differences, which may affect the financial statements significantly. 46 Auditors work hour 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, 2020 under the guidelines of Bangladesh Bank BRPD circular No.14 dated 25th June, 2003. Workers Participation Fund and Welfare Fund Consistent with the industry practice and in accordance with The Bank Company Act. 1991, no provision has been made for WPPF. 48 Net Asset Value Per Share Shareholders’ Equity Net Asset Value (NAV) Per Share 49(a) 1,005,990,788 1,005,990,788 16.67 16.19 16,765,238,028 16,247,876,352 Consolidated Net Asset Value Per Share Shareholders’ Equity Number of Ordinary Share Consolidated Net Asset Value (NAV) Per Share 1,005,990,788 1,005,990,788 16.67 16.15 Events after the Balance Sheet date The Board of Directors in its 341th meetings decided to recommend payment of 2.5% stock dividend & 2.5% Cash dividend for the year 2020. The total amount of dividend is Taka. 502,995,394. Stakeholders’ Information 50 16,291,125,005 Management Retrospection Number of Ordinary Share 16,771,470,505 Risk Governance 47 Corporate Governance The external auditor has covered 80% of the risk weighted assets and has spent around 3,728 hours to complete the audit as per Bangladesh Auditing Standards. 46 Introduction 45 Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 343
345. STANDARD BANK LIMITED Introduction BALANCE WITH OTHER BANK-OUTSIDE BANGLADESH (NOSTRO ACCOUNTS) AS AT 31 DECEMBER 2020 Annexure -A 2020 Conversion rate per unit F.C. 2019 Conversion rate per unit Amount in BDT F.C. Currency Name Amount in Foreign Currency Habib American Bank Ltd., New York USD 4,430,770.56 84.4500 374,178,573.79 1,441,042.51 84.4500 121,696,039.97 Mashreq Bank Psc, New York USD 3,032,309.75 84.4500 256,078,558.39 903,789.78 84.4500 76,325,046.92 ICICI Bank Ltd., Mumbai, India ACU($) 940,150.53 84.4500 79,395,712.26 182,884.56 84.4500 15,444,601.09 USD 8,111,483.84 84.4500 685,014,810.29 1,450,282.63 84.4500 122,476,368.10 Name of the Bank Amount in BDT Amount in Foreign Currency Corporate Governance Interest Bearing Non Interest Bearing Standard Chartered Bank, New York Risk Governance ICICI Bank Ltd., Hongkong USD 163,304.57 84.4500 13,791,070.94 95,502.58 84.4500 8,065,192.88 Bank Al-Jazira, KSA,USD USD 93,260.66 84.4500 7,875,862.74 200,442.04 84.4500 16,927,330.28 Sonali Bank (UK) LTD,USD USD 502,800.14 84.4500 42,461,471.82 95,139.89 84.4500 8,034,563.71 AXIS Bank Limited, Mumbai, India ACU($) A.B. Bank Ltd. Mumbai Management Retrospection Stakeholders’ Information ACU($) 246,177.83 84.4500 20,789,717.74 81,084.62 84.4500 6,847,596.16 Standard Chartered Bank Ltd., Mumbai, India ACU($) 1,581,850.38 84.4500 133,587,264.59 88,514.36 84.4500 7,475,037.70 Nepal Bangladesh Bank Ltd., Kathmundu, Nepal ACU($) 174,683.21 84.4500 14,751,997.08 173,783.21 84.4500 14,675,992.08 Habib Metropolitan Bank, Karachi, Pakistan ACU($) 66,734.91 84.4500 5,635,763.15 90,333.61 84.4500 7,628,673.36 Bhutan National Bank, Bhutan ACU($) 19,069.76 84.4500 1,610,441.23 5,266.76 84.4500 444,777.88 Standard Chartered Bank, Frankfurt, Germany EURO 7,608.62 104.9006 798,148.42 7,118.92 95.8077 682,047.35 139,290.68 104.9006 14,611,668.94 4,677.48 95.8077 448,138.60 22,078,784.00 0.8212 18,131,097.04 1,171,791.00 0.7780 911,594.81 236,566.25 111.0698 26,275,354.25 350,165.03 22.3976 7,842,838.69 3,452.08 60.0081 207,152.76 NIB Bank Ltd., Karachi, Pakistan ACU($) Commerz Bank, Frankfurt, Germany EURO Standard Chartered Bank Ltd., Tokyo JPY Mashreq Bank, London, UK GBP Sonali Bank (UK) LTD,GBP GBP Commerz Bank, Frankfurt, Germany GBP 4,648.19 114.9343 534,236.46 Standard Chartered Bank, London GBP 125,711.45 114.9343 14,448,557.51 Alawwal Bank, KSA, SAR (Saudi Hallandi Bank, KSA) SAR 975,917.53 22.3982 21,858,747.22 Bank Al-Jazira, KSA SAR Westpac Banking Corporation Ltd. AUD Sub Total Sustainability Habib American Bank Ltd., New York(OBU) 1,705,553,699.59 USD 233,591.15 84.4500 Sub Total Financial Information FDR-Standard Chartered Bank , Mumbai, India | 3,509,832.41 84.4500 1,725,280,472.21 USD GRAND TOTAL 344 19,726,772.62 442,408,346.60 Standard Bank Ltd Annual Report 2020 94,500.00 77.8000 7,352,100.00 1,732,632,572.21 297,984,772.02 740,393,118.63 94,500.00 77.8000 7,352,100.00 747,745,218.63
346. 738 ,302,195 320,322,998 Office Appliances Computer 4,662,698,818 Total 31.12.2019 Financial Information 4,994,411,513 125,055,077 140,689,963 Sustainability Total 31.12.2020 Bank Vehicle Software - 801,259,888 Furniture & Fixture Right of Use Assets (ROUA) as per IFRS-16 495,535,566 2,373,245,825 Building Land 331,712,694 344,024,889 8,865,640 - 274,244,824 8,710,959 21,795,370 30,408,096 0.00 - - - - - - - - - - 4,994,411,513 5,338,436,402 133,920,717 140,689,963 274,244,824 329,033,957 760,097,565 831,667,985 495,535,566 2,373,245,825 Adjustment Balance at 31 for December 2020 disposal Stakeholders’ Information Balance at 1st January 2020 968,336,513 1,201,482,878 87,202,348 96,487,898 - 183,808,631 440,309,620 319,642,934 74,031,448 - Balance at 1st January 2020 Management Retrospection Addition during the year Cost AS AT 31 DECEMBER 2020 - 233,146,365 291,812,961 14,266,186 14,191,506 40,001,043 44,695,925 103,186,704 63,941,535 11,530,064 Addition during the year - - - - - - - - - - 1,201,482,878 1,493,295,839 101,468,534 110,679,403 40,001,043 228,504,555 543,496,324 383,584,469 85,561,511 - Adjustment Balance at for 31 December 2020 disposal Depreciation Risk Governance Description STANDARD BANK LIMITED Corporate Governance FIXED ASSETS INCLUDING PREMISES, FURNITURE AND FIXTURES 3,792,928,634 3,845,140,563 32,452,183 30,010,560 234,243,782 100,529,401 216,601,242 448,083,516 409,974,055 2,373,245,825 Taka Written down value at 31 December 2020 Annexure-”B” Introduction Standard Bank Ltd Annual Report 2020 | 345
347. Introduction STANDARD BANK LIMITED NAME OF THE DIRECTORS /SPONSORS AND THE ENTITIES IN WHICH THEY HAVE INTEREST AS AT 31 DECEMBER, 2020 Annexure-”C” Corporate Governance SL. Name & Address Designation 1 2 3 Mr. Kazi Akram Uddin Ahmed 1 Chairman House # 73, Road # 6, O.R. Nizam Road R/A, Chittagong. Mr. Kamal Mostafa Chowdhury Risk Governance 2 3 “Bedura House”, 72, Bangshal Road, Firingi Bazar, Kotwali, Chittagong. Mr. Ashok Kumar Saha Director Name of Firms/Companies in which interested as proprietor, partner, director, managing agent, guarantor employee, etc. 4 29/B, Ghatforhadbeg Chittagong Management Retrospection 4 My Heart’, 8/1, Sukrabad, Agargaon, Dhaka. Director 64% M/s. Kazi & Co. Managing Director 100% Standard Rose Villa Housing Ltd. Chairman 40% Raja Corporation Proprietor 100% Director 14% Raja Securities Ltd. Holy Crescent Hospital Ltd. Stakeholders’ Information 218, D.T. Chittagong. Road, Dewanhat, Director NGS Steel Industries Ltd, Managing Director 33% Uttam Oil Mills Ltd, Managing Director 33% NG Saha Steel Industries (Pvt) Ltd. Director 33% NGS Cement Industries Ltd. Director 33% Chairman 33% Golden Dragon Ltd. Director 15% Hotel Eram International Ltd. Director 18% Hotel Peacock Ltd. Sustainability 6 Financial Information 7 Victor Electronics 400 Bipani Bitan (3rd Floor), Chittagong. Mr. Mohammed Abdul Aziz Director Director 268, Fakirapool, Motijheel, Dhaka 346 | Standard Bank Ltd Annual Report 2020 Director 65% Proprietor 100% Proprietor 100% Taher & Co. Ltd. Managing Director 36714 Shares Golden Brick Works Ltd. Managing Director 219725 Shares Golden Steel Alloy Works Ltd. Managing Director 124163 Shares Al-Haj Mostafa Hakim Housing & Real Estate Ltd. Managing Director 101000 Shares Golden Oxygen Ltd Managing Director 101000 Shares Al-haj Mostafa Hakim Cement Ind. Ltd. Managing Director 9500 Shares Golden Iron Works Ltd. Managing Director 218525 Shares M/s. Monzur Alam Mr. S. A. M. Hossain 2% 100% Olio Dream Heaven 5 Director Proprietor M/s. Olio Enterprise Hotel Mr. Md. Monzurul Alam 7 Managing Director A.K. Saha Steel Industries (Pvt) Ltd. Mr. Ferozur Rahman 6 The Eastern Engineering Works Ltd. K. M. C. International Director Nature and value of interest in the firm/companies in which interested Proprietor 1 Mutual Jute Spinner Ltd. Managing Director 4000 Shares Mostafa Hakim Container Yard. Ltd. Managing Director 5000 Shares Al-Haj Mostafa hakim Bricks. Ltd Managing Director 5000 Shares Eagle Star Textile Mills Limited Managing Director 303557 Shares H.M. Steel & Ind. Ltd. Chairman 10000 Shares Victor Electronics Proprietor 100% Samira Electronics Proprietor 100% Samira Trade Intl. Proprietor 100% Eastern Metal Ind. Chittagong Ltd. Chairman 13% Hotel Victory Ltd. Chairman 40% New Ruma Products Proprietor 100% Alim International Proprietor 100% Remarks 8
348. Name & Address Designation 1 2 3 Director M/s. Radio Vision 398 Bipani Bitan Chittagong 4 Nature and value of interest in the firm/companies in which interested 6 7 M/S. Radio Vision Managing Partner 50% M/S. Pam Complex Pvt. Limited Managing Director 32% M/S. A.B. Electronics Managing Partner 40% M/S. G. Telecom Partner 33% M/S. G. Net Digital Communication Partner 33% Managing Director 50% The Apan Jewelers Proprietor 100% M/S Zahed Brothers Proprietor 100% Proprietor 100% Managing Director 80% R.B. Electronics Industries Ltd. Remarks 8 Corporate Governance 8 Al-Haj Mohammed Shamsul Alam Name of Firms/Companies in which interested as proprietor, partner, director, managing agent, guarantor employee, etc. Introduction SL. Mr. Gulzar Ahmed 9 Director M/S NLZ Fashion Mr. Md. Zahedul Hoque Vice Chairman 284, Khatungonj, Chittagong, Al-Haj Md. Yousuf Chowdhury 8/B, O. R. Nizam Road, Panchlaish R/A., Chittagong Director M/S. Noor Oil & Food Products Ltd. Director M/S. Arafat Ltd. Director Hotel Royal Palace Limited Chairman 60% Royal Tower Proprietor 100% M/s. Lucky Traders Proprietor 100% M/s Lucky Trading Proprietor 100% Ferdous Tailors Fabrics & Fashion Proprietor 100% Management Retrospection 11 M/S NLZ Fashion Ltd. Risk Governance 10 Apan Jewellers, 65 Gulshan Avenue Suvastu Imam Square (Ground Floor) Gulshan-1, Dhaka-1212. Mr. Ferdous Ali Khan 12 House # 27, Lake Drive Road Sector#7, Uttara Model Town Dhaka -1230 Director (i) The Eastern Limited Mr. Kazi Khurram Ahmed 13 Investment Corporation Bangladesh (ICB) 14 Avenue(14th (iii) EMX Limited Proprietor 100% Chairman & MD of representing by Managing Director Investment Corporation of Bangladesh Head Office, 8, Rajuk Dhaka (ii) Ahmed & Sons Director Stakeholders’ Information NAM Villa, House # 4-B/5, Road # 06, Gulshan-1, Dhaka Director Engineering Works Director Not Applicable Independent Director Not Applicable Independent Director Not Applicable Ex-Officio Director Not Applicable Floor), Mr. Najmul Huq Chaudhury House # 232, Road # 9 Block-B, Chandgaon CDA R/A Chittagong Sustainability 15 Md. Nazmus Salehin 16 Basati Green Hamlet Apartment # D-13, 23 Green Road, Dhaka1205 17 Standard Bank Ltd. Chamber Building (3rd floor) 122124, Motijheel C/A., Dhaka-1000 Financial Information Mr. Khondoker Rashed Maqsood MD & CEO Standard Bank Ltd Annual Report 2020 | 347
349. STANDARD BANK LIMITED Introduction STATEMENT OF LOANS TO OUR BANK DIRECTORS AS AT 31 DECEMBER 2020 Annexure- "D" Fig in Lac TK. Corporate Governance SL No. Name of the Directors Status with Bank Name of the Concern Nature of Loan Risk Governance Management Retrospection Stakeholders’ Information Sustainability Mr. Kazi Akram Uddin Ahmed Chairman M/s. Kazi & Co. CC(Hypo) 950.00 92.31 Regular 2 Alhaj Md. Yousuf Chowdhury Director M/s. Lucky Traders CC(Hypo) 929.00 1009.86 Regular 3 Alhaj Md. Shamsul Alam Director M/s. Radio Vision CC(Hypo) 625.00 253.75 Regular 4 Mr. Kamal Mostafa Chowdhury Director M/s. Raja Corporation Bank Guarantee 20.00 6.00 Regular 5 Mr. Kamal Mostafa Chowdhury Director M/s. K.M.C. International SOD General 845.00 1.32 Regular 6 Alhaj Md. Monzurul Alam Director M/s. Monzurul Alam CC(Hypo) 945.00 17.46 Regular 7 Mr. S.A.M. Hossain Director M/s. Samira Trade International CC(Hypo) 660.00 12.85 Regular 8 Mr. Md. Abdul Aziz Director M/s. Mohammed Abdul Aziz CC(Hypo) 523.00 1.88 Regular 9 Mr. Md. Abdul Aziz Director M/s. New Ruma Products Letter of Credit 700.00 36.97 Regular 10 Mr. Md. Abdul Aziz Director M/s. Alim International Letter of Credit 0.00 0.00 Regular 11 Mr.Ferozur Rahman Director M/s. Olio Enterprise SOD General 1,000.32 867.46 Regular 12 Mr. Ashok Kumar Saha Director Mr. Ashok Kumar Saha SOD General 700.00 684.81 Regular 13 Mr. Ashok Kumar Saha Director NGS Steel Ind.Ltd. Bank Guarantee 1.07 1.07 Regular 14 Mr. Ashok Kumar Saha Director NG Shaha Steel Ind.(Pvt.) Ltd. Bank Guarantee 1.30 1.31 Regular 15 Mr. Ashok Kumar Saha Director NGS Steel Ind.Ltd. Bank Guarantee 1.83 1.83 Regular 16 Mr. Mohammed Zahedul Hoque Director M/S.Zahed Brothers CC(Hypo) 1,590.00 1,542.49 Regular 17 Mr. Kazi Khurram Ahmed Director M/s. EMX Ltd. CC(Hypo) 70.00 0.00 Regular 18 Mr. Kazi Khurram Ahmed Director M/s. EMX Ltd. Bank Guarantee 3.97 3.97 Regular 19 Mr. Kazi Khurram Ahmed Director M/s. EMX Ltd. Term Loan 100.00 101.65 Regular 9,665.49 4,636.98 Financial Information | Remarks 1 Total 348 Limit Total Outstanding Standard Bank Ltd Annual Report 2020
350. STANDARD BANK LIMITED Introduction INVESTMENT IN SHARES OF THE BANK AS AT 31 DECEMBER 2020 Annexure- ”E” Face Value Name of the Company No of Shares Total market as at 31.12.2020 Corporate Governance SL No Quoted Cost/present Average rate per value of holdings cost share as at 31.12.2020 Quoted: 10 23,284,408 150,000,000 6.44 5.40 125,735,803 2 Bangladesh Steel Re-Rolling Mills Ltd 10 123,320 3,520,810 28.55 60.20 7,423,864 3 The ACME Laboratories Limited 10 1,282 109,226 85.20 74.70 95,765 4 Runner Automible Limited 10 9,301 676,745 72.76 50.90 473,421 5 Robi Axiata Limited 10 131,188 1,311,880 10.00 29.80 3,909,402 6 Sea Pearl Beach Resort & Spa Limited 10 1,865 18,171 9.74 79.10 147,522 7 Ring Shine Textiles Limited 10 11,913 103,594 8.70 6.40 76,243 Sub Total 155,740,426 137,862,021 Management Retrospection First Bangladesh Fixed Income Fund Risk Governance 1 Unquoted: 10 15,654,816 156,548,164 156,548,164 2 Central Counterparty Bangladesh Limited (CCBL) 10 3,750,000 37,500,000 37,500,000 3 Market Stabilization Fund 5,000,000 5,000,000 4 SWIFT 3,003,185 3,003,185 5 Standard Exchange Co.(UK) Ltd. 33,843,240 33,843,240 6 Standard Express(USA) Ltd. 130,122,500 130,122,500 7 SBL Capital Mgt. Ltd. 1,499,940,000 1,499,940,000 8 SBL Securities Ltd. 799,940,000 799,940,000 9 Preference Share Of Star Ceramics Ltd. - - Sub Total 2,665,897,089 2,665,897,089 Total 2,821,637,516 2,803,759,110 Sustainability Central Depository Bangladesh Limited (CDBL) Stakeholders’ Information 1 Financial Information Standard Bank Ltd Annual Report 2020 | 349
351. STANDARD BANK LTD . Introduction NAME OF DIRECTORS AND THEIR SHAREHOLDINGS AS AT 31 DECEMBER 2020 Annexure-”F” Sl. No. Corporate Governance Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information 350 | Name of Directors Status Closing Share balance as on 31.12.2020 Closing Share balance as on 31.12.2019 Chairman 2,03,07,548 Shares of Tk. 10/ Each Tk.20,30,75,480/- 1,93,40,522 Shares of Tk. 10/ Each Tk.19,34,05,220/- Vice Chairman 3,36,19,672 Shares of Tk. 10/- Each Tk 33,61,96,720/- 3,20,18,736 Shares of Tk. 10/Each Tk 32,01,87,360/- 1 Mr. Kazi Akram Uddin Ahmed 2 Mr. Md. Zahedul Hoque 3 Mr. Kamal Mostafa Chowdhury Director 2,31,15,081 Shares of Tk. 10/- Each Tk. 23,11,50,810/- 2,20,14,363 Shares of Tk. 10/Each Tk. 22,01,43,630/- 4 Mr. Ashok Kumar Saha Director 2,18,06,449 Shares of Tk. 10/- Each Tk. 21,80,64,490/- 2,07,68,047 Shares of Tk. 10/Each Tk. 20,76,80,470/- 5 Mr. Ferozur Rahman Director 2,08,44,334 Shares of Tk. 10/- Each Tk. 20,84,43,340/- 1,98,51,747 Shares of Tk. 10/Each Tk. 19,85,17,470/- 6 Mr. Md. Monzurul Alam Director 2,01,21,044 Shares of Tk. 10/- Each Tk. 20,12,10,440/- 1,91,62,900 Shares of Tk. 10/Each Tk. 19,16,29,000/- 7 Mr. S. A. M. Hossain Director 2,73,93,979 Shares of Tk. 10/- Each Tk. 27,39,39,790/- 2,60,89,504 Shares of Tk. 10/Each Tk. 26,08,95,040/- 8 Mr. Mohammed Abdul Aziz Director 2,01,79,695 Shares of Tk. 10/ Each Tk. 20,17,96,950/- 1,92,18,758 Shares of Tk. 10/ Each Tk. 19,21,87,580/- 9 Mr. Gulzar Ahmed Director 2,01,40,211 Shares of Tk. 10/- Each Tk 20,14,02,110/- 1,91,81,154 Shares of Tk. 10/Each Tk 19,18,11,540/- 10 Al-Haj Mohammed Shamsul Alam Director 2,55,66,242 Shares of Tk. 10/- Each Tk. 25,56,62,420/- 2,43,48,802 Shares of Tk. 10/Each Tk. 24,34,88,020/- 11 Al-Haj Mohd. Yousuf Chowdhury Director 2,01,20,199 Shares of Tk. 10/- Each Tk. 20,12,01,990/- 1,91,62,096 Shares of Tk. 10/Each Tk. 19,16,20,960/- 12 Mr. Ferdous Ali Khan Director 2,27,88,744 Shares of Tk. 10/Each Tk. 22,78,87,440/- 2,17,03,566 Shares of Tk. 10/Each Tk. 21,70,35,660/- 13 Mr. Kazi Khurram Ahmed Director 2,01,68,480 Shares of Tk. 10/- Each Tk.20,16,84,800/- 1,92,08,077 Shares of Tk. 10/Each Tk.19,20,80,770/- 14 ICB, represented by its Managing Director, Mr. Md. Abul Hossain Managing Director, Investment Corporation of Bangladesh 4,09,00,609 Shares of Tk. 10/- Each Tk 40,90,06,090/- 3,89,52,961 Shares of Tk. 10/Each Tk 38,95,29,610/- 15 Mr. Najmul Huq Chaudhury Independent Director NIL NIL 16 Mr. Md. Nazmus Salehin Independent Director NIL NIL 17 Mr. Khondoker Rashed Maqsood MD & Ex-Officio Director NIL NIL Standard Bank Ltd Annual Report 2020
352. STANDARD BANK LIMITED Sl . No. Particulars 31.12.2020 Introduction HIGHLIGHTS 31.12.2019 Total Capital 23,029,356,374 19,532,549,637 3 Capital Surplus/(deficit) 5,118,138,101 2,274,123,997 4 Total Assets 219,271,929,683 221,890,106,639 5 Total Deposits 169,639,336,100 175,467,924,673 6 Total Loans and Advances 162,396,783,610 160,625,510,886 7 Total contingent liabilities and commitments 38,901,943,884 48,747,352,228 8 Credit Deposit Ratio 84.55% 82.09% 9 Percentage of classified loans against total loans and advances 4.87% 5.29% 10 Profit after tax and provision 1,082,055,142 1,504,433,637 11 Amount of classified loans during the year 7,764,228,563 9,232,447,399 12 Provisions kept against classified loan 3,251,441,891 2,589,031,297 13 Provision surplus/(deficit) - - 14 Cost of fund 8.82% 8.52% 15 Interest earning assets 163,371,527,949 183,477,100,013 16 Non-interest earning assets 55,900,401,734 38,413,006,626 17 Return on investment (ROI) 22.35% 7.07% 18 Return on assets (ROA) 0.49% 0.76% 19 Return on Equity (ROE) 6.45% 9.26% 20 Net Interest Margin (NIM) 1.26% 2.81% 21 Incomes from investment 4,202,684,339 1,797,308,127 22 Earning per share (Taka) 1.08 1.57 23 Price earning ratio (times) 7.72 5.95 Sustainability 2 Stakeholders’ Information 9,580,864,650 Management Retrospection 10,059,907,880 Risk Governance Paid Up Capital Corporate Governance 1 Financial Information Standard Bank Ltd Annual Report 2020 | 351
353. Introduction Corporate Governance Risk Governance Management Retrospection ISLAMI BANKING WING Financial Information Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 352
354. STANDARD BANK LIMITED Introduction ISLAMI BANKING WING BALANCE SHEET FOR THE YEAR ENDED 31 DECEMBER , 2020 Particulars Figures in Taka 31.12.2020 31.12.2019 59,774,194 6,298,349 53,475,845 Balance with other Banks and Financial Institutions In Bangladesh Outside Bangladesh 2 122,228,578 122,228,578 - 188,000,000 188,000,000 - Investments in Shares and Securities Government Others 3 58,500,000 58,500,000 - 35,500,000 35,500,000 - Investments General Investment Bills Purchased & Discounted 4 833,824,057 833,824,057 - 786,275,499 786,275,499 - Fixed Assets Including Premises, Furniture & Fixtures Other Assets Non-Banking Assets 5 6 15,623,625 10,211,257 - 4,767,116 8,603,858 - 1,129,408,737 1,082,920,667 1,111,912,282 68,608,773 3,125,607 94,274,141 121,067,140 775,295,501 49,541,119 947,333,783 52,472,963 6,915,376 46,603,345 59,940,823 756,107,797 25,293,479 37,318,301 122,723,617 1,149,230,582 1,070,057,400 (19,821,846) 12,863,267 1,129,408,737 1,082,920,667 TOTAL ASSETS Management Retrospection 89,021,220 11,555,559 77,465,661 Risk Governance 1 Corporate Governance PROPERTY AND ASSETS Cash Cash In Hand (Including Foreign Currencies) Balance with Bangladesh Bank and its agent Bank(s) (including foreign correncies) Notes LIABILITIES AND CAPITAL Liabilities Stakeholders’ Information Borrowing From Banks & Other Financial Institutions Deposits and other Accounts: Current/Al-Wadeeah Deposits & Other Deposits Bills Payable Savings Bank/Mudaraba Savings Deposits Short Term Deposits/ Mudaraba Short Term Deposits Fixed Deposits/ Mudaraba Term Deposits Deposits Under Schemes/ Mudaraba Deposit schemes 9 Financial Information TOTAL LIABILITIES Capital / Shareholder’s Equity Paid Up Capital Statutory Reserve General Reserve Revaluation Reserve on Investment Surplus In Profit and Loss Account/Retained Earnings 8 Sustainability OTHER LIABILITIES 7 Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity Standard Bank Ltd Annual Report 2020 | 353
355. STANDARD BANK LIMITED Introduction ISLAMI BANKING WING BALANCE SHEET FOR THE YEAR ENDED 31 DECEMBER , 2020 Corporate Governance Particulars Notes Figures in Taka 31.12.2020 31.12.2019 OFF-BALANCE SHEET EXPOSURE Contingent Liabilities Acceptance and Endorsements - Letters of Guarantee 52,289,250 39,549,305 Risk Governance Irrevocable Letter of Credit - - Bills For Collection - - Other Contingent Liabilities - - TOTAL: 52,289,250 39,549,305 Management Retrospection Other Comments Documentary Credits And Short Term Trade -Related Transactions - - Forward Assets Purchased And Forward Deposits Placed - - Undrawn Note Issuance And Revolving Underwriting Facilites - - - - Undrawn Formal Standby Facilities, Credit Lines And Other commitments TOTAL OFF-BALANCE SHEET ITEMS Stakeholders’ Information Managing Director Sustainability Financial Information 354 | Standard Bank Ltd Annual Report 2020 52,289,250 Director Director 39,549,305 Chairman
356. STANDARD BANK LIMITED Introduction ISLAMI BANKING WING PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER, 2020 Notes Profit on General Investment Profit Paid on Deposits & Borrowings etc. 10 11 Net Profit on Investment 12 13 14 Total Operating Profit(A) 15 16 17 18 19 20 21 Total Operating Expenses(B) Specific Provision General Provision Provision For Diminution In Value of Investments Provision For Off-Balance Sheet Items 22 Total Provision(D) Total Profit/(Loss ) Before Taxes(E)=(C-D) 23 Net Profit/(Loss) after Taxation Director Director 27,841,487 45,754,034 568,340 974,366 744,850 1,512,222 619,666 290,419 30,129,042 48,176,340 37,193,685 5,491,912 155,778 203,884 206,300 2,382,496 4,189,432 19,686,631 3,147,939 0 81,438 341,970 127,950 0 0 330,948 2,912,960 49,823,488 26,629,837 (19,694,446) 21,546,504 0 0 127,400 0 1,041,290 129,091 127,400 1,170,381 (19,821,846) 20,376,123 0 - 7,512,856 - (19,821,846) 12,863,267 Financial Information Managing Director 109,675,141 63,921,107 Sustainability Provision for Tax expenses Current Tax Deferred Tax 82,698,059 54,856,572 Stakeholders’ Information Profit/(Loss) Before Provision C=(A-B) 31.12.2019 Management Retrospection Salaries and Allowances Rent, Taxes,Insurance, Electricity etc Legal Expenses Postage, Stamp, Telecommunication etc Stationary, Printing, Advertisement etc Directors’ Fee & Other Benefits Managing Director’s Salary & Allowances Audit Fees Depreciation And Repair of Bank’s Assets Other Expenses 31.12.2020 Risk Governance Investment Income Commission, Exchange Earnings and Brokerage Other Operating Income Figures in Taka Corporate Governance Particulars Chairman Standard Bank Ltd Annual Report 2020 | 355
357. STANDARD BANK LIMITED Introduction ISLAMI BANKING WING SELECTED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER , 2020 Corporate Governance Figures in Taka 31.12.2020 1 Risk Governance 1.1 31.12.2019 Cash Cash In hand In Local Currency In Foreign Currency Sub Total 11,555,559 11,555,559 6,298,349 6,298,349 Balance with Bangladesh Bank (including foreign currency) In local Currency In Foreign Currency Sub Total 77,465,661 77,465,661 53,475,845 53,475,845 Total 89,021,220 59,774,194 Management Retrospection Cash Reserve Ratio(CRR) & Statutory Liquidity Ratio (SLR) have been calculated and maintained in accordance with section 33 of the Bank Companies ACT 1991, MPD Circular nos. 4 & 5 dated 1 December 2010 and MPD Circular no. 1 & 2 dated 23 June 2014 and 10 December 2013 and DOS Circular No. 1 dated 19 January 2014. The statutory Cash reserve ratio on the Shariah-based Islamic Bank’s demand and time liabilities at the rate of minimum 3.50% on daily basis and 4.00% on bi-weekly basis have been calculated and maintained with Bangladesh Bank in current account and 5.50% Statutory Liquidity Ratio on the same liabilities has also been maintained in the form of treasury bills, bonds and debentures including excess cash reserve balance with Bangladesh Bank. Both the reserves maintained by the Bank are in excess of the statutory requirements, as shown below: 1.1.1 a) Cash reserve ratio(CRR) for Islami Banking 4.00% of average Demand and Time Liabilities Stakeholders’ Information Required reserve Actual reserve held(average daily on bi-weekly basis) Surplus 44,044,000 77,465,661 33,421,661 41,424,000 53,475,845 12,051,845 60,560,000 103,477,220 42,917,220 41,424,000 53,850,194 12,426,194 11,555,559 33,421,661 58,500,000 103,477,220 6,298,349 12,051,845 35,500,000 53,850,194 90,000,000 216,572 32,012,006 122,228,578 163,000,000 b) Statutory Liquidity Ratio (SLR) for Islamic Banking 5.50% of required average Demand and Time Liabilities Sustainability Required reserve Actual reserve held Surplus Held for Statutory Liquidity Ratio of islamic Banking Cash in hand Excess cash reserve Government Securities(HTM) Financial Information 2 356 | Balance with Other Banks & Finanacial Institutes Placement as MTDR(Mudaraba Term Deposit) Hajj Finance Company Ltd Sonali Bank (Agent of BB) Islamic Finance and Investment Ltd Conventional Settlement A/c Total Standard Bank Ltd Annual Report 2020 25,000,000 188,000,000
358. Figures in Taka 71 ,939 5,062,802 398,846 881,163 51,809 334,533,554 9,624,186 459,581,142 4,237,582 4,281,854 15,099,180 833,824,057 82,339 336,748,120 4,244,699 427,442,705 4,978,570 3,836,052 8,943,014 786,275,499 Classification of Investments Unclassified: Standard including staff Investments Special Mention Account (SMA) Classified: Sub standard Doubtful Bad/Loss Total 833,824,057 833,824,057 0 0 833,824,057 786,275,499 786,275,499 0 0 0 786,275,499 15,623,625 15,623,625 4,767,116 4,767,116 875,556 0 4,521,070 4,520,402 2,319,444 687,361 2,711,518 2,614,884 4,000 Fixed Assets Including Premises, Furniture & Fixtures Furniture & Fixture Total 83,620 1,050 157,460 52,100 10,211,257 Financial Information Other Assets Profit Receivable on MTDR With other FI Profit Receivable on Bond With B.Bank Advance Rent-Office-Branch Advance Income Tax on MTDR/Bond Advance Against TA/DA Advance Bill for Advertisement Sundry Debtors Desk Stationery Stamp in Hand Excise Duty Adjustment(MTDR) Deffered Expenditure Cash Incentive-Foreign Remittance W.U Total Sustainability General Investment SME Bai Muajjal HPSM Profit Receivable Customers Bai Muajjal Profit Receivable Customers Rent Blocked A/C-HPSM Profit Blocked A/C- Bai Profit/Rent Waiver Blocked A/c-Consumer Profit Incentive Receivable-BB Bai Muajjal & Bai MuajjalTerm HPSM Consumer HPSM Real Estate/Housing HPSM House Building Investment HPSM Staff Investment & Staff Car HPSM Transport/Car Investment Quard against MTDR/Schemes Total Stakeholders’ Information 6 18,000,000 17,500,000 35,500,000 Management Retrospection 5 30,000,000 28,500,000 58,500,000 Risk Governance 4.1 31.12.2019 Corporate Governance 4 31.12.2020 Investment in Shares & Securities Bangladesh Govt. Islami Investment Bond Tenure(Months) Maturity Dt. 6 13.02.2021 6 29.04.2021 Total Introduction 3 1,050 132,550 133,050 8,603,858 Standard Bank Ltd Annual Report 2020 | 357
359. Figures in Taka Introduction 7 Corporate Governance 7 .1 Risk Governance 8 Management Retrospection 9 Stakeholders’ Information Sustainability Financial Information 358 | 31.12.2020 31.12.2019 Current/Al-Wadeah Deposits & other deposits Al-Wadiah Current Deposit Sundry Deposit(Notes-7.1) Total 44,146,073 24,462,700 68,608,773 33,843,406 18,629,557 52,472,963 Sundry deposits Sundry Creditors Sundry Deposit Security Deposit Payable Margin on L/C (Reg/Bdt) Margin on L/C (Reg/FC) Margin on letter of Guarantee Profit payable on Mudaraba Deposits Charge payable HV Clearing Charge payable RV Clearing VAT, Excise duty & Income Tax Total 96,096 4,213,872 221,798 5,005,900 595,100 3,737,055 10,589,138 2,000 1,740 24,462,700 146,858 623,000 3,650,886 14,204,129 2,900 1,784 18,629,557 775,295,501 775,295,501 756,107,797 756,107,797 61,700 1,775,309 5,365,184 17,408,826 50,000 26,692 12,633 36,798 75,182 283,554 15,521,380 124,261 - 86,421,530 330,000 Mudaraba Term Deposits Client Deposit Bank Deposit Total Other liabilities Conventional Settlerment A/C Lfc payable Utilities Bill payable Profit receivable on SME Bai-Muajjal Interbank /Branch a/c unadjusted Profit receivable on Bai-Muajjal Profit receivable on Bai-Muajjal Term Profit receivable on Hpsm Car-Staff Other Provisions Profit Suspense A/c Compensation Suspense A/c Accured Expenses Payable Accured Expenses Payable(Deposit Insurance) Bai-Murabaha Compensation Realizable A/c Bai-Murabaha Compensation Realized A/c Provision for Office Rent Defferd Expenditure Provision for Festival Bonuses ,Office Rent & others Depreciation : Furniture & Fixtures Res Atm Settlement IBW With Conv. POS Settlement IBW With Conv. Provision for Tax Specific Provision General Provision Provision for Off-Balance Sheet Items Total Standard Bank Ltd Annual Report 2020 0 127,400 37,318,300.59 94,552 19,315,017 224,840 811 75,915 74,134 181,604 35,386 82,735 7,512,856 7,978,744 395,493 122,723,617
360. Figures in Taka 11 Profit paid on Deposits , Borrowing etc Profit paid on Mudaraba Savings A/c. Profit paid on Mudaraba Term Deposits Profit paid on Mudaraba (MRIP) Deposits Profit paid on Mudaraba Special Notice Deposit Profit paid on Mudaraba Deposits scheme Profit paid on Mudaraba Hajj Savings Scheme Profit paid on MTDF Profit paid on Mmssp Profit paid on Mmip Profit paid on Mmis Profit paid on Mmssg Profit paid on Mmssb Profit paid on Mudaraba Bond Fund Total 1,361,703 48,008,201 644,558 2,923,846 893,996 76,551 11,000 13,263 523,357 354,187 45,371 538 54,856,572 705,945 56,607,582 408,542 1,042,913 778,008 65,954 4,238,356 492.59 53,207.76 19,847.27 260.03 63,921,107 12 568,340 568,340 1,512,222 1,512,222 13 96,999 3,000 24,493 750 50,400 798,724 974,366 84,624 3,500 22,796 508,746 619,666 14 611,135 0 38 110049.9 23626.88 744,850 252,074 0 17221 21123.76 0 290,419 Profit on Investment against Islami Bond with other Banks/NBFI Profit on Islami Inv. Bond with B.Bank Commission,Exchange Earnings & Brokerage Commssion Earned- PO & Remittance etc Exchange Gain Handling Commission Missc. Certification LC Advising Commission(Local) LC Amendment Commission ATM Card Issuance Bank Guarantee Commission Total Other Operating Income Account Service Charge Postage Charges Recoveries Stationary Charges Recoveries Charges on Clearing 15% Charges on RTGS Other Income Total Standard Bank Ltd Annual Report 2020 | Financial Information 28,055,918 28,055,918 109,675,141 Sustainability Total 16,356,244 16,356,244 82,698,059 Profit received from Other Banks & FIs Profit on MTDR with other FIs Stakeholders’ Information 30,931,687 50,687,537 81,619,224 Management Retrospection 27,436,155 38,905,660 66,341,815 Risk Governance 31.12.2019 Corporate Governance 31.12.2020 Profit received from Investment Profit on Investment Rent on Investment Introduction 10 359
361. Figures in Taka Introduction 15 31 .12.2020 31.12.2019 16,083,660 8,892,141 8,044,295 4,287,820 Medical Allownce 1,181,000 678,306 Conveyance Allownce 1,032,800 331,237 Salaries & Allowances Basic salary House Rent Allownce Corporate Governance House Maintenance & Utility 724,500 - 29,410 330,000 232,742 592,300 3,258,286 1,453,560 - 700 1,608,339 856,985 Entertainment Allowance 887,900 644,300 Branch Opening Expenses 879,235 90,000 Leave Fare Compensation Remuneration For Probationers Bonus Other Allowance Provident Fund(Bank Contribution) Risk Governance Charge Allowance Fuel,Car Maintenance & Driver's Salary Risk Allowance 27,713 6,700 120,400 43,000 31,200 2,382 Staff House Maintance Management Retrospection Washing Allowance Cook & Servant Casual Wages/others Total 16 Occupancy & rental Expanses Stakeholders’ Information Lease Rental Payment Electricity & generator etc Insurance(Vehicles) Excise duty on MTDR with other Fin. Inst Insurance Premium Cash Rates & Taxes Total Sustainability Stamp 2,912,605 858,000 37,193,685 19,686,631 648,836 543,229 4,139,040 1,919,916 2,500 381,669 322,011 75,272 88,715 160,500 209,000 84,095 58,819 - 6,250 5,491,912 3,147,939 - - Financial Information - - 155,778 81,438 Total 155,778 81,438 Supplies And Stationeries 169,224 211,468 Publicity & advertisement 34,661 130,502 - - 203,884 341,970 Stationary, printing, advertisement etc Total | 99,400 Telecommunication Computer Stationary 360 130,000 Postage, Stamp, Telecommunication etc Postage 18 800 Rent, Taxes, Insurance, Electricity etc Insurance(on Deposit) 17 519,000 9,600 Standard Bank Ltd Annual Report 2020
362. Figures in Taka 206 ,300 127,950 Depreciation and repair of Bank's Assets Depreciation on Furniture & Fixture Repair on Software & Hardware Maintenance Repair on Office appliance & equipment Repair on Motor Vehicle Maintenance 2,042,897 339,599 86,678 244,270 Total 2,382,496 330,948 Other Expenses Local Conveyance Traveling Busseness Development Training & Recruitment Expenses Entertainment (office) Entertainment Allowance Car Expenses Fuel And Lubricants Professional Charges Discomfort Allowance Newspaper and periodicals Cook & Servant Computer Expenses Utilities Liveries And Uniform Office Plantation Membership Don. To Central Shariah Board Photocopy & Photograph Miscellaneous 54,650 94,475 13,550 76,668 1,166,648 722,275 7,750 4,300 355,370 940,870 29,000 21,000 700,000 2,876 - 28,555 86,160 61,610 280,558 1,020,818 720,000 Total 4,189,432 2,912,960 6,700,658 7,978,744 31.12.2020 31.12.2019 Profit on Investment 37.50% 0 20,034,282 Profit on Islami Bond 0% 568,340 1,512,222 568,340 21,546,504 395,493 8,374,237 8,374,236.00 8,374,236.00 0 0 7,512,856 0 0 7,512,856 Standard Bank Ltd Annual Report 2020 | Financial Information Rate 127,400 6,828,058 Sustainability Total provision maintained Base 22,600 2,669 152,531 31,320 500,000 6,139 Stakeholders’ Information Provision Specific Provision General provision Provision for Diminution in value of Investment Provision for Off-balance sheet Management Retrospection 22 88,000 10,000 29,950 - Risk Governance 21 156,000 10,000 24,300 16,000 Directors fees & meeting expenses Directors fees Traveling and haltage Refreshment & dinner Vat-Honorium Shariah Supervisory Comm. Corporate Governance 20 31.12.2019 Introduction 19 31.12.2020 361
363. Management Retrospection Stakeholders ’ Information Hajj Finance Company Limited, Principal Branch, Dhaka Hajj Finance Company Limited, Principal Branch, Dhaka Hajj Finance Company Limited, Principal Branch, Dhaka 1 2 3 Financial Information Bank/NBFI Sustainability Sl. No. Standard Bank Ltd Annual Report 2020 5540 5561 6011 MTDR no. 90,000,000.00 Grand Total (03 MTDRs) 25,000,000.00 45,000,000.00 Amount (Tk.) 20,000,000.00 17.11.2020 09.12.2020 Renew Date 29.10.2020 29.07.2020 17.08.2020 09.09.2020 Issuing Date MTDRS WITH OTHER BANKS/NBFIS AS ON 31ST DECEMBER 2020 Risk Governance | ISLAMI BANKING WING 9.50% 9.50% 9.00% Rate (in %) Corporate Governance STANDARD BANK LIMITED 28.01.2021 17.02.2021 09.03.2021 Expiry Date Annexure-”2” Introduction 362
364. Introduction Corporate Governance Risk Governance Stakeholders ’ Information Sustainability Financial Information 363 | Standard Bank Ltd Annual Report 2020 Management Retrospection OFF-SHORE BANKING WING Financial Information
365. Introduction STANDARD BANK LIMITED OFF-SHORE BANKING UNIT STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) AS ON DECEMBER 31, 2020 Particulars Notes Corporate Governance PROPERTY AND ASSETS Cash Cash In Hand (Including Foreign Currencies) Balance with Bangladesh Bank and its agent Bank(s) (including foreign correncies) Balance with other Banks and Financial Institutions In Bangladesh Outside Bangladesh 1 1.1 Risk Governance Investments in Shares and Securities Government Others Investments General Investment Bills Purchased & Discounted 2 2.1 Management Retrospection Fixed Assets Including Premises, Furniture & Fixtures Other Assets Non-Banking Assets TOTAL ASSETS 3 Stakeholders’ Information LIABILITIES AND CAPITAL Liabilities Borrowing From Banks & Other Financial Institutions Borrowing from SBL Borrowing from FI Bank 4 4.1 Deposits and other Accounts: Current Deposits & Other Deposits Bills Payable Savings Deposits Interst on Suspense Short Term Deposits Fixed Deposits Diposits Under Schemes Sustainability OTHER LIABILITIES 5 6 TOTAL LIABILITIES Financial Information Capital / Shareholder’s Equity Paid Up Capital Statutory Reserve General Reserve Revaluation Reserve on Investment Surplus In Profit And Loss Account/Retained Earnings 7 31.12.2020 USD BDT - - - - 790,598 66,765,961.41 790,598 66,765,961 - - 19,798,425 1,678,906,472.22 6,289,376 13,509,049 533,339,095 1,145,567,377 20,589,023 1,745,672,434 20,025,016 1,697,972,800.47 14,983,106 5,041,910 1,265,323,335 432,649,465 7,000 591,150.00 7,000 - 591,150 197,984 16,789,065 20,230,001 1,715,353,015 359,022 30,319,419 359,022 30,319,419 20,589,023 1,745,672,434 - Total Shareholders’ Equity Total Liabilities And Shareholders’ Equity 364 | Standard Bank Ltd Annual Report 2020
366. STANDARD BANK LIMITED Introduction OFF-SHORE BANKING UNIT STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) AS ON DECEMBER 31, 2020 Notes 31.12.2020 USD Corporate Governance Particulars BDT OFF-BALANCE SHEET EXPOSURE Contingent Liabilities - - Letters of Guarantee - - Irrevocable Letter of Credit - - Bills For Collection - - Other Contingent Liabilities - - TOTAL: - - Documentary Credits And Short Term Trade -Related Transactions - - Forward Assets Purchased And Forward Deposits Placed - - Undrawn Note Issuance And Revolving Underwriting Facilites - - Undrawn Formal Standby Facilities, Credit Lines And Other - - commitments - - TOTAL OFF-BALANCE SHEET ITEMS - - Risk Governance Acceptance And Endorsements Other Comments Management Retrospection Stakeholders’ Information SVP & CFO SVP, FAD EVP, ID Sustainability AVP, OBU Managing Director & CEO Financial Information Standard Bank Ltd Annual Report 2020 | 365
367. STANDARD BANK LIMITED Introduction OFF-SHORE BANKING UNIT STATEMENT OF COMPREHENSIVE INCOME ( PROFIT & LOSS ACCOUNT) AS ON DECEMBER 31, 2020 Corporate Governance Particulars Notes Profit on Investment Profit Paid on Deposits & Borrowings etc. Net Profit on Investment 8 9 31.12.2020 USD BDT 1,399,073 885,492 513,581 118,151,723 74,779,815 43,371,909 51,684 - 4,364,687 - Total Operating Profit(A) 565,265 47,736,595 Salaries and Allowances Rent, Taxes,Insurance, Electricity etc Legal Expenses Postage, Stamp, Telecommunication etc Stationary, Printing, Advertisement etc Depreciation And Repair of Bank’s Assets Director Fees & Other Benefits Managing Director’s Salary & Allowances Audit Fees Other Expenses Total Operating Expenses(B) Profit/(Loss) Before Provision C=(A-B) 8,258 8,258 557,006 697,407 697,407 47,039,189 Specific Provision General Provision Provision For Diminution In Value of Investments Provision For Off-Balance Sheet Items Total Provision(D) Total Profit/(Loss ) Before Taxes(E)=(C-D) Provision for Tax expenses Current Tax Deferred Tax 197,984 197,984 359,022 16,789,065 16,789,065 30,319,419 - - Net Profit/(Loss) after Taxation 359,022 30,319,419 Risk Governance Investment Income Commission, Exchange Earnings And Brokerage Other Operating Income 10 Management Retrospection 11 Stakeholders’ Information Sustainability Financial Information AVP, OBU 366 | SVP & CFO Standard Bank Ltd Annual Report 2020 SVP, FAD EVP, ID Managing Director & CEO
368. STANDARD BANK LIMITED Introduction OFF-SHORE BANKING UNIT STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) AS ON DECEMBER 31, 2020 Note USD 1 1.1 1.2 Balance with other Banks and Financial Institutions Balance with SBL, HO, ID Balance with Nostro Account (Habib American NY) 2 2.1 2.2 2.3 BDT BDT 1,678,906,472.22 BDT 533,339,094.98 BDT 927,242,516.67 BDT 218,324,860.58 3 4 4.1 4.2 4.3 4.4 4.5 4.6 Other Assets Borrowing Borrowing from SBL Borrowing from Bank Muscat, Oman RAK Bank, UAE Standard Chartered Bank Ltd, Singapore United Bank Ltd, UAE ICICI, India $0.00 $20,025,016.28 $14,983,106.40 $0.00 $3,013,541.47 $2,028,368.41 $0.00 $0.00 BDT 0.00 BDT 1,697,972,800.47 BDT 1,265,323,335.48 BDT 0.00 BDT 258,593,893.14 BDT 174,055,571.85 BDT 0.00 BDT 0.00 5 6 7 8 8.1 8.2 8.3 Interest on Suspense Provision on Loan Surplus in Profit & Loss Account/Retained Earnings Profit on Loan Interest on Term Loan Interest on Foreign Bills Purchased Interest on Local Bills Purchased $7,000.00 $197,984.25 $359,022.13 $1,399,073.10 $362,476.92 $914,874.57 $121,721.61 BDT 591,150.00 BDT 16,789,065.00 BDT 30,319,419.00 BDT 118,151,723.30 BDT 30,611,175.89 BDT 77,261,157.44 BDT 10,279,389.96 9 9.1 8.2 9.3 9.4 Advance Fee & Interest Paid on Deposit & Borrowings etc. Advance fee paid to ICICI Bank Advance fee paid to SCB Intt. Paid on Borrowing fund from SBL Intt. Paid on Borrowing fund from other FI Banks $885,492.18 $0.00 $9,955.56 $347,650.54 $527,886.08 BDT 74,779,814.60 BDT 0.00 BDT 840,747.04 BDT 29,359,088.10 BDT 44,579,979.46 10 10.1 10.2 10.3 10.4 Commission, Exchange Earnings and Brokerage Charge Earned by Swift Interest on Nostro Balance Rebate Received from Nostro Loan processing fee $51,683.68 $6,305.00 $1,192.48 $38,060.00 $6,126.20 BDT 4,364,686.78 BDT 532,457.25 BDT 100,704.94 BDT 3,214,167.00 BDT 517,357.59 11 11.1 11.2 Other Expenses Nostro Account Maintenance Charge Paid to Habib American NY Software Maintenance Charge $8,258.22 $1,597.50 $6,660.72 BDT 697,406.68 BDT 134,908.88 BDT 562,497.80 Sustainability $19,798,425.38 $6,289,376.12 $10,934,463.64 $2,574,585.62 Stakeholders’ Information Loan Term Loan Foreign Bills Purchased & Discounted Local Bills Purchased & Discounted Management Retrospection BDT 66,765,961.41 BDT 0.00 BDT 66,765,961.41 Risk Governance $790,597.53 $0.00 $790,597.53 Corporate Governance SL. Financial Information AVP, OBU SVP & CFO SVP, FAD EVP, ID Managing Director & CEO Standard Bank Ltd Annual Report 2020 | 367
369. Introduction Corporate Governance Risk Governance Financial Information Management Retrospection STANDARD BANK SECURITIES LIMITED Stakeholders ’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 368
370. Introduction Independent Auditor ’s Report TO THE SHAREHOLDERS OF STANDARD BANK SECURITIES LIMITED Corporate Governance REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OPINION We have audited the financial statements of Standard Bank Securities Limited, which comprise the statement of financial position as at 31 December, 2020 and 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 notes to the financial statements, including a summary of significant accounting policies. Risk Governance In our opinion, the accompanying financial statements present fairly, in all material respects of the statement of financial position of Standard Bank Securities Limited as at 31 December 2020, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), Companies Act 1994, the securities and exchange commission rules 1987 and other applicable laws and regulations. BASIS FOR OPINION Management Retrospection We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Standard Bank Securities Limited in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. KEY AUDIT MATTERS Key Audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Stakeholders’ Information We have determined that there are no key audit matters to communicate in our report. OTHER INFORMATION Management is responsible for the other information. The other information comprises all of the information in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Sustainability In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS Financial Information Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, the Companies Act 1994, the securities and exchange commission rules 1987 and other applicable laws and regulations 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. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate or to cease operations, or has no realistic alternative but to do so. Standard Bank Ltd Annual Report 2020 | 369
371. Those charged with governance are responsible for overseeing the Company ’s financial reporting process. Introduction AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Corporate Governance Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Risk Governance Management Retrospection • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast doubt on the Company’s ability to continue as a going concern. • If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause found Standard Bank Securities Ltd. to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the Company’s financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Stakeholders’ Information REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the Companies Act 1994, we also report the following: 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 entity so far as it appeared from our examination of these books; Sustainability c. the statements of financial position and statements profit or loss and other comprehensive income dealt with by the report are in agreement with the books of accounts and returns. Financial Information Dated, Dhaka 02 March, 2021 S M Tanjilur Rahman ACA Enrolment No.: 1885 Khan Wahab Shafique Rahman & Co. Chartered Accountants DVC: 2103021885OS865426 370 | Standard Bank Ltd Annual Report 2020
372. STANDARD BANK SECURITIES LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Amount (In Taka) Notes 31.12.2020 31.12.2019 3,221,729 282,320,683 285,542,412 Current Assets Advances, deposits and prepayments Advance income tax Receivable from DSE Other receivable Margin loan to Clients Investment in shares Cash and cash equivalents 6 7 8 9 10 11 12 1,035,050 47,051,352 34,549,164 476,961 348,232,527 510,094,818 34,532,393 975,972,264 1,260,499,003 2,826,530 40,835,257 3,950 2,750,000 376,684,777 501,039,750 18,468,316 942,608,580 1,228,150,992 13 14 800,000,000 27,518,476 827,518,476 800,000,000 5,401,280 805,401,280 15 16 17 38,580,845 64,467 247,461,740 829,305 419,006 69,708,619 9,719,036 66,197,510 432,980,527 1,260,499,003 8,876,430 175,519 285,971,354 580,935 61,007,004 8,866,461 57,272,009 422,749,712 1,228,150,992 10.34 10.07 Equity and Liabilities: Equity Share capital Retained earnings Current Liabilities Payable to clients Payable to DSE Short Term Loan Others Payable Provision for Expenses Provision for diminution in value of Investment Provision for Clients’ margin loan Provision for income Tax 18 19 20 21 Total Equity and Liabilities Net Asset Value(NAV) Per Share Stakeholders’ Information 2,206,056 282,320,683 284,526,739 Management Retrospection 4 5 Risk Governance Assets: Non-Current Assets: Property, plant and equipment Investment in Stock Exchange Total Assets Corporate Governance Particulars Sustainability The accompanying notes (1-35) form an integral part of these financial statements. Director Chairman Financial Information Chief Executive Officer(Acting) Subject to our separate report of even date. Dated, Dhaka March 02, 2021 Khan Wahab Shafique Rahman & Co. Chartered Accountants Standard Bank Ltd Annual Report 2020 | 371
373. STANDARD BANK SECURITIES LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020 Corporate Governance Particulars A. Notes Amount (In Taka) 2020 2019 Income Brokerage Commission Capital Gain on Investment in Securities Dividend on Investment in Securities Interest Income Other operating Income 17,826,005 3,607,657 12,114,003 50,383,230 747,984 10,853,589 9,135,160 13,642,171 49,741,092 236,450 84,678,878 83,608,461 2,447,740 11,189,341 1,809,487 21,450,146 583,644 118,925 207,000 203,662 53,821 181,370 1,015,673 1,202,643 1,508,103 10,754,960 1,984,126 24,609,740 979,943 114,707 201,250 223,146 51,461 181,320 1,015,673 1,202,194 Total Expenses 40,463,452 42,826,623 C. Total Profit before Provision (A-B): 44,215,426 40,781,838 D. Provision for diminution in value of Investment 19 8,701,615 23,626,837 Provision for clients margin loan 20 22 23 Total Income Risk Governance B. Less: Expenses Management Retrospection Direct Expenses Salary and Allowances Rent, Taxes, Insurance, Electricity etc. Interest expenses on Bank Loan Board Meeting Expenses Stationery, Printing, Advertisements etc. Audit & Consultancy Fees Postage, Stamp, Telecommunication etc. Repair and Maintenance Registration & Renewal fees Depreciation on Fixed Assets Other Expenses 24 25 26 27 28 29 30 31 32 33 34 Stakeholders’ Information Total Provision: E. Total Profit before Taxation (C-D): 852,575 5,180,948 9,554,190 28,807,785 Sustainability 34,661,236 11,974,053 Less: Provision for taxation 21 12,544,040 10,243,528 F. Net profit after Taxation (Transferred to retained earning) 14 22,117,196 1,730,525 G. Earning Per Share (EPS): 35 0.28 0.02 The accompanying notes (1-35) form an integral part of these financial statements. Financial Information Chief Executive Officer(Acting) Director Chairman Subject to our separate report of even date. Dated, Dhaka March 02, 2021 372 | Standard Bank Ltd Annual Report 2020 Khan Wahab Shafique Rahman & Co. Chartered Accountants
374. STANDARD BANK SECURITIES LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF CHANGE IN SHARE HOLDER’S EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020 Balance at 01 January 2020 Total (Amounts in TK.) 800,000,000 5,401,280 805,401,280 - - - 800,000,000 5,401,280 805,401,280 - 22,117,196 22,117,196 800,000,000 27,518,476 827,518,476 Declaration of Dividend for the year 2019 Net profit for the Year Balance at 31 December 2020 Retained earnings Corporate Governance Share capital Particulars Risk Governance STANDARD BANK SECURITIES LIMITED (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF CHANGE IN SHARE HOLDER’S EQUITY Management Retrospection FOR THE YEAR ENDED 31 DECEMBER, 2019 Share capital Particulars Balance at 01 January 2019 835,670,755 - (32,000,000) (32,000,000) 800,000,000 3,670,755 803,670,755 - 1,730,525 1,730,525 800,000,000 5,401,280 805,401,280 Sustainability Director Stakeholders’ Information 35,670,755 Net profit for the Year Chief Executive Officer(Acting) Total (Amounts in TK.) 800,000,000 Declaration of Dividend for the year 2018 Balance at 31 December 2019 Retained earnings Chairman Subject to our separate report of even date. Khan Wahab Shafique Rahman & Co. Chartered Accountants Standard Bank Ltd Annual Report 2020 | Financial Information Dated, Dhaka March 02, 2021 373
375. STANDARD BANK SECURITIES LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020 Amount (In Taka) Corporate Governance Particulars A. Risk Governance Cash Flow from Operating Activities Brokerage commission Other operating income Operating expenses Interest income on bank deposits Interest income on margin loan Capital gain on investment in securities Dividend on investment in securities Advance income tax Advances, deposits and prepayments Other Operating assets Other Operating liabilities Net Cash flow from / (used in) Operating Activities B. Management Retrospection Cash Flow from Investing Activities Investment in Securities Investment in Margin Loan Investment in Stock Exchange Acquisition of property, plant and equipment Net Cash flow from Investing Activities C. Stakeholders’ Information Cash Flow from Financing Activities: Share Capital Short Term Loan from SBL Dividend Paid Net Cash flow from Financing Activities 2020 2019 17,826,005 747,984 (39,447,779) 2,318,063 48,065,168 3,607,657 12,114,003 (9,834,634) 1,791,480 (32,272,175) 30,260,739 35,176,510 10,853,589 236,450 (41,810,950) 3,511,944 46,229,148 9,135,160 13,642,171 (7,587,910) (1,441,040) 6,268,114 (32,584,657) 6,452,018 (9,055,068) 28,452,250 19,397,182 25,966,503 (54,915,016) (154,400) (29,102,913) (38,509,614) (38,509,614) 14,634,800 (32,000,000) (17,365,200) Sustainability D. Net Cash Inflow/(Outflow) in Cash and Cash Equivalents (A+B+C) 16,064,078 (40,016,095) E. Cash and Cash equivalents at beginning of the year 18,468,316 58,484,411 F. Cash and cash Equivalents at end of the Year (D+E) 34,532,393 18,468,316 G. Closing cash and bank balances 34,532,393 18,468,316 0.44 0.08 H. Net Operating Cash Flow (NOCF) Per Share Financial Information Chief Executive Officer(Acting) Director Chairman Subject to our separate report of even date. Dated, Dhaka March 02, 2021 374 | Standard Bank Ltd Annual Report 2020 Khan Wahab Shafique Rahman & Co. Chartered Accountants
376. STANDARD BANK SECURITIES LIMITED Introduction (A SUBSIDIARY COMPANY OF STANDARD BANK LTD.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED ON 31 DECEMBER 2020 1.00 THE COMPANY AND ITS ACTIVITIES: 2.00 Corporate Governance Standard Bank Securities Limited (DSE TREC NO. 156) a subsidiary company of Standard Bank Limited was incorporated as a public limited company in Bangladesh and registered with the Register of Joint Stock Companies on 22 November 2012 under the Companies Act 1994 bearing certificate of Commence of Business no. C-105752/12 having its Head Office at 2. DIT Avenue, (Ext.), 1st Floor, Motijheel Commercial Area, Dhaka 1000. NATURE OF BUSINESS: The main objectives of the Company is to carry on the business of Stock broker/ stock dealer and other related business in connection with the dealing of listed securities. Other objectives of the company are to buy, sell, hold or otherwise acquire or invest the capital of the company in shares, stocks and fixed income securities, etc. The company are to act as a TREC Holder of Dhaka Stock Exchange Limited. Risk Governance 3.00 SIGNIFICANT ACCOUNTING POLICIES: 3.01 Basis of presentation of financial statements: 3.02 Management Retrospection The financial statements of the Company are prepared on a going concern basis under historical cost convention in accordance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS), the Companies Act 1994, the Bangladesh Securities and Exchange commission (BSEC) Rules 1987 and other applicable laws and regulations applicable in Bangladesh. Components of Financial Statements: Following are the components of these financial statements: (i) Statement of Financial Position (ii) Statement of Profit or Loss and Other Comprehensive Income (iii) Statement of Changes in Equity Stakeholders’ Information (IV) Statement of Cash Flows (v) Notes to the financial statements 3.03 Fixed Assets and Depreciation: Recognition and measurement: Items of fixed assets are measured at cost/revaluation less accumulated depreciation and accumulated impairment losses, if any. Sustainability Cost includes expenditure that are directly attributable to the acquisition of asset and bringing to the When parts of an item of fixed asset have different useful lives, they are accounted for as separate items location and condition necessary for it to be capable of operating in the intended manner. The gain or loss on disposal of an item of fixed asset is determined by comparing the proceeds from Property, Plant and Equipment are recognized as assets in accordance with International Accounting Standards (IAS) 16 “Property Plant and Equipment”. Subsequent costs: Financial Information The cost of replacing a component of an item of fixed assets is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the group and its cost can be measured reliably.The carrying amount of the replaced part is derecognized.The costs of the day-to-day servicing of fixed assets are recognized in profit or loss as incurred. Changes in Depreciation Method: Depreciation method has been changed from reducing method to straight line method from year 2017 for accounting policy alignment in accordance with the method followed by parent company (Standard Bank Limited) which is to be treated as “Changes in Accounting Estimates” and prospective accounting has been done for changes in accordance with IAS 8. Standard Bank Ltd Annual Report 2020 | 375
377. Depreciation : Introduction Depreciation is charged at the rates stated below on all fixed assets on the basis of estimated useful lives as determined in the fixed asset policy of the Company. In all cases depreciation is calculated on the straight line method. Charging depreciation commences from the month of acquisition (for full month) and ceases at the month when the assets are disposed. No depreciation has been charged on land. Rate and method of charging depreciation/ amortization of fixed assets are mentioned below: Corporate Governance Category of Assets: 3.04 Rate of Depreciation Method of charging depreciation/ amortization Office equipment 20% Straight Line Method Office renovation & Decoration 10% Straight Line Method Furniture & Fixture 10% Straight Line Method Computer & Server 20% Straight Line Method Software 20% Straight Line Method Reporting Period: Risk Governance These financial statements covers from 1st January 2020 to 31 December 2020 and followed consistently. 3.05 Cash and Cash Equivalents: Cash and Cash Equivalents comprise cash in hand and cash at Bank and Investment in FDR which are held and available for use by the company without any restriction and are readily convertible to a known amount of cash and that, are subject to an insignificant risk of change in value. Management Retrospection 3.06 Investments: 3.6.1 Investment in DSE Shares: In accordance with section 8(Gha) of the Exchanges Demutualization Act, 2013, Dhaka Stock exchange membership has been converted into shares through the issuance of “Trading Right Entitlement Certificate (TREC)” by the DSE. Currently fair value of Trading Right Entitlement Certificate is not ascertainable with reasonableness due to the stock exchange not issuing any TREC other than existing members. No transactions of shares as well as “TREC” have been started and hence after adjustment cost price is considered as fair value. In future if the above shares as well as TREC becomes tradeable on capital market, the fair value would be determined that time and necessary adjustments, if any shall be made. Stakeholders’ Information 3.6.2 Investment in quoted securities: Investment in Shares have been recognized at cost valued on aggregate basis and Stock dividend (Bonus Shares) are added with existing shares with at zero cost which results decrease in per unit cost price of the existing shares. Adequate provision has been made as per BSEC guidelines if market value goes down. 3.07 Advance, Deposits and Prepayments: Advance are initially measured at cost. After initial recognition advance are carried at cost less deduction, adjustments or charges to the account heads. Deposits are measured at payment value. Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to income statement. Sustainability 3.08 Accounting for provisions: The company recognizes provisions only when it has a present obligation as a result of a past event and it is probable that an outflow of resources embodying benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Financial Information 3.09 Provision for Taxation: Current tax has been made as per the Income Tax Ordinance 1984, latest finance act, relevant SROs etc. Income tax withheld from the transactions of traded securities in accordance with section 53BBB @ 0.05% is the final tax liability of the company under section 82C of Income Tax Ordinance (ITO) 1984. 376 | Standard Bank Ltd Annual Report 2020
378. 3 .10 Revenue recognition: Introduction Revenue comprises of brokerage commission, Interest on margin loan, Interest on deposit & other income. Details of revenue recognition policy are given below: 1) Brokerage commission is recognized as income when selling or buying orders are executed. 2) Interest on margin loan recognized on accrual basis. Such income is calculated considering daily margin loan balance of the respectable clients. Income is recognized on monthly and applied to the customers’ account on quarterly basis. Corporate Governance 3) Capital gains/ (loss) are 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 is realized or loss in incurred. 4) Dividend income is recognized on the declaration of dividend and subsequent receipt of such dividend. 5) Other income represents BO Account opening fees & IPO Application fee. Margin loan to clients: Risk Governance 3.11 Standard Bank Securities Limited extends margin loan to the portfolio investors at an agreed ratio (between investors deposit and loan amount) of purchase securities against the respective investor account. The investors are maintaining the margin as per rules and regulations. 3.12 Cash flow Statement: 3.13 Management Retrospection Statement of Cash Flows is prepared principally in accordance with IAS-7 “Cash Flow Statement” and the cash flows from operating activities have been presented under direct method as required by the Securities and Exchange Rules 1987. Earning per share: The Company calculates earning per share in accordance with International Accounting Standard (IAS)-33 “Earning per Share” which has been shown in the face of the statement of profit and loss and other comprehensive income. 3.14 General: 1) The financial statements are presented in Bangladeshi Taka (BDT) Currency, which is the company’s functional currency. 2) Figures in these notes and annexed financial statements have been rounded off to the nearest Taka. Stakeholders’ Information 3) Figures and account titles of previous year have been rearranged whenever considered necessary to conform with current year’s presentation. Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 377
379. Amounts in Taka Introduction 31 .12.2020 4.00 31.12.2019 Property, plant and equipment: Opening balance Corporate Governance 9,934,080 9,779,680 Add : Additions during the year - 154,400 Less: Disposals - - 9,934,080 9,934,080 Opening balance 6,712,351 5,696,678 Add: Charges during the year 1,015,673 1,015,673 - - Closing balance (B) 7,728,024 6,712,351 Written down value (A-B) 2,206,056 3,221,729 282,320,683 282,320,683 Closing balance (A) Depreciation : Less: Adjustment Risk Governance The details of the above balance have been Shown in (Annexure-1) . 5.00 Investment In Stock Exchange Dhaka Stock Exchange Ltd.* (Note: 5.01) Note : Management Retrospection *As per Scheme of Demutualization of DSE in accordance with the Exchange Demutualization Act 2013 (the scheme), the Company being the primary shareholders of DSE and received ordinary shares as well as “Trading Right Entitlement Certificate (TREC)”. No transactions of shares as well as “TREC” have been started and hence after adjustment of 25% Shares sold, the cost price is considered as fair value. In future if the above shares as well as TREC becomes tradable on capital market, the fair value would be determined that time and necessary adjustments, if any shall be made. Share Status are given below: 5.01 Dhaka Stock Exchange Ltd.(DSE) Stakeholders’ Information 6.00 Advance, Deposits and Prepayments A. Advance: Sustainability Office Rent (Head Office) Office Space at DSE Tower, Nikunja B. Financial Information BTCL Advance against RJSC exp. Total (A+B+C) : 378 | Number of Shares Number of Shares Floated (53.33%) 2,886,042 2,886,042 Blocked (46.67%) 2,525,287 2,525,287 5,411,329 5,411,329 830,060 1,541,540 - 1,050,000 830,060 2,591,540 200,000 200,000 4,990 4,990 204,990 204,990 - 30,000 1,035,050 2,826,530 Deposits: Central Depository Bangladesh Ltd (CDBL) C. Type of Shares Standard Bank Ltd Annual Report 2020
380. Amounts in Taka 7 .00 Advance income tax Opening balance 40,835,257 Add: During the year (Note 7.1) Closing balance 7.1 6,216,095 5,399,324 47,051,352 40,835,257 - - 47,051,352 40,835,257 Advance income tax AIT on Interest income 236,758 356,126 Advance Corporate Tax 3,109,286 2,042,611 AIT on dividend 2,870,051 3,000,587 6,216,095 5,399,324 Stock Broker 34,549,164 3,950 Stock Dealer - - 34,549,164 3,950 Risk Governance 9.00 35,435,933 Corporate Governance Less : Adjustment for Assessment 8.00 31.12.2019 Introduction 31.12.2020 Receivable from DSE Other receivable Dividend on Investment in shares 49,961 - 427,000 2,750,000 476,961 2,750,000 348,232,527 376,684,777 348,232,527 376,684,777 Management Retrospection Receivable from Clients 10.00 Margin loan to clients Portfolio Margin Loan to Clients Stakeholders’ Information The above amount represents loan entitled to clients for trading of shares on the secondary capital market in Bangladesh. Margin loans extended on ratio based on the equity invested by individual customers. 11.00 Investment in shares Investment in quoted share * Investment in IPO Shares (Note: 11.01) 510,094,818 501,039,750 - - 510,094,818 501,039,750 - - 3,233,601 1,102,898 Cash in hand Bank balances with Standard Bank Ltd. Sustainability 12.00 Cash and cash equivalents A/C No. 00236001852 (Company A/C.) 00236001884 (Customer A/C.) 9,247,375 2,834,151 0021220004023 (Consolidated Customer A/C.) 14,376,234 13,947,923 Al-Arafah Islami Bank Ltd. 0021220004067(Deler A/C.) Al-Arafah Islami Bank Ltd. 0021220004473(IPO Applicalion A/C.) 606,996 239,214 7,068,187 344,130 34,532,393 18,468,316 34,532,393 18,468,316 Standard Bank Ltd Annual Report 2020 | Financial Information Standard Bank Ltd. Al-Arafah Islami Bank Ltd. 379
381. Amounts in Taka Introduction 13 .00 Share capital 13.01 Authorised 200,000,000 ordinary shares of Taka 10 each 13.02 Corporate Governance Issued, subscribed and paid-up capital 80,000,000 ordinary shares of Taka 10 each fully paid-up Shareholding position of the Company are as under: Sl. No. Risk Governance 1 2 3 4 5 6 7 8 9 10 11 12 13 Total: Name of shareholder Standard Bank Limited Mr. Kazi Akramuddin Ahmed Al-haj Mohd. Yousuf Chowdhury Mr. S.A.M Hossain Mr. Ashok Kumar Saha Mr. Md. Zahedul Hoque Ms.Bedowra Ahmed Salam Mr.Tanveer Mostafa Chowdhury Mr. A.K.M Abdul Alim Mr. Azad Ahmed Mr. Mohammed Arif Chowdhury Mr. Jhahedul Alam Investment Corporation of Bangladesh Management Retrospection 14.00 Retained earnings Opening balance Less: Dividend Add: Net profit for the year Closing balance Stakeholders’ Information 15.00 Payable to Clients Other Clients IPO Application Account No. of Shares 79,994,000 500 500 500 500 500 500 500 500 500 500 500 500 80,000,000 31.12.2020 31.12.2019 2,000,000,000 2,000,000,000 800,000,000 800,000,000 799,940,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 800,000,000 % of Share Holding 99.993 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 100.000 5,401,280 5,401,280 22,117,196 27,518,476 35,670,755 32,000,000 3,670,755 1,730,525 5,401,280 31,890,245 6,690,600 38,580,845 8,866,430 10,000 8,876,430 Total Taka This represents clients’ un-invested amount which is being held for buying marketable securities or refund to the clients as per their instructions. IPO application bank account balance is higher than IPO account because of interest on bank account. Sustainability 16.00 Payable to DSE Stock Broker Stock Dealer 17.00 Short Term Loan Opening Balance Add: Addition during the year Financial Information Less: Refund/ Repayment during the year Closing Balance 64,467 64,467 175,519 175,519 285,971,354 75,744,020 361,715,373 114,253,634 247,461,740 271,336,554 29,634,800 300,971,354 15,000,000 285,971,354 Note: The above loan was taken from Standard Bank Limited bearing interest @9.00 % per annum on quarterly basis vide referance No. SBL/PB/CR/2020/1819, Dated November 03,2020. 380 | Standard Bank Ltd Annual Report 2020
382. Amounts in Taka 31 .12.2019 Introduction 31.12.2020 18.00 Provision for expenses CDBL charges Electricity Bill 114,143 20,191 - 7,130 2,024 7,662 Telephone Bill 1,144 1,640 Lift Charge 2,500 50,000 LFC Payable 233,195 434,870 VAT Payable 9,000 10,356 TDS Payable 1,000 38,086 Link3 Technologies Ltd. 2,300 2,300 Metronet BD Ltd. 2,000 2,000 Amber IT Ltd. 4,200 4,200 419,006 580,935 61,007,004 37,380,167 8,701,615 23,626,837 69,708,619 61,007,004 Risk Governance 50,000 Audit fee Corporate Governance WASA Bill 19.00 Provision for diminution in value of investment: Opening balance Closing balance Management Retrospection Add: Provision made during year *As per BSEC Circular No. BSEC/Serveilance/Mukhopatro(5th Part)/2019/196 maintaining provision on diminution in value of Investment. However the shortfall on such provision can be deferred up to 31 December 2023. 20.00 Provision for Clients Margin Loan : Opening balance Closing balance 8,866,461 3,685,513 852,575 5,180,948 9,719,036 8,866,461 Stakeholders’ Information Add: Provision made during the year *As per BSEC Circular No. BSEC/Serveilance/Mukhopatro(5th Part)/2019/196 maintaining provision on Margin Loan. However the shortfall on such provision can be deferred up to 31 December 2023. 21.00 Provision for income tax: 57,272,009 49,217,067 Add: Provision made during the year 12,544,040 10,243,528 69,816,050 59,460,595 3,618,540 2,188,586 66,197,510 57,272,009 Less: Tax Deducted at Source on Turnover U/S 82C Less: Adjustment of Assessment - - 66,197,510 57,272,009 Financial Information Closing balance Sustainability Opening balance Provision for corporate income tax was made applicable tax laws. Income tax as withheld from the transactions of traded securities @ 0.05% under section 53BBB is the final tax liability of the Company under section 82C of Income Tax Ordinance 1984. Standard Bank Ltd Annual Report 2020 | 381
383. Amounts in Taka Introduction 2020 22 .00 Corporate Governance 22.01 23.00 Risk Governance 24.00 Interest income Interest on Bank Deposit (Note-22.01) Interest Income on Margin Loan Interest on Bank Deposit SND account on Standard Bank Limited SND account on Al Arafah Islami Bank Ltd. Other operating income BO account fees Yearly BO maintenance fee Others Income IPO Application fee Management Retrospection Direct Expenses Laga charges Hawla charges CDBL Charges 2019 2,318,063 48,065,168 50,383,230 3,511,944 46,229,148 49,741,092 213,486 2,104,577 2,318,063 210,375 3,301,569 3,511,944 84,820 119,550 512,744 30,870 747,984 39,410 155,200 41,840 236,450 1,806,589 1,900 639,252 2,447,740 1,094,290 100 413,713 1,508,103 This represents Hawla and Laga charges paid to DSE for the transaction of traded securities. Hawla is paid based on number of transaction and Laga is paid based on turnover at applicable rate prescribed by DSE. CDBL Charge paid against CDS charge to CDBL. 25.00 Stakeholders’ Information Sustainability 26.00 Financial Information 382 | Salaries and allowances Basic salary House rent allowance Conveyance allowance Medical allowance House maintenance Leave fare compensation (LFC) Washing allowance Company’s contribution to provident fund Casual Wages Boishakhi Bonus Festival Bonus Rent, taxes, insurance, electricity, etc Office Rent Sharing of Infrastructure Charge Insurance Premium of Motor Vehicle WASA Charge Lift charge Electricity Bill Standard Bank Ltd Annual Report 2020 5,596,680 2,798,340 316,800 342,000 138,000 233,195 9,600 559,668 156,000 93,278 945,780 11,189,341 5,241,860 2,620,930 317,300 342,500 138,000 434,870 9,600 524,186 156,000 86,974 882,740 10,754,960 1,465,944 120,000 12,031 27,504 30,000 154,008 1,809,487 1,611,610 120,000 14,503 43,065 30,000 164,948 1,984,126
384. Amounts in Taka 27 .00 Board Meeting Expenses Director’s Honorarium 431,200 431,200 Director’s Traveling & haltage 68,800 396,300 Lunch & Refreshment and Misc exp. 83,644 152,443 583,644 979,943 96,377 74,833 - 718 Computer Accessories 11,048 25,356 Advertisement & Publicity 11,500 13,800 118,925 114,707 57,500 57,500 149,500 143,750 207,000 201,250 102,000 102,000 83,380 101,846 Wimax Charge 9,058 12,750 Postage & Courier 9,224 6,550 203,662 223,146 Cleaning expenses 27,621 24,700 Office maintenance 26,200 26,761 53,821 51,461 20,000 20,000 DP Registration Renewal fee 4,600 4,600 Authorized Representative fees 2,500 1,500 TC Certificate Renewal fees to DSE 60,000 60,000 TREC Renewal fee 50,000 50,000 DBA Annual Membership fee 12,500 12,500 Bidding & EII Reg. fees 14,000 15,000 Trade License Renewal fees 17,770 17,720 181,370 181,320 Stationery, printing, advertisements, etc Printing and stationery Cutleries & Cookeries Audit & Consultancy Fees Audit fees Legal & Professional fee Postage, stamps, telecommunication, etc Wan Connectivity Charge Telephone and fax expenses Repair and maintenance Sustainability 32.00 Stakeholders’ Information 31.00 Management Retrospection 30.00 Risk Governance 29.00 Corporate Governance 28.00 2019 Introduction 2020 Registration & Renewal fees Stock Broker & Stock Dealer cert. Renewal fee | Financial Information Standard Bank Ltd Annual Report 2020 383
385. Amounts in Taka Introduction 2020 33 .00 Corporate Governance 34.00 Furniture & Fixture 59,491 59,491 Office equipment 115,584 115,584 Office renovation & Decoration 164,802 164,802 Computer & Server 505,857 505,857 Software 169,939 169,939 1,015,673 1,015,673 16,386 17,136 Other operating expenses Traveling & Conveyance Risk Governance DSE Charges 1,433 16,436 Car Expenses 285,996 285,996 Petrol Oil & Lubricants 180,000 180,000 Newspaper & Periodicals 3,338 5,640 Entertainment 217,793 287,539 Bank Charges & Commission 136,352 104,097 Management Retrospection Business Development Expenses - 1,150 Uniform & leverage 15,820 10,320 Cook & Servent 24,000 24,000 - 92,805 30,000 - Legal Charges RJSC expenses Stakeholders’ Information 35.00 Annual Maintenance fee for Software 118,125 - Security Guard Bill 173,400 177,075 1,202,643 1,202,194 22,117,196 1,730,525 80,000,000 800,000,000 0.28 0.02 Earning Per Share (EPS): Net profit after tax Number of Ordinary Share Earnings Per Share Sustainability Financial Information 384 | 2019 Depreciation on Fixed Assets Standard Bank Ltd Annual Report 2020
386. 4 ,813,267 Office renovation & Decoration Computer & Server 9,779,680 Financial Information Total Balance as on 31.12.2019 Sustainability 9,934,080 154,400 - - - - - - - - Stakeholders’ Information Total Balance as on 31.12.2020 930,050 2,337,615 Office equipment Software 753,185 1,099,963 Furniture & Fixture Additions - - - - - 9,934,080 9,934,080 930,050 4,813,267 2,337,615 1,099,963 753,185 20 20 10 20 10 Sale/ Total at Rate disposal 31 Dec 2020 (%) 5,696,678 6,712,351 590,170 3,737,892 1,183,998 868,796 331,495 Balance at 01 Jan 2020 Management Retrospection Balance at 01 Jan 2020 COST 1,015,673 1,015,673 169,939 505,857 164,802 115,584 59,491 Charge for the Period - - - - - - - Adjustment DEPRECIATION Risk Governance Particulars AT 31 DECEMBER, 2020 DETAILS OF PROPERTY, PLANT AND EQUIPMENT 6,712,351 7,728,024 760,109 4,243,749 1,348,800 984,380 390,986 Total to 31 Dec 2020 Corporate Governance STANDARD BANK SECURITIES LTD. 3,221,729 2,206,056 169,941 569,518 988,815 115,583 362,199 Net book value at 31 Dec 2020 Annexure 1 Introduction Standard Bank Ltd Annual Report 2020 | 385
387. Introduction STANDARD BANK SECURITIES LTD . INVESTMENT IN SHARE AS ON 31 DECEMBER 2020 Annexure-2 Sl. No. Name of Company Corporate Governance 1 ABBANK 2 ACTIVEFINE 3 APOLOISPAT 4 BARKAPOWER 5 BBS 6 CENTRALPHL 7 CRYSTALINS 8 DELTALIFE 9 DESCO 10 DHAKABANK 11 EASTLAND 12 ESQUIRENIT 13 EXIMBANK 14 FAMILYTEX 15 FAREASTFIN 16 FIRSTSBANK 17 GHAIL 18 HEIDELBCEM 19 ICB 20 ICBIBANK 21 IFADAUTOS 22 IFIC 23 INTRACO 24 JAMUNABANK 25 JAMUNAOIL 26 JANATAINS 27 LHBL 28 MJLBD 29 NAVANACNG 30 NBL 31 NCCBANK 32 ONEBANKLTD 33 PDL 34 PRIMEBANK 35 RINGSHINE 36 ROBI 37 RSRMSTEEL 38 RUNNERAUTO 39 RUPALIBANK 40 SAIFPOWER 41 SEAPEARL 42 SIBL 43 SOUTHEASTB 44 SUMITPOWER 45 TITASGAS 46 UCB 47 UTTARABANK 48 WMSHIPYARD 49 ZAHEENSPIN Total Taka Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information 386 | Standard Bank Ltd Annual Report 2020 Cost Value 20,592,249.93 12,399,818.83 7,711,441.77 1,335,200.61 11,619,126.56 1,074,144.01 108,790.00 20,212,551.00 6,674,351.90 23,580,614.78 3,819,535.11 3,132,149.12 10,623,364.04 2,029,089.09 4,560,033.28 4,341,833.64 1,333,662.00 7,198,732.81 7,984,364.29 1,281,180.43 12,123,467.12 7,004,048.53 4,765,663.14 14,541,649.49 17,495,212.37 2,114,225.78 87,514,661.95 14,210,892.75 3,963,731.89 17,575,139.46 15,893,343.20 14,208,556.33 7,526,517.60 18,544,286.02 75,759.48 1,311,880.00 11,797,654.68 652,179.00 9,911,999.76 16,513,911.12 17,764.17 9,131,273.82 11,622,772.28 1,585,665.05 25,624,413.56 10,346,071.30 14,685,271.62 6,007,050.50 1,717,522.56 510,094,817.74 Market Price 12,705,000.00 7,436,000.00 2,845,375.00 1,285,000.00 6,431,250.00 968,000.00 428,632.60 10,230,000.00 5,220,000.00 15,618,750.00 3,390,000.00 2,367,000.00 7,080,000.00 882,000.00 1,470,000.00 3,600,000.00 1,169,000.00 2,244,000.00 5,705,700.00 860,000.00 6,258,720.00 8,360,000.00 4,417,875.00 15,037,556.00 14,895,000.00 1,985,000.00 43,020,000.00 9,997,000.00 2,782,500.00 12,127,500.00 13,464,000.00 9,097,492.40 6,072,000.00 13,680,000.00 56,313.60 3,909,402.40 4,182,000.00 509,000.00 6,479,025.00 11,340,000.00 147,521.50 6,131,944.00 8,456,250.00 1,556,000.00 15,400,000.00 7,402,500.00 11,808,000.00 4,797,000.00 661,500.00 335,966,807.50 Un-realized Gain/(Loss) -7,887,248.47 -4,963,818.83 -4,866,066.77 -50,200.61 -5,187,876.56 -106,144.01 319,842.60 -9,982,551.00 -1,454,351.90 -7,961,864.78 -429,535.11 -765,149.12 -3,543,364.04 -1,147,089.09 -3,090,033.28 -741,833.64 -164,662.00 -4,954,732.81 -2,278,664.29 -421,180.43 -5,864,747.12 1,355,951.47 -347,788.14 495,906.51 -2,600,212.37 -129,225.78 -44,494,661.95 -4,213,892.75 -1,181,231.89 -5,447,639.46 -2,429,343.20 -5,111,063.93 -1,454,517.60 -4,864,286.02 -19,445.88 2,597,522.40 -7,615,654.68 -143,179.00 -3,432,974.76 -5,173,911.12 129,757.33 -2,999,329.82 -3,166,522.28 -29,665.05 -10,224,413.56 -2,943,571.30 -2,877,271.62 -1,210,050.50 -1,056,022.56 (174,128,008.77)
388. Introduction Corporate Governance Risk Governance Stakeholders ’ Information Sustainability Financial Information 387 | Standard Bank Ltd Annual Report 2020 Management Retrospection SBL CAPITAL MANAGEMENT LIMITED Financial Information
389. Introduction Independent Auditor ’s Report SBL CAPITAL MANAGEMENT LIMITED REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Corporate Governance OPINION We have audited the financial statements of SBL Capital Management Limited which comprise the Statement of Financial Position as at 31st December 2020, Statements of profit or Loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. Risk Governance In our opinion, the accompanying financial statements present fairly, in all material respects of the statement of financial position of SBL Capital Management Limited as at 31st December 2020, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Basis for Opinion Management Retrospection We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in jurisdictions, and we have fulfilled our other ethical responsibilities in accordance these requirements and with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key Audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Stakeholders’ Information While the overall effect on the company’s business in the post year relating to the COVID-19 global pandemic still evolving at this point. The company is regularly monitoring the potential future impact on the company’s operations. We have fulfilled the responsibilities described in the Auditors’ Responsibilities of the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risk of material misstatements of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. Other Information Sustainability Management is responsible for the other information. The other information comprises all of the information other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Financial Information In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations 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. 388 | Standard Bank Ltd Annual Report 2020
390. Introduction In preparing the financial statements , management is responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the company’s financial reporting process. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Corporate Governance Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management but not for the purpose expressing an opinion on the effectiveness of the company’s internal control. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the company’s financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Stakeholders’ Information • Management Retrospection Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Risk Governance • REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations, we also report the following: Sustainability 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 company so far as it appeared from our examination of these books; c. The statements of financial position and statements of profit or loss and other comprehensive income dealt with by the report are in agreement with the books of accounts and returns. Financial Information Place: Dhaka Date: April 15, 2021 Shafiq Basak & Co. Chartered Accountants Standard Bank Ltd Annual Report 2020 | 389
391. Introduction SBL CAPITAL MANAGEMENT LIMITED (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER, 2020 Particulars Notes Corporate Governance ASSETS: Non-Current Assets: Property, Plant & Equipment 2.00 Current Assets: Risk Governance Advances, Deposits & Prepayments Investment in Shares Margin Loan to Clients Accounts Receivable Advance Income Tax Stock of Stationery Other Assets Cash & Cash Equivalents 3.00 4.00 5.00 6.00 7.00 8.00 8.01 9.00 TOTAL ASSETS Amount (In Taka) 31.12.2020 31.12.2019 2,243,823 2,424,571 2,243,823 2,424,571 5,259,412,233 4,997,909,319 1,035,050 1,840,646,303 2,845,807,426 95,309,604 314,054,517 69,690 79,034,014 83,455,629 1,746,530 2,144,527,751 2,454,802,237 13,805,157 303,739,315 47,390 54,058,951 25,181,989 5,261,656,056 5,000,333,890 1,509,928,151 1,508,979,057 1,500,000,000 9,928,151 1,500,000,000 8,979,057 2,525,732,662 2,356,821,311 2,488,637,856 776,630 35,793,321 210,646 314,209 2,273,376,987 79,911,688 657,147 1,800,587 461,630 613,273 1,225,995,243 1,134,533,522 345,183,998 457,138,564 356,669,603 489,064 66,514,014 310,444,673 448,601,203 335,097,363 489,064 39,901,219 5,261,656,056 5,000,333,890 100.66 100.60 EQUITY AND LIABILITIES: Management Retrospection Capital and Reserve: Share Capital Retained Earnings 10.00 11.00 Current Liabilities: Stakeholders’ Information Loan facilities from Standard Bank Limited Loan from ICB Provision for Expenses Sundry Deposit Liability for withholding Tax, VAT, LFC & others Accounts Payable 12.00 12.01 13.00 14.00 15.00 16.00 Other Liabilities: Provision for Taxation Provision for diminution in value of investment Provision for Margin Loan Provision for interest waiver to Affected Small Investors Interest Suspense Account 17.00 18.00 19.00 20.A 20.B TOTAL EQUITY AND LIABILITIES Sustainability NAV per share (Per share value Tk. 100) 32.00 The accompanying notes form an integral part of these financial statements. Financial Information Chief Executive Officer Director Chairman Subject to our separate report of even date. Dated, Dhaka Date: April 15, 2021 390 | Standard Bank Ltd Annual Report 2020 Shafiq Basak & Co. Chartered Accountants
392. SBL CAPITAL MANAGEMENT LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST DECEMBER, 2020 Amount in Taka Notes INCOME: Interest Income Transaction /Settlement fees Management fee Gain on Sale of Shares Dividend on Investment in Shares Other Income Total Income (A) 2020 21.A 21.B 29.00 Profit before Provision (C=A-B) Less: Provision for diminution in value of investments Less: Provision for margin loan Less: Provision for interest waiver to A.S.I. Total Provision (D) 18.00 19.00 20.A Less: Provision for Taxation 17.00 Profit/(Loss) after tax Retained earnings brought forward from previous year 30.00 219,683,845 12,380,170 1,811,462 35,375 131,948 560,031 223,100 600,748 3,564,780 238,991,459 199,030,091 11,689,622 1,972,515 44,156 237,262 749,042 87,400 579,748 3,236,869 217,626,705 65,798,019 40,559,014 8,537,361 21,572,240 30,109,601 1,798,830 6,354,368 8,153,198 35,688,419 32,405,815 34,739,324 31,950,222 949,094 455,593 8,979,057 8,523,464 9,928,151 0.06 8,979,057 0.03 Sustainability Retained earnings carried forward Earnings per share 173,878,671 8,782,121 5,711,765 17,632,303 50,934,960 1,245,900 258,185,719 Stakeholders’ Information Profit/(Loss) before tax (E=C-D) 186,868,695 13,190,197 6,971,606 45,341,817 50,713,214 1,703,950 304,789,479 Management Retrospection 22.00 23.00 24.00 25.00 26.00 27.00 28.00 2019 Risk Governance EXPENDITURE: Interest Expense Salary & Allowances Rent, Taxes, Insurance & Electricity Postage, Stamp & Telecommunication Stationery, Printing & Advertisement Directors’ Fee & Other expenses Audit & Consultancy Fees Depreciation Other Expenses Total Expenditure (B) Corporate Governance Particulars The accompanying notes form an integral part of these financial statements. Director Chairman Financial Information Chief Executive Officer Subject to our separate report of even date. Dated, Dhaka Date: April 15, 2021 Shafiq Basak & Co. Chartered Accountants Standard Bank Ltd Annual Report 2020 | 391
393. SBL CAPITAL MANAGEMENT LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY AS AT 31ST DECEMBER, 2020 Corporate Governance Particulars General Reserve Share Capital Balance as on 01.01.2020 Retained earnings Total (Taka) 1,500,000,000 - 8,979,057 1,508,979,057 Dividend for the year 2019 - - - - Retained earnings during the Period - - 949,094 949,094 Balance as on 31.12.2020 1,500,000,000 - 9,928,151 1,509,928,151 Balance as on 31.12.2019 1,500,000,000 - 8,979,057 1,508,979,057 Risk Governance SBL CAPITAL MANAGEMENT LIMITED (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY Management Retrospection AS AT 31ST DECEMBER, 2019 Particulars General Reserve Share Capital Balance as on 01.01.2019 Retained earnings Total (Taka) Stakeholders’ Information 1,500,000,000 - 8,523,464 1,508,523,464 Dividend for the year 2018 - - - - Retained earnings during the Period - - 455,593 455,593 Balance as on 31.12.2019 1,500,000,000 - 8,979,057 1,508,979,057 Balance as on 31.12.2018 1,500,000,000 - 8,523,465 1,508,523,465 Chief Executive Officer Director Chairman Sustainability Subject to our separate report of even date. Dated, Dhaka Date: April 15, 2021 Financial Information 392 | Standard Bank Ltd Annual Report 2020 Shafiq Basak & Co. Chartered Accountants
394. SBL CAPITAL MANAGEMENT LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST DECEMBER, 2020 Particulars Cash Flow from Operating Activities: Net Profit after tax Add: Non Cash Transaction Provision for Expenses Liability for withholding LFC & Others Provision for investment in securities Corporate Income Tax Depreciation 11.00 D. Net Increase in cash and cash equivalents D=(A+B+C) E. Opening cash and cash equivalents Closing cash and cash equivalents (D+E) 4.00 2.00 5.00 303,881,448 (420,000) (391,005,190) (87,543,742) (40,587,519) (188,094,476) (228,681,995) 12.00 12.01 215,260,870 (79,911,688) 135,349,182 196,133,590 10,928,676 207,062,266 58,273,640 10,759,254 25,181,989 83,455,629 14,422,734 25,181,988 59,854,863 1,200,697 19,491,811 2,678,673 229,585 83,455,629 23,441,611 487,217 101,902 89,792 1,061,467 25,181,989 0.70 2.16 9.00 Cash & Cash Equivalents: Name of the Bank Account: SBL Capital Mgt. Ltd Investor’s A/c# 1807 SBL Capital Mgt. Ltd A/c# 1808 SBL Capital Mgt. Ltd Own Portfolio A/c# 1810 Public Issue Application A/c# 1876 SBL Capital Mgt. Ltd.-ICB Fund A/c# 1960 9.01 9.01 9.01 9.01 9.01 Net Operating Cash Flow per share (Note-31) Director Financial Information Chief Executive Officer Sustainability (3,075,586) 346,988 9,094,004 (18,795,391) (1,443,540) (649,015) (24,706,905) 6,354,368 26,723,905 32,378,984 Stakeholders’ Information Cash Used by Financing Activities: Loan from SBL Loan from ICB Dividend paid Net cash flow from financing activities (34,226,827) 33,992,733 (81,504,446) (10,315,202) 711,480 (299,063) (22,300) (24,975,064) 21,572,240 26,612,796 10,468,200 14.00 6.00 7.00 3.00 16.00 8.00 8.01 19.00 20.B Management Retrospection C. 455,593 34,998,976 218,546 451,630 1,798,830 31,950,222 579,748 Risk Governance Cash flow from Investing Activities : Investment in Shares Purchase of Assets Loan to Client Net cash flow from Investing Activities 31.12.2019 949,094 43,745,933 119,484 (250,984) 8,537,361 34,739,324 600,748 13.00 15.00 18.00 17.00 2.00 Sundry Deposit Accounts Receivable Advance Income Tax Advance deposit Account Payable Stock of Stationery Other Assets Provision for Margin Loan Interest Suspense Account Net Cash flow from Operating Activities B. 31.12.2020 Corporate Governance A. Amount (In Taka) Notes Chairman Subject to our separate report of even date. Dated, Dhaka Date: April 15, 2021 Shafiq Basak & Co. Chartered Accountants Standard Bank Ltd Annual Report 2020 | 393
395. SBL CAPITAL MANAGEMENT LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020 Corporate Governance 1.00 COMPANY AND ITS ACTIVITIES SBL Capital Management Limited is a subsidiary company of Standard Bank Limited incorporated as a public limited company on 20th October, 2010 with the Registrar of Joint Stock Companies, Dhaka vide certificate of incorporation No. C-87663/10 dated 20 October, 2010 and commenced its business on the same date. The funtion of its were separated from Standard Bank Limited by forming a subsidiary company in terms of Bangladesh Bank’s BRPD circular No. 12 dated: 14 October, 2009. Bangladesh Securities and Exchange Commission (BSEC) thereafter issued a full fledged Merchant Banking License in favour of SBL Capital Management Limited, vide letter No. SEC/Reg/MB/ SUB/13/2010/529, dated: January 05, 2011 with effect from January 09, 2011. Risk Governance 1.02 Principal Activities: The main objectives of the Company is to carry out the business of full fledged merchant banking activities like margin loan provided to clients for the Investment in securities, issue management, portfolio management, underwriting, corporate advisory services etc. 1.03 Significant Accounting policies: Management Retrospection Statement of Compliance: The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)/ International Accounting Standards (IAS), the Companies Act. 1994, Securities & Exchange Rules, 1987 and other applicable laws in Bangladesh. Basis of preparation of Financial Statements: The financial statements are prepared on a going concern basis under historical cost convention in accordance with Generally Accepted Accounting Principles. Wherever appropriate, such principles are explained in succeeding notes. The financial statements includes: Stakeholders’ Information (i)             Statement of Financial Position (Balance Sheet) (ii)            Statement of Profit or Loss and Other Comprehensive Income (iii)           Statement of Cash Flows (iv)          Statement of Changes in Equity (v)           Notes to the Financial Statements 1.04 Reporting Period: Sustainability The Reporting period of the Company from 1st January, 2020 to 31st December, 2020. 1.05 Statement of Cash Flows: Statement of Cash Flow is prepared in accordance with the International Accounting Standard (IAS)-7: Cash Flow statement has been presented under indirect method. Financial Information 1.06 Property, Plant and Equipments: Recognition and Measurement: Items of Property, Plant & Equipment (PPE) are initially measured at cost. After initial recognition, the item of PPE are carried at cost less accumulated depreciation and Items of fixed assets are measured at cost/revaluation less accumulated depreciation and accumulated impairment losses, if any. 394 | Standard Bank Ltd Annual Report 2020
396. Introduction Cost includes expenditure that are directly attributable to the acquisition of asset and bringing to the When parts of an item of fixed asset have different useful lives , they are accounted for as separate items location and condition necessary for it to be capable of operating in the intended manner. The gain or loss on disposal of an item of fixed asset is determined by comparing the proceeds from Property, Plant and Equipment are recognized as assets in accordance with International Accounting Standards (IAS) 16 “Property Plant and Equipment”. Subsequent costs: Corporate Governance The cost of replacing a component of an item of fixed assets is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the group and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of fixed assets are recognized in profit or loss as incurred. Changes in Depreciation Method: Risk Governance Depreciation method has been changed from reducing method to straight line method from year 2017 for accounting policy alignment in accordance with the method followed by parent company (Standard Bank Limited) which is to be treated as “Changes in Accounting Estimates” and prospective accounting has been done for changes in accordance with IAS 8. Depreciation: Category of Assets 1.07 Management Retrospection Depreciation is charged at the rates stated below on all fixed assets on the basis of estimated useful lives as determined in the fixed asset policy of the Company. In all cases depreciation is calculated on the straight line method. Charging depreciation commences from the month of acquisition (for full month) and ceases at the month when the assets are disposed. No depreciation has been charged on land. Rate and method of charging depreciation/ amortization of fixed assets are mentioned below: Rate of Depreciation Furniture & Fixture 10% Office Equipment 20% Renovation & Decoration 10% Software 20% Cash and Cash Equivalents: 1.08 Stakeholders’ Information Cash and Cash Equivalents comprise cash in hand and bank balances, which were held and available for use of the Company without any restriction. Investments: All Investment in securities are initially recognised at cost, being fair value of the consideration given, including acquisition charges associated with the investments. The valuation methods used for investments is: 1.09 Sustainability Investment in listed securities are acquired and held primarily as well as secondarily for the purpose of selling them in future or held for dividend income are reported at cost. Unrealised Gain /(Loss) are not recognised in the statement of profit or loss and other comprehensive income. Receivables: Receivables are recognised when there is a contractual right to receive cash of another financial assets from another entity. Financial Information 1.10 Share Capital Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets. Standard Bank Ltd Annual Report 2020 | 395
397. 1 .11 Borrowing Funds: Introduction Borrowing funds include borrowings from Standard Bank Limited (SBL) and Investment Corporation of Bangladesh (ICB), which is stated in the Statement of Financial Position (Balance Sheet) as Short Term Loan. 1.12 Provision for Current Taxation: Provision for current income tax has been made @ 37.50% on total income as prescribed in the Finance Act 2019 on the accounting profit made by the Bank in compliance with IAS-12 “Income Taxes”. Corporate Governance 1.13 Benefit to the Employees: The retirement benefits such as Gratuity Fund, Incentive Bonus for the employees of the company as on reporting date have not yet been recongnised for in accordance with the provisions of International Accounting Standards-19, “Employess Benefits” as the company is not yet decided for those benefits. 1.14 Provision for Liabilities: Risk Governance A provision is recognised in the statement of financial position when the company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit will be required to settle the obligations, in accordance with the IAS-37 “Provisions, Contingent Liabilities and Contingent Assets.” 1.15 Provision for Margin Loan: A provision for Equity shortfall of investors in portfolios have been made as per circular of BSEC Directive No. BSEC/ CMRRCD/2009-193/203 & Letter No. BSEC/SRI/MB/Policy-5/2020/132 dated January 30, 2020. Management Retrospection 1.16 Interest Income: In terms of the provisions of IFRS-15 “Revenue from Contracts with Customers”, interest income is recognised on accrual basis. 1.17 Investment Income: Investment Income on investment is recognised on accrual basis. Capital Gains are recognised when these are realised. Stakeholders’ Information 1.18 Fees and Commission Income: Fees and Commission income arising on services provided by the Company are recognised on accrual basis. 1.19 Dividend Income on Shares: Dividend on shares is recognised during the period in which it is declared and ascertained i.e, establised as the right of shareholders. 1.20 Events after the reporting period: Sustainability Where necessary, all the material events after the reporting date has been considered but no adjustment/disclosures is required to be made in the financial statements. 1.21 Directors responsibility on Financial Statements: The board of directors of the company is responsible for the preparation and presentation of these financial statements. Financial Information 1.22 General: 1. The financial statements are presented in Bangladeshi Taka (BDT) Currency, which is the company’s functional currency. 2. Figures in these notes and annexed financial statements have been rounded off to the nearest Taka. 3. Figures and account titles of previous year have been rearranged whenever considered necessary to conform with current year’s presentation. 396 | Standard Bank Ltd Annual Report 2020
398. Amount (In Taka) 2.00 31.12.2019 Introduction 31.12.2020 Property, Plant & Equipments: Opening Balance 6,416,544 Add: Addition during the period 6,416,544 420,000 Less: Adjustment - 6,836,544 6,416,544 3,991,973 3,412,225 600,748 579,748 - - Closing Balance (B) 4,592,721 3,991,973 Written Down Value (A-B) 2,243,823 2,424,571 Advance for Office Rent 830,060 1,541,540 Advance for Custody DP-CDBL 200,000 200,000 4,990 4,990 1,035,050 1,746,530 Total Investments (Note-4.01) 1,840,646,303 2,144,527,751 Total 1,840,646,303 2,144,527,751 Cost value 31.12.2020 Cost value 31.12.2019 Closing Balance (A) Corporate Governance - Depreciation: Opening Balance Add: Charge for the period Less: Adjustment Risk Governance Details are shown in Annexure-1 3.00 Advance, Deposits & Prepayments: Total 4.00 Investment in Shares: Ordinary Shares No. of Company Investment in Secondary Share Market (Note: 4.01.01) 65 1,840,646,303 2,143,958,389 Investment in Primary Share Market 0 - 569,362 1,840,646,303 2,144,527,751 Banking Company 539,715,495 636,520,319 Non Banking Financial Institutions 272,539,658 296,112,977 Insurance Company 251,818,038 203,655,421 Investment Company 107,238,308 190,576,091 Fuel and Power 223,842,210 298,115,377 Total Stakeholders’ Information 4.01 4.01.01 Management Retrospection Security deposit Investment in Secondary Share Market: 445,492,595 518,978,203 1,840,646,303 2,143,958,389 Financial Information Total Sustainability Manufacturing Company and Others Investment in shares represents cost price of securities which have been invested by the company in the capital market. The details of the above balance have been shown in Annexure-2. Standard Bank Ltd Annual Report 2020 | 397
399. Amount (In Taka) Introduction 5.00 31.12.2020 31.12.2019 2,692,698,458 2,301,693,269 153,108,968 153,108,968 2,845,807,426 2,454,802,237 Receivable from Brokers against Investors portfolio 21,669,576 440,062 Receivable from Brokers against Own Portfolio 61,002,228 757,833 52,500 - 10,696,049 10,718,012 1,889,250 1,889,250 95,309,603 13,805,157 303,739,315 284,943,924 10,315,202 13,837,235 - 4,958,156 314,054,517 303,739,315 - - 314,054,517 303,739,315 - - 314,054,517 303,739,315 110,059 244,263 Tax deducted on Dividend Income & Others 10,205,143 13,592,972 Total 10,315,202 13,837,235 Opening Balance 47,390 47,390 Add: Addition during the period 69,690 - Margin Loan to Clients: Portfolio Margin Loan Interest Free Block Loan Total Corporate Governance 6.00 Account Receivable: Sharing Infrastructure Charge Receivable Dividend Receivable Underwriting Commission Receivable Risk Governance Total 7.00 Advance Income Tax Opening Balance Add: Tax deducted at source during the period (Note: 7.01) Add: Advance Income Tax Paid during the period Management Retrospection Total Less: Adjustment of Advance Income Tax for the period Less: Adjustment of demand Tax for the period Closing Balance 7.01 Tax deducted : Tax deducted on Interest Income Stakeholders’ Information 8.00 Sustainability 8.01 Stock of Stationery : 117,080 47,390 Less: Stock consumed during the period 47,390 - Closing Balance 69,690 47,390 9,520,000 11,157,732 Other Assets: i) A/c -KBM Moin Uddin Chisty, IDA-1396 Financial Information ii) A/c -Sheikh Fazlul Karim Selim, IDA-0087 398 | 3,000,000 3,000,000 iii) Interest Suspense receivable 66,514,014 39,901,219 Closing balance 79,034,014 54,058,951 Standard Bank Ltd Annual Report 2020
400. Amount (In Taka) 9.00 Cash & Cash Equivalent Cash in hand Bank Balances with SBL, Principal Branch (Note-9.01) FDR with Banks & NBFI SBL Capital Mgt. Ltd. (A/C: 00236001808) SBL Capital Mgt. Ltd. Own Portfolio (A/C: 00236001810) Public Issue Application (SBL Cap. Mgt.) (A/C:00236001876) 83,455,629 25,181,989 - - 83,455,629 25,181,989 59,854,863 23,441,611 1,200,697 487,217 19,491,811 101,902 2,678,673 89,792 229,585 1,061,467 Closing Balance 83,455,629 25,181,989 10.00 Share Capital: 10.01 Authorized Capital: 5,000,000,000 5,000,000,000 5,000,000,000 1,500,000,000 1,500,000,000 1,500,000,000 1,500,000,000 Management Retrospection 50,000,000 Ordinary Shares of 100/- each Risk Governance SBL Capital Mgt. Ltd.-ICB Fund (A/C: 00236001960) Issued, Subscribed and Paid Up Capital: 1,500,000,000 15,000,000 Ordinary Shares of 100/- each 10.03 - Bank Balance with SBL, Principal Branch: SBL Capital Mgt. Ltd. Investor’s (A/C: 00236001807) 10.02 - Corporate Governance Total 9.01 31.12.2019 Introduction 31.12.2020 Pattern of Shareholdings: Name No. of Shares 5,000 0.0003% 2 Mr. Mohammed Zahedul Hoque 50 5,000 0.0003% 3 Mr. S. A. M. Hossain 50 5,000 0.0003% 4 Mr. Mohammed Abdul Aziz 50 5,000 0.0003% 5 ICB, represented by its Managing Director, Mr. Md. Abul Hossain 50 5,000 0.0003% 6 Mr. Nazmus Salehin - - 0.0000% 7 Mr. Kazi Khurram Ahmed 50 5,000 0.0003% 8 Mr. Tazmeem Mostafa Chowdhury 50 5,000 0.0003% 9 Mr. Sheikh Omar Faruque 50 5,000 0.0003% 10 Mr. Md. Nizamul Alam 50 5,000 0.0003% 11 Mr. Md. Shahedul Alam 50 5,000 0.0003% 12 Mrs. Humayra Ahmed 50 5,000 0.0003% 13 Miss Sumaiya Hossain 50 5,000 0.0003% 14 Standard Bank Limited, represented by the Managing Director & CEO, Mr. Khondoker Rashed Maqsood 14,999,400 1,499,940,000 99.9960% Total 15,000,000 1,500,000,000 100.000% Standard Bank Ltd Annual Report 2020 | Financial Information 50 Sustainability % of Share Mr. Kazi Akram Uddin Ahmed Stakeholders’ Information Amount (TK.) 1 399
401. Amount (In Taka) Introduction 31.12.2020 11.00 Retained Earnings Opening Balance Less: Dividend paid Corporate Governance Add: Profit/(Loss) for the period Total 12.00 31.12.2019 8,979,057 8,523,464 - - 8,979,057 8,523,464 949,094 455,593 9,928,151 8,979,057 2,273,376,987 2,077,243,397 Loan facilities from Standard Bank Ltd.: Opening Balance Add: Addition during the period Risk Governance Less: Refund during the period Closing Balance 215,260,870 196,133,590 2,488,637,856 2,273,376,987 - - 2,488,637,856 2,273,376,987 The above loan was taken from Standard Bank Limited bearing interest @ 9.00 % per annum on quarterly basis vide reference No. SCML/HO/SOD Renewal/2020/4174 dated 08.12.2020. Management Retrospection 12.01 Loan from ICB: i) Loan from ICB for ASI-2011 (Note: 12.01.01) - 14,141,491 ii) Loan from ICB-2019 (Note: 12.01.02) - 65,770,196 Total Loan Balance - 79,911,688 14,141,491 68,983,011 - - Total 14,141,491 68,983,011 Less: Refund during the period 14,141,491 54,841,520 - 14,141,491 12.01.01 Loan from ICB for ASI-2011 : Opening Balance Stakeholders’ Information Add: Addition during the period Closing Balance The above loan was taken as Puji Bazare Khotigroshto Khudro Biniogkarider Shohyaota Tohobil from ICB bearing interest @ 5.00% per annum (simple) on quarterly basis as per ICB letter no. ICB/51/636 Dated April 02, 2018. Sustainability 12.01.02 Loan from ICB-2019 : Opening Balance 65,770,196 - - 71,400,000 Total 65,770,196 71,400,000 Less: Refund during the period 65,770,196 5,629,804 - 65,770,196 Add: Addition during the period Financial Information Closing Balance The above loan was taken as Puji Bazare Shohyaota Tohobil in secondary market from ICB bearing interest @ 4.00% per annum (simple) on quarterly basis as per ICB letter no. ICB/51/501 Dated July 08, 2019. The loan paid to ICB on 28.12.2020 due to the conversion to Islamic Merchant Banking from conventional Merchant Banking from 01.01.2021. 400 | Standard Bank Ltd Annual Report 2020
402. Amount (In Taka) 13.00 Provision for Expenses: Provision for Depreciation - - Accrued Expenses (Note: 13.01) 776,630 657,147 Total 776,630 657,147 657,147 438,601 Accrued Expenses: Opening Balance Add: Accrued Exp. during the period 451,073 889,674 Less: Adjustment during the period 584,599 232,527 Closing Balance 776,630 657,147 33,213,921 1,800,587 Sundry Deposit: Portfolio Deposit Account (Investors) Affected Small Investor’s Deposit Deposit - 35,793,321 1,800,587 VAT deducted at source payable - - Tax deducted at source payable - - Total 15.01 Liability for withholding Tax, VAT & Others: LFC payable (Note-15.01) 210,646 461,630 Total 210,646 461,630 LFC: Opening Balance 461,630 10,000 Add: Addition during the period 200,646 451,630 Total 662,276 461,630 Loss: Disbursement during the period 451,630 - Closing Balance 210,646 461,630 Accounts Payable: Legal Fees payable Interest payable on ICB Loan (Note-16.01) Dividend Payable Total - - 67,600 - 246,609 613,273 - - 314,209 613,273 Sustainability Payable for Leads Software Financial Information 16.01 Stakeholders’ Information 16.00 Management Retrospection 2,579,400 Public Issue Application Deposit 15.00 Risk Governance 704,083 1,361,230 Total 14.00 Corporate Governance 13.01 31.12.2019 Introduction 31.12.2020 Interest Payable on ICB Loan: Interest payable on ICB Loan-2011 - 174,805 Interest payable on ICB Loan-2019 246,609 438,468 Total 246,609 613,273 Standard Bank Ltd Annual Report 2020 | 401
403. Amount (In Taka) Introduction 31.12.2020 17.00 Provision for Tax : Opening Balance 310,444,673 278,494,451 34,739,324 31,950,222 345,183,998 310,444,673 - - 345,183,998 310,444,673 - - 345,183,998 310,444,673 4,534,182 1,763,230 10,205,143 10,186,992 - - Provision of income tax for Financial year 2019 14,739,324 11,950,222 Add: Provision of income tax for Financial year 2011 & 2012 20,000,000 20,000,000 Total Tax Provision 34,739,324 31,950,222 448,601,203 446,802,373 Add: Provision for income tax made during the period (17.01) Corporate Governance Less: Over Provision of Tax for the Financial year Less: Adjustment of Advance Income Tax for the Financial year Closing Balance 17.01 31.12.2019 Provision for income tax made during the period The computation of tax provision for the period is as under: Tax on gain on sale of shares Risk Governance Tax on dividend from investment in share Tax on Business Income Management Retrospection 18.00 Provision for diminution in value of Investment: Opening Balance Add: Provision made during the period Closing Balance 8,537,361 1,798,830 457,138,564 448,601,203 Based on market value prevailing on 31st December of 2020, total value of shares in different companies held by SBL Capital Management Ltd. comes to 1,129,357,038 (cost 1,840,646,303). Details are shown at Annexure-2. Thus difference between market value and cost value of total shares comes to 711,289,227. This represents diminution in investment value. Shortfall in provision are shown below: Stakeholders’ Information Total diminution in investment value 711,289,229 954,470,392 Less: Provision maintained for diminution in investment value 457,138,564 448,601,203 Total shortfall provision require to maintain within 31-December-2022. 254,150,665 505,869,189 Against above shortfall, sum of Tk 8,537,361 had been provided in accounts which represents (as per BSEC circular No. BSC/SRI/MB-Policy/5/2019/166 dated, January 22, 2020) total unrealized loss in comprehensive income statement for the year under audit. Remaining loss in investment value amounting to 254,150,665 would be taken into accounts within 2022. Sustainability 19.00 Provision for Margin Loan: Opening Balance Add: Provision made during the period Closing Balance 335,097,363 328,742,995 21,572,240 6,354,368 356,669,603 335,097,363 Financial Information There arises loss/shortfall in Investors portfolio investment (except rescheduling account shortfall 311,502,173) amounting to Tk 998,858,593 representing difference of loan balance and market value of securities on December 31, 2020 this shortfall/ loss should be provided in account. However, BSEC has given a facilities to the Investors by using a circular on BSC/SRI/MBPolicy/5/2019/166 dated, January 22, 2020) that loss/shortfall in provision for investment might be amortized within 31 December, 2022. Provision made for 21,572,240 against net shortfall of portfolio investment of 663,761,230 (except rescheduling account shortfall 311,502,173). As such, shortfall in provision stands at 642,188,990 would be taken into accounts within 2022 as per above BSEC circular which is made up as follows: 402 | Standard Bank Ltd Annual Report 2020
404. Amount (In Taka) 1,395,127,870 304,799,958 328,742,995 Deficit Provision Less: Amortized in Income Statement of current period 663,761,230 21,572,240 761,584,917 6,354,368 Net provision shortfall 642,188,990 755,230,549 Provision for Interest Waiver to A.S.I.: Opening Balance Add: Provision made during the period 489,064 - 489,064 - Closing Balance 489,064 489,064 Interest Suspense.: Opening Balance Add: Maintained during the period 39,901,219 26,612,796 13,177,314 26,723,905 Closing Balance 66,514,014 39,901,219 Risk Governance 20.B 1,310,360,766 311,502,173 335,097,363 Corporate Governance 20.A 31.12.2019 Introduction 31.12.2020 Provision for Margin Loan: Required Provision for Margin Loan Less: Rescheduling amount shortfall Less: Provision maintained previous year 21.A Total 186,868,695 173,878,671 825,000 29,000 2,400 28,800 818,750 4,500 28,400 13,000 1,200,000 1,703,950 1,245,900 Interest Expenses: Interest expenses on SBL Loan Interest expenses on SBL Time Loan Interest expenses on ICB Loan (Note: 22.01) 215,260,870 2,327,473 2,095,503 196,133,590 2,896,501 Total 219,683,845 199,030,091 Interest expenses on ICB Loan: i) Interest expenses on ICB Loan-2011 ii) Interest expenses on ICB Loan-2019 2,095,503 1,744,033 1,152,468 Total Interest expenses on ICB Loan 2,095,503 2,896,501 Other Income: Issue Management Fees Underwriting commission Documentation Charge Charge for Investment Certificate Account Closing Charges Sharing Infrastructure Charge Total 22.00 22.01 Standard Bank Ltd Annual Report 2020 | Financial Information 171,564,568 2,314,103 - Sustainability 185,800,401 1,068,294 - Stakeholders’ Information 21.B Interest Income: Interest Income from Investors Portfolio Margin Loan Interest Income on SND Account Interest Income on Term Deposit Management Retrospection Interest suspense account represents that the total interest receivable from top twenty Margin loan clients which have not been accounted as interest income due to negative equity of those clients. 403
405. Amount (In Taka) Introduction 31.12.2020 23.00 Salary & Allowances: Salaries (Basic) 5,824,560 5,419,560 - 243,000 2,912,280 2,709,780 316,000 300,000 Medical Allowance 437,600 423,600 Conveyance Allowance 336,800 304,800 Salary for Probationaries House Rent Allowance Corporate Governance House Maintenance & Utility Provident Fund (Company contribution) Festival Bonus Boishakhi Allowance Washing Allowance Casual Wages & Others Risk Governance Total 24.00 Electricity 9,600 648,000 12,380,170 11,689,622 1,465,945 1,611,610 Management Retrospection 27,468 Lift Expenses 30,000 30,000 Water & Sewerage 27,046 43,187 51,600 53,100 1,811,462 1,972,515 Postage, Stamp & Telecommunication: Stakeholders’ Information Postage and Courier 4,775 4,120 Telephone Expenses 10,600 16,036 Mobile Expenses 20,000 24,000 Total 35,375 44,156 Stationery, Printing & Advertisement : Printing & Stationery 80,818 48,840 Computer, Printer & Networking Accessories 51,130 188,422 131,948 237,262 441,600 385,200 Sustainability Director’s Fee & Other Expenses: Director’s haltage expenses Entertainment for the Board Meeting Director’s Traveling Expenses - 19,973 67,631 111,819 50,800 232,050 560,031 749,042 Audit Fees 57,500 74,750 Legal Fees 165,600 - Total Financial Information Audit & Consultancy: Professional Expenses Total | 9,600 856,324 207,150 Director’s Meeting fees 404 96,666 21,500 Total 28.00 98,050 215,371 Total 27.00 541,956 992,660 Generator Expenses WAN Connectivity Expenses 26.00 582,456 1,006,500 Rent, Taxes, Insurance & Electricity: Rent for Office Premises 25.00 31.12.2019 Standard Bank Ltd Annual Report 2020 - 12,650 223,100 87,400
406. Amount (In Taka) Entertainment Expenditure: Entertainment Allowances Entertainment Expenses (Office) 389,600 40,932 372,000 51,641 Total Entertainment Expenditure 430,532 423,641 CDBL Charges: CDBL Charges Less: Cash back rebate from CDBL 1,585,126 - 696,205 - Net charges 1,585,126 696,205 949,094 15,000,000 455,593 15,000,000 0.06 0.03 10,468,200 15,000,000 32,378,984 15,000,000 0.70 2.16 1,509,928,151 15,000,000 1,508,979,057 15,000,000 100.66 100.60 Earning Per Share (EPS): Net profit after tax Weighted average outstanding number of shares Earning Per Share 31.00 Net Operating Cash Flow per share (NOPCFPS): Net cash flow from operating activities Number of shares Net Operating Cash Flow per share 32.00 NAV per share: Shareholders’ equity Number of shares NAV per share Standard Bank Ltd Annual Report 2020 | Financial Information 3,236,869 Sustainability 3,564,780 Stakeholders’ Information Total Management Retrospection 30.00 11,110 423,641 14,378 14,600 25,710 125,631 12,960 15,000 123,485 451,630 15,320 696,205 150,000 350 54,310 37,184 8,100 49,859 571,992 360,000 75,404 Risk Governance 29.02 12,240 430,532 6,390 16,900 125,208 8,465 11,000 24,486 12,000 1,585,126 150,000 700 38,956 70,710 1,890 571,992 360,000 138,185 Corporate Governance 29.01 31.12.2019 Other Expenses: Travelling & Conveyance expenses Entertainment Expenditure (Note-29.01) Photocopy & Photograph Training & Interniship Uniform & Leverage Cleaning Services from Outsourcing Rate & Taxes Bidding Expenses Public Issue registration charge RJSC Fess & Charges Leave Fare Compensation Drinking Water Expenses CDBL Charges (Note-29.02) Registration & Renewal fees BO Account Maintenance Fee Miscellaneous expenses for Board Meeting Office Maintenance Expenses Paper & Periodicals Insurance premium (Motor Vehicle) Car Expenses Petrol, Oil & Lubricants Bank Charges Introduction 31.12.2020 29.00 405
407. 33 .00 Attendance Status of Board Meeting of Directors Introduction During the year ended 31st December 2020, there were 04 (Four) Board Meetings were held. The attendance status of all the meetings is as follows: Name of Directors Corporate Governance Mr. Kazi Akram Uddin Ahmed Position Meeting held Attendance status Attendance 31 December 2020 Risk Governance Management Retrospection Chairman 4 4 4 Mr. Mohammed Zahedul Hoque Director 4 4 4 Mr. S. A. M. Hossain Director 4 4 4 Mr. Mohammed Abdul Aziz Director 4 4 4 ICB, represented by its Managing Director, Mr. Md. Abul Hossain Director 4 4 4 Mr. Kazi Khurram Ahmed Director 4 3 3 Mr. Tazmeem Mostafa Chowdhury Director 4 3 3 Mr. Sheikh Omar Faruque Director 4 3 3 Mr. Md. Nizamul Alam Director 4 1 1 Mr. Md. Shahedul Alam Director 4 4 4 Mrs. Humayra Ahmed Director 4 4 4 Miss Sumaiya Hossain Director 4 2 2 Independent Director 4 4 4 Director 4 4 4 Mr. Nazmus Salehin Mr. Khondoker Rashed Maqsood Total 56 48 48 33.01 Related party disclosures (IAS-24) Stakeholders’ Information The Company carried out a number of transactions with related parties in the normal course of business on arms length basis. Name Of Directors Mr. Kazi Akram Uddin Ahmed Transaction During the year Sustainability 32,000 Mr. Mohammed Zahedul Hoque Director 32,000 Mr. S. A. M. Hossain Director 32,000 Mr. Mohammed Abdul Aziz Director 32,000 ICB, represented by its Managing Director, Mr. Md. Abul Hossain Director 32,000 Mr. Kazi Khurram Ahmed Director 24,000 Directors Remuneration & Attendence Fees Financial Information Mr. Tazmeem Mostafa Chowdhury Director Mr. Sheikh Omar Faruque Director Mr. Md. Nizamul Alam Director 8,000 Mr. Md. Shahedul Alam Director 32,000 Mrs. Humayra Ahmed Director 32,000 Mr. Nazmus Salehin Mr. Khondoker Rashed Maqsood Total | Name of the Transactions Chairman Miss Sumaiya Hossain 406 Relation Standard Bank Ltd Annual Report 2020 24,000 24,000 Director 16,000 Independent Director 32,000 Director 32,000 384,000
408. 33 .02 The total amount of remuneration paid in the accounting year is as follows: Name Of Directors Relation Mr. Kazi Akram Uddin Ahmed Name of the Transactions Introduction Paid During the Year 31-Dec-20 32,000 Director 32,000 Mr. S. A. M. Hossain Director 32,000 Mr. Mohammed Abdul Aziz Director 32,000 ICB, represented by its Managing Director, Director 32,000 Mr. Kazi Khurram Ahmed Director 24,000 Mr. Tazmeem Mostafa Chowdhury Director Mr. Sheikh Omar Faruque Director Corporate Governance Chairman Mr. Mohammed Zahedul Hoque Mr. Md. Abul Hossain Directors Remuneration 24,000 24,000 Director 8,000 Director 32,000 Mrs. Humayra Ahmed Director 32,000 Miss Sumaiya Hossain Director 16,000 Independent Director 32,000 Director 32,000 Mr. Nazmus Salehin Mr. Khondoker Rashed Maqsood 384,000 Management Retrospection Total Risk Governance Mr. Md. Nizamul Alam Mr. Md. Shahedul Alam 33.03 The profit and loss account will give by way of a note detailed information, showing separately the following payments provided or made during the financial year to the directors, including managing director, the managing agents or manager, if any, by the company, subsidiaries of the company and any other person:Paid during the Year Particulars Managerial Remuneration paid or payable during the period to the directors, including managing directors, a managing agent or manager Stakeholders’ Information 31-Dec-20 384,000 Expenses reimbursed to Managing Agent Commission or Remuneration payable separately to a managing agent or his associate Commission received or receivable by the managing agent or his associate as selling or buying agent of other concerns in respect of contracts entered into by such concerns with the company Sustainability The money value of the contracts for the sale or purchase of goods and materials or supply of services, entered into by the company with the managing agent or his associate during the financial period. Any other perquisite or benefits in cash or in kind stating, approximate money value where applicable. Other allowances and commission including guarantee commission Pensions etc. (i) Pensions Financial Information (ii) Gratuities (iii) Payments from a provident funds, subscription and interest thereon iv) Share Based payments Standard Bank Ltd Annual Report 2020 | 407
409. 33 .04 Disclosure as per IAS- 24: Introduction As per Para-17, IAS- 24: An entity shall disclose key management personnel compensation in total and for each of the following benefits: (a) Short-term employee benefits Corporate Governance (b) Post-employee benefits - (c) Other long term benefits - (d) termination benefits and - (e) share- based payment - As per Para-18, IAS- 24: Disclosure requirements of IAS 24, Para 18 minimum disclosure shall include: a) The amount of transaction Risk Governance b) The amount of outstanding balance, including commitments i) Their terms & condition, including whether they are secured, and the nature of the consideration to be provided in settlement Remuneration & Meeting Fee ii) details of any guarantee given or received c) Provisions for doubtful debts related to the amount of outstanding balance d) The expenses recognized during the period in respect of bad or doubtful debts due from related parties Management Retrospection 33.05 Aggregated amount of Remuneration, Fess, Salary & Wages of employees are given below : Directors Remuneration - Board Meeting Attendance Fees 384,000 Wages & Allowance 906,143 Salary & Allowance 11,514,156 12,804,299 Stakeholders’ Information 33.06 Disclosures as per requirement of Schedule XI, Part II, Para-III of the Companies Act, 1994 Employee position of the Company as follows: Salary Range (monthly) Staff Worker Total-2020 Below 40,000 - - - Above 40,000 6 - 6 Sustainability Financial Information 408 | Number of Employee Standard Bank Ltd Annual Report 2020
410. 4 ,097,933 Financial Information Total Balance as on 31.12.2019 - 420,000 420,000 998,584 Sustainability 4,097,933 - - - - - Adjustment Stakeholders’ Information Total Balance as on 31.12.2020 Software - 414,092 Furniture & Fixture - - - 1,984,294 700,963 - Addition during the year Office Renovation Computer, Printer, UPS, Server etc. Office Equipment Balance as on 01.01.2020 4,097,933 4,517,933 1,418,584 414,092 1,984,294 700,963 - Balance as on 31.12.2020 20% 10% 10% 20% Dep. Rate Management Retrospection Particulars 1,093,614 1,673,362 591,817 100,014 595,288 386,243 - Balance as on 01.01.2020 579,748 600,748 220,717 41,409 198,429 140,193 - Charged during the year - - - - - - - Adjustment Depreciation Risk Governance Cost AS AT 31ST DECEMBER, 2020 SCHEDULE OF PROPERTY, PLANT & EQUIPMENTS (A SUBSIDIARY OF STANDARD BANK LTD.) 1,673,362 2,274,110 812,533 141,423 793,718 526,435 - Balance as on 31.12.2020 ANNEXURE-1 Corporate Governance SBL CAPITAL MANAGEMENT LIMITED - 2,424,571 2,243,823 606,050 272,669 1,190,576 174,527 Written Down Value as on 31.12.2020 Introduction Standard Bank Ltd Annual Report 2020 | 409
411. SBL CAPITAL MANAGEMENT LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) OWN PORTFOLIO STATEMENT AS ON 31.12.2020 ANNEXURE-2 Corporate Governance Sl. No. Risk Governance Management Retrospection Stakeholders’ Information Sustainability Financial Information 410 | Company Name A. QUOTED 1 AB Bank Limited 2 ACME Laboratories 3 Aman Feed Limited Total Cost Total Market Value 9,789,620 Unrealised Gain/ (Loss) 6,479,550 (3,310,070) 10,836,127 7,470,000 (3,366,126) 1,643,610 1,794,000 150,390 4 Argon Denims Limited 2,308,147 2,364,000 55,853 5 Asia Pacific Ins. Co. 1,594,218 1,423,100 (171,118) 6 Associated Oxygen 132,060 773,000 640,940 7 Bangladesh Autocars 8,853,908 8,844,000 (9,907) 8 Bangladesh Shipping 4,574,371 4,722,019 147,648 9 Baraka Power Limited 7,344,329 7,110,548 (233,782) 10 BD Welding Electrode 11 BSRM Steel Limited 12 Dhaka Bank Ltd. 13 Dominage Steel BSL 14 Eastern Insurance 5,471,994 5,171,200 (300,793) 111,048,426 46,095,500 (64,952,925) 72,618,400 46,886,000 (25,732,400) 248,140 924,566 676,426 56,961,153 63,419,112 6,457,960 15 Esquire Knit Cmp Ltd 16 EXIM Bank Ltd. 487,806 289,300 (198,505) 30,958,539 21,240,000 (9,718,538) 17 Familytex (BD) Ltd 6,098,476 2,590,000 (3,508,476) 18 Fareast Finance 19 Fareast Islami Life 20 Global Insurance Ltd 97,137 186,000 88,863 21 Green Delta Ins. Ltd 3,546,597 3,264,800 (281,796) 22 Heidelberg Cement 52,118,138 15,408,800 (36,709,333) 208,873 126,000 (82,873) 71,729,834 36,934,400 (34,795,433) 23 ICB Islamic Bank Ltd 52,772,320 27,950,000 (24,822,320) 24 Int. Leasing And FSL 29,135,711 9,600,000 (19,535,710) 25 Islami Insurance 9,014,980 12,100,052 3,085,072 26 Islamic Finance Inv 42,943,315 34,431,325 (8,511,990) 27 IT Consultants Ltd 4,467,934 4,397,700 (70,234) 28 Jamuna Oil Co. Ltd 41,219,768 33,745,450 (7,474,316) 29 LafargeHolcim Bd Ltd 175,095,116 98,993,800 (76,101,315) 30 LankaBangla Finance 59,262,709 54,895,050 (4,367,659) 31 Meghna Petroleum Ltd 3,754,018 3,960,000 205,984 32 Mercantile Bank Ltd 27,311,704 20,242,530 (7,069,174) 33 MIDAS Financing Ltd. 47,588,518 17,224,350 (30,364,167) 46,509,837 19,921,440 (26,588,397) 4,139,186 3,899,400 (239,785) 34 National Bank Ltd. 35 National Housing 36 ONE Bank Ltd. 38,541,945 20,813,100 (17,728,845) 37 Padma Oil Co. Ltd 39,759,043 32,526,194 (7,232,847) 38 Paramount Textile 817,881 667,800 (150,080) Standard Bank Ltd Annual Report 2020
412. Company Name Total Cost Total Market Value Unrealised Gain / (Loss) 39 Peoples Leasing 44,617,972 7,560,000 (37,057,972) 40 Pragati Insurance Ltd. 57,589,009 44,092,881 (13,496,127) 41 Prime Bank Limited 90,432,171 51,317,100 (39,115,071) 42 Prime Finance & Investment 33,473,182 3,263,400 (30,209,781) Prime Islami Life Ins. Co. 39,944,486 13,078,800 (26,865,684) Quasem Industries Ltd. 11,168,737 9,292,000 (1,876,736) 45 Ring Shine Textiles 81,058 56,326 (24,732) 46 Robi Axiata Limited 1,311,880 3,909,402 2,597,522 47 Runner Automobiles 95,458 80,677 (14,781) 48 Rupali Bank Limited 9,352,461 7,005,957 (2,346,504) 49 Sandhani Life Insurance 11,340,623 9,809,200 (1,531,423) 50 Sea Pearl Beach Reasort 17,762 147,522 129,760 3,820,534 3,065,406 (755,127) 14,057,531 7,382,340 (6,675,191) 53 Southeast Bank Ltd 31,476,350 23,922,650 (7,553,700) 54 Square Pharmaceutical 23,578,351 24,803,500 1,225,151 55 Summit Alliance Port Ltd. 3,086,480 3,353,177 266,697 56 Summit Power Ltd. 61,564,069 52,981,800 (8,582,268) 70,134,467 34,095,600 (36,038,866) 107,324,680 67,891,500 (39,433,180) Titas Gas T&D Co. Ltd. United Commercial Bank Ltd. 59 Union Capital Ltd. 15,309,377 5,962,320 (9,347,057) 60 Uttara Bank Limited 22,627,467 19,680,000 (2,947,467) 1,733,407,996 1,071,635,642 (661,772,315) 11,038,359 6,640,000 (4,398,359) 568,176 508,736 (59,440) 11,781,046 9,628,799 (2,152,247) Sub Total (A) B. MUTUAL FUND 1 ICB AMCL 2nd MF 2 NLI First MF 3 Popular Life 1st MF 4 Prime Bank1st ICB MF 3,550,000 (1,385,556) 20,327,535 (7,995,601) C. UNQUOTED 1 IAMCL Second NRB UF 78,915,170 37,393,860 (41,521,310) Sub Total (C) 78,915,170 37,393,860 (41,521,310) Total (A+B+C) 1,840,646,303 1,129,357,038 (711,289,227) Sustainability 4,935,556 28,323,137 Sub Total (B) Stakeholders’ Information 57 58 Management Retrospection Shahjibazar Power Co. Shasha Denims Ltd Risk Governance 51 52 Corporate Governance 43 44 Introduction Sl. No. Financial Information Standard Bank Ltd Annual Report 2020 | 411
413. SBL CAPITAL MANAGEMENT LIMITED Introduction (A SUBSIDIARY OF STANDARD BANK LTD.) STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST DECEMBER, 2020 Amount in Taka Particulars Notes Corporate Governance INCOME: Interest Income 21.A Growth over 2019 2020 2019 Variance % a b c=a-b d=(c /a)*100 186,868,695 173,878,671 12,990,024 7.47% 13,190,197 8,782,121 4,408,076 50.19% 6,971,606 5,711,765 1,259,841 22.06% 157.15% Transaction /Settlement fees Management fee Gain on Sale of Shares 45,341,817 17,632,303 27,709,514 Dividend on Investment in Shares 50,713,214 50,934,960 (221,746) -0.44% 1,703,950 1,245,900 458,050 36.76% 304,789,479 258,185,719 46,603,760 18.05% 10.38% Other Income 21.B Risk Governance Total Income (A) EXPENDITURE: Interest Expense 22.00 219,683,845 199,030,091 20,653,754 Salary & Allowances 23.00 12,380,170 11,689,622 690,548 5.91% Rent, Taxes, Insurance & Electricity 24.00 1,811,462 1,972,515 (161,053) -8.16% Management Retrospection Postage, Stamp & Telecommunication 25.00 35,375 44,156 (8,781) -19.89% Stationery, Printing & Advertisement 26.00 131,948 237,262 (105,314) -44.39% Directors’ Fee & Other expenses 27.00 560,031 749,042 (189,011) -25.23% Audit & Consultancy Fees 28.00 223,100 87,400 135,700 155.26% 600,748 579,748 21,000 3.62% 29.00 3,564,780 3,236,869 327,911 10.13% 238,991,459 217,626,705 21,364,754 9.82% 65,798,019 40,559,014 25,239,006 62.23% Depreciation Other Expenses Total Expenditure (B) Profit before Provision (C=A-B) Stakeholders’ Information Less: Provision for diminution in value of investments 18.00 8,537,361 1,798,830 6,738,531 374.61% Less: Provision for margin loan 19.00 21,572,240 6,354,368 15,217,872 239.49% Less: Provision for interest waiver to A.S.I. 20.A - - - 0.00% Total Provision (D) 30,109,601 8,153,198 21,956,402 269.30% Profit/(Loss) before tax (E=C-D) 35,688,419 32,405,815 3,282,603 - 10.13% 34,739,324 31,950,222 2,789,102 8.73% Profit/(Loss) after tax Retained earnings brought forward from previous year 949,094 8,979,057 455,593 8,523,464 493,501 455,593 108.32% 5.35% Retained earnings carried forward 9,928,151 8,979,057 949,094 10.57% 0.03 108.32% Less: Provision for Taxation Sustainability Earnings per share 17.00 30.00 0.06 0.03 The accompanying notes form an integral part of these financial statements. Financial Information Chief Executive Officer Director Chairman Subject to our separate report of even date. Dated, Dhaka Date: April 15, 2021 412 | Standard Bank Ltd Annual Report 2020 Shafiq Basak & Co. Chartered Accountants
414. Introduction Corporate Governance Risk Governance Stakeholders ’ Information Sustainability Financial Information 413 | Standard Bank Ltd Annual Report 2020 Management Retrospection STANDARD EXCHANGE COMPANY (UK) LIMITED Financial Information
415. Introduction Corporate Governance STANDARD EXCHANGE COMPANY (UK) LTD Risk Governance Company Information For the year ended 31 December 2020 Management Retrospection DIRECTORS Kazi Akram Uddin Ahmed Khondoker Rashed Maqsood Registered Number 06851946 REGISTERED OFFICE Stakeholders’ Information 101 WHITECHAPEL ROAD LONDON E1 1DT ACCOUNTANTS Sustainability Jahan & Co Chartered Management Accountants 22 Osborn Street London E1 6TD SECRETARY Financial Information Muhammad Abdul Ahad Bankers Clear Bank 414 | Standard Bank Ltd Annual Report 2020
416. Introduction Directors ’ Report FOR THE YEAR ENDED 31 DECEMBER 2020 Corporate Governance The directors present their annual report and the financial statements for the year ended 31 December 2020. PRINCIPAL ACTIVITIES Principal activity of the company during the financial year was of financial intermediation. DIRECTORS The directors who served the company throughout the year were as follows: Risk Governance • • • Kazi Akram Uddin Ahmed Mamun Ur Rashid (from 01/11/2016 to 29/01/2020) Khondoker Rashed Maqsood (from 29/01/2020) STATEMENT OF DIRECTORS’ RESPONSIBILITIES Management Retrospection The directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable law and regulations and in accordance with United Kingdom Generally Accepted Accounting Practice. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (Financial Reporting Standard 102). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period. In preparing these financial statements, the directors are required to : select suitable accounting policies and then apply them consistently • make judgements and accounting estimates that are reasonable and prudent • state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. Stakeholders’ Information • Sustainability The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom, governing the preparation and dissemination of financial statements, may differ from legislation in other jurisdictions This report was approved by the board and signed on its behalf by: Financial Information Kazi Akram Uddin Ahmed Director Date approved: 19 January 2021 Standard Bank Ltd Annual Report 2020 | 415
417. Introduction Accountants ’ Report FOR THE YEAR ENDED 31 DECEMBER 2020 Corporate Governance In order to assist you to fulfil your duties under Companies Act 2006. we have prepared (or your approval the accounts of STANDARD EXCHANGE COMPANY (UK) LTD for the year ended 31 December 2020 which comprise the Statement of Comprehensive Income, the Statement of Financial Position and related notes from the company’s accounting records and from information and explanations you have given us. As a practicing member of the Chartered Institute of Management Accountants, we are subject to its ethical and other professional requirements which are detailed at CIMA’s website. Risk Governance This report is made solely to the member of STANDARD EXCHANGE COMPANY (UK) LTD, as a body, in accordance with the terms of our engagement letter. Our work has been undertaken solely to prepare for your approval the accounts of STANDARD EXCHANGE COMPANY (UK) LTD and state those matters that we have agreed to state to the Board of STANDARD EXCHANGE COMPANY (UK) LTD, as a body, in this report in accordance with the requirements of the Chartered Institute of Management Accountants and as detailed at its website. To the fullest extent permitted by law. we do not accept or assume responsibility to anyone other than STANDARD EXCHANGE COMPANY (UK) LTD and its members as a body for our work or for this report. Management Retrospection It is your duty to ensure that STANDARD EXCHANGE COMPANY (UK) LTD has kept adequate accounting records and to prepare statutory accounts that give a true and fair view of the assets, liabilities, financial position and Loss of STANDARD EXCHANGE COMPANY (UK) LTD. You consider that STANDARD EXCHANGE COMPANY (UK) LTD is exempt from the statutory audit requirement for the year. We have not been instructed to carry out an audit or a review of the accounts of STANDARD EXCHANGE COMPANY (UK) LTD. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not therefore, express any opinion on the statutory accounts. Stakeholders’ Information Jahan & Co Chartered Management Accountants 22 Osborn Street London E16TD 19 January 2021 Sustainability Financial Information 416 | Standard Bank Ltd Annual Report 2020
418. Notes 2020 £ Introduction STANDARD EXCHANGE COMPANY (UK) LTD INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 2019 £ 195,200 Gross profit 213,427 195,200 (3,095) (3,105) (215,428) (187,082) (5,096) 5,013 (5,096) 5,013 - - (5,096) 5,013 Selling and distribution costs Administrative expenses Operating profit/(loss) Profit/(Loss) on ordinary activities before taxation Tax on profit on ordinary activities Profit/(Loss) for the financial year 2 Risk Governance 213,427 Corporate Governance Turnover Management Retrospection Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 417
419. Introduction STANDARD EXCHANGE COMPANY (UK) LTD STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Corporate Governance Notes 2020 £ 2019 £ Fixed assets Tangible fixed assets 6 14,018 17,610 14,018 17,610 177,586 Current assets Debtors: amounts falling due within one year 7 54,802 Debtors: amounts falling due after one year 8 126,764 - 113,790 46,471 295,356 224,057 (245,839) (173,036) Net current assets 49,517 51,021 Total assets less current liabilities 63,535 68,631 Net assets 63,535 68,631 Risk Governance Cash at bank and in hand Creditors: amount falling due within one year 9 Management Retrospection Capital and reserves Called up share capital 10 300,000 300,000 Profit and loss account 11 (236,465) (231,369) 63,535 68,631 Shareholders’ funds For the year ended 31 December 2020 the company was entitled to exemption from audit under section 477 of the companies act 2006 relating to small companies. DIRECTORS’ RESPONSIBILITIES: Stakeholders’ Information 1. Sustainability The financial statements were approved by the board of directors on 19 January 2021 and were signed on its behalf by: The members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476 2. The directors acknowledge their responsibilities for complying with the requirements of the companies act 2006 with respect to accounting records and the preparation of accounts These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime of Part 15 of the Companies Act 2006. Financial Information Kazi Akram Uddin Ahmed Director 418 | Standard Bank Ltd Annual Report 2020 Khondoker Rashed Maqsood Director Muhammad Abdul Ahad Secretary
420. Equity share capital Retained Earnings Total £ £ £ 300,000 (236,382) 63,618 5,013 5,013 Total comprehensive income for the year - 5,013 5,013 Total investments by and distributions to owners Profit for the year - - 300,000 (231,369) 68,631 At 01 January 2020 300,000 (231,369) 68,631 (5,096) (5,096) Profit for the year Total comprehensive income for the year - (5,096) (5,096) Total investments by and distributions to owners - - - 300,000 (236,465) 63,535 At 31 December 2020 Risk Governance - At 31 December 2019 Corporate Governance At 01 January 2019 Introduction STANDARD EXCHANGE COMPANY (UK) LTD STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020 Management Retrospection Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 419
421. Introduction STANDARD EXCHANGE COMPANY (UK) LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 Corporate Governance GENERAL INFORMATION STANDARD EXCHANGE COMPANY (UK) LTD is a private company, limited by shares, registered in England and Wales, registration number 06851946, registration address 101, WHITECHAPEL ROAD, LONDON, E1 1DT The presentation currency is £ sterling. 1. ACCOUNTING POLICIES Significant accounting policies Statement of compliance Risk Governance These financial statements have been prepared in compliance with FRS 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland and the Companies Act 2006. Basis of preparation The financial statements have been prepared on the going concern basis and under the historical cost convention as modified by the revaluation of land and buildings and certain financial instruments measured at fair value in accordance with the accounting policies. Management Retrospection The financial statements are prepared in sterling which is the functional currency of the company. Turnover Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sale taxes. Foreign currencies Stakeholders’ Information Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the statement of financial position date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All foreign exchange differences are included to the income statement. Tangible fixed assets Tangible fixed assets, other than freehold land, are stated at cost or valuation less depreciation and any provision for impairment. Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual value, over their expected useful lives on the following basis: Sustainability Short Leasehold Properties 15 Years Straight Line Plant and Machinery 20% Reducing Balance Fixtures and Fittings 20% Reducing Balance 2. OPERATING PROFIT(LOSS) 2020 2019 £ £ Financial Information The operating profit /(loss) is stated after charging: Directors emoluments Depreciation of tangible fixed assets 420 | Standard Bank Ltd Annual Report 2020 - 1,400 3,592 3,977
422. 3 . Directors’ Emoluments 2020 2019 £ £ - 1,400 - 1,400 52,270 52,951 Corporate Governance Administrative Expenses Directors Benefits in Kind Introduction STANDARD EXCHANGE COMPANY (UK) LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 The directors did not withdraw any salary during the period. 4. Staff Costs Pension costs, defined contribution plan 1,760 814 1,400 55,250 56,111 Number Number Administration 1 1 Sales 2 2 3 3 Average number of employees during the year Management Retrospection 2,166 Other staff costs Risk Governance Wages and salaries 5. Average number of employees Average number of employees during the year was 3 (2019 : 3) At 01 January 2020 Plant and Machinery Fixtures and Fittings Total £ £ £ £ 24,421 43,796 91,062 Additions - - - - Disposals - - - - 22,845 24,421 43,796 91,062 16,384 20,075 36,993 73,452 1,523 807 1,262 3,592 - - - - 17,907 20,882 38,255 77,044 Closing balance as at 31 December 2020 4,938 3,539 5,541 14,018 Opening balance as at 01 January 2020 6,461 4,346 6,803 17,610 At 31 December 2020 Sustainability 22,845 Stakeholders’ Information Cost or valuation Short Leasehold Properties Depreciation At 01 January 2020 Charge for year On disposals Financial Information At 31 December 2020 Net book values Standard Bank Ltd Annual Report 2020 | 421
423. Introduction STANDARD EXCHANGE COMPANY (UK) LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 7. Debtors: amounts falling due within one year Corporate Governance Trade Debtors 2020 2019 £ £ 37,460 37,060 Prepayments & Accrued Income 1,778 106 Other Debtors 6,814 131,670 Rent Deposit 8,750 8,750 54,802 177,586 126,764 - 126,764 - 7,896 - PAYE & Social Security 1,115 1,064 Accrued Expenses 3,376 1,137 Rent Deposit Received 1,000 3,000 232,452 151,772 - 16,063 245,839 173,036 300,000 300,000 300,000 300,000 8. Debtors: amounts falling due after one year Risk Governance Other Debtors 9. Creditors: amount falling due within one year Management Retrospection Trade Creditors TT Payable Payable to Brae Saajan 10. Share Capital Stakeholders’ Information Allotted, called up and fully paid 300,000 Class A shares of £1.00 each 11. Profit and loss account Balance at 01 January 2020 Sustainability Loss for the year Balance at 31 December 2020 Financial Information 422 | Standard Bank Ltd Annual Report 2020 (231,369) (5,096) (236,465)
424. 2020 £ Introduction STANDARD EXCHANGE COMPANY (UK) LTD DETAILED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 2019 £ Other Trading Income 14,471 15,300 Exchange Rate Gains 72,154 58,125 126,802 121,775 213,427 195,200 213,427 195,200 Remittance Commissions Gross profit Corporate Governance Turnover Selling and distribution costs Entertainment Travel Expenses 2,600 1,030 - 51 495 2,024 (3,095) Risk Governance Advertising (3,105) Administrative expenses Wages & Salaries 52,951 2,166 1,760 Staff Training 500 400 Staff Welfare 314 1,000 - 1,400 3,500 3,500 - 2,600 Directors Benefits in Kind Accountancy Fees Legal and Professional Fees (Allowable) 3,550 - 2,971 1,795 Cleaning of Premises 1,295 1,542 Rent, Rates & Insurance 50,501 53,710 Bank Charges 75,413 49,668 1,523 1,523 Depreciation Charge: Leasehold Properties 807 937 Depreciation Charge: Fixtures & Fittings 1,262 1,517 Fees & Subscriptions 1,479 380 General Insurance 2,181 1,356 630 873 Computer Expenses Repairs & Renewals 3,234 - Stationery & Postage 1,347 1,918 615 943 Telephone, Fax & Internet Sundry Expenses Security Expenses - (1) 9,600 7,000 270 - Business Meeting Expenses Financial Information Business Development Cost Sustainability Depreciation Charge: Plant & Machinery Stakeholders’ Information Consultancy Fees Light, Heat & Power Management Retrospection Pension Contributions 52,270 310 (215,428) (187,082) Operating profit/(loss) (5,096) 5,013 Profit/(Loss) on ordinary activities before taxation (5,096) 5,013 Profit/(Loss) for the financial year (5,096) 5,013 Standard Bank Ltd Annual Report 2020 | 423
425. Introduction Corporate Governance Risk Governance Financial Information Management Retrospection STANDARD CO (USA) INC Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 424
426. Introduction 122East 42rd Street Suite 2100 New York , NY 10168 Tel. 212 661 2315: Fax 212 983 5276 Corporate Governance United Financial CPA PC INDEPENDENT AUDITOR’S REPORT TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF STANDARD CO (USA) INC. Risk Governance We have audited the accompanying financial statements of Standard Co (USA) Inc., a State of NY corporation, which comprise the balance sheet as of December 31. 2020 and 2019, and the related statements of income and cash flows for the years then ended, and the related notes to the financial statements. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management Retrospection Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Stakeholders’ Information 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 and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION Sustainability In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Standard Co (USA) Inc., as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Financial Information Anowar Hossain United Financial CPA PC New York, New York Date 03/18/2021 Standard Bank Ltd Annual Report 2020 | 425
427. Introduction STANDARD CO (USA) BALANCE SHEET DECEMBER 31, 2020 AND 2019 Corporate Governance ASSETS Year 2020 Year 2019 CURRENT ASSETS Cash in Hand and Branch Fund Cash at Bank (note b) Cash at Foreign Bank (note b) Total cash and bank 1,718,900 769,404 697,455 983,437 91,018 112,177 2,507,373 1,865,018 Risk Governance Account Receivable Other Assets (note c) TOTAL CURRENT ASSETS Leased Hold Improvement 7,225 4,019 66,140 66,140 2,580,738 1,935,177 314,623 Less: Accumulated Depreciation (215,581) Office equipment & Sign 314,623 99,042 63,183 (179,400) 82,847 Management Retrospection Less: Accumulated Depreciation (63,183) Preliminary Expenses 114,616 114,616 Less: Accumulated Depreciation (61,438) (53,797) Total Net-Preliminary Expenses Total other Non-Current Assets 0 (82,847) 0 53,178 60,819 152,220 196,042 2,732,958 2,131,219 1,214,538 756,496 Due to Beneficiary (note 3) 20,330 148,399 SBA PPL Loans 96.190 0 Other current Liabilities Payable 20,692 54,302 1,351,750 959,197 1,550,000 1,550,000 Total Assets LIABILITIES AND SHAREHOLDER’S EQUITY Customer Deposits Stakeholders’ Information Total Current Liabilities Dues to Correspondence (note 3) Total current Liability current Liabilities SHAREHOLDERS’ EQUITY Sustainability Paid in capital (168,792) (377,978) Total Stockholder’s Equity 1,381,208 1,172,022 TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY 2,732,958 2,131,219 Retained Earnings as of December 31, 2020 and 2019 See accompanying independent auditor’s report. Financial Information Anowar Hossain, CPA 426 | Standard Bank Ltd Annual Report 2020 135,223 Mohammad Malek, President & CEO
428. Introduction STANDARD CO (USA) INC. STATEMENT OF STOCKHOLDER’S EQUITY SHAREHOLDERS’ EQUITY Common stock, 20,000 no par value shares authorize, issued and outstanding Retained Earnings as of December 31, 2020 and 2019 Total Stockholder’s Equity 2020 2019 1,550,000 1,550,000 (168,792) (377,978) 1,381,208 1,172,022 Corporate Governance DECEMBER 31, 2020 AND 2019 Management Retrospection Anowar Hossain, CPA Risk Governance See accompanying independent auditor’s report. Mohammad Malek, President & CEO Stakeholders’ Information Sustainability Financial Information Standard Bank Ltd Annual Report 2020 | 427
429. Introduction STANDARD CO (USA) INC. STATEMENT OF INCOME AND RETAINED EARNINGS DECEMBER 31, 2020 AND 2019 Corporate Governance 2020 2019 REVENUES Commission and income 378,253 413,124 Foreign Exchange 1,123,389 905,630 Total Revenue after considering foreign exchange Gains 1,501,642 1,318,754 Salaries and wages 501,130 477,287 Bank charges 163,614 155,958 Risk Governance OPERATING EXPENSES Bond Premium-CA .Atlanta Branch Rent Depreciation Management Retrospection Amortization 4,062 3,750 340,168 324,037 36,180 36,180 7,641 7,641 308,573 336,375 1,361,368 1,341,228 140,274 (22,474) 82,001 56,067 Income Before interest and Taxes 222,275 (33,593) State Income Taxes (13,092) (2,440) Net income 209,183 31,153 (377,978) (409,131) 3 0 (168,792) (377,978) General &Administrative Expenses Total Operating Expenses Operating Income (Loss) Non-Operating Income Stakeholders’ Information Retained Earnings at the Beginning of the Year Adjustments Retained Earnings at the End of the Year Sustainability Anowar Hossain, CPA Financial Information 428 | Standard Bank Ltd Annual Report 2020 Mohammad Malek, President & CEO
430. Introduction STANDARD CO (USA) INC. STATEMENT OF CASH FLOWS DECEMBER 31, 2020 AND 2019 2020 Net Income Corporate Governance CASH FLOWS FROM OPERATING ACTIVITIES 2019 209,183 (31,153) Depreciation 36,180 36,181 Amortization 7,641 7,641 (128,069) (159,595) 0 0 (3,206) (186) Adjustments to reconcile Changes in net assets to net cash provided by operating activities: Account Receivable Suspense Account Due to correspondent 0 0 458,042 (206,857) (33,610) 6,025 Net cash provided from (used) by Operating Activities 546,161 (285,638) SBA PPL Loans 96,190 0 Net cash flow from Investing Activities 96,190 0 0 150,000 Management Retrospection Other Payable Risk Governance Due to Beneficiaries Other Asset Cash flow from Investing Activities: Cash flow from Financing Activities: Paid in Capital Net cash flow from Financing Activities Net increase (decrease) in cash flow Cash at the beginning of the year Cash at the end of the year 150,000 135,638 1,865,018 2,000,656 4 0 2,507.373 1,865,018 Stakeholders’ Information Adjustments 0 642,351 See accompanying independent auditor’s report. Sustainability Anowar Hossain, CPA Mohammad Malek, President & CEO Financial Information Standard Bank Ltd Annual Report 2020 | 429
431. Introduction STANDARD CO (USA) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 AND 2019 Corporate Governance 1. ORGANIZATION Standard Co (USA) Inc. (the Company) is a for-profit corporation based in Queens, New York. The Company was organized in February 1, 2010 under the laws of the State of New York to operate an international money service business. On November 17, 2014 Company registered with the State of California to conduct money transfer business in California. Company received money transfer license to transact the business of receiving money for transmission within this country and aboard pursuant to the provisions of the Xlll-B of the Banking Law in the State of New York on January 31, 2011 and under the provision of the State of California Banking Law a money transmitting license was approved on December 19, 2013. Risk Governance The Company is registered as a Money Service Business (MSB) with the Internal Revenue Service. 2. SIGNIFICANT ACCOUNTING POLICIES a. Basis of Accounting The financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles (GAP) Management Retrospection b. Cash & Cash Equivalents Cash & cash equivalents include cash in bank accounts and highly liquid debt instruments purchased with an original maturity of three months or less. Cash at Bank 2020 2019 Cash in Hand $ 1,718,900 769,404 Cash in Bank 197,455 483,437 HAB BANK CD 500,000 500,000 2,416,355 1,752,841 Stakeholders’ Information Total Cash at Foreign Bank 2020 2019 Agrani Bank 32,856 25,304 Dutch Bangla Bank 8,028 20,410 Pubali Bank 32,315 36,003 Utter a Bank 17,819 30,460 Total 91,018 112,177 Sustainability c. Deposit, Advance and Prepaid Expenses Prepaid expenses primarily consist of prepaid bond and insurance expenses. The prepaid amounts are expensed over the respective terms of the policies in accordance with Generally Accepted Accounting Principles (GAAP). The Company had $66,140 as Deposit, Advance and prepaid expenses at 2020 and $ 66,140 of at December 31, 2019. d. Short-term Investments Financial Information Short-term investments consist of interest-bearing and non-interest bearing Certificate of Deposits (CDs) held at financial institutions (HAS BANK) in the United States. e. Property, Plant, & Equipment The Company follows the practice of capitalizing all expenditures for property, furniture, fixtures, equipment, and leasehold improvements in excess of $500. In accordance with generally accepted accounting principles (GAAP), land is not depreciated. Depreciation or amortization of all such items is computed on the straight-line basis over the estimated useful lives of the assets which generally are as follows: 430 | Standard Bank Ltd Annual Report 2020
432. 39-years Furniture & fixtures 5-7 years Equipment and vehicles 5-7 years Software 3-years Introduction Buildings & improvements Leasehold improvements life of lease or useful life (whichever is shorter) Corporate Governance f. Income Taxes The Company is a C Corp and the Company is required to pay income taxes based on IRC code. During the 2020 company earned profit 209,183. Company paid estimated taxes approximately $13,092 to IRS and to NYS and California State Income and business franchise taxes. g. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the use of management’s estimates. Actual results could vary from these estimates. Risk Governance h. Agent Receivable Company does not have Agents. Company operates suing own branches. The Company has branches in the State of New York and The State of California. i.Commitments The Company renewed a non-cancellable lease agreement for office space. Year 2021 Management Retrospection The future minimum annual rental payments are as follows: Minimum Base Annual Rental Payments $ 340,168 The future minimum monthly rental payments are subject to escalations due to real estate taxes and common are maintenance charges. For the year ended December 31, 2020, lease expense related to this commitment amounted to $340,168. j. Deferred Charges Stakeholders’ Information Deferred charges consist of start-up costs such as legal and organizational expenses that were incurred at the Company inception. The start-up costs are being amortized over twenty years and for the year ended December 31, 2020 and 2019, the Company recognized amortization expense of $ 0 which resulted in an ending net balance in deferred charges of $ 0 k. Concentration of Credit Risk The Company maintains cash with local financial institutions. The Federal Deposit Insurance Corporation (FDIC) insures the total deposits at these institutions up to $250,000 per depositor. I. Date of Management’s Review Sustainability In preparing financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through March 30, 2019, the date that the financial statements were available to be issued. Financial Information Anowar Hossain, CPA Mohammad Malek, President & CEO Standard Bank Ltd Annual Report 2020 | 431
433. 3 . WIRE TRANSFERS PAYABLE Introduction Wire transfers payable consists of the funds owed to the Company’s customers for unpaid wires at December 31, 2020 and 2019, as well as paid wires owed to the Company’s correspondent agent. Wire transfers payable were the following: 2020 Due to Correspondents Corporate Governance Due to Beneficiaries Total 2019 1,214,538 756,496 20,330 148,399 1,234.868 904.895 4. STATEMENT OF CHANGES IN SHAREHOLDERS’ CAPITAL Year 2020 BALANCE at the Beginning of the Year Paid in Capital Risk Governance NET INCOME (LOSS) Year 2019 1,172,022 990,869 0 150,000 209,183 31,153 SHAREHOLDERS INVESTMENTS - DISTRIBUTIONS TO SHAREHOLDERS BALANCE, December 31, 2020 and 2019 1,381,208 1,172.022 5. RISKS AND UNCERTAINTIES Management Retrospection The Company depends on having a bank account to operate its business. Beginning in 2001, due to increased anti-money laundering regulations, there has been a trend in the United States of banks choosing not to do business with Money Service Businesses as a whole including those that comply with Federal and State laws and regulations. This trend has adversely affected the Money Service Businesses industry as a whole. As a result of the aforementioned adverse conditions being imposed by US banks, management is looking into ways to mitigate the risk from this trend. Company maintains only Banking relationship with HAB Bank. Management must look into and pursue banking relationship with other USA Banks. Stakeholders’ Information Sustainability Anowar Hossain, CPA Financial Information 432 | Standard Bank Ltd Annual Report 2020 Mohammad Malek, President & CEO
434. BRANCH NETWORK
435. Introduction DHAKA ZONE : Corporate Governance Afaznagar Branch Rezia Tower (1st Floor) Afaznagar Residential Area, Get no. 1, Fatulla, Narayangonj Cell: 01701221930 Email: afaznagar@standardbankbd.com Aganagar Branch Haji Alim Ullah Complex, Zinzira, East Aganagar, South Keranigonj, Dhaka Cell: 01701221646 Tel: 02-7762380 Email: aganagar@standardbankbd.com Risk Governance Ashkona Branch 247 Dana Plaza, Ashkona, Dakkhinkhan, Uttara, Dhaka 1230. Cell: 01701221643 Tel: 02-8961823 Email: ashkona@standardbankbd.com Ashulia Branch Bhai Bhai Plaza (1st floor), Bogabari, Baipail, Ashulia, Savar, Dhaka. Cell: 01701221683 Tel: 02-7790004 Email: ashulia@standardbankbd.com Management Retrospection Bakshigonj Branch Sawdagor Shopping Complex (1st floor), Old Bus Stand Road, Bakshigonj, Jamalpur Cell: 01701221884 Tel: 09822-56136 Email: bakshigonj@standardbankbd.com Banani Branch Plot # 98, Road-11, Bloc-C, Banani, Dhaka. Cell: 01701221540 Tel: 02-9889545 Email: banani@standardbankbd.com Stakeholders’ Information Banti Bazar Branch Hazi Musa Plaza (1st Floor), Banti Adarsha Bazar, Araihazar, Narayanganj Cell: 01701221699 Email: bantibazar@standardbankbd.com Bhairab SME/Krishi Branch 595/2 Bangobondhu Sharani, Bhairabpur, Bhairab, Kishorgonj. Cell: 01701221711 Tel: 02-9471301 Email: bhairab@standardbankbd.com Sustainability Bhojeshwar Branch Shahnoor Shopping Complex (1st floor), Bhojeshwar Bazar, College Road, Naria, Shariatpur. Cell: 01701221858 Email: bhojeswar@standardbankbd.com Financial Information Bhulta Branch Rabet Al- Hasan Shopping Center (2nd Floor) Bhulta Bus-Stand, Rupgonj, Narayangonj Cell: 01701221693 Email: bhulta@standardbankbd.com Chashara Branch Sufia Complex (1st Floor) 69 North Chashara, Fatulla, Narayanganj Cell: 01701221939 Email: chashara@standardbankbd.com 434 | Standard Bank Ltd Annual Report 2020 Dakkhin Khan Branch 57, Dakkhin Khan Bazar, Sultan Market , P.O + P.SDakkhin Khan, Dhaka-1230. Cell: 01701221625 Tel: 02-8956056 Email: dakkhinkhan@standardbankbd.com Gulshan-1 Branch Uday Tower, 57 & 57A, Gulshan Avenue (South), Circle-1, Gulshan, Dhaka Cell: 01701221505 Tel: 02-9862111 Email: gulshan1@standardbankbd.com Dhaka Udyan Branch (Islamic Banking) Udyan Dil, 1st Floor, Holding#16 Block#B, Dil Mohammad Avenue Mohammadpur, Dhaka Cell: 01701221963 Email: dhakaudyan@standardbankbd.com Hemayetpur Branch Maolana Shopping Complex, Hemayetur, Savar, Dhaka Cell: 01701221705 Tel: 02-44065025 Email: hemayetpur@standardbankbd.com Dhanmondi Branch Sima Blossom, Sheikh Kamal Sarani House # 03, Road # 27(Old), 16 (New), Dhanmondi R/A, Dhaka-1209. Cell: 01701221525 Tel: 02-8156621 Email: dhanmondi@standardbankbd.com Ekoria (Keranigonj) Branch (Near at China BD Friendship Bridge-1), Hasnabad, Ekoria, South Keranigonj, Dhaka Cell: 01701221673 Tel: 02-7761100 Email: ekoria@standardbankbd.com Faridpur Branch R.K. Plaza (1st floor), 244 Goalchamot, Hazralota, Faridpur Sadar, Faridpur Cell: 01701221757 Tel: 0631-61875 Email: faridpur@standardbankbd.com Foreign Exchange Branch PFI Tower (2nd Floor), 56-57 Dilkusha C/A., Dhaka-1000. Cell: 01701221520 Tel: 02-9571933 Email: foreignexchange@standardbankbd.com Gazipur SME/Krishi Branch Sahabuddin Complex (1st floor), 168, Joydebpur Bazar, Gazipur 1700. Cell: 01701221689 Tel: 02-9264263 Email: gazipur@standardbankbd.com Goalanda Branch Akbar Plaza (1st Floor), Ahladipur, Goalanda More, Rajbari Cell: 01701221832 Email: goalanda@standardbankbd.com Gopalgonj Branch City Square Shopping Mall, College Road, Gopalgnoj Cell: 01701221784 Tel: 423-6681570 Email: gopalgonj@standardbankbd.com Imamgonj Branch Bellal Market, 79, Moulvibazar, Dhaka-1100. Cell: 01701221560, Tel: 02-7342525 Email: imamgonj@standardbankbd.com Islampur Branch Textile Center, 12 Islampur Road, Kotwali, Dhaka Cell: 01701221676 Tel: 02-57396940 Email: islampur@standardbankbd.com Kamarpara Branch A. R. Complex, 75 Kamarpara, Uttara, Turag, Dhaka. Cell: 01701221696 Tel: 02-8981591 Email: kamarpara@standardbankbd.com Kanchpur Branch, Narayangonj Jamir Khan Complex (1st Floor), Kanchpur Bus Stand, Kanchpur, Sonargoan, Narayangonj. Cell: 01701221670 Email: kanchpur@standardbankbd.com Kashiani Branch Abdus Samad Market (1st Floor) Chowrasta more, Thana Road P. S. Kashiani, Gopalgonj Cell: 01701221906 Tel: 0665-256255 Email: kashiani@standardbankbd.com Kawran Bazar Branch Hasney Tower (1st Floor) 3/A, Kawran Bazar C/A Dhaka-1215 Cell: 01701221649 Tel: 02-55013234 Email: kawranbazar@standardbankbd.com Kholamora Branch Aziz Super Market (1st Floor), Kholamora Launch Ghat, Samaruddin Nagor, Ward- 2, Kholamora, South Keranigonj, Dhaka-1312 Cell: 01701221702 Tel: 02-7766506 Email: kholamora@standardbankbd.com Green Road Branch Castle Green (1st floor), 142 Green Road, Dhaka. Cell: 01701221550 Tel: 02-9102770 Email: greenroad@standardbankbd.com Kotalipara Branch, Gopalgonj K.M. Super Market (1st Floor), Ghagor Bazar, Kotalipara, Gopalgonj. Cell: 01701221787 Tel: 02-6651277 Email: kotalipara@standardbankbd.com Gulshan Branch 32 Shezad Palace (1st & 2nd Floor), Gulshan Avenue, North Commercial Area, Gulshan-2, Dhaka-1212. Cell: 01701221510, Tel: 02-9881015 Email: gulshan@standardbankbd.com Madhabdi Branch MMK Tower (1st Floor), Madhabdi Bazar, College Road, Anondimoor, Madhabdi, Narshindi Cell: 01701221708 Email: madhabdi@standardbankbd.com
436. Shafipur Branch Shapna Joy Tower (1st Floor), Shafipur Bazar, Kaliakair, Gazipur. Cell: 01701221679 Tel: 068-2251058 Email: shafipur@standardbankbd.com Matuail Branch Momenbagh Chowrasta, Paradogair, Konapara, Matuail, Demra, Dhaka-1362 Cell: 01701221628 Tel: 02-7546147 Email: matuail@standardbankbd.com Nayanpur Branch Alhaj Nizamuddin Tower (1st Floor) Nayanpur Bazar, Sreepur, Gazipur Cell: 01701221933 Email: nayanpur@standardbankbd.com Shibchar Branch 286 Iman Gomosta Market (1st Floor), Guatola, Main Road, Shibchar Bazar, Shibchar, Madaripur. Cell: 01701221796 Tel: 0662-456500 Email: shibchar@standardbankbd.com Mirpur Branch Northern Lion’s R.P. Tower (1st Floor), Plot-4, Block-D, Section-2, Chiriakhana Road, Mirpur, (Near Sony Hall) Dhaka 1216. Cell: 0 1701221545 Tel: 02-9014059 Email: mirpur@standardbankbd.com Muksudpur Branch M. Rahman Plaza (1st Floor) South Chandibordi, Muksudpur, Gopalganj Cell: 01701221942 Email: muksudpur@standardbankbd.com Mymensingh Branch 27, Rambabu Road, Canada Square Shopping Complex, Mymensingh. Cell: 01701221793 Tel: 091-63530 Email: mymensingh@standardbankbd.com Pallabi Branch Alam Tower, Plot-18, Road-03 Section-07, Pallabi Main Road 1st & 2nd Floor, Mirpur-11, Dhaka Cell: 01701227357 Email: pallabi@standardbankbd.com Panthapath Branch 77, Bir Uttam C.R. Dutta Road, Free School Street, Hatirpool, Dhaka. Cell: 01701221565 Tel: 02-9667126 Email: panthapath@standardbankbd.com Pragoti Sharani Branch KA-70, Hazi Ahmed Plaza (1st Floor), Pragati Sharani, Kuril, PO-Khilkhet, PS-Vatara, Dhaka 1229. Cell: 01701221631 Tel: 02-8410225 Email: progotisharani@standardbankbd.com Narsingdi Branch Jewellery potti, Kalibari Road, Narsindgi Sadar, Narsingdi Cell: 01701221664 Tel: 02-9451807 Email: narsingdi@standardbankbd.com Ring Road Branch Probal Tower, 45-49 Ring Road (1st floor), AdaborShamoly, Dhaka. Cell: 01701221655 Tel: 02-9103413 Email: ringroad@standardbankbd.com Nawabgonj Branch Nawabgonj Adhunik Biponi, Zilla Parishad Market, Nawabgonj, Dhaka. Cell: 01701221640 Email: nawabgonj@standardbankbd.com Savar SME/Krishi Branch B-66, Bazar Road, Savar-1340, Dhaka Cell: 01701221682 Tel: 02-7745991 Email: savar@standardbankbd.com Topkhana Road Branch 36, Crescent Center, 1st Floor, Topkhana Road, Dhaka-1000. Cell: 01701221515 Tel: 02-9582060 Email: topkhana@standardbankbd.com Tungipara Branch (Patgati Br.) Munshi Super Market (1st Floor), Patgati Bazar, Tungipara, Gopalgonj Cell: 01701221763 Tel: 02-6656254 Email: tungipara@standardbankbd.com Uttara Model Town Branch Latif Emporium, Plot # 27, Road- 07, Sector- 03, Uttara Model Town, Uttara, Dhaka 1230. Cell: 01701221530 Tel: 02-8955171 Email: uttara@standardbankbd.com Financial Information Principal Branch Metropolitan Chamber & Commerce Building (Mezzanine floor), 122-124, Motijheel C/A., Dhaka-1000. Cell: 01701221500 Tel: 02-9558375 Email: principal@standardbankbd.com Tongi Branch Amin Bhaban, 12 Chearg Ali Market Tongi, Gazipur Cell: 01701221686 Tel: 02-9810622 Email: tongi@standardbankbd.com Sustainability Narayangonj Branch Nazrul Super Market, 1st & 2nd Floor, 61/2 (New), 28 (Old), BB Road, DIT, Narayangonj Cell: 01701221535 Tel: 02-7646153 Email: narayangonj@standardbankbd.com Takerhat Bazar Branch UP Road, Takerhat Bazar, Rajoir, Madaripur Cell: 01701221808 Email: takerhatbazar@standardbankbd.com Stakeholders’ Information Munshikhola Branch Dhaka-Nararangonj Road, Munshikhola, Shampur, Dhaka 1204. Cell: 01701221652 Tel: 02-7448979 Email: munshikhola@standardbankbd.com North South Road Branch 43/44, Malitola Road, Dhaka Cell: 01701221667 Tel: 02-9592551 Email: northsouth@standardbankbd.com Tangail Branch Khan Super Market, Holding -533,Ward-13,Tangail Pouroshova,Tangail Cell: 01701221781 Tel: 0921-61774 Email: tangail@standardbankbd.com Management Retrospection Mohammadpur Branch Manama Turag (1st Floor), 14/23 Shahjahan Road, Block-A, Mohammadpur, Dhaka-1207. Cell: 01701221637 Tel: 02-9110630 Email: mohammadpur@standardbankbd.com North Brook Hall Road Branch 19 North Brook Hall Road Bangla Bazar , Sutrapur, Dhaka Cell: 01701221954 Tel: 02-47123306 Email: northbrookhall@standardbankbd.com Sonargaon Janapath Branch Muktijoddha K.S. Tower (1st Floor), Sonargaon Janapath Avenue, House-01, Road-17/B, Sector-12, Uttara, Dhaka-1230 Cell: 01701221690 Tel: 02-8955158 Email: sonargaonjanapath@standardbankbd.com Risk Governance Mohakhali Branch, Dhaka Green Delta Aims Tower (GF), 51-52, Mohakhali C/A., Mohakhali, Dhaka Cell: 0 1701221555 Tel: 02-9855478 Email: mohakhali@standardbankbd.com New Eskaton Branch 129, New Eskaton Road, Eskaton Tower, Mogbazar, Ramna.Dhaka-1000 Cell: 01701221661 Tel: 02-9341993 Email: neweskaton@standardbankbd.com Corporate Governance Nawabpur Road Branch Shahi Bhaban (1st floor), 106, BCC Road,Thatari Bazar, Dhaka 1203. Cell: 01701221634 Tel: 02-9512138 Email: nawabpurroad@standardbankbd.com Introduction Malibagh Branch “Faith Tower” (1st Floor & 2nd Floor), 476/A, DIT Road, Malibagh, Dhaka-1217 Cell: 01701221658 Tel: 02-9331929 Email: malibagh@standardbankbd.com Standard Bank Ltd Annual Report 2020 | 435
437. Introduction CHITTAGONG ZONE : Corporate Governance Agrabad Branch World Trade Center Chittagong (2nd Floor), 102103, Agrabad C/A, Chittagong Cell: 01701221585 Tel: 031-2513856 Email: agrabad@standardbankbd.com Bagichahat Branch Bilkis Super Market (1st Floor), 8 Hasimpur, Bagichahat, Chandanaish, Chittagong Cell: 01701221921 Email: bagichahat@standardbankbd.com Risk Governance Bahaddarhat Branch Manila Tower (1st Floor), 4544, Bahaddarhat Moor, Chittagong. Cell: 01701221742 Tel: 031-2552512 Email: bahadderhat@standardbankbd.com Bakalia Branch Hossain Tower (1st Floor), 3615/A, Shah Amanat Bridge Connecting Road, Kalamia Bazar, Bakalia, Chittagong Cell: 01701221820 Tel: 031-2866171 Email: bakalia@standardbankbd.com Management Retrospection Basurhat Branch, Noakhali Rupali Plaza (1st floor), Rupali Chattar, Bashurhat, Companigonj, Noakhali. Cell: 01701221799, Tel: 03223-56093 Email: basurhat@standardbankbd.com Brahmanbaria Branch Peara Miah Tower (1st Floor), 1034, Court Road, Brahmanbaria Cell: 01701221748 Tel: 0851-61788 Email: brahmanbaria@standardbankbd.com Stakeholders’ Information CDA Avenue Branch Mariam Bhavon (1st Floor), 1012/A, CDA Avenue, East Nasirabad, Chattogram 4000 Cell: 01701221778, Tel: 031-2553462 Email: cdaavenue@standardbankbd.com Chaktai Branch 330, Chaulpotti, Natun Chaktai, Bakalia, Chittagong Cell: 01701221733 Tel: 031-626794 Email: chaktai@standardbankbd.com Sustainability Chandpur Branch South Plaza (1st Floor) 235 Shahid Muktijoddah Sarak, Chandpur Sadar, Chandpur Cell: 01701221948 Email: chandpur@standardbankbd.com Financial Information Chittagong EPZ Branch Gazi Complex (1st Floor), Airport Road, EPZ Gate, Bandar, Chittagong Cell: 01701221718 Tel: 031-740912 Email: cepz@standardbankbd.com Chittagong University Branch Abul Hossain Building (1st Floor) Chittagong University Gate No. 1 Hathazari Road, Chittagong Cell: 01701221829, Tel: 031-2601716 Email: ctguni@standardbankbd.com 436 | Standard Bank Ltd Annual Report 2020 Chowdhuryhat Branch Fatehabad, Chikondandi, Hathazari, Chittagong. Cell: 01701221739 Tel: 031-683225 Email: chowduryhat@standardbankbd.com Comilla Branch 4/4 Kapariapatti (1st floor), Comilla. Cell: 01701221852, Tel: 081-72489 Email: comilla@standardbankbd.com Cox’s Bazar Branch Hefazat Market (1st Floor), 103, Main Road, East Bazar Ghata, Cox’s Bazar Cell: 01701221754, Tel: 0341-51377 Email: coxsbazar@standardbankbd.com Feni Branch Sayed Ambia Tower (1st & 2nd floor), 74-75, Trank Road, Rajbari Gate, Feni 3900 Cell: 01701221896, Tel: 0331-61080 Email: feni@standardbankbd.com Gunagari Branch S. M. Chowdhury Super Market, Khasmohol, Gunagari, Kalipur, Baskhali, Chittagong Cell: 01701221887, Tel: 03037-56308 Email: gunagari@standardbankbd.com Jamal Khan Road Branch 370/A-378, Moitree bhaban (1st Floor), Chittagong Cell: 01701221736, Tel: 031-2854274 Email: jamalkhanroad@standardbankbd.com Jubilee Road Branch Aziz Chamber (1st Floor), 6 Noor Ahmed Road, Jubilee Road, Chittagong Cell: 01701221580 Tel: 031-610356 Email: jubilee@standardbankbd.com Kadamtoli Branch Rahat Centre, 295 D. T. Road Kadamtoli, Chittagong Cell: 01701221730 Email: kadamtoli@standardbankbd.com Karnaphuli Branch Haji Jafor Ahmed market (2nd & 3rd floor), Moizzartek, Chorpathorghata, Karnaphuli, Chittagong Cell: 01701221775, Tel: 031-2855002 Email: karnaphuli@standardbankbd.com Khatungonj Branch Khatungonj Trade Centre (1st Floor), Ramjoy Mohajan Lane (Post Office Goli), Khatungonj, Chittagong. Cell: 01701221590 Tel: 031-639594 Email: khatungonj@standardbankbd.com Kumira Branch Ghatghar, Boro Kumira Sitakunda, Chittagong Cell: 01701221899 Tel: 030-4251044 Email: kumira@standardbankbd.com Moheshkhali Branch (Islamic Banking) Nurul Amin Park Vision,1st Floor, Holding# 04-145 Dak Bangla Sarak, Gorok Ghata Moheshkhali, Cox’sbazar Cell: 01701221966 Email: moheshkhali@standardbankbd.com Nangalmora SME/Krishi Branch Nangalmora High School Market (1st floor), Nangalmora Bazar, Hathazari, Chittagong. Cell: 01701221876 Email: nangolmora@standardbankbd.com Nimsar Branch Insaf Super Market (1st Floor), Nimsar, Burichong, Comilla Cell: 01701221826 Email: nimsar@standardbankbd.com Oxygen More Branch Ali Noor Complex (1st floor), Oxygen More, Chittagong. Cell: 01701221760 Tel: 031-2584461 Email: oxyzenmore@standardbankbd.com Pahartali Branch, Chittagong Abul Khair Bhaban, 20/44, D.T. Road, CDA Market, Pahartali, Chittagong Cell: 01701221924 Tel: 031-2771931 Email: pahartali@standardbankbd.com Panchlaish Branch S.F.A. Tower (Ground Floor), Probortak More, 132 Panchlaish, Chittagong. Cell: 0170122183, Tel: 031-2558640 Email: panchlaish@standardbankbd.com Patherhat Branch School Market (1st Floor), Noapara, Raozan, Chittagong. Cell: 01701221817 Tel: 031-2572188 Email: patherhat@standardbankbd.com Ramchandrapur (Comilla) Branch NGS Bhaban (1st Floor), Ramchandrapur Bazar, Muradnagor, Comilla Cell: 01701221861 Email: ramchandrapur@standardbankbd.com Sadarghat Branch 291,Hourbourage Dream,Sadarghat Road, Chittagong Cell: 01701221927 Tel: 031-619960 Email: sadarghat@standardbankbd.com Sandwip Branch Abdul Mannan Complex (1st Floor) Haramia, Sandwip , Chattogram Cell: 01701221951 Email: swandip@standardbankbd.com Shakpura Branch Noor Plaza (1st Floor) Shakpura, Chowmohoni Boalkhali, Chittagong Cell: 01701221918 Email: shakpura@standardbankbd.com Sheikh Mujib Road Sekander Bhaban (1st Floor), 545, Sheikh Mujib Road, Dewanhat, Chittagong 4100 Cell: 01701221769 Tel: 031-711467 Email: skmujibroad@standardbankbd.com Sultanpur Branch Hazi Market (1st Floor) Yakubnagar, Sultanpur, Brahmanbaria Cell: 01701221936 Email: sultanpur@standardbankbd.com
438. Alamdanga Branch 640 /A, London Tower (1st floor), Alif Uddin Road, Alamdanga, Chuadanga Cell: 01701221864, Tel: 07622-56353 Email: alamdanga@standardbankbd.com Barisal Branch Mannan Plaza, 84, Sadar Road, Barisal Cell: 01701221772, Tel: 0431-61273 Email: barisal@standardbankbd.com Jessore Branch Utshab Bhaban, 6/D, R.N. Road, Katwali, Jessore Sadar, Jessore Cell: 01701221715 Tel: 0421-68394 Email: jessore@standardbankbd.com Satkhira Branch Islam Tower (1st Floor), Holding No.-5043, Shahid Kajol Sharani, Ward No.-8, Polashpol, Satkhira Sadar, Satkhira Cell: 01701221855 Tel: 0471-62405 Email: satkhira@standardbankbd.com Mohadevpur Branch Shafali Market (1st & 2nd Floor), Mach Chottar, Maid Road, Mohadevpur, Naogaon Cell: 01701221915 Tel: 07426-75011 Email: mohadevpur@standardbankbd.com RANGPUR ZONE: Atrai Branch Seven stars Mall (Ist Floor), Vortetulia Bhoapara Atrai, Noagaon Cell: 01701221835 Tel: 07422-71022 Email: atrai@standardbankbd.com Baneswar Branch Mahi Plaza, Baneswar Bazar, Puthia, Rajshahi Cell: 01701221902 Email: baneswar@standardbankbd.com Bogra Branch Helal Mansion (1st Floor), Sherpur Road, Sutrapur, Bogra Sadar, Bogra Cell: 01701221751 Tel: 0516-7507 Email: bogra@standardbankbd.com Fulbari Branch Mantri Market (1st & 2nd floor) 24/35 Dhaka Dinajpur Highway Road, Dinajpur Cell: 01701221912 Tel: 05327-56554 Email: fulbari@standardbankbd.com Kumarkhali Branch Kumarkhali Tower(1st Floor), Holding No-43-10, Shahid Golam Kibria Sarak, Kumarkhali, Kustia. Cell: 01701221960 Tel: 07025-76221 Email: kumarkhali@standardbankbd.com Gobindagonj Branch Shila Plaza (1st floor), 211/1, Gobindagonj, DhakaRangpur Highway, Gaibandha Cell: 01701221881 Tel: 05423-75108 Email: gobindagonj@standardbankbd.com Kushtia Branch 43, N.S. Road (1st floor), Amlapara, Kushtia. Cell: 01701221745, Tel: 071-72458 Email: kushtia@standardbankbd.com Hatikumrul Branch Sabuj Biplob Super Market (1st floor), Hatikumrul Goal Chattar, Ullapara, Sirajgonj Cell: 01701221814, Tel: 07532-51292 Email: hatikumrul@standardbankbd.com Pirgonj Branch Muktijoddha Complex (1st Floor), Projapara, Thana Road, Pirgonj, Rangpur Cell: 01701221867 Tel: 05227-56047 Email: pirgonj@standardbankbd.com Rajshahi Branch M K Tower (1st & 2nd Floor), 28 Gonokpara, Ward No.-12, Ghoramara, Boalia, Rajshahi 6100 Cell: 01701221712 Tel: 0721-811981 Email: rajshahi@standardbankbd.com Rangpur Branch Shah Jamal Market (1st Floor), Station Road,Rangpur-5400 Cell: 01701221790 Tel: 0521-52127 Email: rangpur@standardbankbd.com Rohanpur Branch Alhaz Abdul Latif Super Market (1st Floor), Rohanpur Boro Bazar, Rohanpur, Gomostapur, Chapai Nawabgonj. Cell: 01701221811 Tel: 07823-74228 Email: rohanpur@standardbankbd.com Saidpur SME/Krishi Branch Khaled Market (1st floor), Shahed Dr. Zhikrul Haque Road, Saidpur, Nilphamari. Cell: 01701221848 Tel: 0552-671454 Email: saidpur@standardbankbd.com Standard Bank Ltd Annual Report 2020 Financial Information Khulna Branch Chamber Building, 5, K.D.A. C/A (Ground Floor), Khulna-9100. Cell: 01701221570 Tel: 041-732633 Email: khulna@standardbankbd.com Pabna Branch BGC Complex (1st Floor),Opposite to central Girls High School, Thana Road, Pabna Sadar, Pabna-6600 Cell: 01701221893 Tel: 0731-63182 Email: pabna@standardbankbd.com Sustainability Khan Jahan Ali Branch Haji Hanif Complex (2nd & 3rd floor) 12-13, Khan Jahan Ali Road, Khulna Cell: 01701221724 Tel: 041-731312 Email: khanjahan@standardbankbd.com Chapainawabgonj Branch Shaleha Sadan, 30 Islampur (Boro Indara More), Chapainawabgonj Cell: 01701221727 Email: chapainawabgonj@standardbankbd.com Dinajpur Branch Northern Plaza,Goneshtala,Dinajpur sadar, Dinajpur. Cell: 01701221721 Tel: 0531-63979 Email: dinajpur@standardbankbd.com Nilphamari Branch Nilphamari Chamber of Commerce & Industry Bhaban (1st floor), Hazi Mohsin Sarak, Nilphamari Bazar, Nilphamari. Cell: 01701221849 Tel: 0551-62590 Email: nilphamari@standardbankbd.com Stakeholders’ Information Jhenaidah Branch Mokbul Hossain Plaza (1st Floor) 250 H.S.S. Road, Jhenaidah Sadar Jhenaidah Cell: 01701221766 Tel: 0451-63029 Email: jhenaidah@standardbankbd.com Kansat Branch Idris Plaza Super Market (2nd floor), Kansatmore, Sona Mosjid Road, Shibgonj, Chapainawabgonj Cell: 01701221823 Email: kansat@standardbankbd.com Management Retrospection Chuadanga Branch Joarder Tower, (1st Floor), 10,Shahid Abul Kashem Sarok, Badurtola, Chuadanga Cell: 01701221870 Tel: 0761-81150 Email: chuadanga@standardbankbd.com Patuakhali Branch Gazi Plaza (1st floor), Sadar Road, Patuakhali. Cell: 01701221877 Tel: 0441-62359 Email: patuakhali@standardbankbd.com Risk Governance Benapole Branch Nahar Tower, 13 Main Road, Benapole Bazar (Oposit of BDR Camp), Benapole, Jessore Cell: 01701221805 Tel: 0421-76076 Email: benapole@standardbankbd.com Hili Branch Alhaj Shafi Uddin Mondal Tower (1st Floor), Charmatha More, Bus stand Road, Bangla Hili, Hakimpur, Dinajpur Cell: 01701221909 Tel: 05329-75214 Email: hili@standardbankbd.com Corporate Governance Bagerhat Branch 119/2 K, Ali Road (1st floor), Mithapukurpar, Amlapara, Bagerhat. Cell: 01701221802 Tel: 0468-64202 Email: bagerhat@standardbankbd.com Mathbaria Branch Haji Adam Ali Khan Supar Market (1st & 2nd Floor), 288 Pharmacy Road, Mathbaria, Pirojpur Cell: 01701221873 Tel: 0462-575310 Email: mathbaria@standardbankbd.com Introduction KHULNA ZONE: | 437
439. Introduction SYLHET ZONE : Corporate Governance Beani Bazar Branch Holding no 1803,Word no 03, Zaman Plaza (1st floor), Beanibazar Pourashava, Sylhet Cell: 01701221841 Tel: 08223-56097 Email: beanibazar@standardbankbd.com Biswanath SME/Krishi Branch Aasmot Ali Complex, College Road, Biswanath, Sylhet. Cell: 01701221905 Tel: 08222-456207 Email: biswanath@standardbankbd.com Risk Governance Goalabazar SME/Krishi Branch Plaza Market (2nd Floor), Sylhet Road Goalabazar, Osmani Nagar, Sylhet. Cell: 01701221847 Tel: 0824-256187 Email: goalabazar@standardbankbd.com Moulvibazar Branch Kusumbag Shopping City, Sylhet Road, Kusumbag, Moulvibazar Cell: 01701221844 Tel: 0861-63451 Email: moulvibazar@standardbankbd.com Management Retrospection Sreemangal Branch Anik Super Market (1st Floor) 182, Station Road, Sreemangal, Moulvibazar Cell: 01701221945 Email: sreemangal@standardbankbd.com Sunamgonj Branch Nasir Plaza, Station Road, Sunamgonj Cell: 01701221890 Tel: 0871-62720 Email: sunamgonj@standardbankbd.com Stakeholders’ Information Sylhet Branch Thikana Tower (1st Floor), Nayasarak, Sylhet 3100 Cell: 01701221575 Tel: 0821-710434 Email: sylhet@standardbankbd.com ISLAMI BANKING WINDOW: Islami Banking Window, Dhaka 36 Topkhana Road, (1st floor), Dhaka-1000 Cell: 01730-015106 Tel: 9513515-6 Sustainability Islami Banking Window, Chittagong Hossen Chamber (G/F), 105, Agrabad C/A, Chittagong Cell: 01712914100 Tel: 711808, 713432 SBL CAPITAL MANAGEMENT Financial Information 2, DIT Avenue (Extension), 2nd Floor, Motijheel C/A., Dhaka-1000 Cell: 01715 079440 Tel: 9151484, 7175698, 7169134, 9515627 (Fax) 438 | Standard Bank Ltd Annual Report 2020 STANDARD BANK SECURITIES LTD. FOREIGN CURRENCY EXCHANGE BOOTH 2, DIT Avenue (Extension), 1st Floor Motijheel C/A., Dhaka-1000 Cell: 01711881516, 01911939495 Tel: 9585836 Shahajalal International Airport, Dhaka, Bangladesh Cell: 01717-575020, 01755619112 OVERSEAS EXCHANGE HOUSE: Standard Exchange Co. (UK) Ltd. 101 While Chapel Road, London E1 1DT, UK Cell: +44 (0) 7949494486, +44 7769336180 Tel: +44 20 7377 0009, +44-7951454395 Fax: +44 20 7655 4456 Email: info@standardexchangeuk.com Standard Express Main Branch 37-22 73rd Street, Suite#2B Jackson Heights NY 11372, U.S.A. Cell: +1-646-3318255, +1-347-944-9476, Tel: +1-347-507-0242, Fax: +1-347-507-0243 Email: ceo@standardmoneytransfer.com Standard Express Jamaica Branch 167-15 Hillside Avenue Jamaica , NY 11432, U.S.A. Tel: +1-718-526-2868 Fax: +1-718-526-2978 Email: standardjamaica@gmail.com Standard Express Ozone Park Branch 74 19 101 Avenue Ozone Park, NY 11416, U.S.A. Tel: +1-917-300-6048 Fax: +1-917-300-6049 Standard Express Brooklyn Branch 490 McDonald Ave, Brooklyn , NY 11218, U.S.A. Tel: +1-347-627-9666 Fax: +1-347-627-9667 Email: standardbkln@gmail.com Standard Express Bronx Branch 2156 Starling Avenue Bronx, NY 10462, U.S.A. Tel: +1-718-684-3466 Fax: +1-718-684-3467 Email: standardbronx@gmail.com Standard Express Jackson Heights Branch 37-22 73rd Street, Suite#A2 Jackson Heights, NY 11372, U.S.A. Tel: +1-347-507-0242 Fax: +1-347-507-0243 Standard Express Los Angeles Branch 4151 West Third Street, Unit A Los Angeles California 90020, U.S.A. Tel: +1-213-330-1810 Fax: 1-213-330-1810 Email: standardlaca@gmail.com
440. Registered Office Metropolitan Chamber Building (3rd Floor) 122-124 Motijheel CA, Dhaka 1000 Phone : 88-02-9577913, 9578385, 9558375 Fax : 88-02-9577898 Web : www.standardbankbd.com Revenue Stamp Taka 20/- PROXY FORM I/we ...................................................................................................................................................................................... of ......................................................................................................................................................................................... being a member of Standard Bank Limited, do hereby appoint Mr./Ms. ............................................................................ of ......................................................................................................................................................................................... as my/our proxy, to attend and vote for me/us on my/our behalf at the 22nd (Twenty Second) Annual General Meeting (AGM) of the company to be held on Thursday, 29th July 2021 at 11:00 am at Bank’s premises addressed Metropolitan Chamber Building (3rd Floor) 122/124, Motijheel C/A, Dhaka-1000 via live webcast by using digital platform through the link https://sbl.bdvirtualagm.com and or at any adjournment thereof. No. of Share Held : (Signature of the Member) Member’s BO/Folio No. : (Signature of the Proxy) Notes: A member entitled to attend and vote at the Annual General Meeting may appoint a proxy to attend and vote on his/her behalf. The Proxy Form duly filled, signed and stamped at BDT 20 must be sent through email to share@standardbankbd. com no later than 72 hours before commencement of AGM. Registered Office Metropolitan Chamber Building (3rd Floor) 122-124 Motijheel CA, Dhaka 1000 ATTENDANCE SLIP Note: Please complete the attendance slip and mail it to share@standardbankbd.com I hereby record my attendance at the 22nd (Twenty Second) Annual General Meeting (AGM) of the company being held on Thursday, 29th July 2021 at 11:00 am at Bank’s premises addressed Metropolitan Chamber Building (3rd Floor) 122/124, Motijheel C/A, Dhaka-1000 via live webcast by using digital platform through the link https://sbl.bdvirtualagm.com and or at any adjournment thereof. Name of the Member/Proxy:.............................................................................................................................................. Member’s BO/Folio No. : .............................................................................................................................................. ............................................................ Signature of Member/Proxy and Date N.B.: No gift/Gift Coupon/Food Box etc. will be distributed/offered to the shareholders at 22nd AGM to be held Annual General Meeting (AGM) of the company being held on Thursday, 29th July 2021 at 11:00 am as per instruction of Bangladesh Securities and Exchange Commission’s (shareholders) Circular No. SEC/CMRRCD/2009-193/154 dated 24 October, 2013.