National Bank Limited for the Year Ended 31 December 2014 Our

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National Bank Limited for the Year Ended 31 December 2014 Our National Bank Limited Independent Auditors’ Report to the Shareholders For the year ended 31 December 2014 We have audited the accompanying consolidated financial statements of National Bank Limited and its subsidiaries (the Group) as well as the separate financial statements of National Bank Limited (the Bank) which comprise the consolidated and separate balance sheets as at 31 December 2014 and the consolidated and separate profit and loss statements, consolidated and separate statements of changes in equity, consolidated and separate cash flow statements, liquidity statement for the year ended on 31 December 2014 and a summary of significant accounting policies and other explanatory notes and annexures thereto. Management's responsibility for the financial statements and internal controls Management is responsible for the preparation and fair presentation of consolidated financial statements of the Group and also separate financial statements of the Bank that give a true and fair view in accordance with Bangladesh Accounting Standards and Bangladesh Financial Reporting Standards, as explained in the relevant notes and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements of the Group and also separate financial statements of the Bank that are free from material misstatement, whether due to fraud or error. The Banking Companies Act 1991 (amended in 2013) and Bangladesh Bank Regulations require the management to ensure effective internal audit, internal control and risk management functions of the Bank. Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries. Auditors' responsibility Our responsibility is to express an opinion on these consolidated financial statements of the Group and the separate financial statements of the Bank based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain a reasonable assurance about whether the consolidated financial statements of the Group and the separate financial statements of the Bank are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements of the Group and the separate financial statements of the Bank. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements of the Group and the separate financial statements of the Bank, whether due to fraud and error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements of the Group and the separate financial statements of the Bank that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the consolidated financial statements of the Group and also the separate financial statements of the Bank. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and also the separate financial statements of the Bank referred to above which have been prepared in the format prescribed by Bangladesh Bank vide circular no. 14 dated 25 June 2003 and in accordance with Bangladesh Financial Reporting Standards and Bangladesh Accounting Standards, read in conjunction with notes, give a true and fair view of the financial position of the Group and of the Bank as at 31 December 2014 and financial performance of the Group and the Bank and their cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in the relevant notes. 1 National Bank Limited Independent Auditors’ Report to the Shareholders For the year ended 31 December 2014 Report on other legal and regulatory requirements In accordance with the Companies Act 1994, Bangladesh Securities and Exchange Rules 1987, the Banking Companies Act 1991 (amended in 2013) and the rules and regulations issued by Bangladesh Bank, 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) to the extent noted during the course of our audit work performed on the basis stated under the auditors' responsibility section in forming the above opinion on the consolidated financial statement of the Group and the financial statements of the Bank and considering the reports of the management to Bangladesh Bank on anti-fraud internal controls and instances of fraud and forgeries as stated under the management's responsibility for the financial statements and internal control: (i) internal audit, internal control and risk management arrangements of the Group and the Bank appeared to be materially adequate; (ii) nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Bank and its related entities; (c) financial statements of all subsidiaries of the Bank which have been audited by other auditors and have properly reflected in the consolidated financial statements; (d) in our opinion, proper books of account as required by law have been kept by the Group and the Bank so far as it appeared from our examination of those books; (e) the consolidated balance sheet and consolidated profit and loss statement of the Group and the separate balance sheet and separate profit and loss statement of the Bank dealt with by the report are in agreement with the books of account; (f) the expenditures incurred during the year were for the purposes of the business; (g) the consolidated financial statements of the Group and the separate financial statements of the Bank have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as with related guidance issued by Bangladesh Bank; (h) adequate provisions have been made to the extent in concurrences with Bangladesh Bank for advances which are, in our opinion, doubtful of recovery; (i) the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements; (j) the information and explanations required by us have been received and found to be satisfactory; and (k) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 4,000 person hours for the audit of the books and accounts of the bank. Dhaka, Bangladesh S. F. AHMED & CO Dated, 14 May 2015 Chartered Accountants 2 National Bank Limited and Its Subsidiaries Consolidated Balance Sheet As at 31 December 2014 Notes 2014 2013 BDT BDT PROPERTY AND ASSETS Cash 17,878,886,161 14,903,989,800 In hand (including foreign currencies) 3 2,246,921,914 2,395,006,619 Balance with Bangladesh Bank and its agent banks 4 15,631,964,247 12,508,983,181 (including foreign currencies) Balance with other banks and financial institutions 5 3,724,625,338 5,817,835,792 In Bangladesh 1,098,452,208 1,966,445,610 Outside Bangladesh 2,626,173,130 3,851,390,182 Money at call and on short notice 6 98,300,000 98,900,000 Investments 7 54,390,596,745 56,370,016,547 Government 46,318,501,027 47,513,285,781 Others 8,072,095,718 8,856,730,766 Loans and advances 8 173,968,771,356 152,287,801,952 Loans, cash credits, overdrafts etc 168,329,551,223 147,459,396,138 Bills purchased and discounted 5,639,220,133 4,828,405,814 Fixed assets including premises, furniture and fixtures 9 2,804,804,431 2,675,280,341 Other assets 10 4,178,288,531 2,436,388,267 Non - banking assets 2.6.5 335,820,241 336,660,241 Total assets 257,380,092,803 234,926,872,940 LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and 11 9,176,323,404 3,322,119,629 agents Deposits and other accounts 12 202,771,974,764 192,299,194,928 Current deposits and other accounts 19,949,019,076 19,115,368,844 Bills payable 2,624,680,314 2,225,679,010 Savings bank deposits 28,714,088,244 24,921,946,124 Fixed deposits 105,576,214,173 92,814,097,206 Term deposit 45,907,972,957 53,222,103,744 Subordinated bonds 1,600,000,000 2,000,000,000 Other liabilities 13 16,972,564,468 13,488,695,117 Total liabilities 230,520,862,636 211,110,009,674 Shareholders' equity Total shareholders' equity 26,859,230,167 23,816,863,266 Paid-up capital 14.2 15,615,635,680 14,196,032,440 Statutory reserve 15 8,439,142,029 7,411,663,610 General reserve 16 65,396,935 17,800,819 Other reserve 17 1,274,947,661 900,929,703 Retained earnings 18 1,464,019,449 1,290,340,814 Non-controlling (minority) interest 88,413 95,880 Total liabilities and shareholders' equity 257,380,092,803 234,926,872,940 3 National Bank Limited and Its Subsidiaries Consolidated Balance Sheet As at 31 December 2014 Note 2014 2013 BDT BDT OFF-BALANCE SHEET ITEMS Contingent liabilities 63,525,835,160 73,504,560,576 Acceptances and endorsements 26,589,876,531 26,767,247,428
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