Annual Report 2018

ANNUAL REPORT 2018

Prime Bank

Prime Bank Prime Bank

B B ime PPrimer Bank Prime

nk Ba Prime Bank Prime Bank

B Prime Bank Prime

Prime Bank

ime Bank Pr LETTER OF TRANSMITTAL

To The Shareholders, Bangladesh Bank, Bangladesh Securities and Exchange Commission, Registrar of Joint Stock Companies & Firms, Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited

Dear Sir(s),

Subject: Annual Report - 2018

We forward herewith Annual Report-2018 of Prime Bank Limited and its Subsidiaries namely Prime Exchange Co. Pte. Limited, Singapore, PBL Exchange (UK) Limited, PBL Finance (Hong Kong) Limited, Prime Bank Investment Limited, Prime Bank Securities Limited and the dedicated CSR Wing of the Bank, Prime Bank Foundation. The Report includes Audited Financial Statements, Balance Sheet, Profit and Loss Account, Changes in Equity, Cash Flow Statement along with notes thereto on the position of the bank at the closing of businesses on 31st December 2018 for your kind perusal and record please.

Yours sincerely,

Mohammed Ehsan Habib

Company Secretary ANNUAL REPORT 2018

CONTENTS

General Information Risk Management Financial Statements of Islamic Financial Statements of PBL Exchange Banking Branches (UK) Ltd. Vision, Mission & Core Values 5 Risk Management Framework &

Forward Looking Statement 6 Mitigation Methodology 129 Balance Sheet 313 Independent Auditors' Report Corporate Proile 8 Market Discipline Disclosure on Proit and Loss Account 315 to the Members of PBL Exchange (UK) Ltd. 414 Five Years’ Financial Summary 10 Risk Based Capital (Basel-III) 141 Cash Flow Statement 316 Proit and Loss Account 416 PBL Milestones 12 Statement of Changes in Equity 317 Balance Sheet 418 Awards and Recognitions 14 Sustainability Analysis Notes to the Financial Statements 318 Statement of Changes in Equity 419 Strategic Priorities 16 Statement of Cash Flow 420 Sustainability Report 170 Group Structure 17 Financial Statements of O-shore Banking Units Notes to the Financial Statements 421 Social Responsibility Initiatives 172 PBL Organogram 18 Report on Prime Bank Foundation 173 Balance Sheet 332 Corporate Philosophy 19 Financial Statements of PBL Finance Green Banking Report 193 Proit and Loss Account 334 Corporate Culture 196 (Hong Kong) Ltd. Board of Directors & Management Pro ile Cash Flow Statement 335 Capital Plan 197 Notes to the Financial Statements 336 Independent Auditors' Report to the Members Composition of Board and its Committees 21 Environmental & Social Initiatives 198 of PBL Finance (Hong Kong) Ltd. 427 Directors‘ Proile 22 Financial Statements of Prime Bank Statement of Income and Retained Earnings 429 Senior Management & Committees 31 Integrated Reporting Investment Limited Statement of Financial Position 430 List of Executives 36 Integrated Reporting 201 Notes to Statement of Cash Flows 431 Auditors' Report to the Shareholders 345 Statement of Value Added and its Distribution 215 Notes to the Financial Statements 432 Message from the Chairman and Statement of Financial Position 347 Economic Value Added Statement 215 Managing Director & CEO Statement of Proit or Loss and Market Value Added Statement 216 Financial Statements of Prime Bank Foundation Other Comprehensive Income 348 From the o¡ice of the Chairman 40 Statement of Changes in Equity 349 Independent Auditors' Report to the Shareholders' Information Managing Director & CEO's Review 43 Statement of Cash Flows 350 Members of the Foundation 439 Horizontal Analysis 218 Notes to the Financial Statements 351 Statement of Financial Position (Balance Sheet) 441 Corporate Governance Vertical Analysis 219 Statement of Proit or Loss and other Comprehensive Directors' Report 48 Graphical Presentation 220 Financial Statements of Prime Bank Income (Income and Expenditure Statement) 442 Corporate Governance Report 61 Distribution of Shareholdings 222 Securities Limited Receipts and Payments Statement 443 Certiicate on Corporate Governance 69 Shares held by Directors 222 Auditors' Report to the Shareholders 369 BSEC Checklist on Corporate Governance 70 Market Price Information 223 Supplementary Information Statement of Financial Position 371 Statement of the Board of Directors 81 Financial Calendar 2018 223 Statement of Proit or Loss and Human Resource Accounting 446 Statement of the Audit Committee 83 rd Other Comprehensive Income 372 Glimpses of 23 Annual General Meeting 448 CEO & CFO’s Declaration to the Board 85 Financial Statements Statement of Changes in Equity 373 Branch Network 449 Report on Activities of the Audit Committee 86 Notable Activities During 2018 456 Independent Auditors’ Report to the Shareholders 225 Statement of Cash Flows 374 Report on Activities of the Risk Management Committee 88 Redressal of Investors Complaints 458 Consolidated Balance Sheet 230 Notes to the Financial Statements 375 CRO’s Report on Risk Management 89 Minutes of 23rd Annual General Meeting 459 Consolidated Proit and Loss Account 232 Ethics & Compliance 91 Notice of the 24th Annual General Meeting 463 Consolidated Cash Flow Statement 234 Financial Statements of Prime Exchange Co. Acronyms 464 Consolidated Statement of Changes in Equity 235 PTE. LTD., Singapore Business Review and Analysis Proxy Form 465 Balance Sheet 236 Independent Auditor's Report Management Review 95 Proit and Loss Account 238 to the Member of Prime Exchange Co. Pte. Ltd. 392 Segmental Analysis 116 Cash Flow Statement 239 Statement of Proit or Loss Report on Human Resource Management 118 Statement of Changes in Equity 240 & Other Comprehensive Income 394 Report on Non-performing Asset (NPA) 123 Notes to the Financial Statements 241 Products and Services 126 Statement of Financial Position 395 Statement of Changes in Equity 396 Statement of Cash Flows 397 Notes to the Financial Statements 398 CONTENTS

General Information Risk Management Financial Statements of Islamic Financial Statements of PBL Exchange Banking Branches (UK) Ltd. Vision, Mission & Core Values 5 Risk Management Framework &

GENERAL INFORMATION

Vision, Mission & Core Values

Forward Looking Statement

Corporate Profile

Five Years’ Financial Summary

PBL Milestones

Awards and Recognitions

Strategic Priorities

Group Structure

PBL Organogram

Corporate Philosophy

4 PRIME BANK VISION MISSION

To be the best Private Commercial Bank in To build Prime Bank Limited into an efficient, Bangladesh in terms of efficiency, capital market driven, customer focused institution with adequacy, asset quality, sound management and good corporate governance structure. Continuous profitability having strong liquidity. improvement of our business policies, procedure and efficiency through integration of technology at all levels.

CORE VALUES

DELIVER High standard to our customers, clients and shareholders. We share a passion for serving the financial needs of people, companies and institutional investors.

COMMITMENT Fully committed to achieving success for our customers, our teams and ourselves through compliance with regulatory guidelines.

TRUST Have trust in our team. We work together to deliver towards full capabilities to all our constituents. We strive to be consistent and straightforward in our interactions.

SUCCEED Know we succeed only when our customers, communities and environment succeed. We do business in an open, direct and sustainable way.

PRIME BANK 5 ANNUAL REPORT 2018

We bring newer banking solution “to our customers to ease the process of traditional banking.”

FORWARD LOOKING STATEMENT

• Prime Bank is creating a responsible business that will always meet customers’ needs and a culture where our colleagues put customers first. This is the key to our long-term success and to fulfilling our aim to retain our position as the best private commercial Bank for customers, colleagues and shareholders; • The transformation in the form of centralization recently undertaken will ensure we maintain the core values of the past while equipping us to succeed in the future; • To keep pace with the rapid change in technology to bring new opportunities to improve our service to customers with faster, more convenient and more extensive propositions tailored to meet their needs; • We aim to treat all our customers fairly and inclusively, making it easy for them to find, understand and access products that are right for them, whatever their circumstances. • We are working to build a “strong balance sheet” by maintaining capital adequacy, asset quality, strengthening liquidity position, and adopting risk mitigation measures against market risk; • Develop the bottom line through improved recovery processes. Recovery of NPL will be the Bank’s priority area and there is significant room for improvement; • Cost management has been a strategic priority and we like to remain focused on maintaining our competitive advantage in cost leadership aligned with our centralized business model.

6 PRIME BANK • We are strong supporters of comprehensive regulatory reform. We support many of the steps that have been taken to protect consumers in the financial services sector. If properly implemented, reform should contribute to future stability of the financial system; • Our approach to reward aims to provide a clear link between remuneration and delivery of the Bank’s key strategic objectives, namely, becoming the best bank for customers whilst delivering long-term, superior and sustainable returns to shareholders. • We believe in offering fair reward where colleagues are rewarded for performance aligned to the long-term sustainable success of the business, our commitment to rebuilding trust and changing the culture of the Bank. • The increasing role of digital has heightened customer expectations for personalization while transforming the manner in which customers interact with Banks. We believe security and resilience are important factors, with the ability to respond to heightened cyber and fraud risks key to retaining customer trust in a digital environment. • Maintaining corporate sustainability will always remain to be an issue of critical importance to us. We recognize our responsibility to take actions supporting environmental issues and to use our business resources to enable our clients, customers and employees to reduce their own environmental impacts.

PRIME BANK 7 ANNUAL REPORT 2018

CORPORATE PROFILE

Prime Bank was established in April, 1995 Total Assets (BDT) by a group of committed and visionary entrepreneurs who conceived an idea of million floating a commercial bank with different 293,901 outlook. Prime Bank is prominent for its superior service quality, brand image, strong corporate governance and Loans and Advance (BDT) corporate culture. We always remain committed to delivering the best service 205,810 million for our customers. We aim to treat all of them fairly and inclusively, making it easy for them to find, understand and Deposits (BDT) access products that are right for them, whatever their circumstances. We have 197,518 million continued to transform the Bank to become a safer, more agile and customer focused organization whilst increasing Net Profit (BDT) profitability. Committed for excellence, Prime Bank is a top-tier bank in 2,188 million Bangladesh and reputed among regulators as distinctly ‘compliant’. CRAR 17.04%

Return on Equity UK 8.60%

Return on Assets

Bangladesh Hong Kong 0.76%

Singapore

8 PRIME BANK Authorized Capital 2018 2017 25,000 BDT 25,000 BDT Paid-up 11,323 } in Million 10,293 } in Million Share Capital Capital

Prime Bank DSE CSE Limited 27 March 2000 15 November 1999 Listing In- formation

Long-Term 2018 2017 AA AA ST-2 ST-2 Rating Informa- Short-Time tion

2018 2017 Branches 146 146

Number of Branches & ATM ATM 170 168

Prime Bank Investment Limited Prime Bank Securities Limited Prime Exchange Co. PTE Ltd (Singapore) 05 PBL Exchange (UK) Limited Number of Sub- sidiaries PBL Finance (Hong Kong) Limited

Hoda Vasi Chowdhury & Co., Aziz Halim Khair Choudhury Auditors Chartered Accountants Chartered Accountants

Auditors & Tax K.M. Hasan & Co., Tax Adviser Adviser Chartered Accountants

Prime Bank Limited Share Division 119/120 Adamjee Court Sarker Mansion (8th floor) Annex Building-2 Address 29, Rajuk Avenue Motijheel C/A, Dhaka-1000 Corporate Motijheel C/A, Dhaka-1000 office Web: www.primebank.com.bd

PRIME BANK 9 ANNUAL REPORT 2018

FIVE YEARS’ FINANCIAL SUMMARY (BDT in million except ratios)

Result of Operation 2018 2017 2016 2015 2014 Interest income 18,390 14,769 13,989 15,551 18,446 Interest expenses 10,741 9,875 10,676 14,257 15,574 Net interest income 7,650 4,894 3,313 1,294 2,872 Investment income 2,154 4,246 6,203 7,989 6,194 Commission, exchange and brokerage 2,209 2,245 1,693 1,956 2,033 Other operating income 887 764 814 834 806 Operating revenue 12,899 12,148 12,023 12,073 11,906 Operating expenses 7,180 6,775 6,266 6,166 5,750 Operating profit 5,719 5,373 5,757 5,906 6,157 Provision for loans and assets 1,782 3,564 3,412 3,154 2,877 Net profit before tax 3,938 1,809 2,345 2,752 3,280 Tax including deferred tax 1,750 750 150 613 887 Net profit after tax 2,188 1,059 2,195 2,139 2,393

Balance Sheet Authorized capital 25,000 25,000 25,000 25,000 25,000 Paid-up capital 11,323 10,293 10,293 10,293 10,293 Shareholders’ equity 26,181 24,708 25,285 26,415 24,461 Deposits 197,518 199,014 197,934 194,825 204,838 Loans and advances 205,810 198,323 170,212 151,865 147,367 Investments 26,046 23,807 48,249 62,733 72,642 Fixed assets 6,943 6,434 6,590 6,516 6,613 Total assets 293,901 281,275 272,224 267,322 269,218 Total liabilities 267,720 256,567 246,939 240,907 244,758

Other Business Import 182,263 186,050 134,914 114,747 126,571 Export 134,616 107,002 89,720 88,827 110,096 Remittance 45,755 38,120 32,119 39,146 39,484 Guarantee Business 23,250 31,597 32,350 35,000 30,155 No. of foreign correspondents 672 687 684 658 638

Liquidity Measures Long-term liabilities 107,586 93,427 90,593 95,170 104,040 Current liabilities 160,134 163,140 140,721 130,576 126,276 Earning assets 241,264 230,038 219,508 215,025 220,115 Current assets 163,248 163,826 157,004 140,218 147,341 Net current assets 3,114 686 16,283 9,641 21,064 Credit-deposit ratio (Conventional) 82.65 84.43 74.95 69.86 66.70 Credit-deposit ratio (Islamic) 82.71 83.25 82.83 79.36 74.56 Current Ratio (percent) 1.02 1.00 1.12 1.07 1.17 Gearing Ratio (percent) 80.43 79.08 78.18 78.27 80.96 CRR Held (percent) 5.72 6.76 6.65 7.04 6.71 SLR Held (percent) 15.28 14.96 28.04 33.18 29.83 Debt Equity Ratio (percent) 9.78 9.63 10.24 10.96 9.99

10 PRIME BANK (BDT in million except ratios)

Capital Measures 2018 2017 2016 2015 2014 Total risk weighted assets 224,585 230,211 254,001 229,843 214,892 Tier-1 Capital 24,335 23,048 23,634 22,977 22,511 Tier-2 Capital 13,924 9,203 7,998 6,306 4,802 Total capital 38,259 32,251 31,632 29,283 27,313 Tier-1 Ratio (percent) 10.84 10.01 9.30 10.00 10.48 Tier-2 Ratio (percent) 6.20 4.00 3.15 2.74 2.23 Capital to Risk Weighted Asset Ratio (percent) 17.04 14.01 12.45 12.74 12.71 Leverage Ratio (percent) under Basel-III 6.52 6.61 7.36 7.57 N/A Liquidity Coverage Ratio (LCR) 101.41 109.58 139.90 178.71 145.86 Net Stable Funding Ratio (NSFR) 127.94 120.08 120.56 109.12 107.25

Operating Performance Ratio (%) Net interest margin (NIM) 3.62 2.56 2.02 0.86 1.91 Gross profit ratio 54.72 55.28 52.97 45.85 43.33 Cost-income ratio 55.93 55.98 52.11 51.08 48.29 Cost of Deposit 4.72 4.46 4.94 6.64 7.36 Cost of Fund 7.95 7.91 8.13 9.72 10.19 Yield on average advance 8.51 7.42 8.45 10.20 12.09 Spread 3.79 2.96 3.51 3.56 4.73 Earning asset to total assets (average) 81.30 81.00 81.36 81.73 82.28 Return on average assets (ROA) 0.76 0.38 0.81 0.80 0.91 Return on average equity (ROE) 8.60 4.24 8.49 8.41 10.08 Return on capital employed 4.28 4.55 4.97 4.86 4.79

Asset Quality Non-performing loans (NPLs) 12,686 10,799 10,139 11,883 11,215 NPLs to total loans and advances (percent) 6.16 5.45 5.96 7.82 7.61 Provision for unclassified loans and advance 3,726 4,647 3,503 2,031 1,741 Provision for classified loans and advance 4,567 4,269 3,787 5,749 4,586 NPL Coverage 65% 83% 72% 65% 56%

Share Information Market price per share (BDT) 17.80 27.40 17.70 18.10 19.60 No. of shares outstanding (in million) 1,132 1,029 1,029 1,029 1,029 No. of shareholders 14,895 15,102 15,876 18,652 23,102 Earnings per share (BDT) (Restated) 1.93 0.94 1.94 1.89 2.11 Dividend (percent) 12.5 C 10 B, 7 C 16 C 15 C 15 C Dividend yield (percent) 7.02 6.20 9.04 8.29 7.65 Market capitalization (BDT in million) 20,155 28,204 18,219 18,631 20,175 Net asset value per share (BDT) 23.12 24.00 24.56 25.66 23.76 Price earning ratio (times) 9.21 29.30 8.31 8.71 8.43

Other information No. of branches 146 146 145 145 140 Number of ATM 170 168 168 168 160 No. of employees 3,212 3,499 2,961 2,934 2,867 Profit per employee (BDT in million) 1.78 1.54 1.94 2.01 2.15

PRIME BANK 11 ANNUAL REPORT 2018

PBL MILESTONES

2004 • Registered as Depository Participant of 2000 CDBL • Listed with Dhaka 2006 Stock Exchange Limited • Incorporation of Prime Exchange Co. Pte. Ltd., 2008 Singapore • Launching of 1st ATM

1995-99 2003 • Incorporation of • License issued 2007 the Company from the • Opening of • Certificate of Bangladesh Bank as Primary Dealer first Off-shore Commencement Banking Unit of Business at DEPZ, Savar, • License issued by 2005 Dhaka Bangladesh Bank • Agreement with • License issued for Temenos for Core opening the first Banking Software Branch, Motijheel Temenos T24 • Commencement of business from the Motijheel Branch • Commencement of Islamic banking business from IBB, Dilkusha • Listed with Chittagong Stock Exchange Limited

12 PRIME BANK 2010 2018 • Incorporation of • TFP Award PBIL from Asian • Incorporation of 2014 Development PBSL Bank-Best SME • Launching of Deal. • Obtained JCB Cards in • Asia permission for Bangladesh issuance of Rights Sustainability • Launching of Share 2012 Reporting Rating- Premium Banking ’GOLD Rank’. • Launching of SMS • Launching of Service ‘Monarch’ • Best SME Deal Bankingg Mobile Banking Award from Asian • Ground breaking • Launching of Development of Prime Tower Biometric Smart Bank. Card-Prime Cash

2009 2013 • Launching of • Launching of Internet Banking Prime Bank • Opening of first Nursing Institute SME Centre • Launching of Islamic Credit • Recipient of SAFA 2011 Best Bank Award Card 2015 • Change of Face • Launching of • Incorporation of Value and Market First Business PBL Exchange Lot of Shares of World MasterCard (UK) Ltd. PBL Credit Card in • Launching of Bangladesh Phone Banking • Prime Bank • Commencement Receives of business of Remittance PBL Finance Award (Hong Kong) Ltd.

PRIME BANK 13 ANNUAL REPORT 2018

AWARDS AND RECOGNITIONS

NATIONAL AWARDS AND RECOGNITIONS

FIRST POSITION- ICAB National Award for Best Presented Annual Reports (Category: Private Sector-Banks/ Financial Sector) Year: 2002, 2005, 2006, 2007, 2008, 2009, 2011, 2013 and 2015

FIRST POSITION- ICAB National Award for Best Presented Annual Reports (Category: Corporate Governance Disclosures) Year: 2009 and 2015

FIRST POSITION- ICMAB National Best Corporate Award Year: 2009, 2010, 2012 and 2013

FIRST POSITION- ICSB National Award for Corporate Governance Excellence (Category: Banking Companies) Year: 2015 and 2016

Other National Awards and Recognitions Bangladesh Business Awards 2011 – DHL – The Daily Star The Industry 2012 – Best Rated Bank Award

14 PRIME BANK INTERNATIONAL AWARDS AND RECOGNITIONS

FIRST POSITION- SAFA Best Presented Accounts and Corporate Governance Disclosures Awards Year: 2009 and 2013

FIRST POSITION- SAFA Best Presented Annual Report Awards and SAARC Anniversary Awards for Corporate Governance Disclosures (Private Sector Banks) Year: 2011 and 2015

Other International Awards and Recognitions: Financial News Services (FNS) Award 2005 – Best Performing Local Bank Financial Institution Award - 10 years of Service (2005) International Star for Leader in Quality (ISLQ) Award, France (2011) Industry Best Rated Bank Award 2012 – Awarded as Strongest Bank The Bizz 2012 – Inspirational Company Award International Platinum Star for Quality Award 2012 Best Bank of Bangladesh by Global Survey (Best Emerging Market Bank in Asia) – 2013 Serdar Patel Awards (2015) National Center for Sustainability Reporting- Sustainability Reporting Awards 2016 Best SME Deal Award from Asian Development Bank - 2018

PRIME BANK 15 ANNUAL REPORT 2018

STRATEGIC PRIORITIES

With the view to attaining the VISION of the bank and to meet the challenges of current environment PBL has a set of strategic priorities. Those priorities are regularly reviewed and refreshed in order to meet the challenges of changing environment. The Board and Management is committed to manage those priorities in a balanced way with an appropriate mix of growth, return, risk and productivity. PBL believes it can achieve its goal to be ‘A Bank with a Difference’ by focusing on the following strategic priority:

Customer best choice Assisting our clients to operate successfully and being their bank bank of choice for their business and personal financial needs;

Service excellence Providing delightful customer experience & service quality;

Continuous diversification with special focus on retail deposit and Diversification MSME & Consumer business;

Quality growth Maintaining quality asset & business growth;

Achieving technological excellence and to deliver technology Technology driven driven products and services;

Data security Keeping protection of Customer Data & flawless customer service;

Create strong brand image that carry a commitment of quality and Brand image integrity;

Sustainable returns to stakeholders, exceeding market and Sustainable return shareholder expectations;

Seamless business To conduct transparent and high quality business operation based operation on market mechanism within the legal and social framework ;

Doing business without Committed to community as a corporate citizen and contributing compromising the towards the progress of the nation in a socially responsible society manner;

To be the employer of best choice with special focus on Best employer continuous development of Human Capital and accomplishing a motivational environment to retain critical resources;

16 PRIME BANK GROUP STRUCTURE

Prime Bank Limited

Overseas Local Subsidiaries Subsidiaries

Prime Bank Prime Bank Securities Ltd. Investment Ltd. (95% owned) (99.99% owned)

Prime Exchange (UK) Ltd. (fully owned)

Prime Exchange PBL Finance Co. Pte. Ltd. (Hong Kong) Ltd. (fully owned) Singapore (fully owned)

PRIME BANK 17 ANNUAL REPORT 2018 d

Overall Reporting Division Internal Audit dit Committee of the Boar Au Treasury Operation s Centralized Operation s Operation s Clearing Cell Card & AD C & Reconciliatio n Trade Operations SEVP & CO O Cash Management Regulatory Reporting Liability Operations O shore Banking ojects Facilit y SEVP Board Secretariat Internal Control & Management Divisio n Compliance Division FMD & Special Pr n CO ML

AML & CFT Department Special Asset Legal Divisio n Management Divisio DMD & CA Client Experience & Process Governance

Financial Division DMD & CFO Administration Divisio n Islamic Banking O O Credit Division Information Credit Risk Management DMD & CR Security Division Administration Divisio n Risk Management Division Re-engineering Business Proces s ector & CE Board

Managing Dir MSME Banking Busines s Small Business IT Service & Support Micro & Cottage Medium Business - Collection - Liability-MSME - Islamic Banking Unit - Products, Proposition s & Specialized Busines s - Business Finance & MIS - Channel Suppor t SEVP & Planning Busines s Business Branches Consumer Banking IT Infrastructure Card & ADC Consumer Banking Distribution Network SEVP Brand & Division ansaction Banking Finance Banking Tr International Structured Transaction Communications cial Banking DMD BPM+Management Reporting & MIS Division Treasury Agriculture Commer Segments (CBD) Support & tagong) HR Division Area s Corporate Infrastructure Public Sector & Institutional Banking C&IB Liability Team (Dhaka & Chit PBL ORGANOGRAM

18 PRIME BANK CORPORATE PHILOSOPHY

For Our Customers To provide the most courteous and efficient service in every aspect of its business

To be innovative in the development of new banking products and services

For Our Employees By promoting their well-being through attractive remuneration and fringe benefits

By promoting good staff moral through proper staff training and development, and provision of opportunities for career development

For Our Shareholders By forging ahead and consolidating its position as a stable and progressive financial institution

By generating profits and fair return on their investment

For Our Community By assuming our role as a socially responsible corporate citizen in a tangible manner By adhering closely to national policies and objectives thereby contributing towards the progress of the nation By upholding ethical values and best practices constantly seeking to improve performance by aligning our goals with stakeholders’ expectations, because we value them.

PRIME BANK 19 BOARD OF DIRECTORS & MANAGEMENT PROFILE

Composition of Board and Its Committees

Directors’ Profile

Senior Management & Committees

List of Executives COMPOSITION OF BOARD AND ITS COMMITTEES

Board of Directors Mr. Azam J Chowdhury Chairman Mr. Mafiz Ahmed Bhuiyan Vice Chairman Mr. Imran Khan Vice Chairman Mr. Md. Nader Khan Director Mr. Quazi Sirazul Islam Director Mrs. Marina Yasmin Chowdhury Director Mr. Md. Shahadat Hossain Director Mr. Md. Shirajul Islam Mollah Director Mrs. Nasim Anwar Hossain Director Mrs. Salma Huq Director Mr. Nafis Sikder Director Mr. Waheed Murad Jamil Director Mr. Tarique Ekramul Haque Director Mr. Mohammad Mushtaque Ahmed Tanvir Director Mr. Shamsuddin Ahmad, Ph.D Independent Director Dr. G. M. Khurshid Alam Independent Director Mr. M Farhad Hussain FCA Independent Director Prof. Dr. M. Shamim Z. Bosunia Independent Director

Executive Committee Mr. Md. Shirajul Islam Mollah Chairman Mr. Quazi Sirazul Islam Member Mrs. Nasim Anwar Hossain Member Mr. Mafiz Ahmed Bhuiyan Member Mr. Imran Khan Member Mr. Tarique Ekramul Haque Member Mr. Waheed Murad Jamil Member

Audit Committee Mr. Shamsuddin Ahmad, Ph.D, Chairman Mr. Md. Nader Khan Member Dr. G. M. Khurshid Alam Member Mr. M Farhad Hussain FCA Member

Risk Management Committee Dr. G. M. Khurshid Alam Chairman Mr. Mohammad Mushtaque Ahmed Tanvir Member Mr. Shamsuddin Ahmad Ph.D Member Mr. M Farhad Hussain FCA Member

Nomination and Remuneration Committee Dr. G M Khurshid Alam Chairman Mr. Md. Nader Khan Member Mr. Md. Shirajul Islam Mollah Member

PRIME BANK 21 ANNUAL REPORT 2018

DIRECTORS’ PROFILE

Azam J Chowdhury, Chairman Board of Directors is an elite industrialist and entrepreneur in Bangladesh. He is the Chairman and owner of East Coast Group, a conglomerate focused on fuel & energy sector for more than three decades. Currently Mr. Azam J Chowdhury is associated in the position of President, Chairman, Managing Director and Director with the following prestigious businesses:

President:

Bangladesh Association of Publicly Listed Companies (BAPLC)

Bangladesh Energy Companies Association (BECA)

Bangladesh Ocean Going Ship Owner’s Association (BOGSOA)

LPG Operators Association of Bangladesh (LOAB)

Azam J Chowdhury Chairman: Chairman The Consolidated Tea & Lands Company Bangladesh Limited (formerly, James Finlay Limited).

Managing Director:

MJL Bangladesh Limited- Affiliate partner of Exxon Mobil, one of the world’s largest fuel & Lubricant businesses.

Director:

Central Depository Bangladesh Limited (CDBL).

Omera Petroleum Ltd. one of the largest LPG operators of the country

Omera Cylinders Ltd. & Omera Fuels Ltd.

In the past Mr. Chowdhury also served as Chairman of Green Delta Insurance Company Limited (2001-2005), one of the most successful general insurance companies in Bangladesh.

In recognition to his performance and repute, the Hungarian Government nominated him as the Honorary Consul of Hungary in Bangladesh.

Mr. Chowdhury is a renowned Golfer and achieved laurels several times in this sporting arena.

22 PRIME BANK Mr. Mafiz Ahmed Bhuiyan is a Sponsor Director and currently Vice Chairman and Chairman of the Board of Prime Bank Ltd and Prime Bank Foundation respectively.

Mr. Bhuiyan is Managing Director of IPE Technology Limited, Shepherd World Trade Limited, Shepherd Consultant & Management Ltd, Native Holdings Ltd. and Chairman of Citizen Securities & Investment Limited (A full-fledged Merchant Bank).

He is former Trustee/Life Member of Eastern University & South East University and Director of Australian International School (International Holdings Ltd.).

As a Businessman, Mr. Bhuiyan can be termed as one of the pioneers in the field of RMG in terms of setting up backward linkage industries in collaboration with reputed overseas companies belonging to developed countries.

Mr. Bhuiyan takes keen interest in Games and Sports and is a Member of Kurmitola Mafiz Ahmed Bhuiyan and Army Golf Club, Dhaka. Vice Chairman

Mr. Imran Khan is a promising business personality. Currently he is Vice Chairman of the Board of Directors and had also served as Vice Chairman of the Executive Committee in the past.

He is Director of the reputed company Pedrollo nk Limited, a market leader in terms of import of PEDROLLO (Italian Brand) Water pumps including sales & distribution in Bangladesh. The company also acts as sole agent of renowned brands Itap, HCP and Rain Bird in Bangladesh.

Mr. Khan is also a director of PNL Holdings Ltd., PNL Water Management Ltd., Halda Valley Tea Company Ltd., Halda Fisheries Ltd. and Hill Plantation Ltd. In addition, he is owner of Prima Enterprise, engaged in import and trading business.

Mr. Khan is an Ex-Cadet of Fauzdarhat Cadet College, Chittagong and completed his post-graduation from North South University, Dhaka.

Imran Khan Mr. Khan actively associates himself with CSR activities and is a member of the Vice Chairman Chittagong Club Ltd., Chittagong Boat Club, Shaheen Golf & Country Club and Governing body of Lion Mukhlesur Rahman Foundation- a renowned NGO and Charitable Organization operating from Chittagong for the underprivileged and poor masses across the country.

PRIME BANK 23 ANNUAL REPORT 2018

Mr. Md. Shirajul Islam Mollah, a Sponsor Director, is also a past Chairman of the Board of Directors. Presently he also holds the position of Chairman of the Executive Committee of the Board. A very successful business personality, Mr. Shirajul Islam Mollah is the Managing Director of:

China-Bangla Ceramic Industries Limited

Bengal Tiger Cement Industries Limited

Bajnabo Textile Mills Limited

United Shipping Lines Limited

United Progressive Dredging Ltd.

He is the Chairman of The People’s University of Bangladesh and President of Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA).

Md. Shirajul Islam Mollah Widely travelled, Mr. Shirajul Islam Mollah is involved with various social and Chairman, Executive Committee educational activities and earned recognitions from a number of organizations. He is the founder of Bajnabo Abul Faiz Mollah High School, Shibpur, Narsingdi. A philanthropist, Mr. Md. Shirajul Islam Mollah is also the Chairman of Shirajul Islam Mollah Samaj Seba Foundation.

Mr. Mollah is a member of Dhaka Stock Exchange (DSE) and Ex. Member of Parliament as well.

Mr. Shamsuddin Ahmad, Ph.D. has been an Independent Director of the Bank with effect from April 2015.

Dr. Ahmad is a distinguished development practitioner with 26 years of experience in the World Bank tackling development challenges in the financial sectors of several countries. As a Senior Financial Sector Specialist in the South Asia region of the World Bank, Dr. Ahmad has worked extensively with the Bangladesh Bank, the State Bank of Pakistan and the Nepal Rastra Bank in assisting these Central Banks to transform themselves into professional, efficient and modern institutions.

Dr. Ahmad retired from the World Bank Headquarters in Washington DC in February 2015, and is keen to utilize his expertise and experience to further develop the financial sector in Bangladesh.

Shamsuddin Ahmad, Ph.D. Dr. Ahmad completed his MBA with distinction from IBA in 1977, and started his career as a banker with American Express Bank in Bangladesh. He obtained his Chairman, Audit Committee Masters and Ph.D. degrees in Development Economics from the University of Hawaii, and returned home to join the World Bank Office in Dhaka in October 1989. He was later posted in Islamabad, Kathmandu and Washington DC offices of the World Bank.

He has won several awards in his educational and professional pursuits, including the prestigious Makana Award for Leadership at the East West Center. He also completed the Financial Institutions Program for Economic Development at the Kennedy School of Government in Harvard University in 2004.

Besides travelling, Dr. Ahmad loves playing golf, tennis and bridge, and is also an enthusiastic ballroom-dancer.

He has been Chairman of the Audit Committee since his induction in 2015.

He is also Chairman of Prime Bank Securities Limited and Director of PBL Finance (Hong Kong) Limited, wholly owned subsidiaries of Prime Bank.

He is also a member of the Risk Management Committee (RMC) of the Board of Directors.

24 PRIME BANK Mr. G.M. Khurshid Alam has been an Independent Director of the Bank with effect from April 2015.

Mr. Alam is currently serving as a Director with Policy Research Institute (PRI), a leading policy and economic research think-tank of Bangladesh. Prior to that he served for 17 years with the World Bank as Senior Private Sector Development Specialist in its South Asia Private Sector and Finance (SASFP) Department from where he retired in August 2012.

Mr. Alam started his professional career entering Government services in 1981 as a member of the Bangladesh Civil Service (Admin) cadre. He served in different positions both in the field administration, Ministry of Finance and Bangladesh Biman before joining the World Bank in 1995.

Mr. Khurshid Alam is a PhD in Economics from Boston University, USA. He is Dr. G.M. Khurshid Alam married and has three children. Chairman, Risk Management Committee He is currently Chairman of Risk Management Committee, member of the Audit Committee of the Board, Director of Prime Bank Investment Limited (PBIL), and PBL Exchange (UK) Limited - subsidiary of Prime Bank.

Quazi Sirazul Islam is a Sponsor Director & former Chairman of the Board of Directors.

An elected Member of Parliament in 1996 and 2001, Mr. Islam is the Managing Director of renowned jewelry house, Amin Jewelers Limited.

He is the Chief Advisor of Sonar Bangla Insurance Limited, Member of Gulshan Club Limited and Chairman of the City Hospital (Burn Hospital), the only Private Sector Hospital of such kind in Bangladesh.

A philanthropist by nature, Mr. Islam was awarded Kabi Jasimuddin Gold Medal, Maulana Akram Khan Gold Medal, Sufi Motahar Hossain Gold Medal and Atish Dipankar Gold Medal for his contribution in the education and social welfare sectors. He was also awarded MJF (Melvin Jones Fellow) Medal by the Lions International Foundation for his contribution to the Society.

Quazi Sirazul Islam Mr. Islam is immediate past Chairman of Bangladesh Jewelry Association and is a Director life member of Red Crescent Society, Bangladesh, and Member Trustee, People’s University of Bangladesh.

He is also member of Gulshan Society, Gulshan Club and Gulshan North Club Limited.

Mr. Islam is currently member of the Executive Committee of the Board.

PRIME BANK 25 ANNUAL REPORT 2018

Mr. Md. Nader Khan is a Sponsor Director and former Chairman of the Board of Prime Bank Limited. He is an entrepreneur and has the credentials of setting up many prestigious commercial establishments in different sectors. Currently, he is associated with the following business concerns in the capacity of:

Chairman:

Artisan Ceramics Ltd.

CIDER Education Services Ltd.

Managing Director:

Pedrollo nk Limited

Halda Valley Tea Co. Ltd.

Halda Fisheries Ltd. Md. Nader Khan PNL Holdings Ltd. Director Director:

National Life Insurance Co. Ltd.

Hill Plantation Ltd.

The Consolidated Tea and Lands Company (BD) Ltd.

Baraoora (Sylhet) Tea Company Ltd

Consolidated Tea and Plantation Ltd.

One of his business concerns, Pedrollo nk Limited is the market leader in the sales and distribution of famous ‘PEDROLLO’ brand water pumps from Italy since 1985.

In 2010, Mr. Khan received Prime Ministers award for Tree Plantation while in 2018 he received another award from the PM for highest Tea production (3,500 Kg) per hectare at the Halda Valley Tea Company Ltd. as against average production of 1,500 Kg/hectare.

Mr. Khan is a philanthropist and involved in various CSR activities. He is the Chairman of Lion Mukhlesur Rahman Foundation, Zero Club Foot Project, Founder of Cider International School, Ex- Governor (2000- 2001) of Lions Club International- District 315 B4 Bangladesh to mention a few.

He is a Trustee Member of ESTCDT (Education, Science, Technology and Cultural Development Trust) of IUB (Independent University, Bangladesh) & CIU (Chittagong Independent University) and Chairman, Finance Committee of CIU.

Mrs. Marina Yasmin Chowdhury is a Sponsor Director and former Vice Chairperson of Prime Bank Limited. She is currently the Vice Chairperson of East Coast Group (ECG), a conglomerate focused on Fuel & Energy Sector for more than three decades.

She is also the Chairperson of Clean Fuel Filling Station Limited and Parkesine Products Limited, subsidiaries of East Coast Group.

Mrs. Chowdhury is former director of Green Delta Insurance Company Limited, one of the leading general insurance companies of Bangladesh.

Outside the business, Mrs. Marina Y. Chowdhury is actively engaged in philanthropic activities conducted through East Coast Group Foundation. She also takes keen personal interest in philanthropic and charitable causes like Health and Education for the underprivileged.

Marina Yasmin Chowdhury In her leisure time she enjoys preparing culinary dishes for her family members. Director

26 PRIME BANK A successful businessman, Mr. Md. Shahadat Hossain is a Sponsor Director of Prime Bank Limited. He is also past Vice Chairman of the Board of Directors.

His business entity consists of VIP Shahadat Poultry & Hatchery, VIP Shahadat Cold Storage and Rangpur Agro Industries.

An active social worker, Mr. Hossain is associated with different social welfare organizations dedicated to the services of general masses.

Md. Shahadat Hossain Director

Mrs. Nasim Anwar Hossain, a sponsor Director, is former Vice Chairperson of the Board of Directors. She is currently a Member of the Executive Committee of the Board as well.

Mrs. Hossain is a Masters in Political Science from Dhaka University.

She is a successful business personality and Director of the following Companies

Prime Cement Ltd.

Lubricants Asia Ltd.

Bengal Tiger Cement Industries Limited.

She is member of the Board of PBL Finance (Hong Kong) Limited - subsidiary of Prime Bank.

Mrs. Hossain is an active social worker and takes keen interest in different Nasim Anwar Hossain benevolent and philanthropic activities. Director

Mrs. Salma Huq is a Sponsor Directors and former Chairperson of the Executive Committee of Prime Bank Ltd. She is a Director of GQ Group since 1986 engaged in manufacturing pen, disposable plastic wares, pp woven sacks, mosquito coils and snack foods. GQ Group is also one of the sponsors of:

Prime Insurance Co Ltd.

Prime Finance & Investment Ltd.

PFI Securities Ltd. and

Prime Capital Management Ltd.

Mrs. Salma Huq is actively engaged in philanthropic activities like providing scholarship to needy students and arranging medical treatment for the poor.

She is one of the founders of Qazi Saleema Huq Women’s College and Qazi Saleema Salma Huq Huq Girls’ High School. Director

PRIME BANK 27 ANNUAL REPORT 2018

Mr. Nafis Sikder, Director is the Managing Director of renowned Palmal Group founded by his late father, Engr. Nurul Haque Sikder, a prominent business personality of the early eighties.

Mr. Nafis after completion of ‘O’ and ‘A’ level went to Washington University, Saint Louis, Missouri, USA and obtained BS in Business Administration with distinction.

With his ingenuity and expertise in operations, strategic management & marketing skills, expanded the Group’s business many folds in all spheres of RMG business. The group at present is the most prolific and trusted suppliers of Apparels to some of the reputed North American, Australian and European buyers.

Mr. Nafis Sikder is an avid philanthropist and actively contributes in the promotion and expansion of educational institutes through establishing new Schools and Colleges.

He is also associated with numerous socio welfare and charitable organizations Nafis Sikder actively supporting the causes of Health Care and poverty alleviation. Director

Mr. Waheed Murad Jamil has been appointed Director of the Prime Bank Ltd. with effect from 28.09.2015 to represent M/s. MAWSONS Ltd, a business concern owned by his family members. An emerging business personality, Mr. Jamil is a business graduate and current Director of Primeasia University, Prime Islami Life Insurance Ltd. Fareast Islami Securities Ltd. and Managing Director of Everest Homes Ltd. and Nowhata Green Bricks Limited.

Mr. Jamil is a member of the Executive Committee of the Board of Prime Bank Limited.

Waheed Murad Jamil Director

Effective December 10, 2015 Mr. Tarique Ekramul Haque has been appointed Director of Prime Bank.

Mr. Tarique Ekramul Haque, Chairman and Director of Bangla Trac Limited, completed his graduation degree (BA Honors in Economics) from University of Manchester, United Kingdom in 2001. Afterwards, he obtained Post graduate degree (MSc in Accounting & Finance) from London School of Economics, U.K. in the year 2003.

Mr. Tarique E Haque started his career in 2001 in Goldman Sachs International, London, UK as a Financial Analyst. In 2004, upon completion of his master’s in accounting and Finance from the London School of Economics, he returned to Bangladesh to join his family in establishing Bangla Trac Limited (Bangla CAT) - the Dealer for Caterpillar Inc. (USA) products in Bangladesh. Today, Bangla CAT is the market leader for electric power solutions and construction machineries in Tarique Ekramul Haque Bangladesh. In 2008, he led the establishment of Bangla Trac Communications Director Limited - an International Gateway Operator. In 2010, he led the establishment of Acorn Infrastructure Services Limited – a power plant based in Chittagong, Bangla Trac Power Unit-1, power plant in Daudkandi, & Bangla Trac Power Unit-2, power plant in Jashore established in 2018. In 2016 he also led the establishment of Tiffin Box Limited’ the exclusive franchisee for Burger King quick service restaurants in Bangladesh.

Mr. Tarique E Haque is currently a member of the Executive Committee of the Board.

28 PRIME BANK Mr. Mohammad Mushtaque Ahmed Tanvir (Titash), representing Uniglory Cycle Industries Limited, was appointed Member of the Board of Prime Bank in the 433rd Board Meeting held on 13.05.2015.

Mr. Tanvir is an Architect from BUET. After graduating in 1994, he started business career in his own discipline wherein he practiced for 6 years. Subsequently, he joined Uniglory Cycle Components Limited - a sister concern of the Meghna Group as the Managing Director.

Mr. Tanvir became the Chief Executive officer (CEO) of the Transworld Bicycle Co. Ltd another Unit of the same Group wherein he was largely responsible for planning, programming, designing and managing the 100% export oriented industry. Within a short span of time, Mr. Tanvir became the Managing Director of Uniglory Paper & Packaging Ltd and director of some of the industries under the Group. Mohammad Mushtaque Ahmed Tanvir (Titash) Finally he became the Executive Director of Uniglory Cycle Industries Limited, the biggest unit of the Group. During his tenure in various capacities, he made Director himself a symbol of innovation, persistence and entrepreneurship for the Group.

Mr. Tanvir is a sportsman having deep attachment for playing and managing Basket Ball & Golf. He is also associated with a number of organizations like Cadet College Club Ltd, Gulshan Youth Club, Bogra Golf Club, Mirzapur Ex. Cadet Association. He was also General Secretary of Athletic Club of EUCSU in BUET.

Mr. Tanvir is a widely traveled person and led a number of sports teams locally and regionally.

Mr. M. Farhad Hussain FCA has been an Independent Director of the Bank with effect from April 2015.

Managing Partner of M/s Hussain Farhad & Co., Chartered Accountancy Firm, Mr. Hussain is a fellow member of the Institute of Chartered Accountants of Bangladesh with thirty eight years of experience and holding in key positions of Finance and Accounts with multidisciplinary business organizations at home and abroad.

Mr. M. Farhad Hussain FCA is a council member and former President of The Institute of Chartered Accountants of Bangladesh (2007). He is also Technical Advisor of South Asian Federation of Accountants (SAFA). In addition, Mr. Hussain is/was associated with the following organizations in different capacities:

Director

M. Farhad Hussain FCA • Bay Asset Management Ltd. Independent Director • Independent Director of Matin Spinning Mills Ltd and Al-Haj Textile Mills Ltd. Former Director • Shadharan Bima Corporation • Dhaka Stock Exchange (DSE) • Agrani Bank Limited. • Dhaka WASA Past Member of the Boards of: • South Asian Federation of Accountants (SAFA) • Confederation of Asia Pacific Accountants (CAPA) • Former Advisor of Bangladesh Securities and Exchange Commission • Financial Consultant of Oriental Bank Ltd.

Mr. Hussain is currently member of the Audit Committee and Risk Management Committee of the Prime Bank , member of the Board of PBL Exchange Singapore and Chairman, Prime Bank Investment Limited (PBIL), subsidiaries of the Bank.

PRIME BANK 29 ANNUAL REPORT 2018

Prof. Dr. M. Shamim Z. Bosunia has been appointed an Independent Director of Prime Bank Limited in the 482nd Board Meeting of the Bank on 30th August 2018.

Prof. Bosunia is a renowned personality and a leading Civil Engineer of the country by profession and whose expertise and advisory services have been pressed for implementation into various mega projects of the country.

He is an ex. professor of BUET and past President of The Institution of Engineers Bangladesh (IEB).

Currently, Prof. Bosunia is associated with the following organizations:

• Emeritus Professor, Dept. of Civil Engineering: University of Asia Pacific (UAP) Dhaka;

• Member, Panel of Experts: PADMA Multi-Purpose Bridge Project and Karnaphuli River Tunnel Project; Prof. Dr. M. Shamim Z. Bosunia • Chairman, Board of Rajshahi WASA; Independent Director • President, Bangladesh Association of Consulting Engineers. (BACE)

• Managing Director & Chairman, Abode of Consultants (Pvt.) Limited

Prof. Bosunia is a widely travelled person and led a number of Team/Group responsible for implementation of various mega projects/schemes sponsored by UNDP/World Bank/GOB.

Mr. Rahel Ahmed was appointed Managing Director & CEO of Prime Bank Limited on December 14, 2017. Prior to this, he was the DMD and Chief Business Officer of the bank overseeing all businesses of large corporate and institutional clients since 2015.

Mr. Ahmed is an international banker having more than two decades of extensive experience in Wholesale Banking. He has held senior leadership position with the two largest multinational Banks in Bangladesh, ANZ Grindlays Bank and Standard Chartered Bank prior to his relocation to Dubai, UAE where he worked for 7 years for two of the largest regional Banks; Emirates NBD Banking Group and First Gulf Bank in senior roles including in Islamic Banking arena. He played a leading role in ‘Business Model Restructuring and Centralization process’ of Prime Bank during last 3 years.

Mr. Ahmed holds an MBA in International Business from Maastricht School Rahel Ahmed of Business, Netherlands. He is also a certified “Credit Professional” from the Managing Director & CEO world reputed Omega, UK and holds Certificate of Recognition in International Trade Skill Assessment Program jointly conducted by Standard Chartered Group London and ICC. He was also accorded ‘Outstanding Employee and CEO’s award’ in Standard Chartered Bank and First Gulf Bank for his outstanding performance in different times.

30 PRIME BANK SENIOR MANAGEMENT

From the Left

M Habibur Rahman Chowdhury Rahel Ahmed Md. Golam Rabbani Md. Touhidul Alam Khan Syed Faridul Islam Deputy Managing Director & CFO Managing Director Deputy Managing Director Deputy Managing Director Deputy Managing Director & CEO

PRIME BANK 31 ANNUAL REPORT 2018

SENIOR MANAGEMENT TEAM (SMT)

From the Left

Md. Golam Rabbani Sk. Matiur Rahman Abdul Halim Syed Faridul Islam Deputy Managing Director Senior Executive Vice President Senior Executive Vice President Deputy Managing Director

Rahel Ahmed M Habibur Rahman Chowdhury Md. Touhidul Alam Khan Md. Ziaur Rahman Managing Director & CEO Deputy Managing Director & CFO Deputy Managing Director Senior Executive Vice President

32 PRIME BANK EXECUTIVE RISK MANAGEMENT COMMITTEE

Standing (from left)

Md. Abul Kashem Md. Shahadat Hossain ANM Mahfuz Abdul Halim Executive Vice President Senior Executive Vice President Senior Executive Vice President Senior Executive Vice President

Mir Md. Hassanul Zahed Mohammad Jashim Uddin Md. Feroz Al Azad Executive Vice President Senior Executive Vice President Executive Vice President

Sitting (from left)

Mohd. Rafat Ullah Khan Syed Faridul Islam M Habibur Rahman Chowdhury Md. Iqbal Hossain Senior Executive Vice President Deputy Managing Director Deputy Managing Director & CFO Senior Executive Vice President

Sk. Matiur Rahman Senior Executive Vice President

PRIME BANK 33 ANNUAL REPORT 2018

ASSET LIABILITY COMMITTEE

Standing (from left) Shams Abdullah Muhaimin ANM Mahfuz Rahel Ahmed Abu Zafar Md. Sheikhul Islam Senior Executive Vice President Senior Executive Vice President Managing Director & CEO Executive Vice President

Syed Faridul Islam Deputy Managing Director

Sitting (from left)

Md. Touhidul Alam Khan M Habibur Rahman Chowdhury Sk. Matiur Rahman Md. Feroz Al Azad Deputy Managing Director Deputy Managing Director & CFO Senior Executive Vice President Executive Vice President

34 PRIME BANK SUSTAINABLE FINANCE COMMITTEE

Standing (from left)

Md. Moniruzzaman Md. Iqbal Hossain Mir Md. Hassanul Zahed Md. Amir Hossain Majumder Md. Feroz Al Azad Vice President Senior Executive Vice President Executive Vice President Executive Vice President Executive Vice President

Md. Abul Kashem Md Asif Bin Idrish Mohammad Nazmul Karim Chowdhury Executive Vice President Senior Vice President Executive Vice President

Sitting (from left)

Mohd. Rafat Ullah Khan Md. Touhidul Alam Khan M Habibur Rahman Chowdhury Syed Faridul Islam Senior Executive Vice President Deputy Managing Director Deputy Managing Director & CFO Deputy Managing Director

ANM Mahfuz Mohammad Jashim Uddin Senior Executive Vice President Senior Executive Vice President

PRIME BANK 35 ANNUAL REPORT 2018

LIST OF EXECUTIVES

Managing Director & Additional Managing Deputy Managing CEO Director Director

Rahel Ahmed Md. Tabarak Hossain Bhuiyan Md. Golam Rabbani Md. Touhidul Alam Khan Syed Faridul Islam M Habibur Rahman Chowdhury

Senior Executive Vice President

Mohammed Ehsan Habib Mohammad Jashim Uddin Abdul Halim Md. Ezaz Hossain Md. Shahadat Hossain Md. Anwarul Islam Abu Ashraf Siddiquee Ziaur Rahman Faruk Ahammad Sk. Matiur Rahman Mohd. Rafat Ullah Khan Abu Nayeem Mohmmad Mahfuz Md. Iqbal Hossain Shams Abdullah Muhaimin Syed Tofail Ali

Executive Vice President

Syed Sahadat Hossain Syed Md. Nazmul Huque Abu Zafar Md. Sheikhul Islam Imtiaz Ahamed Bhuiyan Muhammad Anowarul Islam Md. Tarique Parvez Jewel Md. Amzad Hossain Mir Md. Hassanul Zahed Md. Feroz Al Azad Md. Amir Hossain Majumder Mohammad Nazmul Karim Chowdhury Mohammad Zubayer Ershad Md. Abul Kashem

Senior Vice President

Md. Moniruzzaman Md. Abdul Quddus Shaila Abedin Md. Moniruzzaman Tofail Ahmed Mohammad Firoz Alam Md. Hafizur Rahman Mallick Mohammad Masud Shahjahan Shahbaj Talat Mohd. Afzal Hossain Saif-Ul-Alam Md. Al-Amin Mahbuba Ashraf Md. Ramiz Uddin Miah Tanvir Ahmed Mahboob Muhammad Anuarul Kabir Abu Taher Md. Zakaria Nurul Momen Khan Mohammad Nur Nobi Md. Salah Uddin Mamur Ahmed Muhammad Muzahid Hossain Md. Asif Bin Idrish

Vice President

Mollah Farid Ahmed Debashis Chakraborty Muhammad Rashed Iqbal Md. Yusuf Ali Md. Nazrul Islam Md. Moniruzzaman Kazi Azaharul Islam Md. Mozahid Kabir Ahmed Masudul Goni Md. Jafar Hasan Md. Khaled Anwar Shahana Pervin Md. Showkat Kamal Sarker Mohammad Ashrafuzzaman Asif Ibne Sattar A K M Enamul Haque Md. Arman Uddin Bhuiyan Rahat Masood Harunur Rashid Chowdhury Hasan-Ul-Huq Muhammad Ebnul Alam Palash S M Khurshed Alam Farid Ahmed Md. Nadeem Kazi Moinul Haque Sharmin Akther Mohammad Farhan Adel Dorothy Sultana Mohammad Khurshid Alam Syed Hasnain Mamun A K M Abdul Alim Ibne Khabir Md. Saidur Rahman Dipu Nazrul Islam

36 PRIME BANK Vice President

Mohammad Aminul Islam Mohammad Aminur Rahman Tanvir Ahmed Siddiqui Morshed Ahammed Mohammed Samiullah Mohammad Reaz Ahmad Mohammad Anisur Rahman Nighat Mumtaz Bishanat Sharder Md. Rashaduzzaman Mohammad Zubaer Hossain

Senior Assistant Vice President

Md. Alamgir Md. Mahabub Ujjaman Sirajul Hoque Md. Ariful Hoque Mohammad Afzalur Rahman Khan Md. Hasan Jamal Md. Rabiul Islam Mohammad Noor-E-Alam Siddique Mohammad Badrul Anam Md. Rezwan Uddin Swhel Ashis Bhattacharjee Nahida Sultana Md. Nazrul Islam S M Parvez Kabir Shubir Kumar Barua Mohammad Shawkat Ali Md. Abdur Raafi Iftikhar Ahmed Chowdhury Nazneen Akhter A T M Ahsan Takiyan Chowdhury Shamima Pervin Mohammad Abu Ali A. S. M. Hafizur Rahman Florence Sutopa Majumder Md. Taj Uddin Ahmed Md. Mir Murad Ali Syed Delwar Hossain Giash Uddin Ahmed Muntasir Quium Khan Md. Kamrul Islam Md. Ruhul Quisth M. Riyadh Farhan Kamrun Nahar S M Shahidul Islam Kh. Md. Sufian Raji Md. Mainul Kabir Mohammad Mamunur Rashid Abul Kalam Azad Mohammad Raihan Shaheed Md. Emdad Hossain Mohammad Mamunur Rashid Mohammad Jahangir Bhuiyan Masud Uddin Ahmed Muhammed Mustafizur Rahman Md. Hashmot Ali Mollah Mohammad Kamal Uddin Abdullah Al Mehdi Md. Moinul Hasan Farjana Yeasmin Saleh Md. Mahfuzul Hassan Shah Mohammad Mohsin Md. Fazle Rabby A. H. M. Kamrul Monem A K M Khairul Basher Mohammed Saiful Hossain Md. Istiaq Khaled Md. Mobinul Haque Md. Abu Sayeed Md. Azad Hossain Mohammad Sazzad Hossain K. M. Sakhawat Hossain Kazi Shafiul Azam Md. Aminur Rahman Akanda Mohammad Mamunur Rahman Mohammed Masud Rayhan Md. Rabiul Ahasan Muhammad Anisur Rahman Bhuyan

Assistant Vice President

Md. Saidur Rahman Md. Abul Hasanat A K M Humyun Kabir Mohammad Abdus Sattar Md. Rezaul Karim A K M Ziaul Latif Shamina Sultana Mesbahuddin Ahmed Sharmin Rahman Md. Emdadul Haque Md. Adil Uddin Md. Nasim Goni Chowdhury Md. Obaidul Hoque Bangajit Basak Md. Monirul Haque Bhuiyan Md. Shamsul Hoque Mohammad Rafiqul Islam Md. Ohiduzzaman Tareq Bin Mamun Md. Mahfuzur Rahman Shariful Ahsan Sayeda Rehana Ferdousi Md. Shazzad Hossain Rumman Alam Chowdhury Md. Rejaul Karim Mohsinul Hoq Sumon Mohammad Hanif Md. Zakir Hossain Md. Azharul Islam Md. Masud Alam Noor Mohammad Howlader Md. Rafiqul Islam Rajib Dey Kazi Foorkan Uddin Mollah Asaduzzaman Mohammad Nazimuddin Sheikh Md. Nizam Uddin Md. Saiful Hasan Faria Azad Sheme Md. Azmal Huda Md. Asaduzzaman Pijuce Kumar Roy

PRIME BANK 37 ANNUAL REPORT 2018

Assistant Vice President

Shakil Ahmed Khan Md. Shahtab Rizvi Md. Sariful Islam Hamida Khanam Sharifuzzaman Chowdhury Muhammad Mahbub Alam Molla Shahnaz Akhter Suraiya Rahman Saifuddin Ahmed Taksima Sultana Muhammad Ariful Islam Tahmina Akter Md. Abdul Halim Md. Rehan Uddin Mohammad Ansarul Karim Shahed Shahjahan Kabir Tawhida Choton Sharmin Jahan Khan Mohammad Roichal Hoque Asadul Kabir Md. Abdul Aziz Mohammad Sazzad Hossain Afsana Kishwar Md. Mamun Sikder Md. Afif Bin Haque Shaikat Ibrahim Ali A. S. M. Zahidul Islam Farzana Mahzabeen Sabina Easmin Azizul Hoq Shahid Uddin Ahmed Md. Solaiman-Al-Raji Md. Ferdous Hossain Polash Rupam Chowdhury Md. Rafiqul Islam Sherajus Salekin Nawadir Ali Khan Sarker Muhammad Ahmed Muneer Muhammad Moniruzzaman Md. Ashadul Latif Mohammad Anisuzzaman S. Md. Zaved Chowdhury Mohammad Shakhawat Hossain Nazia Jihan Tania Md. Joynal Abedin Al Meraz Ahmed Kazi Muhammad Rezaul Karim Muhammad Abu Zafor Rony Chanddro Podder Mohammad Shihab Hayat Rizvi Md. Ershad Ali Md. Rakibuzzaman Rojina Parvin Salahuddin Ahmed Ahmedur Rahman Md. Ziaul Hasan Sarwat Jahan Kabir B M Touhiduzzaman Sajib Sarkar Abu Mohammad Tariqul Ismail Md. Burhanul Hassan Mohammad Shahadat Hossain Md. Younus Mohammad Mahfuzur Rahman S. M. Sohel Jamil M. M. Mahbub Hasan Mohammad Tanveer Haider Imon Sattya Ranjan Chakraborty

38 PRIME BANK MESSAGE FROM THE CHAIRMAN AND MANAGING DIRECTOR & CEO

From the office of the Chairman

Managing Director & CEO’s Review ANNUAL REPORT 2018

FROM THE OFFICE OF THE CHAIRMAN

Dear Stakeholders, Global Economy recovery, although they remain exposed to volatile prices. The year 2018, as we have experienced, Global economic growth remained was a challenging year for global steady at 3.1 per cent in 2018, as a Economic activity at the global level is and domestic market, offering both fiscally induced acceleration in the expected to expand at a solid pace of 3 opportunity to thrive and fear to confront United States of America offset slower per cent in 2019, but there are increasing instability. The prospect of protectionist growth in some other large economies. signs that growth may have peaked. The trade policies, particularly in the United Developed economies expanded at a growth in global industrial production States with President Trump’s new steady pace of 2.2 per cent, and growth and merchandise trade volumes has been trade strategy, US-China trade war, fast- rates in many countries have risen close tapering since the beginning of 2018, evolving new technologies reshaping the to their potential, while unemployment especially in trade-intensive capital and trade landscape, and uncertainty about rates in several developed economies intermediate goods sectors. Leading the UK’s future trade relationships with have dropped to historical lows. Among indicators point to some softening in the EU and beyond suggest a global trade the developing economies, the regions economic momentum in many countries in system that is facing more uncertainty of East and South Asia remain on a 2019, amid escalating trade disputes, risks than ever before. However, Bangladesh relatively strong growth trajectory, of financial stress and volatility, and an has been able to continue its sustained expanding by 5.8 per cent and 5.6 undercurrent of geopolitical tensions. At the growth amid all sorts of uncertainties per cent, respectively in 2018. Many same time, several developed economies with its resilient mindset and everlasting commodity exporting countries, notably are facing capacity constraints, which may aspiration. fuel exporters, are continuing a gradual weigh on growth in the short term.

40 PRIME BANK Bangladesh’s progressing economy technology adaptation, capacity build-up, corporate governance, and The Bangladesh economy has been able improved regulatory and supervisory to maintain sustained economic growth environment. The Foreign Exchange CRAR in the year 2018 due to many reasons. 3.03% reserve remained sound and hit around 2018 2017 The country’s aim tomake substantial USD 32 billion in December 2018.Total progress in growing its economy, lifting 17.04% 14.01% deposits and advances, both observed people out of poverty, and improving a rise of 9.05 percent and 12.68 percent the lives of its people was well on target respectively. However, classified loan last year. Employment has increased increased to 10.29 percent of total specially in IT sector, more people have outstanding amount in December 2018 access to health and education, and from 9.31 percent in the same period NPAT basic infrastructure has also improved. 2018 2017 1,129 of previous year. The private sector GDP growth for FY2017-18 reached 7.86 credit recorded 13.33 percent growth in 2,188 1,059 percent which is significantly higher December 2018 which was significantly BDT in million than the growth of 7.28 percent in the lower than 18.00 percent of the same preceding fiscal year. Among the broad month of the previous year. Among sectors of GDP, the contribution of the positives, there is signal of growth agriculture and service sector to GDP of industrial sector in the country. slid down by 0.51 percentage point to ROE Bangladesh Bank data shows that 14.23 percent and by 0.74 percentage 2018 2017 4.36% disbursement of industrial term loans point to 52.11 percent which was offset increased by 21.22 percent and stood at 8.60% 4.24% by an increased share of industry by Taka 19111.22 crore and recovery also 1.24 percentage point to 33.66 percent increased by 5.57 percent during the in relation to the preceding year. first quarter of FY19 as compared to the Investment in FY2017-18 increased corresponding period of the previous to 31.23 percent of GDP, up by 0.72 fiscal year. However, total liquid assets percentage point from the preceding of the scheduled banks decreased by fiscal year. As per Bangladesh Bank data, 3.44 percent and stood at Taka 255169.52 rate of inflation on the basis of consumer crore as of end December, 2018 which price index was 5.55 in December, 2018, was Taka 264267.37 crore at the end of lower than 5.70 in the same period of June of the same year. Due to political previous year. With a national strategy stability and using more of legitimate focused on manufacturing, dominated channel by the remitters, inflow of by the garment industry, the country remittance witnessed an upward trend has seen exports soar by an average last year. annual rate of 15-17% in recent years; reaching a record USD36.7 billion as of Safe but Progressive Journey of Prime June, 2018.This sector is on the track to Bank meet the government’s goal of USD39 2018 was pivotal for Prime Bank, which billion in 2019.Rapid growth enabled is now engaged in one of the largest Bangladesh to reach the lower middle- restructuring processes in its history. income country status in 2015. In 2018, Under the new Management the bank Bangladesh fulfilled all three eligibility went on a challenging first year, since criteria for graduation from the UN’s the bank experienced some structural Least Developed Countries (LDC) list reforms like adopting centralized for the first time and is on pathway for banking model. The management set graduation in 2024. out a new strategic agenda for the bank, Domestic Banking Scenario: with the customer at its heart, placing it at the forefront of the industry, and re- The overall scenario of banking engaging the clients in the best possible industry in our country remained way. volatile and experienced a moderate level of resilience round the year The senior management was 2018. Although the industry has lost strengthened with key internal and little of its momentum due to some external appointments, and plans put concerns like increasing volume of non in place to achieve successful structural performing loan (NPL), it has brought reform as well as major initiatives to several positive changes in terms embrace digital technology, to upgrade of modernization, quality of assets, our systems architecture in the latest application of international standards, core banking system, to become

PRIME BANK 41 ANNUAL REPORT 2018 fully cyber ready and improve our • Development of human resource for its officials as well. Apart from control effectiveness. Prime Bank’s through training program at home cricket, the bank also sponsored Golf latest and highly sophisticated Core and abroad competition. A three day long “Prime Banking System (CBS) software now Bank Cup Golf Tournament-2018”at • Identification of growth driver and allow customized service offerings to Kurmitola Golf Club was arranged by the cost optimization. our valued clients and triggers more bank last year. innovation in product development • Providing IT security to our Online Accolades & Recognition features. customers to safeguard their transaction from cyber threat In terms of accolades and recognitions, The Core business was redefined and once again, the year 2018 has been a reorganized in preparation for structural • Ensuring highest level of compliance remarkable year for the Prime Bank. reform, together with plans to bring its to the regulatory body and The bank has received Best SME Deal returns among the market leaders. While transparency to our stakeholders Award from Asian Development Bank much is yet to be done, including full- • Introducing tech-savvy products to (ADB), which was awarded at fourth fledged agent banking, more digitization cope with local and international Annual ADB Trade Finance Program in the banking model, business trend (TFP) Award-2018 held in Singapore. restructuring will largely be completed in • Providing more dynamic and Apart from this prestigious award, the 2019.This should allow the Bank to return efficient trade and credit related Bank achieved “GOLD RANK” in Asia into a better shape and accomplish more services exploiting the benefit of Sustainability Reporting Rating 2018 stable financial performance in coming centralization by National Centre for Sustainability years. The year itself saw external Reporting (NCSR) and Institute of surprises, including the increase of NPL, CSR Activities Certified Sustainability Practitioners different social movements, new entrants Prime Bank has always been exemplary (ICSP), Indonesia. In addition, the Bank in the industry, Government election and in its endeavors in respect of performing has also been awarded by Citibank so on. We also faced regulatory pressure Corporate Social Responsibility (CSR) NA, USA with their “2017 Performance to increase capital levels amid shrinking every year. With no difference the bank Excellence Award”. interest rates, and the need to improve has extended its benevolent hand in Note of Appreciation: further our control effectiveness and numerous occasions throughout last corporate culture. Notwithstanding such year. For instance, it opened a medical In conclusion, I would like to express my pressures, I’m pleased with the progress support center and eye camp to provide gratitude to all the relevant stakeholders that we have made, because it signals of instant free medical services & essential of the bank, including customers, shiny days ahead. Compared to previous medicine to the devotees attending shareholders, and patrons for putting year, the quality of our portfolio and at the Ijtema premises. The bank has their trust upon us. I am also grateful loan loss coverage ratio has improved organized health awareness programs to all the members of board for their considerably. We also received a vibrant for its Monarch customers in different ceaseless support and guidance to response from our subsidiaries in this fields, for instance, preventive care make effective decisions to address any year. for cardiac problems on the occasion challenges we faced during the year. My Strategic Actions of World Heart Day-2018 and cancer heartiest thanks to the management and awareness program on a separate employees of the bank for their vigorous Strategic endeavors are ongoing occasion. To help the poor & cold-hit effort, commitment and devotion to the processes to deal with ever-changing people the bank distributed blankets in bank to make it a success. I believe, 2018 market trends and business demands. many parts of the country. The Bank also has brought countless opportunities We always remain proactive to that call; arranged the tree plantation program to us and our dedication; love for this otherwise, are well responsive according on ‘Earth Day’ in bank premises located bank will help us grow even bigger in to need of our business requirement. in different places to encourage and coming years. Our continuous journey Putting our purpose at the heart of promote the concept of green world. of excellence will not stop if our our business is critical if we are to be collaborative effort remains continued. a truly responsible bank. Our actions With the aim to develop highly need to match our words. That’s why, we competent cricketers for the future, believe in continuous market vigilance Prime bank, as part of CSR, sponsored and improvement for the sake of our Prime Bank Young Tigers National stakeholders. in addition to contingency School Cricket Tournament, the largest plans, the management persistently aim cricket competition of the country. More Azam J Chowdhury to perform some routine tasks which than 11000 students from 554 schools Chairman include but not limited to: participated in the tournament, which is being sponsored by Prime Bank for last • Maintaining quality asset & 3 years. The bank also believes, in order generating greater value from our to remain physically and mentally fit, portfolio everybody should participate in sports • Ensuring improvement of service and recreational activities. Therefore, it quality arranged Prime Bank cricket tournament

42 PRIME BANK MANAGING DIRECTOR AND CEO’S REVIEW

Prime bank has a solid foundation, a trusted customer base and a robust balance sheet. We “ are well positioned for continued sustainable growth and ready to take advantage of promising opportunities that arise in a changing economy

Honorable Shareholders, Respected 2018, it continued to be another year more agile and customer focused Members of the Board of Directors of growth as well as consolidation.” We organization whilst maintaining steady and my beloved Prime Bank family continually focused on few essential profits. Such performance excellence members, components of strategic plans and was the result of strategic initiatives priorities by delivering diversified including effective balance sheet I am indeed privileged to present products & services to our customers in management, focus on ‘Current Account another exceptionally successful year an effort to treat all fairly and inclusively Savings Account’ (CASA) being low cost of Prime Bank at the face of many making it easy for them to find, products liabilities base, quality asset growth and challenges the industry underwent that are right for them under any continuous identification of customer during that period. Although the bank circumstances. We have continued to needs and gradual improvement of achieved incredible growth in terms of transform the Bank to become a safer, customer service. net operating performance in the year

PRIME BANK 43 ANNUAL REPORT 2018

PBL ended year 2018 with a keen sense trend from 3.92 percent in December Moreover, Bangladesh Bank’s instruction of focus as the entire organization 2017 to 4.09 percent in December 2018. to reduce the AD ratio in coming days geared up for what came out to be a However, from the beginning of the 2019, will force the banks to collect more more challenging year. Working as an the Industry facing a liquidity challenge deposits which lead to higher cost of integrated team by believing in ‘One and as a result in February 2019 average deposit for overall industry. Bank, One Team’ mantra, we found call money rate raised to 4.36 percent. innovative and differentiating ways to delight our customers, attracting new Performance overview 2018 businesses while strengthening existing Prime Bank has been consistently maintaining its financial performance over the last relationships. All business segments five years in terms of business volume and profitability. At the end of 2014 total assets and key branch personnel were most of the Bank was BDT 269,218 million whereas at the end of 2018 it stood at BDT 293,901 effective in providing new levels of high million recording a growth of more than 9 percent. Below table shows the comparative quality, personalized service. financial information of the bank of last five years. World Economy (BDT in million) World economy is estimated to have grown by 3.70 percent in 2018, projected Balance sheet 2018 2017 2016 2015 2014 by IMF, which was 3.80 percent in Paid-up capital 11,323 10,293 10,293 10,293 10,293 previous year. Global growth is expected Shareholders’ equity 26,181 24,708 25,285 26,415 24,461 to be slightly decreased in 2019. Although near-term growth could have surprise Deposits 197,518 199,014 197,934 194,825 204,838 on the upside, the global outlook is still Loans and advances 205,810 198,323 170,212 151,865 147,367 subject to substantial downside risks, Total assets 293,901 281,275 272,224 267,322 269,218 including the possibility of financial stress, increased protectionism, rising geopolitical tensions and ongoing trade In line with the changes in business dynamics and also having the Bank’s transformation war between China and USA. ongoing during the period, profitability varied in last five years. Net profit of the bank went up to BDT 2,188 million at the end of 2018 as opposed to BDT 1,059 million of Bangladesh Economy previous year. The key reason of that significant rise in Net Profit has been the increase Bangladesh has continued its journey of net interest income and decrease of requirement of provisions for loans and towards graduating to Middle Income advances. country at a rate faster than anticipated (BDT in million) with a greater than 6 percent GDP growth during last consecutive eight Operating performance 2018 2017 2016 2015 2014 years. Keeping pace with recent growth Net interest income 7,650 4,894 3,313 1,294 2,872 trends in the economy, fiscal year of 2017-18 ended in happy notes with a Operating revenue 12,899 12,148 12,023 12,073 11,906 GDP growth rate of 7.86 percent against Operating expenses 7,180 6,775 6,266 6,166 5,750 a 7.28 percent growth in last fiscal year. Operating profit 5,719 5,373 5,757 5,906 6,157 The outlook also remains steady for the ongoing fiscal of 2019. Average inflation Provision for loans and assets 1,782 3,564 3,412 3,154 2,877 looked yet better at 5.54 percent in Profit before tax 3,938 1,809 2,345 2,752 3,280 December 2018, slightly lower compared Tax expense 1,750 750 150 613 887 to 5.70 percent in December 2017. Country’s current account balance is Profit after tax 2,188 1,059 2,195 2,139 2,393 under slight pressure caused by growth in total imports resulting from increased imports of investment goods and flood Key ratios (%) 2018 2017 2016 2015 2014 related foods. Total import in FY2017- Cost of deposit 4.72 4.46 4.94 6.64 7.36 18 was USD 54.46 billion as against total export of USD 36.67 billion in the same Yield on advance 8.51 7.42 8.45 10.20 12.09 period. Country’s foreign exchange Return on assets (ROA) 0.76 0.38 0.81 0.80 0.91 reserve also reflects robust look with Return on equity (ROE) 8.60 4.24 8.49 8.41 10.08 USD 32.02 billion at the end of 2018. Earnings per share (Taka) 1.93 0.94 1.94 1.89 2.11 Banking industry scenario Dividend (C=cash; B=bonus) 12.50 C 7 C & 10 B 16 C 15 C 15 C During 2018, industry held sufficient liquidity position and as such inter-bank Non-performing loans ratio 6.16 5.45 5.96 7.82 7.61 call money rate was stable. The call Capital to risk weighted asset 17.04 14.01 12.45 12.74 12.71 money rate was slightly in upward ratio (CRAR)

44 PRIME BANK Accounting policies and estimation and changes thereon Shareholders’ 26,181 24,708 6% Bank’s financial statements for the year Equity 2018 2017 Growth (%) under review has been prepared as per BDT in Million International Accounting Standards (IAS) and International Financial 2,188 1,059 Reporting Standards (IFRS) as applicable Net profit after 107% in Bangladesh and circulars/guidelines tax 2018 2017 Growth (%) of Bangladesh Bank and other regulatory BDT in Million authority as applicable for banks. Accounting policies and estimation are 1.93 0.94 107% consistently followed except otherwise EPS disclosed in the financial statements. 2018 2017 Growth (%) Adequate disclosures is being made for any changes in accounting policies and –– Under Basel III regime banks need over the years to come. MSME Banking estimation including the effect of such to maintain additional buffer capital would strengthening further their changes. However, no such material of 2.50 percent from 2019. This foothold and continue expanding the changes of accounting policies and may increase pressure to banking horizon to capture more of market estimation occurred during the year of industry to maintain additional pie. Within Wholesale Banking arms, reporting. capital requirement in coming years Corporate and Institutional Banking Peer industry financial analysis which may also limit the ability of would continue to consolidate it’s strong Bank regularly reviews the activities, banking industry to further lending. position by undertaking profitable only selective transactions and cementing financial performance, financial Future planning & forecast position and cash flows of peer further the partnership with the Although Prime Bank Limited industry competitor based on available longstanding proven clients. They is maintaining its performance information in public. It helps to would focus more on underwriting large consistently during last many years, we formulate strategic planning and transactions and thereafter distributing still believe we have to go a long way in renewed focus for coming days. In line them to diversify risk by leveraging on terms of achieving service excellence with reviewing peer group data PBL our Syndication and Structured Finance and best corporate practices. Our also regularly analyzes its SWOT to arms. Trade and more specifically Export presence in the market is growing maximize the outcome in a very stiff and based clients would remain key growth progressively and we have improved competitive business environment. area for both them and Commercial our presence in all areas of operations. Banking divisions. Commercial Banking Risk and concerns for the banking We have professionals with profound would have key focus to churn more of industry managerial talents and perhaps most the relationships given the mid market Although the year 2019 expected to be importantly, we have a hard earned spectrum they deal in. Transaction shinning for banking industry under reputation as one of the top service Banking team would continue to foster regime of new government, but some providers in the industry. their product and sales support towards uncertainty still remaining as follows; PBL is committed to achieve performance the Wholesale Bank relationship teams –– From the beginning of the 2019, the excellence through intense focus on all towards building the scale and ensure Industry facing a liquidity challenge. segments of business, strong budgetary utilization. Moreover, they would be Moreover, Bangladesh Bank’s control process and an effective system focusing more on product solutions to decision for reduction of AD ratio of internal control. Management is continue fetching institutional deposits will impact its lending decision and confident that, PBL will be able to deliver namely CASA. increase of cost of deposit; satisfactory result to its stakeholders in the coming year. Forthcoming years of “PBL corporate positioning, –– Implementation of various mega PBL would be all about reengineering projects are in the process. Thus, to ‘for a better future’ is further the business and operational meet up the expenditure, government brought to life through processes to make it more digitally may borrow fund from banking driven and be convenient for the clients personalized service sector which may affect some degree of the Bank. Consumer Banking would delivered with disciplined of the liquidity scenario; be focusing more on their service quality efficacy and customer- –– Inflow of wage earners remittance is improvement by introducing automated oriented efficiency, because not up to the mark and there is also processes and channels to target the risk of further declining in remittance ‘Generation Z’ more specifically. It’s a our valued customers are growth; journey and that would have to continue the bank’s greatest asset.”

PRIME BANK 45 ANNUAL REPORT 2018

Outlook 2019 We set our strategy giving highest 8.60% 4.24% 4.36% priority on sustainable business growth ROE and in accordance with that, we believe 2018 2017 Change 2019 shall be a year of moderate growth and consolidation again for the Bank. 8.51% 7.42% Keeping bank’s strategy in mind along 1.09% YOA with the economic scenario we sorted 2018 2017 Change our priority and initiatives for the coming year, which I’d like to put down here as under: 17.04% 14.01% 3.03% –– We presume that money market CRAR 2018 2017 Change will be in a challenging state in the coming year and interest rates may climb up as function of that. To meet environment green and to safeguard Finally, I take this opportunity to thank this challenge, we need to manage the planet from warming and towards all of our customers for their cooperation liquidity effectively and rationalize achievement of the broader objectives and support and the employees for pricing of the Loan Portfolio to of Sustainable Development Goals their enthusiasm & tireless effort. I am maintain the NIM; (SDGs) of the Country; indebted to the board of directors of the bank for their forward looking views –– Recovery and managing NPL is Acknowledgements one of the critical success factor. and guidance. I express my appreciation In closing, I would like to reiterate For which we set increasing focus and thanks to all the regulators for that, together, we will continue to take on strengthening recovery and their continuous help and assistance, the bank forward and deliver more managing NPLs effectively. especially, Bangladesh Bank has always value to those we serve and to our been forthcoming in their valuable –– Focus on fee income must continue; shareholders. We are aware that, we face guidelines and co-operation from –– We believe that innovation and both opportunities and challenges in time to time. I look forward to another diversification of products and the year ahead, we have the confidence success story in 2019. services is another key factor to of knowing that the bank we so proudly Thank you all for your continued trust in ensure continuous growth and serve, not only embraces the future, but Prime Bank. sustainability and our concentrated is defining what that future will be. strives will continue in this regard; “As the custodian of the –– Increased focus on retail & SME and OBU business; enterprise, we are committed to safeguard and add further –– Focus on Green Banking and Rahel Ahmed Eco-friendly Financing as a part interest of the bank’s owners- Managing Director & CEO of the commitment to keep the our shareholders….”

46 PRIME BANK CORPORATE GOVERNANCE

Directors Report

Corporate Governance Report

Certificate on Corporate Governance

BSEC Checklist on Corporate Governance

Statement of the Board of Directors

Statement of the Audit Committee

CEO & CFO’s Declaration to the Board

Report on Activities of the Audit Committee

Report on Activities of the Risk Management Committee

CRO’s Report on Risk Management

Ethics & Compliance ANNUAL REPORT 2018

DIRECTORS’ REPORT

The Board of Directors of Prime Bank Limited has the pleasure of growth in advanced economies is projected to slow from an presenting Director’s Report, Audited Financial Statements for estimated 2.3 percent in 2018 to 2.0 percent in 2019 and 1.7 the year ended on December 31, 2018 together with Auditors’ percent in 2020. Report to the Shareholders on the occasion of 24th AGM of the Bank. A review of the report would reveal satisfactory Bangladesh Economy performance of the bank in a competitive environment. In Bangladesh reached lower-middle-income status on the addition, an overview of the global and Bangladesh economy strength of an annual economic growth rate of 6 percent and during 2018 and outlook for 2019 has been provided as part of above during last five years and more. The consistent growth humble presentation to our valued shareholders. was achieved mainly by a rise in readymade garment exports, The Directors’ Report has been prepared in compliance with overseas workers’ remittances, and domestic consumption. section 184 of the Companies Act 1994, BSEC Notification, the Economic growth in 2018 was mainly driven by strong domestic Listing Regulations of Dhaka and Chittagong Stock Exchanges, demand with support from robust credit growth, export and guidelines of Bangladesh Bank and other applicable remittance inflows, Government expenditure supported by regulations. Moreover, the Directors are pleased to explain and domestic consumption and investments. Buyers’ confidence in disclose some issues, which they consider relevant to ensure the RMG industry underpinned by improving workplace safety transparency and practice of corporate governance in the conditions and external demand including strong US growth operational activities of the bank. The Directors believe the momentum and diversification of RMG orders away from Report will give real insights of the bank’s performance during China aided exports can be attributed for the trend. Improved the year under review. energy supply and political calmness also supported economic activities. In terms of sectorial performance, monthly industrial Global Economy production indices suggest strong growth in first half of 2019. Economic growth accelerated in more than half the world’s The service and agricultural sector activities to remain buoyant economies in 2018. Advanced economies expanded at a in 2019 supported with relatively political stability. Based on steady pace of 2.3 percent in 2018, and growth rates in many the recent economic trends and econometric estimates, have risen close to their potential, while unemployment rates in Bangladesh Bank projected GDP growth in the range of 7.5- several developed economies have dropped to historical lows. 8.2 for FY2019 assuming continued political stability and no Among the developing economies, the regions of South Asia external shocks. remained on a relatively strong growth trajectory, expanding GDP by 5.6 percent in 2018. Many commodity exporting countries, FY (Jul-Jun) Growth (%) notably fuel exporters, are continuing a gradual recovery, 2011-12 6.52 although they remain exposed to volatile prices. Global economic growth remained at steady 3.7 percent in 2018. 2012-13 6.01 Economic activity at the global level is expected to expand 2013-14 6.06 at a solid pace of more than 3 percent in 2019. The growth in 2014-15 6.55 global industrial production and merchandise trade volumes 2015-16 7.11 has been tapering since the beginning of 2018, especially in 2016-17 7.28 trade-intensive capital and intermediate goods sectors. 2017-18 7.86 Particulars 2017 2018 2019 2020 Estimates Estimates Projections Projections World Output 3.8 3.7 3.5 3.6 Advanced Economies 2.4 2.3 2.0 1.7 Foreign Exchange Reserve Emerging market and (USD in million) 4.7 4.6 4.5 4.9 Developing Economies World Economic Outlook, IMF

35,000 33,227 32,016 January 2019 32,092 IMF forecasted that weakness in the second half of 2018 will

30,000 27,493 carry over to coming quarters, with global growth projected

25,000 22,310 to decline to 3.5 percent in 2019 before picking up slightly to

3.6 percent in 2020. This growth pattern reflects a persistent 20,000 18,095 decline in the growth rate of advanced economies. From 15,000 the trend levels reflected above it appears that downtrend occurring more rapidly than previously anticipated-together Dec,2018 Dec,2017 Dec,2016 Dec,2015 Dec,2014 with a temporary decline in the growth rate for emerging market Dec,2013 and developing economies in 2019, suggesting contractions in few countries like Argentina and Turkey, as well as the impact of trade actions on China and other Asian economies. Specifically,

48 PRIME BANK Foreign exchange reserves have grown fast to a level generally There is pressure on banking industry for entering into an era deemed as adequate, but not yet to a level that could be of lower interest rates regime. In December 2018, the weighted viewed as excessive seen against those of other developing average interest rate on lending of scheduled banks was 9.49 economy competitors. Foreign exchange reserves held by the percent. On the other hand weighted average interest rate Bangladesh Bank stood at US$ 32,016 million at the end of on deposit was 5.26 percent an increase from 5.01 percent in December 2018 while it was US$ 33,227 million in December January 2018. 2017. Foreign exchange reserves decreased due to weak/less remittance flow in 2018 and high import payments. Risk and concerns for the banking industry

Overall outlook Although the year 2019 is expected to be better for banking industry in Bangladesh but following uncertainties appear, will Bangladesh is now at a crossroads of development. The growth momentum that the country has achieved over the persist: last decade must be continued and should be further boosted • From the onset of 2019, the Industry has been passing to help the economy to the middle income group. Exports through a liquidity contraction. On top of that Bangladesh will grow with continued economic recovery in the US and Bank’s directives for reduction of AD ratio in coming days the Euro area, strong expansion in remittances will boost will force the banks to collect deposits at higher rates consumption demand, private and public investment will pick limiting fresh lending at affordable pricing. up as the business environment improves under a stabilizing political situation, and spending will increase under the annual • Growth of investment and business activities may not development program. From another point of view, the overall occur as per projections due to various directives likely to outlook for the Bangladesh economy is favorable over the impact credit flow and lack of governance letting loose medium term in light of a growing working age population ever rising NPLs. and likely continued global demand for Bangladeshi products. • In order to execute the ongoing mega projects, government Faster growth beyond 7 percent and sustained investments in infrastructure especially in the energy sector will assist turning may borrow huge sums from the banking sector eventually the country to a mid-income one. causing severe impact on the liquidity scenario. • Flow of wage earners remittance may shrink further. Banking Industry Outlook • As per roadmap for implementation of Basel III, banks will Banking industry has achieved steady growth in deposit require maintaining additional buffer capital of 2.50 percent mobilization. Total deposits in banking industry increased to from 2019 onwards and this may cause pressure on Capital BDT 10,099 billion in December 2018 as against BDT 9,261 billion Management resulting in curtailing fresh lending. in December 2017 representing a growth of 9.05 percent. On the other hand, total bank’s advance increased to BDT 9,604 billion in 2018 from BDT 8,444 billion in 2017 registering a 13.74 Capital Market Outlook percent growth. Banking and capital markets are interlinked for the progress of Industy Deposit Industy Advance the economy. Until recent time the market appeared heading BDT in Million

810 for stability after the 2010 bubble but uncertainty might set 3 , 2 620 56 79 99 68 1 ,0 04, in anytime despite Bangladesh Bank’s proactive efforts in 0 6 23 261, 10 5 9,6 13 51 444 ,3 5 9, 402,

73 stabilizing the capital market and at the same time taking 8, 8, 49 450, 131, 588, 7, 174, 7, steps for reining in the banking sector’s capital market 6, 451, 6, 5, exposures within global best practice norms linked to their capital bases.

Dec, 14 Dec, 15 Dec, 16 Dec, 17 Dec, 18 Month End DSEX Index Banking sector indicators appeared concerning in 2018 as gross non-performing loan (NPL) ratio increased to 10.30 percent at the end of December 2018 from 9.31 percent in December DSEX Performance 2017. NPL ratio of Prime Bank, however, stood at 6.16% from 5.45 percent in 2017- still much lower than the industry average. 2018 2017

Industry Classified Loan Prime Bank Classified Loan 6,307

Industry Classified Loan Prime Bank Classified Loan 6,245 14 6,500 6,093 6,040 6,020 6,006 6

12 5,861 5,805 5,739 6,000 5,720 10.30 5,65 9.69 9.31 9.23

10 8.79 5,403 1 7 5,500 3 6

8 5 6 9 4 5,61 3 5,59 5,60 4 1 5,47 7.82 5,40 7.61 5,38

6 6,000 5,36 5,34 5,30 5,28 5,28 6.16 5.96 4 5.45 4,500 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2

14 17 18 015 2 20 20 , ec Dec, 20 Dec, Dec, 2016 Dec, D

PRIME BANK 49 ANNUAL REPORT 2018

Country’s growing trade and financial integration and Company Act 1991,BRPD circular no. 14 dated 25 June 2003, the increased participation of global investors, capital market will rules and regulations issued by Bangladesh Bank, International be in a mature shape in coming days. Market capitalization Financial Reporting Standards (IFRS) as adopted by the ICAB in of DSE remained around 20 percent of GDP at the end of the name of Bangladesh Financial Reporting Standards (BFRS), December 2018. High national saving tendency can support the Securities and Exchange Rules 1987, Dhaka and Chittagong capital market development with the companies shifting their Stock Exchange’s listing regulations and relevant rules & long-term financing away from the banking system towards regulations applicable in Bangladesh. the capital market, accompanied by continued improvement The financial statements of 2018 have been reviewed by the in governance, technology and reliable information disclosure. Audit Committee of the Board of Directors of the Bank and then referred to the Board of Directors for its consideration. Brief History of Prime Bank Limited The external auditors, Aziz Halim Khair Choudhury, Chartered Prime Bank Limited (“the Bank”) was incorporated as a Accountants and Hoda Vasi Chowdhury & Co., Chartered public limited company under Companies Act, 1994 with Accountants appointed by the shareholders, have certified the registered office at 119-120 Motijheel C/A, Dhaka-1000. It the fairness of the financial statements for the year ended 31 commenced its banking business with one branch from April 17, December 2018. 1995 under the license issued by Bangladesh Bank. At present the Bank has 146 (One Hundred Forty Six) branches including Maintaining proper books of account 18 (Eighteen) SME Centre/Branches across Bangladesh and 2 Prime Bank maintained proper books of account for its (Two) booths located at Dhaka Club, Dhaka and at Chittagong financial transactions occurred during 2018. The transactions Port, Chittagong. Out of the above 146 branches, 05 (five) are recorded as per guidelines stipulated by the Bangladesh branches are designated as Islamic Banking branch complying Accounting Standard (BAS) and Bangladesh Financial with the rules of Islamic Shariah. Also the Bank has 3 (Three) Reporting Standards (BFRS) as applicable for the bank. The Off-shore Banking Units (OBU), 5 (Five) subsidiary Companies books of account have also been reviewed by the external (3 Foreign subsidiaries & 2 Local subsidiaries). The Bank went auditors, Aziz Halim Khair Choudhury, Chartered Accountants for Initial Public Offering (IPO) in 1999 and its shares were listed and Hoda Vasi Chowdhury & Co., Chartered Accountants with with Dhaka Stock Exchange Limited and Chittagong Stock an opinion that proper books of accounts as required by the Exchange Limited as a publicly traded company for its general law have been properly maintained. classes of share. Appropriate Accounting policies Principal activities Appropriate accounting policies have been consistently The principal activities of the bank are to provide all kinds of applied, except for the changes disclosed in the financial commercial banking services to the customers which includes statements in preparation of financial statements and that the extending credit/lending to customers, deposit taking, retail and accounting estimates are based on reasonable and prudent SME financing, trade financing, project financing, lease and hire judgment. Bank records financial transaction on accrual basis purchase financing, credit cards, remittance services etc. The with required disclosures and also prepared the financial mode of banking includes both conventional and Islamic banking. statements accordingly. The services are provided through both traditional and modern IT based products. The bank performs investment banking Follow up of IAS & IFRS in preparation of financial statements and advisory services through Prime Bank Investment Limited and brokerage services through Prime Bank Securities Limited. International Accounting Standards (IAS) and International Bank’s subsidiaries at Singapore and UK are engaged in providing Financial Reporting Standards (IFRS) as applicable in remittance facilities to expatriate Bangladeshis. PBL Finance Bangladesh have been followed in preparation of financial (Hong Kong) Limited advises, negotiates, confirms and provides statements. However, in case requirement for provisioning and discounting facilities against LCs originating from PBL and other Circulars issued by Bangladesh Bank differs with those of other banks in Bangladesh. The company also handles remittance regulatory authorities and accounting standards, Circulars business. 3 (three) Off-shore Banking Units offers banking services issued by Bangladesh Bank has prevailed. As such the Group related to foreign currency denominated assets and liabilities. and the Bank has departed from certain requirements of BFRS in order to comply with the rules and regulations of Bangladesh At present, the bank has been rendering services through 146 Bank which are disclosed in notes to the financial statements. branches including 18 SME branches. The introduction and expansion of ATM network, Internet Banking, SMS Banking, Phone Internal control & compliance Banking, Mobile Banking, Biometric Smart Card and KIOSK ushered The Audit Committee, an assistive committee of the Board a new era and PBL is now well poised for sustainable development. reviews the effectiveness of the system of internal controls and Preparation of Financial Statements management, establish effective audit process and manage various risks. The internal audit function reporting to the Audit The financial statements prepared by the management present Committee operates independently of other aspects of the fairly its state of affairs, the result of its operations, cash flows company’s management structure. It continuously reviews and changes in equity. These statements have been prepared the company’s system of internal controls. These controls in accordance with the “first Schedule (Section-38) of the Bank include financial controls that assist the Board in meeting its

50 PRIME BANK responsibilities for the integrity and accuracy of the company’s Top management accounting records. The Company’s financial statements, The Bank is led by Mr. Rahel Ahmed, Managing Director & CEO. prepared from those records, comply with the required laws He is a prominent and professional banker with 24 years of and standards. The system of internal control is sound in rewarding multi-dimensional experience in banking and other design and has been effectively implemented and monitored. fields of management. Mr. Ahmed has proven track record A separate report on internal control and compliance is in leading various teams in different banks contributing in enclosed with the annual report. business policy formulation and strategy management. There are some other veteran and prominent bankers serving the Statement of Directors’ Responsibility to establish Bank and contributing their expertise to the continuous growth appropriate system of internal control of the Bank. The Directors acknowledge their overall responsibility for the Managing Director & CEO With Prime Bank (since dated) Bank’s systems of internal control for establishing efficiency, effectiveness, reliability, timeliness, completeness and Rahel Ahmed 01 February 2015 compliance with the applicable laws and regulations. This Additional Managing Director process ensures that a system of internal control in accordance Md. Tabarak Hossain Bhuiyan 16 June 2007 with best financial reporting practice was in place throughout the year and up to the date of the signing of these financial Deputy Managing Director statements. It also involved an assessment of the ongoing Md. Golam Rabbani 06 January 2015 process for the identification, evaluation and management of Md. Touhidul Alam Khan FCMA 10 March 2015 individual risks and of the role of the various committees and Syed Faridul Islam 05 April 2015 bank’s risk management functions. Mohammad Habibur 11 December 2017 Rahman Chowdhury FCA Statement of Directors’ on adequacy of the system of internal control Analysis of key operating and financial data for last 5 (five) years

The Directors confirm that the Board through its committees Prime Bank is maintaining its performance consistently in last has reviewed the effectiveness of the bank’s systems of internal five years in term of business volume and profitability. In last control for the year ended 31 December 2018. The Board through five years bank’s total assets recorded 9.17 percent growth and the audit committee has supervised the policies and various stood at BDT 293,901 million at the end of 2018, which was parts of businesses to ensure an effective internal control BDT 269,218 million at the end of 2014. During last five year system. The Board business strategy, significant policies for loans and advances grew by 39.66 percent whereas deposits internal control system and risk management have been taken decreased by 3.57 percent. Below table shows the comparative properly and internal audit and control has been accomplished business highlights of the bank in last five years. as per requirement of the Bank Company (amended) Act 2013, Bangladesh Bank guidelines, Corporate Governance guidelines Total Assets (BDT in Million) of Bangladesh Securities and Exchange Commission etc.

Going concern 293,901 281,275 272,224 267,322 Going concern is one of the fundamental assumptions in 269,218 accounting on the basis of which financial statements are prepared. Financial statements are prepared assuming that a business entity will continue to operate in the foreseeable future without the need or intention on the part of management to liquidate the entity or to significantly curtail its operational activities. Therefore, it is assumed that the entity will realize its assets and settle its obligations in the normal course of 2014 2015 2016 2017 2018 the business. It is the responsibility of the management of a bank to determine whether the going concern assumption is appropriate in the preparation of financial statements. The Shareholders' Equity (BDT in Million) management of Prime Bank has calculated all the ratios related to the maintenance of regulatory capital, LCR, NSFR, Leverage

ratio, adequacy of bank’s liquidity as per structured liquidity 26,181 26,415 25,285 24,70 8 profile, regulatory reserves and has performed stress testing 24,461 to determine bank’s shock absorbent capacity in different scenario. All the ratios and results thus calculated reveal that Prime Bank is running well above the level of different parameters set by the respective guideline of Bangladesh Bank.

2014 2015 2016 2017 2018

PRIME BANK 51 ANNUAL REPORT 2018

(BDT in million) Change Balance Sheet (2018 vs 2017) 2018 2017 2016 2015 2014 % Amount

Authorized capital - - 25,000 25,000 25,000 25,000 25,000 Paid-up capital 10.00 1,029 11,323 10,293 10,293 10,293 10,293 Shareholders’ equity 5.96 1,473 26,181 24,708 25,285 26,415 24,461 Deposits (0.75) (1,496) 197,518 199,014 197,934 194,825 204,838 Loans and advances 3.78 7,487 205,810 198,323 170,212 151,865 147,367 Investments 9.41 2,239 26,046 23,807 48,249 62,733 72,642 Fixed Assets 7.92 509 6,943 6,434 6,590 6,516 6,613 Earning assets 4.88 11,226 241,264 230,038 219,508 215,052 220,115 Total assets 4.49 12,626 293,901 281,275 272,224 267,322 269,218 Total liabilities 4.35 11,153 267,720 256,567 246,939 240,907 244,758 Import (2.04) (3,787) 182,263 186,050 134,914 114,747 126,571 Export 25.81 27,614 134,616 107,002 89,720 88,827 110,096 Remittance 20.03 7,636 45,755 38,120 32,119 39,146 39,484 Guarantee Business (26.42) (8,348) 23,250 31,597 32,350 35,000 30,155

In line with the changes in business dynamics, profitability of the bank has varied in last five years. Net profit of the bank recorded an astonishing growth of more than hundred percent. Net profit increased to BDT 2,188 million at the end of 2018 from BDT 1,059 million of previous year. Moreover, below table shows the comparative operating performance in last five years.

(BDT in million) Change Operating Performance (2018 Vs 2017) 2018 2017 2016 2015 2014 % Amount Interest income 24.52 3,621 18,390 14,769 13,989 15,551 18,446

Interest expenses 8.76 866 10,741 9,875 10,676 14,257 15,574

Net interest income 56.31 2,756 7,650 4,894 3,313 1,294 2,872

Investment income (49.26) (2,092) 2,154 4,246 6,203 7,989 6,194

Commission, exchange and brokerage (1.62) (36) 2,209 2,245 1,693 1,956 2,033

Other Operating Income 16.10 123 887 764 814 834 806

Operating Income 6.18 751 12,899 12,148 12,023 12,073 11,906

Operating expenses 5.99 406 7,180 6,774 6,266 6,166 5,750

Profit before provision and tax 6.44 346 5,719 5,373 5,757 5,906 6,157

Provision for loans and assets (50.02) (1,783) 1,782 3,564 3,412 3,154 2,877

Profit after provision before tax 117.68 2,129 3,938 1,809 2,345 2,752 3,280

Tax including deferred tax 133.33 1,000 1,750 750 150 613 887

Profit after tax 106.60 1,129 2,188 1,059 2,195 2,139 2,393

However, details of operating and financial data of Prime Bank in last five years are shown separately in financial summary of annual report with charts and graphical presentation. Some key performance ratios are also shown in the below table.

Key Performance Ratio (%) 2018 2017 2016 2015 2014

Net Interest Margin (NIM) 3.62 2.56 2.02 0.86 1.91 Cost-Income Ratio 55.93 55.98 52.11 51.08 48.29 Credit-Deposit Ratio (Conventional) 82.65 84.43 74.95 69.86 66.70 Credit-Deposit Ratio (Islamic) 82.71 83.25 82.83 79.36 74.56 Cost of Deposit 4.72 4.46 4.94 6.64 7.36

52 PRIME BANK Key Performance Ratio (%) 2018 2017 2016 2015 2014

Cost of Fund 7.95 7.91 8.13 9.72 10.19 Yield on Average Advance 8.51 7.42 8.45 10.20 12.09 Return on Average Assets 0.76 0.38 0.81 0.80 0.91 Return on Average Equity 8.60 4.24 8.49 8.41 10.08 Return on Capital Employed 4.28 4.55 4.97 4.86 4.79 Earnings per Share (Taka) 1.93 0.94 1.94 1.89 2.11 Dividend* 12.50 C 7.00 C 10.00 B 16.00 C 15.00 C 15.00 C Dividend Cover Ratio (Times) 1.55 0.55 1.33 1.39 1.55 Dividend Yield 7.02 6.20 9.04 8.29 7.65 Net Asset Value per Share (Taka) 23.12 24.00 24.56 25.66 23.76 Price Earnings Ratio (Times) 9.21 29.30 8.31 8.71 8.43 Non-Performing Loans Ratio 6.16 5.45 5.96 7.82 7.61 Capital to Risk Weighted Asset Ratio (CRAR) 17.04 14.01 12.45 12.74 12.71 Leverage Ratio (Basel-III) 6.52 6.61 7.36 7.57 - Liquidity Coverage Ratio (LCL) 101.41 109.58 139.90 178.71 145.86 Net Stable Funding Ratio (NSFR) 127.94 120.08 120.56 109.12 107.25 * C = Cash, B = Bonus

Significant deviations from operating results of last year Extraordinary gains or loss

Bank’s net financial performance has improved significantly Extraordinary gains or losses refer to infrequent and unusual in 2018 due to increase of net interest income, decrease in gains or loss and which is not part of the bank’s ordinary, day- requirement of provision for loans and advances etc. In 2018, to-day operations. There is no such a gain or losses during the yield on advances was 8.51 percent compared to 7.42 percent year under reporting. in 2017 which resulted in an increase of bank interest margin by more than 1 percent. Significant deviations in key operating Risk Based Capital Framework lines are described as follows: Risk Based Capital Adequacy Framework (Revised Regulatory Net interest income: Net interest income increased by 56 Capital Framework for banks in line with Basel III) has been percent stood to BDT 7,650 million in 2018 against BDT 4,894 implemented in Bangladesh from beginning of 2015 through million in 2017. The main reasons for this growth is the growth BRPD Circular No- 18 dated December 21, 2014. Bank was in of interest income. In 2018, spread increased by more than 1 Basel II regime in 2014 maintaining its capital level above percent and yield increased to 8.51 percent. the minimum requirement, estimating the additional capital requirement to find out level of Adequate Capital against all Investment income: Investment income decreased by 49 types of risks under Pillar II and providing adequate disclosure percent in 2018 compared to previous year. Last year there was as per pillar III (market discipline) of Basel II guideline. a one-off event of realization of revaluation gain of BDT 1,559 million. From very beginning of implementation of Basel III in Bangladesh, Prime Bank has been continuing to calculate Profit after tax: Profit after tax increased significantly by more minimum capital requirement (MCR) considering credit than 106 percent in 2018 compared to previous year. Net profit risk, market risk and operational risk considering the Capital increased mainly due to requirement of less provision and Conservation Buffer @ 0.625 percent. The summary of pillar I increase of net interest margin in 2018. The bank maintained (Minimum Capital Requirement) on solo basis of Prime Bank is provision for loans and assets of BDT 1,782 million from profit of as under: 2018 against BDT 3,564 million in 2017.

(BDT in Million)

Particulars 2018 2017

Tier I Capital 24,335 23,048

Tier II Capital 13,924 9,203

Total Regulatory Capital 38,259 32,251

Risk Weighted Assets 224,516 230,211

Capital to Risk Weighted Asset Ratio (CRAR) (%) 17.04 14.01

PRIME BANK 53 ANNUAL REPORT 2018

Focusing on the Future Requirement Credit Rating

Bangladesh Bank has issued the “Guidelines on Risk Based Bangladesh Bank vide BRPD Circular No.06 dated July 05, 2006 Capital Adequacy”, a Revised Regulatory Capital Framework has made it mandatory for the Bank’s to have themselves credit for banks in line with Basel III, on December 2014. Aiming to rated. Accordingly Credit Rating of Prime Bank Limited was maintain capital above the required level as per this new done by two rating agencies, namely Credit Rating Information guideline, Prime Bank has issued third subordinated bond and Services Ltd (CRISL) & Credit Rating Agency of Bangladesh of BDT 7,000 million in August 12, 2018. Though raising fund Ltd (CRAB) based on audited Financial Statements as on from external sources is a short term and costlier solution, December 31, 2017. The rating report is summarized as under; the bank is emphasizing more on risk assets management and capital generation from internal sources like increasing Particulars CRISL CRAB reserve by generating profit. For risk assets management, Long Term Rating AA AA2 the bank is emphasizing on completion of credit rating of all Short Term Rating ST-2 ST-2 unrated corporate and medium customers by external credit Date of Rating 28 June 2018 27 June 2018 rating agencies and also emphasizing on restructuring of asset Validity Date 30 June 2019 30 June 2019 portfolio to low risk based assets. Moreover, the Bank has also Based on Financial built up a platform to transfer from the standardized approach December 31, 2017 Statement of risk measurement to more advanced version of Internal Risk Based Approach in evaluation of risk exposure of the Bank. Events occurring after the reporting date

Risk Management As at the date of this report, the Directors are not aware of any matter or circumstance that has arisen since the end of the The identification, evaluation and management of risk, together year 2018 up to the date of approval of financial statements with the way we respond to changes in the external operating by the Board of Directors of the Bank that has significantly environment are key to sustainable growth and underpin the affected or may significantly affect the operations of the Bank, robustness of our business plans and strategic objectives, the results of its operations or its state of affairs. However, protecting our license to operate and our reputation and the only event is, “on 03 April, 2019 , the Board of Directors of helping create a long-term source of competitive advantage. the Bank recommended 12.50 percent cash dividend” which Risk management is embedded in Prime Bank’s organizational is subject to approval of the shareholders in the next Annual structure, operations and management systems. Business risks General Meeting to be held on 16 May 2019. across the Group are addressed in a structured and systematic way through a predefined risk management structure. This Corporate social responsibility ensures that the Board’s assessment of risk is informed by risk factors and mitigating controls originating from and We acknowledge our responsibilities towards the society identified by the Group’s assets, functional departments and as a whole in which we live, care for all stakeholders, ethical operations, including the Company’s subsidiaries. Moreover, functioning, respect for employee’s rights and welfare, respect Prime Bank possesses a detailed risk management system for human beings, respect for environment and disseminate with procedures in place to support risk evaluation across the information on CSR policy. We realize that sustainable Group. The risks associated with the delivery of the business development is an ongoing journey. We are confident that plan and annual work programs and the associated mitigation we are well positioned and prepared to deliver against our measures are maintained in asset or project risk matrices and responsibilities in the short, medium and long term. A separate registers. Prime Bank possesses different committees for risk report on Corporate Social Responsibility has been attached management. The Credit Committee and Asset and Liability with the annual report. Committee (ALCO) is constituted by the Company’s senior management team which regularly reviews issues related to Corporate governance the markets, credit and liquidity and, accordingly, recommend Prim Bank focuses on ethics, governance and transparency. We and implement appropriate measures to proactively identify are committed to maintain full compliance with the laws, rules and mitigate risks. Prime Bank possesses an approved Asset and regulations that govern our business. The main objective Liability Management (ALM) policy under the responsibility of Prime Bank’s corporate governance is to develop a strong, of the ALCO. The Company’s Credit Risk Management (CRM) sustainable and competitive company in the best interest of department independently scrutinizes projects from a risk- its shareholders, employees, business associates and society at weighted perspective and assists relevant departments in large. Successful value added business is profoundly dependent setting business development priorities. These are aligned with upon transparency, internal and external confidence and trust. the Company’s risk appetite while optimizing the risk-return trade-off derived from relevant risk exposures. The CRM team Compliance of the conditions of SEC’s notification also clearly defines exceptionally high-risk sectors and prohibits In exercise of the power conferred by section 2CC of the lending to those projects which the Company does not ascribe Securities and Exchange Ordinance, 1969 (XVII of 1969), to, including those which represent negative environmental, Bangladesh Securities and Exchange Commission (BSEC) social or ethical standards. Details of risk management are issued notification no. SEC/CMRRCD/2006-158/207/Admin/80 given in the “Risk Management” Chapter of this Annual Report. dated June 03, 2018 to comply with certain conditions

54 PRIME BANK for corporate governance. The notification was issued for Business ethics and Compliance establishing a framework for ensuring good governance How we work is as important as what we do. Prime Bank has a practices in the listed companies for the interest of the investors reputation for delivering innovation, performance and solutions. and the capital market. A statement on the compliance with The key element to our long-term success is something less the SEC’s conditions has been attached with the Annual Report tangible and less easily illustrated with figures. These are with compliance certificate. Moreover, as per requirement of integrity and honesty in our business dealings, a factor that Bangladesh Securities & Exchange Commission, a certificate contributes to our long-term relationships with clients. from a professional Chartered Accountants has been obtained and attached with the annual report. Meeting of the Board of Directors and attendance

Protecting interest of minority shareholders During the year 2018 total 14 no. of Board of Director’s meeting, 13 no. of Executive Committee meeting, 10 no. of Prime bank is committed to protect the interest of minority Audit Committee meeting and 04 no. of Risk Management shareholders of all of its five subsidiary companies. All the Committee meeting were held. The status of the attendance subsidiary company is eventually fully owned considering direct is mentioned below: and cross holding of shares except only six number of shares of Prime Bank Investment Limited is allocated to the name of senior management of the bank. As a result, no decision of the bank adversely affect the interest of any outsider.

Attendance of Board of Directors in Board Meeting 2018

Total SL. Composition of the Board Status Meeting Attended Remarks Held 1 Mr. Azam J Chowdhury Chairman 14 13

10 nos. of meetings 2 Mr. Mafiz Ahmed Bhuiyan Vice-Chairman 14 9 held since his joining

3 Mr. Imran Khan Vice-Chairman 14 7

4 Mr. Md. Nader Khan Director 14 12

5 Mr. Quazi Sirazul Islam Director 14 4

6 Mrs. Marina Yasmin Chowdhury Director 14 7

10 nos. of meetings 7 Mr. Md. Shahadat Hossain Director 14 10 held since his joining 10 nos. of meetings 8 Mr. Md. Shirajul Islam Mollah Director 14 6 held since his joining

9 Mrs. Nasim Anwar Hossain Director 14 11

10 Mrs. Salma Huq Director 14 4

11 Mr. Nafis Sikder Director 14 -

12 Mr. Waheed Murad Jamil Director 14 12

13 Mr. Tarique Ekramul Haque Director 14 5

14 Mr. Mohammad Mushtaque Ahmed Tanvir Director 14 9

15 Mr. Shamsuddin Ahmed Ph.D Independent Director 14 14

16 Dr. G.M. Khurshid Alam Independent Director 14 11

17 Mr. M. Farhad Hussain FCA Independent Director 14 11

1 no. of meeting held 18 Prof. Dr. M. Shamim Z. Bosunia Independent Director 14 1 since his joining

* Directors who could not attend the meeting were granted leave of absence

PRIME BANK 55 ANNUAL REPORT 2018

Attendance in Executive Committee (E.C) Meeting during the year 2018

Total Sl Name of the Directors Status Meeting Attended Remarks Held 10 nos. of meetings held 1 Mr. Md. Shirajul Islam Mollah Chairman 13 9 since his joining 2 Quazi Sirajul Islam Member 13 7

3 Mrs. Nasim Anwar Hossain Member 13 10 10 nos. of meetings held 4 Mr. Mafiz Ahmed Bhuiyan Member 13 10 since his joining 5 Mr. Imran Khan Member 13 6

6 Mr. Tarique Ekramul Haque Member 13 -

7 Mr. Waheed Murad Jamil Member 13 13

Attendance in Audit Committee Meeting during the year 2018

Total Sl Name of the Directors Status Meeting Attended Remarks Held 1 Mr. Shamsuddin Ahmad, Ph.D. Chairman 10 10

2 Mr. Md. Nader Khan Member 10 03

3 Dr. G M Khurshid Alam Member 10 08

4 Mr. M Farhad Hussain FCA Member 10 09

Attendance in Risk Management Committee Meeting during the year 2018

Total Sl. Name of the Directors Status Meeting Attended Remarks Held 1 Dr. G M Khurshid Alam Chairman 04 03 2 nos. of meetings held 2 Mohammad Mushtaque Ahmed Tanvir Member 04 - since his joining 3 Mr. Shamsuddin Ahmad, Ph.D Member 04 04

4 Mr. M Farhad Hussain FCA Member 04 03

Pattern of Shareholding

Fully paid up shares issued to No of Shares Amount in Taka % of Shares Sponsors 4,152,053,35 4,152,053,350 36.67%

Financial Institutions 3,076,157,17 3,076,157,170 27.17%

Foreign Investors 348,688,82 348,688,820 3.08%

Non- resident Bangladeshi 26,774,64 26,774,640 0.24%

General Public 3,719,160,79 3,719,160,790 32.84%

Total 11,322,834,77 11,322,834,770 100%

56 PRIME BANK Shareholding of Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer and Head of Internal Audit and their spouses and minor children:

Shares held as Sl. Name of The directors on 31 Dec 2018 i) Directors: Mr. Azam J Chowdhury, Chairman 1 22,661,273 (Representative of East Coast Shipping Lines Ltd.) 2 Mr. Mafiz Ahmed Bhuiyan, Vice Chairman 22,650,208

3 Mr. Imran Khan, Vice Chairman 22,647,170

4 Mr. Md. Nader Khan, Director 41,821,296

5 Quazi Sirazul Islam, Director 22,677,773

6 Mrs. Marina Yasmin Chowdhury, Director 27,288,000

7 Mr. Md. Shahadat Hossain, Director 22,672,741

8 Mr. Shirajul Islam Mollah, Director 22,709,414

9 Mrs. Nasim Anwar Hossain, Director 25,702,323

10 Mrs. Salma Huq, Director 35,479,775

11 Mr. Nafis Sikder, Director 28,408,795 Mr. Waheed Murad Jamil, Director 12 22,646,523 (Representative of Mawsons Limited.) 13 Mr. Tarique Ekramul Haque, Director 22,660,429 Mr. Mohammad Mushtaque Ahmed Tanvir, Director 14 22,836,275 (Representative of Uniglory Cycle Industries Ltd.) 15 Mr. Shamsuddin Ahmad, Ph.D, Independent Director -

16 Dr. G. M. Khurshid Alam, Independent Director -

17 Mr. M. Farhad Hussain, FCA, Independent Director -

18 Dr.M.Shamim Z. Bosunia, Independent Director -

ii) Mr. Rahel Ahmed, (Managing Director & CEO) and Spouse -

iii) Mr. Mohammed Ehsan Habib ( Company Secretary) and Spouse - Mohammad Habibur Rahman Chowdhury FCA (Deputy Managing Director and Chief Financial Officer) iv) - and Spouse v) Md. Faruk Ahammad (Senior Executive Vice President and Head of Internal Audit) and Spouse -

Executives (Top five salaried employees of the company, other than the Directors, Chief Executive Office, Company Secretary, Chief Financial Officer and Head of internal audit)

Shares held as Sl. Name of Executives on 31 Dec 2018 1 Mr. Habibur Rahman, Additional Managing Director -

2 Mr. Md. Touhidul Alam Khan, Deputy Managing Director -

3 Syed Faridul Islam, Deputy Managing Director -

4 Mr. Md. Golam Rabbani, Deputy Managing Director -

5 Mr. Ziaur Rahman, Senior Executive Vice President -

Shareholders holding 10% or more voting interest in the company:-

Shareholders holding 10% or more voting interest in the company Nil

PRIME BANK 57 ANNUAL REPORT 2018

Related party transaction

Significant contracts where Bank is a party and wherein Directors have interest during the year 2018

(Amount in BDT)

Relationship with the Outstanding Name of Directors Nature of transaction Approved limit Bank amount

Azam J Chowdhury Chairman Credit Card 1,000,000 10,949 Mr. Imran Khan Vice Chairman Credit Card 1,000,000 221,419 Mr.Md.Nader Khan Director Credit Card 500,000 75,692 Mrs. Marina Yasmin Chowdhury Director Credit Card 1,000,000 43,520 Mrs. Nasim Anwar Hossain Director Credit Card 500,000 122,208 Mrs. Salma Huq Director Credit Card 500,000 59,382 Mr.Nafis Sikder Director Credit Card 500,000 29,783 Mr. Tarique Ekramul Haque Director Credit Card 500,000 216,996 Quazi Sirazul Islam Director Credit Card 500,000 865 Mr. Waheed Murad Jamil Director Credit Card 500,000 164,506 Dr. G. M. Khurshid Alam Independent Director Credit Card 500,000 309,356

*Coverd by cash security

Shares issued to Directors and Executives without consideration or exercisable at a discount Nil

Related party transactions

Nature of party/ contract Relationship Amount Lease agreement Common Director 2,475,168 Lease agreement Common Director 322,920 Lease agreement Common Director 2,054,688 Lease agreement Common Director 60,000 Lease agreement Common Director 738,300 Lease agreement Common Director 4,788,540 Lease agreement Common Director 2,760,000

Lending policies in respect of related party

a) Amount of transaction regarding loans and advances, deposits, guarantees and commitment as on 31.12.2018 Nil b) Amount of transactions regarding principal items of deposits, expenses and commission Nil c) Amount of provision against loans and advances given to related party Nil d) Amount of guarantees and commitments arising from other off-balance sheet exposures Nil

Disclosure of transaction regarding Directors and their related concerns Nil

Business other than banking business with any relation concern of the Directors as per Section 18(2) of the Bank Companies Act, 1991. Lease agreement made with the Sponsor Director & Independent Director

Nature of contract Branch Name Name of Director and related by Remarks

Jubilee Road Mr. Md. Nader Khan Director & Lease period: 01.08.2015 to Lease agreement Branch owner of the premises 31.07.2021 ATM Booth Lease period: 12.10.2011 to Mr. Md. Nader Khan Director & Lease agreement Jubilee Road 11.10.2021 owner of the premises Branch Store Room Mr. Md. Nader Khan Director & Lease period: 13.12.2014 to Lease agreement (Regional) owner of the premises 12.12.2020

58 PRIME BANK Nature of contract Branch Name Name of Director and related by Remarks

Mr. Md. Nader Khan Director & Lease period: 28.11.2017 to Lease agreement ATM Booth owner of the premises 27.11.2027 Lease period: 01.09.2013 to Lease agreement Mrs. Marina Yasmin Chowdhury Kulaura Branch 31.08.2019 Director & owner of the premises

Lease agreement Quazi Sirajul Islam Lease period: 10.07.2016 to Head Office Director & owner of the premises 09.07.2022

Mr. Azam J Chowdhury & Mrs. Lease period: 01.01.2017 to Lease agreement Halishahar Marina Yasmin Chowdhury 31.12.2025 Branch Director & owner of the premises

Service receiving companies where the Directors interest subsisted during the year

Name of party Relationship Nature of transaction Amount - - - -

Investment in the Securities of Directors and their related concern Nil

Business with subsidiary

Name of party Relationship Nature of transaction Outstanding Amount Prime Bank Investment Limited Subsidiary Company OD Facilities 3,026,635,480 Prime Bank Securities Limited Subsidiary Company OD Facilities 393,452,756 Prime Bank Securities Limited Subsidiary Company Share Trading 184,242,731 PBL Finance (Hong Kong) Ltd Subsidiary Company Term Placement 2,214,960,000

Remuneration of Directors Appropriation of profit

The Bank does not pay any remuneration to its Directors other Taking into account the profit available for distribution after than purpose stated in the relevant Bank Companies Act and complying with regulatory requirement, the Board in its 489 prevailing BRPD circulars. As per the BRPD circular no.03 dated meeting held on 03 April 2019 recommended 12.50 percent 18/01/2010 and BRPD Circular letter no. 11 dated 04/10/2015, cash dividend for the year ended on December 31, 2018 which Chairman may be provided with a car, telephone, Office is subject to approval of shareholders in the next Annual chamber and private secretary. Directors are entitled to fees General Meeting. and other benefits for attending Board, EC, Audit Committee, RMC and Shariah supervisory committee meeting. Managing Director is paid salaries and allowances as per approval of the Board and Bangladesh Bank.

Proposed appropriations are as follows:

(BDT in million)

Particulars 2018 2017 Net profit after tax for the year 2,188 1,059 Retained earnings at the beginning 359 382 Profit available for appropriation 2,547 1,441

Proposed appropriations: Transferred to statutory reserve 788 362 Proposed stock dividend - - Proposed cash dividend 1,415 721 Retained earnings 344 359

As per corporate governance guidelines the Board declare that, no bonus share or stock dividend has been declared as interim dividend during the year 2018.

PRIME BANK 59 ANNUAL REPORT 2018

Auditors Report Future outlook

The Board of Directors reviewed the Auditors Report issued Prime Bank Limited is making progress on embedding by the Bank’s auditors Aziz Halim Khair Choudhury, Chartered sustainability into business. We still believe that, we have scope Accountants and Hoda Vasi Chowdhury & Co., Chartered to do better. However, Market conditions are challenging and Accountants based on the audited financial statements sometime volatile as witnessed in recent times. We have a of the bank for the year ended on 31 December 2018. The strong capital base and have acquired good size of quality auditors didn’t raise any material misstatement or significant portfolio and diversity to help us boost our revenue earnings. disagreement during review of the Bank’s financial statements. Our presence in the market is growing steadily and we have The Board also reviewed auditors’ opinion/suggestions made improved our presence in all areas of operations. We have under a separate management letter likely to give strategic professionals with profound managerial talents and perhaps directions/ guidelines to the management for further most importantly, we have a hard earned reputation as one improvement. of the top service providers in the industry. We are convinced of our ability to continue to thrive in all areas of our business Appointment of Auditors backed by around two decades plus experience and driven by Aziz Halim Khair Choudhury, Chartered Accountants and the ambition to continue reaching new heights in performance. Hoda Vasi Chowdhury & Co., Chartered Accountants were the Building on our strength, we are confident that the company auditors of the Bank for the years 2017 and 2018. As 2018 was will be able to present better results to the shareholders in the the second year, both the firms are eligible for reappointment years ahead. in the year 2019. Acknowledgement Section 210 of the Companies Act, 1994 gives authority to the shareholders to fix the appointment of the auditors and their I would like to thank my colleagues for their valuable time and remuneration. Hence, the Board recommends reappointment contributions in guiding the Company to the right direction. of Aziz Halim Khair Choudhury, Chartered Accountants I also like to thank Bangladesh Bank, Bangladesh Securities and Hoda Vasi Chowdhury & Co., Chartered Accountants and Exchange Commission, Dhaka and Chittagong Stock as the auditors of the Bank for the year 2019. However, such Exchanges, Central Depository Bangladesh Limited, borrowers, appointment will be subject to approval of the shareholders in depositors and all stakeholders for their continuous support the next Annual General Meeting. and trust on us.

Looking forward for a better performance in the current year Rotation of Directors 2019. At the Ordinary General Meeting in every subsequent year one On behalf of the Board of Directors. third (1/3rd ) of the Directors who have been holding longest in office shall retire from the office according to the clause 108 & 109 of Article of Association (AOA) of the Bank. The Bank will follow the conditions and rotate the Directors as per laws.

Annual General Meeting Azam J Chowdhury Chairman 24th Annual General Meeting of the Bank will be held on 16 May 2019 at KIB Complex, Krishi Khamar Sarak at 11.00 a.m. and in this connection Directors’ Report and financial statements were approved in the Board Meeting held on 03 April 2019 for presentation to the shareholders.

60 PRIME BANK CORPORATE GOVERNANCE REPORT

Corporate Governance at Prime Bank comprises carefully of PBL nominated four independent directors (1/5th of total considered rules and practices by which Board of Directors number of Directors) so that Board comprises of core skills and Management of the Bank ensures accountability, fairness, considered important for diversification in the composition of transparency and independence of the operational activities the company’s directors. of the Bank. The objective is to earn and maintain trust and The Board in its 482nd Meeting held on 30.08.2018 appointed confidence of the stakeholders and help the business attain Prof. Dr. M. Shamim Z. Bosunia a renowned civil engineer as sustainability. Prime Bank as a bank of many stands inclusive Independent Director of the Bank with the permission from rather than exclusive, with its core business offering wide BSEC and Bangladesh Bank. His nomination will be placed spectrum of financial products and services to individual and for approval at the upcoming AGM of the bank. Other three businesses. Prime Bank is firmly convinced that a traditional independent directors of the bank are Dr. G.M. Khurshid Alam, banking model focused on closer customer relationships and Mr. Shamsuddin Ahmad Ph.D and Mr. M. Farhad Hussain, FCA. advisory services best serves its purpose, as such, its goals are The Board of Prime Bank affirms that the Independent Directors based on customers’ needs & solutions and not merely a product. appointed by the Board are in compliance with the relevant directives/guidelines on corporate governance released by the Board of Directors: BSEC with regard to appointment of Independent Directors.

Policy on appointment of Directors: Retirement and Re-election of Directors: Prime Bank always complies with the prescription of the As per Companies Act, each year one-third of the Directors retire regulatory authorities regarding appointment of directors. from office at the AGM and if eligible, may offer them for re- Bangladesh Bank circulars, BSEC notifications, Bank election at the AGM. In line with the BCA 1991 (amendment # 2018), Companies Act and Companies Act are strictly followed in this no Director should serve exceeding 9 (nine) years and give a break regard. Currently all the members of the Board, other than the for a period of three years in order to be eligible to be reappointed. Independent Directors maintain minimum two percent shares Pursuant to the prevailing directives, following Directors will retire of the company’s paid up capital and the Board collectively hold at the 24th AGM (2019) and are eligible for re-election: more than 30% shares required as per prevailing directives. 1. Mr. Md. Nader Khan As per newly amended Banking Companies Act 1991 (amended up to 2018), a Director may be in the office for a period up to 2. Mr. Quazi Sirazul Islam nine years at a stretch (except Independent Directors) and 3. Mrs. Marina Yasmin Chowdhury may be reappointed after a lapse of three years subject to 4. Mrs. Salma Huq eligibility and approval of the regulatory authorities. Again, as in 5. Mrs. Nasim Anwar Hossain the Companies Act, 1994, Directors are subject to retirement, as such, one-third of the Directors retire by rotation in every 6. Mr. Tarique Ekramul Haque AGM except the Independent Directors as per new CG codes 7. Mr. Mohammad Mushtaque Ahmed Tanvir (representing of BSEC. The term of office of an Independent Director is three Uniglory Cycle Industries Ltd.) years and may be prolonged by another three years with the prior approval of the concerned regulators. With regards to Among the above retiring directors, all of them are eligible nomination, removal and casual vacancies etc. of the directors, for reappointment and may continue in compliance with the Bank strictly follows the relevant rules and regulations section 15KaKa of BCA 1991 (Amended up to 2018). applicable in such circumstances. Role of the Board: The Managing Director is appointed for a minimum period of As per Bank Companies Act, Section 15B, Board of Directors three years subject to approval of Bangladesh Bank and his shall be responsible for framing and implementing policies office is not subject to retirement by rotation. with regard to risk management, internal control, internal audit All the directors of the Board are from non-executive category and compliance thereof. The section further states that: and more than one-fifth is Independent. Currently, there are • Every bank Company shall constitute an Audit Committee four independent directors in the composition of the Board consisting of such members who are not member of the with the approval of the BSEC, Bangladesh Bank and consent executive committee of the Board of Directors of the shareholders at the AGM. • Again, every banking company shall constitute a risk Independent Director: management committee consisting of members of the Board of Directors As per the Bank Companies Act, 1991 at least 3 directors should be from Independent category if the maximum number In compliance with the above stated guidelines, the Board of of the Board members is 20. Again, as per BSEC guidelines Prime Bank has been discharging its roles and responsibilities on Corporate Governance at least one fifth of the total which among others include the followings: Directors should be from Independent category. Therefore, in • Work planning and strategic management compliance with BSEC’s Corporate Governance Code, Board • Credit & Risk Management

PRIME BANK 61 ANNUAL REPORT 2018

• Internal Control Management Each Director also assures that they shall continue to comply • Human resources management & developments. with the set of codes approved by the Board of Directors. • Financial management • Appointment of Chief Executive of the Bank (CEO) Chairman of the Board: • Holding Board and various Committee meetings. The Chairman of the Bank is elected by the Board of Directors as per article 112.1 of the Articles of Association of the Bank, and Code of Conduct for the Board of Directors: the Board considers the Chairman independent. The Board of Directors in discharging their roles & responsibilities has adopted a Code of Conduct to carry out their duties in an Roles and Responsibilities of the Chairman: honest, responsible and businesslike manner and within the The roles and responsibilities of the Chairman are as follows: scope of their authority, as set forth in the laws of the country as well as in the Memorandum and Articles of Association of • As the Chairman of the Board of Directors (or Chairman of the Company. The Code of Conduct states that: any Committee formed by the Board of Directors) does not personally possess the jurisdiction to apply policy making or 1. The Members shall act honestly, in good faith and in the executive authority, he shall not participate in or interfere into best interests of the shareholders and the company. the administration or operational and routine affairs of the bank. 2. The members shall not make improper use of information • The Chairman may conduct on-site inspection of any acquired as a director. branch or financing activities under the purview of the 3. The members shall not take improper advantage of the oversight responsibilities of the Board. He may call for position as a director. any information relating to bank’s operation or ask for 4. The members will be obligated to be independent in investigation into any such affairs; he may submit such judgment and actions and take all reasonable steps to information or investigation report to the meeting of be satisfied as to the soundness of decision taken by the the Board or the Executive Committee and if deemed board of directors. necessary, with the approval of the Board, he shall take 5. Confidential information acquired by the members in the necessary action thereon in accordance with the set rules course of exercise of directorial duties shall remain the through the CEO. However, any complaint against the CEO property of the company and it will be improper to disclose shall have to be apprised to the Bangladesh Bank through or allow it to be disclosed, unless that disclosure has been the Board along with the statement of the CEO. authorized by the company, or the person from whom the Besides this, the Chairman may/shall assume any other information has been received. responsibility if the Board assigns within the purview of the 6. Members shall make every effort to attend all Board and Rules, Regulations, Acts and Articles of the Bank, BSEC’s Committee Meetings during their tenure. They will not notification on Corporate Governance Guidelines etc. absent themselves without good reasons or confirming leave of absence. Independence of Chairman and CEO: 7. To maximize effectiveness of the Board/Committee The Chairman is independent of the CEO, and this has been in Meetings, contribution of individual director shall be practice since inception of the Bank. This also complies with monitored and appraised on an annual basis. Section 1.4 of the BSEC’s notification on Corporate Governance. 8. Board members having interest of any nature in the agenda Policy on training of Board of Directors: of the meeting, shall declare beforehand the nature of their interest and withdraw from the room, unless they have a Prime Bank is fully committed to maintain highest standards of dispensation to speak. Corporate Governance & professionalism in driving the Bank’s 9. Training opportunities/orientation/workshops will be progress on the principles of transparency and openness. For this arranged for the members (especially for the newly purpose, training at home and abroad especially on the Corporate inducted members) to make them acquainted with the Governance is encouraged by the Board. As such, whenever international best practices, their fiduciary obligations, opportunities arise, bank utilizes it to train and orient its members. Code of Conduct etc. As per records, Chairman & Directors of the bank have attended workshop and training courses at home and abroad in the past. 10. Members shall always maintain ‘Fit and Proper Test Criteria’, clean CIB status and other obligations declared by the Appraisal of the Board’s performance: Primary and other Regulators. Prime Bank Limited doesn’t have a scheme for annual appraisal 11. Members shall be judicious about their entitlement of of the board’s performance till date, but the bank is abiding benefit/privileges as per Banking Companies Act -1991 and by the Code of Conduct prescribed by the regulators and all circulars issued by Bangladesh Bank and shall be willing formulated by the Board. The Board members have always to produce supporting documents, if required. taken decisions that have in the interest of the bank as a whole 12. Members shall comply with Article 23.1 of the Bank’s and have performed their duties accordingly. Another way of Memorandum and Articles of Association of the Company appraising the Board’s performance is conducted by analyzing while making Sale-Buy of Company’s share and shall refrain the execution of the projects In addition; evaluation of the from making such transaction without formal declaration. Board also takes place at the AGM by the Shareholders.

62 PRIME BANK Evaluation of the CEO by the Board: Role of the Company Secretary:

There is a five year (2015-2019) Strategic Priorities & Action Plan Company Secretary is responsible for advising the Board on (KPI) for the evaluation of the CEO/Management and is revised/ issues relating to compliance with the relevant laws, rules, reviewed by the Board depending on prevailing scenario and procedures and regulations affecting the Board and the Bank, trend of the market challenges. as well as best practices of governance. He is also responsible for advising the Directors of their obligations and duties to The CEO is also evaluated on an annual basis as against the disclose their interest in securities, disclosure of any conflict KPI’s set forth at the beginning of the year. The Board has of interest in a transaction involving the Bank, prohibited to the discretion to evaluate CEO whenever it wishes to and deal in securities and restricted to disclose any price-sensitive particularly during reappointment. information. At the start of each year, the Board participates in extensive The responsibilities of the Company Secretary comprises of: discussions with the Management and decides on financial and non-financial objectives. The annual financial budget are i. Ensuring the compliance of the Bank in relation to considered and decided by the Board at the beginning of the financial and legal practices, as well as issues of corporate financial year. The business and financial goals are assessed governance. He acts as a point of communication each quarter with actual accomplishments by the Board. The between the management, board of directors, company non-financial successes are also evaluated by the Board in shareholders, reporting in a timely and accurate manner each quarter. Furthermore, yearly appraisal and assessment of on company procedures and developments the accomplishments of goals are made at the end of the year. ii. Ensure the Bank complies with its governing document, A few mentionable KPIs for the CEO are: meet annual budgetary policies, company law and any other relevant legislation i.e. targets approved by the Board, maximize shareholders value regulations with Bangladesh Bank, Bangladesh Securities through desired ROA, ROI, ROE and EPS, maintain sustainable and Exchange Commission (BSEC) and Registrar of Joint growth on investment and revenue for the Bank, reduction of NPL Stock Companies etc. ratio and improvement in the score for CAMELS & CRMR of BB. iii. Support the Chairman in the smooth functioning of the Board. Receive agenda items from other Directors/staff Board Meetings: and ensure appropriate agenda items are tabled at Board The Board meets as required to discuss business strategy, meetings. This is done in consultation with the Chief financial performance, matters pertaining to compliance and Executive and the Chair. governance as well as reports on matters deliberated by the iv. In line with Bangladesh Bank guidelines the Company respective committees. The Board reviews, amongst others, Secretary has to act as the Secretary to all the committees the financial performance of the Bank and subsidiaries, risk i.e. Executive Committee, Audit Committee and Risk management and compliance reports and approve the Management Committee of the Board of Directors. quarterly results of the Bank at its meeting. In addition, Special v. Ensure the appointment of Bank’s board members as per Board meetings are held when necessary, to deliberate on major procedure laid down in the governing document and transactions and ad-hoc matters that require the Board’s urgent policies are followed. attention and decision. A Board meeting is held at the beginning vi. Confirms that Annual General Meetings (AGMs) and of the year to discuss the Bank’s Business plan and budget. Extraordinary General Meetings (EGMs) are run effectively Meeting papers on the proposals and reports are delivered and in accordance with the provisions of Bank’s governing to the Directors prior to the meetings, giving them sufficient document. time to evaluate the proposals. Paperless meeting has been vii. File the annual list of members and summary of share introduced using in-house developed software. This enables the capital together with the authenticated Balance Sheet and Board to function and discharge their responsibilities effectively. the Profit and Loss account. Issue Dividend Warrants, bonus The minimum information required for the Board to make an share certificates and make arrangement for disposal of informed and effective decision includes background, objective, fractional shares, if any. key issues, rationale, financial and non-financial impact of the viii. viii. Maintain and liaise with various corporate bodies viz. proposal. Directors who are unable to attend a meeting due to BAB, ABB, Chambers/other bodies, regulators. unavoidable circumstances are encouraged to provide feedback to the Chairman on matters to be deliberated for their views and Business objectives and areas of business focus: which are given due consideration at the meetings. • PBL’s Board always sets business objectives and areas for focus in consistency with the market. The latest business Directors’ Remuneration: objectives and areas of business focus can be found in Directors are not eligible for any remuneration other than the “Statement Regarding Forward Looking Approach” has attendance fee for the Board and its Committee Meeting. been included with the annual report. Currently, as per BRPD Circular letter No. 11, dated October 04, 2015, directors are eligible for remuneration of BDT 8,000 for Audit Committee: attending each meeting but numbers of such Meetings are As per BSEC notification BSEC/CMRRCD/2006-158/207/ also prescribed in the said circular determining the numbers Admin/80 dated 3rd June 2018 on Corporate Governance Code with or without remuneration. and Bangladesh Bank Guidelines; the current Audit Committee

PRIME BANK 63 ANNUAL REPORT 2018 has been formed with 4 members including 3 Independent 8. The representation letter to the auditors; and Directors. All the members belong to none-xecutive category 9. All material information presented with the financial and are financially literate as they have years of experience in statements including the business review, and corporate banking, businesses and financial sectors reforms. governance statements relating to the audit and risk The Audit Committee of the Board is headed by an independent management. non-executive director who is not a member of the Executive • Make recommendations to the Board for approval Committee. He is a retired Senior Financial Sector Specialist at the Annual General Meeting on the appointment, from the World Bank and a Ph.D. in Development Economics reappointment and removal of the external auditor. The from University of Hawaii, USA and MBA from IBA Dhaka Audit Committee also ensures that process for appointment University with distinction. Besides the Chairman, another of external auditor passes through due procedure. member of AC is a doctorate (Ph. D) in Economics and also • Oversee the relationship with the external auditor, a retired World Banker and currently Director, Policy Research including: Institute (PRI), a leading Policy & Research Think-Tank of i. Approving the terms of engagement (and the engagement Bangladesh. A third member of the Committee is a Managing letter) of the external auditor, including the remuneration Partner of a renowned audit firm and distinguished Fellow to be paid Chartered Accountant. j. Assessing the external auditor’s effectiveness, The Audit Committee has an approved Internal Audit Charter to independence and objectivity, ensuring that key partners operate and function independently and effectively. The TOR has are rotated at appropriate intervals been suitably designed to carry out its roles and responsibilities k. Agreeing the policy for, and where required by that policy, to attain the common objective of oversight. As per Charter, approving the provision of non-audit services by the Head of Internal Audit has direct access to the audit committee external auditor and the related remuneration and can raise his concerns whenever situation so warrants. l. Agreeing with the Board policy on the employment of former employees of the Bank’s auditor, and monitoring Responsibilities of the Audit Committee: the implementation of this policy • To monitor integrity of the financial statements of the Bank • Review and approve the annual audit plan, and ensure that (and any discussion or analysis thereof including annual and it is consistent with the scope of the audit engagement, and interim reports), and any formal announcements relating to the coordinated with the activities of the Internal Audit function Bank’s actual and forecast financial performance, reviewing • Discuss with the external auditor, before the audit significant financial reporting judgments contained in them. commences, the nature and scope of the audit and review • To review any unusual items or matters brought to its the auditor’s quality control procedures and steps taken by attention requiring the exercise of managerial judgment the auditor to respond to changes in regulatory and other affecting the preparation of the statements and requirements announcements • Review the findings of the audit with the external auditor, • To provide a forum for the discussion and resolution of considering the external auditor’s management letter and areas of disagreement in relation to the statements and management’s responsiveness to the auditor’s findings announcements, e.g. between management and the and recommendations External Auditor Accounting, Financial Reporting and • Review reports prepared by the external auditor as the Regulatory Compliance Audit Committee shall require, considering management’s • To review, and challenge where necessary, the actions, response to any major external audit recommendations estimates and judgments of management (and any • Review annually and report to the Board on the changes in them), in relation to the interim and annual qualification, expertise and resources, and independence financial statements before submission to the Board, of the external auditors and the effectiveness of the audit paying particular attention to: process, with a recommendation on whether to propose to 1. Significant accounting policies and practices, and any the shareholders that the external auditor be reappointed. changes in them The assessment should cover all aspects of the audit 2. Disclosures and estimates requiring a major element of service provided by the audit firm, and include obtaining judgment a reporting on the audit firm’s own internal quality control 3. The extent to which the financial statements are affected procedures and consideration of the audit firm’s annual by any unusual transactions in the year, the methods used transparency report where available. to account for any significant or unusual transactions • Ensure that the audit committee section of the annual report where different approaches are possible, and how such should include an explanation of how the committee has transactions are disclosed assessed the effectiveness of the external audit process and 4. The clarity and completeness of disclosures, and the the approach taken to the appointment or reappointment of context within which financial statements are made the external auditor, including length of term 5. Compliance with accounting standards • Review the audit representation letters before signature, 6. Compliance with legal and regulatory requirements giving particular consideration to any nonstandard issues within the representations. 7. The going concern assumption

64 PRIME BANK Internal Control: 2. Timely review of evaluations of internal controls made by management, internal auditors, and external auditors. A system of effective internal controls is a critical component of bank management and a foundation for the safe and sound 3. Periodic efforts to ensure that management has promptly followed operation of the organization. A system of strong internal up on recommendations and concerns expressed by auditors controls can help ensure that the goals and objectives of a and supervisory authorities on internal control weaknesses. banking organization will be met, that the bank will achieve 4. Periodic review of the appropriateness of the bank’s long-term profitability targets, and maintain reliable financial strategy and risk limits. and managerial reporting. Such a system can also help ensure Through the establishment of the Audit Committee, the that the bank will comply with laws and regulations as well as Board of Directors monitors the effectiveness of internal policies, plans, internal rules and procedures, and decrease the control system. The Audit Committee evaluates whether risk of unexpected losses or damage to the bank’s reputation. management is setting the appropriate compliance culture by Internal control is a process established by the board of communicating the importance of internal control among the directors, senior management and all levels of personnel. employees. They also review the corrective measures taken by It is not solely a procedure or policy that is performed at a the management relating to operational lapses. certain point in time, but rather it is continually operating at Senior management of Prime Bank develops processes that all levels within the bank. The board of directors and senior identify, measure, monitor and control risks incurred by the management are responsible for establishing the appropriate bank; maintains an organizational structure that clearly assigns culture to facilitate an effective internal control process and responsibility, authority and reporting relationships; ensures for monitoring its effectiveness on an ongoing basis; however, that delegated responsibilities are being carried out effectively; each individual within an organization must participate in the sets appropriate internal control policies; and monitors the process. The main objectives of the internal control process adequacy and effectiveness of the internal control system. can be categorized as follows: They ensure proper control through techniques such as top 13. Efficiency and effectiveness of activities (performance level reviews, activity controls, physical controls, compliance objectives); with exposure limit, approvals & authorizations and verification 14. Reliability, completeness and timeliness of financial and & reconciliation of transactions of the Bank. management information (information objectives); and Review of the adequacy of the system of internal controls 15. Compliance with applicable laws and regulations by Board of Directors: (compliance objectives). In almost every Audit Committee meeting the issue of Performance objectives for internal controls pertain to the adequacy of the system of internal controls is a factor that is effectiveness and efficiency of the Bank in using its assets and taken into consideration. The Audit Committee is responsible other resources and protecting the bank from loss. to the Board of Directors to ensure that the system of Information objectives address the preparation of timely, internal controls is adequate to protect against any type reliable, relevant reports needed for decision-making within of fraud & forgeries. The committee reviews the corrective the banking organization. They also address the need for measures taken by management relating to fraud-forgery reliable annual accounts, other financial statements and other and deficiencies in internal control. The Audit Committee financial-related disclosures and reports to shareholders, places all the compliance report before the Board of Directors supervisors, and other external parties. and regulators on a timely basis and has performed all other Compliance objectives ensure that all banking business oversight functions in relation to Internal Control System of complies with applicable laws and regulations, supervisory the Bank. In this way, the Directors review the adequacy of the requirements, and the organization’s policies and procedures. system of internal controls in consistent manner. This objective must be met in order to protect the Bank’s reputation. Risk Management: Key objective is Identification of risks to which PBL is exposed Key features of Internal Control System and the manner in internally and externally since Banking industry is unique in which the system is monitored: many ways and one of the features that set it apart from other Key features of Internal Control System of the bank are as business is the diversity and complexity of the risks it is exposed follows: to. Deregulated regimes along with globalization of business have opened new frontiers that warrant risk management an 1. Management oversight and the control culture even greater priority. The failure to adequately manage these 2. Risk recognition and assessment risks exposes banks not only to business losses but also may 3. Control activities and segregation of duties result in circumstances that they cannot remain in business. 4. Information and communication Following are the core risk areas of banking: 5. Monitoring activities and correcting deficiencies 1. Credit Risk The board of directors of Prime Bank performs the following 2. Asset and Liability/Balance Sheet Risk activities to monitor the Internal Control System: 3. Foreign Exchange Risk 1. Periodic discussions with management concerning the 4. Internal Control and Compliance risk effectiveness of the internal control system.

PRIME BANK 65 ANNUAL REPORT 2018

5. Money laundering Risk Furthermore, as per the BSEC Code, the Chairperson of the 6. Information and Communication Technology Security Risk Committee may appoint or co-opt any external expert and/ 7. Environment Risk or member(s) of staff to the Committee as advisor who shall be non-voting member, if the Chairperson feels that advice Banking companies in Bangladesh, while conducting day to- or suggestion from such external expert and/or member(s) of day operations, may face additionally some other risks both staff shall be required or valuable for the Committee. internally and externally. i.e. The Committee is headed by an Independent Director who is • Credit risk also includes concentration risk, country risk, a retired Senior Private Sector Development Specialist of the transfer risk, and settlement risk World Bank and a Ph.D. in Economics from Boston University, • Market risk (including interest rate risk in the banking book, USA. He is currently Director, Policy Research Institute (PRI), foreign exchange risk and equity market risk) a leading Policy & Research Think-Tank of Bangladesh. Other • Liquidity Risk two members of the Committee are also renowned business • Operational Risk personality of the Country. • Strategic Risk • Reputation Risk Role Of The NRC:

Strategies adopted to manage and mitigate the risks NRC shall be independent and responsible or accountable to the board of directors and to the shareholders. NRC shall Prime Bank adopted following strategies to manage and oversee, among others, the following matters and make report mitigate the risk but not limited to: with recommendation to the board of directors: • Setting targets for capital ratios and capital composition 1. (1) Formulation of the criteria for determining qualifications, • Managing balance sheet positive attributes and independence of a director and • Managing the funding structure recommend to the Board of Directors’ a policy, relating • Determining general principles for measuring, managing, to the remuneration of the directors, top level executives, and reporting the bank’s risks considering the followings; • Developing risk policies for business units a. The level and composition of remuneration is reasonable • Determining the overall investment strategy and sufficient to attract, retain and motivate suitable • Identifying, monitoring, and managing the bank’s current directors to run the company successfully; and potential operational risk exposures b. The relationship of remuneration to performance is clear • Handling “critical risks” (risks that require follow-up and and meets appropriate performance benchmarks; and further reporting) c. Remuneration to directors, top level executives involves a • Following up on reviews by and reports from Bangladesh balance between fixed and incentive pay reflecting short Bank and informing the Board of issues affecting the bank’s and long-term performance objectives appropriate to the operational risks working of the company and its goals. • Following up on reports prepared by Internal Audit and informing 2. Devising a policy on Board’s diversity taking into the Board through Audit Committee of unusual circumstances consideration age, gender, experience, ethnicity, educational background and nationality. • Preparing management information on issues such as IT security, physical security, business continuity, and compliance. 3. Identifying persons who are qualified to become directors and who may be appointed in top level executive positions More information regarding Risk management techniques in accordance with the criteria laid down, and recommend used by management to identify and mitigate risk can be their appointment and removal to the Board. found in the Risk Management chapter. 4. Formulating the criteria for evaluation of performance of Independent Directors and the Board; Formation of Nomination and Remuneration Committee: 5. identify the company’s needs for employees at different As per BSEC notification BSEC/CMRRCD/2006-158/207/ levels and determine their selection, transfer/replacement Admin/80 dated 3rd June 2018 on Corporate Governance and promotion criteria; Code, the Board of Directors in its 485th Meeting held on 6. Developing, recommending and reviewing annually the 28.10.2018 constituted a new committee named ‘Nomination company’s human resources and training policies; and and Remuneration Committee’ (NRC) with the following 03 (three) members: 7. The company shall disclose the nomination and remuneration policy and the evaluation criteria and activities i. Dr. G M Khurshid Alam, Independent Director - Chairman of NRC during the year at a glance in its annual report; ii. Mr. Md. Nader Khan, Director - Member Despite the formation of NRC in compliance with the BSEC iii. Mr. Md. Shirajul Islam Mollah, Director - Member Corporate Governance Code, activation of the committee has All the members belong to nonexecutive category and are been put on hold as per decision of Central Bank, the Primary financially literate as they have years of experience in banking, Regulator of the Bank Companies for further clarification on businesses and financial sector. apparent conflict with the Bank Companies Act with regard to number/formation of committees by the Board of Directors.

66 PRIME BANK Ethics, Integrity and Compliance: are advised to take particular care when they are responsible for dealing with customers, suppliers, agents on behalf of the Prime Bank is committed to establishing highest level of Bank. Any failure to disclose a conflict of interest leads to a business compliance and ethical standard. disciplinary action. The Bank has an ‘Employee Code of Ethics and Business Conduct’ – a framework of ethical behavior for all the Communication on the statement of ethics & business employees of the organization. practices:

The leaders/managers are required to exemplify the highest All employees are educated to comply with Code of Ethics standards of conduct and ethical behavior. Leaders/managers and conform to the relevant laws and regulations. HR Division at Prime bank are expected to: makes sure that during joining employees read, understand the • Lead according to Prime Bank standards of ethical conduct, ‘Code of Ethics and Business Conduct’ and acknowledge the in both words and actions. same by signing. HR continuously raises awareness on regular interval among employees to ensure that business decisions • Create and maintain an environment where employees feel and actions undertaken by employees are completely in comfortable asking questions or reporting concerns. compliance with the prevalent rules and regulations. The • Be diligent in enforcing the Bank’s ethical standards and leaders/managers of the Bank are mandatorily required to taking appropriate action if violations occur. communicate and help their employees to understand how • Contact the Human Resources Division when in need of ethics apply to their positions and everyday behavior. assistance. The Employee Code of Ethics and Business The Board of Directors of Prime Bank has approved ‘Employee Compliance also specify the grounds of punishment Code of Ethics and Business Conduct’ with a commitment to to refrain employees from any unwanted behavior. For setting high ethical standards so that customers’ expectations instances, an employee shall be liable to disciplinary and interests are protected in a compliant manner. actions, if he/she:

• Is convicted of any offence involving moral turpitude; or Whistle Blowers Protection Policy:

• Is corrupt or may reasonably be considered to be corrupt; or Whistle blowing about bad practices can help ensure that problems are identified before it is too late. This helps • Assumes a style of living beyond his/her ostensible means; or prevent disasters ranging from customer mistreatment to • Is engaged or is reasonably suspected of being engaged huge financial loss. Prime Banks whistle blowing procedures in subversive activities, or is reasonably suspected of being encourage employees to disclose concerns using appropriate associated with others engaged in subversive activities, channels before these concerns become a serious problem and whose retention in service is therefore considered which might jeopardize Bank’s reputation through negative prejudicial to national security; or publicity, regulatory investigation, fines and/or compensation.

• Is in possession of pecuniary resources or property Employees are encouraged to report any wrong-doing within disproportionate to his/her known sources of income etc. the Bank. The Head of Internal Control and Compliance and • The code of employee ethical behavior gives focus on the Human Resources Divisions are the primary channel to report followings: any incident. The Reporting channels offer the employees the opportunity to report while maintain their identity confidential. • Protecting Privacy of Customers’ and Confidential However, from experience Prime Bank understands that an Company Information, effective whistle blowing policy demands for a shift in the • Preventing Money Laundering and/or Fraud, culture. The Bank has a division named Internal Control and Compliance Division which dedicatedly works to ensure • Avoiding Drug/Substance/Alcohol Abuse in the Workplace effective controls mechanism in the entire business entity. • Protecting Bank’s assets

• Avoiding any conflict of interest etc. Disclosure of Remuneration of Directors, Chairman, Chief Executive and Senior Executives Each of the above stated issue is properly explained as separate section in the ‘Employee Code of Ethics and Business The Directors of the Bank are paid only honorarium for Conduct’. attending Board or Committee meetings. On the other hand, the Managing Director is paid salary and allowances as fixed The ‘Employee Code of Ethics and Business Conduct’ starts by the Bangladesh Bank. The total cost related to employee with the phrase “Uncompromising integrity”. Employees of compensation is shown in the profit and loss account. Prime Bank are judged not only in terms of competencies, but also with their integrity. The reputation and continued success Human Capital: of Prime Bank largely depend on a shared commitment to the core value of integrity. Respecting this value is the responsibility Employees are the key driving force of Prime Bank’s continuous of each and every member of the organization. success. A group of motivated and engaged employees with diverse talents are the key asset of Prime Bank. Prime Bank is The Code of Ethics and Business Conduct aware employees highly reputed in the market as an employer of choice. The to avoid situations where their personal interests conflict, or Bank has positioned itself with a performance-driven rewarding may appear to conflict, with those of the Bank. Employees work culture; where employees are treated with respect and

PRIME BANK 67 ANNUAL REPORT 2018 receive widened opportunities to realize their diverse potentials shareholders are made by publication in the daily newspapers fully as well as benefit the organization by demonstrating value and through the digital media as well. To ensure compliance creating behaviors. with regulatory bodies, PBL ensures that it publishes in two widely circulated newspapers in English and Bangla and sent To ensure long term sustainability, Prime Bank has a special to the stock exchanges and BSEC. focus on skill and merit based recruitment and selection process, highly competitive remuneration package, adequate training and PBL ensures effective communication with the shareholders development programs, career growth with succession planning, and encourages shareholder participation at the AGM. PBL high-performance culture and pleasant working atmosphere connects with the investors through AGM, EGM, Annual Report where employees are able to escalate their grievance and receive and Company’s website. Shareholders are offered the chance counseling. Following are highlights by which human resources to enquire with the Board regarding the operation of the Bank. are nourished and career progressions are ensured: They are also presented the opportunity and scope to make queries with the Company’s auditors concerning topics linked • Recruitment and selection process with ‘best-fit’ ethos to the audit of the Company’s financial statements at the AGM. followed by clearly defined policy and procedures

• Ensuring adequate learning & development opportunities Environmental and Social Obligation: through effectively designed training programs and on- A natural and fresh environment, efficient use of reserves and the-job experience appreciation for people’s well-being and safety are what PBL • Well-crafted compensation & benefits package to have a has always believed in. In harmony with this, PBL is constantly positive impact on employees’ overall wellbeing working towards decreasing consumption of energy (especially • Ensuring horizontal and vertical career growth electricity, water, gas, papers etc.) at its branches, removal of the use of hazardous substances from its practices and • Succession planning for the talents in different layers of the reducing waste generation. The importance is on diminishing organizational hierarchy paper transactions to the extent that the Credit Committee has • Comprehensive performance management program to already been made paperless, and PBL is moving forward and reward employees and drive further development thinking about implementing it more through the branches. • Reward & recognition program to meet employees’ intrinsic Board and its Committee Meetings are also made paperless psychological need for appreciation through using in-house built software. One of the key objectives for financing manufacturing companies is to ensure that they • Grievances and counseling try to lessen their carbon footprint. • Ensuring a decent workplace where employees can Bangladesh Bank has taken steps to inspire green banking in participate in work with respect Bangladesh through issuance of guidelines on green banking and Environmental Risk Management (ERM). It is always Communication to Shareholders & Stakeholders: inspiring banks in lessening paper communications and fitting Prime Bank ensures that all shareholders are notified at least solar power system in branches and giving refinance to the 2 weeks before the AGM so that they can attend on the day. solar energy, bio-gas and effluent treatment plant (ETP) sectors Financial Statements (Quarterly and Half yearly) or relevant at concessional pricing. PBL has always been committed to the information are updated on the website and notified to all environment and also been active in social activities throughout stakeholders duly. The Bank tries to maintain liaison with the year 2018, and will remain so in the future as well. the shareholders as much as possible and ensures that all PBL has always been active regarding its activities for the stakeholders are informed about the bank’s activities on a environment. One of its achievements was to make the Credit routine basis. PBL also engages with all types of stakeholders Committee & Board Meetings paperless. It is also in the process as much as possible to ensure that information is effectively of issuing a green manual for how to make all branches and communicated. divisions more environmental friendly. Also, solar panels have The Directors appreciate the importance of general been set up in quite a few branches as well, and the initiative shareholders of the Bank and use the Bank’s AGM as further has been taken to install more solar panels in branches in the opportunities to communicate with them. PBL provides copies future. Environmental activities during the year can be found of the annual report in order that these are made available to more in details in the Green Banking Report. them well in advance for detail and constructive discussion. It is PBL has always been an active member of society and has tried the company’s policy to give the shareholders the opportunity to enhance people’s lives and its employees as well. to ask questions about its activities and prospects at the AGM. The Board also structures these meetings so that shareholders Prime Bank Foundation was initiated solely for the purpose can vote separately on each matter, by proposing separate of Corporate Social Responsibility. PBL’s social activities resolutions for each item to be considered. can be found on the Prime Bank Foundation chapter and its commitment to its employees can be found in the Employee’s PBL tries utmost to ensure that all shareholders can participate Report. 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, PBL ensures that AGM is held at a convenient place where all shareholders may attend. Notices to

68 PRIME BANK CERTIFICATE ON CORPORATE GOVERNANCE

PRIME BANK 69 ANNUAL REPORT 2018

BSEC CHECKLIST ON CORPORATE GOVERNANCE Status of Compliance With Corporate Governance Code (CGC)

Annexure – C

Status of compliance with the conditions imposed by the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 dated June 03, 2018 issued under section 2CC of the Securities and Exchange Ordinance, 1969:

Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied Size of the Board of Directors 1 (1) Board’s size shall not be less than 5 (five) and more than 20 √ (twenty). Independent Directors 1(2) (a) √ At least 1/5th of the total number of directors; 1(2) (b) For the purpose of this clause: Independent Director does not hold any share or holds less Independent than one percent (1%) shares of total paid up capital; Director does 1(2) (b) (i) √ not hold any shares of the company. Independent Director is not a sponsor of the company or is not connected with the company’s any sponsor or director or nominated director or shareholder or any of its associates, sister concerns, subsidiaries and parents or holding entities 1(2) (b) (ii) √ 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: Independent Director has not been an executive in immediately 1(2) (b) (iii) √ preceding 2 (two) financial years; Independent Director does not have any other relationship, Independent whether pecuniary or otherwise, with the company or its Directors are subsidiary/associated companies; engaged as 1(2) (b) (iv) √ nominated Director of subsidiary companies. Independent Director is not a member or director or officer of 1(2) (b) (v) √ any stock exchange; Independent Director is not the shareholder, director or officers 1(2) (b) (vi) of any member excepting Independent Director or TREC holder √ of Stock Exchange or an Intermediary of the capital market; Independent Director is/was not the partners or executives during preceding 3 (three) years of concerned company’s 1(2) (b) (vii) statutory audit firm or audit firm engaged in internal audit √ services or audit firm conducting special audit or professional certifying compliance of this Code; Independent Director is not the Independent Director in more 1(2) (b) (viii) √ than 5 (five) listed companies; Independent Director is not convicted by a court of competent 1(2) (b) (ix) jurisdiction as a defaulter in payment of any loan or any √ advance to a bank or a non-bank financial institution (NBFI); Independent Director has not been convicted for a criminal 1(2) (b) (x) √ offence involving moral turpitude;

70 PRIME BANK Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied The independent Director shall be appointed by the Board of 1(2) (c) √ Directors and approved by the Shareholders in the AGM; The post of Independent Directors cannot remain vacant for No such 1(2) (d) more than 90 days; √ event occurred. The tenure of office of an Independent Directors shall be for a period 1(2) (e) √ of 3 (three) years which may be extended for 1 (one) tenure only; 1(3) Qualification of Independent Director (ID) Independent Director shall be a knowledgeable individual with 1(3) (a) √ integrity who is able to ensure required compliance. 1(3) (b) Independent Director shall have following qualifications: Business Leader who is or was a promoter or director of an unlisted company having minimum paid-up capital of Tk.100.00 1(3) (b) (i) √ million or any listed company or a member of any national or international chamber of commerce or business association; 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 1(3) (b) (ii) 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; Former official of government or statutory or autonomous or regulatory body in the position not below 5th Grade of the 1(3) (b) (iii) √ national pay scale, who has at least educational background of bachelor degree in economics or commerce or business or Law; University Teacher who has educational background in N/A 1(3) (b) (iv) Economics or Commerce or Business Studies or Law; 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 1(3) (b) (v) √ Chartered Financial Analyst or Chartered Certified Accountant or Certified Public Accountant or Chartered Management Accountant or Chartered Secretary or equivalent qualification; The Independent Director shall have at least 10 (ten) years of 1(3) (c) √ experiences in any field mentioned in clause(b); In special cases, above qualification or experiences may be 1(3) (d) √ relaxed by the Commission. 1(4) Duality of Chairman of the Board of Directors and Managing Director or CEO- The Positions of the Chairman of the Board and the Managing 1(4) (a) Director (MD) and/or Chief Executive Officer (CEO) of the √ company shall be filled by different individuals; The Managing Director (MD) and/or Chief Executive Officer 1(4) (b) (CEO) of a listed company shall not hold the same position in √ another listed company; The Chairman of the Board shall be elected from among the 1(4) (c) √ non-executive directors of the company; The Board shall clearly define respective roles and 1(4) (d) responsibilities of the Chairman and the Managing Director √ and/or Chief Executive Officer;

PRIME BANK 71 ANNUAL REPORT 2018

Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied In the absence of the Chairman of the Board, the remaining members may elect one of themselves from non-executive 1(4) (e) directors as Chairman for that particular Board’s meeting; √ the reason of absence of the regular Chairman shall be duly recorded in the minutes. 1(5) Directors’ Report to Shareholders 1(5) (i) Industry outlook and possible future developments in the industry; √

1(5) (ii) Segment-wise or product-wise performance; √ Risks and concerns including internal and external risk factors, 1(5) (iii) √ threat to sustainability and negative impact on environment; Discussion on cost of goods sold, gross profit margin and net 1(5) (iv) √ profit margin; Discussion on continuity of any Extra-Ordinary activities and 1(5) (v) √ their implications (gain or loss); Basis for related party transaction- along with a statement 1(5) (vi) showing amount, nature of related party, nature of transactions √ and basis of transactions of all related party transactions; Utilization of proceeds raised through public issues, right issues N/A 1(5) (vii) and/ or through any others instruments; An explanation if the financial results deteriorate after the N/A 1(5) (viii) company goes for IPO, RPO, Rights Offer, Direct Listing etc.; If significant variance occurs between Quarterly Financial performance and Annual Financial Statements the 1(5) (ix) √ Management shall explain about the variance on their Annual Report’ Remuneration paid to directors including Independent 1(5) (x) √ Directors; The financial statements prepared by the Management of 1(5) (xi) the company present fairly its state of affairs, the results of its √ operation, cash flows and changes in equity; Proper books of account of the company have been 1(5) (xii) √ maintained; Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the 1(5) (xiii) √ accounting estimates are based on reasonable and prudent judgment; International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as --applicable in 1(5) (xiv) Bangladesh, have been followed in preparation of the financial √ statements and any departure there-from has been adequately disclosed; The system of internal control is sound in design and has been 1(5) (xv) √ effectively implemented and monitored; Minority shareholders have been protected from abusive 1(5) (xvi) actions by or in the interest of, controlling shareholders acting √ either directly or indirectly and have effective means of redress; There are no significant doubt upon the company’s ability to 1(5) (xvii) √ continue as a going concern; Significant deviations from the last year’s operating results 1(5) (xviii) of the company shall be highlighted and the reasons thereof √ should be explained;

72 PRIME BANK Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied Key operating and ﬁnancial data of at least preceding 5 (ﬁve) 1(5) (xix) √ years shall be summarized; If the company has not declared dividend (cash or stock) for N/A 1(5) (xx) the year, the reasons thereof shall be given; Board’s statement to the effect that no bonus share or stock No such 1(5) (xxi) dividend has been or shall be declared as interim dividend; √ event occurred. Total number of Board meetings held during the year and 1(5) (xxii) √ attendance by each director. The pattern of shareholding shall be reported to disclose the aggregate number of shares (along with name 1(5) (xxiii) wise details where stated below) held by Parent or Subsidiary or Associated Companies and other 1(5) (xxiii) (a) √ related parties (name- wise details); Directors, Chief Executive Officer, Company Secretary, Chief 1(5) (xxiii) (b) Financial Officer, Head of Internal Audit and Compliance and √ their spouses and minor children (name- wise details)’ 1(5) (xxiii) (c) Executives; and √ Shareholders holding ten percent (10%) or more voting interest 1(5) (xxiii) (d) N/A in the company (name- wise details). In case of the appointment/re-appointment of a Director, a disclosure on the following information to the 1(5) (xxiv) Shareholders:- 1(5) (xxiv) (a) a brief resume of the Director; √

1(5) (xxiv) (b) Nature of his/her expertise in specific functional areas; √ Names of companies in which the person also holds the 1(5) (xxiv) (c) √ directorship and the membership of committees of the Board. A Management’s Discussion and Analysis signed by CEO or MD presenting detailed analysis of the 1(5) (xxv) company’s position and operations along with a brief discussion of changes in the financial statements, among others, focusing on:- Accounting policies and estimation for preparation of financial 1(5) (xxv) (a) √ statements; Changes in accounting policies and estimation, if any, clearly describing the effect on financial performance or results and 1(5) (xxv) (b) √ financial position as well as cash flows in absolute figure for such changes; Comparative analysis (including effects of inflation) of financial performance or results and financial position as well as cash 1(5) (xxv) (c) √ flows for current financial year with immediate preceding five years explaining reasons thereof; Compare such financial performance or results and financial 1 (5) (xxv) (d) √ position as well as cash flows with the peer industry scenario; Briefly explain the financial and economic scenario of the 1 (5) (xxv) (e) √ country and the globe; Risks and concerns issues related to the financial statements, 1 (5) (xxv) (f) √ explaining such risk and concerns mitigation plan of the company; Future plan or projection or forecast for company’s operation, 1 (5) (xxv) (g) performance and financial position, with justification thereof, i.e., √ actual position shall be explained to the shareholders in the next AGM; Declaration or certification by the CEO and the CFO to the 1 (5) (xxvi) Board as required under condition No.3(3) shall be disclosed as √ per Annexure-A;

PRIME BANK 73 ANNUAL REPORT 2018

Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied The report as well as certificate regarding compliance of 1 (5) (xxvii) conditions of this Code as required under condition No.9 shall √ be disclosed as per Annexure –B and Annexure-C. 1 (6) Meetings of the Board of Directors √ The Company shall conduct its 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 the conduct for the Chairman, other Board members and Chief Executive officer The Board shall lay down a code of conduct, based on the recommendation of the Nomination and Remuneration Committee 1 (7) (a) (NRC) at condition No.6, for the Chairman of the Board, other board √ members and Chief Executive Officer of the company; The code of conduct as determined by the NRC shall be posted on the website of the company including, among others, prudent conduct and behavior; confidentiality; conflict Under 1 (7) (b) of interest; compliance with laws, rules and regulations; process. prohibition of insider trading; relationship with environment, employees, customers and suppliers; and independency. 2 Governance of Board of Directors of Subsidiary Companies- Provisions relating to the composition of the Board of the 2 (a) holding company shall be made applicable to the composition √ of the Board of the subsidiary company; At least 1 (one) Independent Director on the Board of the 2 (b) holding company shall be a director on the Board of the √ subsidiary company; The minutes of the Board meeting of the subsidiary company 2 (c) shall be placed for review at the following Board meeting of the √ holding company; The Minutes of the respective Board meeting of the holding 2(d) company shall state that they have reviewed the affairs of the √ Subsidiary Company also; The Audit Committee of the holding company shall also review 2 (e) the Financial Statements, in particular the investments made by √ the Subsidiary Company. Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal 3 Audit and Compliance (HIAC) and Company Secretary (CS)- 3(1) Appointment The Board Shall appoint a Managing Director (MD) or Chief Executive Officer (CEO), a Company Secretary (CS), a Chief 3 (1) (a) Financial Officer (CFO) and a Head of Internal Audit and √ Compliance (HIAC); The positions of the Managing Director (MD) or Chief Executive Officer (CEO), Company Secretary (CS), Chief Financial Officer 3 (1) (b) (CFO) and Head of Internal Audit and Compliance (HIAC) shall √ be filled by different individuals; The MD or CEO, CS, CFO and HIAC of a listed company shall 3 (1) (c) not hold any executive position in any other company at the √ same time;

74 PRIME BANK Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied The Board shall clearly define respective roles, responsibilities 3 (1) (d) and duties of the CFO, the HIAC and the CS; √ The MD or CEO, CS, CFO and HIAC shall not be removed from No such 3 (1) (e) their position without approval of the Board as well as immediate event dissemination to the Commission and stock exchange(s). occurred. 3 (2) Requirement to attend Board of Directors’ Meetings 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) The MD or CEO and CFO shall certify to the Board that they 3 (3) (a) have reviewed financial statements for the year and that to the √ best of their knowledge and belief: These statements do not contain any materially untrue 3 (3) (a) (i) statement or omit any material fact or contain statements that √ might be misleading; These statements together present a true and fair view of 3 (3) (a) (ii) the company’s affairs and are in compliance with existing √ accounting standards and applicable laws; 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 3(3) (b) √ company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board or its members; The Certification of the MD or CEO and CFO shall be disclosed 3 (3) (c) √ in the Annual Report. Board of Directors’ Committee- √ 4 For ensuring good governance in the company, the Board shall have at least following sub-committees: 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) Audit Committee shall be the sub-committee of the Board; √ The Audit Committee shall assist the Board in ensuring that the financial statements reﬂect true and fair view of the state 5 (1) (b) √ of affairs of the Company and in ensuring a good monitoring system within the business; The Audit Committee shall be responsible to the Board; the 5 (1) (c) 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 members; √ The Board shall appoint members of the Audit Committee who shall be non-executive Directors of the company 5 (2) (b) √ excepting Chairman of the Board and shall include at least one Independent Director.

PRIME BANK 75 ANNUAL REPORT 2018

Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied All members of the Audit Committee should be “financially literate” and at least 1 (one) member shall have accounting or 5 (2) (c) √ related financial management background and 10 (ten) years of such experience. The Board shall appoint the new Committee member if less than 03 members to fill up the vacancy immediately or not later No such 5 (2) (d) than 1 (one) month from the date of vacancy in the Committee event to ensure continuity of the performance of work of the Audit occurred. Committee; The Company Secretary shall act as the secretary of the 5 (2) (e) √ Committee; The quorum of the Audit Committee meeting shall not 5 (2) (f) √ constitute without at least 01 Independent Director. 5(3) Chairman of the Audit Committee Chairman of the Audit Committee shall be an Independent 5 (3) (a) √ Director. In the absence of the Chairman of the Audit Committee, the remaining members may elect one of themselves as Chairman for that particular meeting, in that case there shall be no 5 (3) (b) √ problem of constituting a quorum as required under condition No.5(4) (b) and the reason of absence of the regular Chairman shall be duly recorded in the minutes. Chairperson of the Audit Committee was present Chairman of the audit committee shall remain present in the in the last 5 (3) (c) √ Annual General Meeting (AGM): AGM. This year it will be ensured by the Management. 5 (4) Meeting of the Audit Committee The Audit Committee shall conduct at least 04 (four) meetings 5 (4) (a) √ in a financial year: The quorum of the meeting of the Audit Committee shall be constituted in presence of either two members or two-third 5 (4) (b) √ of the members of the Audit Committee, whichever is higher, where presence of an Independent Director is 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; √ Monitor Internal Audit and Compliance process to ensure that it is adequately resourced, including approval of the Internal 5 (5) (c) √ Audit and Compliance Plan and review of the Internal Audit and Compliance Report; 5 (5) (d) Oversee hiring and performance of external auditors; √

76 PRIME BANK Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied Hold meeting with the external or statutory auditors for review 5 (5) (e) of the annual financial statements before submission to the √ Board for approval or adoption; Review along with the management, the annual ﬁnancial 5 (5) (f) √ statements before submission to the board for approval; Review along with the management, the quarterly and half 5 (5) (g) yearly Financial Statements before submission to the Board for √ approval; 5 (5) (h) Review the adequacy of internal audit function; √ Review the Management’s Discussion and Analysis before 5 (5) (i) √ disclosing in the Annual Report; Review statement of a related party transactions submitted by 5 (5) (j) √ the Management; Review Management Letters/ Letter of Internal Control 5 (5) (k) √ weakness issued by statutory auditors. Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required 5 (5) (l) √ for effective audit and evaluate the performance of external auditors; and Oversee whether the proceeds raised through Initial Public Offering ((IPO) or Repeat Public Offering (RPO) or Rights Share 5 (5) (m) N/A 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. √ The Audit Committee shall immediately report to the Board on 5 (6) (a) (ii) the following findings, if any: Report on conflicts of Interests. No such 5 (6) (a) ii) (a) √ event occurred. Suspected or presumed fraud or irregularity or material defect No such 5 (6) (a) ii) (b) identified in the internal audit & compliance process or in the √ event financial statements; occurred. Suspected infringement of laws, regulatory compliances No such 5 (6) (a) (ii) (c) including securities related laws, rules and regulations; √ event occurred. Any other matter which the Audit Committee deems necessary No such 5 (6) (a) ii) (d) shall be disclosed to the Board immediately. √ event occurred. 5 (6) (b) Reporting to the Authorities If the Audit Committee’s reporting to the Board is unreasonably No such ignored, the Audit Committee shall report such findings to the event Commission following due procedures. occurred. 5 (7) Reporting to the Shareholders and General Investors Report on activities carried out by the Audit Committee, No such including any report made to the Board under condition No.5(6) event (a) (ii) above during the year, shall be signed by the Chairman of occurred. the Audit Committee and disclosed in the annual report of the issuer company

PRIME BANK 77 ANNUAL REPORT 2018

Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied 6 Nomination and Remuneration Committee (NRC)

6 (1) Responsibility to the Board of Directors The Company shall have a Nomination and Remuneration 6 (1) (a) √ Committee (NRC) as a sub-committee of the Board; The NRC shall assist the Board in formulation of the nomination criteria or policy for determining qualifications, positive 6 (1) (b) 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; The Terms of Reference (ToR) of the NRC shall be clearly set 6 (1) (c) forth in writing covering the areas stated at the condition No. 6 √ (5) (b) 6 (2) Constitution of the NRC The Committee shall comprise of at least three members 6 (2) (a) √ including an Independent Director; 6 (2) (b) All members of the Committee shall be non-executive directors; √ Members of the Committee shall be nominated and appointed 6 (2) (c) √ by the Board; The Board shall have authority to remove and appoint any 6 (2) (d) √ members of the Committee; In case of death, resignation, disqualification, or removal of any No such member of the Committee or in any other cases of vacancies, event 6 (2) (e) the Board shall fill the vacancy within 180 (hundred eighty) days occurred. of occurring such vacancy in the Committee; The Chairman of the Committee may appoint or co-opt any No such external expert and/or member(s) of staff to the Committee event as advisor who shall be non-voting member, if the chairman occurred. 6 (2) (f) 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 6 (2) (g) √ Committee; The quorum of the NRC meeting shall not constitute without 6 (2) (h) √ attendance of at least an Independent Director; No member of the NRC shall receive, either directly or indirectly, any remuneration for any advisory or consultancy role or 6 (2) (i) √ otherwise, other than Director’s fees or honorarium from the company; 6 (3) Chairman of the NRC The Board shall select 1 (one) member of the NRC to be 6 (3) (a) Chairman of the Committee, who shall be an Independent √ Director; In the absence of the Chairman of the NRC, the remaining members may elect one of themselves as Chairman for that 6 (3) (b) √ particular meeting, the reason of absence of the regular Chairman shall be duly recorded in the minutes; The Chairman of the NRC shall attend the annual general Will be meeting (AGM) to answer the queries of the shareholders; ensured 6 (3) (c) by the Management.

78 PRIME BANK Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied 6 (4) Meeting of the NRC The NRC shall conduct at least one meeting in a financial year; Under 6 (4) (a) process. The Chairman of the NRC may convene any emergency 6 (4) (b) N/A 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 6 (4) (c) of the Committee, whichever is higher, where presence of an N/A Independent Director is must as required under condition No. 6 (2) (h); The proceedings of each meeting of the NRC shall duly be 6 (4) (d) recorded in the minutes and such minutes shall be confirmed in N/A the next meeting of the NRC. 6 (5) Role of the NRC NRC shall be independent and responsible or accountable to 6 (5) (a) √ the Board and to the shareholders NRC shall oversee, among other, the following matters and 6 (5) (b) √ make report with recommendation to the Board: Formulating the criteria for determining qualifications positive attributes and independence of a director and recommend 6 (5) (b) (i) √ 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 6 (5) (b) (i) (a) sufficient to attract, retain and motivate suitable directors to run √ the company successfully; The relationship of remuneration to performance is clear and 6 (5) (b) (i)(b) √ meets appropriate performance benchmarks; and Remuneration to directors top level executive involves a Remuneration balance between fixed and incentive pay reflecting short and of directors long-term performance objectives appropriate to the working and CEO’s is 6 (5) (b) (i)(c) of the company and its goals; determined by Bangladesh Bank. Devising a policy on Board’s diversity taking into consideration Under 6 (5) (b) (ii) age, gender, experience, ethnicity, educational background and process. nationality; Identifying persons who are qualified to become directors and who may be appointed in top level executive position in 6 (5) (b) (iii) N/A accordance with the criteria laid down, and recommend their appointment and removal to the Board; Formulating the criteria for evaluation of performance of Under 6 (5) (b) (iv) Independent Directors and the Board; process. Identifying the company’s needs for employees at different Under 6 (5) (b) (v) levels and determine their selection, transfer or replacement process. and promotion criteria, and Developing, recommending and reviewing annually the Under 6 (5) (b) (vi) company’s human resources and training policies; process. The Company shall disclose the nomination and remuneration 6 (5) (c) policy and the evaluation criteria and activities of NRC during √ the year at a glance in its annual report.

PRIME BANK 79 ANNUAL REPORT 2018

Compliance Status Remarks Condition (Put √ in the appropriate column) (if any) Title No. Not Complied complied 7 External or Statutory Auditors The issuer company shall not engage its external or statutory 7 (1) auditors to perform the following services of the Company, √ namely:- 7 (1) (i) Appraisal or valuation services or fairness opinions; √

7 (1) (ii) Financial information systems design and implementation; √ Book-keeping or other services related to the accounting 7 (1) (iii) √ records or ﬁnancial statements; 7 (1) (iv) Broker-dealer services; √ 7 (1) (v) Actuarial services; √ 7 (1) (vi) Internal audit services or special audit services; √ 7 (1) (vii) Any service that the Audit Committee determines; √ Audit/certification services on compliance of corporate 7 (1) (viii) governance as required under clause(i) of condition No.9 (1), √ and 7 (1) (ix) Any other service that creates conflict of interest; √ No partner or employees of the external audit firms shall possess any share of the company they audit at least during 7 (2) the tenure of their audit assignment of that Company; his or √ her family members also shall not hold any shares in the said company: Representative of external or statutory auditors shall remain Auditor was present in the Shareholders’ Meeting ((Annual General Meeting present in the or Extraordinary General Meeting) to answer the queries of the last AGM. This 7 (3) shareholders. year it will be ensured by the Management. 8 Maintaining a website by the company The company shall have an official website linked with the 8 (1) √ website of the stock exchange; The Company shall keep the website functional form the date 8 (2) √ of listing; The company shall make available the detailed disclosures 8 (3) on its website as required under the listing regulations of the √ concerned stock exchange(s); 9 Reporting and Compliance of Corporate Governance The company shall obtain a Certificate from a practicing Professional Accountant/Secretary (CA/CMA/CS) other than its statutory auditors or audit firm an yearly basis regarding 9 (1) √ compliance of conditions of Corporate Governance code of the Commission and shall such certificate shall be disclosed in the Annual Report; The professional who will provide the certificate on compliance Under 9 (2) of this Corporate Governance Code shall be appointed by the process. shareholders in the annual general meeting; The directors of the company shall state, in accordance with 9 (3) the Annexure-C attached, in the directors’ report whether the √ company has complied with these conditions or not.

80 PRIME BANK STATEMENT OF THE BOARD OF DIRECTORS

A- Statement on Directors’ Responsibility to Establish and promoting adherence to the organization’s legal and Appropriate System of Internal Control: ethical obligations.

Banking transactions are diversified, complex and fraught with The Board believes failure in corporate governance is a real inherent risks. Again these are also no longer limited within the threat to the future of the Bank. With effective corporate geographical boundaries of a country. Under the circumstances, governance based on core values of integrity and trust the issues relating to effective internal control systems, corporate Bank will have competitive edge in attracting and retaining governance, transparency and accountability has become of talent and generating positive reactions in the market place- immense significance. if the Bank has a reputation for ethical behavior in today’s marketplace, it creates not only customer loyalty but employee The primary objectives of internal control system in a bank are loyalty as well. Effective corporate governance can be achieved to help bank perform better through use of its resources, to by adopting set of principles and best practices. A great deal communicate better internally and the external stakeholders depends upon fairness, honesty, integrity and the manner in and to comply with the applicable laws and regulations. The which the Bank conduct its affairs. Prime Bank makes profit in Bank, therefore, needs to have in place an appropriate and order to survive and grow; however, the pursuit of profits must effective internal control environment under which controls stay within ethical bounds. The Bank has adopted policies that are developed, implemented and monitored. The control include environmental protection, whistle blowing, ethical environment consists of the mechanisms and arrangements training programs and so on. Such compliance mechanisms that ensure internal and external risks, to which the Bank is help develop and build a corporate image and reputation, gain exposed to, are identified; then appropriate and effective loyalty and trust of the consumers and heighten commitment internal controls are developed and implemented to manage of the employees. those. The Board is knowledgeable about the content and operation The Directors recognize their obligation for the Bank’s systems of the compliance and ethics system in the Bank and exercise of internal control for establishing effciency, effectiveness, reasonable oversight with respect to the implementation and consistency and appropriateness with regard to compliance effectiveness of the same. The Board also helps establish an with the relevant laws and regulations. organizational culture that encourages ethical conduct and a The Directors affirm that they are actively concerned with commitment towards compliance with the law. sound corporate governance and diligently discharge their The Board, therefore, would like to state that it has been actively responsibilities for establishing business strategies and involved in establishing standards and procedures designed to adopting policies for internal control, risk management and prevent and detect misconduct and also promote a high level implementing risk based internal audit as per ‘section 15 kha of ethics and compliance within the Bank. of Banking Company (amended) Act 1991’ for ensuring Bank is appropriately and effectively managed and controlled. C- Statement that the Directors have reviewed the Adequacy The Directors also affirm that the Board, through its committees, of the System of Internal Control: has appraised the effectiveness of the bank’s systems of The Board of Directors has certain roles as stipulated in the internal control for the year ended 31 December, 2018. The ‘Bank Company (amended) Act 1991’. Accordingly, the Directors Directors have attended periodical review meetings with have worked on maintaining sound corporate governance and senior management to discuss the effectiveness of the internal diligently discharged their responsibilities. The Directors have control systems of the Bank and ensure that management established broad business strategies, adopted significant policies has taken appropriate actions as per recommendations of the for internal control and risk management and implemented auditors and regulators. risk based internal audits as per ‘sections 15 Kha & 15 Ga of the Bank Company (amended) Act 1991’ for ensuring that the Bank is B- Board’s Statement on its commitment to establishing appropriately and effectively managed and controlled. high level of Ethics and compliance within the organization: The Board has reviewed the policies and manuals of various segments of businesses in order to establish an effective internal Compliance is a comprehensive program that helps Bank control system which is adequate for achieving sustainable and their employees conduct operational activities ethically growth through orderly and efficient conduct of business. with the highest level of integrity as per legal and regulatory The Directors have also checked the control procedures requirements. Establishing an effective Compliance and Ethics for ensuring safeguard of the Bank’s asset, prevention and system has become a necessity to protect any regulated detection of fraud and error, adequacy and completeness of organization. At its core, an effective system protects an accounting records, timely preparation of financial information organization by detecting and preventing improper conduct and the efficient management of risk.

PRIME BANK 81 ANNUAL REPORT 2018

The Board has overseen the policies for creating a productive The Audit Committee has reviewed the arrangements made internal control system which is vital for sustainable by management for adding the control features to the existing development while upholding an effcient manner of business. Management Information System (MIS). The committee has They have also considered the competence and fullness of also reviewed the corrective measures taken by management accounting records, sound preparation of ﬁnancial information, relating to fraud-forgery and deficiencies in internal control and systematic management of risk and overall internal control revealed in the previous years. It has placed all the compliance processes. reports before the Board of Directors and regulators on a timely basis and has performed all other oversight functions relating The Board of Directors monitors the adequacy and to Internal Control Systems of the Bank. effectiveness of Internal Control systems through formation of Audit Committee. While forming the Committee, all the conditions mentioned in the Banking Company’s (amended) Act 1991, Bangladesh Bank guidelines and the Corporate Governance guidelines by Bangladesh Securities and Exchange Commission were adequately addressed. The committee has reviewed the system of internal control and management of core risks faced by the Bank. It has also reviewed the audit process, the Bank’s process for monitoring compliance with laws and regulations and codes of business conduct.

82 PRIME BANK STATEMENT OF THE AUDIT COMMITTEE

A- Statement on Audit Committee’s review to ensure that employees of the Bank of any concerns regarding questionable Internal Controls are well conceived, properly Administered accounting or auditing matters. and satisfactorily monitored: c. Reviews the findings of the examination by the regulatory Prime Bank Ltd. (Bank) has a defined internal control policy agencies or other auditors. and guidelines for providing reasonable assurance that d. Reviews the process for communicating code of conduct the Board’s objectives are attained in terms of operational to the Bank personnel and monitoring compliance activities, financial reporting, and compliance with prevailing therewith. laws and regulations. The Audit Committee through its oversight activities ensures that Management has put in place e. Obtains regular updates from the Management and Bank’s appropriate policies and procedures on internal control. legal counsel regarding compliance matters.

A successful internal control environment requires In addition, the Audit Committee ensures that legal fees are Management’s commitment and support. Management’s goal settled on a timely basis and that the Bank does not have to is not to make each person an expert in internal control but bear any penalties in this regard. to increase awareness and understanding as to why the Bank It can, therefore, be stated that the Audit Committee supervises needs those and how to use them. The Audit Committee always and assures the Board that the Bank complies with all the stresses on these facts and ensures that Management takes applicable laws, rules and regulations, and also takes measures proper measures for raising awareness of the employees about to ensure that all statutory dues are being settled on time. the internal control processes. The Committee frequently guides Management on issues of internal control and also C- Statement on Audit Committee’s involvement in the gives decisions on critical issues. Review of the External Audit Functions:

The Audit Committee, during the year 2018, held ten The Audit Committee focuses on the financial management meetings to review the operational activities of the Bank and and reporting of the Bank. The Committee provides specific Management. Through the execution of the Internal Audit expertise in this critical area as effective financial management Plan, Special Investigations, and surprise inspections, the and reporting determines creditworthiness to outsiders and Committee ensures that internal controls are well conceived, confirms the growth trend and successes to the insiders. have been properly administered and satisfactorily monitored These are the key determinants in establishing market value of by the Management. The Committee has been working on Prime Bank – the ultimate scorecard of management’s success. and monitoring closely the subject and the contents of internal The Audit Committee undertakes the following responsibilities control with the objective of ensuring that these are effective regarding review of the external auditors’ functions: and workable. a. Reviews the external auditors’ proposed audit scope and B- Statement on Audit Committee’s role in ensuring approach, including coordination of audit efforts with Compliance with Laws and Regulations: internal audit team.

The Board, Audit Committee and the Management, all play b. Reviews the performance of the external auditors and critically important roles in promoting a compliance culture exercises final approval on the appointment of the auditors. in the operation and management of the banking affairs. As In performing this review, the Committee: per the directives of the regulators, the Board sets the policy i. At least annually, obtains and reviews a report by the guidelines for Management compliance and it’s the Audit independent external auditor describing the firm’s internal Committee that ensures those are strictly complied with quality-control procedures; material issues raised by the through its oversight functions. recent internal quality-control review, and assesses the As part of the responsibility, the Audit Committee, among auditor’s independence in all relationships between the others, also undertakes the following regular measures for external auditor and the Bank. ensuring compliance: ii. Takes into account the opinions of Management and a. Reviews effectiveness of the system of monitoring Internal Audit Division. compliance with the laws and regulations upon receiving iii. Reviews and evaluates the findings and recommendations investigations reports which are again followed up for of the independent external auditors. regularization through appropriate actions including iv. Presents conclusions with respect to the external auditors disciplinary ones, where warranted. to the Board. b. Establishes procedures for: c. Reviews and approves any non-audit work assigned to (i) The receipt, retention, and treatment of the complaints by the external auditors and ensures that such work does not the Bank regarding accounting, internal controls or auditing compromise the independence of the external auditors. matters; and d. Presents its conclusion with respect to the independence (ii) The confidential and anonymous submission by the of the auditors to the Board.

PRIME BANK 83 ANNUAL REPORT 2018 e. Meets separately with the external auditors to discuss any are properly reflected in the financial reports. matters that the Committee or auditors believe should be The Audit Committee assumes the following responsibilities discussed privately. with regards to annual and interim financial statements: f. Recommends appointment/ re-appointment of external a. Understands management’s responsibilities and auditors. representations with regard to annual and interim financial statements. D- Statement on Audit Committee involvement in 3.2.5 Selection of appropriate Accounting Policies: b. Understands and assesses the appropriateness of management’s selection of accounting principles and The Audit Committee is a vital Committee of the Board of policies. Directors assigned with the responsibilities of oversight of the financial reporting and disclosure process. The Audit c. Understands management’s judgment and accounting Committee, as such, has a large degree of responsibility estimates applied in financial reporting. regarding selection of appropriate accounting policies for d. Confers with both management and the external auditors the Bank, and evaluation of the annual and quarterly financial about the financial statements. statements. In addition, members of the Committee often e. Assesses whether financial statements are complete and discuss complex accounting figures, issues, and decisions made fairly presented in all material aspect. by the Management and the application of new accounting principles or regulations. Should significant complications with f. Verifies that the financial position of the company and regard to accounting practices or personnel arise; a special disclosures are clear and transparent. investigation is instructed by the Audit Committee using g. Reviews financial statements and other information outside consulting resources, if deemed necessary. External presented with it prior to release. auditors are also expected to inform the Committee about a It is to be noted that it is management’s responsibility to range of issues, such as their views on management’s selection prepare complete and accurate financial statements and of accounting principles, accounting adjustments arising from disclosures in accordance with financial reporting standards their audits, discrepancies or complexities faced in working and applicable rules and regulations. The Audit Committee with management, and any identified acts of fraud or illegal assures itself that the external auditors are satisfied that the activities. accounting estimates and judgments made by management, The Audit Committee is aware that the selection and application and that management’s selection of accounting principles of the company’s accounting policies must be appropriately reflect an appropriate application of IFRS, IAS and BFRS. The analyzed. The Committee is aware that investors increasingly appropriateness, including the degree to which management demand full transparency of accounting policies and their bias, if any, is evident, of the Bank’s accounting principles and effects. In line with this, the Committee always encourages underlying estimates, and the transparency of the financial management to disclose trends, events, or uncertainties that disclosures in reflecting financial performance, would be would materially affect the reported financial statements. The the core discussion between the committee and external Committee is always apprised of the evaluation criteria by auditors. The committee is always interested in discussing and Management in their selection of the accounting principles and understanding the auditor’s views on accounting issues and methods. Proactive discussion between the Audit Committee actively seeks to develop a relationship with the external auditor and Management always takes place before signing of the that allows a full, frank and timely discussion of all material annual report regarding critical accounting policies. issues. With regard to interim reports, the Committee always In view of the above, the Audit Committee would like to state has an extensive discussion with management regarding that it takes all necessary steps to ensure that management is material issues before approval of the interim accounts. taking adequate considerations when selecting accounting The Audit Committee of Prime Bank Limited has always been policies. The Committee is actively involved in selection extensively involved in the review of the financial statements of appropriate accounting policies that are in line with the and has provided recommendations whenever needed. applicable accounting standards, and annually reviews the The committee has duly carried out such responsibilities same. throughout the year 2018, to the best of their ability.

E- Statement on the Audit Committee involvement in the review and recommendation of the Annual and Interim Financial Releases:

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 financials statements. The Committee reviews and discusses with management all significant correction/adjustments (whether or not made) to ensure that all material adjustments

84 PRIME BANK CEO & CFO’S DECLARATION TO THE BOARD

03 April 2019

The Board of Directors Prime Bank Limited Adamjee Court Annex Building 119/120 Moijheel C/A, Dhaka-1000

Subject: Declaration on Financial Statements for the year ended on 31 December 2018.

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 03 June 2018 under section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby declare that:

1. The Financial Statements of Prime Bank Limited for the year ended on 31 December 2018 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;

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.

In this regard, we also certify that: -

i. We have reviewed the financial statements for the year ended on 31 December 2018 and that to the best of our knowledge and belief:

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.

ii. 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,

Sd/- Sd/- Rahel Ahmed Mohammad Habibur Rahman Chowdhury FCA Managing Director & CEO Deputy Managing Director & CFO

PRIME BANK 85 ANNUAL REPORT 2018

REPORT ON ACTIVITIES OF THE AUDIT COMMITTEE

Audit Committee of the Board is considered the overseer of the The Company Secretary supports the Committee for effective activities of the company for protecting interest of the relevant functioning as per directives of BB and BSEC guidelines. stakeholders and for which it stands out as a pivotal committee of the Board as per Bank Companies Act and Bangladesh B- Activities of the Committee during the year 2018: Securities and Exchange Commission-the regulator of the The responsibility of the Audit Committee has been widened listing companies in Bangladesh. The process of protection is with the promulgation of revised ICC Guidelines and Risk primarily executed through regular oversight functions which, related circulars, the amended Bank Companies Act, 1991, among others, include reviewing financial reporting process, Corporate Governance Code. Accordingly, the Committee has system of internal controls, audit process, Management of to discharge manifold functions including special assignments financial risks and monitoring compliances with the prevailing requested by the Board. laws and regulations of the country. During the year, the Committee held in total ten (10) Meetings Considering importance of the committee in terms of ensuring to deal with various Audit Reports/Agenda on the following corporate governance practices in the operational activities, nature of auditing: regulators have been continuously endeavoring to enable the Audit Committees through revision of guidelines/directives i. Risk Based; etc. with the objective to shift focus on the governance issues ii. Comprehensive; and compliance culture for ensuring transparency. During the iii. Information System & IT; year, new set of Corporate Governance Code and Financial iv. Special Inspection; Reporting were promulgated by the BSEC where extra emphasis v. Surprise Inspection; has been laid down for upholding fairness, transparency, Summary of activities under reference of the year: accountability and independence- basic fundamentals of Corporate Governance. Audit Committee of Prime Bank also Financial Reporting: earnestly believes in such values and principles and aspires to give those a permanent shape in the progress of the bank. • Reviewed Draft Annual Financial statements for the year ending on December 31, 2017. In pursuant to the objective, during the year Internal Audit & Inspection teams were asked to develop strategies/processes, • Reviewed Un-audited quarterly financial statements of the Charters/Manuals , Policies, risk grading matrix, audit grading Bank (Q1-Q3) template and other relevant tools and reference books for making the auditing approach purposeful and effective. All Internal Control: such auditing guidelines were prepared as per BB guidelines • Reviewed half yearly Self-Assessment reports on Anti Fraud and those have been very useful for conducting auditing Internal Controls (SAAFIC). assignments in a structured and organized manner. • Reviewed/Evaluated overall effectiveness of the Internal A- Constitution of Audit Committee: Control Systems and Policies & procedures of the Bank and recommended it to the Board for endorsement The Board of Directors constituted the Audit Committee with 04 (four) members giving due emphasis on the suitability and • Reviewed Internal Control & Compliance Manual of Prime following fit and proper test criteria. All the members chosen Bank Limited. are financially literate and possess required qualifications in Internal Audit: keeping with the spirit & objectives laid down in the regulatory guidelines. Among the members of the Committee, three (03) • Reviewed and approved Audit Plan for the year 2018 including the Chairman, are from the Independent category • Reviewed major Audit findings and observations on and none belong to the Executive Committee of the Board Information Security Division conducted by IT Audit so as to avoid any conflict of interest. In addition, all the members are knowledgeable and keen to ensure compliance • Reviewed Draft Internal Audit Manual with the financial, regulatory and corporate laws. All of them • Reviewed Summary Report of the Audit Findings for the have professional experiences due to long engagement with year-2017 corporate & financial management in addition to having • Approved Annual Audit Plan – 2019 relevant academic background. • Reviewed 03 years (2018-2020) Departmental Strategic Current composition of the Audit Committee Status with Name Status with Bank Educational Qualification Committee Shamsuddin Ahmad Ph.D Independent Director Chairman Ph. D. (Economic Development), University of Hawaii, USA Mr. Md. Nader Khan Director Member B.Sc. Dr. G.M. Khurshid Alam Independent Director Member Ph.D. (Economics), Boston University, USA Mr. M. Farhad Hussain FCA Independent Director Member Fellow of Institute of Chartered Accountants.

86 PRIME BANK Planning of the Internal Audit & Inspection division and Compliance Functions: REPORT ON ACTIVITIES OF THE AUDIT COMMITTEE recommended to the Board Reviewed Compliance Policy of the Bank • Reviewed revision of Internal Audit Charter of the Audit & Reviewed progress and compliance status of the decisions/ Inspection Division and recommended to the Board for Minutes of the Audit Committee Meetings, Board and Executive approval Committee. • Reviewed the risk based audit report of the branches, different department and divisions of Head Office. Other functions:

• Reviewed IT Audit Progress report, Summary of IT Audit Emphasized on training for the officials through setting up an Report of different IT systems. ideal Training Academy including sending abroad to suit the purpose and requirement of the Bank • Reviewed the audit reports of all foreign subsidiaries. Annual Integrated Report on the Health of Prime Bank Limited • Reviewed Draft Internal Audit Policy. for the year 2017 • Reviewed monthly Audit Departmental Operational Reviewed status of Deferral(s) allowed to the customers for Activities Update. execution of documentation and other purposes on periodical • Reviewed information on Year –To-date (YTD) progress basis. reports.

• Reviewed Information on E-mail System, Active Directory & C- The Committee also carried out the following activities Anti-Virus conducted by IT Audit. those are linked with the events/ occurrences with the year 2019: • Reviewed reports on Information Security Division(ISD),Network Infrastructure Management and Reviewed Draft Annual Financial Statements for the year SWIFT operation conducted by IT Audit 2018 and recommended suitable changes before presenting the same to the Board. The Committee also held discussions • Reviewed Information on RemitF@st System, ALTITUDE with the representatives of External Auditors: 1) Hoda Vasi system, and BACH (BACPS & BEFTN) operation conducted Chowdhury & Co. & 2) Aziz Halim Khair Choudhury, Chartered by IT Audit. Accountants; to ascertain compliance with the regulatory • Reviewed major audit findings and observations on Disaster directives and international standards in preparation of the Recovery Management, Migration, and Up-gradation of financial statements. CBS T24(R-16) and AML software (Sanction Screening & Scrutinized the applications of the intending External Auditors CTR) conducted by IT Audit. of the bank and recommended to the Board for appointment at AGM. External Audit & Auditors: Endorsed the Activity Report of the Audit Committee for Exchanged views with the External Auditors in the 136th AC the year 2018 and reports drafted for insertion in the Annual meeting held on 09.04.2018 where representatives of the Audit Report- 2018 and authorized the Chairman of the Committee Firms namely M/S. Hoda Vasi Chowdhury & Co and Aziz Halim to sign on its behalf. Khair Choudhury were present. All discussed and shared their observations/ findings with regard to internal control tools put Before concluding, I would like to express my gratitude to in place for oversight including their adequacy. the Members of the Committee for their valuable time, useful suggestions and taking keen interest in fulfilling the objectives Scrutinized applications for the aspiring External Auditors of leading to protecting the interest of the stakeholders. I would the Bank for the year 2018 and recommending to the Board for also like to thank the Management & the Board of Directors consideration at the AGM for final appointment: for allowing the Committee to discharge its duties and responsibilities as an independent Committee of the Board. Inspections Reports (Internal & Bangladesh Bank):

Reviewed Inspection Report on the documentation status of different customers of the Bank (branch-wise)

Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on the position of 31.12.2017, 31.03.2018, 30.06.2018 and 30.09.2018 respectively.

Periodical Reporting:

Reviewed quarterly status report on Complaints received by Service Quality and Central Complaint Management Cell

PRIME BANK 87 ANNUAL REPORT 2018

REPORT ON ACTIVITIES OF THE RISK MANAGEMENT COMMITTEE

Risk Management Committee Disclosures

The Risk Management Committee (RMC) is one of the three assistive Committees of the Board besides the Executive Committee and the Audit Committee in compliance with the Banking Companies Act 1991 and BRPD Circular no. 11, dated October 27, 2013 of Bangladesh Bank. At Present, following Directors of the Board are representing the Risk Management Committee:

Sl Name Status in the Bank Status in the Committee

1 Dr. G.M. Khurshid Alam Independent Director Chairman 2 Mr. Mohammad Mushtaque Ahmed Tanvir Director Member 3 Mr. Shamsuddin Ahmad, Ph.D. Independent Director Member 4 Mr. M Farhad Hussain FCA Independent Director Member

Duties and Responsibilities

• Identifying different risks, introduce and implement proper strategies to control those risks, review existing risk management principles & procedures and take corrective measures if necessary;

• Ensure appropriate organizational structure for risk management;

• Form separate committees at Management level for compliance of instructions under risk related guidelines and supervision of their activities;

• Review risk management policies and guidelines, review loan approval limit and submission to the Board for necessary revision each year;

• Examine and approve the preservation of data and reporting implemented by the management and ensure implementation of the same;

• Inform the Board of Directors about the summary of minutes of meetings of the committee;

• Submit decisions/recommendations of the Committee to the Board on quarterly basis. If sought by the committee, internal and external auditors will submit evaluation report to the committee.

The Board of Directors of the Bank has formed the Risk Management Committee (RMC) as per guidelines of Bangladesh Bank. Risk Management Committee of the Board oversees the overall risk management of the bank. The committee also reviews risk management policies, process& guidelines of the bank and submit it to the Board for prior approval or renewal as necessary. During 2018, 04 (Four) RMC meetings were held and 26 (Twenty Six) memos were placed before the RMC. The agendas discussed in the RMC meeting are as below:

Sl Name of the Memo

1 Discussion of Sustainable Finance Activities 2 Review of restructured Large loans 3 Review of Information Security Policy and Procedures of the Bank 4 Review of Fraud Detection and Management Process 5 Review of Comprehensive Risk Management Report 6 Review of Borrower Rating and Capital Management status 7 Review of Stress Testing of the Bank 8 Review of Green Banking Policy 9 Risk Appetite Statement of the Bank 10 Internal Capital Adequacy Assessment Process of the Bank 11 Review of Quarterly Risk Management Report 12 Discussion on Annual Report of AML/CFT activities of last year

The committee likes to extend sincerest 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 thank the Management & the Board for assisting the Committee to discharge its due role.

88 PRIME BANK CRO’s REPORT ON RISK MANAGEMENT

Effective risk management is essential to perform consistently security related documents is being revalidated by legal firms and sustainably for the sake of our stakeholders and therefore and also cross examined by the independent audit firms. Prime Bank considers risk management as a core job beside Corrective measures are being taken as per the audit report its core business. We try to add value to clients and the issued. Periodical Stock verification and insurance coverage communities by operating efficiently and generating returns has been made mandatory before sanctioning or renewing for shareholders by taking and managing risk. Through our Risk any credit proposals. Since the Bank has significant exposure Management Framework we try to manage enterprise wide in RMG sector, a separate Merchandiser Team has been formed risks with the objective of maximizing risk-adjusted returns with people having adequate experience in RMG operation. while remaining within our risk appetite. This has enhanced the Bank’s capability to identify risks and mitigate them on time. In order to shift to risk adjusted return To ensure health of the Bankwhich is a significant part of the on capital, borrower’s rating is considered while considering whole financial systems, identifying, measuring, monitoring any price adjustment which is encouraging the borrowers and controlling various type of risks are crucial factors.. In to complete rating procedure of External Credit Assessment addition to the traditional risks faced by the Banks in credit and Institute (ECAIs). market risks, various operational risks are also created due to various reasons like: Operational Risk Management • Increasing use of automated technology Operational Risk Management (ORM) is a continual cyclic • Growing importance of IT integration and shared services process which includes risk assessment, risk decision across financial institutions and entities making, and implementation of risk controls, which results • Necessity of reducing earnings volatility and achieving in acceptance, mitigation, or avoidance of risk. ORM is cost efficiencies the oversight of operational risk, including the risk of loss resulting from inadequate or failed internal processes and • Shifting from vanilla type products to technology based systems; human factors; or external events.Operational Risk products which are creating more complexity in product Management of the bank is guided by the “principles for the and product development sound management of Operational Risks” suggested by Basel • Increasing customer needs committee on Banking supervision. One of the principles • Evolving outsourcing arrangements and increasing is to have a strong control environment that utilizes policies, dependency processes, and systems; appropriate internal control; and appropriate risk mitigation and/or transfer strategies. Bank;, • Increasing focus by regulators on legal, fraud, and follows a sound internal control program that consists of five compliance issues. components of that are integrated to risk management process; • Knowledge gap and lack of supervision. Control environment, risk assessment, control activities, This has necessitated development of enterprise wise risk information & Communication and monitoring activities. As a management framework for the Banks. Prime Bank Limited part of strengthening Operational Risk Management, the Bank (PBL) is increasingly focusing on development of appropriate is now centralizing its total general banking operation which will risk management framework for managing risks of the Bank. hopefully significantly reduce various operational lapses that Risk Management Division has been set up which identifies, was prominent in Branch Banking.Credit Administration and monitors and reports various type of risks and develop Bank- Trade Service Operation already centralized in the past years. wide integrated risk management culture. The Division has At the end of 2018, the Bank has brought Liability Operations, been working on identifying the gaps in the risk management Cash Management Operations, Treasury Operations, and procedure of the Bank, placing those issues to Executive Risk Remittance Operations under the umbrella of centralized Management Committee (ERMC) comprising of members from operations team along with Card Operations and Alternative all key business / risk areas and following up for rectification. Deliveries Channel (ADC) operations. Major activities of RMD include preparing Risk Management Risk Management and Control functions units of the bank Paper, performing stress testing, vetting of different Product requires to ensure appropriate operational risk management by Program Guidelines, process manuals, developing various risk implementing Segregation of duties, system automation, data models and acting as an operation layer for Internal Capital accuracy, proper supervision, On and off-site monitoring with Adequacy Assessment. the aid of MIS & Reports and senior management overview. The bank is consciously driving the culture to implement bank wide Credit Risk Management operational risk management involving all its employees. The Bank in recent past has increased its focus in managing Credit Risk. Total Credit Administration Process has been Information Technology Risk centralized which have mitigated various risks arising from PBL has an IT audit team, which has been formed as per human error in branch banking. Similarly, Trade related the Central Bank’s guideline. The team conducts IT Audit in functions of branches havebeen shifted to centralized Trade each branch on a periodic basis and provides suggestions Service Division since 2016. To reduce the residual risks, the to higher management.Moreover, independent Information

PRIME BANK 89 ANNUAL REPORT 2018

Security Department has been formed to assess the IT related at the end of December, 2018. Besides, Proper organizational risks faced by the Bank and suggest appropriatemeasures to structure and procedures are also in place to ensure mitigation mitigate risk. of operational risk and market risk.

Market Risk Pillar 2 Risk Management

Market risk is actively monitored by the Treasury Division of The key principle of the Supervisory Review Process (SRP), the Bank. As per stress testing, the Bank is unlikely to face any the second Pillar of Basel-III is that “Banks shall have a process major risks in liquidity, interest rates and foreign exchange. A for assessing overall capital adequacy in relation to their system based Value at Risk (VaR) Model is being used by the risk profile and a strategy for maintaining their capital at an Bank to assess the risk related to the Foreign Exchange position. adequate level”. SRP covers additional risks like Residual Risk, Treasury Mid office monitors risk limits including position Concentration Risk, Liquidity Risk, Reputation Risk, Strategic limits and stop loss limits for the trading book and reviews Risk, Settlement Risk etc. PBL assessed its additional capital periodically. Interest rate risk is also being monitored through requirement under Pillar 2 and submitted the statements on the use of re-pricing gap analysis and duration analysis. Internal Capital Adequacy Assessment Process (ICAAP) to Bangladesh Bank. PBL has also been conducting stress testing Environmental & Social (E&S) Risk Management on its financials and asset portfolio on quarterly basis and Prime Bank Limited (PBL) recognizes that its financing decisions reporting the outcomes to Bangladesh Bank, as a part of Pillar have potential impact on human health and environment. Under 2 risk management. this purview, PBL has developed Environmental & Social Risk Pillar 3: Market Discipline Management policy statement and procedure manual in 2017 which was fully implemented and effective from the Beginning PBL always delivers the appropriate disclosures not only to of 2018. The Environmental and Social (E&S) Risk Management meet the regulatory requirements but also as per international Policy Statement represents the Banks commitment towards best practices. Disclosures on the position of PBL’s risk profile, being E&S compliant in its activities and financing and the E&S capital adequacy, and risk management system has been Risk Management Procedure Manual is a detailed document included in this Annual Report also.As per the Bank Companies on the process flow, roles and responsibilities and operational Act 1991(Amended up to 2013),and as guided by the procedure of E&S Risk Management for the Bank. Bangladesh Bank BRPD Circular no. 11 dated October 27, 2013 the Risk Management Committee (RMC) of the Board has been PBL always committed to promote sustainable growth in formed to look after the risk management issues of the Bank. the economy. During the year 2018, PBL strictly followed the ESRM guideline and total 1,271 borrowers were eligible for Revised Regulatory Capital Framework for banks in line with Environmental Social Risk Rating (ESRR).During 2018, the Bank Basel III has financed total amount of BDT 335.70 million among which 287.20 million for installation of ETP in 04 projects, BDT 28.0 Bangladesh Bank vide BRPD Circular No – 18 dated December million in 06 Eco Friendly Brick Production projects, BDT 0.0786 21, 2014 issued“Guidelines on Risk Based Capital Adequacy million in a solar system project, BDT 0.1 million in two bio-gas (Revised Regulatory Capital Framework for banks in line with plant in existing Dairy & poultry Farm, 19.6 million in a LED Bulb/ Basel III)” with effect from January 01, 2015. The new guidelines Tube Assembly Plant.. As a part of exploring new ventures in aimed to strengthen the quality and quantity of the regulatory environment friendly projects, the Bank has also conducted capital base and enhance the risk coverage of the capital several field visits, meetings with existing and prospective framework. PBL is well poised for implementing Basel III phase entrepreneurs, consultants and Central Bank officials. To by phase during the period 2015-2019. It is mentionable that, strengthen E&S Risk Management PBL had also organized a PBL is maintaining much higher Common Equity Tier-1 (CET- number training, workshops, seminars etc. during 2018. 1) capital ratio than the prescribed minimum ratio of 4.5% by Bangladesh Bank. Though in reality, risk capital will remain only Pillar 1 Risk Management a number and might not be effective if banks do not assess their risk periodically and take timely corrective action when PBL has been maintaining capital well above the minimum the risk exceeds the threshold limit. Thus, whether it is Basel capital requirement as against Credit, Market and Operational II or Basel III, it is crucial that PBL does not depend solely on risk. The Bank has proper credit risk mitigation process in “regulatory capital”. What is needed is a dynamic risk mitigation place. Moreover, PBL is consistently trying to rate its corporate strategy, where all employees act as risk managers in their own borrowers not only to have expert opinion on the borrowers area. RMD is trying to develop a proper risk culture across the but also to strengthen capital base. As of December 2018, PBL organization where “risk” is an integral part of future business has 68.43 percent of its corporate borrowers rated through decision-making. Having said that, PBL always had the External Credit Assessment Institutions (ECAIs). Through reputation of being one step ahead and committed to continue borrower rating, PBL achieved capital relief of 13,093.90 million the same in the coming days. during 2018. In terms of Capital Adequacy, PBL was well above of minimum capital requirement i.e. 10 percent in all the four quarters of 2018, to be exact Capital to Risk weighted Asset Ratio of the Bank was 14.10% at the end of March, 15.07% at the end of June, 16.65% at the end of September and 17.04%

90 PRIME BANK ETHICS & COMPLIANCE

Professional Ethics Respect for others

The Board and senior management have a vital role to play in This principle demands that the conduct of every individual be shaping and embedding a healthy corporate culture, and this governed by the notions of good faith, honesty, moral integrity, continued to be a focus in 2018. Main aspect of our culture Precision and professionalism. Employees are expected to is Professional ethics which encompass the personal and serve customers with loyalty, care and discretion. corporate standards of behavior expected from the Prime Bank officials. The commitment of our employees, at all levels, Respect for professional secrecy to compliance issues serves as a reflection of our shared Prime Bank employees are bound by professional secrecy. values. Prime Bank has its own Charter of Professional Ethics They are prohibited from using any confidential information that reflects our ambitions, commitments and principles of of which they may become aware in the course of their work excellence. It sets out our fundamental ethical principles and to perform transactions, whether directly or indirectly, for their serves to guide our professional conduct. own profit or that of others.

Respect for rules and others Transparency

Rules on professional conduct and compliance have always Our Banks inform customers of the conditions and rates that been a key part of our business. These rules go beyond apply to the products and services they offer. Our employees simply applying the legal provisions and regulations currently are expected to give their customers clear information about in force. The conduct of each individual should be guided the services, products and loans on offer. by the principles of good faith and honesty. Everyone has a responsibility to comply with the law and regulations – Meeting our commitments particularly those that relate specifically to banking – in the Customer-facing employees must be aware of the level of interests of all stakeholders. service that can be delivered to customers and take care not to Customer insight enter into commitments that cannot reasonably be met.

Prime Bank has put in place a series of procedures and tools Collective disclosure requirements that enable it to identify and gain a better understanding of Employees can directly alert the Group’s managers, directors its customers. The processes for opening accounts for new or shareholders of any anomalies that they notice, particularly customers and for creating and updating customer files are with regard to ethics, without fear of reprisals or sanctions. governed by strict rules.

Combating money laundering and the financing of terrorism Preventing conflicts of interest Prime Bank have introduced an internal handbook on ways of Prime Bank has put in place decision-making systems to prevent combating money laundering and the financing of terrorism. conflicts of interest from arising, in particular by separating its All employees are expected to remain vigilant in this regard. Investment and commercial divisions and adopting a collective This vigilance is based upon knowing their customers well. The approach to lending decisions. bank does not engage in transactions or financial deals with individuals or corporations of whose identity and/or activities it is not aware.

PRIME BANK 91 ANNUAL REPORT 2018

BUSINESS REVIEW AND ANALYSIS “In-depth review of business & performance assists to have an understanding of economic environment, trend of business dynamics which shows more opportunities that ultimately leads to sustainable operations.”

Corporate And Institutional Banking One-stop services offered to CnIB clients, starting from structured solutions to cash management under one roof, paid off in terms of volume of business and earnings as well. This initiative made CnIB clients more comfortable in doing business with Prime Bank and reap best possible synergy from the relationship. We hope to continue this approach in the days ahead with particular focus on cash management services and onboarding of more rewarding relationships for the bank.

Commercial Banking Division The Team CBD has set its vision statement for 2018-2021 “Quality Credit for Sustainable Growth” and the officials/executives of the division have taken the challenges to reach at emerging stage from disperse situation under centralization of corporate business of the bank. CBD will bring new dimension as well in 2019 & onward by adapting to changing client needs, benchmarking mobility solutions and bespoke products & services through better client knowledge.

92 PRIME BANK In Prime Bank Net Profit grow 106.60% CRAR 17.04%

MSME Banking 2018 Prime Bank initiated a revamped MSME banking in 2017 and made it ready to serve customer thoroughly in 2018. The Bank adopted appropriate and conducive policies in this arena and took MSME as a high potential enterprise market segment and in this regard, started operation by adding a dedicated and customer-driven sales force, cash flow-oriented lending assessments, decentralized decision-making through 146 touch points.

Consumer Banking Monarch team recorded a milestone on net deposit growth in 2018 which helped the team to cross 1,000 crore marking just in 04 years of operation. This has been possible through an all-out team effort and superior service provided by the Monarch team.

Diversified Products & Services Diversification is one of our core strengths. PBL always trys to understand needs of customers of all segments and recently we launched “PRIME DIGI” 1st ever digital account in the country.

PRIME BANK 93 BUSINESS REVIEW AND ANALYSIS

Management Review

Segmental Analysis

Report on Human Resource Management

Report on Non-Performing Asset (NPA)

Products and Services MANAGEMENT REVIEW

Prime Bank passed another successful year in terms of its increasing portfolio on a selective manner, onboarding funds at operating performance despite many political and economic optimum price, and focused services helped us to attain [39%] uncertainties. The Bank did well in 2018 indeed in terms of net overall income growth during the year. profit and return on assets. The growth rate of net profit and return on assets were 107 and 100 percent respectively. This was possible due to prudent balance sheet management. Prime Bank focuses on sustainable growth and as such emphasized on diversification of assets, increasing non-funded revenue generating services, strengthening internal control and compliance through the implementing process of centralization.

With the view to deploying concentrated effort, the business are controlled and monitored through its major four segments; CNIB, CBD, MSME and Retail. Besides conventional mode of business PBL gives parallel emphasis on its Islamic banking Financial Closure of the Syndication for Hashem Rice Mills Limited wing. Moreover, other key divisions also plays vital role in achieving organization goal. A brief review of business of the Due to strategic rebalancing of overall asset portfolio mix for the key segments and divisions has been stated below including bank, CnIB’s asset portfolio growth was rationally kept at [6%]. an analysis of financial position and the performance of the Nevertheless, optimization of wallet shares from rewarding & bank during the year under review. risk minimal customers helped us to augment funded income by [1.42] times over the last year. Wholesale Banking Segment

The Wholesale Banking segment of Prime Bank Limited started its journey from [December 2015], soon after accomplishing centralization of key processes across the bank. The segment provides comprehensive relationship coverage to corporate clients & financial institutions and became the most dominant business segment for the bank in terms of both income & profit, since its inception.

The segment comprises of 5 (five) key divisions – namely, Corporate & Institutional Banking (CnIB) Division, Commercial Banking Division (CBD), Transaction Banking (TB) Division, International Division (ID), and Treasury Division (TrD). Accordingly, it offers a full suite of products and services, Musical Program for Wholesale Banking Sponsors including but not limited to term & working capital financing under both conventional & Islamic window, trade financing, Due to persisting demand-supply gap existed in foreign treasury support, cash management solutions, and project & currency market throughout the year, we grew our Export syndication financing, etc. business by [1.4] times over last year, but controlled Import business with a reversed growth. As a result, a marginal Segregation of business into CnIB and CBD, based on group increase of [2%] could be achieved in non-funded income. turnover, in the clients’ ecosystems helped Prime Bank to serve We also remained careful with our Guarantee business and better than the previous with focused & customized manner controlled its growth similar to Import business. and strengthen bonding further with existing & newly inducted clients as well. Notably, Commercial Banking Division (CBD) serves corporate clients with an annual turnover ranging from BDT 250 ~ 8,000 million, while the Corporate & Institutional Banking (CnIB) Division serves only to those clients having turnover beyond the highest threshold of CBD.

In 2018, the Wholesale Banking segment contributed [80%] and [23%] respectively in the asset and liability pool of the entire bank. The trade business of [USD 3.9 billion], highest ever since the inception of this segment, also contributed [4.67%] to the overall trade of Bangladesh.

Corporate and Institutional Banking (CNIB) Mezban Program for Wholesale Banking Customers

Being the election year, 2018 was a challenging year for To support the growth of CnIB’s asset portfolio with self- the banking community. However, our careful strategy for supported liability within next 5 years, we put additional focus

PRIME BANK 95 ANNUAL REPORT 2018 on our liability products and could posted a [20.40%] growth in The funded outstanding as a whole witnessed a growth over 11 2018, despite high volatility continued at local liquidity market percent in 2018 over the same of 2017. CBD had no non-performing with occasional spiky offers from competing banks. loan for core relationship customers as at end December-2018.

To excel further, we continued our journey for onboarding The deposit volume of the Commercial Banking customers committed & experienced personnel to our team and strategically stood at BDT 11,319 million whereas import, export and guarantee focus on business segments with high growth potentials. business channeled through the Bank in 2018 stood at BDT 51,996 Creation of a dedicated team for public sector & infrastructure million, BDT 50,222 million and BDT 8,080 million respectively. projects, was the latest initiative under this endeavor. During the year 2018, CBD officials conducted 324 factory/project Notably, one-stop services offered to CnIB clients, starting visits to the customers. Moreover, they had visits to Head Office from structured solutions to cash management under one roof, and other establishments of the customers whenever required. paid off in terms of volume of business and earnings as well. This initiative made CnIB clients more comfortable in doing business with Prime Bank and reap best possible synergy from the relationship. We hope to continue this approach in the days ahead with particular focus on cash management services and onboarding of more rewarding relationships for the bank.

Commercial Banking Division

The centralization of Relationship Management for Corporate customers of Prime Bank Limited started with Board’s decision Loan Agreement Signing with a customer to segregate the corporate customers based on their annual turnover. Accordingly, Commercial Banking Division (CBD) was assigned for the corporate having annual turnover in the range of BDT 250 million & above to below BDT 8,000 million.

CBD started its operation on 13 October 2015. At present, CBD has 05 segments for which there are 05 Segment Heads, 16 Relationship Managers (RMs) and 23 Associate Relationship Managers (ARMs). One of the segments cover Chittagong region. Moreover, CBD has two Hubs at Rajshahi & Khulna under two segments. The team CBD is headed by the Deputy Managing Director & Chief Business Officer (CBO) of A Jeans Manufacturing Factory financed by the Bank Commercial Banking Division. The CBO is also assisted by the Business Planning Manager (BPM), Management Information Among the eligible loan customers of CBD, 239 customers System (MIS) Official and the Secretary to plan and manage were rated by External Credit Rating Agencies which resulted the overall activities of CBD. to capital relief for the Bank.

Key features of customers of CBD are- they are of diverse In addition to procuring core business, the RMs/ARMs of CBD nature, from different cultural background, have different also contributed through cross-selling of products and services management patterns, requirements and expectations. The offered by other business segments of the Bank in 2018 which RMs & ARMs have been discharging their responsibility for included among others 08 payroll agreements. providing services to these Commercial Banking customers, Throughout the year 2018, different talent development retaining existing customers in a stiff competitive market, programs (training, workshop and seminar) on topics like booking of new clients to ensure sustainable growth, relationship management, negotiation, communication skill, regularizing problematic accounts as well as ensuring internal trade finance, syndication financing, anti money laundering & regulatory compliance. etc. were arranged for the employees of CBD. As at end December-2018, Sectoral allocation of CBD loan portfolio customers under relationship of CBD had total funded & non-funded Strategic Priorities of exposure of BDT 111,416 million CBD are to ensure: against which funded outstanding • Quality Credit was BDT 39,901 million whereas • Sustainable profitability non-funded outstanding was BDT • Low NPL (Less than 2%) 25,864 million. The portfolio was • Human Capital adequately covered by securities RMG Construction Manufacturing (Other than Food) Iron & Steel Printing & Packging Food Manufacturing • Retain worthy Client and well diversified among different Textile Healthcare Agriculture Tranding Service Ceramics • Best-in-class in quality of sectors of the economy like Ship Breaking Jute ICT service and reputation Readymade Garments, Textile, Iron Real Estate Transport Poultry Furniture Telecom Pharmaceuticals • Capital Relief for Higher & Steel, Construction, Healthcare, Leather Cold-Storage Tourism Capital Adequacy Manufacturing, Agriculture etc. Ship Building Others • Compliance • Diversified Portfolio 96 PRIME BANK • Better Relationship Management. The Team CBD has set its vision statement for 2018-2021 with different partners for specialized privileges for Monarch “Quality Credit for Sustainable Growth” and the officials/ customers which include local and international brands like executives of the division have taken the challenges to reach at The Westin Dhaka, Le Meridien, Pan Pacific Sonargaon, Sarah emerging stage from disperse situation under centralization of Resort, Dusai Resort & Spa, Manipal Hospital (India) etc. Monarch corporate business of the bank. CBD will bring new dimension became a trendsetter by introducing overseas travel insurance as well in 2019 & onward by adapting to changing client needs, facility for its valued customers. This has been introduced for benchmarking mobility solutions and bespoke products & the first time in priority banking space in Bangladesh. services through better client knowledge. Monarch also hosted various customer engagement events focusing on entertainment, lifestyle and health issues Consumer Banking throughout the year which were highly appreciated by its Consumer Banking Division took a number of major initiatives in valued Monarch Customers that in turn helped enhancing 2018 for the advancement of Consumer Banking business and Prime Bank’s brand recognition and value. operations while keeping customers in the center of all activities. With its robust deposit portfolio, a resilient team coupled with excellent service standard, Monarch is poised to become a strong Some noteworthy initiatives of 2018 were: player in the Priority segment of the banking industry in the offing. • Consumer Banking was redefined. Branches, Cards, ADC along with the existing Product, Segment, Sales, 1050 Portfolio (Monarch) Collection, Consumer Finance and Consumer Compliance 1019 1000 came under Consumer Banking Division. 961 950 931 911 904 • Monarch was established as a strong player in the High 889 900 865 Net Worth Segment market through enhanced customer 852 864 860 850 843 relationship management T CRORE 800

BD 792 800 • The productivity of Sales Team has been increased through 750 structured approach. 17 18 18 18 -18 18 18 18 18 18 18 r- y-18 v-18 Jan- eb- Jul- • CASA mix in the deposit portfolio was increased. Dec- F Ma Apr Ma Jun- Aug- Sep- Oct- No Dec-

• Home Loan portfolio was increased through realigning the New and Revamped Consumer Products product features Focusing on customer requirements and convenience remains • Launch new and revamped competitive products to meet the pivotal element in designing Consumer Products. Product the lifestyle aspirations of the customers team always provide relentless efforts to improve and redesign • Enhanced MIS and Analytics support for all wings of the products with changing requirements of consumers. The team Consumer Banking division launched a new deposit scheme, “Kotipoti Deposit Scheme” • Controlled Portfolio at Risk (PAR) at a minimum level for a (KDS) as well as revamped the existing schemes: Prime healthy Consumer Loan Portfolio Millionaire Scheme (PMS) Monthly Benefit Deposit Scheme (MBDS), Double Benefit Deposit Scheme (DBDS), Contributory

Consumer Banking Deposit Mix : 2017 vs. 2018

CASA CASA FDR FDR 34% 32% 35% 41% 2018 2017

Scheme Scheme 25% 33%

Monarch: Crossing a Milestone Savings Scheme (CSS), Laksma Puron Deposit Scheme (LPDS) Monarch team recorded a milestone on net deposit growth in and Lakhopati Deposit Scheme (LDS) with the attractive 2018 which helped the team to cross 1,000 crore marking just in features. All of these stand out as very competitive products 04 years of operation. This has been possible through an all-out in the market. team effort and superior service provided by the Monarch team. Moreover, the prevailing RFCD account has also been revamped The Customer Value Proposition (CVP) has further been with more competitive & attractive features. enhanced through a number of new corporate alliances

PRIME BANK 97 ANNUAL REPORT 2018

Consumer Finance department has developed a number of automated tools for asset, liability, transactions, payroll, Monarch, service quality etc. to support the growing business need of Consumer Banking division. They have developed their own robust Consumer Banking Data Warehouse for Deposit, Asset, Customer, Transaction and Average Balance Datamart.

The team also successfully conducted Interest Rate Review Project for rationalization of loan revenue.

The new Consumer Loan PPG (Product Program Guide), Portfolio Risk Minimization specially Home Loan PPG has provided impetus to the growth of Home Loan portfolio. Portfolio at Risk (PAR) is a major indicator of the health of the asset portfolio of a bank. Consumer Banking’s PAR reduced Consumer Loan Outstanding Balance : 2017 vs. 2018 from 16.80% in 2015 to 4.71% in 2018, indicating a giant leap in

1,000 improvement of the portfolio health. 13 1. 41 49 3. 800 74 The structured approach of the Collection team along with 66 67 59 8.

600 552. close monitoring has resulted in continuous improvement in e 42 or

1. PAR. 400 37 7. 30 T Cr 24 2 BD 8

200 .0 1.3 68 62 50 4 30+PAR up to 179 DPD 5. - 4. 20% PERSONAL LOAN CAR LOAN HOME LOAN SECURED SECURED EMI 16.80% OVERDRAFT 18% 2017 2018 16% 14% 11.95% 12% 10% 5.46% Sales Team Attained Higher Productivity 8% 4.71% 6% Consumer Banking division made keen efforts to increase 4% 2% the productivity of the Sales Teams by equipping them with 0% good product knowledge, on the job training and rigorous 2015 2016 2017 2018 monitoring of performance on a day to day basis. Both Liability and Asset team have enhanced its productivity level and they are all set to take up the challenges for the coming years. MSME Banking 2018 – Traversed another Horizon

To reach out to the customers and provide doorstep service, There are 7.81 million economic entities in Bangladesh, Sales team took initiative to set up a small kiosk at reputed according to BBS Economic Census 2013 of which around organizations (e.g. United Hospital) for Consumer Loan 99% are CMSME in reference to size of operation. According products. to another ADB Institute study conducted in 2016, 99% formal businesses in Bangladesh are SME. They constitute 75% non- Meanwhile, the Payroll Team of Consumer Banking on boarded agricultural employment and contribute about 25 percent to in total 43 new companies with 3,352 salary accounts in 2018. the national GDP by only manufacturing set ups. No. of Payroll Accounts : 2015 to 2018 Small and Medium Enterprises (SMEs) are treated as the 50,000 engines of growth and drivers of innovation worldwide. 38,051 40.000 They play a significant role in driving economic growth and 30,169 generating jobs. In Bangladesh, the sector is actually changing 30.000 20,039 the face of the economy. SMEs are playing a vital role for the 20,000 10,283 country’s accelerated industrialization and economic growth, 10,000 employment generation and reducing poverty. SMEs now occupy an important position in the national economy. - 2015 2016 2017 2018 Considering such large stake and potential in economy Deeper Insights of Consumer Banking Data Prime Bank initiated a revamped MSME banking in 2017 and made it ready to serve customer thoroughly in 2018. The Consumer Banking greatly depends on MIS and Analytics. Bank adopted appropriate and conducive policies in this As a big stride in this path, RM Coding and Segment Coding arena and took MSME as a high potential enterprise market have been successfully completed to measure business segment and in this regard, started operation by adding a performance based on system based reports. dedicated and customer-driven sales force, cash flow-oriented Consumer Finance team has also started Payroll Database lending assessments, decentralized decision-making through analysis. This has given the Consumer Banking Management 146 touch points. Moreover, key developments in 2018 in better insights into the health of the payroll portfolio. The team management, technology, customer service, operation, credit introduced Monthly MIS Pack/ Report to provide a monthly risk management, products, distribution and sales around overview of deposit, loans, cards and collection performance MSME banking are illustrated below. of Consumer Banking Division.

98 PRIME BANK Segment speciic organization and people

Conducive Broad range loan approval of inancial policy solution MSME Banking 2018

Relationship Simpliied professional Appraisaland at customer Documents door step

In 2018 bank developed and launched a range of financial MSME Islamic Banking product comprising rising need of funds, guarantees and Being a leading private commercial bank having countrywide transactions of countrywide diversified cottage, micro, small network, Prime Bank adopted remarkable steps to offer and medium sized enterprise customer. Limit size, purpose, MSME Islamic Banking products and services through all collateral and eligibility of the loan products were varied and the distribution channels (branches and MSME hubs) of the accommodate rising trends, potential and circumstances of bank, with a view to cater the needs of customers who want our growing economy. to avail financial services under Islamic modes, for which, an Islamic Banking Unit within MSME Banking Division has been MSME Banking - Loan Products established for business vertical of MSME. Four MSME Islamic Prime Shahaj Business loan up to BDT 20 Lakh without collateral Banking Products have been developed in 2018 which gets Business Loan BDT 10 Lakh to 1 Crore by applauding market response. The products are – Prime taking lien of 30-50% cash security/FDR Shombhabona • Hasanah Shombhabona having regular transactions in banks • Hasanah Emarat Up to BDT 10 Crore loan to build various type • Hasanah Chalti Prime Emarat of buildings for accommodation, commerce • Hasanah Sampad and production Customers across the country are being served at their Up to BDT 5 Crore loan to finance operating doorsteps by dedicated MSME Relationship Managers based capital of MSMEs in the form of Term Loan, Prime Chalti on nearest business hubs and branches in addition to services CC (Hypo), Bill Purchase, SOD, LC, BG, LATR, from branch, ATMs, internet, mobile apps, POS and call Performance Security etc. Up to BDT 5 Crore loan to finance fixed centre. MSME Credit Risk Management, Credit Administration asset purchase (machinery, equipment, and Other functional units serve the solution value chain by Prime Sampad vehicle, vessel) and/or building shop, factory, adopting MSME conducive policy, procedure, infrastructure warehouse, new projects and technology. As a result of an all-out collective team effort banks traversed a remarkable horizon in 2018 in MSME banking. Anchol Rin Loan for women led enterprise up to BDT 50 lakh MSME Banking – At a Glance MSME Banking – Deposit Products As at 31 Dec 2018 or During 2018 A transactional account for MSMEs to MSME facilitate sales proceeds realization, trade Business 1,350 New Loan Customer Booked and administrative payments and other Account 4,581 Loan Customer Live enterprise transactions An interest bearing transactional account for 7,066 Loan Account Live MSME Special MSME having auto balance swapping facility 124,000 Deposit Customer Live Notice Deposit with linked accounts 18,390,000,000 Taka Customer Deposit Balance A Fixed Deposit Accounts for MSME provides a MSME Fixed 21,120,000,000 Taka Loan Outstanding higher rate of interest in return after fixed tenor Deposit of time – 1, 3, 6 & 12 month 21,150,000,000 Taka Loan Disbursed

PRIME BANK 99 ANNUAL REPORT 2018

MSME – Women Entrepreneur Development Banking

A good number of women are entering into entrepreneurship in Bangladesh while many other are in queue by making an extra effort to overcome family and societal responsibilities together. Prime Bank recognizes their potential and sets affirmative initiatives to facilitate women in business success. Led by a dedicated Women Entrepreneurship Development Manager MSME Banking take initiatives and implemented actions plans round the year. Some of these are –

Preferred and Low Cost Entrepreneurship Market Promotion Celebration Women Day Finance Development Workshop

Bank partnered with Bank celebrates Women Day Selected women enterprises Bank organized workshop Bangladesh Bank and provides to recognize contribution are offered Prime Bank to illustrate business preferred loans without of women in workplace Sponsored stall at annual management and banking security up to BDT 2.5 Million with special attention and women entrepreneur fair issues among women in and with security up to BDT 5 differentiation thru distribution organized by Bangladesh business or are interested to Million to eligible women led of gifts, cakes and circulating Bank. be in business in near future. enterprises at rebated rate messages highlighting them.

International Awards

In 2018, Prime Bank Ltd. has got Best SME Deal Award from Asian Development Bank (ADB).Rahel Ahmed, MD & CEO accompanied by Head of MSME Banking received this prestigious award at fourth Annual ADB Trade Finance Program (TFP) Award-2018 held on 4 September 2018 in Singapore.Over 200 guests from banks and other financial institutions around the world attended the event.

Trade Services Division Since inception as a Division, the primary objective of centralization of Trade Finance through this division has been to Trade Services Division (TSD) is running with a team of ensure efficiency, grow specialized expertise in Trade Finance dedicated and qualified, certified trade Specialists who are well and necessary utilization of Manpower performing compliance conversant in International Trade & Foreign Exchange Business. of rules and regulation of concerned regulatory authorities At present Trade Services Division supports all segments of like Bangladesh Bank, other concerned Govt. authorities, ICC Trade Finance clients of the Bank by opening all forms of LCs, rules and publications for International Trade transactions and Issuing Shipping Guarantees, Handling Import Documentary international standard banking practices. Collections, Advising LCs, Purchasing or Negotiating Local & Trade Finance is process-oriented, document-intensive Foreign Export Documents, Handling of Export Documentary and highly skill demanding division. Due to centralization Collections. Besides this trade service division has also been of Trade activities, the bank has been able to derive the providing all sorts of demand guarantee (Local & Foreign) following benefits which ultimately impacted hugely in good service to our valued customers and demand guarantees to governance, adherence to compliance and most importantly a the different government and autonomous bodies against maintaining a congenial business friendly environment for the foreign counter guarantees. valued clientele of the bank. With the competent guidance, support and supervision of competent authority of the Bank, cordial cooperation Key Benefits of Business segments and customers, Prime Bank has • Centralized trade operations with trade finance processing at a central hub successfully set and made fully operational centralized trade • Trade business can be extended at the doorstep of all services including demand guarantees of the Bank. At present segment of customers Trade Services Division has centralized Import & Export and BG activities of all segments of clients of the Bank through three • With ease of implementing new products, new revenue service points namely: Motijheel, Gulshan and Chattagram. generation opportunities are envisaged

In 2018, TSD has successfully supported 26 % increase in • Better reconciliation and effective financial control export volume compared to that of last year. Other trade • Compliance, monitoring of transaction and uniformity in transaction of different sectors also shown an increasing trend transactions in line with the International Banking standard practice in the current year. and regulations of Central bank and other Govt. authorities.

100 PRIME BANK Treasury Prime Bank Treasury has the following desks through which it offers a complete and well diversified range of services to its What we do in Prime Bank Treasury: customers both in the interbank and corporate market. Every day the Banking industry is facing the growing challenges Prime Bank Treasury Structure: in technology, regulation and compliance. And as such to cope up with it, Treasury has become a strategically very important business partner for all the business segments across the Money Bank. Now a day’s, Treasury is more responsible for making Primary Market sound financial investments with the available liquidity while Dealership reducing financial risks, although, the function of Treasury is (PD) & Fixed Income mainly to ensure adequate liquidity and capital of the Bank Securities while administering the financial assets. Prime Bank Treasury is not an exception. Over the last couple of years Prime Bank Treasury Treasury has been performing excellently well in spite of the Asset market volatility, uncertainty, complexity & ambiguity that has Liability been observed globally as well as within the country. Management (ALM) Prime Bank Treasury primarily focuses on the followings: Foreign Expanding transaction volume; Exchange

Utilizing different market opportunities within all risk and regulatory limits; How was 2018? Strengthening ALM operations in line with market changes & In the year 2018 the overall business environment observed regulatory guidelines; in the country was quite calm. But since it was an election Creating a diversified fund management channel; year Business houses were very cautious and reluctant about Minimize market, liquidity and interest rate risks; investment at the later part of the year which was witnessed through decline in growth of private sector credit. Enhancing profitability;

Private Sector Credit Growth in 2018 22.00%

20.00% 18.36% 18.00% 16.95%

16.00%

14.00% 13.20%

12.00%

10.00% 18 18 18 18 18 18 18 18 18 18 18 18 l- r- r- t- y- v- c- n- n- g- b- p- Ju Ja Ju Ap Ma Fe Oc No Se De Ma Au

However in 2018, the Local Money Market was more or less economic growth in 2018 while containing inflation within liquid throughout the year. This was mainly due to lack of 5.55%. Govt. borrowing from the Banking Sector. Deficit budget financing shifted from market-based tools (bank loans and Policy rate, Call Money rate & Inflation: government securities) to non-marketable instruments, e.g., National Savings Certificates (NSCs). Such large scale recourse Outlook of 2019: to non-marketable borrowing is creating an environment The GDP is expected to grow by 7.20% in FY2019 as that is stifling development of different markets like bond, consumption demand slackens despite a rebound in worker pension fund, mutual fund, group insurance fund and so remittances. Remittance beneficiaries are likely to adopt forth. In this situation, to support country’s economic growth, a cautious approach to spending, repaying debt incurred Bangladesh Bank took several steps under inclusive banking in recent years of remittance declines. Private investment specially credit accessibility for agricultural as well as small and is nevertheless expected to edge up with support from an medium enterprises (SME), empowerment of women, green accommodative credit policy, and public investment will banking, modernization of financial sector, mobile banking, expand as the authorities seek to speed the implementation e-commerce, export promotion and liberalizing foreign of infrastructure projects. Export performance is expected to exchange transaction. All these steps along with the prudent strengthen on projected higher growth in the euro area and monetary policy adopted by Bangladesh Bank ensured steady the US. However, net exports will not add to growth, as imports

PRIME BANK 101 ANNUAL REPORT 2018

Industry Repo, Reverse Repo, Call Money Rate and Inflation

Repo Reverse Repo Call Money Rate Inflation 7.50% 6.75%

6.50% 5.76% 6.00% 5.50% 4.75% 5.55% 4.75% 4.50% 4.09% 3.50% 3.90% 2.50%

1.50% 18 18 18 18 18 18 18 18 18 18 18 18 l- r- r- t- y- v- c- n- n- b- g- p- Ju Ja Ju Ap Ma Fe Oc No Se De Ma Au are expected to expand strongly with rising fuel requirements, current account deficit may deteriorate further if policies and a steady increase in imports of capital goods. Agriculture to rein in import demand do not succeed. Failure to boost growth is projected to be slightly higher at 2.5% as higher rice revenues and tap foreign financing could unduly limit spending prices encourage farmers to plant more of the staple crop. With on needed infrastructure. Finally, climate & disaster resilience an expected improvement in domestic and external demand, and whether remains a risk. industry growth will likely be stronger at 10.6%, as services edge up to 6.5%. Inflation is projected to edge up to 6.3% in FY2019 Treasury performance in 2018: because of further increases in natural gas and electricity In the year 2018, Treasury achieved all of its KPIs successfully, prices and continued taka depreciation. However, normal even exceeded in some areas like Exchange Gain & Cross weather and projected stability in global oil prices should Currency dealing. temper price pressures compared with this year. Call money rate is likely to rise on some pickup in Government borrowing. Prime Bank Treasury, at the very beginning of the year, through Policy support will continue for micro, small, and medium- its own market research and market intelligence anticipated sized enterprises with renewed emphasis on employment- the market condition and accordingly adopted a dynamic focused manufacturing and services, and on expanding the fund management and investment strategy for the bank. availability of low-interest agricultural loans. The central bank Our prudent investment strategies in Money Market, Foreign is cooperating with capital regulators to encourage startup Exchange Management as well as in Primary Dealership & Fixed financing for entrepreneurs in Bangladesh. Income securities again contributed to a very successful Year 2018. With a continued favorable global outlook, export growth is projected at 14.0% in FY2019. Taking into account central Prime Bank Money Market (MM) Operation: bank’s policy measures, imports are forecast to grow 7.50% Over most of the period of 2018 the interbank money market in FY2019 since Annual development spending was slated to experienced a liquid scenario. The number of days when grow by 38.5% to accelerate the implementation of some large money market felt a bit stretched was very limited. This was infrastructure projects including the Padma Bridge, Dhaka mainly possible for the accommodative monetary policy Metro Rail, Rooppur Nuclear Power Plant, Payra Port, coal- stance that was adopted by Bangladesh Bank. Call money fired power plants at Rampal and Matarbari and Kornophuli rate hovered around 3.00% - 4.50% throughout the year 2018. under water tunnel. As the dynamics of the recovery stabilize, Alike the previous years, Prime Bank Money Market Desk was remittances are expected to grow by 11.0% in FY2019. Due to very active in the money market all through the year 2018. rising of remittances and exports, the current account deficit The revenue generated by MM Desk in 2018 was BDT 1,195.86 is expected to lower, at 2.0% of GDP with monetary policy million compared to BDT 1,090.07 million of 2017. The biggest beginning to moderate import demand for FY2019. challenge in 2018 was to ensure the best utilization of fund, Forecasts for FY2019 are based on several assumptions: The which Money Market desk of Prime Bank did very successfully.

Daily Average Call Money Position & rate of Prime Bank

Call Borrowing Call Lending W. Avg Rate (%) of Borrowing W. Avg Rate (%) of Lending

300 5.00% 275 4.50% 250 4.00% 225 3.50% 200 175 3.00% 150 2.50% 125 2.00% 100 1.50% 75 50 1.00% 25 0.50% 0.00% 18 18 18 18 18 18 18 18 18 18 18 18 l- r- r- t- y- v- c- n- n- b- g- p- Ju Ja Ju Ap Ma Fe Oc No Se De Ma Au

102 PRIME BANK Prime Bank Primary Dealership & Fixed Income Operation: Asset Liability Management (ALM) Desk:

In 2018, Prime Bank continued its position as one of the Best Asset Liability Management (ALM) is an integral part of Bank Primary Dealer Bank in Bangladesh. It expanded its dominance Management. Head of Treasury is the member secretary of ALCO. in both Primary & Secondary Market of Govt. securities trading. Through ALM our Bank mainly aims to achieve objectives such as:

Prime Bank G.Sec portfolio in Comparison to Avg. Market Yield of G.Sec in 2018

T Bill BGTB BB Bill PBL Avg Mkt Avg 11.00% 2,600 8.65% 10.00% 8.29% 9.00% 2,100 430 570 410 8.00% 3 3 8 5 2 2 8 1,600 7 4 7.00% 92 05 78 83 9 04 04 1, 86 1,89 1,89 1, 02 2 2, 1, 1, 2, 2, 1,94 1,98 1 6.00% 1,100 2, 5.00% 5.52% 4.88% 600 4.00% 3.00% 100 396 396 396 497 497 497 2.00% 18 18 18 18 18 18 18 18 18 18 18 18 l- r- r- t- y- v- c- n- n- b- g- p- Ju Ja Ju Ap Ma Fe Oc No Se De Ma Au

Prime Bank Foreign Exchange Dealing: • Quality growth in assets & liabilities; In FX market, Interbank Foreign Exchange rate was quite volatile • Containment of risk in a coherent manner; and illiquid throughout the year 2018. USD appreciated against BDT and stood at 83.90 level as of 31th December’18 which • Ensuring regulatory compliance; was 82.70 at the very beginning of 2018. Our FX Desk was able • Stability and consistency in earnings; to forecast the situation very early and as such handled the • Profitability & increasing value of the Stakeholders; situation pragmatically. In 2018, FX Desk generated BDT 111.18 crore as Exchange Gain in comparison to 105.49 crore of 2017. ALM desk, through its own market research and market FX Corporate sales Desk was also very active in the interbank as intelligence presented the market outlook throughout the year, well as the corporate foreign exchange market throughout the gives an explicit idea about the market liquidity for availing year 2018. The total volume in 2018 handled by FX Corporate market opportunities for investment and fund deployment in sales Desk was USD 657.71 million compared to USD 361.24 the market. Throughout 2018, the desk helped in pricing the million in 2017. products of both assets and liabilities to gain the competitive

Net Open Position & Exchange Rate Movement-2018

NOP USD/BDT Exchange Rate 60.00% 84.0000

50.00% 83.6000 40.00%

30.00% 83.2000 20.00% 82.8000 10.00%

82.4000 (10.00)

(20.00) 82.000 8 8 8 8 8 8 8 18 18 18 18 18 18 -1 -1 -1 -1 -1 -1 -1 r- r- y- n- ul ct ay an ov un ug- Ja Ap Ma Sep- J Ma O 1 N A D ec M 1 1 2 31 30 J 30 J 31 27 27 28 28 29

In the year 2018, FX Cross Currency desk registered a growth advantage from the market movement. It also presented of 16.71% in exchange gain over 2017. During the said period, the bank’s overall financial position in front of the senior profit earned from speculative dealing was BDT 1.76 crore management to formulate an effective investment and fund compared to BDT 1.48 crore of 2017. management strategy for the bank.

Proprietaty/ speculative Dealing Performance 2018, 2017 & 2016 Amount in USD Year Total Deal Volume Growth in Volume 2018 5,005 2,014,447,970.14 119.36% 2017 2,689 918,320,927.50 33.02% 2016 2,513 690,368,745.00 135.24%

PRIME BANK 103 ANNUAL REPORT 2018

In 2018, Treasury operated within all regulatory limits. This reflects partner fixes its own business strategy. Being a major Prime Bank Treasury’s commitment to operate within the rules contributor of the bank’s revenue line, Treasury contributed and regulations of the Bank as well as other regulatory bodies. significantly in 2018. All the strategy and policies that were implemented in 2018 paid us very well and helped us to have a Treasury Income in 2018: profitable 2018. Overall Treasury revenue numbers in 2018 from We all are well aware that, a Bank as a whole fixes its yearly different revenue heads are given below with a comparison of business target and accordingly Treasury being a strategic 2017 & 2016 to show the growth in its business horizon and revenue line.

Treasury Income Figures in Million Particulars 2018 2017 2016 Foreign Exchange Gain 1,111.82 1,054.95 633.28 Interest Income Call Loan 85.70 43.80 24.02 Interest Income on Placement /Deposit (Local) 750.38 725.91 105.39 Interest Income on Placement /Deposit (Foreign) 359.78 320.35 257.34 Interest Income on Govt. Securities 2,011.55 2,312.01 3,326.80 Interest Income on Debenture/Bonds 13.55 23.45 37.19 Capital Gain for Sell of Govt. Sec. 19.15 1,558.59 1,946.67 Gain on discounted bond/bills 21.67 363.25 784.52 Underwriting Commission regarding Treasury Bill/Bond 3.87 6.19 28.25 Total 4,377.46 6,408.51 7,143.46 -31.69% -10.29% -24.64%

Treasury Income 2016 - 2018

ϮϬϭϲ ϮϬϭϳ ϮϬϭϴ

ϳ͕ϭϰϯdŝŶDŝůůŝŽŶ ϲ͕ϰϬϵdŝŶDŝůůŝŽŶ ϰ͕ϯϳϳdŝŶDŝůůŝŽŶ

Treasury Priorities in 2019: • Managing Balance sheet in the most efficient and professional manner; • Maximizing Treasury Portfolio return through exploring existing & new areas of business; • Special Emphasize for building awareness among corporate customers regarding hedging and its benefits; • Emphasizing on developing market research expertise under ALM operation; • Updating the policies related with treasury in line the changed/modified/amended policies as endorsed by • Strengthening on proprietary/speculative trading under FX dealing; Bangladesh Bank from time to time; • Strengthening Foreign Exchange corporate sales operation; • Organizing knowledge sharing programs e.g. Trainings, • Emphasizing on providing Forex Advisory services; Seminars on Treasury and Market risk Management; • Strengthening relationship with all counterparts (both Interbank & Corporate);

104 PRIME BANK International Division Export Processing Zone, Chittagong Export Processing Zone and Adamjee Export Processing Zone. OBUs accept deposit/ Foreign Remittance: borrow from non-resident persons/institutions including During the year 2018, Prime Bank received foreign remittance of Bangladesh nationals working abroad and 100% foreign owned USD 547.90 million which is 16.07% higher than previous year. In enterprises in Export Processing Zones in Bangladesh. OBUs addition to commercial remittance, Prime Bank gives very high also make loans/advances to foreign owned enterprises in priority to mobilise wage remittance by maintaining bilateral Export Processing Zones in Bangladesh and joint venture / business relationship with the renowned exchange houses local firms subject to approval from Bangladesh Investment and banks in Saudi Arabia, Kuwait, Qatar, Bahrain, UAE, Oman, Development Authority. OBUs offer wide range of services Malaysia, USA, South Korea and the global players like Western including trade finance, working capital, term loan, discounting Union Money Transfer & Continental Exchange Solutions Inc. of UPAS L/Cs and export bill of on-shore customers etc. Loan (RIA Financial Services). In 2018, Prime Bank took initiative to book of OBUs registered growth of 2.95% over previous year reach unexplored market and established new relationship reaching to USD 284.04 million as on December 31, 2018 which with ‘Kookmin Bank, Korea’. is 11.59% of overall loan portfolio of the Bank. During the year 2018, OBUs have made a profit of USD 3.48 million compared As a part of Bank’s strategic initiative to handle increased to USD 3.00 million in 2017 registering a growth of 15.83%. volume of inward foreign remittance, the NRB Remittance Operations Unit of the Bank, backed by IT facilities, provided Prime Exchange Co. Pte. Ltd., Singapore efficient service to procure remittance and speedy delivery Since its modest beginning in 2006 with single branch-single of foreign remittance through wide distribution network corridor business in Singapore, Prime Exchange Co. Pte. comprising of own branches along with country-wide network Ltd. (PEC) has grown over the years and now has 3 (three) of two reputed NGOs- BURO Bangladesh and UDDIPAN. strategically located outlets in Singapore and distribution Correspondent Banking: network in India and Philippines in addition to its core market in Bangladesh. With over 12 years of experience PEC, Singapore PBL maintains active relationships with an extensive network of has established itself as a trusted brand in the Singapore banks and financial institutions all over the world and provides Remittance Industry. The company has banking and agency a wide range of correspondent banking services generating relationship with banks having large network in Bangladesh benefits to its customers. Correspondent network of PBL and internationally renowned banks such as DBS Bank Ltd includes 672 members, covering 255 banks spread across 69 Singapore, BDO Bank Philippines, ICICI Bank Ltd and HDFC countries as on December 31, 2018. PBL also maintains 32 Nostro Bank Ltd of India. Accounts in 9 major currencies with reputed international banks around the world in all the important global financial centres. Total volume of remittance was SGD 74.80 million in 2018 compared to SGD 71.70 million in 2017. The company made During 2018, Correspondent Banking has been reoriented operating profit of SGD 24,500 in 2018 compared to SGD to a relationship-based model and aligned with Wholesale 186,970 in 2017. Banking stream which has created synergy to offer cross border trade transactions at very competitive term for LC advising, PEC always strives to expand presence in Singapore through confirmation, negotiation and discounting, issuance and/or agency arrangement with remittance companies, bringing confirmation of bonds, guarantees and counter-guarantees; customers under its network coverage at competitive rates processing of documentary collections and Vostro Account and fee. PEC Singapore is also actively considering to utilise services to correspondents. In During the year, bank has initiated fintech-based remittance companies to offer customers a a number of structured transactions with support from partner faster and more convenient money transfer experience. banks backed by globally renowned Export Credit Agencies. PBL Exchange (UK) Limited PBL enjoys sufficient credit limits with a large number of The company has been operating with three Branches in international banks including ADB and IFC under trade finance London, Birmingham and Manchester since its inception in program. In recognition to a unique solution of cross border 2010. Since 2017, the company, as an Authorised Payment trade transaction in SME sector, Prime Bank received “Best Institution (API), began Agents operation to reach the Non Trade SME Deal Award” from ADB for the year 2018. Resident Bangladeshi (NRB) community throughout the UK. PBL continued borrowings from foreign Banks and multilateral As per FCA’s re-authorisation process, the Company has been institutions viz. IFC, ICD and FMO to meet increasing demand in authorisation to carry on payment services activities as an foreign currency lending through Offshore Banking Units. During Authorised Payment Institution (API) from 16 May 2018, under the year, bank’s executives met representatives of international Payment Services Regulations 2017 (PSRs). banks and participated in a number of international conferences, The company has been operating by remaining compliant with seminars including SIBOS 2018 in Sydney which has further rigorous regulatory guidelines. Despite fierce competition in strengthened correspondent relationship with Banks. the Money Service Business Sector, total number of remittance Offshore Banking for the year 2018 has reached to 70,016, with the remittance volume hitting GBP 37.51 million, compared to GBP 31.98 million PBL is offering Offshore Banking facilities in foreign currencies in 2017. The company has managed to make some marked through its three Offshore Banking Units (OBUs) located in Dhaka progress in business by doubling its total Agent network from

PRIME BANK 105 ANNUAL REPORT 2018

18 in 2017, to 51 Agents by the end of 2018. There has been is one of the key driving forces of the economy of Bangladesh. a significant growth in the transaction volume through agent There is no alternative but to increase production through the network, from GBP 9.5 million in 2017 to GBP 15.45 million in development of agriculture to ensure food security. Similarly, 2018. agriculture is still now the largest employment generating sector of Bangladesh. Besides, agriculture makes the largest The company expects to deploy more Agents in its service contribution to favorable Balance of Payment position through network in 2019 with a view to expand service coverage to poverty alleviation, providing raw materials for industry, newer areas in UK. Along with the expected deployment of the reducing imports and enhancing exports. According to the new software, PBL Exchange UK will pursue more marketing Agricultural & Rural Credit Policy and Program of Bangladesh programs to further enhance its mark in the remittance service Bank, crop, fisheries and livestock will have to be given priority. sector. In the later part of 2019, PBL Exchange (UK) Ltd will seek to tap in to the digital domain by offering mobile Apps and web Agriculture as a sector depends more on credit than any other access to the wider community, in order to remain competitive sector because of seasonal variations in farmers’ returns and a and increase coverage. Despite challenges due to Brexit and its changing trend from subsistence to commercial farming. In the impact on UK economy, PBL Exchange (UK) Ltd. is expected to absence of necessary working capital for buying water, fertilizer grow in 2019. and pesticides, coupled with it the lack of the knowledge for their balanced application, farmers often fail to reap a better PBL Finance (Hong Kong) Limited harvest from modern technology-led crops.

PBL Finance (Hong Kong) Ltd., the third fully owned overseas In line with Government efforts as well as the Bangladesh subsidiary of Prime Bank Limited, has become well acquainted Bank’s Agricultural & Rural Credit Policy and Program, Prime within the Hong Kong business houses having major trading Bank continued its proactive policy and program support to relationship with Bangladeshi industries importing fabrics, boost up agriculture financing. accessories for RMG sector, clinkers and minerals products like Prime Bank Limited recognized that Agriculture / Rural Credit gypsum and limestone for cement manufacturing industries, is one of the major tools for ensuring “inclusion” of the rural capital machineries for different sectors, mobile phone people into the banking activities and plays a major role in accessories & IT products. The coverage is growing in other the overall economic development of the country. As such sectors as clientele have been widening with continuous effort Bangladesh Bank’s timely guidance to emphasize on this sector from both of Hong Kong office and parent bank – PBL’s Head has created a far reaching effect not only on this particular Office with help of marketing cell. Since its launch of business sector but on the economy as a whole. Prime Bank Limited, in September 2011, Company’s professional and expert officials in line with the guidance of the Bangladesh Bank, has been deputed from PBL and local recruits from Hong Kong have relentlessly working to increase its activities in the agricultural been rendering personalized services to corporate/ businesses / rural sector and the bank has been ceaselessly trying to in Hong Kong. contribute in the sector and will continue doing so in the future The business trend throughout the year 2018 was mixed due to for the greater interest of the country. the consequences of US-China trade & tariff war percolates into Introduction of Agricultural Loan products in Prime Bank Hong Kong economy causing Hong Kong investors become Limited more vigilant and cautious. However, within this market scenario, the company has earned an operating profit of HKD PBL has been providing Agriculture Loan in the form of Abad 5,447,754 in 2018 compared to HKD 6,398,652 in 2017. The Core (for crops loan), Khamar (for farm loan) and Nabanno (any agri Banking Software (CBS) Temenos T24 system connectivity has purpose loan) to meet up working capital and capital expenditure made the company better equipped from Oct 2018 for ensuring requirements of the farms/ projects/ enterprises/ farmers. faster service which is a milestone migration achievement. So far it has established RMA with 44 banks which help to run its Abad (Crops loan) trade finance services smoothly and formulation of FI marketing Rural people of Bangladesh are dependents on agriculture. Team at PBL, Head Office from October 2018 for ensuring and For helping and encouraging and betterment of rural people enhancing the trade finance business is another addition to / share cropper/ marginal farmers/ small farmers/ medium help handle more trade-based business in 2019 and onward. farmers to cultivate crops/ vegetables, Prime Bank provides The company is going to strive forward to increase its revenue/ Abad (crop loan) to bear the cost of tilling of land, fertilizer, fee-based income through advising, negotiation, confirmation pesticides, irrigation, seed etc. in addition to funded business through discounting facilities This product has been designed to ensure desired amount of against banker’s acceptance on L/Cs originating from Prime money for the share cropper, the marginal, small and medium Bank Limited and other Bangladeshi Banks. scale farmers at the beginning of cultivation. The farmers can repay their loan after harvesting time. This product helps them Agriculture Financing a lot in terms of benefit as they need not to take high interest The overall economic development of Bangladesh is closely loan from the local money lenders, businessmen and MFIs/ interlinked with the development of the agricultural sector. NGOs. Moreover, this flexible repayment system removes their At the moment, 14.23% of Bangladesh’s GDP originates from mental pressure of weekly/monthly/quarterly installments and agricultural sector, and the sector absorbs about 41% of the farmers are contributing to the national production over the total labor force of the country, which indicate that Agriculture year by their better production.

106 PRIME BANK Khamar (for farm loan) purchasing of Farm machineries/ Agri. Equipments (Irrigation and tilling technology/equipments, Thresher, Tractor, Harvester Prime Bank has been providing Khamar Loan to meet up etc), Solar Pumps/solar power operated irrigational equipment, working capital and capital expenditure requirements of the Rural transport and to meet up the capital requirement of farm of Fisheries, Hatchery, Poultry, Beef Fattening, Milching Nursery farming, Weavers (Handloom Industry), Tissue culture cow/Dairy, Bio-gas Plant (for Farm) , Duck rearing, Integrated farming, Others (related to Agriculture), etc. Farm , etc.

Agriculture Loan by purpose Nabanno (any agri- purpose loan) The Bank has been involved in disbursing quite a large portfolio Prime Bank has been providing Nabanno Loan to MFIs of agriculture loans for various purposes during the year 2018, (for onward lending to Agriculture sector), the farmers for which are listed below:

Table: Agriculture Loan by purpose

BDT in Million

2018 Purpose Disbursement Outstanding Crops / Vegetables cultivation 2895.00 1942.90 Fisheries 183.82 195.54 Livestock 715.02 564.73 Irrigation equipment 146.95 51.10 Farm Machineries 1.82 1.86 Crop storage & Marketing and Others 91.50 172.33 Poverty Alleviation 770.07 499.10 Total 4804.18 3427.56

Agricultureral Loan Disbursement During 2018 Purpose-wise Outstanding as on 31.12. 2018

16.03% 14.56% 1.90% 0.04% 5.04% 3.06% 0.05% 1.49%

56.68% 14.88% 60.26% 3.06%

3.83%

5.70% Crops / Vegetables cultivation Farm machineries Crops / Vegetables cultivation Farm machineries Fisheries Crop storage & Marketing and others Fisheries Crop storage & Marketing and others Livestock Poverty Alleviation

Irrigation equipment Livestock Poverty Alleviation Irrigation equipment

Bangladesh is endowed with a favorable climate and soil the items. Bank may receive 6% interest loss compensation conditions for the production of variety of crops all the year from Government through Central Bank after realizing the round. The major crops cultivated in the country are rice, loan from borrower in full. Prime Bank Limited has positive wheat, jute, pulses, potato, oilseeds, spices, maize, sugarcane intention to contribute in flourishing the crop diversification and vegetables. For climate change, there is a growing need in the country with a view to attaining multifarious output in to change the cropping pattern in the country. Water efficient production, saving foreign exchange, substituting rice and high value crops (such as maize, spices, oilseeds and pulses) other conventional crops. should be promoted in the drought prone region of the country In line with this the Bank has financed a substantial amount for through distribution of high quality seeds and saplings at cultivation of spices and maize. Credit facilities are allowed at subsidized price along with provision for agricultural credit at rebate rate (4 percent) under interest loss compensation from rebate / low interest rate. Government for cultivation of spices and maize to reduce The Central Bank has advised all banks that Credit facilities shall dependency on import and save huge amount of foreign be allowed at rebate rate (4%) under interest loss compensation currency incurred for importing the items. During the year of scheme of Government for cultivation of pulse, oil seeds, 2018, PBL has disbursed Tk.4.02 million among 44 farmers at spices & maize to reduce dependency on import and to save rebate rate (4 percent) for cultivation of species and maize. huge amount of foreign exchange incurred for importing

PRIME BANK 107 ANNUAL REPORT 2018

BDT in Million Target and achievement

Loan disbursed @ 4% interest No. of Clients Prime Bank Limited has disbursed Agricultural & Rural Credit Crops (Jan 2018 to Dec 2018) of Tk. 4804.18 million in the year 2018. However, considering the FY 2017-2018, Tk. 4396.79 million against the total target of Spices 2.52 18 Tk.2730.00 million has been disbursed. Maize 1.50 26 Total 4.02 44 In line with the Agricultural & Rural Credit Policy and Programme of Bangladesh Bank, a target of agricultural credit amounting Moreover, Prime Bank has disbursed Tk. 8.17 million to 10 (ten) to Tk. 3240.00 million has been set for Prime Bank for the FY taka account holders under financial inclusion program during 2018-2019, out of total target, an amount of Tk.2573.35 million the year of 2018. has already been disbursed/achieved during the period from July 2018 to December 2018. Pictures of some PBL financed projects on Agriculture

Financing in Guava cultivation Financing for Fish Farming

Financing in Dairy Farm Financing in poultry farm

Disbursement of Crop loan among the farmers

108 PRIME BANK Performance of Research and Development (R&D) Division Major activities performed by R&D Division are as follows:

A keen understanding of business environment, trend of Market Research industry’s dynamics and forecast of major indicators play a crucial role in formulating strategies for growth and sustainable Product Development operation. Data, information and insight gathered through • New Product Development: R&D Division designed Product systematic process help the business to take the right decision. Program Guideline (PPG) of New Deposit Product “Money Besides, opportunities of business avenues can also be explored Building Scheme” combining FD with Scheme. and existing business can be also given new dimension to increase the business volume and sustainable growth. Most • Product Re-engineering: A number of recommendations have importantly, what the customer/stakeholders think about the been made here to make our scheme accounts lucrative. organization and its peer organization, determine competitive • PPG of Single Installment Schemes in association with advantage. To gather the insight, there is no alternative to Consumer Banking Division qualitative and quantitative studies. • PPG of Motorcycle Loan in association with Consumer R&D division of the Bank undertakes research studies to Banking Division provide reliable, accurate, valid information on economy, • revision of interest rate, provisional profit rate tenure and market, customer and contemporary issues. Considering the all the applicable and expected installment sizes for the business trend, present scenario and forecast- R&D designs DBDS, MBDS Schemes products had been done following and reengineers products and services, gathers consumer the suggestions of the Bank’s ALCO. insight, proposes prospective locations for banking business, analyzes sectors, disseminates knowledge through economic Marketing Research: publication and undertakes ad-hoc research. • Credit Card Market Scenario of Bangladesh: Overall Banking Industry and Peer Banks

R&D’S PRIORITY AREAS • Sector-Wise Credit Concentration Status: Overall Banking Industry and Peer Banks

• A feasibility study has been conducted on Agent Banking in some areas as a part of pilot study to expand alternative delivery channel of the bank.

Sector Research on Local Industry

R&D Division provides up-to-date information on the industry/ Consumer sector as per instruction of the Board of Directors of the Bank. In addition, it is also a requirement of CRM of the Bank and different business units of the Bank. In this regard, R&D Division has already prepared and submitted the following reports to the Bank’s internal stakeholders: Economy • Ceramic Industry • Steel Industry • Vaccine Industry • Electronics Industry

These reports have provided market information focusing on size of market, total supply, production capacity/utilization, top market players, future outlook/prospect of the respective industry based on primary as well as secondary data available from numerous sources. Banking Market

R & D DIVISION’S ACTIVITIES Business and Industry Market Operations Economic Studies Research Research Policy Research

New Product Monthly Branch Newsletter Development, Commodity Expansion ”In-Focus” Product Business Program (BEP) Weekly Reengineering Priority ATM xpansion e-Newsletter Consumer Sectors Program Miscellaneous Insight Functions

PRIME BANK 109 ANNUAL REPORT 2018

Operations Research This system also has several built-in security features to protect the Bank against the threats like Cross-site scripting, The Business Feasibility Study is one of the crucial and frequent SQL injection, DOS attacks, blocking of Directory Traversal, studies undertaken by R&D for serving the bank in setting up Command Injection, Replay Attacks, and even can protect the any Branch, ATM Booth at recommended and prospective users from the “Coffee Shop Scenario”. areas over the country based on geographical, demographic, business, financial and economic data analysis. Bank’s vision to provide more convenient ways to perform banking transactions through new and improved alternate • To explore potential geographic locations where the bank delivery channels like Internet Banking, Digital Wallet, Mobile can extend its services to contribute to the socio-economic Banking/Apps, Agent Banking has moved one step closer with the development of the area, Feasibility Studies have been conducted implementation of this latest version of CBS. With this new and on around Thirty (30) new locations all over the country for new improved technology, Prime Bank aims to create new markets, branch and ATM expansion and business growth. improve efficiency and advance toward greater prosperity. • Branch Relocation Study has been conducted in One (01) place to make a comparative analysis between existing Internal Control & Compliance Division and proposed premises of the branch Banking is a diversified and multifarious financial activity which • A Feasibility Study on Ascertaining the Scope of Prospective involves different types of risks. An effective internal control Green Branch of Prime Bank. and compliance system has become essential in order to underpin effective risk management practices and to ensure Business and Economic Policy Research smooth performance of the banking industry.

• The monthly publication “In-Focus” has focused on The objective of internal control and compliance function contemporary issues that are critical to global and domestic is to assist Management in ensuring that all activities of the economy as well as financial markets and institutions. In Bank and its staffs are conducted in accordance with ever total Five (05) unique issues have been circulated to all evolving compliance laws, rules and standards. A system stakeholders (inside and outside). of internal control allows management to stay focused on • Besides, a weekly e-newsletter is being disseminated to the organization’s pursuit of its operations and financial provide financial insights to valued readers on a weekly performance goals, while operating within the confines of basis. Fifty (52) issues have been communicated to the relevant laws and minimizing surprises along the way. internal stakeholders of the Bank. The responsibility of implementing internal controls starts with the business lines, which are the “first lines of defense” Miscellaneous Activities against breaches that could cause the bank not to fulfill its • Write up for Sustainability Report of the Bank objectives, not to report properly, or not to comply with laws and regulations. Beyond that, in any bank, the three important • Write up for different issues such as for CAMEL’s reporting, “control functions” are risk management, compliance, and Financial Stability Report etc. internal audit. This triumvirate of key functions is underpinned R&D will endeavor to provide insight, information in an by, and in turn implements and reinforces, the system of internal innovative and insightful manner to align the Bank’s vision in controls. The first two of these control functions constitute the being the best commercial bank. “second lines of defense” against mishaps. The final, or “third line of defense” is the internal audit function. Core Banking Software and its operations The Directors are responsible for maintaining and reviewing Since 2007, Prime Bank has been using Core Banking Software, T24 the effectiveness of overall internal control system of the of TEMENOS, one of the best available in the global market with bank in order to accomplish a satisfactory standard of its cutting-edge technology. Recently, it has upgraded its CBS T24 to portfolio. To meet this requirement and to discharge its the latest version R16 to offer new products and open new avenues obligations, procedures have been designed for achieving to serve its customer in more flexible and cost-efficient ways. bank’s basic mission and vision; for ensuring timely, accurate, With the latest version of Core Banking Software i.e. T24 (R16), and comprehensive reporting concerning financial and non- Prime Bank is now running all three types of banking services financial, internal and external; and for conducting activities i.e. Conventional Banking, Islamic Banking, and Off-Shore and taking specific actions in accordance with applicable laws Banking as well through a single platform and has managed and regulations. These procedures can only provide reasonable to reduce infrastructure and administrative costs significantly. assurance, not absolute assurance, with regard to achievement of the organization’s objectives. After implementing this latest version of CBS, Bank has acquired the capability to run all of its foreign operations and subsidiaries These procedures are designed covering five components with T24-R16, and recently on 2nd October 2018, Prime Bank of internal control system to ensure the effectiveness of has implemented T24 (R16) in one of its subsidiary company at internal control system within the Bank in accordance with Hong Kong i.e. PBL Finance (Hong Kong) Ltd., and now running “Guidelines on Internal Control & Compliance in Banks” issued its business operations under T24 (R16), while all CBS related by Bangladesh Bank. functional & technical supports and day end processes are The Bank maintains a culture and environment that provides for being provided and managed centrally from Bangladesh. a sound and effective internal control system, together with a

110 PRIME BANK commitment by all employees to adhere with the principles of • Look over the decisions taken over at the meetings of Audit integrity and transparency. Accordingly, the bank has prepared Committee of the Board of Directors, Executive Committee banks own Internal Control & Compliance guidelines requiring of the Board of Directors, Board of Directors etc.; that management and staff at every level in the bank have a role, • Dissemination of regulatory instructions among all the duly and responsibility for maintaining sound internal control. concerns; The Bank has also established an organizational structure of ICCD after getting proper approval from Audit Committee of • Follow up proper correspondence with the regulators the Board & Board of Directors. The Board of Directors of the against their queries in the neck of time; Bank demonstrated independence from Management and • Extending the coverage and frequency of Compliance formed an Audit Committee with such directors who are not Tests; the members of Executive Committee of Board and exercises • Developed action plans for corrective action and oversight over the development and effectiveness of the improvements in internal controls environment by the internal control environment. ICCD itself; Banks are in the business of risk-taking. Consequently, it is • As a part of green banking initiatives, ICCD adopted web imperative that, as part of an internal control system, these portal for collecting DCFCL, QOR, LDCL, sending and risks are being recognized and continually assessed. From an receiving Audit and Compliance Reports instead of hard internal control perspective, a risk assessment should identify copies to save usage of papers. and evaluate the internal and external factors that could adversely affect the achievement of banking organization’s • Ensuring accuracy in Self-Assessment Anti-Fraud & Internal performance, information and compliance objectives. Controls through physical verification The Bank promotes a strong compliance culture, where • Minimizing the observations / lapses as well as develop compliance risk is identified and continuously monitored. The compliance culture within the Bank Internal Auditors of the Bank set out annual risk based audit • Introducing compliance rating on Branches and reward plan, approved by the Audit Committee of the Board (ACB) and best compliant branch conducted audit activities accordingly. The Risk Management Committee of the Board continually reviews and monitors the • Introduced online partial daily DCFCL for Branches. Fully development, identification & assessment of risks relating to automation of DCFCL & QOR will be accomplished with business objectives, assessment procedures. the help of IT.

The Bank has formal policies, procedures and guidelines that • Extending on-site inspection of DCFCL, QOR and LDCL are designed to ensure compliance with generally accepted and cover at least 30%-40% branches according to ICC conduct, ethics and business practices by ensuring regulatory Guidelines instructions and global standard which includes a well- • Introducing concurrent audit at selective Divisions as per defined ICC Manual for the Bank comprising of Compliance ICC Guidelines Policy, Compliance Rating Criteria etc. In order to ensure the • Minimizing credit deferrals as well as enriching effectiveness of the internal control system, it is continually documentation status within the Bank verified that these control policies & procedures are being complied with. A summary report on the overall audit • Introduced IT Unit for compliance of IT audit report observations and compliance thereof had also been reviewed by the SMT & Audit Committee on quarterly basis.

The Bank initiates MIS Committee to ensure supply of correct and accurate information to Management and other stakeholders. The decisions of SMT, ALCO, ECB, ACB and Board meeting had been minuted properly & communicated with the concerned Divisions/Departments for rectification and comply thereof.

In addition to the above, the bank developed control activities and taken key strategies that contributes to the mitigation of risks amongst which the followings are newsworthy:

• An explicit way of storing, analyzing and reviewing all the policy, process, guidelines, procedures, Product Program Guidelines of the Bank to ensure internal control and compliances;

• Evaluating performance and effectiveness of the Bank periodically;

• Review of internal and external audit reports and compliances thereof at regular basis;

• Ensures multi-typed, periodic statements to ensure the compliance of all audit findings;

PRIME BANK 111 ANNUAL REPORT 2018

Financial Analysis

Total Assets

Total Assets of PBL stood at BDT 293,901 million as on 31 December 2018 as against BDT 281,275 million of previous year registering a growth of about 4.49 percent over the year 2017. In total assets, loan and advances covered 70.03% of total assets. Contents of total assets of PBL is shown in following table:

(BDT in Million) Growth Assets 2018 2017 Volume % Cash 17,640 18,005 (365) -2.03% Balance with other banks and financial institutions 13,405 10,083 3,322 32.95% Money at call and short notice - 1,500 (1,500) 100.00% Investments 26,046 23,807 2,239 9.41% Loans, advances and lease / investments 205,810 198,323 7,487 3.78% Fixed assets 6,943 6,434 509 7.92% Other assets 23,837 22,903 934 4.08% Non - banking assets 221 221 - 0.00% Total assets 293,901 281,275 12,626 4.49%

Cash and bank balance

Cash and bank balance includes notes and coins in hand, balance with Bangladesh bank and its agent bank and balance with other banks and financial institutions. In 2018, total Cash and bank balance was BDT 31,044 million compared to BDT 28,087 million in December 2017. Details are as follows:

(BDT in Million) Growth Assets 2018 2017 Volume % Cash 17,640 18,005 (365) -2.03% Balance with other banks and financial institutions 13,405 10,083 3,322 32.95% Total 31,044 28,087 2,957 10.53%

Money at Call on Short Notice

Call lending is a part of the treasury function. Bank’s lending under this head of BDT 903,070 million as on December 31, 2018 and it was BDT 470,000 million in the same date of last year which is equivalent of 92.14 percent growth compared to the corresponding period. Positive growth indicates that banks has strong liquidity position as well as bank is efficient in generating income.

Investment

Investment in Treasury bill/bond occupies a significant portion of the total investment of the Bank which is BDT 18,662 million as on December 31, 2018 and it was BDT 21,354 million in 2017. Details are as follows:

(BDT in Million) Growth Assets 2018 2017 Volume % Government Securities: Held for trading (HFT) 5,981 - 5,981 100% Held to maturity (HTM) 18,662 21,354 (2,692) -13% Prize Bond 3 2 1 26% Other Investments: - Share 398 149 249 166% Bangladesh Bank Bills - 2,301 (2,301) -100% Bonds 1,002 - 1,002 100% Total 26,046 23,807 2,239 9%

112 PRIME BANK Loans and advances Loans and Advances BDT in Million PBL’s loans and advances increased by BDT 7,487 million during the year 2018 and stood at BDT 205,810 million which was BDT 198,323 million in 2017 showing a substantial growth of 3.78 percent over the previous year. Concentration of loans and advances was well managed and details of concentration are given at notes to the financial statements. The ratio of non- 205,810 198,323 performing loan was 6.16 percent which is much lower than the industry average. The Bank continued its participation in different credit program for financing in industrial projects, import, export, house building, retail, agriculture etc. 170,212 151,865 147,367 Fixed Assets

Fixed assets include land, building, furniture & fixture, office equipment and vehicles etc. PBL’s fixed assets decreased by BDT 509 million during the year 2018 and stood at BDT 6,943 million which was BDT 6,434 million in 2017.

Other Assets 2014 2015 2016 2017 2018 Other assets of the bank increased by BDT 934 million during the year 2018 and stood at BDT 23,837 million and it was BDT 22,903 million in 2017. The main components of other assets are investment in subsidiaries, advance income tax, advance rent, interest receivable, branch adjustment account and suspense account etc.

Borrowings from other Banks, Financial Institutions and Agents

PBL has borrowed fund from other banks and financial institutions as well as Bangladesh Bank as Refinance against SME loan. PBL has also borrowed foreign currency for its OBU operation. The bank has also raised fund by issuing subordinated bond. In 2018, borrowings of the Bank stood at BDT 33,945 million which was BDT 22,087 million in 2017.

Deposits

During the year 2018 total deposits of the bank decreased by BDT 1,496 million and stood at Deposits BDT 197,518 million and it was BDT 199,014 million in 2017. Total deposit include Bank deposit BDT in Million and Customer deposit.

Shareholders’ Equity 204,838 199,014 197,934 Total shareholders’ equity includes paid up capital, share premium, statutory reserve and 197,518 194,825 retained earnings and other reserves. By the end of the year 2018, total shareholders’ equity increased by BDT 1,473 million from BDT 24,708 million in 2017 which is equivalent of 5.96 percent growth. Detail are as follows: (BDT in Million) Growth Assets 2018 2017 Volume % Paid up capital 11,323 10,293 1,030 10% Share premium 1,212 2,241 (1,029) -46% Statutory reserve 10,353 9,566 787 8% Revaluation 1,534 1,528 6 0% 2014 2015 2016 2017 2018 Retained earnings 1,759 1,079 680 63% Total Shareholders’ Equity 26,181 24,708 1,473 6%

Foreign Currency Foreign Currency Translation Gain 13 Retained Earnings Retained Earnings 1,079 Translation Gain 15 1,759 Revaluation Gain 1,515 Revaluation Gain 1,519 Paid-up Capital 10,293 Paid-up Capital 11,323 2018 2017

Statutory Reserve 10,353 Statutory 9,566 Share Premium Reserve 1,212 Share Premium 2,241

PRIME BANK 113 ANNUAL REPORT 2018

Analysis of Operating results of PBL

In 2018, PBL made operating income of BDT 12,978 million (it was BDT 12,207 in 2017) whereas operating expense was BDT 7,258 million in 2018 compared to BDT 6,834 million in 2017. Profit before provision and tax was BDT 5,719 million compared to BDT 5,373 million in 2017. Profit after tax was BDT 2,188 million against BDT 1,059 million in 2017. Earnings per Share stood at BDT 1.93 which was BDT 0.94 in 2017. Detail are as follows:

(BDT in Million) Growth Assets 2018 2017 Volume % Interest Income 18,390 14,769 3,621 25%

Interest Expense 10,740 9,875 865 9%

Net Interest Income (NII) 7,650 4,894 2,756 56%

Non-Interest Income 5,249 7,254 (2,005) -28%

Operating Expenses 7,180 6,775 405 6%

Profit before Provision & Taxes 5,719 5,373 346 6%

Profit before Taxes (PBT) 3,938 1,809 2,129 118%

Net Profit after Taxes (NPAT) 2,188 1,059 1,129 107%

Interest Income

During the year 2018, interest income increased by BDT 3,621 million and stood at BDT 18,390 against BDT 14,769 million in 2017. The major interest earning came from follows:

(BDT in Million) Growth Assets 2018 2017 Volume % Interest on loans and advances 17,195 13,679 3,516 25.70%

Interest on balances with other Banks & FI’s 750 726 24 3.31%

Interest on balance with foreign Bank 360 320 40 12.50%

Interest on call loans 85 44 41 93.18%

Total 18,390 14,769 3,621 24.52%

Interest Expense

In 2018, PBL incurred BDT 10,741 million as interest expense and it was BDT 9,875 million in 2017. It reveals a growth of 8.76 percent during 2018. The Bank was able to maintain a strong liquidity position during the period and simultaneously managed to procure deposit at lower cost. Our average cost of deposits in 2018 was 4.72 percent which was 4.52 percent in 2017.

Net Interest Income

PBL earned total BDT 7,650 million as net interest income during the year 2018 registering Commission Exchange and Brokerage BDT in Million increase by BDT 2,755 million which is equivalent to 56.31 percent growth over previous year. It indicates that the management of the Bank is more efficient to manage the interest rate of 245 209

loans and deposits. 2, 2, 033 2, 956 Income from Investment 1, 693 PBL has earned investment income of BDT 2,154 million during the year 2018 which was BDT 1, 4,246 million in 2017. In investment income, interest income was BDT 2,132 million (equivalent to 98.97 percent) and non-interest income was BDT 22 million.

Commission, Exchange and Brokerage

During the year 2018, PBL earned total BDT 2,209 million as commission, exchange and brokerage which was BDT 2,245 million in 2017. Commission, exchange and brokerage income slightly decreased by BDT 36 million from previous year.

2014 2015 2016 2017 2018

114 PRIME BANK Other Operating Income

Other operating income increased by BDT 123 million and stood at BDT 887 million in 2018. It was BDT 764 million in 2017.

Operating Expenses

Total operating expenses during 2018 has increased by BDT 405 million to compute total amount of BDT 7,180 million. It reveals an increase of 5.98%. The main components of the operating expenses are as follows:

(BDT in Million) Growth Assets 2018 2017 Volume % Salaries and allowances 4,159 3,824 335 9% Rent, taxes, insurance, electricity, etc. 961 906 55 6% Legal expenses 106 83 23 28% Postage, stamp, telecommunication, etc. 70 78 (8) -10% Stationery, printing, advertisements, etc. 226 198 28 13% Managing Director’s salary and fees 10 12 (1) -12% Directors’ fees 4 4 (1) -18% Auditors’ fees 1 1 - 0% Depreciation and repair of Bank’s assets 407 365 41 11% Other expenses 1,236 1,304 (68) -5% Total 7,180 6,775 405 6%

Operating Profit

The total operating profit of the bank for the year 2018 stood at BDT 5,719 million in comparison with BDT 5,373 million in 2017.

Profit before Tax

Profit before tax of the Bank stood at BDT 3,938 million in 2018 compared to BDT 1,809 million in 2017. The Bank maintained adequate amount of provision against loans and advances, off-balance sheet items, and other assets. Bank maintained adequate provision during 2018 as per regulatory requirement.

Net Profit after Tax

During the year 2018, net profit after tax increased by BDT 1,129 million and stood at BDT 2,188 million. It was BDT 1,059 million in 2017.

Earnings per Share

In 2018, PBL’s earnings per share (EPS) was BDT 1.93 compared to BDT 0.94 in previous year.

Earnings Per Share (BDT) Operating Profit Net Profit After Tax BDT in Million BDT in Million 393 2, 6,157 11 139 195 188 2. 5,906 2, 2, 2, 5,757 5,719 93 94 89 1. 1. 1. 5,373 05 9 94 1, 0.

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

PRIME BANK 115 ANNUAL REPORT 2018

SEGMENTAL ANALYSIS

PBL is dedicated to provide best services by offering innovative products to the society where it operates. PBL also provides services in local geographic areas and demographics segment. PBL can often best define market segments based on product benefits when it offers multiple products. In segmenting the market, the potential customers are divided into several sections with similar needs. From the very beginning, PBL is offering attractive financial products and services considering the concurrent needs of customers.

Prime Bank has 3 Off-shore banking units, 5 Islamic Banking branches, 2 local subsidiaries and 3 foreign subsidiaries. The business and performance overview of those segments are enumerated as follows:

Off-Shore Units Prime Bank Islamic Banking Branches

Overseas • Prime Exchange Pte. Ltd. (Singapore) Local • Prime Bank Investment Ltd. Subsidiaries • PBL Exchange (UK) Ltd. Subsidiaries • Prime Bank Securities Ltd. • PBL Finance (Hong Kong) Ltd.

(BDT in Million) 2018 2017 2018 vs Particulars % of total % of total Amount Amount 2017 % assets assets

Prime Bank Limited 239,552 81% 230,797 82% 4%

Islamic Banking Branches 19,850 7% 17,857 6% 11%

Off Shore Banking Units 24,988 8% 23,365 8% 7%

Prime Bank Investment Limited 6,951 2% 7,021 2% -1%

Prime Bank Securities Limited 1,228 0.4% 1,295 0.5% -5%

Prime Exchange Pte. Ltd. (Singapore) 92 0.03% 118 0.04% -22% Group Assets Group PBL Exchange (UK) Ltd. 30 0.01% 48 0.02% -37%

PBL Finance (Hong Kong) Ltd. 2,321 1% 1,894 1% 23%

Total 295,011 100% 282,395 100% 4%

2018 2017 2018 vs 2017 Particulars % of total % of total Amount Amount % revenue revenue

Prime Bank Limited 11,855 88% 11,051 87% 7%

Islamic Banking Branches 710 5% 824 7% -14%

Off Shore Banking Units 334 2% 273 2% 22%

Prime Bank Investment Limited 243 2% 207 2% 18%

Prime Bank Securities Limited 59 0.4% 67 1% -11%

Prime Exchange Pte. Ltd. (Singapore) 52 0.4% 64 1% -19% Group Revenue Group PBL Exchange (UK) Ltd. 61 0.5% 49 0% 23%

PBL Finance (Hong Kong) Ltd. 102 1% 110 1% -7%

Total 13,416 100% 12,645 100% 6%

116 PRIME BANK Business Segmentation

PBL business has been divided into four major segments i.e Corporate & Institutional Banking, Commercial Banking, MSME and Consumer. Highest deposits is in Consumer segment which represents 67 percent of total deposit & highest loans is in Corporate & Institutional Banking segment representing 55 percent of total loans and advance of the bank. Segmental business (Deposits & Loans) as on 31 December 2018 has been stated as follows:

(BDT in Million) 2018 2017 2018 vs 2017 Particulars % of total % of total Amount Amount % deposits deposits Corporate & Institutional Banking 34,504 17% 28,744 14% 20% Commercial Banking Division 11,990 6% 14,470 7% -17% MSME 18,390 9% 17,994 9% 2%

Deposits Consumer & Others 132,634 67% 137,806 69% -4% Total 197,518 100% 199,014 100% -1%

Deposits

Corporate & Corporate & Institutional Institutional Banking: 18% Banking: 15%

Commercial Commercial Banking Banking Division: 6% Division: 7% 2018 2017 MSME: 9% MSME: 9% Consumer & Consumer & Others: 69% Others: 67%

(BDT in Million) 2018 2017 Particulars 2018 vs 2017 % of % of total Amount Amount % total loans loans Corporate & Institutional Banking 114,058 55% 107,633 54% 6% Commercial Banking Division 52,321 25% 48,915 25% 7% MSME 21,120 10% 22,232 11% -5%

advances Consumer & Others 18,310 9% 19,543 10% -6% Loans and Loans Total 205,810 100% 198,323 100% 4%

Loans and Advances

Consumer Consumer & Others: & Others 10% 9% MSME: MSME 10% 11% Corporate & Corporate & Institutional Institutional Banking: Banking 2018 55% 2017 54%

Commercial Commercial Banking Banking Division: Division 26% 25%

PRIME BANK 117 ANNUAL REPORT 2018

REPORT ON HUMAN RESOURCE MANAGEMENT

Many Banks in Bangladesh aspire to be the package. The remuneration policy of the Bank does not allow Human Best in the Market. But very few have all the any discrimination between male and female employees. In Capital elements required: talent, resources, and addition, employees are paid bonus based on yearly business perseverance. The term human capital in an performance. organizations and businesses are an important and essential In addition to monthly competitive base pay and a good asset who contributes to development and growth, in a similar number of allowances (e.g., House Rent allowance, Medical way as physical assets such as machines and money. The allowance, Conveyance allowance etc.), Prime Bank has variety collective attitudes, skills and abilities of people contribute to of market-competitive Benefits schemes designed to motivate organizational performance and productivity. Any expenditure the employees. The various cash and non-cash benefits include: in training, development, health and support is an investment, not just an expense. An organization can’t survive if there are • Company provided car for top level Executive employees no employees. Organization runs with the help of individuals • Car allowance for all Executive level employees who contribute in their own way in its success and productivity. • Leave fair assistance allowance Employees spend maximum part of their day in offices and strive • Medical treatment allowance hard to achieve the goals and objectives of the organization. • Maternity benefits Employees ought to be motivated from time to time so that • Car loan facility they develop a sense of attachment towards their organization and also deliver their best. Knowledge and expertise which • House loan facility employees develop in due course of time to further increase • Staff loan at reduced interest rate the productivity of organizations refer to human capital. Human • House furnishing allowance capital is defined as the collective stock of skills, attributes, • Mobile phone allowance knowledge, and expertise of employees which further plays an • Travel allowance integral role in increasing the productivity of the organization. • Technical allowance Motivated and Engaged Employees • Festival bonus

Prime Bank has a diverse group of motivated and engaged • Allowance for employees’ meritorious students employees. From experience it knows that if employees are • Annual leave properly empowered, they become more engaged and go extra • Maternity leave miles to fulfil organization’s ambition. Engaged employees are • Study leave etc. likely to take more responsibility and embrace accountability which helps to achieve the sustainability strategies. The Bank The Bank also provides long-term as well as retirement has positioned itself with a performance-driven rewarding work benefits to employees: culture; where employees are treated with respect and receive • Leave encashment plenty of development opportunities. Prime Bank has a special focus on: • Provident fund • Gratuity benefit • Ensuring a balanced diversity • Retirement benefit • Promoting human capital development • Partial and full disability benefit • Providing competitive compensation and benefits • Death benefit to family members etc. • Promoting a performance centric culture • Protecting human rights Broadbanding Pay Structure: • Ensuring workplace health and safety The Management introduced Broadbanding Pay Structure • Ensuring equal opportunity which aims to ensure a performance driven work culture All the people related issues in Prime Bank are governed by the through a strategic compensation plan synced with the well-defined policies and procedures which are duly reviewed performance of individual employee. Since inception, Prime by the Management time to time. Bank has practiced a scale based pay structure for each grade, so to reward individual performance the new policy offers a Compensation & Benefits flexible pay plan that will compensate the person, not the grade. To maintain the market competitiveness, the compensation It places an increased emphasis on encouraging employees and benefits of Prime Bank are regularly reviewed through to develop new skills and paying for the skills according to market and peer group study. The well-crafted total rewards their contribution and equity. In a nutshell, broadbanding is a help the Bank to attract, motivate and retain talent. more flexible pay system for both the employees and for the employers where career progression takes a different route. In PBL, the Board of Directors is not eligible for any compensation. Given that, the specific reasons behind introduction of this new They are paid honorarium for attending meetings only. On the pay structure is: other hand, all employees are paid competitive remuneration

118 PRIME BANK 1. It facilitates/encourages internal /lateral movement Healthy and Safe Work Environment (Through Job Rotation) In Prime Bank, the physical, mental and social well-being of 2. It rewards performers than the non performers (Through the employees always gets priority. Healthy, productive and Pay for Performance) motivated employees are the foundation of a successful organization. Prime Bank helps employees to assume 3. It puts added trust & greater autonomy in line management responsibility for their own personal behaviour in health-related (Through Teamwork/ Relationship) matters, and support health-promoting general conditions Moreover, the policy states that when one employee reaches within the Company. We continuously focus on improving the highest grade within a Band, the employee will grow further health and safety of employees that includes proper work when he/she is ready to take or has taken higher responsibilities place design and decoration of head office and branches, and match the criteria of the next Band. maintaining the cleanliness at work space, holding awareness The total compensation and benefits system of Prime Bank session related to physical and psychosocial well-being, tracks costs and is linked with performance, while maintaining email communication on various health and safety related a balance with the business affordability. topics, sending alerts to employees on emergency situations, arranging fire drill sessions, financial support for medical care Performance Management Program etc. Because of the nature of operations, Bank employees are not usually exposed to work-related injury, occupational Prime Bank has a comprehensive performance management diseases or fatality. Yet, the Bank remains cautious so as not to program that evaluates employees’ yearly performance create any hazardous work condition. against business targets at the year-end. In addition, their functional and leadership competencies are also rated by Decent Workplace the line management. This appraisal process also identifies the competency gap and training needs of employees. All Prime Bank has a decent work environment where employees employees (except employees under probation or training) can work with dignity, have the freedom to express opinions, of the Bank undergo annual performance appraisal process. can participate in the decision making process that affect their The process ensures that clear feedback on improvement lives, and receive equal treatment and opportunity. The Bank is points (performance and professional capabilities) is provided committed to ensure the best practices in compliance with the to employees by their Managers to promote employees’ labour code of the country. Bank Management believes that long-term career development and improved contribution to the business can grow favourably if the organization enables organizational performance. All regular employees undergo employees through creating and maintaining a decent workplace. the annual performance and career development review. In Prime Bank, employees have the right to exercise freedom of association or collective bargaining following the legal Work-life Balance procedure of country laws. However, employees have never Prime Bank wants its’ employees to balance the work and formed or wanted to form any collective bargaining agency. personal life and has organization-wide practices and policies The Bank follows non-discriminatory approach in all HR policies that actively support employees to achieve success at both and practices. The salary of an employee is determined based work and home. Management is also open and shows flexibility on his/her competency, experience and performance. The in regard to a balanced work-life. Bank neither employs child labour nor has any provision for forced labour. Employees have the right to resign from their In Prime Bank, employees are entitled to sufficient annual leave employment serving proper notice period and following the and sick leave with pay. To enjoy vacation with family, Bank internal procedures. provides Leave Fare Assistance Allowance to employees. All female employees are eligible for Maternity Leave (Parental Leave) Ensuring a decent workplace also encompass Bank’s with pay for a period of six months. In 2018, a total of 53 female investment decisions as well as agreements with the suppliers employees availed Maternity leave. After completion of the leave, and contractors. For instance, human right, as appropriate, they returned to work and are still continuing with the organization. is covered as an integral part of decision making for major financial investments. Among all the significant investments, Culture garments and manufacturing industry contain major stakes where issues related to human rights are more relevant and Culture plays a vital role to create a high performance critical. Hence, any such investment agreement is subject to environment that supports sustainability strategy screening of human right issues along with other criteria. implementation. Prime Bank carefully develop, shape and impact organizational culture by: practicing values appropriate On the other hand, all the agreements of Prime Bank with for the bank; defining working relationship and communication suppliers or contractors undergo due assessment process pattern between superior and subordinates; governing rules which requires complying with Labour Code and other and regulations which control employees’ behaviour; promoting applicable laws of the country. Moreover, the procurement a strong employer brand through which employees identify decisions are also subject to conformity with International with the organization; maintaining effective reward system Labour Conventions. The team involved in procurement visits that affects employees loyalty and empowering employees to suppliers and contractors’ premises on need basis to monitor demonstrate their innovativeness not only to be competitive in working conditions and other relevant issues like labour the market but also to achieve a sustainable growth. practices, human right etc.

PRIME BANK 119 ANNUAL REPORT 2018

The security personnel employed by the Bank are formally Percentage of female employee over the years: trained and aware of policies and procedures regarding human right issues. The training requirement also applies to third party Year % of Female Employees organizations that provide security personnel to the Bank. 2014 21.00% The most recent addition to encourage female employees at 2015 21.64% the workplace is that they are now able to avail child day-care facility in Motijheel area. Female employees having offices in 2016 21.93% Motijheel and peripheral area now can avail child day-care 2017 20.92% facility where they can keep their children in a safe and secured 21.17% environment. This will not only help to retain female employees 2018 but will relieve them of the dilemma of leaving their child/ children at home. Gender diversity among Board members:

Gender No. of Members Percentage (%) Diversity in Workplace Male 15 83.33% Prime Bank believes that diverse, heterogeneous teams generate greater creativity, innovation and business Female 03 16.67% development. An inclusive culture maintains and drives Total 18 100% workforce diversity by fostering the exchange of ideas and collaboration among individuals and across groups. To speak New recruitment by gender and age: simply, our constant success depends in part on maintaining a plurality of perspectives. By Gender:

Employees by age group and gender: Gender No. of Emp. %

Age group No. of Emp. Percentage Male 62 84.93%

Less than 30 years 251 7.81% Female 11 15.07%

30 to 50 years 2,809 87.45% Total 73 100% Over 50 years 152 4.73% By Age: Grand Total 3,212 100%

We practice equal employment opportunity; for competent Age group No. of Emp. % candidates regardless of their gender, age, locality or ethnicity. Below 30 years 23 31.51% While recruiting fresh graduates, the Bank sources the pool from different recognized public and private universities; with a 30 to 50 years 49 67.12% view to create a diverse work force. Over 50 years 1 1.37%

Total 73 100% Employees by religion:

Religion No. of Emp. Percentage Employee turnover by gender and age: Islam 2,947 91.75% By Gender: Hindu 251 7.81% Gender No. of Emp. % Buddhist 12 0.37%

Christian 2 0.06% Male 295 81.94%

Total 3,212 100% Female 65 18.06% Total 360 100% Gender diversity among employees: By Age: Gender No. of Emp. Percentage

Male 2,532 78.83% Age group No. of Emp. %

Female 680 21.17% Below 30 years 44 12.22%

Total 3,212 100% 30 to 50 years 308 85.56%

Besides, our ration of male and female employees has been Over 50 years 8 2.22% increasing over the time. Currently, approximately 21.17% of Total 360 100% total employees are female. On the other hand, 16.67% of the Board of Directors represents females. For the year 2018, the turnover rate is 10.73%.

120 PRIME BANK Learning & Development Ethical and Lawful Behavior in Prime Bank

In Prime Bank, Human Resources (HR) Division regularly Prime Bank is always committed to establish the highest level undertakes effectively designed training programs targeting of ethical standard. Employees are properly oriented to comply the right group of employees through proper training need with Code of Ethics & Business Conduct. All employees duly assessment. Prime Bank believes that continuous efforts should signed the ‘Code of Ethics & Business Conduct’ and the copy be given so that employees acquire and develop the right set is preserved in respective Employee Records. During joining, HR Division makes sure that all the new employees read and of skills required to face the challenge of ever changing market. accept this policy by signing. In Prime Bank, the employee development plan is based on Bank also has ‘Service Excellence Handbook’ & ‘General Code proper training need assessment. In 2018, Bank’s internal & Discipline’, which are read by each employee including new HR Training and Development Centre arranged training on employees while joining in the Bank and record of these are different topics for 3548 enthusiastic participants. Besides, preserved in personal file after signing by employees. a total of 311 employees were sent to participate in various “The Prime Bank Employee Code of Ethics and Business training programs/conferences in home and abroad. Conduct” – is a framework of ethical behavior for all the The banking sector is complex and diverse with evolving nature employees of the organization that embodies all the factors of threats and the risks. So, the training module is updated time mentioned above. It is a reflection of Prime Bank’s role as to time for employees of the Bank in the changing context of a socially responsible corporate citizen which believes in financial market. providing the most courteous and efficient service through innovative banking services and products. However, Prime Openness in communication for a better employee- Bank’s most farsighted objective is to uphold and build upon management relation the honour of Bangladesh as a nation, through exhibiting its own competence as a local organization that can perform at Employee communications and consultation are the lifeblood of least on par with a multinational one, if not better than one. any business. Proper exchange of information and instructions help the Bank to function more efficiently and provides the The employees of Prime Bank are trained to put their own duties opportunity to build greater trust among employees and and ethics before everything else. They treat their colleagues management in discussing issues of mutual interest. To ensure with reverence and honour, and their customers as esteemed guests. They also learn to abide by the laws that govern our effective employee communications, management takes a business, and contribute to the strength and wellbeing of positive lead. our community and shareholders. In addition to their regular The Management has introduced a Whistleblower Protection responsibilities employees are also expected to demonstrate Policy which intendeds to encourage and enable employees the below ethical behavior: and others to raise serious concerns internally so that the Management can address and correct inappropriate conduct and actions. Employees have an avenue to report concerns about violations of code of ethics or suspected violations of law or regulations. The policy covers the protection of a “The Prime Bank Employee Code of Ethics whistleblower in two important areas – confidentiality and and Business Conduct” against retaliation. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment. • Protect Privacy of Customers’ Additionally, now there is an avenue to report sexual and Confidential Company harassment in the workplace. The policy aims to ensure Information; a working environment in line with our values, where all • Prevent Money Laundering individuals are treated equally, fairly and with dignity and and/or Fraud; also foster compliance with governing laws pertaining to sexual harassment. Such policy creates awareness about the • Demonstrate Workplace nature of offences and the consequences of an offender. This Respect; not only fosters a neutral environment but gives a feeling of • Avoid Offensive Behavior and assurance that any wrong doing will be strictly addressed by Sexual Harassment; the Management.

Any operational changes are properly planned and managed. • Avoid Drug/Substance/ Management follows a participative approach during any Alcohol Abuse in the major transformation followed by prior communication to Workplace; the employees. Since there is no trade union or employee • Protect the Bank’s Assets; association, no notice period regarding operational change is stipulated by any collective agreement.

PRIME BANK 121 ANNUAL REPORT 2018

It is mandatory for every employee of Prime Bank Limited to As per the implementation process of integrity strategy in the abide by the ‘Employee Code of Ethics and Business Conduct’ Prime Bank Limited, topic on integrity/ ethics has already been and also comply with any other orders or directions provided included in training curriculum and Human Resources Training by the Management or Board of Directors from time to time. & Development Centre has also started its effort in this regard. It is also worth mentioning here that the Branch Network Integrity/ Ethics Committee Division of the Bank in their regular monthly meeting with Head As per the Bangladesh Bank’s Instructions first Integrity/ Ethics of Branches and Other Branch Executives/ Officials conducts a Committee, Prime Bank Limited, Head Office, Dhaka was session titled “Improvement of Ethical Values of Officials”. formed in the year of 2013 for the implementation of National Besides, as per Clause No # 6.1 of the National Integrity Strategy Integrity Strategy which has been designed and modelled work plan and its implementation quarterly progress report, by the Government of People’s Republic of Bangladesh on 11.05.2017 “Innovation Team” is also formed envisioning envisioning happy-prosperous and corruption free Bangladesh to ensure customer services at mass people, to increase the and establishing rule of law in its different organs/organizations. standard of services and to make customer friendly access to Thereafter, lastly on 11.12.2018, the abovementioned such services. Furthermore, reference to the Clause No # 6.3 of Committee was restructured. Currently, Mr. Ziaur Rahman, abovementioned progress report, the Right to Information Act, Senior Executive Vice President & Head of Human Resources 2009 and in line with Bangladesh Bank’s guidance on 31.12.2017 Division is holding the position as Focal Point of the Committee. a “Responsible Officer” and “Appellate Authority” is appointed. Apart from Focal Point, the Integrity/Ethics Committee, Prime As per Section 24 of the Right to Information Act, 2009, The Bank Limited, Head Office is comprised of 05 (five) members “Appellate Authority” shall dispose of the application filed by from different Divisions/ Departments of the Bank, i.e. Branch any person who is aggrieved by the decision of “Responsible Network Division, Legal Division, Human Resources Training Officer”. The “Responsible Officer” shall discharge his duties in & Development Centre, Brand & Communications and accordance with the provisions of Section 7–10 of the said Act. Compliance Department. In addition, 173 Integrity/ Ethics Integrity Strategy Work Plan and Implementation quarterly Committee(s) are also formed in different locations in the Bank, report of Prime Bank Limited is submitted to Bangladesh Bank i.e. Regional, Cluster-wise & Branch-wise Committee(s). regularly. Moreover, on 28.12.2017 a separate “Integrity Strategy Implementation Unit/ Cell”, Prime Bank Limited, Head Office, Dhaka has also been formed comprising of 05 (five) Officials/ Executives of the Bank. This Unit/ Cell came into force with immediate effect and might furnish its obligations according to the guidelines provided by Integrity Strategy Implementation Cell of Bangladesh Bank. Thereafter, on 11.12.2018, the abovementioned Unit/ Cell was restructured.

122 PRIME BANK REPORT ON NON-PERFORMING ASSET (NPA)

Prime Bank Limited has mandated reduction of NPA to be BDT in Million treated as ‘Top Most Priority’. Addressing the problematic Particulars 2018 2017 customers and bringing down the Non-Performing Assets (NPA) by instilling strict lending and recovery discipline remain Opening Balance (NPA) 10,799.05 10,139.48 the key imperatives for Prime Bank Limited. The overall banking Add: Additional NPA during the 8,806.93 8,007.07 sector got impacted by certain factors like very high NPA and period probability of re-classification of loans earlier rescheduled. Less: NPA recovered during the Establishing or maintaining good governance, managing NPA (1,346.72) (1,635.79) period including collecting bad loans and increasing profitability were Less: NPA declassified/ major challenges for 2018 since recovery from rescheduled regularized as performing (1,632.05) (2,333.23) loans was not encouraging. Major industrial sectors did not during the period perform in line with expectations mainly due to infrastructural Less: NPA written-off during the bottlenecks. (3,941.44) (3,378.48) period Non-Performing Asset (NPA) is a debt obligation where the borrower has not paid previously agreed upon interest and Closing Balance (NPA) 12,685.77 10,799.05 principal repayments to the designated lender for an extended period of time. The non-performing assets are therefore not No. of rescheduled loans 48 nos. 102 nos. yielding any income to the lender in the form of principal and Written-offs: interest payments. Therefore, managing Non-Performing Asset During the years 2018 & 2017, the movement of written-off (NPA) to keep it at the lowest possible level is at the core of our accounts is as under: business priorities. We have embedded the essence of asset quality in our business values, therefore, instituted the best BDT in Million local as well as international industry practices throughout our Particulars 2018 2017 business processes. Opening Balance 18,236.77 15,428.92 Prime Bank has a fully capable Special Asset Management Division (SAMD), dedicated for management and recovery Add: Addition during the year 3941.44 3,378.48 of problem credits. Major responsibilities of this Division is to Less: Collection/Reduction formulate strategy and action plans for prevention of credit (267.05) (570.63) during the year losses, maximization of recoveries, rescheduling, and/or pursuing legal actions. Closing Balance 21911.16 18,236.77

Under the present overall socio economic dynamics, Prime Bank has prioritized to extend purpose-oriented credit facilities Movement of provisions made against NPA with required security/collateral support as their policy priority since diversion of fund is one of the identified causes of loan BDT in Million Particulars default. So, it becomes imperative need to keep a close watch 2018 2017 on the borrower’s business operations and the movement of its Opening Balance 4,269.93 3,824.06 financial indicators in an empirical manner.

Prime Bank has formulated well-structured NPA management Add: Addition during the year 2,904.78 2,558.40 strategy and we believe that Bank’s intense recovery strategies Less: Adj. during the year (2,607.43) (2,112.53) and innovative approaches will lead to a better asset portfolio of the Bank. Closing Balance 4,567.28 4,269.93

During the year 2018, the NPA Ratio of the Bank has significantly Sector-wise Loan Exposure and Non-Performing Asset (NPA) increased to 6.16% from previous year’s 5.45%. The absolute Status: figure shows a rise in classified portfolio from BDT 10,799.05 Following Table shows sector-wise exposure vis-à-vis sector- million in 2017 to BDT 12,685.77 million in 2018 due to sudden wise NPA of Prime Bank Ltd.: non-performance of some large borrowers. Special efforts are being made by the Special Asset Management Division through stringent and rigorous monitoring over the loan portfolio.

Movement of NPA:

The movement in NPA accounts during the years 2018 & 2017 has been depicted in the following table:

PRIME BANK 123 ANNUAL REPORT 2018

Amount in Taka (Million)

Year 2018 Year 2017 Sector- Sector- Sectors Sub-sectors Total wise Total wise Loans & Total NPA NPA in % Loans & Total NPA NPA in % Advances of Total Advances of Total Portfolio Portfolio Agricultural Credit 3,428.00 15.90 0.46% 5,782.40 18.10 0.31% 1. Large Scale a) Food Manufacturing 6,963.80 410.40 5.89% 10,469.00 646.50 6.18% b) Beverage 635.80 - - 1,061.00 - - c) Tobacco 713.30 - - 833.80 - - d) RMG 23,264.50 607.40 2.61% 15,112.50 1,432.46 9.48% e) Textile 11,384.70 51.20 0.45% 9,816.80 40.90 0.42% f) Footwear, other wearing 1,318.10 116.60 8.85% 1,124.20 124.40 11.07% apparel & made up Textiles g) Wood cork & allied ------products h) Furniture & Fixture 1,088.80 0.30 0.03% 1,414.80 0.10 0.01% i) Paper & paper products 243.00 42.60 17.53% 14.00 - - j) Printing, publishing & allied 1,471.00 - - 1,439.50 1.90 0.13% industries k) Leather & leather products 29.80 - - - - - Industry l) Rubber products 3,312.70 5.10 0.15% 4,333.00 0.30 0.01% m) Chemical & chemical 774.30 20.60 2.66% 456.30 - - products n) Petroleum & coal products ------o) Non-metallic mineral 7,359.10 1.90 0.03% 5,548.40 4.60 0.08% products p) Basic metal products 14,221.10 162.30 1.14% 13,985.90 174.50 1.25% q) Electrical machinery & 1,087.90 19.20 1.76% 1,180.80 - 0.00% apparatus r) Other manufacturing 4,593.10 23.30 0.51% 5,165.50 20.20 0.39% industries s) Ship building 945.50 - - 771.00 - - t) Ship breaking 978.20 52.90 5.41% 829.40 - - u) Pharmaceutical 4,935.80 - - 4,221.90 - - 2. Small Scale 739.40 1.70 0.23% 794.60 46.70 5.88% Construction 14,807.10 4,500.30 30.39% 18,149.20 2,326.10 12.82% Power, Gas, Water & Sanitary 1,884.20 - - 215.20 - - Services Transport, Storage & 5,646.20 597.20 10.58% 4,958.70 404.40 8.16% Communication Trade Services 22,484.80 1,985.60 8.83% 21,626.70 1,557.90 7.20% 1. Urban a) Commercial 3,538.10 361.60 10.22% 3,956.80 719.20 18.18% Housing Services b) Residential 4,140.10 274.10 6.62% 3,923.50 280.60 7.15% 2. Rural 403.50 20.00 4.96% 391.50 25.60 6.54%

124 PRIME BANK Amount in Taka (Million)

Year 2018 Year 2017 Sector- Sector- Sectors Sub-sectors Total wise Total wise Loans & Total NPA NPA in % Loans & Total NPA NPA in % Advances of Total Advances of Total Portfolio Portfolio Professional and Miscellaneous 7,254.00 700.10 9.65% 5,985.40 798.40 13.34% Services Others 32,331.39 1,865.97 5.77% 31,944.49 1,338.89 4.19% OBU 23,832.23 849.50 3.56% 22,816.44 837.30 3.67%

Total 205,809.52 12,685.77 6.16% 198,322.73 10,799.05 5.45%

Prime Bank projects domestic demand-driven economic deployed external sources where found suitable, strengthened activity will remain relatively buoyant, as indicated by credit our legal team, thereby intensified recovery initiatives which growth, industrial activity and import needs which are reflected brought in defaulting clients under negotiation and thereby in the loan portfolio of our Bank. During past few years, Prime sizable recovery was possible in the year 2018. On the other Bank maintained a supervisory vigilance on lending efficiency hand, in order to check any further significant NPA, we have and risk management which will further be strengthened. extensively reorganized our Division and re-engineered business and operational processes putting into a strong risk In order to arrest NPA, our focus was not only on reducing management framework in place which are expected to result NPA portfolio, but also avoiding further NPA. In line with that, further improvement in the year 2019. we have strengthened our recovery and monitoring drives,

Non-performing loans (NPLs) Provision for loans and advance NPL Coverage NPLs to total loans and advances

100 10.00 12,686 11,883

11,215 5.45

10,799 7.61 80 7.82 5.96 8.00 10,139 6.16 8,916 8,293 7,780

7,290 60 6.00

6,327 CENT

(BDT in Million)

E PRECENT

40 4.00 PR 56 65 72 83 65 20 2.00

- - 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

PRIME BANK 125 ANNUAL REPORT 2018

DCTS SCS

Corporate oan roducts Conventional Deposit roducts

orking Capital inance Current ccount Capital achinery inance Savings ccount eal state inance Short otice Deposit SD ork order inancing ixed Deposits mport and Trade inance y irst ccount School Banking xport inance Shukonna emale SB ccount roect inance rime remium Structured inance rime xcel ease inance rime ower rimeDii Singlenstallment Based Deposit Scheme Double Benefit Deposit Scheme Services S oan roducts Monthly Benefit Deposit Scheme ccount Deposit Scheme remium anking onarch Anchol omen ntrepreneurs oan Brighter Tomorrow nternet anking ATT Chalti in orking Capital oan onthlynstallment Based Deposit Scheme ffShore anking rime Sampad Capital oan ouse Building Deposit Scheme SS anking Saha in Collateral ree oan aksmauron Deposit Scheme hone anking through oushami in Seasonal oan akhopati Deposit Scheme ocker Services rime Shomhabona obagoto ccount oreign emittance rime marat Contributory Savings Scheme nvestment ond for s rime illionaire Scheme Accounts acilities for s otipoti Deposit Scheme orex und anagement oney arket Services etail oan roducts rimary ealer Services AT Services Sapna eer Home oan repaid Cards Sapna Sha Home oan slamic Deposit roducts ebit Cards Abash Home oan aster ebit Card Car oan Aladeeah Current Account ACA C ebit Card ersonal oan udaraba Savings Account SA roprietary ebit Card etail S udaraba ayroll Account Credit Cards etail Secured udaraba Special otice eposit S ther udaraba eposit Accounts asterCard old Credit Card udaraba Term eposit eceipt T asterCard Silver Credit Card SA old Credit Card griculture oan roducts Singlenstallment ased eposit Schemes SA Classic Credit Card Mudaraba Double Benefit Deposit Scheme (MDBDS) nternational Credit Card bad Crop oan Mudaraba Monthly Benefit Deposit Scheme (MMBDS) latinum Credit Card hamar armonCrop oan udaraba eposit Scheme Hasanah Credit Card abanno or any gripurpose oan udaraba ducation Savings Scheme SS C Credit Card onthlynstallment ased eposit Schemes und Transfer udaraba House uilding eposit Scheme HS ST udaraba aksmauron eposit Scheme SS Foreign Drafts slamic Banking asanah udaraba akhopati eposit Scheme S T udaraba Contributory Savings Scheme CSS ACS nvestments roducts udaraba Ha Savings Scheme HSS TS udaraba Cash aqf eposit Scheme Home nvestment aneel Auto nvestment urak Household urables nvestment Asbab edical nvestment Shifa uardeHasana

126 PRIME BANK DCTS SCS

Corporate oan roducts Conventional Deposit roducts

PRIME BANK 127 RISK MANAGEMENT

Risk Management Framework & Mitigation Methodology

Market Discipline Disclosures on Risk Based Capital (Basel-III) RISK MANAGEMENT FRAMEWORK & MITIGATION METHODOLOGY

Risk is inherent in all our business activities. Sound risk v. The risk function can help banks remove biases; management enables us to serve our customers and deliver for our vi. The pressure for cost savings will continue. shareholders. If not managed well, risks can result in financial loss, regulatory sanctions and penalties, and damage to our reputation, The six trends suggest a vision for a high-performing risk function each of which may adversely impact our ability to execute our is inevitable. It will need to be a core part of banks’ strategic business strategies. We take a comprehensive approach to risk planning, collaborate closely with businesses, and act as a center management with a defined Risk Framework and an articulated of excellence in analytics and de-biased decision making. Bank Risk Appetite Statement which are approved annually by the Risk to manage multiple risk types while complying with existing Management Committee (RMC) and the Board. regulation and preparing for new rules will make it more valuable still, while its role in fulfilling customer expectations will probably Bank’s risk appetite statement indicates the amount of capital, render it a key contributor to the bottom line. earnings or liquidity we are willing to put at risk to achieve our strategic objectives and business plans, consistent with Risk management functions will need to transform its applicable regulatory requirements. Our risk appetite provides operating models;initiatives can be implemented that will bring a common and comparable set of measures for senior short-term business gains while helping build the essential management and the Board to clearly indicate our aggregate components of a high-performing risk function over the next level of risk and to monitor whether the bank’s risk profile remains few years. Here are some examples of such initiatives that can in alignment with our strategic and capital plans. Our risk be launched immediately: appetite is formally articulated in the Risk Appetite Statement, i. Digitize core processes prepared in accordance with the regulatory guidance and ii. Experiment with advanced analytics and machine learning. template.Our overall capacity to take risk is limited; therefore, we prioritize the risks we take in order to maintain a strong iii. Enhance risk reporting. and flexible financial position so we can withstand challenging iv. Collaborate for balance-sheet optimization economic conditions and take advantage of organic growth v. Build a strong risk-management culture opportunities. Therefore, we must set objectives and targets for capital and liquidity that are intended to permit us to continue Risk management is a discipline at the core of every enterprise to operate in a safe and sound manner. and encompasses all activities that affect its risk profile. The objective of risk management is to identify and analyze risks and The setting of an appropriate strategy and risk tolerance/ manage their consequences. Basel II/III Accord, the standards appetite levels, a holistic risk management approach and of Risk Management as guided by the Bank for International effective reporting lines to the competent authority in its Settlements (BIS) and particularly Basel Committee on Banking management and supervisory functions, enables management Supervision (BCBS), has been applied by bank regulators across to take risks knowingly and treat risks where appropriate. Risk the world. The Central Bank of Bangladesh i.e. Bangladesh management is a part of internal governance involving all Bank also issued guidelines to comply with the global norms areas of bank. There is a strong link between good corporate which forms the basis of risk management of all scheduled governance and sound risk management. Without proper risk banks in Bangladesh. The guidelines require that Banks adopt management, the various functions in a banking institution enhanced policies and procedures of risk management. PBL’s cannot work together to achieve the bank’s objectives. It risk management strategy is based on a clear understanding is an essential part of helping the bank grow and promote of various risks, disciplined risk assessment, measurement sustainability and resilience. procedures and continuous monitoring. PBL continues to focus on improving its risk management systems not only to Trends in Risk Management ensure compliance with regulatory requirements but also to Risk management in banking has been transformed over the ensure better risk-adjusted return and optimal capital utilization past decade, largely in response to regulations that emerged keeping in mind of the business objectives. For sound risk from local as well as global financial crisis. But important trends management, PBL manages risk in strategic level, managerial are afoot that suggest risk management will experience even level, and operational level. more sweeping change in the next decade. The risk management process of the bank operates under The change expected in the risk function’s operating model following structure: illustrates the magnitude of what lies ahead. Six trends are • The Board of Directors (BoD) approves overall risk shaping the role of the risk function of the future: management policies of the Bank in line with the regulatory i. Regulation will continue to broaden and deepen; guidelines; The Board also sets the Risk Appetite of the ii. Customer expectations are rising in line with changing technology; Bank at the beginning of the year. iii. Technology and advanced analytics are evolving; • Executive Committee (EC) of the Board is responsible for all sort of decision making as set by the Board. All decisions iv. New risks are emerging; taken by EC are ratified by the Board afterward;

PRIME BANK 129 ANNUAL REPORT 2018

• Audit Committee (AC) of the Board reviews the internal Basel III implementation status audit reports of the bank and operational risk and assesses Basel III is an evolution rather than a revolution for many banks. whether internal control of the Bank is proper or not; It was developed from the existing Basel II framework, and the • Risk Management Committee (RMC) of the Board oversees most significant differences for banks are the introduction of the overall Risk Management of the Bank. The committee liquidity and leverage ratios, and enhanced minimum capital also reviews risk management policies & guidelines, loan requirements. approval limit and submits to the Board for necessary Globally Basel III was introduced in 2010 as the previous version revision each year; of capital standard, was felt inadequate to maintain financial • For managing risk, PBL established Credit Risk stability during global financial crisis started in 2007 with the Management Division (CRM), Credit Administration intention of gradual implementation starting from January 01, Division (CAD), Recovery Division, Legal Division, Internal 2013 and full implementation starting from January 01, 2020. Control and Compliance Division (ICCD), Internal Audit & In Bangladesh, Basel III phase wise implementation started Inspection Division and Risk Management Division (RMD). back in 2015 and will fully be implemented from January 2020. For managing money laundering risk, Branch Anti Money Basel III changes & implementation status of Prime Bank briefly Laundering Compliance Officer (BAMLCO) for every stated below - Branch under dedicated Chief Anti Money Laundering Capital: Banks are required to hold at least 4.5% of risk- Compliance Officer (CAMLCO) has been placed; weighted assets in the form of Core Equity Tier-1 as prescribed PBL also formed various risk committees at management level, by Bangladesh Bank. This rule is an effort to ensure that banks like Head Office Credit Review Committee (HOCRC), Asset maintain high quality capital. In contrast to the requirement Liability Committee (ALCO), Senior Management Team (SMT), Tier-1 capital of PBL is 10.92% at the end of Dec 2018. Central Compliance Committee(CCC), and Enterprise Risk Liquidity ratios: The Liquidity Coverage Ratio (LCR) mandates Committee (ERMC) to Identify, assess, mitigate and monitor that banks must hold high-quality liquid assets that would of risk throughout the organization; In addition to these cover the bank’s cash outflows for a minimum of 30 days in a Committees, a Risk Management Forum (RMF) has also been stress scenario whereas the Net Stable Funding Requirement introduced by Risk Management Division (RMD) to escalate (NSFR) is for banks to have enough funding to last for a &capture,evaluate and mitigate operational risk at different whole year in an emergency. PBL had a very healthy Liquidity level of activities through combined effort. To assist this forum throughout the year and was able to maintain LCR within the and formally capture various events, an online module named regulatory threshold during the year 2018, however, the said Risk Platform has also been developed where employees of the ratio was marginally above the threshold of 100% at the end bank can escalateor register any anticipated or potential risks. of December 2018, efficient liquidity management will be a big challenge for banking sector so do the PBL, as the credit Risk Management Committee of the Board: growth shows upward trend than the deposit growth at the end To oversee the risk management of the Bank, the Board has formed of Dec 2018 which stood at 13% and 9.4% respectively. a Risk Management Committee as per the guidelines of Bangladesh Leverage Ratio and its Impact on business: The new quality Bank. The Committee supervises various risks arise from cores risks capital requirement policy and leverage ratio calculation will namely Credit Risk, ICC Risk, ICT Risk, FX Risk, ALM Risk &, AML affect all businesses proportionally and the impact would Riskand also Operational risk, which is key risk component of day be more pressing on marginally profitable businesses, but all to day banking operation. Presently four(04) members of the Board businesses would suffer unless the cost rise could be passed on of Directors are representing in the Risk Management Committee. to customers as Banks need to ensure LCR and NSFR to comply During 2018 four(04) RMC meetings were held where following with Basel III regulations. Moreover introduction of Leverage memos were placed before the Committee: ratio means Banks will have to have sufficient Tier-1 capital for SI Subject its business expansion. In comparison to LCR, NSFR, quality capital and Leverage Ratio, PBL is in good position as the Bank 1 Discussion of Sustainable Finance Activities is maintaining above 10% of CET-1 capital against total RWA. 2 Review of restructured Large loans Review of Information Security Policy and Procedures Risk Management Process 3 of the Bank Risk management is nothing but balancing the trade-off 4 Review of Fraud Detection and Management Process between risk and return and ensure optimum risk-adjusted 5 Review of Comprehensive Risk Management Report return on capital. Risk management function of PBL strives to 6 Review of Borrower Rating and Capital Management status proactively anticipate vulnerabilities at the transaction as well as at the portfolio level, through quantitative and qualitative 7 Review of Stress Testing of the Bank examination of the embedded risks. Risk is managed through 8 Review of Green Banking Policy a framework of policies and principles approved by the Board 9 Risk Appetite Statement of the Bank of Directors which ensures that the Bank operates within its 10 Internal Capital Adequacy Assessment Process of the Bank risk appetite. The policies and procedures established for this purpose are continuously benchmarked with international 11 Review of Quarterly Risk Management Report best practices. Furthermore, the Internal Capital Adequacy 12 Discussion on Annual Report of AML/CFT activities of last year Assessment Process (ICAAP) of the Bank assesses all the

130 PRIME BANK significant risks other than the risks under Pillar-1 of Basel III and The above process of risk management is being undertaken by calculates the adequate capital requirement. PBL which implies that if any risk(s) remains un-attended, that will be addressed through the repetition of the process which started with identification of those factors and the process continues.

Identiication Credit Risk Management

Management of Credit Risk in PBL

While financial institutions have faced difficulties over the Monitoring years for a multitude of reasons, the major cause of serious Measurement banking problems continues to be directly related to lax credit standards for borrowers and counterparties, poor portfolio risk management, or a lack of attention to changes in economic or other circumstances that can lead to a deterioration in the credit standing of a Bank’s counterparties. Credit risk is most simply defined as the potential that a Bank’s borrower or counterparty will fail to meet its obligations in accordance Planning & Aggregation with agreed terms, however, “migration risk” which refers to the Controlling potential deterioration of the credit quality of an un-defaulted exposure, also subsumed under broader definition of credit risk in a core principles of Basel Committee.

Identification: The first stage of risk management is to identify Credit risk is one of the significant risks of bank by the nature bank’s risk area in order to measure and manage i.e either of their activities, according to the basel regulation, bank mitigate or risk transfer. Typically PBL distinguishes Credit risk, need to allocate high amount of capital for providing poor or Market risk, Liquidity risk, Operational risk, and Information risky credit. The quality of credit is considered by recognizing & Communication Technology (ICT) risk. Beside these, the rating of the exposure. If an exposure is rated as “AAA”, it concentration risk, strategic risk, residual risk, reputation risk, treated as high quality credit than an exposure rated as” C” and settlement risk, environmental & climate risk etc are covered it required less capital as per regulation. under Internal Capital Adequacy Assessment Process (ICAAP). The goal of credit risk management is to maximize a Bank’s Measurement: The consistent assessment of the above risk adjusted rate of return by maintaining credit risk exposure mentioned types of risks is an essential prerequisite for within acceptable parameters. The effective management of successful risk management. For example, in order to assess credit risk is a critical component of a comprehensive approach credit risk associated with any corporate financing proposal, PBL to risk management and essential to the long-term success of carries out various risk assessment like financial spreadsheet any banking organization. That is why a risk based asset review analysis, credit risk grading and other risk like concentration framework has also been put in place wherein the frequency of related to the borrower and the relevant industry. asset review would be higher for high exposure cases and/or Aggregation: PBL closely monitors aggregate risk in order poor credit rating. to minimize its exposure to adverse financial developments- Sound practices that the Bank is trying to ensure are - such as a credit crunch or even insolvency- arising from a • Establishing an appropriate credit risk environment; counterparty or client. While aggregating risks, it is important to take into account correlation effects which cause a Bank’s • Operating under a sound credit granting process; overall risk differing from the sum of the individual risks. This • Maintaining an appropriate credit administration applies to risks both within a risk category as well as across measurement and monitoring process; different risk categories. • Ensuring adequate controls over credit risk Planning & Controlling: PBL takes into consideration the business strategy while planning and setting control for The following sets of principles are used for the sustainable risk mitigating risk. As risk management is the trade-off between management culture: risk and return, PBL always tries to manage the risk without Balancing Risk and Return: Risk is taken considering the hampering the business growth and stakeholders return. interest of Bank’s stakeholders, in line with Bank’s strategy and Internal Capital Adequacy Assessment Process (ICAAP) is one within its risk appetite. of the largest part of planning and controlling of risk. Responsibility: All employees ensure that risk-taking is Monitoring: Risk monitoring is the most challenging task in the disciplined and focused. whole risk management cycle as monitoring helps the Bank to Accountability: Risk is taken only by delegated authorities and where identify earlier any probable risk that may take in place in many there is appropriate infrastructure and resources. PBL maintains a cases. Risk monitoring also helps to track whether the risks clear and transparent process for all risk-taking decisions. actually incurred lie within the prescribed limits, thus ensuring an institution’s capacity to bear those risks. Anticipation: PBL seeks to anticipate future risks and ensures awareness of all known risks.

PRIME BANK 131 ANNUAL REPORT 2018

Competitive advantage: The bank seeks to achieve the implementation of Internal Rating Based Approach (IRB), competitive advantage through efficient and effective risk Bank shall continue existing Credit Risk Grading (CRG) System management and control. The credit risk management policy which was circulated vides BRPD Circular No. 18 in 2005 for of PBL operates under the following broad principles: implementation.

A. Establishing an appropriate Credit Risk environment C. Operating under a sound credit granting process

The Board of Directors is responsible for approving PBL follows sound, well defined credit-granting criteria. These andreviewing the credit risk strategies and policies of the criteria include a thorough assessment of the borrower or the bank periodically. The strategy reflects Bank’s tolerance for risk counterparty, as well as the purpose and structure of the credit, and the level of profitability the bank expects to achieve for and its source of repayment. incurring various credit loss. • Credit facilities are allowed in a manner so that asset growth Senior management is responsible for implementing the can be maintained ensuring optimum asset quality and credit risk strategy approved by the Board and for developing without compromising the Bank’s standard of excellence; standard policies and procedures for identifying, measuring, • PBL carefully avoids name lending. Credit facility is being monitoring and controlling any type of risk associated with granted on business consideration with absolute due the strategy. Such policies and procedures address credit risk diligence; of the Bank’s activities and at both the individual credit and portfolio level. • Risks inherent in a credit proposal are being identified and appropriate mitigating steps are taken accordingly; PBL ensures that the risks inherent in products and activities which are apparently new to the bank are subject to adequate • Collateral offered against a credit facility is properly valued procedures and controls before being introduced or and verified by the concerned Relationship Officer or undertaken, and approved in advance by the Board of Directors Relationship Manager periodically. In addition, the same or its appropriate committee. In order to streamline risk control collateral is valued and verified by an enlisted surveyor features in a more effective manner, PBL has put in place of the bank which is now applicable for all customers Standard Operating Procedure (SOP) in line with internationally irrespective of any amount; accepted best practices. Moreover, the Bank has centralized • Risk grading of the accounts is being done as per the its corporate credit to ensure better management of corporate Bangladesh Bank’s guidelines. Any credit approval/ borrowers. Besides, Credit Risk Management Division also sanction aresubject to the banking regulations in force set different limits in regards to sector concentration, area or imposed by the regulatory body from time to time and concentration, Off-Balance Sheet Exposure etc. subject to changes of the Bank’s policy. Data collection check list and limit utilization format are prepared for B. Borrower evaluation regular assessment. Internal Audit & Inspection Division Borrower evaluation is at the core of the credit risk management. independently reviews the risk assessment at the time of Bangladesh Bank vides BRPD Circular No 16 dated 30.10.2018 conducting internal audit. has circulated “Guidelines on Internal Credit Rating System • PBL also performs borrower rating to assess its borrowers for Banks”. From November, 2018, new Guidelines on Internal for ensuring sound asset quality. Credit Risk Rating System (ICRRS) is simultaneously effective The bank has established overall credit limit at every level for besides existing CRG. From 01.07.2019, ICRRS willbe mandatory. groups of legally connected borrowers including individual ICRRS comprises with 20 (twenty) different rating templates for borrowers and counterparties that aggregate in comparable 20 industries/ sectors instead of just one template for all the and meaningful manner for different types of exposures, both sectors like previous CRG model. in the banking & trading book and on & off balance sheet. Internal Credit Risk Rating System will be an integral part of PBL always complies with the prevailing banking regulations credit risk management for the banks. The key uses of these regarding Single Borrower Exposure Limit set by the Bangladesh guidelines are as follows: Bank from time to time. Credit facilities to a single customer i. To provide a granular, objective, transparent, consistent (Individual, Enterprise, Company, Corporate, Organization, and framework for the measurement and assessment of Group) are being treated as Large Loan if total limit amount borrowers’ credit risk. exceeds 10 percent of the total capital of the Bank. As per BRPD ii. To facilitate the portfolio management activities. Master Circular no. 02 dated January16, 2014on Single Borrower Exposure Limit,PBL has always maintained thepercentage iii. To assess the quality of individual borrower to help the ceiling of Large Loan Portfolio exposure. banks to determine the quality of the credit portfolio, line of business, the branch or the Bank as a whole. The bank has a clearly-established process in place for approving new credits as well as the extension of existing iv. To be used for individual credit selection, credit pricing and credits. A thorough credit risk assessment is done before setting credit limit and terms and conditions. granting loans. The Credit Risk Assessment includes borrower PBL will start preparation (including capacity building) for risk analysis, industry risk analysis, historical financial analysis, “Internal Credit Risk Rating System (ICRRS)’ simultaneously. projected financial performance, conduct of account, and Before adoption of Internal credit risk rating system in line with security against the proposed loan.

132 PRIME BANK The assessment originates from relationship manager/ is completed by the Relationship Manager and sent to the account officer and is reviewed by Head Office Credit Review approving authority in Credit Risk Management Division for Committee. The Credit analyst or executive duly delegated any account that is showing signs of deterioration. The Risk by proper authority approves the credit proposals. Executive Grade is also changed and referred to Credit Risk Management Committee of the Board approves the proposals beyond the Division for assistance in recovery. delegated authority limit of the Management. The Board of The bank has also put a system in place for monitoring Directors also reviews the proposals approved by the Executive the condition of individual credits including determining Committee on post facto basis. the adequacy of provisions and reserves. The guidelines All credit extensions are made on an arm’s length basis. In established by the Bangladesh Bank for Credit Information particular, credits to related companies and individuals are Bureau (CIB) reporting, provisioning and write-off of bad monitored with particular care and other appropriate steps and doubtful debts and suspension of interest are followed are taken to control or mitigate the risks of connected lending. meticulously in all cases. Provision is maintained for any shortfall Credit granting process at PBL operates within the defined in the Forced Sale Value (FSV) to cover total loan outstanding risk limit so that the bank can achieve its growth target and once an account is classified. superior return on capital. PBL also has information systems and analytical techniques that enable the management to measure the credit risk inherent in Sales Risk Analysis Processing all on- and off-balance sheet activities. PBL has taken initiative to make management information system more robust and Aquisition of Approval sophisticated for monitoring the asset quality of the Bank. At credit Speciic Documentation Decline Customer present total limit loading and disbursement procedure of the Bank is fully centralized within Credit Administration Division (CAD) and various MIS reports for monitoring purpose e.g Collect & Rebiew Risk & Collteral Disbursement Documents Assessment overdue report, EOL report, disbursement report etc. can be generated from this end as well. All credit approvals are given complying with the requirements of Bank’s Memorandum and Send Documents to Central Credit Review Monitoring Articles of Association, the Bank Company Act-1991(amended Review Unit up to2013), as amended from time to time, the Bangladesh Bank’s circulars, guidelines and other applicable laws, rules D. Maintaining an appropriate credit administration, and regulations, Bank’s Credit Risk Management Policy, Credit measurement and monitoring process Operational Manual and all relevant circulars that are currently A system has been put in place by the bank for ongoing in force. Any deviations from the internal policy of the bank are administration of various credit risk-bearing portfolios. well documented and subject to approval from competent Dedicated independent risk management units are developed authority/Board of Directors. The portfolio is well diversified for these purposes. Dedicated committees at management with respect to sector and industry. Concentration of credit is level have been set up to monitor risk. PBL segregated the total carefully avoided to minimize risk. credit process into Relationship Management/Marketing, Credit PBL takes into consideration of potential future changes in Approval/Risk Management, Credit Administration to improve economic conditions while assessing individual credits and the knowledge levels and expertise in each department and credit portfolios. An important element of sound credit risk to impose controls over the disbursement of authorized loan management involves discussing what could potentially go facilities and obtain an objective and independent judgment wrong with individual credits and within the various credit of credit proposals. Credit Administration Division completes portfolios, and factoring this information into the analysis of the security documentation after getting approval from Credit adequacy of capital and provisions. Risk Management Division and ensures adherence to approved terms and other requirements before limit creation E. Ensuring adequate controls over credit risk and disbursement. To minimize credit losses, monitoring PBL has established a system of independent, ongoing credit procedures and systems are placedwhich provides an early review and the results of such reviews are communicated indication of the deteriorating financial health of a borrower. directly to the Board of Directors and senior management. Early Alert system is an example of such monitoring PBL ensures that the credit-granting function is being procedures. An Early Alert Account is one that has risks or properly managed and that credit exposures are within levels, potentialweaknesses of a material nature requiring monitoring, consistent with prudential standards and internal limits. The supervision, or close attention of the management. If bank has established and enforced internal controls and other such weaknesses are left uncorrected, they may result in practices to ensure that exceptions to policies, procedures and deterioration of the repayment prospects for the asset or in limits are reported in a timely manner to the appropriate level the Bank’s credit position at some future date with a likelihood of management. of being downgraded. Early identification, prompt reporting Prime Bank Limited has taken initiative to introduce Risk Based and proactive management of Early Alert Accounts are prime Pricing Model and the model has already been developed responsibilities of all Relationship Managers / Officers and which is currently under scrutiny of senior management. After the whole process is a continuous one. An Early Alert Report getting vetting by RMC and subsequently approved by the

PRIME BANK 133 ANNUAL REPORT 2018

Board of Directors, the Risk Based Pricing Model will be in place Wherever the ESRR is “High”, the credit risk management for pricing corporate loans. Benefits of Risk Based Pricing are: function is to ensure drafting an E&S Action Plan (ESAP) and include additional covenants/conditions to be used to mitigate • Enhance shareholders value by ensuring that credit risk the identified problems. associated with the transaction is appropriately measured and priced Liquidity Risk Management • Enable the Bank to know well ahead of time, what kind of Liquidity risk is the failure to meet obligations leading to an price will satisfy its risk/return preferences inability to support normal business activity and to meet • Enhance the achievement of credit portfolio goals and liquidity regulatory requirements. Liquidity risk can arise due to objectives. market liquidity or funding liquidity. Market liquidity risk is the PBL also has a system in place for managing problem credits risk of the inability to sell assets due to lack of liquidity in the and various other workout situations. All NPLs are assigned market. Funding liquidity risk is the risk of the inability to meet to Account Manager(s) within the Recovery Division, who is liabilities when they fall due or can only be met at abnormal responsible for coordinating and administering the action plan high price. / recovery of the account and serve as the primary customer To manage liquidity risk, PBL maintains diversified and contact after the account is downgraded to doubtful. stable funding base comprising of core retail, corporate and institutional deposits. The principle responsibility of the liquidity Environmental & Social Risk Management risk management of the bank rests with Treasury Division which Environmental & Social risk may be defined as an actual maintains liquidity based on historical requirements, current or potential threat of adverse effects on living organisms liquidity position, anticipated future funding requirement, and environment by effluents, emissions, wastes, resource sources of fund, options for reducing funding needs, present depletion, etc., arising out of an organization’s activities. These and anticipated asset quality, present and future earning effects increase risks as they bring an element of uncertainty capacity, present and planned capital position. ALCO manages or possibility of loss in the context of a financing transaction. the liquidity risk by:

Environmental & Social Risk Management is the process of • Setting tolerance limit for cumulative cash flow mismatches, identification, analysis, assessment, control, and avoidance, • Setting limit on loan to deposit ratio and minimization, or elimination of unacceptable environmental • Setting limits on dependence on institutional deposits & Socialrisks. An organization may use risk assumption, risk which are volatile in nature. avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) in proper management of future From the liquidity statement it can be seen that out of total events having impact on the environment. deposit liabilities of BDT 267,584 million, contractual maturity of liability within 1 year is BDT 160,134 million. In the liquidity Environmental & Socialrisk is one of the several risks that statement it is apparent that there is moderate negative gap in the Bank must take into account while assessing financing 3-12 months and 1-5 years’ bucket which reveals that pressure opportunities as it affects credit risk to a great extent. As on liquidity is nominal. In reality, approximately 85-90 percent environmental risk is a facilitating element of credit risk, the of fixed term deposits are renewed on maturity. As such, the Bank has integrated Environmental & SocialRisk Management negative gap actually converts into positive gap. with Credit Risk Management in all aspects.

As instructed by the Bangladesh Bank, PBL has Environmental & Cost of Deposit based on daily average Social Risk Management policy statement and Environmental & Social Risk Management Procedure Manual. The loan categories 4.75%4.74% for which PBL uses Environmental & Social Risk Management 4.74% 4.72% Manual (ESRM) are agriculture, retail, trade, microfinance, SME, 4.72% corporate finance and project finance and it is applicable forall 4.70% 4.68% loan proposals (New/Renewal/Enhancement/ Rescheduling/ 4.68% Restructuring). 4.66% • If the Environmental & Social Risk Rating (ESRR) is low, then 4.64% the transactions are approved as per the Delegation of Mar-18 Jun-18 Sep-18 Dec-18 Business Power (DBP) holder. Deposit Mix (BDT in Crore) • If the Environmental & Social Risk Rating (ESRR) is medium, Short Term then the transactions are escalated to one (1) level up Deposit, 1,293.76 Current Deposit, Savings Deposit, from the authority that approves low risk transactions 1,989.84 4,317.62

conforming to DBP but up to the Managing Director. Others, 1,589.44

• If the Environmental & Social Risk Rating (ESRR) is high, Scheme Deposit, 2018 3,165.00 then the transactions are escalated to the Board/Executive Committee (as applicable) after review by the MD, for approval. Fixed Deposit, 7,396.00

134 PRIME BANK Market Risk Management net worth arising out of all re-pricing mismatches and other interest rate sensitive position. Market risk is defined as the risk of losses in on and off-balance sheet positions arising from adverse movements in market 1.04 Duration Gap prices which may impact the Bank’s earnings and capital. The 1.02 purpose of market risk management framework is to minimize 1 the risk of loss and maximize profit in trading portfolio. The risk 0.98 0.96 may pertain to interest rate related instruments (interest rate 0.94 risk), equities (equity price risk) and foreign exchange rate risk 0.92 (currency risk). Besides, the Bank is also exposed to liquidity or 0.9 funding risk. 0.88 0.86 Market Risk management is guided by well laid policies, 0.84 guidelines, processes and systems for the identification, March-18 June-18 September-18 December-18 measurement, monitoring and reporting of exposures against Maturity grouping of rate sensitive assets and liabilities of the various risk limits. The Asset Liability Management Committee Bank (see table on Interest Rate Risk Analysis) shows positive (ALCO) meets periodically and reviews the positions of trading gap in first quarter and moderate negative gap in the second groups, interest rate sensitivity, sets deposit and benchmark to third quarters. If interest rate increases by 1 percent, the lending rates and determines the asset liability management Bank will enjoy positive earnings of BDT 23.52 million during strategy, as deemed fit, in light of the current and expected 1 year period and vice versa. The impact is very insignificant business environment. Treasury Front office has developed compared to total revenue of the Bank and also within the MAT policy to manage stressed liquidity. Treasury mid office acceptable limit as stipulated by the Bangladesh Bank. The has been formed which is responsible to monitor, measure and statement also shows that there will be 8.88% impact on analyze the risks inherent in treasury operations of the Bank. quarterly net profit which is also within the stipulated limit of Treasury back office before formation of Mid office used to 10 percent.” monitor risk limits including position limits and stop loss limits for the trading book and reviews periodically. For managing and Moreover interest rate risk is also monitored through DEAR monitoring foreign exchange risk PBL has started calculation of or Daily Earnings at Risk. DEAR is defined as the estimated Value at Risk (VaR). Interest rate risk is monitored through the potential loss of a portfolio’s value over a one-day period as use of re-pricing gap analysis and duration analysis. Interest a result of adverse movement in market conditions, such as rate risk is further monitored through the ALCO. changes in interest rates, foreign exchange rates or market volatility. PBL uses various tools like structural liquidity profile, stress testing etcfor measuring liquidity risk. PBL maintains diversified Foreign Exchange Risk Management sources to facilitate the bank to meet funding requirements. It is the risk that the bank may suffer losses as a result of adverse exchange rate movements during a period in which it has an open position in an individual foreign currency. In addition, the Market Risk bank is also exposed to interest rate risk and settlement risk on account of its foreign exchange business.

To evaluate the extent of foreign exchange risk, a Liquidity Gap Report is prepared for each currency. Gap or mismatch of maturities can arise due to a customer transaction resulting in a long or a short position for the bank. The Net Open position Limit (NOP) of the Bank is ± USD 75.23 million which is equivalent to ± BDT 6,311.79 million on overnight basis as fixed Interest Equity Foreign Rate Risk Risk Exchange by Bangladesh Bank. The actual Net Open Position (NOP) of the Risk Bank as on December 31, 2017 was Tk. 1,946.61 million which is equivalent to USD 23.20 million. The overall exposure did not exceed the stipulated limit at any point of time. Interest Rate Risk

Interest rate risk is the risk of losing revenueby an interest- alue at isk a (at 99% confidence level) bearing asset, such as a loan or a treasury bond etc due to mount in variability of interest rates. In general, as rates rise, the price of a fixed rate bond will fall, and vice versa. 122,140.56 99,388.16 PBL monitors interest rate risk through duration gap analysis, 48,290.82 45,704.89 sensitivity analysis, andDaily Earning At Risk (DEAR) analysis. The short term impact of changes in interest rates is on the bank’s Net Interest Income (NII). In a longer term, changes in 18 8 8 - -1 1 8 18 interest rates impact the cash flows on the assets, liabilities 8 -1 r- 18 18 8 ch-1 18 -1 and off-balance sheet items, which raise the risk of losing the y- gust vember cember- Mar April- Ma June- July Au SeptemberOctobe No De

PRIME BANK 135 ANNUAL REPORT 2018

Furthermore Foreign Exchange Risk is also measured and • Incident reporting and analysis of causes and actionstaken on monitored through Value at Risk (VaR) under variance – losses from both internal & external fraud and control lapses; covariance method. The Value-at-Risk is the maximum loss • Review of safety and control measures of premises. that the Bank is likely to face within a given time period with (usually) a 95% (high) & 99% (extremehigh) probability. Risk control and measurement in PBL are as under:

Equity Risk Management • Manuals and Standard Operating Procedures are in place and implementation of those are regularly monitored; Equity risk is defined as losses due to changes in market price of equity held by the bank. To measure and identify • Regular review of system and network by concerned the risk, mark to market valuations of the share investment Divisions and related committees. portfolios are done. Mark to market valuation is done against a • Internal Audit & Inspection Division of the Bank undertake predetermined limit. Risk Based Internal Audit, Comprehensive audit, special Equity Risk of the Bank is also monitored through analysis of audit and IT audit of branches and departments at own investment on shares by subsidiaries, margin loan against Head Office for review of the operation and compliance investment in share by subsidiaries and loan statement against of statutory requirement respectively and submit the shares. major audit findings to Audit Committee of the Board. Upon getting guidelines from the Committee Internal Furthermore, PBL measures equity risk through stress testing Control, Compliance & Government Relations Division by devaluing equity portfolio held by the bank 10%, 20% and communicate with related branches for immediate 40% under minor, moderate and major shock level respectively. compliance on mentioned issues and thereafter submit During 2018, Capital to Risk weighted Asset Ratio (CRAR) was the updated compliance status to the Audit Committee of greater than 10% under all equity shock levels. the Board.

Capital Market Exposure • Self-Assessment of Anti-Fraud Internal Control are being carried out with due diligence under the purview of best Bond/ practices in the banking industry. Debenture, 0 Loan to Stock Share, 8.23 Dealer, 1 • Risk Based Internal Audit (RBIA)is being carried out by Loan to other Brokerage, 60.72 Internal Audit & Inspection Division. • Independent Anti Money Laundering (AML) Inspection is being conducted at branch level byInternal Audit & 2018 Inspection Division. Loan to own Subsidiary Loan to other Brokerage • Segregation of duties and multi-tier approval procedure Loan to Stock Dealer Bond Debenture are in place. Share Loan to own • IT Audit is being carried out on regular basis Subsidiary, 390 • Establishing a Data Center for backup of data and Operational Risk Management, information

Operational risk is defined as the risk of loss resulting from • Regular testing of system’s back-up procedure and inadequate or failed internal processes, people and systems, contingency plan or from external events. Operational risks vary in their components. Some are very high occurrence with low impact Prevention of Money Laundering and some are low occurrence with high impact risks. Third Money Laundering means properties acquired or earned consultative paper of Basel-II recommended following event directly or indirectly through illegal means or illegal transfer or based classification of operational risks: use of legally earned money, conversion and concealment of • Internal fraud; ownership and source of fund. Bangladesh Bank through BRPD • External fraud; Circular No. 17 dated October 07, 2003 advised the scheduled • Employment practices and workplace safety; commercial banks operating in the country to put in place • Client, products and business practices; effective risk management system which includes Money • Damage to physical assets; Laundering Risk Management among others. • Business disruption and system failure; PBL has updated Anti Money Laundering Guidelines in 2016, • Execution, delivery and process management. which includes Senior Management commitment to the anti- money laundering program. The Management has developed In PBL, operational risks are identified and measured in the such a culture for the Bank so that all the employees strictly following manner: adhere to each and every provision of Money Laundering • Risks are identified with reference to the relevant policy Prevention Act 2012 which was letter amended on 2015 and manuals, processes, procedures and practices; Anti-Terrorism Act-2009 with amendment of 2012 and 2013. All employees of the Bank, irrespective of the position they • Controls are evaluated as per Departmental Control hold, are accountable to the Top Management and regulatory Function Check List (DCFCL);

136 PRIME BANK bodies for their activities which might directly or indirectly • Fiduciary risk is the risk that arises from Bank’s failure to relate to money laundering. Details of Anti Money Laundering perform in accordance with explicit and implicit standards activities are included in the ‘Corporate Governance’ chapter applicable to their fiduciary responsibilities. As a result of this Annual Report. of losses in investments, banks may become insolvent and therefore unable to (i) meet the demands of current For mitigating the risks, the management of the Bank has account holders for repayment of their funds and (ii) formed Anti Money Laundering Department. The Bank has also safeguard the interests of their PLS (Profit Loss Sharing) nominated CAMLCO, Deputy CAMLCO centrally and BAMLCO deposit holders. Banks may fail to act with due care when at branches for monitoring compliance issues related to Anti managing investments resulting in the risk of possible Money Laundering. The regulatory requirements are being forgone profits to PLS deposit holders. In order to reduce complied with the guidelines. Shari’ah non-compliance risk, the Muraqibs regularly The CAMLCO of the Bank has been participating in the conducted Shari’ah audit. Fiduciary risk is controlled CAMLCO Conference organized by Bangladesh Bank every through Bank’s risk management process. year. The Central Bank has been arranging district level AML related training for employees of all schedule Banks operating Information &Communication Technology Risk Management in the district(s). We are living in an era of information and communication technology and the banks have become more technology Internal Control and Compliance driven these days. Use of computer, internet has become a Internal Control and Compliance is a management process common practice in the banking industry. There are certain designed to achieve effectiveness and efficiency of operations, risks involved in the use of information and communication reliable financial reporting and compliance with laws and technology. This risk may arise from malfunction of system, regulations. failure of network, lack of knowledge about the use of Internal Audit & Inspection Division conducts internal audit in technology, virus attack, hacking etc. all the Branches of our Bank to identify lapses/irregularities PBL has a robust network infrastructure with scalable, secure, related to account opening, preparation and update of KYC redundant and load balanced architecture to support its and other related issues, preparation of accurate Transaction customers regarding the on-line transactions with highest Profile (TP) and to build up the knowledge about AML issues/ level of security. PBL uses world renowned Active Devices in its matters and forwards those to Internal Control, Compliance & network infrastructure. Government Relations Division for follow-up. PBL has adopted world class Core Banking Software “TEMENOS Pillar 1 and Pillar 2 of Basel Accord also focuses on operational T24” and also implemented Disaster Recovery (DR) site which risk and supervisory review respectively attaching considerable is located in Uttara to make sure that the bank operates importance to internal control & compliance and on supervision smoothly under unavoidable circumstances. The Bank has & monitoring. As prescribed in the Bangladesh Bank core risk relocated its Data center this year for better management guideline on Internal Control & Compliance, Management of IT infrastructure and equipment. PBL has performed DR Committee (MANCOM) of PBL reviews the overall effectiveness test during month of December2018, although the result of internal control system. of DR test was satisfactory but bank has to go a long way in The chapter on ‘Corporate Governance’ of this Annual Report Business Continuity &IT DisasterRisk Management. As the bank contains detail discussion on internal control & compliance is transforming to centralized operation,the BCP & DRP need measures of the Bank. to be equally supplemented by contingency planning with adequate system, logistical& structural set up.

Islamic Banking Risk Management PBL has an IT audit team also, formed as per the Central Bank’s Islamic banking is becoming a popular mode of banking guideline. The team conducts IT Audit in each branch on a because of its Shari’ah complied principles. In many countries, periodic basis and provides reports to higher management. there are separate Islamic banking banks and also banks which IT Division is also managing IT related training programs to are operating under both conventional and Islamic mode of make sure that employees are aware of IT risk related issues. banking. In addition to the investment risk, market risk, liquidity The chapter on ‘Corporate Governance’ in this Annual Report risk and operational risk there are other risks in Islamic banking contains details of IT audit. operation. Information Security Management • Shari’ah Non-Compliance Risk arises from the failure of the banks to comply with Shari’ah rules and regulations. Information security (InfoSec) is the practice of preventing As more and more banks are operating under both unauthorized access, use, disclosure, disruption, modification, conventional and Islamic banking, it is becoming inspection, recording or destruction of information. On the increasingly important to comply with Shari’ah rules and other hand, Information security management (ISM) describes regulations for the sustainability of Islamic banking. Based controls that an organization needs to implement to ensure on historical reviews, the potential areas of Shari’ah non- that it is sensibly protecting the confidentiality, availability, and compliance is assessing potential profits that cannot be integrity of assets from threats and vulnerabilities. Information recognized as eligible profits under Shari’ah Principle. Security Division (ISD) is dedicated to provide information security services & expert security guidance to all employees

PRIME BANK 137 ANNUAL REPORT 2018 of Prime Bank Limited (PBL) to ensure confidentiality, integrity, Risk Management Reports & availability of the information assets & resources according As per Bangladesh Bank (BB) requirement, Risk Management to PBL’s Information Security Policy & Bangladesh Bank’s Division (RMD) prepares Risk Management Report which is regulations & guidelines. Information Security Division directly presented in the meeting of Executive Risk Management reports to Chief Risk Officer. Committee (ERMC) on monthly basis. At the end of each Information Security Division conducting Information quarter, Risk Management Report along with the minutes is Security Risk Assessment of various Applications, Systems submitted to Bangladesh Bank by Risk Management Division. & Business Processes on regular basis with consideration Risk Management Report is a comprehensive document of latest vulnerabilities, threats and information security related to riskissues which is being placed in the ERMCs’ breaches. In consequence, Information Security Divisionhas monthly meeting.Italso allows identification and mitigation of conducted Risk Assessment on Swift System, DCRMS (Debit risk under necessary guidance of the Senior Management of Card Requisition Management System), Docudex System/ the Bank. Application, Altitude iOS Apps, and Risk Assessment Review on In addition to the prescribed format of Bangladesh Bank, PBL Network Devicesduring the year of 2018. has incorporated various analyses on Credit Risk, Market Risk, To fulfill the vision, Information Security Division (ISD) has Liquidity Risk, Operational Risk as well as Strategic Risk. been solely working for last three to four years to mitigate Risk Management Paper is also being submitted to the PBL’s information risks and ensure bare minimum information Risk Management Committee of the Board(BRMC) and the security breaches. ISD was able to successfully justify his role decisions are being communicated with relevant divisions of in the organization with some remarkable achievements in year the bank for necessary initiatives. 2018 and continues the succession by conducting Information Security Risk Assessment of various Applications, Systems Borrowers’ Rating & Business Processes on regular basis with consideration of latest vulnerabilities, threats and information security breaches. As prescribed by Bangladesh Bank (BB), all banks in Bangladesh Moreover, ISD is actively engaged in various transformational assessing credit risk under the Standardized Approach projects of Prime Bank, like; Data Center Migration (TIER-III) of the Risk Based Capital Adequacy framework (Basel III), project, Core Banking Up gradation project, EMV CO. and CMS where External Credit Assessment Institutions (ECAIs) duly up gradation project, Microsoft up gradation project as well as recognized by BB performs borrower rating against which PCI-DSS (Payment Card Industry Data Security Standard) project. risk weight mapped with the credit rating category and risk weighted assets (RWA) is determined for calculating the capital ISD analyze information security incidents and set priority requirement of banks against credit risk. items mainly to eliminate information leaks. ISD have identified problems systematically and making improvement plans Basel-III, in respect of capital measurement and capital based on assessment results. ISD have conducted periodic standards, aligns capital of a bank more closely with the vulnerability assessment and penetration testing internally to underlying risk. With a view to smooth implementation of Basel all critical systems or applications as well as externally through III Accord, The management of PBL decided to conduct Credit third party vendors to measures and find out the security Rating for Corporate Borrowers through External Credit Rating threats and vulnerabilities in Banking Infrastructure. Assessment Institutions (ECAIs).

Apart from this, ISD also conducting regular security awareness Capital Management is one of the key strategic issues these session/training to all end users of prime Limited through days in the banking business. Borrower rating not only plays classroom or through online platform. ISD Provides end users’ an important role in improving capital adequacy of the bank information security training, awareness and periodically through capital relief but also helps the bank to understand the monitors the users’ knowledge regarding information security risk associated with the borrowers. In this regard, RMD calculates through training evaluation and communications. capital relief on the basis of rated customers quarterly. As a result of vigorous effort and continuous persuasion, Internal Capital Adequacy Assessment Process (ICAAP) 570 (68.43%) borrowers out of total 833 eligible Corporate & The Bank conducts ICAAP process every year as stipulated Commercial borrowers of PBL was completed and for SME this by the Bangladesh Bank. ICAAP is aimed at ensuring that the number was 163. The rating distribution of the 733 Corporate & bank maintains an amount of capital commensurate to its risk SME borrowers of PBL as on 31 Dec 2018 was asfollows: profile and improves upon its risk management systems and framework. It involves realistic assessment of the level of risks Borrowers Rating Distribution inherent in the business operations of the bank and setting BB Grade-4, 8.87% aside adequate capital to cover all such risks like Residual Risk, BB Grade-1 , 14.87% Concentration Risk, Liquidity Risk, Reputation Risk, Strategic Risk, Settlement Risk etc. The assessment is done considering the operational presence, activities, and processes etc. BB Grade-2, 31.92% Monitoring all the material risks also forms part of ICAAP. In short, ICAAP is integrated into the management and decision BB Grade-3 making process and is reflected in the processes and business BB Grade-2 BB Grade-3, 44.07% BB Grade-1 operations of the Bank. BB Grade-4

138 PRIME BANK Stress Testing Performing loan directly downgraded to B/L-Sectoral Concentration (RMG, SME & Construction) A stress test, in financial terminology, is an analysis or simulation designed to test the ability of a given financial institution to deal It is a measure of the concentration risk where the bank has during forecasted economic crisis. Instead of doing financial the second highest investment. It assumes that 3 percent, 9 projection on a “best estimate” basis, a bank or its regulators percent and 15 percent of the performing loan will be directly do stress testing where it looks at how robust institutions is in downgraded to B/L category in minor, moderate and major certain crashes, a kind of “What-If” scenario analysis. levels of shock respectively. CRAR of PBL will be 16.94 percent, 16.52 percent and 16.11 percent in minor, moderate and major This type of analysis has become increasingly widespread, levels of shock respectively when considering individual shock. and has been taken up by various governmental bodies as a regulatory requirement on certain financial institutions to 18.00% 16.00% ensure adequate capital allocation to cover potential losses 14.00% incurred during extreme, but plausible, events. 12.00% 10.00% Stress testing framework as provided by Bangladesh Bank Minor 8.00% assesses the impact on Capital to Risk Weighted Asset Ratio Moderate 6.00% Major (CRAR) due to minor, moderate and major level of shock in 4.00% terms of credit risk, exchange rate risk, liquidity risk, equity 2.00% price risk and interest rate risk. Stress testing for credit risk 0.00%

-18 18 18 18 18 18 18 18 18 assesses the impact of increase in the level of Non-Performing r- y- 18 g- v- Mar Ap Ma Jun- Jul- Au Sep- Oct- No Dec- Loans (NPLs) of the banks. Increase in NPLs due to default of top large loan borrowers

Performing loan directly downgraded to B/L- Sectoral It represents the scenario of the bank when top large borrowers Concentration Industry 1(Other Manufacturing) default. It is assumed that top 3, 7 and 10 borrowers of the It is a measure of the concentration risk where the bank has the bank will default in minor, moderate and major levels of shock highest investment. It assumes that 3 percent, 9 percent and respectively. CRARof PBL will be 13.43 percent, 10.84 percent 15 percent of the performing loan will be directly downgraded and 8.63 percent in minor, moderate and major levels of shock to B/L category in minor, moderate and major levels of shock respectively when considering individual shock. PBL is trying to secure more collateral coverage to avert any negative impact Percentage of on capital due to default of top large loan borrowers. Moreover, Bangladesh No. of Rated Total Rated the bank is continuously monitoring the performance of large Bank Rating Borrowers of PBL Borrowers loan borrowers. Grade Corporate SME Total Percentage 16.00% BB Grade 1 109 0 109 14.87% 14.00% BB Grade 2 222 12 234 31.92% 12.00% 10.00% BB Grade 3 213 110 323 44.07% 8.00% Minor Moderate BB Grade 4 25 40 65 8.87% 6.00% Major BB Grade 5 1 1 2 0.27% 4.00% 2.00% Total 570 163 733 100.00% 0.00%

8 8 8 18 18 1 18 1 18 -1 18 18 ** Risk weight for unrated exposure is 125 percent. r- r- y- 18 g- v- Ma Ap Ma Jun- Jul- Au Sep- Oct No Dec-

respectively. CRAR of PBL will be 16.78 percent, 16.06 percent Negative shift in NPLs categories and 15.32 percent in minor, moderate and major levels of shock It represents the shift of a loan from one NPL category to the respectively when considering individual shock. next category. It is based on the assumption of 5 percent, 10 percent and 15 percent downward shift in the NPLs 18.00% 16.00% categories in minor, moderate and major levels of shock respectively. CRARof PBL will be 16.48 percent, 14.60 percent 14.00% 12.00% and 14.20percentin minor, moderate and major levels of shock 10.00% respectively when considering individual shock. Minor 8.00% Moderate 18.00% 6.00% Major 16.00% 14.00% 4.00% 12.00% 2.00% 10.00% Minor 0.00% 8.00% Moderate Major 8 8 8 6.00% 18 18 18 18 -1 18 18 r- -1 y- 18 g- v- ep-1 Ma Apr Ma Jun- Jul- Au S Oct No Dec- 4.00% 2.00% 0.00%

8 8 18 18 18 8 18 18 18 18 -1 r- y- -1 v- c- o e Mar Ap Ma Jun- Jul-1 Aug- Sep- Oct N D

PRIME BANK 139 ANNUAL REPORT 2018

Decrease in the Forced Sale Value (FSV) of the collateral 15 percent in minor, moderate and major levels of shock respectively. Capital Adequacy Ratio (CAR) of PBL will be 17.11 It represents the Bank’s condition when FSV of collateral percent, 17.07 percent and 17.03 percent in minor, moderate decreases sharply. It is based on the assumption that FSV of and major levels of shock respectively when considering collateral will fall by 10 percent, 20 percent and 40 percent in individual shock. minor, moderate and major levels of shock respectively. CRARof PBL will be 16.97 percent, 16.80 percent and 16.45 percent in 18.00% 16.00% minor, moderate and major levels of shock respectively when 14.00% considering individual shock. 12.00% 10.00% Minor 18.00% 8.00% Moderate 16.00% 6.00% Major 14.00% 4.00% 12.00% 2.00% 10.00% Minor 0.00% 8.00% Moderate 8 8 8 8 18 18 18 1 18 18 6.00% Major -1 -1 y- 18 -1 v- Mar Apr Ma Jun- Jul- Aug- Sep- Oct No Dec- 4.00% 2.00% Equity shock 0.00%

8 8 8 18 18 18 18 18 -1 18 1 It represents the Bank’s condition when market value of share - y- 18 -1 v- p o Mar- Apr Ma Jun- Jul- Aug- Se Oct N Dec- falls sharply. It is based on the assumption that share price will Increase in NPLs change by 10 percent, 20 percent and 40 percent in minor, moderate and major levels of shock respectively. Capital It represents the condition of the bank when Non-Performing Loans Adequacy Ratio (CAR) of PBL will be 17.06 percent, 16.98 increases significantly. It is based on the assumption that 3 percent, percent and 16.81 percent in minor, moderate and major levels 9 percent and 15 percent of performing loans will be downgraded of shock respectively when considering individual shock. to Bad & Loss category having 100% provisioning requirement in 18.00% minor, moderate and major levels of shock respectively. Capital 16.00% Adequacy Ratio (CAR) of PBL will be 15.52 percent, 12.00 percent 14.00% 12.00% and 7.75 percent in minor, moderate and major levels of shock 10.00% Minor respectively when considering individual shock. 8.00% Moderate 6.00% Major 18.00% 4.00% 16.00% 2.00% 0.00%

14.00% 8 8 18 18 18 18 18 18 18 -1 -1 y- 18 v- c- 12.00% Mar Apr Ma Jun- Jul- Aug- Sep- Oct- No De 10.00% Minor When all the shocks are considered together, Capital Adequacy 8.00% Moderate 6.00% Major Ratio (CAR) of PBL will be 14.31 percent, 8.36 percent and 4.00% 2.89 percent in minor, moderate and major levels of shock 2.00% respectively. So, the Bank can absorb minor level of shock 0.00% only when all the shocks are considered together. However, 8 -1 18 18 18 18 18 18 18 18 y- 18 g- v- o Mar Apr- Ma Jun- Jul- Au Sep- Oct- N Dec- for absorbing other levels of shock which is very unlikely in the Interest rate shock industry, the bank may require additional capital and reserve. 18.00% It represents the condition of the bank when interest rate 16.00% changes significantly. It is based on the assumption that 14.00% 12.00% interest rate will change by 1 percent, 2 percent and 3 percent 10.00% Minor in minor, moderate and major levels of shock respectively. 8.00% Moderate Major Capital Adequacy Ratio (CAR) of PBL will be 16.88 percent, 16.61 6.00% 4.00% percent and 16.35 percent in minor, moderate and major levels 2.00% of shock respectively when considering individual shock. 0.00% 8 8 8 -18 18 18 18 1 18 18 1 -1 y- 18 g- p- v- 18.00% pr a Mar A M Jun- Jul- Au Se Oct- No Dec- 16.00% 14.00% For absorbing different shocks under Stress Testing, PBL 12.00% took the following measures: 10.00% Minor 8.00% Moderate • Exposure on large loan customers are being monitored Major 6.00% closely 4.00% 2.00% • Emphasize on enhancing collateral coverage against large 0.00%

8 8 loan exposure; 18 8 18 18 18 18 18 -1 y- 18 -1 -1 ct ov Mar- Apr Ma Jun- Jul- Aug- Sep- O N Dec- • Encouraging focus on MSME & Consumer loanlending; Foreign exchange shock • Regular loans are being monitored closely in order to avoid It represents the condition of the bank when exchange rate classification; changes significantly. It is based on the assumption that exchange rate will change by 5 percent, 10 percent and • Persuading unrated Corporate and MSME customers to bring them under the umbrella of ECAI’s credit rating.

140 PRIME BANK MARKET DISCIPLINE DISCLOSURES ON RISK BASED CAPITAL (BASEL-III)

1. Scope of Application The name of the top corporate Prime Bank Limited a) entity in the group to which this guidelines applies. An outline of differences inPrime Bank Limited has 5 (Five) subsidiaries viz. (i) Prime Bank the basis of consolidation for Investment Limited, (ii) Prime Bank Securities Limited, (iii) Prime accounting and regulatory Exchange Co. (Pte.) Limited, Singapore, (iv) PBL Exchange (UK) purposes, with a brief description Limited and (v) PBL Finance (Hong Kong) Limited. of the entities within the group (a) that are fully consolidated; A brief description of the Bank and its subsidiaries is given below: (b) that are given a deduction Prime Bank Limited: treatment; and (c) that are neither consolidated nor deducted (e.g. The Prime Bank Limited (“the Bank”) was incorporated as a public where the investment is risk- limited company in Bangladesh under Companies Act, 1994 with weighted). the registered office of the company at 119-120 Motijheel C/A, Dhaka-1000. It commenced its banking business with one branch from April 17, 1995 under the license issued by Bangladesh Bank. Presently the Bank has 146 (One Hundred and Forty Six) Branches including 18 (Eighteen) SME Centers/ Branches all over Bangladesh and 2 (Two) booths located at Dhaka Club, Dhaka and at Chittagong Port, Chittagong. Out of the above 146 branches, 05 (five) branches are designated as Islamic Banking branch complying with the rules of Islamic Shariah. Also the Bank has 3 (Three) Off-shore Banking Units (OBU), 5 (Five) subsidiary Companies (3 Foreign subsidiaries & 2 Local subsidiaries). The Bank went for Initial Public Offering in 1999 and its shares were listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly traded company Qualitative for its general classes of share. disclosure The principal activities of the Bank are to provide all kinds of b) commercial banking services to its customers through different business divisions and branches.

Subsidiaries of PBL:

Prime Bank Investment Limited:

Prime Bank Investment Limited (PBIL) is a subsidiary company of Prime Bank Limited incorporated as a public limited company on April 27, 2010 with the registrar of Joint Stock Companies, vide certificate of incorporation no.C-84266/2 dated 28 April 2010 which has commenced its business on the same date.

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.

Prime Bank Securities Limited:

Prime Bank Securities Limited was incorporated on April 29, 2010 as a private Limited company under the Companies Act 1994. The main objectives of the company are to carry on business of stock brokers / dealers in relation to shares and securities dealings and other services as mentioned in the Memorandum and Articles of Association of the Company. The company commenced its operation from May 2011.

PRIME BANK 141 ANNUAL REPORT 2018

Prime Exchange Co. (Pte.) Limited, Singapore:

Prime Exchange Co. (Pte.) Ltd., Singapore a fully owned subsidiary company of Prime Bank Limited was incorporated in Singapore on January 06, 2006 and commenced its remittance business with one (1) Branch from July 08, 2006. In 2011 the Company has also opened another Branch located at Jurong East Branch, Block: 134 #01-305 Jurong Gateway Road, Singapore 600134 and in 2016 it has opened its 3rd branch located at Joo Koon Branch, 55 Benoi Road , #01-14, Joo Koon Bus Interchange (Opposite KFC), Singapore-629907. The principal activities of the company are to carry on the remittance business and to undertake and participate in transactions, activities and operations commonly carried on or undertaken by remittance and exchange house.

PBL Exchange (UK) Limited:

PBL Exchange (UK) Limited was incorporated as a private limited company with Companies House of England and Wales under registration no. 7081093 dated 19 November 2009. The company is a wholly owned subsidiary of Prime Bank Limited. The company commenced its operation on 02 August 2010 with three Branches located at Brick Lane of London, Coventry Road of Birmingham and North Oldham of Manchester. The registered office is located at 16 Brick Lane, London E1 6RF.

PBL Finance (Hong Kong) Limited:

PBL Finance (Hong Kong) Limited, a fully owned subsidiary of Prime Bank Limited, was incorporated with Companies Registries of Hong Kong (Certificate of incorporation no. 1584971 and Business Registration no. 58197431 both dated April 7, 2011). PBL Finance (Hong Kong) Limited obtained Money Lending Licenses # 307/2011 issued by Honorable Court of Hong Kong on 28th July 2011. It has commenced its operation from August 2011 with one branch located at Suite 1407, 14/F, Admiralty Centre, Tower-1, 18 Harcourt Road, Hong Kong. c) Any restrictions, or other major impediments, on transfer of Not applicable funds or regulatory capital within the group. Quantitative d) The aggregate amount of capital disclosure deficiencies in all subsidiaries not Not applicable included in the consolidation that are deducted and the name(s) of such subsidiaries.

2. Capital Structure Summary information on the As per Guidelines on Risk Based Capital Adequacy (Revised terms and conditions of the main Regulatory Capital Framework for Banks in line with Basel III) features of all capital instruments, introduced by Bangladesh Bank, ‘Common Equity Tier-1 (CET 1)’ especially in the case of capital Capital of PBL consists of (i) Paid-up Capital, (ii) Non-repayable Share instruments eligible for inclusion Premium Account, (iii) Statutory Reserve, (iv) Retained Earnings and in CET1, Additional Tier 1 or Tier 2. (v) Minority Interest in Subsidiaries.

Prime Bank does not have ‘Additional Tier 1 (AT 1)’ Capital since it Qualitative a) did not issue any instrument that meets the qualifying criteria for disclosure Additional Tier 1 Capital. Subsidiaries did not issue AT 1 capital to third parties as well.

Tier-2 Capital consists of (i) General Provision (ii) Subordinated Debt/ Instruments issued by the Banks that meet the qualifying criteria for Tier 2 Capital. (iii) Revaluation Reserves (50% of Fixed Assets & Govt. Securities and 10% of equity instruments) subject to regulatory adjustment/deduction i.e. 80% for 2018.

142 PRIME BANK Solo Consolidated The amount of Tier-1 capital with separate disclosure of: Taka in Crore Common Equity Tier 1 (CET 1) Capital: i. Fully Paid up capital 1,132.28 1,132.28 ii. Non repayable share premium account 121.19 121.19 iii. Statutory reserve 1,035.34 1,035.34 iv. General reserve - 2.80 b) v. Retained earnings 175.90 179.88 Quantitative vi. Minority interest in subsidiaries - - disclosure vii. Dividend equalization account - - Sub-Total 2,464.71 2,471.49 Additional Tier 1 Capital - - Total Tier 1 Capital 2,464.71 2,471.49 Tier 2 Capital 1,470.22 1,471.24 Total amount of Tier 1 and Tier 2 capital 3,934.93 3,942.73 c) Regulatory Adjustments/Deductions from capital (109.03) (112.53) d) Total eligible capital 3,825.90 3,830.20

3. Capital Adequacy: A summary discussion of the bank’s The Bank has adopted Standardized Approach (SA) for approach to assessing the adequacy computation of capital charge for credit risk and market of its capital to support current and risk, and Basic Indicator Approach (BIA) for operational risk. future activities. Assessment of capital adequacy is carried out in conjunction with the capital adequacy reporting to the Bangladesh Bank.

The Bank has maintained Capital to Risk Weighted Asset Ratio (CRAR) at 17.04% & 16.58% for stand-alone and for consolidated group respectively. As per guideline, Bank is required to maintain a Capital Conservation Buffer (CCB) of 2.50%, comprised of Common Equity Tier-1 (CET-1) Capital, above the regulatory Minimum Capital Requirement (MCR) of Qualitative 10%. The following table shows that Bank has adequate Tier-1 disclosure a) & Tier-2 Capital to maintain all the ratios at the required level. It has covered both MCR as well as CCB (required for 2018) with its eligible capital after considering all regulatory adjustments.

The Bank’s policy is to manage and maintain its capital with the objective of maintaining strong capital ratio and high rating. The Bank maintains capital levels that are sufficient to absorb all material risks. The Bank also ensures that the capital levels comply with regulatory requirements and satisfy the external rating agencies and other stakeholders including depositors. The main objective of the capital management process in the Bank is to ensure that Bank has adequate capital to meet up its all sorts of obligations any time.

Quantitative Solo Consolidated disclosure Particulars Taka in Crore b) Capital requirement for Credit Risk 19,726.55 20,128.42 c) Capital requirement for Market Risk 211.13 400.32 d) Capital requirement for Operational Risk 2,513.98 2,578.96 Total Risk Weighted Assets (RWA) 22,451.65 23,107.71 Total Regulatory Capital (Tier 1 & Tier 2) 3,825.90 3,830.20 e) Capital To Risk Weighted Asset Ratio (CRAR) 17.04% 16.58% Common Equity Tier 1 (CET 1) Capital to RWA Ratio 10.84% 10.55% Tier 1 Capital to RWA Ratio 10.84% 10.55% Tier 2 Capital to RWA Ratio 6.20% 6.03% Minimum Capital Requirement (MCR) 2,245.17 2,310.77 f) Capital Conservation Buffer (2.50% * RWA) 561.29 577.69

PRIME BANK 143 ANNUAL REPORT 2018

• Minimum Tier 1 Capital Ratio: 6.00%, • Minimum Total Capital Ratio: 10.00%, • Capital Conservation Buffer: 2.50% • Minimum Total Capital plus Capital Conservation Buffer: 12.50%

4. Credit Risk: Qualitative a) The general qualitative disclosure requirement with respect to credit risk, including: disclosure i) Definitions of With a view to strengthening credit discipline and bring classification and provisioning past due and regulation in line with international standard, a phase-wise program for classification impaired (for and provisioning was undertaken by the Bank as per Bangladesh Bank circulars issued accounting from time to time. In this regard, all the loans and advances/investments are grouped purposes); into four categories for the purpose of classification, namely (i) Continuous Loan, (ii) Demand Loan, (iii) Fixed Term Loan and (iv) Short-term Agricultural and Micro Credit. They are classified as follow:

Continuous & Demand Loan are classified as:

Sub-standard- if it is past due/overdue for 03(three) months or beyond but less than 06 (six) months;

Doubtful- if it is past due/overdue for 06 (six) months or beyond but less than 09 (nine) months;

Bad/Loss- if it is past due/overdue for 09 (nine) months or beyond.

In case of any installment(s) or part of installment(s) of a Fixed Term Loan amounting up to Taka 1 million is not repaid within the due date, the amount of unpaid installment(s) are treated as “past due or overdue installment”. Such types of Fixed Term Loans are classified as under:

Sub-standard- if the amount of past due installment is equal to or more than the amount of installment(s) due within 06 (six) months, the entire loans are classified as “Sub-standard”.

Doubtful- if the amount of past due installment is equal to or more than the amount of installment(s) due within 09 (nine) months, the entire loans are classified as “Doubtful.

Bad/Loss- if the amount of past due installment is equal to or more than the amount of installment(s) due within 12(twelve) months, the entire loans are classified as “Bad/Loss”.

In case of any installment(s) or part of installment(s) of a Fixed Term Loan amounting more than Taka 1 million is not repaid within the due date, the amount of unpaid installment(s) are treated as “past due or overdue installment”. Such types of Fixed Term Loans are classified as under:

Sub-standard- if the amount of past due installment is equal to or more than the amount of installment(s) due within 03 (three) months, the entire loans are classified as “Sub-standard”.

Doubtful- if the amount of past due installment is equal to or more than the amount of installment(s) due within 06 (six) months, the entire loans are classified as “Doubtful”.

Bad/Loss- if the amount of past due installment is equal to or more than the amount of installment(s) due within 09 (nine) months, the entire loans are classified as “Bad/Loss”.

Short-term Agricultural and Micro Credit will be considered irregular if it is not repaid within the due date as stipulated in the loans agreement and will be classified as under:

Sub-standard- if the irregular status continues after a period of 12 (twelve) months, the credits are classified as “Sub-standard”.

Doubtful- if the irregular status continue after a period of 36 (thirty six) months, the credits are classified as “Doubtful”.

Bad/Loss- if the irregular status continue after a period of 60 (sixty) months, the credits are classified as “Bad/Loss”.

A Continuous loan, Demand loan or a Term Loan which remained overdue for a period of 02 (two) months or more, is treated as “Special Mention Account (SMA)”.

144 PRIME BANK ii) Description The Bank is required to maintain the following general and specific provision in of approaches respect of classified and unclassified loans and advances / investments on the basis followed of Bangladesh Bank guidelines issued from time to time: for specific Particulars Rate and general General provision on unclassified Small and Medium 0.25% allowances Enterprise (SME) financing. and statistical General provision on unclassified loans and advances/ 1% methods; investments other than Consumer Financing, Loans to Brokerage House, Merchant Banks, Stock Dealers etc., SMA as well as SME Financing). General provision on Short-term Agricultural & Micro-credits. 1%

General provision on interest receivable on loans / 1% investments. General provision on off-balance sheet exposures (Provision 1% has been made on the total exposure and amount of cash margin & value of eligible collateral were not deducted while computing off-balance sheet exposure). General provision on unclassified loans and advances/ 2% investments for housing finance, loans for professionals to set-up business under consumer financing scheme. General provision on the unclassified loans to Brokerage 2% House, Merchant Banks, Stock Dealers, etc. General provision on unclassified amount for Consumer 5% Financing. General provision on outstanding amount of loans kept in Special Mention Account (SMA) will be at the same respective rate as stated above (0.25% to 5%) as per BRPD Circular No. 05 dated 29.05.2013. Specific provision on Sub-Standard loans & advances / 20% investments Specific provision on Doubtful loans & advances / investments 50%

Specific provision on bad / loss loans & advances / investments 100%

Quantitative b) Total gross Total gross credit risk exposures broken down by major types of credit exposure disclosure credit risk of the Bank: exposures Particulars Taka in Crore broken down by Secured Overdraft/Quard Against TDR 3,415.81 major types of Cash Credit/Mudaraba 2,539.88 credit exposure. Loan (General) 6,541.92 House Building Loan 213.59 Loan Against Trust Receipts (LTR) 989.81 Payment Against Documents (PAD) 1.06 Retail Loan 1,564.75 Lease Finance/Izara 421.62 Credit Card 88.92 Hire Purchase 1,162.54 Other Loans & Advances 2,705.74 Bill purchased/discounted-Inland 597.65 Bill purchased/discounted-Foreign 337.69 Total 20,580.95

PRIME BANK 145 ANNUAL REPORT 2018

c) Geographical Geographical distribution of exposures, broken down in significant areas by distribution major types of credit exposure of the Bank: of exposures, Particulars Taka in Crore broken down Urban: Dhaka Zone 16,499.00 in significant Chittagong Zone 2,424.01 areas by major Khulna Zone 365.13 types of credit exposure. Rajshahi Zone 458.64 Barishal Zone 10.46 Sylhet Zone 149.71 Rangpur Zone 192.99 Sub-Total: Urban 20,099.95 Rural: Dhaka Zone 196.77 Chittagong Zone 118.23 Khulna Zone 7.68 Rajshahi Zone 116.24 Rangpur Zone 16.11 Sylhet Zone 25.97 Sub-Total: Rural 481.01 Grand Total (Urban + Rural) 20,580.95 d) Industry or Industry or counterparty type distribution of exposures, broken down by major types counterparty of credit exposure of the Bank: type distribution Particulars Taka in Crore of exposures, Commercial Lending 2,140.28 broken down by Export Financing 1,264.63 major types of House Building Loan 213.59 credit exposure. Retail Loan 1,564.75 Small & Medium Enterprises (SME) 2,112.04 Special Program Loan - Staff Loan 0.51 Loans, Advances & Lease/Investments to Managing Director / 158.53 CEO and other senior executives Industrial Loans/Investments (Details are given below) 11,674.12 Other Loans & Advances 1,452.49 Total 20,580.95 Industrial Loans/Investments Particulars Taka in Crore Agriculture 356.05 Textile Industries 1,803.17 Food and allied industries 649.01 Pharmaceutical Industries 451.29 Leather , Chemical, Cosmetics, etc. 159.94 Tobacco Industries 70.43 Cement and Ceramic Industries 467.72 Service Industries 2,323.02 Transport & Communication Industries 533.42 Other Industries including bills purchased and discounted 4,860.06 Total 11,674.12

146 PRIME BANK e) Residual Residual contractual maturity break down of the whole portfolios, broken down by contractual major types of credit exposure of the Bank: maturity Particulars Taka in Crore breakdown Repayable on Demand - of the whole Up to 1 month 2,915.75 portfolio, broken Over 1 month but not more than 3 months 3,910.38 down by major types of credit Over 3 months but not more than 1 year 5,779.97 exposure. Over 1 year but not more than 5 years 5,266.67 Over 5 years 2,708.18 Total 20,580.95 f) By major industry or counterparty type: i) Amount of The amount of classified loans and advances/investments of the Bank are given below impaired loans as per Bangladesh Bank guidelines. and if available, Particulars Taka in Crore past due loans, Standard 18,459.89 provided Special Mention Account 852.48 separately; Sub-standard 137.28 Doubtful 260.33 Boss/Loss 870.97 Total 20,580.95 ii) Specific Specific and general provisions were made on the amount of classified and unclassified and general loans and advances/investments, off-balance sheet exposures and off-shore banking provisions; and units, interest on receivable, diminution in value of investment and other assets- suspense of the Bank according to the Bangladesh Bank guidelines. Particulars Taka in Crore Provision on classified loans/investments 406.04 Provision on unclassified loans/investments 348.00 Provision on Off-balance sheet exposures 151.31 Provision for Off-shore Banking Units 74.35 Provision for interest receivable on loans & advances/ 0.95 investments Provision for other assets 25.74 Provision for diminution in value of investments. 3.56 Total 1,009.95 iii) Charges During the year the specific and general provisions were made on the amount of for specific classified and unclassified loans and advances/investments, off-balance sheet allowances exposure, off-shore banking units, interest on receivable, diminution in value of and charge- investment and other assets-suspense of the Bank as per Bangladesh Bank guidelines. offs during the Particulars Taka in Crore period. Provision on classified loans/investments 269.03 Provision on unclassified loans/investments (93.60) Provision on Off-balance sheet exposures (16.50) Provision for Off-shore Banking Units 2.72 Provision for interest receivable on loans & advances/ - investments Provision for other assets 5.33 Provision for diminution in value of investments 1.87 Provision for impairment loss for investment in subsidiaries 8.61 Total 177.46

PRIME BANK 147 ANNUAL REPORT 2018

g) Gross Non Performing Assets (NPAs). Non Performing Assets (NPAs) to Outstanding loans and advances.

Movement of Non-Performing Particulars Taka in Crore Assets (NPAs). Opening balance 1,079.90 Addition/adjustment during the year 188.68 Closing balance 1,268.58

Particulars Taka in Crore Movement of specific Opening balance 377.37 provisions for NPAs. Provisions made during the period 269.03 Transferred from unclassified loan & advances - including OBU Write-off (260.74) Recoveries of amounts previously written off 20.38 Closing Balance 406.04

5. Equities: Disclosures for Banking Book Positions Qualitative a) The general qualitative disclosure requirement with respect to equity risk, including: disclosure Differentiation between holdings on which capital gains are Investment in equity securities are broadly expected and those taken under other objectives including categorized into two parts: for relationship and strategic reasons; and i) Quoted Securities (Common or Preference Shares & Mutual Fund) that are traded in the secondary market (Trading Book Assets).

ii) Unquoted securities include shares of Central Depository Bangladesh Limited (CDBL), investment in SWIFT, Star Ceramics Preference Share, Golden Harvest Ice Cream Ltd and Market Stabilization Fund (MSF). Discussion of important policies covering the valuation The primary aim is to invest in these equity and accounting of equity holdings in the banking book. securities for the purpose of capital gain by This includes the accounting techniques and valuation selling them in future or held for dividend methodologies used, including key assumptions and income. Dividends received from these practices affecting valuation as well as significant changes equity securities are accounted for as in these practices. and when received. Both Quoted and Un- Quoted equity securities are valued at cost and necessary provisions are maintained if the prices fall below the cost price.

148 PRIME BANK Quantitative Solo Consolidated disclosure Taka in Crore At market At market At cost At cost value value b) Value disclosed in the balance sheet of investments, as well as the fair value of those investments; for 11.25 8.23 151.72 102.83 quoted securities, a comparison to publicly quoted share values where the share price is materially different from fair value. The cumulative realized gains (losses) arising from c) sales and liquidations in the reporting period. - - • Total unrealized gains (losses) (3.02) (48.89) d) • Total latent revaluation gains (losses) - -

• Any amounts of the above included in Tier-2 capital. - - e) 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 (10% on market value). • Specific Market Risk 0.82 10.28 • General Market Risk 0.82 10.28

6. Interest Rate Risk in the Banking Book (IRRBB) Qualitative a) The general qualitative disclosure Interest rate risk is the risk where changes in market interest rates disclosure requirement including the nature might adversely affect a bank’s financial condition. Changes of IRRBB and key assumptions, in interest rates affect both the current earnings (earnings including assumptions regarding perspective) as well as the net worth of the bank (economic value loan prepayments and behavior perspective). To evaluate the impact of interest rate risk on the net of non-maturity deposits, and interest margin, Prime Bank monitors the size of the gap between frequency of IRRBB measurement. rate sensitive assets and rate sensitive liabilities in terms of the remaining period to repricing. Repricing refers to the point in time when adjustments of interest rates on assets and liabilities occur owing to new contracts, renewal of expiring contracts or that a contract specifies a floating rate that adjusts at fixed time intervals.

A maturity mismatch approach is used to measure Prime Bank’s exposure to interest rate risk. A positive mismatch means that more assets than liabilities are repriced in a given period. With a positive mismatch, a rise in market interest rates will have a positive effect on the bank’s earnings. On the other hand, a negative mismatch, where more liabilities are repriced than assets in a given period, means a drop in earnings if interest rates had increased.

The table presented below showing the Interest Rate Risk Analysis of Prime Bank Limited. The analysis shows that Bank may have a positive earnings impact of Taka 3.2454 crore in the first quarter which has also been positive in the second quarter. In the third quarter, the total year-to-date accumulated earnings impact has also been positive (Taka 4.6741 crore). Hence, accumulated earning for the year 2018 owing to a 1% increase in interest rate is a gain of Taka 2.3519 crore.

The rule of thumb suggests that quarterly gaps, causing an earnings impact of 10% of the Bank’s average quarterly net profit for each 1% change in interest rates, should be carefully handled by the Bank’s Management. The last row of the following table reveals that earnings impact on Prime Bank’s average quarterly net profit is not significant and remains within the acceptable limit as prescribed by Bangladesh Bank.

PRIME BANK 149 ANNUAL REPORT 2018

6. Interest Rate Risk Analysis (for 1% change in the market rate of interest)

Quantitative b) The increase Over 3 Over 6 Over 9 disclosure (decline) in earnings months months Particulars 1 to 90 days months to or economic to up to 6 to up to 9 up to 1 year value (or relevant months months measure used by Taka in Crore management) Rate Sensitive for upward and 8,660.00 3,385.97 850.96 725.25 Assets downward rate shocks according Rate Sensitive 7,343.80 4,059.93 1,556.02 1,604.22 to management’s Liabilities method for GAP 1,316.20 (673.96) (705.06) (878.97) measuring IRRBB, Cumulative GAP 1,316.20 642.24 (62.82) (941.79) broken down Adjusted Interest 1.00% 1.00% 1.00% 1.00% by currency (as Rate Changes (IRC) relevant). Quarterly earnings impact (Cum. GAP 3.2454 1.5836 (0.1549) (2.3222) * IRC) Accumulated earning impact to 3.2454 4.8290 4.6741 2.3519 date Earning impact/Avg. 12.26% 18.24% 17.66% 8.88% quarterly net profit

7. Market Risk: Qualitative a) i) Views of Board of Directors Market risk is the possibility of losses of assets in balance sheet and disclosure (BOD) on trading/ investment off-balance sheet positions arising out of volatility in market variables activities. i.e., interest rate, exchange rate and price. Allocation of capital is required in respect of the exposure to risks deriving from changes in interest rates and equity prices in the bank’s trading book, in respect of exposure to risks deriving from changes in foreign exchange rates and commodity price in the overall banking activity. The total capital requirement for banks against their market risk shall be the sum of capital charges against:

• Interest rate risk

• Equity position risk

• Foreign exchange (including gold) position risk throughout the bank’s balance sheet and

• Commodity risk. ii) Methods used to measure Measurement Methodology: Market risk. As banks in Bangladesh are now in a stage of developing risk management models, Bangladesh Bank has suggested the banks for using Standardized Approach for credit risk capital requirement for banking book and Standardized (rule based) Approach for market risk capital charge in their trading book.

Maturity Method has been prescribed by Bangladesh Bank in determining capital against market risk. In the maturity method, long or short positions in debt securities and other sources of interest rate exposures, including derivative instruments, are slotted into a maturity ladder comprising 13 time-bands (or 15 time-bands in case of low coupon instruments). Fixed-rate instruments are allocated according to the residual term to maturity and floating- rate instruments according to the residual term to the next re-pricing date.

150 PRIME BANK In Standardized (rule based) Approach the capital requirement for various market risks (interest rate risk, price and foreign exchange risk) are determined separately.

The total capital requirement in respect of market risk is the sum of capital requirement calculated for each of these market risk sub- categories. e.g.:

Capital Charge for Interest Rate Risk = Capital Charge for Specific Risk + Capital Charge for General Market Risk;

Capital Charge for Equity Position Risk = Capital Charge for Specific Risk + Capital Charge for General Market Risk;

Capital Charge for Foreign Exchange Risk = Capital Charge for General Market Risk;

Capital Charge for Commodity Position Risk = Capital charge for general market risk. iii) Market Risk Management Treasury Division manages the market risk and ALCO monitors the system. activities of treasury Division in managing such risk.

iv) Policies and processes for To mitigate the several market risks the bank formed Asset Liability mitigating market risk. Management Committee (ALCO) who monitors the Treasury Division’s activities to minimize the market risk. ALCO is primarily responsible for establishing the market risk management and asset liability management of the Bank, procedures thereof, implementing core risk management framework issued by the regulator, best risk management practices followed by globally and ensuring that internal parameters, procedures, practices/polices and risk management prudential limits have been set up and followed.

The Treasury Division are taking following measures to minimize the several market risks:

Foreign exchange risk management: it is the risk that the bank may suffer losses as a result of adverse exchange rate movement during a period in which it has an open position in an individual foreign currency. This risk is measured and monitored by the Treasury Division. To evaluate the extent of foreign exchange risk, a liquidity Gap report is prepared for each currency.

ii) Equity Risk: Equity risk is defined as losses due to changes in market price of the equity held. To measure and identify the risk, mark to market valuation of the investment portfolios of share is being done. Mark to market valuation is done against a predetermined limit. At the time of investment, following factors are taken into consideration:

• Security of Investment • Fundamentals of securities • Liquidity of securities • Reliability of securities • Capital appreciation • Risk factors and • Implication of taxes etc.

Quantitative b) The capital requirements for: Solo Consolidated disclosure Taka in Crore • Interest rate risk - - • Equity position risk 1.65 20.57 • Foreign exchange risk and 19.47 19.47 • Commodity risk - - Total Capital Requirement 21.11 40.03

PRIME BANK 151 ANNUAL REPORT 2018

8. Operational Risk: Qualitative a) i) Views of BOD on Operational risk is defined as the risk of loss resulting from inadequate or failed disclosure system to reduce internal processes, people and systems or from external events. This definition Operational Risk includes legal risk but excludes strategic and reputation risk. It is inherent in every business organization and covers a wide spectrum of issues. The Board of Directors (BOD) of the Bank and its Management firmly believe that an effective internal control systems has been established within the Bank to ensure adequacy of the risk

management framework and compliance with a documented set of internal policies concerning the risk management system which mainly include,

# Top-level reviews of the Bank’s progress towards the stated objectives;

# Checking for compliance with management controls;

# Policies, processes and procedures concerning the review, treatment and resolution of non-compliance issues; and

# A system of documented approvals and authorizations to ensure accountability to the appropriate level of management.

Bank has ensured some other internal practices to be in place as appropriate to control operational risk. Examples of these include:

# Close monitoring of adherence to assigned risk limits or thresholds;

# Maintaining safeguards for access to, and use of, bank’s assets and records;

# Ensuring that staffs have appropriate expertise and training;

# Regular verification and reconciliation of transactions and accounts.

The BOD has modified Bank’s operational risk management process by issuing a high level standard like SOP, supplemented by more detailed formal guidance. This explains how the bank manages operational risk by identifying, assessing, monitoring, controlling and mitigating the risk, rectifying operational risk events, and implementing any additional procedures required for compliance with local regulatory requirements.

The Bank maintains and tests contingency facilities to support operations in the event of disasters. Additional reviews and tests are conducted in the event that any branch of the bank is affected by a business disruption event, to incorporate lessons learned in the operational recovery from those circumstances. Plans have been prepared for the continued operation of the bank’s business, with reduced staffing levels. ii) Performance Motivated and Engaged Employees gap of executives Prime Bank has a diverse group of motivated and engaged employees. From and staffs. experience it knows that if employees are properly empowered, they become more engaged and go extra miles to fulfill organization’s ambition. Engaged employees are likely to take more responsibility and embrace accountability which helps to achieve the sustainability strategies. The Bank has positioned itself with a performance-driven rewarding work culture; where employees are treated with respect and receive plenty of development opportunities. Prime Bank has a special focus on:

• Ensuring a balanced diversity • Promoting human capital development • Providing competitive compensation and benefits • Promoting a performance centric culture • Protecting human rights • Ensuring workplace health and safety • Ensuring equal opportunity

All the people related issues in Prime Bank are governed by the well-defined policies and procedures which are duly reviewed by the Management time to time.

152 PRIME BANK Compensation & Benefits

To maintain the market competitiveness, the compensation and benefits of Prime Bank are regularly reviewed through market and peer group study. The well-crafted total rewards help the Bank to attract, motivate and retain talent.

In PBL, the Board of Directors is not eligible for any compensation. They are paid honorarium for attending meetings only. On the other hand, all employees are paid competitive remuneration package. The remuneration policy of the Bank does not allow any discrimination between male and female employees. In addition, employees are paid bonus based on yearly business performance.

In addition to monthly competitive base pay and a good number of allowances (e.g., House Rent allowance, Medical allowance, Conveyance allowance etc.), Prime Bank has variety of market-competitive Benefits schemes designed to motivate the employees. The various cash and non-cash benefits include:

• Company provided car for top level Executive employees • Car allowance for all Executive level employees • Leave fair assistance allowance • Medical treatment allowance • Maternity benefits • Car loan facility • House loan facility • Staff loan at reduced interest rate • House furnishing allowance • Mobile phone allowance • Travel allowance • Technical allowance • Festival bonus • Allowance for employees’ meritorious students • Annual leave • Maternity leave • Study leave etc.

The Bank also provides long-term as well as retirement benefits to employees:

• Leave encashment • Provident fund • Gratuity benefit • Retirement benefit • Partial and full disability benefit • Death benefit to family members etc.

Broadbanding Pay Structure:

The Management introduced Broadbanding Pay Structure which aims to ensure a performance driven work culture through a strategic compensation plan synced with the performance of individual employee. Since inception, Prime Bank has practiced a scale based pay structure for each grade, so to reward individual performance the new policy offers a flexible pay plan that will compensate the person, not the grade. It places an increased emphasis on encouraging employees to develop new skills and paying for the skills according to their contribution and equity. In a nutshell, broadbanding is a more flexible pay system for both the employees and for the employers where career progression takes a different route. Given that, the specific reasons behind introduction of this new pay structure is:

1. It facilitates/encourages internal /lateral movement (Through Job Rotation) 2. It rewards performers than the non-performers (Through Pay for Performance) 3. It puts added trust & greater autonomy in line management (Through Teamwork/ Relationship)

PRIME BANK 153 ANNUAL REPORT 2018

Moreover, the policy states that when one employee reaches the highest grade within a Band, the employee will grow further when he/she is ready to take or has taken higher responsibilities and match the criteria of the next Band.

The total compensation and benefits system of Prime Bank tracks costs and is linked with performance, while maintaining a balance with the business affordability.

Performance Management Program

Prime Bank has a comprehensive performance management program that evaluates employees’ yearly performance against business targets at the year-end. In addition, their functional and leadership competencies are also rated by the line management. This appraisal process also identifies the competency gap and training needs of employees. All employees (except employees under probation or training) of the Bank undergo annual performance appraisal process. The process ensures that clear feedback on improvement points (performance and professional capabilities) is provided to employees by their Managers to promote employees’ long-term career development and improved contribution to organizational performance. All regular employees undergo the annual performance and career development review.

Work-life Balance

Prime Bank wants its’ employees to balance the work and personal life and has organization-wide practices and policies that actively support employees to achieve success at both work and home. Management is also open and shows flexibility in regard to a balanced work-life.

In Prime Bank, employees are entitled to sufficient annual leave and sick leave with pay. To enjoy vacation with family, Bank provides Leave Fare Assistance Allowance to employees. All female employees are eligible for Maternity Leave (Parental Leave) with pay for a period of six months. In 2018, a total of 53 female employees availed Maternity leave. After completion of the leave, they returned to work and are still continuing with the organization.

Culture

Culture plays a vital role to create a high performance environment that supports sustainability strategy implementation. Prime Bank carefully develop, shape and impact organizational culture by: practicing values appropriate for the bank; defining working relationship and communication pattern between superior and subordinates; governing rules and regulations which control employees’ behaviour; promoting a strong employer brand through which employees identify with the organization; maintaining effective reward system that affects employees loyalty and empowering employees to demonstrate their innovativeness not only to be competitive in the market but also to achieve a sustainable growth.

Healthy and Safe Work Environment

In Prime Bank, the physical, mental and social well-being of the employees always gets priority. Healthy, productive and motivated employees are the foundation of a successful organization. Prime Bank helps employees to assume responsibility for their own personal behaviour in health-related matters, and support health- promoting general conditions within the Company. We continuously focus on improving health and safety of employees that includes proper work place design and decoration of head office and branches, maintaining the cleanliness at work space, holding awareness session related to physical and psychosocial well-being, email communication on various health and safety related topics, sending alerts to employees on emergency situations, arranging fire drill sessions, financial support for medical care etc. Because of the nature of operations, Bank employees are not usually exposed to work-related injury, occupational diseases or fatality. Yet, the Bank remains cautious so as not to create any hazardous work condition.

154 PRIME BANK Decent Workplace

Prime Bank has 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. The Bank is committed to ensure the best practices in compliance with the labour code of the country. Bank Management believes that the business can grow favorably if the organization enables employees through creating and maintaining a decent workplace.

In Prime Bank, employees have the right to exercise freedom of association or collective bargaining following the legal procedure of country laws. However, employees have never formed or wanted to form any collective bargaining agency. The Bank follows non-discriminatory approach in all HR policies and practices. The salary of an employee is determined based on his/her competency, experience and performance. The Bank neither employs child labour nor has any provision for forced labour. Employees have the right to resign from their employment serving proper notice period and following the internal procedures.

Ensuring a decent workplace also encompass Bank’s investment decisions as well as agreements with the suppliers and contractors. For instance, human right, as appropriate, is covered as an integral part of decision making for major financial investments. Among all the significant investments, garments and manufacturing industry contain major stakes where issues related to human rights are more relevant and critical. Hence, any such investment agreement is subject to screening of human right issues along with other criteria.

On the other hand, all the agreements of Prime Bank with suppliers or contractors undergo due assessment process which requires complying with Labour Code and other applicable laws of the country. Moreover, the procurement decisions are also subject to conformity with International Labour Conventions. The team involved in procurement visits suppliers and contractors’ premises on need basis to monitor working conditions and other relevant issues like labour practices, human right etc.

The security personnel employed by the Bank are formally trained and aware of policies and procedures regarding human right issues. The training requirement also applies to third party organizations that provide security personnel to the Bank.

The most recent addition to encourage female employees at the workplace is that they are now able to avail child day-care facility in Motijheel area. Female employees having offices in Motijheel and peripheral area now can avail child day-care facility where they can keep their children in a safe and secured environment. This will not only help to retain female employees but will relieve them of the dilemma of leaving their child/children at home.

Diversity in Workplace

Prime Bank believes that diverse, heterogeneous teams generate greater creativity, innovation and business development. An inclusive culture maintains and drives workforce diversity by fostering the exchange of ideas and collaboration among individuals and across groups. To speak simply, our constant success depends in part on maintaining a plurality of perspectives.

Employees by age group and gender: Age group No. of Emp. Percentage Less than 30 years 251 7.81% 30 to 50 years 2,809 87.45% Over 50 years 152 4.73% Grand Total 3,212 100.00%

We practice equal employment opportunity; for competent candidates regardless of their gender, age, locality or ethnicity. While recruiting fresh graduates, the Bank sources the pool from different recognized public and private universities; with a view to create a diverse work force.

PRIME BANK 155 ANNUAL REPORT 2018

Employees by religion: Religion No. of Emp. Percentage Islam 2,947 91.75% Hindu 251 7.81% Buddhist 12 0.37% Christian 2 0.06% Total 3,212 100.00%

Besides, our ration of male and female employees has been increasing over the time. Currently, approximately 21.17% of total employees are female. On the other hand, 16.67% of the Board of Directors represents females.

Gender diversity among employees: Gender No. of Employees Percentage Male 2,532 78.83% Female 680 21.17% Total 3,212 100.00%

Percentage of female employee over the years: Year % of Female Employees 2014 21.00% 2015 21.64% 2016 21.93% 2017 20.92% 2018 21.17%

Gender diversity among Board members: Gender No. of Members Percentage (%) Male 15 83.33% Female 03 16.67% Total 18 100%

New recruitment by gender and age: By Gender: Gender No. of Emp. % Male 62 84.93% Female 11 15.07% Total 73 100.00%

By Age: Age group No. of Emp. % Below 30 years 23 31.51% 30 to 50 years 49 67.12% Over 50 years 1 1.37% Grand Total 73 100.00%

Employee turnover by gender and age: By Gender: Gender No. of Emp. % Male 295 81.94% Female 65 18.06% Total 360 100.00%

156 PRIME BANK By Age: Age group No. of Emp. % Below 30 years 44 12.22% 30 to 50 years 308 85.56% Over 50 years 8 2.22% Grand Total 360 100.00%

For the year 2018, the turnover rate is 10.73%.

Learning & Development

In Prime Bank, Human Resources (HR) Division regularly undertakes effectively designed training programs targeting the right group of employees through proper training need assessment. Prime Bank believes that continuous efforts should be given so that employees acquire and develop the right set of skills required to face the challenge of ever changing market.

In Prime Bank, the employee development plan is based on proper training need assessment. In 2018, Bank’s internal HR Training and Development Centre arranged training on different topics for 3548 enthusiastic participants. Besides, a total of 311 employees were sent to participate in various training programs/conferences in home and abroad.

The banking sector is complex and diverse with evolving nature of threats and the risks. So, the training module is updated time to time for employees of the Bank in the changing context of financial market.

Openness in communication for a better employee-management relation

Employee communications and consultation are the lifeblood of any business. Proper exchange of information and instructions help the Bank to function more efficiently and provides the opportunity to build greater trust among employees and management in discussing issues of mutual interest. To ensure effective employee communications, management takes a positive lead.

The Management has introduced a Whistleblower Protection Policy which intendeds to encourage and enable employees and others to raise serious concerns internally so that the Management can address and correct inappropriate conduct and actions. Employees have an avenue to report concerns about violations of code of ethics or suspected violations of law or regulations. The policy covers the protection of a whistleblower in two important areas – confidentiality and against retaliation. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment.

Additionally, now there is an avenue to report sexual harassment in the workplace. The policy aims to ensure a working environment in line with our values, where all individuals are treated equally, fairly and with dignity and also foster compliance with governing laws pertaining to sexual harassment. Such policy creates awareness about the nature of offences and the consequences of an offender. This not only fosters a neutral environment but gives a feeling of assurance that any wrong doing will be strictly addressed by the Management.

Any operational changes are properly planned and managed. Management follows a participative approach during any major transformation followed by prior communication to the employees. Since there is no trade union or employee association, no notice period regarding operational change is stipulated by any collective agreement.

Ethical and Lawful Behavior in Prime Bank

Prime Bank is always committed to establish the highest level of ethical standard. Employees are properly oriented to comply with Code of Ethics & Business Conduct. All employees duly signed the ‘Code of Ethics & Business Conduct’ and the copy is preserved in respective Employee Records. During joining, HR Division makes sure that all the new employees read and accept this policy by signing.

PRIME BANK 157 ANNUAL REPORT 2018

Bank also has ‘Service Excellence Handbook’ & ‘General Code & Discipline’, which are read by each employee including new employees while joining in the Bank and record of these are preserved in personal file after signing by employees.

“The Prime Bank Employee Code of Ethics and Business Conduct” – is a framework of ethical behavior for all the employees of the organization that embodies all the factors mentioned above. It is a reflection of Prime Bank’s role as a socially responsible corporate citizen which believes in providing the most courteous and efficient service through innovative banking services and products. However, Prime Bank’s most farsighted objective is to uphold and build upon the honour of Bangladesh as a nation, through exhibiting its own competence as a local organization that can perform at least on par with a multinational one, if not better than one.

The employees of Prime Bank are trained to put their own duties and ethics before everything else. They treat their colleagues with reverence and honour, and their customers as esteemed guests. They also learn to abide by the laws that govern our business, and contribute to the strength and wellbeing of our community and shareholders. In addition to their regular responsibilities employees are also expected to demonstrate the below ethical behavior:

• Protect Privacy of Customers’ and Confidential Company Information;

• Prevent Money Laundering and/or Fraud;

• Demonstrate Workplace Respect;

• Avoid Offensive Behavior and Sexual Harassment;

• Avoid Drug/Substance/Alcohol Abuse in the Workplace;

• Protect the Bank’s Assets;

It is mandatory for every employee of Prime Bank Limited to abide by the ‘Employee Code of Ethics and Business Conduct’ and also comply with any other orders or directions provided by the Management or Board of Directors from time to time.

Human Resources Accounting in Prime Bank

To understand and draw an inference on how well the Human Resources are yielding on the investment made, Prime Bank tracks the profit and related HR costs. In this process, the costs of recruitment, training, compensation, other direct cost related to employees are measured to estimate the overall investment. The costs are then compared with several parameters. This analysis helps the Bank to have an outlook and make prudent decisions on future HR investment. Valuing the human resources and measuring the direct impact of the cost spent for employees is difficult as there is no specific or widely adopted method. Human Resources accounting is the process of valuing human resources as assets. Presently, this is not accounted in the conventional accounting practices. The period of existence of a set of human resources in an organization cannot be predicted; hence treating and valuing them as assets in strict sense is not plausible. However, followings are some of the parameters which are tracked year on year:

Amount in BDT Million Particulars 2018 2017 Salary cost per employee 1.29 1.10 Operating cost per employee 2.24 1.94 Operating income per employee 4.02 3.47 Profit before provision per employee 1.78 1.54 Profit before tax per employee 1.23 0.52 Salary cost as percentage of operating cost 58.06 56.61 Salary cost as percentage of operating income 32.32 31.57

158 PRIME BANK iii) Potential Risk factors/Potential external events: external events There are certain risk factors which are external in nature but can affect the business of the Bank. The factors discussed below can significantly affect the banking business:

• General business and political condition

Some major economic-financial indicators performed well below par in the outgoing calendar year i.e. 2018, casting their adverse impacts on Bangladesh’s economic health. The underperformances are: a negative overall balance of payments (BoP), net domestic asset with the central bank and inadequate broad-money growth as a result of poor demand deposits. The net sales of national savings certificates continued to rise over expectation, leading to low growth in the banking sector and leaving huge liabilities for the government. And imports expanded substantially, driven mainly by import of food and machinery mostly meant for Padma Bridge and capital machinery, affecting the balance of trade.

Performance of Prime Bank greatly depends on the general economic conditions of the country. For Bangladesh 2018 has been a mixed year of achievements and challenges. Though some macro indicators reflect the positive trends, the overall strength of the economy is weakening due to a number of developments toward the second half of the year. One of the major achievements of the economy has been a 7.86 percent economic growth in FY 2017-18 breaking the six percent cycle that continued for a decade or so. Like previous years, major boost of growth has come from the industrial sector followed by the services sector. Though average inflation has been around 5.54 percent, food inflation is showing a declining rate in recent months, mainly because of agricultural achievement in rice production result in decline of price. Investment is a major impetus to Bangladesh’s growth. Despite the relative calm in the political scenario, private investment has not picked up. Target was set to increase investment to 31.90 percent of GDP in FY 2017-18, keeping in mind the need for a growing economy.

The external sector has been a source of strength for the Bangladesh economy for several years. This has changed in recent periods. A glimmer of hope is in the horizon with both RMG and total exports picking up during July-December of FY 2018-19. Current account deficit of Bangladesh reached its historical highest at USD 9.8 bn in 2018. High import growth arising primarily from one–time surge in food grain import due to flood and sharp increase in petroleum products import exerted significant pressure on current account. Modest performance in export and remittance turned out to be insufficient to ameliorate it. As a result USD gets dearer. Central bank supported the currency throughout the year, soaking up further BDT liquidity from the market.

• Good Governance

Despite a bounce back in a sluggish growth and the rise in import volumes in recent months, the financial sector faced a number of serious challenges, which could threaten progress in the year 2019. A severe governance crisis caused the industry to face a record increase in non-performing loans (NPL), financial scams and liquidity shortages. Bad loans and recapitalization in the banking sector, have always been a cause for concern in Bangladesh.

The lack of good governance is another reason for the deterioration of the banking sector’s health. Government’s move to award licenses to new banks at a time when the sector is struggling may cause further imbalance in the economy. There was a saying that the existing 58 (2 newly opened in 2018) banks cannot cover all the people across the country; the new banks will bring all people under the banking umbrella. Economic experts opined that this is totally wrong because the new banks can never give service in the villages due to high costs, rather the existing banks could have extended their branch network to achieve the same goal.

PRIME BANK 159 ANNUAL REPORT 2018

The new law allowing more members of the same family to be directors of the privately owned banks and extension of their tenure are apprehended to further deteriorate the governance in private banks. Despite the central bank’s attempt to improve performance of the banking sector, improvements are not visible yet. The independence of the central has been gradually diminishing due to political influence. If reform measures are not taken, the crisis of the banking sector will have serious implications for the economy.

• Foreign remittance

In FY 2017-18 remittance earning growth experienced a growth of 14.86 percent with the increase of manpower export. The uptrend in fuel oil prices globally also contributed to raise the inflow of remittance, particularly from the Middle-Eastern countries. The Bangladesh Bank as well as the government is working continuously to expedite remittance inflows from different parts of the world through formal banking channel. The depreciating mode of Taka against the US Dollar also played a role for high export and remittances growth to some extent. The exchange rate of taka depreciated significantly against dollar last year mainly due to a higher demand for the greenback for settling import bills. The country’s stable outlook would continue with this upward trend in inward remittances in 2019.

• Inflation

Inflation came down to 5.35 percent in December 2018, from 5.37 percent a month ago, riding on a decline in food as well as non-food prices, according to Bangladesh Bureau of Statistics. In 2018, food inflation decreased and for the last two months, non-food inflation also decreased, the overall inflation fell. The lower price of rice mainly influencing the decline of food inflation. In addition oil price in the global market, stable exchange rate over the year result in lower inflation in December 2018. The government has set the inflation target at 5.6 percent for fiscal 2018-19.

• Changes in credit quality of borrowers

Nonperforming loans in the banking sector are on the rise this year on the back of increasing tendency of habitual defaulters to file writ petitions, which stall the loan recovery process. The share of NPLs in the total outstanding loans came down to 10.30 per cent as of December 31 in 2018 from 11.45 per cent three months back. It was 9.31 per cent on December 31, 2017. Some willful defaulters continue to file writ petitions with the High Court to show their loans as unclassified. The habitual defaulters take fresh loans from banks soon after filing the writs as these give them a clean slate. The Credit Information Bureau reports they present then are flawless. “But they do not pay back the loans”. Banks are yet to take the requisite tough administrative and legal actions against those habitual defaulters. Stronger recovery drives by the commercial banks and rescheduling of loans before the last parliament election pushed down the volume of default loans in the final quarter (Q4) of 2018. Credit flow to the private sector needs to be monitored properly to ensure that disbursed loans are being used properly and there is no fund diversion at the borrowers’ end.

• Implementation of Basel-III in Bangladesh

In 2018, the banking sector exposed further weaknesses through major indicators such as rise of nonperforming loans, lower capital adequacy and the overall lack of governance in the sector. Though the period of BASEL III implementation is approaching in 2019, most banks are not prepared. The government has been recapitalizing the state-owned banks for their loss every year without any fruition. This has been an unfortunate example of using public money towards compensating for the greed of bank defaulters.

• Volatility in equity market

Overall, 2018 was not good for the market. The market was depressed due to this year being election year and unrest in the banking sector. Investors went

160 PRIME BANK through a volatile financial sector amid financial scams, non-performing loans, and poor management that dampened investor moods. In 2018, financial sector was adversely affected by rising interest rate and growing NPL problems which dominated its stock market performance. Financial composite which includes Bank, NBFI, and Insurance declined by 18.60% against overall market decline of 13.80%. On the other hand, outperforming the market in 2018. However, 2018 witnessed a number of developments in the form of partnerships and regulations. The strategic partnership between DSE and a Chinese consortium of Shanghai and Shenzhen Stock exchanges is expected to contribute in capital market improvement. Provided that interest rates remain under control and liquidity conditions improve, the market is expected to perform better. Stable political environment will attract foreign investment and improvement of exports and remittance can help ease pressure on currency.

• Liquidity Crisis:

Senior bankers and experts suggest Bangladesh’s banks be cautious in liquidity management from the start of 2018 as well as 2019 as a majority of them have been facing a shortage of available liquid funds at the extreme end of this year. Over the year Bangladesh Bank has taken different initiatives such as to reduce the AD ratio, CRR and SLR requirement to cope up with the liquidity crisis. An increasing trend in private sector credit growth, large import payments and declining depositors’ confidence on the banking sector may erode banks’ liquidity base. The banks may also face a shortage of foreign currency funds because of the need to make a huge amount of import payments. The latest volatile situation in the banking sector might also put an adverse impact on depositors’ confidence which will add extra pressure on banks’ efforts to collect the fund from common people. The rate of interest on deposit has increased sharply which indicated that the banks are now facing a shortage of available funds. Higher interest rate on savings tools continues to encourage the common people to keep their money on the instruments avoiding the bank. Such phenomenon has emerged as a challenge for the banks.

• Digital security

Cyber heist in baking sector in different countries in recent time has jolted the board and bank management out of the stupor. SWIFT, the global messaging system used to move trillions of dollars each day, warned banks that the threat of digital heists is on the rise as hackers use increasingly sophisticated tools and techniques to launch new attacks. To prevent cyber heist Banks need to become very much alert and to make investments in strengthening their own IT infrastructure along with security measures.

• The risk of litigation

In the ordinary course of business, legal actions, claims by and against the bank may arise. The outcome of such litigation may affect the financial performance of the Bank.

• Success of strategies

PBL is proceeding with its strategic plan and its successful implementation is very important for its financial performance. Major deviation due to external and internal factors will affect the performance of the Bank. iv) Policies Operational risk can broadly be defined as the risk of direct or indirect losses and processes or damaged reputation due to failure attributable to technology, employees, for mitigating processes, procedures or physical arrangements, including external events and operational risk. legal risks. In other words, operational risk can be defined as any risk which is not credit risk, market risk, liquidity risk, strategic risk nor compliance risk. The Bank’s operational risk management focuses on proactive measures in order to ensure the accuracy of information used internally and reported externally, a competent and well-informed staff, and its adherence to established rules and procedures as well as on security arrangements to protect the physical and ICT infrastructure of the Bank.

PRIME BANK 161 ANNUAL REPORT 2018

The Operational Risk Management Function is responsible for monitoring, coordinating measures, reporting on operational risks and developing the framework models and methodologies as required.

The Bank identifies and assesses the operational risk inherent in all its material products, activities, processes and systems. Furthermore the Bank ensures that before new products, activities, processes and systems are introduced or undertaken, the operational risk inherent in them is subject to adequate assessment procedures. The Bank mitigates operational risks by defining, documenting and updating the relevant business processes. Furthermore, the Bank mitigates operational risk by following strict rules for the assignment of duties and responsibilities among and within the functions and a system of internal control and supervision. The main principle for organizing work flows is to segregate the business-generating functions from the recording and monitoring functions. An important factor in operational risk mitigation is also the continuous development and upgrading of strategic information and communication systems.

Risk Management Division (RMD) of the bank is primarily responsible to drive and look after the overall risk management function including operational risk management. RMD under the leadership of Chief Risk Officer (CRO) is entrusted to ensure:

• Drive and populate the culture of pro-active risk identification and mitigation; • Lead Bank wide integrated risk management approach; • Validate and improve the reliability and effectiveness of business operation and the operations of the risk management framework; • Identify the Bank’s operational deficiencies; • Increase accuracy and visibility of risk information; • Designing of organizational structure by clearly defining roles and responsibilities of individuals to support the identification, assessment, control and reporting of key risk indicators; • Ensure compliance with the core risks management guidelines at the department level, and at the desk level; • RMD will work under Bank’s organizational structure and suggest to the management to take appropriate measures to overcome any existing and potential financial crisis; • Initiation to measure different market conditions, vulnerability in investing in different sectors; • RMD will also work for substantiality of capital to absorb the associated risk in banking operation.

Activities undertaken by “Risk Management Division” since inception and recent approaches

• Risk Management Division (RMD) is the propagator of effective risk management across the bank; • Aligned the division’s structure and committees in line with the Central Bank directives/circulars; • Ensured all the regulatory reporting are prepared and submitted on time; • Reviewed Product Program Guidelines (PPG) and suggested a standard template to bring discipline and uniformity in managing asset and liability products. • Driving the initiatives of business continuity management across the Bank; • Ensured that development or review of internal processes/policies/guidelines/ Manuals are vetted by RMD; • RMD played a vital role in determining strategies in consistency with risk management policy, which can measure, monitor, and maintain acceptable risk level of the Bank; • Prudently oversaw Capital Management, Internal Capital Adequacy Assessment Process (ICAAP), Credit Risk, Market Risk (Foreign Exchange Risk, Interest Rate Risk, and Equity Risk), Liquidity Risk, Operational Risk (Internal Control & Compliance Risk, Reputation Risk, and Money Laundering Risk) as guided by the Central Bank;

162 PRIME BANK v) Approach • RMD analyzed the overall portfolio of the Bank through Risk Management Paper, for calculating Stress Testing and ICAAP, also effectively engaged in preparation of efficient capital charge for Management Information System (MIS) report for the higher management and operational risk. for the Risk Management Committee of the Board.

• Risk Management Division has recently formed a Risk Management Forum (RMF), a common platform among the all divisions for driving the culture of pro-active risk identification and escalation of risk across the bank. The member of Risk Management Forum meets regularly in monthly meeting to analyze identified/potential risks and suggest mitigation followed by monitoring.

Risk Management Division (RMD) has developed an online module named ‘Risk Platform’ for escalation and reporting of identified & anticipated risk events of the Bank proactively to the management as part of integrated risk management approach.

Stress Testing in PBL:

Stress testing framework as provided by Bangladesh Bank assesses the impact on CRAR (Capital to Risk Weighted Asset Ratio) due to minor, moderate and major level of shock in terms of credit risk, exchange rate risk, liquidity risk, equity price risk and interest rate risk. Stress testing for credit risk assesses the impact of increase in the level of Non-Performing Loans (NPLs) of the banks for the following scenario -

• Performing loan directly downgraded to B/L- Sector wise Concentration 1

• Performing loan directly downgraded to B/L- Sector wise Concentration 2

• Increase in NPLs due to default of top large loan borrowers

• Negative shift in NPLs categories

• Decrease in the Forced Sale Value (FSV) of the collateral

The stress testing based on the financial performance of the Bank as on December 31, 2018 has also been completed which shows that the Bank has adequate capital to absorb minor level of shocks for combined shock. However, for absorbing moderate and major levels of shock which is very unlikely in the industry, the Bank may require additional capital.

Quantitative Solo Basis Consolidated Particulars disclosure Taka in Crore b) The capital requirement for operational risk 251.40 257.90

9. Liquidity Ratio: Qualitative (a) - Views of BOD on system to reduce Liquidity Risk Disclosure - Methods used to measure Liquidity Risk - Liquidity risk management system - Policies and processes for mitigating Liquidity Risk. Bank is maintaining the ratios mentioned in the Bangladesh Bank guideline considering all the relevant factors, policies and procedures to mitigate Liquidity Risk. A brief discussion on the emergence of those ratios and their interpretation is stated in the following part: In the aftermath of the financial crisis of 2008-09, the Basel Committee of Banking Supervision (BCBS) emphasized on a program of sustainability revising its existing guidelines with a goal to promote a more resilient banking sector through further restructuring of the existing approach by strengthening global capital and liquidity rules within the global regulatory framework.

BCBS proposed two liquidity ratios in December 2009 i.e. 1. Liquidity Coverage Ratio (LCR) and 2. Net Stable Funding Ratio (NSFR). Following that Bangladesh Bank vide its BRPD Circular No-07 dated March 31, 2014, declared the road map for implementing the Revised Regulatory Capital Framework for banks in line with Basel III in Bangladesh starting from the year 2015. According to the revised road map issued vide BRPD Circular No. 18/2014, from January 2015 and onwards Banks have to maintain a standard LCR and NSFR, the minimum standard of which is defined by Bangladesh Bank.

PRIME BANK 163 ANNUAL REPORT 2018

Prior to LCR and NSFR, Cash Reserve Ratio (CRR), Statutory Liquidity Reserve (SLR), and Advance Deposit Ratio (ADR) were grossly used as benchmark parameter of measuring a bank’s liquidity in most of the countries. But in the wake of financial crisis due to the limitations, as well as ineffectiveness of those ratios, the BCBS suggested more reforms in the liquidity measures like LCR and NSFR which are more relevant with the structure and mix of Bank’s balance sheet as well as funding.

For the LCR, the stock of high quality liquid assets is compared with expected cash flows over a 30 day stress scenario. The expected cash outflows are to be covered by sufficient liquid, high quality assets. It aims to ensure that a bank maintains an adequate level of unencumbered, high-quality liquid assets that can be converted into cash to meet its liquidity needs for 30 calendar days. The minimum standard set by BB is that LCR shall be greater than or equal to 100.

On the other hand, the NSFR compares available funding sources with funding needs resulting from the assets on the Balance Sheet. Like the LCR, the NSFR calculations assume a stressed environment. It aims to limit over-reliance on short-term wholesale funding (mostly interbank) during times of abundant market liquidity, increase stability of the funding mix, encourage better assessment of liquidity risk across all on- and off-balance sheet items, and promotes funding stability. The minimum standard set by BB is that NSFR shall be greater than 100. Quantitative (b) - Liquidity Coverage Ratio : 101.41%% Disclosures - Net Stable Funding Ratio (NSFR): 127.94% - Stock of High quality liquid assets: BDT 4,236.46 crore - Total net cash outflows over the next 30 calendar days: BDT 4,177.42 crore - Available amount of stable funding: BDT 23,377.54 crore - Required amount of stable funding: BDT 18,272.51 crore (The above ratios and balance are stated as per position of December 31, 2018)

10. Leverage Ratio Qualitative (a) Views of BOD on system to reduce excessive leverage policies and processes for managing Disclosures excessive on and off-balance sheet leverage:

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

b. reinforce the risk based requirements with an easy to understand and a non-risk based measure

Prime Bank calculates leverage ratio on quarterly basis and submits it to the Department of Off-site Supervision (DOS), Bangladesh Bank along with CRAR report.

Approach for calculating exposure:

A minimum Tier-1 leverage ratio of 3% has been prescribed by Bangladesh Bank to maintain by the Banks both at solo and consolidated level. Accordingly, Prime Bank maintains leverage ratio on quarterly basis. The formula for calculating leverage ratio is as under:

Leverage Ratio = Tier-1 Capital (after related deductions)/ Total Exposure (after related deductions) Quantitative (b) Solo Consolidated Disclosures Sl. Particulars In crore Taka A. Tier-1 Capital 2,433.48 2,437.57 B. On balance sheet exposure 28,933.34 29,044.40 C. Off-balance sheet exposure 8,449.07 8,449.07 D. Total deduction from on and off-balance sheet exposure 31.23 33.92 E. Total exposure (B+C-D) 37,351.18 37,459.55 F. Leverage Ratio (A/E)*100 6.52% 6.51%

164 PRIME BANK 11. REMUNERATION:

11.1 Qualitative Disclosure: Qualitative (a) Information relating to the bodies that Prime Bank has a flexible compensation and benefits Disclosure oversee remuneration. Disclosures should system that helps to ensure pay equity, is linked with include: performance that is understood by employees, and keeps in touch with employee desires and what’s coveted in the Name, composition and mandate of the market, while maintaining a balance with the business main body overseeing remuneration. affordability. The compensation and benefits are reviewed External consultants whose advice has through market and peer group comparison. The been sought, the body by which they were balanced total rewards help the Bank to attract, motivate commissioned, and in what areas of the and retain talent that produces desired business results. remuneration process. Remuneration Committee is generally understood to be A description of the scope of the bank’s derived from among the Board. The Board of Directors of remuneration policy (e.g. by regions, the Bank approves the remuneration policy in accordance business lines), including the extent to which with the Remuneration and Increment & Promotion Policy it is applicable to foreign subsidiaries and recommended by the Senior Management. The policy branches. approved by the Board of Directors is implemented by the A description of the types of employees Management with the support and/or under the supervision considered as material risk takers and as of Human Resources Division. The officials are evaluated by senior managers, including the number of a Committee which is formed comprising of all DMDs and employees in each group. Head of HR. The Committee is responsible for Performance Appraisal Rating, Promotion and implementation of the Pay Progression Strategy of the Bank.

Though the Bank has no permanent external consultant for managing remuneration, but expert opinion may have been sought by the Management, in case to case basis, regarding Gratuity related provisioning accounting and settlement of end service benefits of the separated employees. (b) Information relating to the design and Policy Objective: structure of remuneration processes. Prime Bank Limited aims to create a future-oriented, strategic Disclosures should include: compensation plan in order to attract and retain its talent An overview of the key features and through using a modern compensation strategy called objectives of remuneration policy. “Broadbanding Pay Structure”. This policy applies to all the Full Time and Permanent Employees of Prime Bank Limited. The Whether the remuneration committee Remuneration Policy is designed to establish broad pay-ranges reviewed the firm’s remuneration policy based on performance, skills or competencies and avoid during the past year, and if so, an overview of multiple pay structures. The policy is also empowering managers any changes that was made. & encourage the professionals for career development A discussion of how the bank ensures that risk and compliance employees are remunerated Broadbanding Pay Structure: independently of the businesses they The Management introduced Broadbanding Pay Structure oversee. which aims to ensure a performance driven work culture through a strategic compensation plan synced with the performance of individual employee. It places an increased emphasis on encouraging employees to develop new skills and paying for the skills according to their contribution and equity. In a nutshell, broadbanding is a more flexible pay system for both the employees and for the employers where career progression takes a different route.

Salary Structure:

Salary component is as under:

Part–I: (i) Basic; (ii) House Rent; (iii) Medical Allowance; Part–II: (i) Conveyance; (ii) Leave Fare Assistance

PRIME BANK 165 ANNUAL REPORT 2018

Annual Performance Bonus:

As a part of employee motivation through monetary incentive, a bonus policy formulated. The Bank has been paying the bonus to the employees every year on the basis of their performance. The objective of bonus policy is to promote the performance of individual employee as well as team. (c) Description of the ways in which current Bank takes into account the following key risks when and future risks are taken into account in the managing and determining remuneration arrangements: remuneration processes. Disclosures should (a) Financial Risks; include: (b) Operational Risks; and An overview of the key risks that the bank takes into account when implementing (c) Compliance Risks. remuneration measures. While evaluating the performance of each employee An overview of the nature and type of the annually, all the financial and non-financial indicators key measures used to take account of these as per pre-determined set criteria are considered and risks, including risks difficult to measure accordingly the result of the performance varies from one (values need not be disclosed). to another and thus affects the remuneration as well.

A discussion of the ways in which these measures affect remuneration.

A discussion of how the nature and type of these measures has changed over the past year and reasons for the change, as well as the impact of changes on remuneration. (d) Description of the ways in which the Prime Bank Ltd. uses modern standardized strategies for bank seeks to link performance during a determining pay progression within the newly proposed performance measurement period with Bands to adjust pay rates of individual employees over levels of remuneration. Disclosures should time. It is determined on the following basis: include: Inflation Support based: It includes process for An overview of main performance metrics for adjusting basic pay increase across the Organization & bank, top-level business lines and individuals. all employees receive the same amount of percentage increase to maintain & balance lifestyle expenditures; A discussion of how amounts of individual what is commonly referred to as inflation support. remuneration are linked to bank-wide and individual performance. Performance based: It includes process for Performance Planning & Management, Performance Assessment, A discussion of the measures the bank will Incentives and Recognition to determine the amount in general implement to adjust remuneration of pay increases. It differentiates performers from non- in the event that performance metrics are performers and also creates positive effects on employee weak. motivation. (e) Description of the ways in which the bank To maintain the market competitiveness, the seek to adjust remuneration to take account compensation and benefits of Prime Bank are regularly of longer-term performance. Disclosures reviewed through market and peer group study. The well- should include: crafted total rewards help the Bank to attract, motivate and retain talent. All employees are paid competitive A discussion of the bank’s policy on deferral remuneration package. The remuneration policy of the and vesting of variable remuneration and, if Bank does not allow any discrimination between male the fraction of variable remuneration that is and female employees. Prime Bank has variety of market- deferred differs across employees or groups competitive Benefits schemes designed to motivate of employees, a description of the factors the employees. The various cash and non-cash benefits that determine the fraction and their relative include: importance. • Company provided car for top level Executive A discussion of the bank’s policy and criteria employees for adjusting deferred remuneration before vesting and (if permitted by national law) after • Car allowance for all Executive level employees vesting through clawback arrangements. • Leave fair assistance allowance

• Medical treatment allowance

166 PRIME BANK • Maternity benefits

• Car loan facility

• House loan facility

• Staff loan at reduced interest rate

• House furnishing allowance

• Mobile phone allowance

• Travel allowance

• Technical allowance

• Festival bonus

• Allowance for employees’ meritorious students

• Annual leave

• Maternity leave

• Study leave etc.

• The Bank also provides long-term as well as retirement benefits to employees:

• Leave encashment

• Provident fund

• Gratuity benefit

• Retirement benefit

• Partial and full disability benefit

• Death benefit to family members etc. (f) Description of the different forms of variable The Bank pays variable remuneration on cash basis (i.e. remuneration that the bank utilizes and the direct credit to the employee Bank account and/or Pay rationale for using these different forms. Order/ Cheque), as the case may be, as per Employees’ Disclosures should include: Service Rule/ practice.

An overview of the forms of variable Bank provides annual increments based on performance remuneration offered (i.e. cash, shares and to the employees with the view of medium to long term share-linked instruments and other forms. strategy and adherence to Prime Bank’s values.

A discussion of the use of the different forms of variable remuneration and, if the mix of different forms of variable remuneration differs across employees or groups of employees), a description of the factors that determine the mix and their relative importance.

11.2 Quantitative Disclosure: Quantitative (g) Number of meetings held by the main There were 06 (six) meetings of the Committee, which is Disclosure body overseeing remuneration during the responsible for Performance Appraisal Rating, Promotion finanhm.marufcial year and remuneration and implementation of the Pay Progression Strategy of paid to its member. the Bank, held during the year 2018. All the members of the Committee are from the core banking area/operation of the Bank. No additional remuneration was paid to the members of the Committee for attending the meeting except their regular remuneration. (h) Number of employees having received a • Performance Bonus/incentives: BDT 98.39 Million variable remuneration award during the • Number of total festival bonus: 03 financial year. • Total amount of festival bonus: BDT 575.96 Million Number and total amount of guaranteed bonuses awarded during the financial year. • Number of severance payments: 298

PRIME BANK 167 ANNUAL REPORT 2018

Number and total amount of sign-on awards • Total amount of severance payments: BDT 805.06 made during the financial year. Million

Number and total amount of severance • (including provident fund, gratuity fund, retirement payments made during the financial year. benefit and leave encashment) (i) Total amount of outstanding deferred No deferred remuneration was paid out in the financial remuneration, split into cash, shares and year 2018. share-linked instruments and other forms.

Total amount of deferred remuneration paid out in the financial year. (j) Breakdown of amount of remuneration Part–I: BDT 2,824.62 & Million awards for the financial year to show: Part–II: BDT 445.48 Million - fixed and variable.

- deferred and non-deferred.

- different forms used (cash, shares and share linked instruments, other forms). (k) Quantitative information about employees’ No amount is outstanding of deferred remuneration and exposure to implicit (e.g. fluctuations in retained remuneration exposed to ex post explicit and/or the value of shares or performance units) implicit adjustments. and explicit adjustments (e.g. clawbacks or There were no reductions during the financial year 2018 similar reversals or downward revaluations due to ex post explicit adjustments. of awards) of deferred remuneration and retained remuneration: There were no reductions during the financial year 2018 due to ex post implicit adjustments. Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and/or implicit adjustments.

Total amount of reductions during the financial year due to ex post explicit adjustments.

Total amount of reductions during the financial year due to ex post implicit adjustments.

168 PRIME BANK SUSTAINABILITY ANALYSIS

Sustainability Report

Social Responsibility Initiatives

Report on Prime Bank Foundation

Green Banking Report

Corporate Culture

Capital Plan

Environmental & Social Initiatives ANNUAL REPORT 2018

SUSTAINABILITY REPORT

“Act Responsible, Think Sustainable” GRI 102 - General Disclosures: The report contextual information about an origination. Sustainability report conveys disclosures of an organization’s most critical impacts – be they positive or negative – on the GRI 103 - Management Approach: To report the management environment, society and the economy. As part of our constant approach for each material topic. commitment to disclose the impacts on the economy, the (B) Topic-specific Standards: There are various topic-specific environment, and /or society to stakeholders against the Standards, organized in three series: activities of Prime Bank Limited, the bank has been publishing • Economic topics (200 Series) Sustainability Report since 2013. • Environmental topics (300 series) Prime Bank successfully completed the GRI Materiality Disclosures Service for the earlier Sustainability Reports • Social topics (400 series) and those Report had already been achieved “materiality Prime Bank is strategically moving towards a sustainable future disclosure” icon from GRI, the Netherlands for quality report & and playing a role of private sector partner of the Bangladesh for maintaining the all guidelines as well under GRI G4. The ‘GRI Government who has already adopted ‘whole of society’ Materiality Disclosures Service’ organizational mark is the formal approach to ensure attainment of ‘Sustainable Development confirmation that the report has undergone and successfully Goals (SDGs)’. Innovation and Sustainability – which are closely completed the ‘GRI Materiality Disclosures Service’ and in line related – are key pillars of Prime Bank’s strategy. The Bank with the international standard one under latest guidelines of started its journey in the year 1995 with the firm commitment GRI G4 or GRI standard 2016. The Sustainability Reports of the of excellence in customer service with a difference and with bank had uploaded in GRI website (based on headquarter at a mission to be an efficient, market driven, customer focused Netherlands). institution with good corporate governance structure through In 2018 Prime Bank has been awarded as “GOLD” Rank in Asia designing and adopting policies to embed sustainability into Sustainability Reporting (ASR) Rating for Sustainability Report-2017 its operations, undertaking awareness and capacity building by the National Center for Sustainability Reporting (NCSR), activities, supporting & financing environment friendly business Indonesia, which indicates that Prime Bank is striving for excellence initiatives, covering social dimension of sustainability concerns to create Social, Environmental and Economic Benefits. and ensuring transparency in financial as well as sustainability reporting. In order to prepare Sustainability Report uniformly, GRI has announced new Guidelines named “GRI Standards” in 2016. By using the Global Reporting Initiative (GRI) standards, Under this guideline, all organizations / companies have to reporting organizations can generate reliable, relevant and prepare Sustainability Report under new standards from July standardized information with which to assess opportunities 2018. Mentionable that previous GRI G4 Guidelines have been and risks, and enable more informed decision-making – transitioned to GRI Standards for preparing Sustainability both within the business and among its stakeholders. By Report which was released by the Global Sustainability developing and communicating their understanding about the Standards Board (GSSB), GRI. As per new guidelines, connections between sustainability and business, companies the companies to be more transparent about the impacts their can enhance their value, measure and manage change, and activities and assets have on the environment, economy and drive improvement and innovation. society. The Supplement for Financial Sectors has also been Prime Bank Limited believes in eco-friendly socially responsible developed according to a multi-stakeholder process and have banking system which drives the whole nation towards a included some new criteria’s and indexes to prepare report for healthy environment and presents an excellent and hazardless the banking sector. banking. In order to protect the environment, Bank is spreading As Prime Bank is striving for excellence to create Social, its wings by introducing both in-house & external green Environmental and Economic Benefits, the Bank has taken activities towards supporting Green Economy. Sustainability initiative to prepare Sustainability Report uniformly by strategy of Prime Bank Limited entails adopting environmentally following the new Guidelines named “GRI Standards” in 2016 responsible operations, monitoring our consumption of internal to communicate to it’s stakeholders about it’s impacts on the environmental resources and embracing efficiency as a way economy, the environment, and /or society. to reduce the environmental footprint of our operations. Our direct environmental impacts are limited to paper, energy, water GRI Sustainability Reporting Standards (GRI Standards) are consumption, and the greenhouse gases (GHG) emissions used by organizations around the world to communicate they produce. Bank’s Green banking activities are day-by-day to stakeholders about their impacts on the economy, the flourishing towards creating a “Greener” future for the welfare environment, and /or society. The use of the GRI Standards of the society. For a sustainable economy Prime Bank Limited helps organizations to disclose this information in a consistent plays crucial role in financing environment friendly projects led and comparable way. It also helps to promote greater by green banking which believes in social responsibility. We transparency and accountability of organizations. currently have no premises located or planned in areas of high Overview of the set of GRI Standards: biodiversity value. A. Universal Standards: The Universal Standards apply to all The emerging idea of integrating strategic sustainability- organizations preparing a report in accordance with the related information with other material financial information is a GRI Standards: significant and positive development. Sustainability is, and will GRI 101 - Foundation: Starting point for using the GRI increasingly be, central to the change that companies, markets Standards. and society will be navigating. Sustainability information that

170 PRIME BANK is relevant or material to a company’s value prospects should these objectives throughout the organization. They must therefore be at the core of integrated reports. also choose a strategy that is consistent with the mission, culture, and aligned with geography, customer, product, Corporations have become more sensitive to social issues and community, and other stakeholder requirements. Strategy and stakeholder concerns are striving to become better corporate leadership are minimum enablers to successful sustainability citizens. Whether the motivation is a concern for society implementation. Just as the formulation of sustainability and the environment, government regulation, stakeholder strategy is critical, so is the execution. Management must pressures, or economic profit, the result is that managers must also make choices about how to implement the sustainability make significant changes to more effectively manage their strategy and integrate economic, social, and environmental social, economic, and environmental impacts. Companies hunt impacts into their organizations. These impacts are sometimes for ways to improve their performance, determining the best managed using “soft” leadership elements and culture along ways to thoroughly integrate these improvements into all parts with a variety of informal systems. In their recruitment and of the organization still facing challenges. These challenges are developing practices, companies may seek to create in their because implementing sustainability is fundamentally different employees a passion and commitment to sustainability. They in than implementing other strategies in the organization. For effect create a culture to support sustainability decisions. This operating goals, the direct link to profit is usually clear. For culture is firmly embedded in the beliefs, values, and mission innovation, the goals are long-term and often difficult to predict and vision statements of companies that serve to inspire and and measure, the intermediate goal is new products and the motivate employees to take sustainability obligations seriously. ultimate goal is increased profit. However, for sustainability, the goal is to simultaneously achieve excellence in both social and Prime Bank has developed “Environmental & Social (E&S) environmental and financial performance. Risk Management Policy Statement” and “Environmental & Social Risk Management Procedure Manual” in line with the It is difficult to implement the proper systems to pursue Bangladesh Bank Guidelines. These documents comprise of sustainability and to evaluate the impacts of sustainability on prime bank’s commitment towards being Environmentally financial performance and the trade-offs that ultimately must & Socially (E&S) compliant, include the social risk factors, be made. Often, it is unclear how trade-offs between financial excluded activities, discouraged sectors, define environmental and environmental or social performance should be made. and social requirements for lending, E&S risk management There is considerable uncertainty about how shareholders procedures, tools, roles & responsibilities etc. These two policy will respond to these trade-offs. Moreover, the trade-offs and procedural documents played a vital role in strengthening keep changing—at certain times, shareholders may want the ESMS in Prime Bank Limited. company to place substantial weight on social performance and the environment, whereas at other times they may want the Prime Bank has an independent ‘Sustainable Finance Unit’ company to place more weight on short-term profits. The costs which is being headed by the Head of Credit Risk Management of implementing sustainability are also constantly changing. (CRM) Division. Five fulltime officials have been deployed in this For example, potential technology improvements may make it unit to plan, execute and monitor Bank’s sustainable banking far cheaper to implement pollution reduction later rather than and sustainable financing activities. The main activities of earlier. Even when sustainability is thought to provide financial this Unit includes formulation, amendment & up-gradation benefits, the benefits can, at best, only be measured over long of policies related to green banking, Corporate Social time horizons, which make it difficult to measure the impact Responsibility, environmental and social risk management, of social and environmental performance and to quantify the green office guide, green strategic plan etc. They monitor resulting benefits. The constant uncertainty about how far to all the process and procedures related to carbon footprint move toward sustainability, the constantly changing emphasis measurement, green marketing, and management of climate on and costs of implementing sustainability, and the long time risk fund. They will also ensure implementation of directives horizons therefore make it difficult to implement sustainability related to sustainable development goals (SDGs) provided in the same way that other strategic initiatives are implemented. by the Bangladesh Government and Bangladesh Bank from time to time. They assist concerned business division and The standard implementation approaches often fail. In order to international division of the Bank in signing participation improve the integration of social and environmental impacts agreement and applying all on-lending / on-blending (re- into day-to-day management decisions, companies must finance/pre-finance/re-imbursement) scheme/fund/facility/ tie the measurement and reporting of these impacts into project under ‘Sustainable Finance Department’ of Bangladesh decision making processes. Further, these impacts must be Bank. They liaise in designing financial instruments and measured and reported in financial terms and then integrated products under green finance and sustainable finance with into the traditional investment models. So how can companies concerned business division and Bangladesh Bank and seek integrate sustainability into day-to-day decision-making? approval from Bangladesh Bank in this regard. We have a Through the combination of a clear and well-articulated and ‘Sustainable Finance Committee’ to set annual objective of communicated sustainability strategy, senior management Sustainable Finance Unit and to evaluate its performance. commitment to a broader set of objectives than profit alone, This committee ensures appropriate coordination and support and utilizing appropriate structures and systems to drive among all the relevant divisions of the Bank to accomplish the sustainability through the organization. activities of Sustainable Finance Unit. All these activities of the The importance of vision and communicated core values are well Bank are reported separately by another committee named accepted. But these commitments to social and environmental ‘Sustainability Reporting Committee’ through Sustainability concerns must be consistently communicated both in words Report following GRI standards and receive GRI ‘Materiality and actions. Companies must exercise leadership to decide Disclosure Certification’ every year which ensure transparency how much integration of social and environmental concerns of our sustainable initiatives to a larger extent to the internal they want and how they want to do it, align the organization, and external stakeholders. articulate the trade-offs to managers, and continually reinforce

PRIME BANK 171 ANNUAL REPORT 2018

SOCIAL RESPONSIBILITY INITIATIVES

The modern concept of Corporate Social Responsibility (CSR) around twenty percent of total CSR expenditure allocation in is evolving gradually despite several obstacles. Driving forces this area would be appropriate. behind this evolution is pressure from various stakeholders a) Support assistances in this area would include direct (Importers, Environmentalists, etc.) while slow progress is grants towards costs of curative treatment of individual attributed to lack of Good Governance, consumer forums and patient, towards costs of running hospitals and diagnostic above all lack of understanding by business houses that CSR is centers engaged substantially in treatment of patients from not charity but is rather an instrumental investment to achieve underprivileged population segments, and sustainable growth. Corporate Social Responsibility (CSR) is gaining fast global acceptance as a standard to assume b) towards costs of preventive public health and hygiene environmentally sustainable and socially equitable business initiatives like provision of safe drinking water, hygienic toilet practices. The role of business world-wide and specifically in facilities for poor households and for floating population in the developed economies has evolved from classical ‘profit urban areas, and so forth. maximizing’ approach to a ‘social responsibly’ approach, where iii) The remainder of direct budgetary CSR expenditure businesses are not only responsible to its stockholders but allocations should be used in such other areas as: also to all of its stakeholders in a broader inclusive sense. With a) emergency disaster relief, promoting adoption of increased globalization, local businesses are being integrated environmentally sustainable output practices and with the global economy than ever hence pressure is mounting on local businesses to converge on international standards b) lifestyles, promoting artistic, cultural, sports and recreational of socially responsible business. As a member of the global facilities for the underprivileged, upgrading facilities and economy, Bangladesh is also aware of the need to take positive lifesavings equipment’s in emergency rescue services like the initiative to establish an image of environmentally and socially fire brigades etc., responsible businesses. CSR as a concept is being gradually c) infrastructure improvement for disadvantaged communities interwoven into the psyche of local business, however, the in remote far flung areas and so forth. process is slow and only in its infancy. The above outlined indicative allocation guidelines are for direct The banking sector of Bangladesh has been actively budgetary CSR expenditures only. Indirect costs associated participating in various social activities. However, these with promotion of inclusive financing for productive SME efforts were hardly recognized and labeled as CSR activities initiatives in agriculture, manufacturing and services, and for since most of the banks have not integrated CSR in their environmentally beneficial ‘green’ projects are partly mitigated routine operation; rather these were in the form of occasional by such policy supports as concessional refinance lines, with charity or promotional activities. Bangladesh Bank (BB) has the remainder to be viewed as investment costs of expanding taken initiatives in respect of formalizing CSR in the banking into newer client bases. sector of Bangladesh and issued a directive to the banks Over the past 11 years, Prime Bank Foundation (PBF) has and, financial institutions on June 01, 2008 in this regard. It played a pivotal role in the field of national development in defined the strategic objective for CSR engagement, provided the education and health sector. PBF is a staunch believer some priority areas with a suggestion to foster CSR in their of empowerment rather than aid and this belief is reflected client businesses, and suggested a first time CSR program clearly in the long term projects that PBF has undertaken over indicating some likely action plans. BB’s DOS Circular No 01 the years. Sustainable growth, rather than charity has been of June 2008 and the subsequent circulars on the subject the core objective of all of PBF’s projects. The projects of PBF comprehensively enumerate the expected ranges and areas of aim not only to make health and education more accessible CSR engagements of banks in the communities they operate to the target population but also to contribute to the national in. Given the current pattern of relative urgencies of needs development through its initiatives. A country’s development in diverse areas, broad adherence to the following allocation depends largely on the well-being of its population as well pattern is advisable: as a strong educational backbone, and that is exactly what i) Education and job focused vocational training being crucial in PBF strives to accomplish. PBF hopes to expand its sphere of widening advancement opportunities for the underprivileged influence through its initiatives and provide more opportunities population segments, around thirty percent of total CSR of better health and education in order to ensure equal expenditure should be: opportunities for the less privileged people of our society. (a) for scholarships/stipends for students from low income family Prime Bank Foundation (PBF), being the CSR wing of Prime in reputed academic and vocational training institutions, and Bank, has a unique business philosophy which believes that (b) for support towards upgrading of facilities in academic “Sustainability for self and others, private and public interests and vocational training institutions substantially engaged with are one and the same.” This means that PBF’s business activities students and trainees from the underprivileged rural and urban must sustain not only for the Foundation’s own benefits, but population segments. Selection processes for scholarships also for the society and the nation. The idea behind this dogma and stipends should elicit enough information to preclude represents the essence of our CSR, and has been carried on in applicants from drawing benefits from multiple banks sources. the Foundation’s Mission Statement, which also includes: “We aim to constantly stay a step ahead in dealing with change, ii) Preventive and curative healthcare support assistance for create new value, and contribute broadly to society and its underprivileged population segments comes next in priority, development.”

172 PRIME BANK PRIME BANK 173 ANNUAL REPORT 2018

Prime Bank Nursing Foundation is Caring All the students from Prime College of Nursing, Dhaka (PCND)’s 1st and 2nd batch are already employed in different public and private hospitals and organisation as a Senior Staff Nurse. Among these 66 students, 15 have joined as Govt. 2nd class Gazette Officer and posted at Medical College Hospital / city/ division/ district/ upazilla level service delivery points and rest of the 41 graduates are employed in different An Enlightened private hospitals like Apollo, Asgar Ali Hospital, Square, United, Delta, Pran RFL Group Tomorrow Hospitals of Bangladesh. Prime Bank Foundaion came forward and is Prime Bank English Medium helping students through Education Support School (PBEMS) started its Programme (ESP) to gain higher education. journey in 2008. PBEMS These students are now working in higher initiated with a unique approach positions of different organizations. If more of teaching methodology which In 2017, Prime Bank Eye Hospital opportunity is given, these students would be focuses on low cost and values (PBEH) examined 20,211 patients at able to move forward. oriented education. the base hospital. On the other The year 2018 was a year of hand, 16,608 patients were great achievement as PBEMS examined in the fields through its obtained the Cambridge outreach eye camps. In the Approval under British Council reporting year 1,398 patients were and also approval from Primary operated at PBEH which was 992 Education and Dhaka Board. only in 2016 (surgery growth 40.92%).

Prime Bank Cricket Club (PBCC) was established in November 2011 by acquiring a club of Dhaka Premier Division. It has been The Future able to rise as one of the best cricket clubs of Bangladesh, with championship title in key Vision tournaments of domestic cricket within a short time through high professionalism and well-organized administration.

A Winning Team

174 PRIME BANK Prime Bank Nursing Foundation is Caring All the students from Prime College of Nursing, Dhaka (PCND)’s 1st and 2nd batch are already employed in different public and private hospitals and organisation as a Senior Staff Nurse. Among these 66 students, 15 have joined as Govt. 2nd class Gazette Officer and posted at Medical College Hospital / city/ division/ district/ upazilla level service delivery points and rest of the 41 graduates are employed in different An Enlightened private hospitals like Apollo, Asgar Ali Hospital, Square, United, Delta, Pran RFL Group Tomorrow Hospitals of Bangladesh. Prime Bank Foundaion came forward and is Prime Bank English Medium helping students through Education Support School (PBEMS) started its Programme (ESP) to gain higher education. journey in 2008. PBEMS These students are now working in higher initiated with a unique approach positions of different organizations. If more of teaching methodology which In 2017, Prime Bank Eye Hospital opportunity is given, these students would be focuses on low cost and values (PBEH) examined 20,211 patients at able to move forward. oriented education. the base hospital. On the other The year 2018 was a year of hand, 16,608 patients were great achievement as PBEMS examined in the fields through its obtained the Cambridge outreach eye camps. In the Approval under British Council reporting year 1,398 patients were and also approval from Primary operated at PBEH which was 992 Education and Dhaka Board. only in 2016 (surgery growth 40.92%).

A Winning Team

PRIME BANK 175 ANNUAL REPORT 2018

MESSAGE FROM THE CEO OF PRIME BANK FOUNDATION

The Corporate who take into account the financial and I would like to thank our governing bodies, the Board of social return in CSR are more likely to not only increase Directors of Prime Bank Limited and Foundation Management their profitability but enhance their sustainability as well. It Committee for their invaluable guidance and advice. I would is wise to be sufficient and expect return in order to make a also like to especially thank you, our shareholders, for their life-time impact for a nation and help the project stand on continued trust and support. And finally, I would like to thank our its own feet. Self-sufficiency is the quality of feeling secured clients and beneficiaries around the county for their confidence and contented with an organisation, a deep-rooted sense of in our organisation, people, brands and technologies. inner completeness and stability. Self-sustainability and self- Before I come to an end, I extend my sincere thanks to you all sufficiency of an organisation are overlapping states of being in for taking time to review our activities this year and for sharing which the organisation needs little or no help from others. It is with us a sense of optimism for what we make things possible. our belief that self-sufficiency entails the organisation enough to fulfil needs, while a self-sustaining entity can maintain self- sufficiency indefinitely. But there is no definitive guide on how Sincerely yours, to become self-sufficient. Instead of specific steps, it is more important that we may have to change the way we look at and think about our actions and dependency and seek alternatives in each area. For the Prime Bank Foundation (PBF), this is the Dr. Iqbal Anwar year we take a closer look to witness the achievement from our Chief Executive Officer initiatives of CSR over the past years. Prime Bank Foundation In 2018, we have achieved the point of sustainability of another income generating projects of PBF. Now we feel pressure to work harder to earn more and have more for being a self-reliant project and make all the beneficiaries self-sufficient. We believe that the principles and examples of achievement will remain forever, while the social problems and technological changes will persist.

In the face of such unevenness, some organisations will assume achievement requires a winner-takes-all approach. They believe that achievement depends on putting all their energy into attaining one goal, such as single-minded focus on priority area or a commitment to being one of the best contributors in the society. If an organisation develops in the right way, the ideals of that organisation itself and society can become powerful and manageable-factors of success. So in PBF, we believe that the utmost priority of achievement is being independent in terms of projects and having the financial and social return.

2018 was an important landmark on our path toward our long- term sustainability goal. It is our belief that all our CSR work is important when it has impact on other lives as our CSR is designed to make social impact and have the return in terms of economical and social.

For such entities to become and remain successful, each individual ought to work towards the common goal of the organisation, and the organisations have to value individuals. Our team members of both PBF and projects level like to feel proud not only of being a part of something bigger than themselves, but also of being validated for their individual ideas, contributions and achievements.

As you read this annual report, we hope it will remind you of our sustainable projects and energise you for the future. For those of PBF and its projects’ team who have tirelessly committed time and energy to the success of this organisation, I do salute and thank you a lot.

176 PRIME BANK Introduction

In the year 2002, a reverie of Prime Bank Limited started its obviously earn for his/her survival and at the same time support journey with a longing to help the society in a lifetime. Now education for others. it is 2019, after 12 years of project intensification in 2007, the Moving forward, the passion which triggered in 2007 led to desire to help the people of Bangladesh has now become the commencement of another Education Project. Prime perpetual. Prime Bank Foundation started with the initiatives for Bank Foundation inaugurated Prime College of Nursing, the welfare of our society in the Corporate Social Responsibility Dhaka, in the year 2013. The college has been able to (CSR) sector. The projects of Prime Bank Foundation have successfully complete 6 years of its journey as the project become sustainable and at the same time serving the society became sustainable in 2018. Prime College of Nursing, Dhaka as well. Prime Bank and Prime Bank Foundation believe that feels proud to share that it started with Diploma in Nursing sustainability can only be achieved if there is a social and Science and Midwifery course and now with the affiliation financial return from the CSR project. of Dhaka University offering B. Sc. in Nursing both Basic and As we reflect on the previous years, we travelled a long way, Post Basic Courses. The year 2018 brought a new horizon of and the footsteps left behind have shown that a CSR project achievement for PCND as it reached the point of sustainability, can sustain if it runs on its own and at the same time help the which bears the evidence to the strategic path provided by the society. Now, we will head towards an end of a new beginning Board of Prime Bank Limited in managing the project. With the of the journey. 12 years have passed after project intensification introduction of two new programmes B. Sc. in Nursing both in 2007, and with time the projects of Prime Bank Foundation Basic and Post Basic Courses in 2018, and with efficient staff now stand on its own feet and also serving the people and and teachers, PCND achieved sustainable growth which is an society to stand on its own. example for other nursing institutions in Bangladesh. The year 2018 was a year of Achievement as PCND became self reliant in As part of a CSR guideline by the Bangladesh Bank, CSR the 3rd year of its 3 year strategic plan. projects of Banks should focus on education and health sector of Bangladesh. Reflecting on this, Prime Bank Foundation With the education project, Prime Bank and Prime Bank started Prime Bank English Medium School (PBEMS) in Uttara Foundation also took the initiative to open Prime Bank Eye in the year 2008. PBEMS initiated with a unique approach of Hospital under its health project. Prime Bank Eye Hospital was teaching methodology which focuses on low cost and values- established in 2012 at House # 82, Road # 8A, Satmasjid Road, oriented education. In the year 2015, the project was nurtured Dhanmondi, Dhaka-1209 with the management & technical in a way by all the team effort of Prime Bank Foundation family assistance of Aravind Eye Care System (AECS), one of the that it became sustainable. The project now generates enough centres of excellence in eye care in India. revenue for its survival and at the same time save for future According to National Eye Care Plan and National Institute of expansion. Achievement came forward to PBEMS as the Ophthalmology and Hospital (NIOH), around 250,000 people existence of the school has been approved by international in Bangladesh are at risk of losing eyesight because of diabetic and local governing bodies. PBEMS envisaged bringing out retinopathy. Also, about 750,000 people in Bangladesh are the best of the education methodology and curriculum in our suffering from blindness. In 2018, PBEH examined 36,917 country only by becoming sustainable in it. patients of which 1,677 patients underwent surgery from PBEH In continuation of the Education project, Prime Bank and which is an indirect contribution to the economic growth of Prime Bank Foundation introduced a unique combination Bangladesh. Among these people, many have joined the of helping the youth to build a better future. The Education employment sector and now are able to contribute to the Support Programme (ESP) stepped in the year 2007. The family. Prime Bank Eye Hospital is indirectly helping to eradicate Programme was designed to serve the nation builders of the unemployment and poverty from Bangladesh. Although the future of Bangladesh. ESP is a fully subsided project, which has percentage of contribution is small, but we all know that “We a social return. The classification of social return falls into the can do no great things, only small things with great love”. national level of a country as 1671 students completed their ~Mother Teresa. graduation under different fields with the help of a monthly stipend from Prime Bank Foundation. When a project helps a nation to produce Doctors, Engineers, Lawyers, Police officers, BCS-Cadre, Professor and many more, this

return can be measured as it PBEMS

is a direct contribution to GDP PCND in the form of employment. PBEH Even if the designation cannot be classified directly in accordance with GDP, ESP Cost Recovery Break Even Point an educated individual can

PRIME BANK 177 ANNUAL REPORT 2018

Education Support Programme (ESP) distinguished personalities of Bangladesh, namely Prof. From the beginning of Prime Bank’s journey, the Board and M. Q. K. Talukder, Chairman, management of Prime Bank believed that Corporate Social Centre for Women and Child Responsibility (CSR) should focus on making some return to the Health and Chairperson, society, for which Prime Bank through Prime Bank Foundation Bangladesh Breast Feeding subsequently started Corporate Social responsibility, especially Foundation (Chairperson of in the field of Health & Education. Prof. M. Q. K. Talukder the Advisory Committee), Scholarship programme is one of the unique programmes Prof. Jamilur Reza Choudhury, in the Education sector of Bangladesh. As part of the Educationalist, Vice Chancellor uniqueness, ESP was launched in the year 2007. According of Asia Pacific University, to a famous quote by Mother Teresa “As Jesus said love one Former Vice Chancellor of another. He didn’t say love the whole world.” Prime Bank and BRAC University (Member of Prime Bank Foundation understand that country’s growth the Advisory Committee) and and development depends largely on the strong educational Ms. Rasheda K. Chowdhury, Prof. Jamilur Reza Chowdhury backbone. Education is the most powerful weapon which can Director, Campaign for Popular be used to improve the economic growth of Bangladesh, as Education (CAMPE), (Member it is directly linked with alleviating poverty. Bangladesh has of the Advisory Committee). the seventh largest population in the world. It is needless to The ESP follows guidelines very emphasize the immense role; such a huge manpower can play strictly where gender equality in the economic, social and intellectual development of the is concerned; the female country. But poverty and financial hardship is the main reason to male ratio of 3:7 must be in the discontinuation rate of higher studies. Ms. Rasheda K. Chowdhury maintained to ensure that a Prime Bank Foundation’s Education Support Programme sufficient number of both genders receive assistance. Students (ESP), is a long term renewable scholarship programme for from all 64 districts of the country are recipients of the PBF underprivileged but meritorious students. Eligible students scholarship. We can proudly mention that PBF has made a receive monthly stipend that allows them to pursue undergrad/ country-wide impact through its commendable initiative and graduation level studies. Our scholarship programme has is helping students build a strong foundation for their families’ spread to all the 64 districts of Bangladesh. & society’s future.

Investment through social contribution never fails. It is a hard- With the help of the PBF stipend the first 7 batches from edged business decision which is first-rated for a business. As 2007 to 2013 have successfully completed their graduation. per Bangladesh Bank CSR guideline (GBCSRD circular No-7, In addition to this, more than 1055 out of 1671 passed out dated December 22, 2014) and around 30% (thirty percent) of awardees are now established in Public & private University the total CSR expenditure should be spent in the education & College Teachers/Medical Officers/Engineers/Civil Service sector, including scholarships/stipends for underprivileged but & Custom officers/Class-1 Officers/Bankers/Business etc. All meritorious students of Bangladesh. these established young people play a key role in helping their As a part of Prime Bank’s CSR activities, this unique programme family, developing the society and serving the nation. was launched in 2007 with 170 awardees. Today, after 12 rewarding years, we are proud to say that our ESP has been able to witness the achievement which influenced the lives of 3445 awardees and their family across the country.

In keeping the continuity of the past years’ selection process, the same steps of the previous years were followed this year. Applications were invited from potential underprivileged but meritorious students through advertisements in the country’s leading national dailies. We received 6662 applications from 64 districts of the country. As per selection criteria set by the honourable Advisory Committee, 776 students were primarily selected. After on site & off site Validation Exercises and conducting all other relevant processes, most deserving 291 meritorious students were finally selected for 2018. The first instalment of stipends for all the students selected in 2018 is to be disbursed to their individual accounts through a formal Award Giving Ceremony.

In order to ensure that most deserving students are awarded for the scholarship, PBF has a three member Advisory Committee which is commissioned to develop neutral selection criteria. The Advisory Committee consists of three

178 PRIME BANK Avgv‡ì wkÿv e„wËi Ae`v‡b Lvw`Rv LvZzb Zv‡ì g‡ZvB GKRb GB wkÿv e„wËi mn‡hvwMZvq D”Pwkÿv m¤ú~Y© K‡i Gme †gavexiv GLb Lyjbvi w`Nwjqv _vbvi GK AwZ nZ`wi`ª cwiev‡ii mšÍvb Lvw`Rv, 4 †evb A‡b‡KB m¤§vbRbK Ae¯’v‡b Kg©iZ| G‡ì A‡b‡KB AZ¨šÍ fv‡jv 1 fvB I evev- gvmn 7 m`‡mï cwievi| gv A‡bï evwo‡Z wSGi KvR djvdj K‡i wk¶v m¤úbœ Ki‡Z †c‡i‡Q hv‡ì A‡b‡KB AvR Wv³vi, Ki‡Zb| nVvr GK KwVb †iv‡M AvµvšÍ n‡q Avi KvR Ki‡Z cv‡ibv| BwÄwbqvi, XvKv wek¦vwe`¨vjqmn wewfbœ wek¦we`¨vjq/K‡j‡Ri wkÿK, Lvw`Rvi evev A‡bï Rwg‡Z w`b gyRywi LvUZ| cÖvqB KvR _vKZbv| wewmGm Kg©KZ©v, e¨vsK Kg©KZ©vmn miKvix †emiKvix wewfbœ cÖwZôv‡b bv †L‡q wKsev Aa©vnv‡i _vK‡Z n‡Zv| Zv‡ì cwiev‡ii m`mïv LyeB PvKix‡Z wb‡qvwRZ| hviv cwieZ©b K‡i Pj‡Q Zv‡ì e¨vw³, cwievi Amnvq n‡q †M‡jv| DcvqvšÍi bv †`‡L Lvw`Rvi evev XvKvq P‡j Av‡mb| GgbwK †MvUv mgvR| RwgRgv, mnvq m¤úwË ej‡Z Zvi wKQyB wQjbv| MÖv‡gi †jvK R‡bi wbKU GLv‡bB †_‡g †bB Zv‡ì A‡b‡KB AvR mgvR †meK wKsev D‡`¨v³v| †_‡K mvgvb¨ wKQy UvKv wb‡q P‡j Av‡m| GwM‡q hv‡”Qb mgv‡Ri bvbvwea mn‡hvMxZvq| wKQyw`b c~‡e©I hviv A‡_©i cyivb XvKvq dyUcv‡_i nKv‡ii mv‡_ †njcvi wnmv‡e KvR Ki‡Z jvM‡jv| Afv‡e Amy¯’Zvq ay‡K ay‡K Kó †c‡qwQ‡jv AvR ZvivB GwM‡q hv‡”Qb 4-5 eQi KvR Kivi ci wb‡RB GKUv f¨vb Mvwo‡Z K‡i Bmçj, †ZvKgv, A‡bK Amnvq gvby‡li wPwKrmvi A_© †hvMvb w`‡Z| GwM‡q hv‡”Qb A‡bK ev`vg, njy‡ì ¸uov Gme wewµ K‡i †Kv‡bv iK‡g Pvwj‡q wb‡”Q msmvi| `wi`&ª QvÎ-QvÎx‡K wek¦we`¨vj‡q fwZ© Kiv‡Z, GgbwK wewfbœ mn‡hvwMZv Ki‡Z GwM‡q hv‡”Q Zviv, GUvB n‡jv cÖvBg e¨vsK dvD‡Ûkb Gi wk¶v wKš‘ mšÍv‡bi †jLvcovi LiP enb Kivi mvg_© †h Zvi †bB| Lvw`Rvi e„wËi hyMvšÍKvix dj| evev e‡jb, Avgvi eo msmvi Zv‡ì gy‡L `y‡ejv Lvevi Zy‡jw`‡Z wM‡q ÒKZ †ejv †h Avwg bv †L‡q _vKwQ Zvi †Kv‡bv wn‡me ‡bB| wginvwRi e„wË cvIqvi Abyf~wZ wK Rvb‡Z PvB‡j †KD †KD e‡jb, Ò†Kvb e¨vsK ev‡Mi GKUv fvOv N‡i K‡qKRb nKvi wg‡j †Kv‡bv iK‡g ivZ KvUvBÓ| Avgv‡ì‡K `xN© 5 eQi Avw_©K mnvqZv w`‡e GUv wek¦vmB nw”Qjbv| †Q‡j-†g‡q¸‡jv Am¤¢e †gavex, GKUy mn‡hvMxZv Zv‡ì Rb¨ n‡Z cv‡i Avw_©K mnvqZv †Zv w`jB 3 gvm ci ci Avgv‡ì wkÿvi gvb AMÖMwZ wekvj Avkxe©v`| Lvw`Rv eiveiB Am¤¢e fv‡jv †iRvë K‡i Avm‡Q ZvB wKbv Zv Rvwb‡q GKwU cÖwZ‡e`b w`‡Z n‡Zv| GB we†kl c×wZi Kvi‡b Avwg Lvw`Rvi †jLvcovq evav †`Bwb, Zv‡K wek¦we`¨vjq ch©šÍ Avb‡Z fv‡jv †iRvë Ki‡ZI mÿg nB| G†ì A‡b‡KB Av‡eM K‡Ú Avgv‡ì‡K kix‡ii i³ cvwb K‡iwQ, Avgvi †h KZ Kó n‡q‡Q Zv Avcbv‡ì e‡j e†jb Avgv‡ì GB cwieZ©‡b cÖvBg e¨vsK dvD†Ûkb Gi f~wgKv Avgv‡ì †evSv‡Z cvi‡evbv, Avcbv‡ì e¨vsK †_‡K wk¶ve…wË †c‡q‡Q ï‡b Avgvi ü`‡q wPi¯§iYqxq n‡q _vK‡e | mgMÖ †`‡ki nvRvi nvRvi nZ`wi`ª ü`qUv Avb‡›` fvm‡Q, A‡bK Lywk n‡qwQ Avwg Avcbv‡ì †`qvi gZ wk¶v_©x GgbwK Zv‡ì cvwievwiK Rxe‡bi GB cwieZ©‡b cÖvBg e¨vsK/ Avgvi wKQyB †bB| ‡`vqv Kwi Avjøvn Avcbv‡ì g½j Ki‡eb| cÖvBg e¨vsK dvD‡Ûk‡bi Ae`vb G†`‡k GK Abb¨ `„óvšÍ n‡q _vK‡e|

wkÿv Rxeb †kl Ki‡Z cvi‡e wKbv †mB wPšÍvq we‡fvi wQj hviv cÖvBg e¨vsK dvD‡Ûk‡bi e„wËi Ae`v‡b Ggb AmsL¨ QvÎ-QvÎx AvR m¤§vbRbK K‡g© wb‡qvwRZ| Dc‡ii Qwe¸‡jv Zv‡ìB KÕRbv| hvPvB evQvB Gi mKj avc AwZµg K‡i G eQi Avevi e„wË †cj 291 Rb †gavex A_P nZ-`wi`ª QvÎ QvÎx hv‡ì Nvg Siv‡Z nq `y‡ejv Lvevi †RvUv‡Z, †cvlvK-cwi”Q‡ì AfveI _vwg‡q †`q Zv‡ì c_Pjv, hv‡ì Kv‡iv Kv‡iv A‡c¶v Ki‡Z nq hvKvZ ‡dZivi gZ Lqiv‡Zi Dci| Afve-AbUb hv‡ì wbZ¨ mw½| kZeuvav wWw½‡q hviv GLbI †eu‡P _vKvi Rb¨ AeY©bxq msMÖvg K‡i hv‡”Q| `vwi`ªZvi Kvi‡Y Avgv‡ì †`‡k GL‡bv S‡i co‡Q AmsL¨ wk¶v_©x| †Kv‡bv iK‡g gva¨wgK/D”Pgva¨wgK cvi n‡jI mvnm cv‡”Qbv MÖvRy‡qkb †j‡fjG cv ivLvi| A_P MÖvRy‡qkb Ki‡Z cvi‡jB GKRb n‡q D‡V c«_g †k«Yxi bvMwiK| nvj ai‡Z cv‡i cwiev‡ii| DcK…Z nq mgvR Z_v †`k A_P `vwi`ªZvi Kvi‡Y GLbI S‡i co‡Q AmsL¨ wk¶v_©x|

K‡ói K_v ej‡Z wM‡q Kvbœvq †f‡½ co‡Q Lvw`Rvi evev

PRIME BANK 179 ANNUAL REPORT 2018

cÖvBg e¨vsK dvD‡Ûk‡bi wkÿve„wËi c×wZ I mvwe©K w`K m¤ú‡K© †`‡ki e‡iY¨ e¨vw³Z¡, wkÿv cÖwZôvb cÖavb I wefvMxq cÖavbiv †h BwZevPK/ Avkv e¨vÄK Dw³ K‡ib, Zvi LÐwPÎ d‡Uv M¨vjvwi AvKv‡i wb‡¤œ Zz‡j aiwQt

wek¦we`¨vjq ch©v‡q hviv fwZ©i my‡hvM cvq Zviv wbtm‡›`‡n †`‡ki †gavex mšÍvb, wKš‘ `~fv©M¨ cÖvBg e¨vsK dvD‡Ûkb KZ©„K, †k‡ievsjv K…wl wek¦we`¨vjq mn mgMÖ †`‡ki MÖ¨vRy‡qkb Avwg †R‡b Avbw›`Z †h cÖvBg e¨vsK dvD‡Ûkb 2007 mvj †_‡K `wi`ª †gavex QvÎ-QvÎx‡ì n‡jI mZ¨ `vwi`ªZvi Kvi‡Y A‡b‡KB fvjfv‡e †jLvcov †kl Ki‡Z cv‡i bv| ïay ZvB ch©v‡qi myweav A_P †gavex QvÎ-QvÎx‡ì †h wkÿve„wË cÖ`vb K‡i Avm‡Q Zv AZ¨šÍ wkÿve„wË cÖ`vb K‡i Avm‡Q hvi AvIZvq G hver ivRkvnx wek¦we`¨vj‡qi 37 wU wefvM †_‡K bv A‡b‡K †jLvcov †Q‡o w`‡ZI eva¨ nq| Avwg †R‡b AZ¨šÍ Avbw›`Z †h cÖvBg e¨vsK cÖksmbxq| Avwg †R‡b AZ¨šÍ Lywk n‡qwQ †h ÓcÖvBg e¨vsK Gi G mvgvwRK Kvh©µg †`‡ki 211 Rb QvÎ-QvÎx `xN© †gqvw` GB wkÿve„wË †c‡q‡Q| dvD‡Ûkb GiKg 3145 Rb QvÎ-QvÎx †K `xN© †gqvw` wkÿve„wË cÖ`vb K‡i Avm‡Q| GB gv‡bi AMÖMwZ n‡”Q wKbv ZvI Z`viwK Kiv nq, G we‡kl c×wZi Kvi‡Y Zuviv fv‡jv †iRvë GB wkÿve„wËi mn‡hvwMZvq Gch©šÍ A‡bK QvÎ-QvÎx D”P wkÿv †kl K‡i‡Q| Zv‡ì g‡a¨ wkÿve„wËi myweav ‡c‡q evsjv‡`k K…wl wek¦we`¨vjq †_‡KB 231 QvÎ-QvÎx K…wZ‡Z¡i mv‡_ Ki‡ZI mÿg n‡”QÓ| A‡b‡KB BwÄwbqvi, wkÿK, wewmGm Kg©KZ©v, e¨vsK Kg©KZ©v mn miKvix †emiKvix wewfbœ †jLvcov Pvwj‡q Avm‡Q| Avwg Av‡iv Rvb‡Z cvijvg ‡h GB e„wË myweav †c‡q Gch©šÍ Avwg Av‡iv †R‡bwQ †h 2007 mvj †_‡K ïiæ K‡i Ghver 3145 Rb QvÎ-QvÎx†K `xN© cÖwZôv‡b PvKyix‡Z wb‡qvwRZ Av‡Q| mgMÖ †`‡ki Ggb nvRvi nvRvi nZ`wi`ª QvÎ-QvÎx‡ì †Z‡ivkÕi †ekx QvÎ-QvwÎ AZ¨šÍ fvj †iRvë K‡i wek¦we`¨vj‡qi wkÿvRxeb †kl Ki‡Z †gqvw` wkÿve„wË cÖ`vb K‡i‡Q| G wkÿve„wËi mn‡hvwMZvq G ch©šÍ GKnvRvi wZbkZ R‡bi Rxe‡bi GB cwieZ©‡b cÖvBg e¨vsK/cÖvBg e¨vsK dvD‡Ûkb Gi Ae`vb G‡`‡k GK Abb¨ mÿg n‡q‡Q| hv‡ì A‡b‡KB cÖ‡ek K‡i‡Q miKvix †emiKvix I †ekx QvÎ-QvÎx D”P wkÿv ‡kl Ki‡Z mÿg n‡q‡Q| hv‡ì `„óvšÍ n‡q _vK‡eÓ| m¤§vbRbK Kg©ms¯’v‡b, Ae`vb ivL‡Q cwievi I mgv‡Ri Kj¨v‡Y| A‡b‡KB GLb wek¦we`¨vjq I K‡jR wkÿK, wewmGm Kg©KZ©v, cÖvBg e¨vsK I cÖvBg e¨vsK dvD‡Ûk‡bi DË‡ivËi mvdj¨ Kvgbv †`‡ki Kj¨v‡b Ggb GKwU gnr D‡ØvM mwZ¨B cÖmskbxq| Wv³vi, BwÄwbqvi, ea¨vsK Kg©KZ©v mn miKvix †emiKvix wewfbœ KiwQ| cÖ‡dmi ‡gvt Avãyj KzÏym cÖwZôv‡b PvKyix‡Z wb‡qvwRZ| Ae`vb ivL‡Z cvi‡Q Zv‡ì cÖ‡dmi Gg Avãym †mvenvb Wxb cwievi GgbwK †MvUv mgv‡Ri Dbœq‡b| Avwg g‡b Kwi, mgMÖ DcvPvh© K…wl Abyl` †`‡k cÖvBg e¨vsK/cÖvBg e¨vsK dvD‡Ûkb Gi Ae`vb GK Abb¨ ivRkvnx wek¦we`¨vjq evsjv‡`k K…wl wek¦we`¨vjq `„óvšÍ n‡q _vK‡eÓ| cÖ‡dmi W. Kvgvj DwÏb Avnv¤§` DcvPvh©, ‡k‡ievsjv K…wl wek¦we`¨vjq

cÖvBg e¨vsK dvD‡Ûk‡bi wkÿve„wËi c×wZ m¤ú‡K© Avwg Ab¨vb¨ e¨vs‡Ki wmGmAvi Abyôv‡bI ‡`‡ki A¯^”Qj †gavex‡ì cv‡k ùvov‡bvi Rb¨ Avwg cÖvBg e¨vsK dvD‡Ûk‡bi wkÿve„wË ‡`‡ki mKj e¨vsK I Avw_©K cÖwZôvb `wi`ª I †gavex‡ì cv‡k `vovK Avwg GB Avkv e¨v³ e‡jwQ Kvh©µ‡gi Ae¨vnZ mvdj¨ Kvgbv Kwi| Kwi| W. AvwZqvi ingvb dR‡j Kwei cÖ‡dmi Iqvwn` DwÏb gvngy` mv‡eK MfY©i, evsjv‡`k e¨vsK MfY©i, evsjv‡`k e¨vsK

Avwg cÖvBg e¨vsK dvD‡Ûkb ev AvRg †R †Pxayix mv‡ne †K GB e‡j abëv` RvbvB †h ‡`‡ki †gavex I nZ`wi`ª‡ì D”P wkÿv AR©‡bi Rb¨ †h wkÿve„wË cÖ`vb Kiv n‡q‡Q Zvi Rb¨ Avwg Avkv Kwi, cÖvBg e¨vsK dvD‡Ûkb Zv‡ì G gnZx D‡`¨vM Ae¨vnZ ivL‡e| Avgvi AviI Avcbviv QvÎ-QvÎx‡ì AÜKv‡ii XvKbvwU Ly‡j w`‡q‡Qb| cÖvBg e¨vsK I cÖvBg e¨vsK dvD‡Ûkb‡K abëv` RvbvB| cÖZ¨vkv, †`‡ki Ab¨vb¨ Avw_©K cÖwZôvbmg~nI cÖvBg e¨vsK dvD‡Ûkb Gi b¨vq ¯^v¯’¨ I wkÿv cÖ‡dmi Avãyjøvn Avey mvqx` Rbve byiæj Bmjvg bvwn` †ÿ‡Î Ae`vb †i‡L †`k‡K GwM‡q wb‡Z mnvqZv Ki‡e| mv‡eK wkÿvgš¿x, evsjv‡`k †Zvdv‡qj Avn‡g` Ggwc, mv‡eK evwYR¨ gš¿x

G‡`‡ki myweavewÂZ A_P m¤¢vebvgq gvbyl‡ì mvnvh¨v‡_© MVbg~jK I †UKmB wKQz ‡`‡ki myweavewÂZ A_P †gavex Ggb QvÎ-QvÎx wbe©vP‡bi cÖv_wgK c‡e©i KvR m¤úv`b K‡i cÖvBg e¨vsK G mKj QvÎ-QvÎx‡ì Avw_©K mnvqZv `vb K‡i Zv‡ì D”Pwkÿv m¤úbœ Ki‡Z GKUv Kievi ZvwM` cÖvBg e¨vs‡Ki m¤§vwbZ D‡`¨v³vMb memgq Abyfe Ki‡Zb| ZviB _vwK cwil‡ì Acivci `yB m`‡mï mnvqZvq cv‡k ‡_‡K GKwU gnr KvR Ki‡Q| Avwg e¨vw³MZ fv‡e Avkv Kwi cÖvBg e¨vsK GmKj avivevwnKZvq Avgiv cÖwZwôZ Kijvg cÖvBg e¨vsK dvD‡Ûkb, hvi AvbyôvwbK Kvh©µg ïiæ cÖ‡dmi Rvwgjyi †iRv †Pxayix QvÎQvÎx‡ì cv‡k _vK‡e| nq 2007 mv‡j wkÿv mnvqZv Kg©m~wPi gva¨‡g W. †gvt bIkv` Avjx Rbve AvRg †R †Pxayix Dcva¨ÿ, ivRkvnx †gwW‡Kj K‡jR ‡Pqvig¨vb, cÖvBg e¨vsK wjwg‡UW

cÖvBg e¨vs‡Ki GB gnwZ D‡`¨vM †hb Ae¨vnZ _v‡K Avwg †mB Av‡e`b e¨v³ KiwQ| D”Pwkÿvi c_ cÖk¯’ Kivi GB D‡`¨vM‡K Avwg AvšÍwiKfv‡e mvayev` Rvbvw”Q| Zv‡`i GB GB wkÿve„wËi cwimi AviI e¨vcK n‡j A‡bK †gavex `wi`ª wkÿv_x© GB e„wËi AvIZvq mgvwRK Kg©m~wPi mdjZv Kvgbv KiwQ| Avm‡Z cvi‡e| cÖ‡dmi Wvt †gvt Kvgiæj Avnmvb cÖ‡dmi Wvt †gvt Av‡bvqvi nvwee ‡kL gv‡R`yj nK Aa¨ÿ, w`bvRcyi †gwW‡Kj K‡jR Aa¨ÿ, ivRkvnx †gwW‡Kj K‡jR wefvMxq cÖavb, gv‡K©wUs wefvM †eMg †iv‡Kqv wek¦we`¨vjq, iscyi

180 PRIME BANK Our proud ESP awardees who were uncertain about their graduation. Today! With the help of ESP stipend the awardees successfully completed their graduation and many of them has obtained outstanding result. Some awardees are shown as under:

Name: Md. Anwar Hossain Name: Md. Imam Uddin PBF ID # 11-1-061 PBF ID # 13-1-2-290 Result: 8th Position Result: 8th Position Subject: Applied Physics Subject: Social Welfare Institution: Pabna University of Science Institution: Dhaka University and Technology

Name: Ms. Asia Khatun Name: Ms. Tasmia Islam PBF ID # 11-1-198 PBF ID # 13-2-1-203 Result: 1st Position Result: 1st Class 5th Subject: Account and Information System Subject: Bangla Institution: Dhaka University Institution: Rajshahi University

Name: Md. Shahin Kabir Name: Mohammad Saiful Islam PBF ID # 12-1-2-235 PBF ID # 14-1-1-112 Result: 5th Position Result: 1st Position Subject: Islamic History and Culture Subject: Civil Engineering Institution: Dhaka University Institution: Chittaong University of Engineering & Technology

Name: Ms. Tandra Bagchi Name: Ms. Tasmia Islam PBF ID # 12-2-1-178 PBF ID # 13-2-1-203 Result: 1st Class 3rd Result: 4th Position Subject: Urban & Regional Planning Subject: Generic Engineering Institution: Khulna University of Institution: Dhaka University Engineering Technology

Name: Mr. Anondo Mohon Name: Md. Shah Paran PBF ID # 12-1-1-83 PBF ID # 14-1-2-251 Result: 6th Position Result: 3rd Position Subject: Computer Science and Subject: Development Studies Engineering Institution: Dhaka University Institution: Islamic University

Name: Ms. Fahima Akter Name: Ms. Sadia Afrin PBF ID # 13-2-1-167 PBF ID # 14-2-2-338 Result: 1st Position Result: 1st Class Subject: Chemistry Subject: Population Science and Human Institution: Begum Rokeya University, Resource Rangpur Institution: Dhaka University

PRIME BANK 181 ANNUAL REPORT 2018

At a Glance ESP Awardees Dropped Out Recently Award, ESP Expenditure by year Gratuated 56 84

09 620 ,0 66,3 39 43 ,7 ,3 ,878 ,0 42 611 42 ,

,201 Passed Out 36 37 37 ,5 Awardees Awardees, 61 1671 ,9 now in 54 31

,0 Job, 1051 81 ,0 26 20 00 ,0 ,8 93 ,1 49 90 529 ,8 19 715 8, , ,7 1 8,3 15 556 301 55 4, ,9

11 Existing ,292, 1 Awardees, Y2007 Y2008 Y2009 Y2010 Y2011 Y2012 Y2013 Y2014 Y2015 Y2016 Y2017 Y2018 1718 Financial statement of Education Support Programme Total Contribution Taka: 27,78,09,378.00 Total Awardees 3445

Prime Bank recognized and encouraged Sumon Ali and Ms. Shahnaj Parvin for their bravery and outstanding contribution

Paikpara, a beautiful village looks like a painting coloured in green. It is located in the Hondial Union of Chatmohar Upazila of Pabna. Beside the village, the ‘Chalanbil’ gave a new dimension to the beauty of Paikpara. People from all walks of life visit the place regularly. On 31st August, 2018, in the evening, a group of 22 people came to the ‘Chalanbil’ in Paikpara village to enjoy the boat ride. They climbed on to the roof of the boat to capture the memory for which the boat got stranded at one stage with the load of the people.

Nearby the Chalanbil, Sumon Ali, a student of Class-VII of Hondial Dimukhi High School was sitting on the dike in his tiny boat (dinghy).Confused by the unexpected incident, at that moment, Sumon jumped out of his tiny boat (dinghy) to save the lives of the people. With Sumon’s prompt action, alertness and bravery, he was able to save 17 people with the help of Shahnaj, another comrade in the rescue team.

Suman and Shahnaj are now among the outstanding personalities of the Paikpara village. On September 8, 2018, the “Daily Prothom Alo” gave special appreciation and encouragement to them by publishing an article “Shadharoner Oshadharon Shahosh”. Prime Bank recognised Suman and Shahnaj’s bravery and outstanding contribution. Accordingly, Sumon Ali received a long time monthly stipend under ESP of Prime Bank Foundation. Also, Ms. Shahnaj Parvin received mygb I kvnbvR cvifx‡bi Amvgvb¨ Ae`v‡bi ¯^xK…wZ a one-time amount of Tk. 25,000. With the approval of the f~wgKv: Board of Directors of Prime Bank/Foundation Management Committee, Chief Executive Officer of Prime Bank Foundation cvBKcvov, Qwei gZ my›`i GK MÖvg| mey‡Ri mgv‡ivn Pvwiw`K| cvebvi & Deputy Managing Director Mr. Golam Rabbani of Prime Bank PvU‡gvni Dc‡Rjvi nvwÛqvj BDwbq‡b Gi Ae¯’vb| MÖv‡gi cvk w`‡q Limited along with the help of Mr. Md. Jasim Uddin, Deputy e‡q Pjv ÔPjbwejÕ cvBKcvovi †mŠ›`‡h© G‡b w`‡q‡Q bZzb gvÎv| ZvB‡Zv Commissioner of Pabna distributed the recognition through a ågb wcqvmy gvby‡li Avbv‡Mvbv GLv‡b †hb GK wbZ¨ ‰bgwËK e¨vcvi| formal ceremony in Pabna on October 22, 2018. The eventhad 31 †k AvMó, mÜ¨vÿY| 22 Rb ch©U‡Ki GKwU `j †bŠåg‡b Av‡m a widespread publicity and it was publsihed in the print media. cvBKcvov MÖv‡gi Pjbwe‡j| we‡ji †mŠ›`‡h© AvZ¥nviv mevB| Avb›`Nb gyn~Z© ¯§iYxq Ki‡Z †bŠKvi QB‡q D‡V †mjwd ZzjwQj m‡e wg‡j| QB‡q

182 PRIME BANK DVv ågb wcqvmy †mB 22 R‡bi fv‡i GK ch©v‡q Wze‡Z Lv‡K †bŠKvwU| year of 2008 in Uttara. The voyage of establishing a quality and ïiæ nq AvZ© wPrKvi, euvPvI! euvPvI!! unique English Medium School commenced with the vision to help the society to carry on the paramount level of creativity mygb I Zvi Dcw¯’Z eyw×: and individualism which can be transferred to others. In the mygb Avjx, eqm gvÎ 13| nvwÛqvj wØgyLx D”P we`¨vj‡qi mßg †kÖYxi long run, this helps the community in creating leaders who can QvÎ †m| ˆKk‡ii PÂjZv Zvi †Pv‡L gy‡L| we‡ji Zx‡i GK †QvÆ wWw½ build a better future for a nation. Over all these years, PBEMS †bŠKvq e‡m ågb wcqvmy‡ì Avb›` Dc‡fvM KiwQj GKvKx| †K RvbZ, with its Interactive Methodology successfully completed its 10 Zx‡i e‡m _vKv GB ‡QvÆ †Q‡jwUB mevi Rb¨ ÎvZv n‡q Av‡Q! NUbvi year long journey. However, with time, the urge of establishing AvKw¯§KZvq wKsKZ©e¨wegyp, mygb| gyû‡Z©B wbR‡K ¸wU‡q `ªæZ Qz‡U the school with Cambridge guided all to obtain the approval. P‡j Zvi wWw½wU wb‡q 22 R‡bi Rxeb euvPv‡Z| myg‡bi wWw½wU wbZvšÍB PBEMS’s unique approach of teaching nurtured the project in †QvU! m‡ev©&”P 5 Rb em‡Z cv‡i G wWw½ †bŠKvq| A_P gvbyl 22 Rb! such way that the project is now sustainable. The first batch gvbyl¸‡jv‡K GK mv‡_ Zvi (myg‡bi) wWw½‡Z DVv‡j KvD‡KD& nqZev of PBEMS students who started their journey in 2008 are now euvPv‡bv hv‡ebv! Am¤¢e axkw³ m¤úbœ †QvÆ myg‡bi gv_vq bZzb wPšÍv preparing for their O-Level examination in 2019. PBEMS has Av‡m| fvM¨vnZ gvbyl‡ì wPrKvi K‡i e‡j, ÒAvcbviv †KD ‡bŠKvq given a praiseworthy performance in an environment where the DV‡eb bv| ïay †bŠKv a‡i cvwb‡Z †f‡m _vKzb| mevB DV‡j wWw½ Wz‡e vision and mission of the project was difficult to comprehend to hv‡e ZLb Avcbv‡ì KvD‡K euvPv‡bv hv‡e bv!Ó the society of Bangladesh. After 10 long years, we can proudly say that we not only dream of becoming self-sustainable, but kvnbvR cvifxb, hvÎx D×v‡i myg‡bi mn‡hv×v: we already did and initiated some of the work of expansion of kvnbvR cvifxb| hv‡K †c‡q ‡QvÆ mygb Amnvq hvÎx‡ì D×v‡ii GK PBEMS by planning to hire another campus of the school.

mn‡hv×v cvq| 35 eQi eqmx GB M„nea~ wej †_‡K evwo †div nuvm ¸‡jvi The year 2018 was a year of great achievement as PBEMS Lvevi w`w”Qj wkï mšÍvb‡K †Kv‡j wb‡q| g„Zz¨ c_ hvÎx ågb wcqvmy‡ì obtained the Cambridge Approval under British Council. We AvZ© wPrKvi Kv‡b Avm‡ZB Kvjwej¤^ bv K‡i wWw½wU wb‡q Qz‡U P‡j `~N©Ubv have finally proved that PBEMS is a quality English Medium KewjZ ¯’v‡b| myg‡bi Dcw¯’Z eyw×‡Z wew¯§Z nq kvnbvR cvifxb wb‡RI| School with low cost. Also, PBEMS has obtained the approval myg‡bi †KŠkj LvwU‡q †mI g„Zy¨cÖvq hvÎx‡ì Rxeb euvPv‡Z we‡kl f~wgKv from Primary Education and Dhaka Board. The quality of iv‡L| mygb I kvnbvR cvifx‡bi eyw×, mvnwmKZv I cÖ‡Póvq ‡eu‡P hvq education of PBEMS has not only been recognized by 17 wU ZvRv cÖvY| fv‡Mï wbg©g cwinvm! 5 Rb‡K eiY Ki‡Z nq mwjj International Body but also by the government of Bangladesh. mgvwa! †bŠKvi gvwS mvZ‡i Kz‡j G‡m wb‡R‡ì Rxeb iÿv K‡i| In line with the projection, PBEMS got the approval from the cÖvBg e¨vsK KZ…©K mygb I kvnbv‡Ri exi‡Z¡i ¯^xK…wZ `vb: Board of Prime Bank Limited to open another campus after completion of 2019. Ggb Amvgvb¨ Ae`v‡b mygb I kvnbvR AvR cvBKcvov MÖv‡gi Av‡jvwPZ wcÖq e¨w³Z¡| GjvKvi gvby‡li gy‡L gy‡L Zv‡ì MíK_v| ‰`wbK cÖ_g “Achievement” has come in the path of PBEMS as the integrity Av‡jv weMZ 8 †m‡Þ¤î 2018 Bs Zvwi‡L Zv‡ì Òkwbev‡ii †µvoc‡ÎÓ of the school has been seen and approved by international and local governing bodies. In the starting of its journey, mygb I kvnbvR‡K wb‡q Òmvavi‡Yi AmvaviY mvnmÓ bv‡g GK AvwU©K¨vj PBEMS envisaged to bring out the best of the method and Qvwc‡q mygb I kvnbvR cvifx‡bi Ae`v‡bi ¯^xK…wZ `v‡bi cvkvcvwk we‡kl curriculum in our country. Prime Bank English Medium School Drmvn cÖ`vb K‡i| cvebvi †Rjv cÖkvmK wb‡RI mygb‡K Ò‡¯^”Qv kÖ‡gi would like to thank Prime Bank, Prime Bank Foundation and exiÓ Dcvwa `v‡bi cvkvcvwk Avw_©K mnvqZvi gva¨‡g Drmvn cÖ`vb K‡ib| all its well-wishers, without them the journey of a decade and bwRi wenxb exi‡Z¡i ¯^xK…wZ I Drmvn cÖ`v‡b cÖvBg e¨vs‡Ki f~wgKv: achievements would not have been possible. Our project is an eq‡m cwic~Y© bv n‡jI eyw&×‡Z cwic°Zvi cÖgvY w`‡q‡Q mygb Avjx| example for others and eventually it has been able to achieve the common vision of the management, Prime Bank, Prime cvkvcvwk kvnbvR cvifx‡bi Ae`vb Amvgvb¨| avivevwnK Drmvn cÖ`v‡b Bank Foundation and the society. mygb ‡nv‡mb GKw`b A‡bK eo n‡q ‡`‡ki m¤ú‡` cwiYZ n‡e, Ggb Avkv ZvB AevšÍi bq| Avi kvnbvR cvifxb †Zv G‡`‡ki bvix mgv‡Ri Kv‡Q GK bZzb †cÖiYv ev D`vniY| mygb ‡nv‡mb I kvnbvR cvifxb‡K Avw_©K mn‡hvwMZvi D‡jøwLZ cwiKíbv ev¯Íevq‡b cÖvBg e¨vs‡Ki ‡evW© Ae wW‡i±im-Gi m¤§vwbZ m`m¨M‡bi m`q Aby‡gv`b mv‡c‡ÿ wmBI, cÖvBg e¨vsK dvD‡Ûkb, cvebvi ‡Rjv cÖkvmK Rbve †gvt Rwmg DwÏb Gi mn‡hvwMZvq GK Abvi¤ô Abyôv‡bi gva¨‡g kvnbvR cvifxb‡K GKKvjxb I mygb †nv‡mb‡K AvbyôvwbKfv‡e BGmwc- Gi wkÿve„wËi AvIZvf~³ K‡ib| D‡jøL¨ †h, mygb Avjx‡K e„wË cÖ`v‡b BGmwc-Gi e„wË cÖvß QvÎ/QvÎx‡ì GKvD›U †Lvjvi ixwZ ûeû cvjb Kiv n‡q‡Q| mygb Avjx‡K BGmwc-Gi AvIZvq gvwmK nv‡i `xN© †gqv`x wkÿve„wË cÖ`vb Kiv n‡q‡Q| kvnbvR cvifxb‡K Zuvi Ae`v‡bi ¯^xK…wZ ¯îæc GKKvjxb 25,000/- (cwPuk nvRvi) UvKv gvÎ cÖ`vb Kiv n‡q‡Q|

Prime Bank English Medium School (PBEMS)

Ten Years of Achievement

Prime Bank English Medium School (PBEMS), one of the PBEMS is now registered as a Cambridge International School initiatives of Prime Bank Foundation started its journey in the

PRIME BANK 183 ANNUAL REPORT 2018

PBEMS is now registered as a and we expect them to demonstrate responsibility for learning, Cambridge International School for their actions and for the environment.

Reflecting on the year 2018, I have reflected on the bigger picture of PBEMS and what we need to do to continue to grow and develop the school in a purposeful and innovative direction. In the year 2018, the focus was on establishing the foundation of the school by determining the quality of the school. In order to make the journey of accomplishment memorable, I needed the support of all my team members and Prime Bank Foundation to obtain the registration of the school as a Cambridge International School from the British Council. It was a challenging time for the school, as the team needed to include and upgrade more facilities within the budget. PBEMS compared to other English Medium Schools has an element of difference, as it is one of the CSR projects of Prime Bank Foundation. The policy, guidelines and requirements of Cambridge, does not compromise with any of the prerequisites, including the financial ability of a school. The need to have all the physical facilities was given priority. Also, the registration of Primary Education and Dhaka Board was one of the important necessities. Teaching and learning was an emphasis and through hard work and dedication by the staff from both campuses, Cambridge syllabus was planned and PBEMS is now registered under Dhaka Education Board implemented as a written, taught and assessed curriculum. Ongoing Professional Development in teaching and learning From the Desk of the Principal, PBEMS strategies aligned with Cambridge, was another focus. Finally, The one year journey with Prime Bank English Medium School through hard work, satisfying the requirements and submitting for me has been an exciting, engaging and requiring abundant all documentation, PBEMS finally obtained the Cambridge energy. Resilience is definitely a common value that most approval in November 2018. Now, we have verification that people in Bangladesh possess and is to be admired. PBEMS is a quality English Medium School, which has been Confidence is one of the attributes of PBEMS teachers, staff approved by National and International Bodies. and students. What we are most confident about is that there I believe that resilience is one of the most important attributes is a great future for the school. Everyone involved with PBEMS for anyone to acquire. I have become extremely resilient - I have is confident that together we can continue to build on what is to bounce back when maybe I have not achieved what I set already a great place for students to grow and learn. out to do within a timeframe. But one of the most important Innovation is one of the attributes of the Cambridge teacher things I have learned that I cannot achieve on my own - I need and learner. You might ask how we are innovative. The model my team and the support of the wider community and Prime for our English Medium School encourages students to interact Bank Foundation. As they say there is no ‘I’ in TEAM. I would with each other and the teaching methodology engages the like to take this opportunity to thank all of the staff, parents and students in the learning process. To be engaged in the learning students of PBEMS and also the Foundation for the support I process is another attribute that allows PBEMS students to have received in 2018. experience hands on learning opportunities and be more Helen Salmon involved with the community and service. As a responsible Principal (till Dec 2018), human being, the students are learning to value authenticity Prime Bank English Medium School

Principal of PBEMS interview was published in The Daily Jugantor

184 PRIME BANK Commencement of a New Beginning…. I also give advice to my sister on her projects and if there is

Reean Rahman John of Class-10, a student of PBEMS Uttara, any gap in her assignments, I ask her to study. Even though I shared his views about his beloved school PBEMS. I am with stress her out sometimes, I knew it came with love. My parents; PBEMS Uttara since 2011. “According to me, PBEMS gave me Mr. Anisur Rahman and Mrs. Umme Salma Rahman have been the perfect platform and the opportunity to explore and learn telling how my sister is jealous over my social enhancement with the help of the Interactive Methodology. I would like to and my English language skills. PBEMS helped me to visualize share that my respected teachers guided me in a way that now my aim to study in a quality English Medium School. I would be I am more focused in life and have the intention to become a thankful to Prime Bank English Medium School for providing global responsible citizen of Bangladesh. From extracurricular affordable fees which have made my dream come to reality. activities, physical education, project work, building moral PBEMS also taught us the skill of compassion and being values and obeying the elders, all these have guided me appreciative of others. At PBEMS, we have been educated to develop my future and be determined in whatever I am that caring for someone cannot be based on conditions, it is engaged with”. something we do out of moral values”.

“Now in 2018, everything changed during the end of my junior Finally I would conclude by asking for best wishes from all so year of school. I have started giving advice to my peers on what that we graduate from school with flying colours in O-Level subjects they should take for their O and A-Level examination. examination-2019.

PRIME BANK 185 ANNUAL REPORT 2018

Prime Bank Eye Hospital (PBEH)

We are also in the field of success…

Prime Bank Eye Hospital (PBEH), one of the best ophthalmic and modern hospitals, located at House # 82, Road # 8A, Satmasjid Road, Dhanmondi, Dhaka-1209. Prime Bank Eye Hospital is a health project of Prime Bank Foundation (a CSR wing of Prime Bank Limited). The hospital started its journey in the year 2012 and is now able to provide all kinds of eye treatment services to the patients. By this time, Prime Bank Eye Hospital is already established as the hospital of choice among the patients. Since inception, this hospital is operating under the guidance of Aravind Eye Care System (AECS) as the management & technical partner of PBEH.

In the year 2018, among the three projects, Prime Bank English Medium School and Prime College of Nursing Dhaka, are now the mandates of PBEH is to provide eye care services to both sustainable projects of PBF. Not only did the projects reach the rich and poor. In the year 2018, PBEH performed 665 walk-in point of sustainability, they are now contributing to some of the and 1012 camp surgeries. The cost associated with the camp activities of PBF and also supporting themselves. surgeries was Tk. 33,88,936/-. On the other hand, the cost Prime Bank and Prime Bank Foundation believes that associated with walk-in surgeries was Tk. 38,29,612/-. In return sustainability is achievable if there is a social and financial return of the services, PBEH incurred almost the same amount of cost from our CSR projects. When a hospital becomes sustainable, to perform both camp and walk-in surgeries. Whereas, 43% its desire to help the society for a life time is fulfilled. Reflecting revenue was achieved from walk-in and on the other hand 12% on this, the need for making the health project sustainable was achieved from camp surgery. The same amount of service arises. As PBEH is now a partially subsidised project, the was provided to the rich and the poor as it is one of the mandates hospital feels more pressurised to accomplish sustainability of PBEH. So, the requirements of the hospital and the patients in order to be considered as an independent and recognised do not compromise with any of the provisions, including the hospital in the health sector of Bangladesh. financial ability of PBEH. The hospital had to set up its prices of different surgical procedures, investigations and pathological From the year 2012, PBEH has been facing crucial time to tests based on the requirements of daily patients and the provide reduced rate of eye care services to the poor. One of catchment area. Every year, PBEH incurs a huge operating cost in order to provide the services with a comparatively lower priced fee. Therefore, it becomes challenging for PBEH to offer discount to the prices and maintain the financial sustainability which is an obstacle in generating enough revenue for the hospital. As PBEH provides services to all categories of patients in the country, the prices were set according to the financial solvency of the patients. In some cases, more than 60% discount is given for surgical procedures of the camp and walk-in poor patients. The average discount of all surgical procedures for the poor patients is almost 40%. The annual loss for offering such discounts is huge which definitely has some negative impact to enable PBEH to stand on its own feet. However, as per the trend of subsidy of PBEH, it is certain that the hospital is also on the verge of success with the directive ÒcÖwZw`b †`Le †fvi, bZzb Av‡jvq...Ó|

Some Statistics of Prime Bank Eye Hospital (2018)

In the year, Prime Bank Eye Hospital (PBEH) examined a total of 36,917 patients (pts). Of them, 22,552 patients were walk-in, 10,567 patients were from outreach eye camps and the rest 3,798 patients were examined at the Vision Centre, Narayanhat, Chattagram.

In 2018, the income growth of PBEH shows that it increased from 21% to 77% over the last six years because the amount of subsidy is gradually decreasing by year. The decrease in subsidy occurred due to increase in patient & increased number of surgeries.

186 PRIME BANK 698 665

22552 524 504 20211 18906 391 15481

11900 250 9042

147 5676

Y2012 Y2013 Y2014 Y2015 Y2016 Y2017 Y2018 Y 2012 Y 2013 Y 2014 Y 2015 Y 2016 Y 2017 Y 2018 Walk-in Patient Examination Walk-in Patient’s Surgery

50000 3000 45000 2644 2500 40000

35000 2000 30000 1500 1497 25000

20000 1000 1012 15000 700 500 395 468 10000 93 5000 0 Y2012 Y2013 Y2014 Y2015 Y2016 Y2017 Y2018 0 Y2012 Y2013 Y2014 Y2015 Y2016 Y2017 Y2018 Camp Patient Examination Camp Patient Surgery

Note: In 2013 and 2014, camp patients were high as PBEH conducted 55 additional eye camps fully sponsored by Prime Bank Limited. Similarly, camp patients’ surgery was also high.

PRIME BANK 187 ANNUAL REPORT 2018

A Letter of a Patient to CEO, PBF

Respected Sir,

I am Md. Shahjahan Chowdhury. I am currently an UN retiree residing in Dhanmondi. Fortunately or unfortunately, I have had three Operations in three different hospitals namely, Square Hospital for Orthopaedics Surgery, Japan Friendship Hospital for Recta; Surgery and Prime Bank Eye Hospital for Cataract Phaco Surgery at Satmasjid Road, Dhanmondi 15, Dhaka. But I have been blessed to have undergone my surgery at Prime Bank Eye Hospital.

Dr. Anthony Albert, who did my Cataract Phaco Operation, was a very peaceful, gentle and helpful person. As a doctor, he handled my case with precision and care. I don’t think I could have met a better doctor than Dr. Anthony.

The Counsellor on call, Dilruba Sultana, was an exceptionally cooperative, supportive and a cheerful person at all times. She helped me to sort out my documents and enabled me to easily carry out the hospital procedures.

The concerned support staff Stela, Jaya and Rina Dey of the hospital took care of my basic requirements and catered to my various needs whenever required. I am very satisfied and content with my stay and operation at Prime Bank Eye Hospital. And I hope your esteemed organisation will continue to deliver high quality service in the future as well. I am extremely pleased with your hospital’s service and will definitely recommend your hospital to family and friends.

Thanking you, Md. Shahjahan Chowdhury Cataract Phaco Patient

188 PRIME BANK Prime College of Nursing, Dhaka (PCND) Kvwnbx - 1 In the past years, Bangladesh has achieved tremendous success Ònv‡Riv Lvbg I Av‡qkv LvbgÓ Avgvi cwiev‡ii Me© ...... in the health sector. As a Nursing College in Bangladesh, we Avmmvjvgy-AvjvBKzg| nv‡Riv Lvbg Ges Av‡qkv Lvbg Avgvi ‡gvU 7 can proudly mention that Prime College of Nursing, Dhaka mšÍv‡bi g‡a¨ cÖ_g GB `yB †g‡q| GB †g‡qiv 2013 mv‡j GBPGmwm (PCND), an initiative of Prime Bank Foundation, is a part of this success as well. PCND’s aim is to make qualified and skilled cvm Kivi ci LyeB wPšÍvq wQjvg I‡ì †Kv_vq covïbv KivB| ZLb nurses in Bangladesh. The college is proud to portray nursing Avgv‡ì GK AvZ¥x‡qi gva¨‡g cÖvBg K‡jR Ae bvwm©s, XvKv m¤ú‡K© as a prosperous profession in every corner of the country. Rvb‡Z cvwi| Zvici Rvbyqvix 2014 †Z GB K‡j‡R Avgv‡ì `yB †g‡q‡K fwZ© Kwi| PCND was established in January 2013 and in the past six years of PCND since inception was well heeled. The journey started K‡jRwU XvKvi bZzb Gqvi‡cvU© †iv‡Wi cv‡k¦© wLj‡ÿZ GjvKvq Aew¯’Z| with 29 students and now the number of students in the 1st-2nd- GKB fe‡b K‡jR K¨v¤úvm I †g‡q‡ì _vKvi my›ì eë¯’v Av‡Q| 3rd year of college stands to 137. PCND is uncompromisingly K‡jRwU `ÿ wkÿKgÛjx Øviv cwiPvwjZ| Av‡Q DbœZgv‡bi bvwm©s j¨ve| offering standard nursing education under the guidance & Bs‡iRx Ges Kw¤úDUvi wkÿvi Rb¨ Avjv`vfv‡e j¨ve| Av‡iv Av‡Q fv‡jv supervision of Dhaka University (DU) & Bangladesh Nursing Bs‡iRx Ges we‡`k †_‡K cov‡jLv Kiv Kw¤úDUvi wkÿK| nvmcvZvj and Midwifery Council (BNMC). A total of 121 “Diploma in cÖvw±m Gi Rb¨ i‡q‡Q Kzwg©‡Uvjv †Rbv‡ij nvmcvZvj| GKK_vq K‡jRwU Nursing Science & Midwifery” graduates are currently working bvwm©s covïbvi Rb¨ LyeB fv‡jv| in different public & private healthcare service delivery centres in Bangladesh at Medical College & Medical university/division/ GB K‡jR †_‡K 2016 mv‡j Avgvi †g‡qiv LyeB fvj djvdj K‡i district/upazila level and private hospitals: Square, Apollo, Asgar ‡mweKv n‡q ‡ewi‡q‡Q| cvm Kivi ciciB `yB †g‡qi PvKzix n‡q‡Q Ali, and United Hospital etc. They have held the reputation of †`‡ki bvgKiv ‡emiKvix AvmMi Avjx nvmcvZv‡j| G eQi (2018 the PCND at every step of their work. mvj) Zv‡ì GKRb Av‡qkv Lvbg wØZxq †kÖYxi Kg©KZ©v wnmv‡e miKvix In both public and private sectors, students are making the PvKzix †c‡q‡Q| eZ©gv‡b PUªMÖvg †gwW‡Kj K‡jR nvmcvZv‡j ÷vd bvm© name of the PCND proud. All the faculty members of PCND c‡` Av‡Q| bvwm©s ‡ckvq Lye Aí mg‡q ‡g‡qiv fv‡jv Kivq Avwg LyeB feel proud to mention that in 2018 a remarkable number of Avbw›`Z| GB †ckvq †g‡q‡ì‡K fv‡jv bvm© wn‡m‡e M‡o †Zvjvi Rb¨ students have got the opportunity to join as the Govt. 2nd Avwg cÖvBg K‡jR Ae bvwm©s, XvKv Gi Kv‡Q K…ZÁ| Class Officer and posted at different Public Medical College bvwm©s †ckv‡K Avwg LyeB m¤§vb Kwi| Kvib G †ckvi gva¨‡g me ai‡bi Hospitals including Bangabandhu Sheikh Mujib Medical University (BSMMUH), District level general hospitals and gvby‡li DcKv‡i Avmv hvq| hv Ab¨ †Kvb †ckvq m¤¢e bq| Z`ycwi Upazila level Health Complexes. ag©xq `„wó‡KvY †_‡K GB †ckv n‡jv DËg †mev ev mIqv‡ei KvR| G eQi Avgvi Av‡iK ‡Q‡j GBPGmwm cvk K‡i‡Q| miKvix fwZ© To take this success further, two new feathers have been added cixÿvi gva¨‡g GB K‡j‡R 3 eQi †gqvw` wW‡cøvgv Bb bvwm©s mvBÝ GÛ to the crown as the great achievement in the year 2018. During the year, PCND obtained the affiliation of Dhaka University to wgWIqvBdvwi †Kv‡m© fwZ© Kwi‡qwQ| Avwg g‡b Kwi bvwm©s wkÿvi Rb¨ offer two B. Sc. Nursing Courses: B. Sc. in Nursing (4 years) and mew`K †_‡K GB K‡jRwU LyeB fv‡jv| GLv‡b bvwm©s wkÿvi cvkvcvwk Post Basic B. Sc. in nursing (2 years). Post Basic B. Sc. in nursing ˆbwZK wkÿvI ‡`qv nq| hv K‡j‡Ri QvÎ-QvÎx‡K GKRb Av`k© gvbyl course already started from July 2018. A total of 30 students wnmv‡e M‡o Zzj‡Z mvnvh¨ K‡i| have enrolled in B. Sc. in nursing course under the govt. unified Avkv Kie Avgvi mšÍvb‡ì gZ Ab¨vb¨ †Q‡‡j-‡g‡qiv GKBfv‡e cÖvBg exam system by Directorate General of Nursing and Midwifery K‡jR Ae bvwm©s, XvKv †_‡K bvwm©s wkÿv MÖnY Ki‡e| wb‡R‡K GKRb (DGNM) for the session 2018-19. Their classes will start from fv‡jv bvm© I Av`k© gvbyl wnmv‡e M‡o †Zvjvi my‡hvM cv‡e| GB K‡j‡R January 20, 2019. Av‡iv `ywU weGmwm bvwm©s †Kvm© Pvjy Kivi Lei †R‡b Avwg LyeB Avbw›`Z| The year 2018 was also the milestone of PCND for its Avgvi †g‡q‡ì‡K K‡j‡Ri 2 eQi †gqvw` †cv÷ †ewmK weGmwm Bb achievement as a self sustaining project of PBF. During the bvwm©s †Kvm© Kiv‡bvi B”Qv Av‡Q| K‡j‡Ri Kv‡Q Avgv‡ì Av‡iv Avkv period from 2013 to 2017, PCND expended/invested a total of AwP‡iB D”PZi GgGmwm Bb bvwm©s Pvjy Kivi| GB K‡jR †_‡KB hv‡Z Tk. 5.86 crores. As per projection of PCND, it is expected that Avgv‡ì mšÍv‡biv mn‡RB D”PZi bvwm©s wkÿv jvf Ki‡Z cv‡i| its sustainability will be strengthened gradually. Accordingly, PCND will be able to pay back the total expended amount K‡jR KZ…©cÿ‡K Avwg AvšÍwiK abëv` RvbvB Zv‡ì ‡mevi Rb¨| Avwg (Tk. 5.86 crores) by 2024 enabling PBF to invest needed for its K‡j‡Ri DbœwZ Kvgbv KiwQ| vertical and horizontal expansion of its existing/new activities.

PCND has already achieved a high ranking position among other nursing colleges and institutes in Bangladesh. To keep the reputation ahead, all the faculty members and staff of PCND are working with full of devotion and dedication. PCND is committed to work persistently for providing standard nursing education and make students as qualified and efficient future nurse.

PRIME BANK 189 ANNUAL REPORT 2018

cÖvBg K‡jR Ae bvwm©s, XvKv †_‡K cvkK…Z mdj QvÎ-QvÎx‡`i K‡qKRb

Kg©‡ÿ‡Î ‡hvM w`‡q GKUv welq Lye fvjfv‡e Dcjwä Ki‡Z †c‡iwQ Ñ wcwmGbwW ïay `ÿ ‡h Avkv-AvKv•Lv wb‡q wcwmGbwWÕ‡Z Rvbyqvix 2015 mv‡j fwZ© n‡qwQjvg Zvi †_‡K A‡bK bvm©-B ‰Zwi K‡i bv| GKRb fvj gvbyl I ˆZwi K‡i| †ewk wKQz AR©b K‡iwQ|

iæwj gvbwKb wmwbqi óvd bvm© Kzwg©‡Uvjv †Rbv‡ij nvmcvZvj Igi mvwb wmwbqi óvd bvm© ¯‹qvi nvmcvZvj wjt

welqwfwËK wel‡q wewfbœ miKvix we‡klvwqZ nvmcvZvjmn mviveQi wbqwgZfv‡e miKvix Kzwg©‡Uvjv †Rbv‡ij nvmcvZv‡j wK¬wb‡Kj cÖwkÿY GKRb `ÿ bvm© wn‡m‡e M‡o Zzj‡Z gvbm¤úbœ bvwm©s wkÿvi Rb¨ Avgv‡`i K‡jRwU GKwU e¨wZµgag©x cÖwZôvb| ¸iæZ¡ Abw¯^Kvh©|

Bgivb wgqv wmwbqi óvd bvm© myBwU Av³vi ‡kL dwRjvZz‡bœQv gywRe †g‡gvwiqvj ‡Kwc‡R wmwbqi óvd bvm© we‡klvwqZ nvmcvZvj Kzwg©‡Uvjv †Rbv‡ij nvmcvZvj

K‡j‡Ri D”P gvbgm¤§Z bvwm©s wkÿvi cvkvcvwk G·Uªv KvwiKzjvg Kg©Kv‡Û AskMÖn‡b Avgv‡K GKRb `ÿ bvm© wn‡m‡e M‡o Zzj‡Z K‡j‡Ri Ae`vb Abw¯^Kvh©| †bZ…Z¡`v‡bi AwfÁZv Avgv‡`i‡K AvZ¨cÖZ¨wq K‡i Zz‡j‡Q|

¯^Y©v ivq jyebv Av³vi wmwbqi óvd bvm© wmwbqi óvd bvm© wm‡jU GgGwR Imgvbx †gwW‡Kj K‡jR nvmcvZvj miKvwi nvmcvZvj

`ÿ bvm© I Av`k© gvbyl wn‡m‡e wb‡R‡K cÖwZwôZ Ki‡Z wcwmGbwWÕi `ÿ bvm© wn‡m‡e wb‡R‡K Mo‡Z PvB‡j cÖvBg K‡jR Ae bvwm©s, XvKv-Gi wkÿv Acwinvh©| bvwm©s wkÿvi weKí †bB|

‡gvt †ivgvb Avn‡g` Rqv PvKgv wmwbqi óvd bvm© w m w b q i ó v d b v m © G¨v‡cv‡jv nvmcvZvj wjt ev›`ievb †Rbv‡ij nvmcvZvj

190 PRIME BANK New Initiative of Prime Bank Foundation Prime Bank Cricket Club (PBCC) In order to implement Prime Bank Board’s/Foundation Management Committee’s approved wish-list of supply-side Prime Bank believes that financing initiatives/enterprises on Prime Bank Foundation’s sports is not only a source of pure entertainment but also is connected with the mental and physical health, and the character development of the nation. As a whole, Prime Bank has long been a patron of culture in Bangladesh, having sponsored sporting events over many years. Cricket, no doubt, is a passion of the entire nation.

Along with the health and education sectors, Prime Bank also focused on cricket because it is popular in Bangladesh and helps our country to maintain an image as one of the important cricket nation. In this regard, Prime Bank Cricket Club (PBCC) was established in November 2011 by acquiring a club of The MOU was signed between Prime Bank Foundation Dhaka Premier Division. In the year 2018, PBCC participated in and Symon Capital Trust Bangladesh Cricket League (BCL) and was the winner in the tournament. PBCC also performed in Dhaka Premier League own land at Ashulia, Savar, Dhaka; a partnership has been (DPL). formed between Symon Capital Trust (SCT), an Australia based International Corporate Advisory Firm, specialising in Impact Investment, Capital Raising & International Development Assistance and Prime Bank Foundation (PBF). Accordingly, a Memorandum of Understanding (MOU) for partnership was signed between SCT and PBF on July 9, 2018 to develop an impact investment health services strategy, setup a medical college and multi-purpose hospitals on PBF’s land at Ashulia, Savar, Dhaka, Bangladesh. This MOU has been designed to establish the mentioned infrastructures and operations after consultation and completion of feasibility studies. Winner of BCL 2018-2019

CSR contribution Conducted Directly by PBL

Amount of Description of initiatives Expenditure (Jan-Jun, 2018) (in BDT) 1) Donation to Society for the Welfare of 5,00,000/- Autistic Children (SWAC) for continuing yearly salary of Occupational Therapist. 2) Donation to Bangladesh Thalassaemia 1,00,000/- Hospital. 3) Donation to BAPLC in connection with 10,00,000/- owning an office space. 4) Donation to Prime Minister’s Relief & 50,000,000/- Welfare Fund. 5) Donation to SWAC for the 11th World 1,00,000/- Autism Awareness Day Celebration Program-2018. Total = 51,700,000/-

PRIME BANK 191 ANNUAL REPORT 2018

Amount of Others Description of initiatives Expenditure (Jul-Dec, 2018) Donation to 50,000pcs Blankets to 1,97,10,000.00 (in BDT) Prime Minister’s Relief Fund. Education Donation to 18,000pcs Blankets for 70,95,600.00 Donation to Central Women’s College to 300,000.00 underprivileged People through PBL build a female common room Branches. Donation to Old Faujians Association for 500,000.00 Donation to Debhata B.B.M.P Govt 100,000.00 procuring micro bus Institution for celebrating 100years of Donation to Chittagong Independent 20,000.00 anniversary. University regarding a research on Donation to Tea Planters & Traders 922,000.00 ‘Expansion & Profitability’ Association of Bangladesh, Sreemangal Health for installing 5 units Air Conditioners. Donation to Mr. Mohammed Syed Noor 50,000.00 Donation to BAB (Bangladesh 53,60,000.00 for his own Medical Treatment Association of Banks) for implementation of cultural development projects by concerned ministry of the Government. Donation to Kara Odhidoptor for 10,00,000.00 inauguration of the Book ‘Tin Hajar Tipanno Din’ Total 350,57,600.00

Strategic Goals Strategic Goal 1

Make education more accessible for all

• Prime Bank Foundation’s scholarship programme has been able to reach out to the poor but meritorious students from all sixty four districts of the country. Education Support Programme (ESP) has been successful in bringing change to the society. With the contribution of ESP, students graduated on time are now employed in a respectable position.

• Prime Bank English Medium School has been able to give a student the learning of moral development. As a result, these students have a positive perception towards life.

• Prime College of Nursing, Dhaka also has been able to witness the accomplishment as the students who graduated in the 1st and 2nd batch are employed in renowned hospitals in Bangladesh. Strategic Goal 2

Make health more accessible for all

• Prime Bank Eye Hospital is continuously helping the people in need of proper eye care service. The hospital looks after every patient as it is both for the rich and the poor at the same time. Strategic Goal 3

Build a strong and dynamic organisation, capable of facilitating effective education, eye and other components of the health programme

Our capacity development venture is envisioned to establish learning processes and methodically systematize information flow, experiences, best approach and lessons learned at project level and the organisation we work with.

We aim to institutionalize the values of being a responsible corporate citizenship into the way of doing business and to professionalize the practice of CSR.

Monitor, measure and report on the impact of the work that we do.

Implemented information sharing and communication systems to lead our people and programmes.

Increased efficiency in managing organisational resources.

Continued building capacity of project staff and systems to support our target people.

192 PRIME BANK GREEN BANKING REPORT

The word “Green Banking” has been conceptualized to instructed the Banks & NBFIs (vide SFD Circular No. 02 dated implement the broader concept like sustainable development. 1st December, 2016) to: “Sustainable Development” is development that meets the i. Establish a Sustainable Finance Unit needs of the present without compromising about the ability of future generations to meet their own needs. Various global ii. Establish a Sustainable Finance Committee chaired by initiatives are underway to counter the adverse effects of senior most Deputy Managing Director. development such as global warming and climate change. iii. Ascertain the Terms of Reference (TOR) set by Bangladesh Banks can play an instrumental role in these global efforts to Bank for Sustainable Finance Unit and Sustainable Finance make the planet a better place for livelihoods. Committee in the Bank.

“Green Banking” means operating banking business in such iv. Risk Management Committee (RMC) of the Board of a fashion that proper and adequate attention is allocated in Directors to oversee the formulation of policy, set strategies social, ecological and environmental factors of environment and programs and monitor the overall activities related by minimizing conservation of nature and natural resources. to Sustainable Banking and Sustainable Finance (Green “Green Banking” is a form of banking taking into account the Banking & CSR) programs. social and environmental impacts and their main objects are to As a regulatory body of the Banking sector, Bangladesh Bank safe-guard and conserve the environment. As the intermediary introduced Environmental & Social Risk Management (ESRM) of financial sector, banks can ensure that business entities framework for Banks and NBFIs. The framework includes adopt environment-friendly practices. The main objective is the environmental & social risk management factors for to reduce carbon footprint from banking operations as well as ensuring the sustainable development and protection of the from financed projects. surroundings from further deterioration.

Bangladesh Bank’s initiatives To promote Green Banking, Bangladesh Bank has declared the following preferential treatments for the compliant banks: The Sustainable Finance Department of Bangladesh Bank is engaging and encouraging all Banks and NBFIs to expedite • Points to be awarded on management component while their green banking initiatives and standards. The necessary computing CAMELS rating resulted ultimately in overall policy guidelines and strategies for Banks and NBFIs have been rating of the Bank; disseminated by the central bank which encompasses policy • Top 10 (ten) Banks’ name to be declared in the Bangladesh formulation and governance, incorporation of environmental & Bank website. social risks into credit risk management, in-house environmental • Consideration will be given while according permission for management, introduction of green finance, creation of a opening new Branch of the Bank. climate risk fund, capacity building through training and awareness along with periodical regulatory reporting on green Bangladesh Bank also, vide GBCSRD Circular No. 04 dated banking practices. September 04, 2014 instructed all scheduled banks to allocate 5% of its total funded disbursed loan for BB enlisted 52 (Fifty- With a view to incorporate sustainability in the financial sector; two) Green products. Bangladesh Bank undertook its first initiative during the year 2011 by introducing Green Banking Policy Guideline for the Prime Bank’s commitment Banks (vide BRPD Circular No. 02 dated February 27, 2011) and later during the year 2013 it was made applicable for the Prime Bank Limited believes in eco-friendly and socially NBFIs (vide GBCSRD Circular no. 04, dated August 11, 2013). In responsible banking system which drives the whole nation that policy guideline, Bangladesh Bank instructed the Banks towards a healthy environment and presents an excellent and NBFIs to formulate green banking policy and establish a and hazardless banking. In order to protect and balance the separate green banking unit/cell with an aim to evaluate and environment, Prime Bank is spreading its wings by introducing manage the activities related to green banking. Afterwards, both in-house & external Green activities towards supporting Bangladesh Bank vide its GBCSRD Circular No. 08 dated Green Economy. December 24, 2013 instructed the Banks to assign the Risk Management Committee of the Board of Directors to supervise Green Banking Governance at Prime Bank the overall green banking activities of the Bank. As per instruction of Bangladesh Bank vide SFD Circular No. 02 Moreover, the Government of Bangladesh has taken initiatives Prime Bank Limited has established Sustainable Finance Unit to implement Sustainable Development Goals (SDGs) at (SFU) under CRM Division. Moreover, a Sustainable Finance national level which was announced by the United Nations to Committee has been established which is chaired Deputy implement at global arena. In line with that, Honorable Prime Managing Director & Chief Risk Officer. The Risk Management Minister of Bangladesh has also instructed all to participate in Committee (RMC) of the Board of Directors is to approve combined manner to accomplish SDGs. In this connection, policies, strategies and programs related to Sustainable to bring stability in financial sector, Bangladesh Bank has Banking and Sustainable Finance (Green Banking & CSR) programs.

PRIME BANK 193 ANNUAL REPORT 2018

Sustainable Finance Unit (SFU): As per BB SFD Circular No. 02, Energy & water management: The Bank has advised the Prime Bank established SFU under direct supervision of Head officials to adopt energy and water efficient practices. The of CRM Division. The ToRs of SFU are as under: officers have been advised to put emphasis to ensure efficient use of gas, fuel, electricity and water with a view to reduce • Formulation, amendment and implementation of Green carbon emission. Energy efficient equipments like energy Banking policy, Green Office Guide, E&S Risk Management saving bulbs, products with ecofriendly features are being Policy and other related policy used in the office. • Participation agreement signing and applying Refinance from BB Paper Consumption Management: Green Printing Guideline is • Support in annual budget preparation & escalation an integral part of our Green Office Guideline which is being • Provide necessary assistance to internal & external circulated among all employees. Internal communications are stakeholders done through emails. All staffs have dedicated email IDs for • Assisting Sustainable Reporting Committee (SRC) & FAD in office use. Customer communications are being done through preparing Annual Sustainability Report emails, SMS or ATM displays also. Use of scrap or one side used • Conduct SFC Meeting regularly papers has become usual practice in the workplace. One side • Update RMC of the Board on quarterly basis regarding used papers are also used for printing draft copies of the office Sustainable Banking assignments. All divisions and branches have been instructed • Regulatory & Internal Reporting to maintain a stock in-out register to prevent misuse of papers.

Sustainable Finance Committee (SFC): As per BB SFD Circular Renewable Energy Usage: Up to year 2018, the Bank has No. 02, Prime Bank established SFC chaired by DMD & CRO. installed solar panels at 36 branches as well as at 4 ATM booths The ToRs of SFC are as under: and as part of its commitment to the usage of renewable energy resources. Approve, monitor & evaluate the activities of Sustainable Finance Unit at management level. Green Travel: Prime Bank always encourages the officials to consider the following green approaches while travelling: Set annual objective of Sustainable Finance Unit and evaluate its performance. • Encourage employees to use Public Transport/Carpool Program. Ensure appropriate coordination and support among all relevant division of the Bank to accomplish the activities of • Encourage employees to use eco-friendly energy for Sustainable Finance Unit. private vehicles.

Green Banking Policy of Prime Bank Online Banking and Internet banking facilities offered by Prime Bank In line with Circular No.02 dated February 27, 2011 of Banking Regulations & Policy Department, Bangladesh Bank; Prime Online banking system is a great way to reduce paper Bank Limited outlined a comprehensive Green Banking Policy consumption. Prime Bank has been one of the pioneers in for implementing Green Banking activities. The updated Green introducing online Banking and it covers 146 branches. All the Banking Policy of the Bank which was revised during year 2018 146 branches of the Bank are providing online banking facilities is in place which is duly approved by the Board of Directors and through its core banking system namely “Temenos T24”. Fund circulated vide instruction circular among all employees. Transfer to Other bank’s Accounts through BEFTN has been made available through Online Banking for the Consumer Green Office Guide of Prime Bank Banking Customers. As a result, customers can execute fund As part of Prime Bank’s continuous effort of positively upholding transfer through paperless and automated Online Banking over the Green Banking initiatives, the Bank has developed Green internet to any other account in Bangladesh. Office Guide as a general guideline to facilitate the Green Prime Bank Limited has also offered a safe and convenient Banking objectives of the Bank. The Green Office Guide has Internet Banking, which is accessible 24/7. By using real-time pictorial demonstration for better understanding of the internet banking our customers can avail services like balance readers. The updated Green Office Guide of the Bank which enquiry, view account statement, view loans & deposit of their was revised during year 2018 is in place which is duly approved own, insurance premium payment, mobile & utility bill payment. by the management of the Bank and circulated vide instruction circular among all employees. Automated Teller Machine (ATM)

In addition to the Bank’s own 164 ATMs, the Bank has joined Major In house Green Banking Initiatives taken by Prime National Payment Switch Bangladesh (NPSB) network during Bank Ltd the year 2014, which enabled the cardholders of the Bank to Prime Bank is aligned with Green Banking values. Here are some enjoy cash withdrawal facility from other ATMs under NPSB initiatives that we already have taken with a view to practice Network. Prime Bank uses the BACH and BEFTN mechanism for Green Management in the offices. convenient payment activities which to a great extent supports Solid waste management: 3R approach (Reduce, Reuse and the concept of green banking. Recycle) has been advised for lowering solid waste. However, careful management and disposal of solid waste has been advised.

194 PRIME BANK Capacity Building initiatives taken by Prime Bank Field Visit to explore green financing opportunity: Member of SFU accompanied Agriculture Support Division and visited For continuous capacity building of our human resource, all different areas of Natore & Rangpur during mid-September of the foundation training courses organized by our HR-Training 2018 to explore the opportunity of Green Finance. The team & Development Center has dedicated session to familiarize visited several poultry farms, dairy farms and solar irrigation the participant with the concept related to Green Banking & pumping project. During the visit, the officials met & discussed sustainability. with relevant stakeholders from different sectors including Green Event organized by Prime Bank entrepreneur/farm owners.

Earth Day 2018: On 22nd April 2018 to celebrate “Earth Day”, Financing in Green projects by Prime Bank Prime Bank arranged tree plantation program by planting trees Green financing could be one of the suitable opportunities to at branch premise. diversify the bank’s business. It is also sensible initiative to keep our environment better. Prime Bank is committed to promote sustainable growth in the economy. We have launched 52 lending products to support green and efficient energy projects. Prime Bank has financed various projects which are environment friendly. During 2018, the Bank has financed a total of 33.57 Crore in green finance of which BDT 28.72 crore for installation of ETP in 04 projects, BDT 2.80 crore in 06 Eco Friendly Brick Production projects, BDT 7.86 Lac in a solar system project, BDT 1 lac in two bio-gas plant in existing Dairy & poultry Farm, 1.96 crore in a LED Bulb/Tube Assembly Plant. In addition to the above, to explore new ventures in environment World Environment Day 2018: To observe World Environment friendly projects, the Bank has conducted field visit, meetings Day on 5th June, 2018 an advertisement for print media was with existing and prospective entrepreneurs and Central Bank developed and published in leading daily newspapers. The officials. The outcome is positive and we aspire to see the theme was “Beat Plastic pollution” . ultimate outcome of this endeavor.

Disclosure and Reporting of Green Banking Activities Green by Prime Bank

Prime Bank has been regularly reporting its Green Banking Activities to Bangladesh Bank on quarterly basis since 2011. Moreover, there is a detail section namely “Sustainable Finance” in Bank’s official website for disclosing our Green Banking activities. Prime Bank has been reporting Sustainability Report based on the GRI framework as benchmark to show organizational performance with respect to laws, norms, Green Carnival codes, performance standards and voluntary initiatives; demonstrate organizational commitment to sustainable Free Altitude subscription for one year (22 April – 31 May development; and compare organizational performance over 2018): Alternate Delivery Channel (ADC) Division offered time. It is mentionable that, Prime Bank has been awarded internet banking “Altitude” subscription fee (which is BDT 575 as “GOLD “Rank in Asia Sustainability Reporting (ASR) including vat) free for 1st year during 22 April -31 May 2018 and Rating for Sustainability Report-2017 by the National Center for communicated about this offer to the valued accountholders Sustainability Reporting (NCSR), Indonesia. by giving an SMS and displaying message on ATM screens. The outcome of the campaign was quite impressive.

Pot Bonsais to customers (22 April – 15 May 2018): Distributed number of pot bonsais among selected valued customer through Branches Network Division as a token to create awareness during 22 April 2018 - 15 May 2018.

Green Marketing performed by Prime Bank

As part of Green Marketing, Prime Bank commenced the mandatory use of jute in product packaging. Prime Bank Limited has been using its official website for advertising new products as well as the features of existing products to capture the market and also it will penetrate to get new customers. Prime Bank Limited also conveys various offers of different Credit Cards through SMS.

PRIME BANK 195 ANNUAL REPORT 2018

CORPORATE CULTURE

We understand that our ability to succeed ultimately depends on our culture and ensuring it holds everything we need to deliver: our strategies from performance and compliance to stewardship and responsibility. As an important determinant of the culture, we wish to build dynamic and engaged leadership teams who are charged with, living the Bank’s values each day and holding themselves accountable and responsible for the business, celebrating success and learning from their mistakes.

196 PRIME BANK CAPITAL PLAN

Capital planning should be in tune with the business plan of a How Do We Managee Capital at Prime Bank bank at present keeping in mind the desired business plan for the The Prime Bank’s approach, to managing capital in line with future. It should follow a forward looking approach taking into Basel-3 and other risk management frameworks, is approved consideration, the target growth, target ROE and target CRAR by the Risk Management Committee (RMC) and the Board and (to cover both Pillar 1 and Pillar 2 risks). To achieve the objective, includes amongst others: capital planning should be an integral part of ICAAP which is reviewed by the central bank every year to assess whether Bank Capital Management Framework has adequate quality capital in line with its strategies. The Capital Management Framework comprises the Capital planning is a dynamic and ongoing process that, in order governance, policies and procedures which set out the to be effective, is forward-looking in incorporating changes in requirements for effective management of capital at Prime a bank’s strategic focus, risk tolerance levels, business plans, Bank level and its entities, including identification, assessment, operating environment, or other factors that materially affect monitoring, managing and reporting of any capital matters to capital adequacy. Capital planning assists the bank’s Board of relevant committees such as RMC and the Board. The Capital Directors and senior management to: Management Framework contains the basis for setting of internal 1. identify risks, improve their understanding of the bank’s capital targets and also the principles for the development and overall risks, set risk tolerance levels, and assess strategic usage of Risk Adjusted Return on Capital (RAROC) to measure choices in longer-term planning; and manage the return on capital across the Bank. 2. identify vulnerabilities such as concentrations and assess Capital Contingency Plan their impact on capital; The Capital Contingency Plan is to ensure robust monitoring 3. integrate business strategy, risk management, capital and of capital position and provides a framework for effective liquidity planning decisions, including due diligence for a governance and escalation process in the event of a capital merger or acquisition and crisis. The Capital Contingency Plan also formalizes the basis, 4. have a forward-looking assessment of the bank’s capital strategies and action plans to restore capital to required level needs, including capital needs that may arise from rapid in the fastest possible time without affecting business plans, changes in the economic and financial environment. assets growth and strategic agenda. The most effective capital planning considers both short-term and long-term capital needs and is coordinated with a bank’s Annual Capital Plan overall strategy and planning cycles, usually with a forecast The Annual Capital Plan involves detailed planning of the Bank’s horizon of at least 5 years. The capital planning process should regulatory capital to highlight the capital projections, capital be tailored to the overall risk, complexity, and corporate requirements, levels of capital and capital mix to support the structure of the bank. The bank’s range of business activities, Bank’s business plan and strategic objective. overall risks and operating environment have a significant impact on the level of detail needed in a bank’s capital planning. Capital Structure A more complex institution with higher overall risk is expected Prime Bank holds a significant amount of its capital in the form to have a more detailed planning process than an institution of common equity which is permanent and has the highest loss with less complex operations and lower risks. While the exact absorption capability on going concern basis. In addition to content, extent, and depth of the capital planning process common equity, there are some other components like share may vary, an effective capital planning process includes the premium, statutory reserve, retained earnings etc. in the core following components: capital. The Bank also maintains subordinated debts in order to a. Identifying and evaluating risks ; optimize capital mix and reduce overall costs of capital. b. Setting and assessing capital adequacy goals that relate to risk; Capital to Risk Weighted Asset Ratio c. Maintaining a strategy to ensure capital adequacy and contingency planning ; As per Basel III guideline, Banks are required to maintain d. Ensuring integrity in the internal capital planning process ‘minimum Total Capital Ratio’ of 10% including ‘Common and capital adequacy assessments. Equity Tier-1 Capital Ratio’ of 4.50%. Additionally, Banks have to maintain ‘Capital Conservation Buffer’ of 2.50% by the end of Our approach to capital management is driven by our strategic the year 2019. There are some phase-in arrangements for Basel objectives whilst ensuring that the regulatory requirements, III implementation by the Bangladesh Bank which allow the capital targets and risk appetite are met at all times across Banks to maintain ‘Capital to Risk Weighted Asset Ratio (CRAR)’ the Bank. Effective capital management is fundamental to the at 11.25% & 11.875% by the end of 2017 & 2018 respectively. Prime sustainability of the Bank. As such, the Prime Bank proactively Bank has already been able to maintain CRAR at 17.04% at the end manages its capital position, capital mix and capital allocation of 2018. As a result of our efficient Balance Sheet management, to meet the expectations of key stakeholders such as regulators, the Bank has consistently been maintaining all Basel ratios after shareholders, investors, rating agencies and analysts whilst release of Action Plan/Roadmap for implementation of them by ensuring that the return on capital commensurate with risks Bangladesh Bank. undertaken by respective business units and subsidiaries.

PRIME BANK 197 ANNUAL REPORT 2018

ENVIRONMENTAL & SOCIAL INITIATIVES

What is Environmental & Social (E&S) Risk in financing? After drafting, finally “Environmental & Social (E&S) Risk Management Policy Statement” and “Environmental & Social Environmental & Social (E&S) risks are the potential negative Risk Management Procedure Manual” was placed before the consequences on the natural environment (air, water, soil, nature, bank’s Risk Management Committee of the Board. With the animals or valuable sites) or community people (e.g. employees, consent of the Risk Management Committee of the Board, the customers, local residents) due to business operations. policy & procedure documents were placed before the Board Environmental Risk Management (ERM) Guideline: of Directors for approval. In November 2017, the “Environmental & Social (E&S) Risk Management Policy Statement” and In order to incorporate “Environmental Risk” in overall credit/ “Environmental & Social Risk Management Procedure Manual” investment management, Bangladesh Bank issued ‘Guidelines got approval from bank’s Board of Directors and it was fully on Environmental Risk Management (ERM) for Banks and rolled out across the bank from January 01, 2018. Financial Institutions in Bangladesh’ vide BRPD Circular No. 01/2011. Guideline on ERM has been a pioneering initiative from Project milestones of Environmental & Social Management any central bank or financial sector regulatory body all over System (ESMS) Implementation in Prime Bank: the globe in context of addressing environmental risk in the • In 2014, PBL deployed an E&S Manager and eight process of credit management in banks or financial institutions. representatives of various divisions to form an ESMS Prime bank adopted the ERM policy as provided by Bangladesh Implementation Committee. Bank and incorporated it in the credit policy in 2011. • In 2014, PBL appointed a foreign consultant namely FI Evolution of Environmental & Social Risk Management Konsult of Czech Republic to provide technical assistance (ESRM) Guideline from Environmental Risk Management for developing and implementing a system for managing (ERM) Guideline: E&S risks.

During 2017, Bangladesh Bank introduced “Guidelines on • In 2015, Prime Bank organized three one-day training Environmental & Social Risk Management (ESRM)” for Banks sessions (conducted by FI Konsult) to equip 90 bank staff. and Financial Institutions with an Excel-based Risk Rating • In 2015 & 2017, the bank reformed ESMS Implementation Model and circulated vide SFD Circular No. 02 dated February Committee by including more members from cross 08, 2017. The ESRM Guideline had replaced the Guidelines on functional divisions. ERM. Moreover, vide the same circular, Bangladesh Bank had declared that, year 2017 to be treated as phase-in period for • In 2017, Bangladesh Bank circulated ESRM Guidelines. implementation of ‘Guidelines on ESRM’ and from January • In July 2017, Prime Bank organized a day long training 01, 2018 ‘Guidelines on ESRM’ to be enforceable under Bank session for 32 PBL officials. Training of Trainers (TOT) was Company Act, 1991 and Financial Institutions Act, 1993. also conducted in the duration.

In 2014, long before Bangladesh Bank circulated the final ESRM • In November 2017, Prime Bank Board of Directors approved guideline, Prime Bank took initiative to strengthen the then the “Environmental & Social (E&S) Risk Management Policy ERM guideline and expand the area from environmental risk Statement” and “Environmental & Social Risk Management management to environmental and social risk management Procedure Manual”. considering both national and international standards. • From 01 January 2018, both the policy and the procedure was The revision work in 2014 started with the help of a foreign made effective on the entire lending portfolio of the bank. consultant namely FI Konsult of Czech Republic under the • Continuous follow up and hand holding is done now. background of Prime Bank borrowing some fund from FMO, a Moreover, currently periodical E&S review is being conducted Netherlands based development bank. for learning and to identify the scope of improvement. During the policy revision series of meetings and consultations were held and with the help of the consultant in line with What is “E&S Risk Management Policy Statement” and “E&S Bangladesh Bank guidelines, Prime Bank with its active co- Risk Management Procedure Manual”? operation drafted two (2) important documents namely • E&S Risk Management Policy Statement: It represents “Environmental & Social (E&S) Risk Management Policy the Banks commitment towards being E&S compliant in its Statement” and “Environmental & Social Risk Management activities and financing. The applicability, excluded sectors Procedure Manual”. These documents comprise of prime and discouraged sectors are defined in this policy statement. bank’s commitment towards being Environmentally & Socially (E&S) compliant, include the social risk factors, excluded • E&S Risk Management Procedure Manual: It is a detailed activities, discouraged sectors, define environmental and document representing the process flow, roles and social requirements for lending, E&S risk management responsibilities and operation procedure of E&S Risk procedures, tools, roles & responsibilities etc. These two policy Management for the Bank. and procedural documents played a vital role in strengthening ESMS in Prime Bank Limited.

198 PRIME BANK Highlights of major components of Environmental & Social Environmental & Social Risk & Opportunities Management Management System (ESMS): (ESROM 2.0):

• Exclusion List: List of identified 12 activities, where Prime In 2018, the Bank participated in ESROM 2.0 where 29 employees Bank is committed not to finance for any such activity, and 2 clients of the Bank attended 2-day long training program production, use of, trade & distribution. in 8 different sessions on “E&S Risk Management”. The training program was organized by FMO, DEG, proparco, Oe-EB, UNEP- • Discouraged Sectors: List of identified 11 sector, where the FI facilitated by ERM- India and participated by 9 FIs operating Bank finance is discouraged under the purview of legal aspect, in Bangladesh including Prime Bank Limited. regulatory compliance, business risk and banking ethics

• Industry categorization by Department of Environment (DoE): Industries are being categorized based on environmental risk. The categorizations are recorded as Green, Orange A, Orange B and Red where industry categorized as “Green” is expected to have low environmental impact through its operation and industries categorized as “Red” is believed to pose the highest environmental risk.

• ESDD Checklist: It is an excel-based Risk Rating Model comprising of 12 questions for determining the associated E&S Training by IFC: environmental & social risk of a concern. The outcome of ESDD is known as environmental & social risk rating (ESRR) In 2018, few officials of the Bank obtained “Training for ESRM and categorized as high, medium & low. Implementers” organized by IFC.

• Environmental & Social Action Plan (ESAP): For “High” In-house Training on “E&S Risk Management”: ESRR an E&S Action Plan (ESAP) needs to be drafted within a reasonable timeframe. In 2018, Prime Bank Human Resources-Training & Development Center organized two dedicated training on E&S Risk • E&S Covenants: For “Medium” and “High” ESRR E&S management to familiarize the participant with the concept covenants/conditions is required to be incorporated in the related to Environmental & Social Risk Management where 56 Sanction Advice. bank officials received training. • Monitoring of E&S Risk: After disbursement monitoring by bank officials is required to address E&S risk issues. Workshop on “Environmental & Social Safeguard and Compliance Reporting” by BB: Applicability of ESMS in Prime Bank Limited: In 2018, In October 2018, Bangladesh Bank organized a workshop ESMS is applicable for all loan proposals (New/Renewal/ on “Environmental & Social Safeguard and Compliance Enhancement/ Rescheduling/Restructuring) under agriculture, retail, Reporting” where 2 Prime bank officials participated. trade, microfinance, SME, corporate finance and project finance. E&S Training by IFC & FI Konsult: Process Flow Environmental & Social (E&S) Risk Management: In 2017, to equip bank’s officials on ESRM, the bank arranged training by FI Konsult for 60 bank officials from different

1.POLICY 3. ESRM PROCEDURES 4. REPORTING Bank’s environmental & social E&S Performance of business segments. commitment & standards Evaluating E&S Risk Bank & clients

Transaction Screening

Risk Categorization

2. E&S CAPACITY Roles & responsibilites Training E&S Due Diligence

Conditions of Financing

Monitoring E&S Risk

Reviewing Client’s E&S performance

Managing Non-compliance

Environmental & Social (E&S) Risk Management Capacity Building: Training of the Trainers:

For continuous capacity building of our human resource on In 2017, Training of Trainers Workshop was organized by foreign E&S, both internal and external training/seminars & workshops consultant Milan Tomik, FI Konsult where 11 officials received has been arranged. ToT.

PRIME BANK 199 INTEGRATED REPORTING

Integrated Reporting

Statement of Value Added and Its Distribution

Economic Value Added Statement

Market Value Added Statement WELCOME TO OUR INTEGRATED REPORTING

This report is prepared around Prime Bank Limited (PBL)’s story in the bank, we have prepared corporate governance report of value creation. The crucial features of our value creation adhere to the revised Corporate Governance code issued by process are the different forms of capital that provide the Bangladesh Securities and Exchange Commission (BSEC). inputs, and the value creating actions that result in outputs, The information content of the report covers the economic, outcomes and impacts, while the entire process is driven by social and environmental impacts resulting from value creation bank governance. activities of the bank and includes a rational assessment of prospective impacts. The assessment of materiality embedded Here is a description of the context and framework of our in our process has ensured that we report on all material issues reporting. relating to sustainability with regard to aspects internal and The companies Act, 1994 requires that the Bank publishes external to the organization within the sphere of influence of its annual report within a specified period after the end of its the bank. The bank stakeholder identification process ensures financial year. It also stipulates particular requirements and stakeholder comprehensiveness. disclosures that must be integrated in the annual report. In This Annual Report relates to the activities of Prime Bank Limited parallel, the Board’s commitment to stewardship demands and its subsidiaries, collectively referred to as the PBL Group, transparency on matters related to stakeholders. covering a 12-month period ended 31 December 2018. There have PBL’s value creation model aims to generate value while been no changes in reporting scope and/or boundaries from the matching the bank’s responsibilities towards its various previous year. Non-financial information in this report pertaining to stakeholders, including its shareholder and the environment. the previous year has not been restated, unless otherwise stated. How the bank achieved this over the last financial year through The Assurance Statement is available at the end of this report. performance and conformance is discussed comprehensively The Independent Auditor’s opinion on the Financial Statements through the different segments of the report. is available in the Independent’s Auditor’s Report. The financial Statements of the bank as at 31 December 2018 have been prepared in accordance with the applicable Responsibility of the Board of directors of PBL Bangladesh Accounting Standards (BASs) and Bangladesh We acknowledge the responsibility to ensure the integrity of Financial Reporting Standards (BFRSs). In addition to, we this integrated report, which addresses all material issues, have followed relevant criteria mentioned in the framework presents fairly PBL’s integrated performance. The integrated issued by the ‘International Integrated Reporting Council report, incorporated in this annual report has been prepared in (IIRC)’ and the guidelines issued by the ‘Institute of Chartered line with the key guidelines of IIRC. Accountants of Bangladesh (ICAB)’ in the form of ‘Integrated Reporting Checklist’.

The sustainability requirements, as detailed separately in our Sustainability Report, comply the GRI Standards issued by the Global Reporting Initiative (GRI). To report the good governance

PRIME BANK 201 ANNUAL REPORT 2018

Competitive intensity and our response information to our stakeholders. Our effort to manage the risks as those cannot be removed completely. We have done it A detailed analysis of competitive intensity PBL faces while through illustrating our risks structure by using Michael Porter’s conducting business in country’s vibrant banking industry five forces model. and PBL responses to absorb the shock of these risks on its business model have been considered relevant in providing

Threat of new entrants Buyer power

Despite the regulatory and capital requirements of Corporate and high net worth individual customers starting a new bank, a number of new banks have have relatively higher bargaining power. Individual entered in the market. With so many new banks in the consumers, especially in the retail banking market is obvious to intensify the competition and the marketplace, have relatively low bargaining power. probability of new entrants will intensify it further. However, in the aggregate, the bargaining power of consumers is greater.

Supplier power Threat of substitute product

The two main suppliers for a bank are the depositors In addition to the threat from the new entrants, PBL is who supply the primary resource of capital and also exposed to competition from the other financial employees who supply the resource of work. The intermediaries offering substitute products. These power of the suppliers is largely based on the market, include the non-banking finance companies and the their power is often considered to fluctuate between new entrants as well as the substitute products are low to medium. adding on to the already existing competition from the present players.

Competitive rivalry

The banking industry of Bangladesh is considered highly competitive. Because of this, PBL must attempt to attract clients by offering cutting-edge services, higher rates, investment services, and greater conveniences compared to its rivals. The banking competition is often a race to determine whether PBL can offer both the best and fastest services.

One of the industry element that intensifies the importance of competition is the relatively low switching costs that customers face.

202 PRIME BANK VALUE CHAIN OF PBL

• Corporate governance • Nondiscriminatory • World class core • Financial reporting in code Recruitment and banking software compliance with • Risk Audit selection • ATMs regulatory guidelines • Risk based internal • Training and • Internet banking • Accounting Standards audit development • Mobile banking (BFRSs, BASs) • Regulatory compliance • Career Development • Automation of • Management • Credit risk • Higher pay operation Information System management process • Performance Appraisal • IT audit (MIS) • Operational risk • Succession planning • IT security • Management management process • Decision support Accounting • Internal control system • Financial Accounting systems (ICSs)

Governance and Risk Management s

Human Capital Management

Technological Advancement Mar

Support activitie Finance and Reporting gin s Inbound Operations Outbound Marketing Services Logistics Logistics and Sales Primary activitie

• Customer databank • Dedicated trade • Tailored made • Advertising • Dedicated customer • Talented human service desk for products and • Branding, market service & complaint capital handling trade services development management • Modern Technology transactions • High quality • Multi channel • Customer • Dedicated team for customer service management relationship providing SME • Asset quality • Alternative delivery management service through e icient channel • Apparent • Real time credit risk • Direct sales communication transactions management executives • Faster turnaround time

PRIME BANK 203 ANNUAL REPORT 2018

PESTEL Analysis

Macroeconomic factors Impact on industry Our Front P-Political factors Despite eleventh national election Entrepreneurs took conservative steps The bank is ready to take up the was held in 2018 Political stability in the year of election. However, It is opportunities which will open for the was remaining same in the country. expected that Entrepreneurs will be growth of private sector investment. Political stability have encouraged the starting investment again. The demand Suitable strategy will be taken by entrepreneurs to borrow more from local of loans and advances will increase and the management by assessing the sources to meet their growing demand pressure will put on liquidity. environment. for investment. Demands of public sector will increase as The vigorous risk mitigation process of The present government leads the existing mega projects will be completed the bank is enable to mitigate the political country in last ten successive years in timely manner and huge infrastructure risk. and elected for next five years. As projects will be taken. the present government effectively controlled the political environment so far so, it is expected it will continue in near future. As a result, policy and priority in infrastructure development will be emphasized. E-Economic factors Interest rate has been decreased to single The spread has declined affectingPBL attracted low cost or no cost funds digit. Lower interest rates on loans and interest income of Banks. and decreased the loan rate which will advances has inspired the businessmen help to retain present customers as well to borrow additional fund from local as to attract prospective customers. banks for investment. In 2018, GDP growth rate hit 7.86% After having excess liquidity for quite The asset liability management which was the highest ever in history a long time, banks have faced liquidity committee has managed the assets and of the country’s economy. GDP growth pressure in the last half of 2018. Low-cost liabilities efficiently. Management has increased by 7.97% compared to last foreign loan has been taken by some of been working at high scale to increase its year’s growth. the entrepreneur. loan and advance portfolios in agriculture and SME from last few years which will continue for upcoming years. S-Social Factors The life styles of the citizens have Banks analyze the demands of customers Per capita income in fiscal year 2017-2018 changed due to advancement of in different methods as customerswas $1751 which has a positive impact on information technology which has lifestyle has changed. Information the banking sector. Life style of people facilitated gathering of information in providing sources have changed and has improved and this led to opening no time. Customers desire a seamless qualities of services have improved due new window of financing and PBL is banking experience and technology is to increased awareness of the customers. ready to capitalize it through its superior developing to allow customers to enjoy Differentiation is the key driver to sustain products and services. services easier. in the market. T-Technological Technological development is growing Banks need further investment and The core banking system (CBS), Temonos fast as government invests at large scale improve operational efficiency to meet version-R16, of PBL has been updated. to make IT infrastructure in the country. up the demand of customers following This Updated CBS would further strength the regulatory rules and regulations. its processes and give opportunities for Technology is changing how customers further growth with proper control in operate their accounts. Many banks place. offer a mobile app to operate accounts, transfer funds, generate E-statement and PBL has launched a mobile app to pay bills on smartphones. operate accounts, transfer funds, generate E-statement and pay bills on smartphones.

204 PRIME BANK Macroeconomic factors Impact on industry Our Front E-Environmental The environment and climate change A separate department namely PBL has outlined an inclusive green effect on human existence and the sustainable finance department has banking policy for implementing green planet are now a global concern. The been opened by Bangladesh bank which banking activities. world is more conscious about green and is engaging and encouraging all banks PBL has also incorporated the environmentally sustainable banking. and FIs to step-up their green banking environmental risk management policy Sustainable finance is vastly appreciated initiative and standards. in its credit risk management policy as by the community. Regulatory monitoring has been an integral part of environmental due increased on green financing. diligence.

Bangladesh Bank also introduced green PBL has launched a mobile app to baking policy for all banks. operate accounts, transfer funds, generate E-statement and pay bills on smartphones. Thus, PBL is trying to reduce individual environmental footprints. L-Legal Banking sector are faced with rigorous Increase in regulatory demand placing PBL has already developed a decent laws and regulations set by the different greater pressure on employees and image for compliance issues. regulators. increasing the cost of compliance. PBL imparts training to employees, notify Emphasis has to be put on the application the customers about the new rules and of provision for loans and advances and regulations to ensure requirement of capital adequacy. compliance.

SWOT Analysis

STRENGTH

Strengths Strengthening our bank further Solid capital base Strong ability for playing important role on growth platform Strong brand among local banks continue our efforts to boost up the goodwill for creating good image Competent and experienced employees Invest in people as they are the main assets of the bank Personalized products and services and high level of customer Continue market research to innovate new product and service service line Credit portfolio is diversified by multiple norms and Maintain the diversification to minimize the credit risk classifications Sound asset liability management Keep continuing top class practice Advance risk management and pricing systems Continue proactive initiative to manage the risk Clear structure, high degree of flexibility and fast decisions Invest in operations and technology to improve the decision making Conventional and sustainable business policy Continue strong monitoring and response in time to cope up the changes Rigorous regulatory adherence Comply the regulatory rules and regulations for the improvement of the bank World class core banking software Obtain the best benefits for our sustainable growth Excellent job environment Continue to uphold the pleasant environment where an employee can perform without any fear PBL has 123 Conventional branches, 18 SME branches, 05 PBL will establish more banking channels nationwide, in order Islamic Banking branches, 03 OBU, 170 ATMs across the country. to providing financial services effectively.

PRIME BANK 205 ANNUAL REPORT 2018

WEAKNESS

Weaknesses Dealing our weaknesses Dependency on interest income from loan and advance as a Diversify the portfolio, innovate the new products and services key source of income in line with the demand of customers

OPPORTUNITY

Opportunities Capitalizing on opportunities Unique culture and competitive positioning in the market Talented employees will play strong role with the current continue to attract top talent talented employees Building new client relationships Opportunity to expand the business Several new initiatives introduced to increase the product Customers will attract for others products and services portfolio and enhance cross-selling Growing economy Opportunity to expand the loans and advances Private sector credit growth has risen notably Opportunity to expand the loan and advances portfolio

THREAT

Threats Responding to threats Client losses from aggressive competitor actions Providing topmost services to all customers Liquidity surplus driving banking sector participants towards Creating new loan market, Select customers very carefully, unhealthy price wars to grab the best customers Attract new customers by offering differentiated services The increase in regulatory demand placing greater pressure Train employees properly, Educate the customers, Change the on employees and increasing the cost of compliance system to cope up the changes Scarce skills representing challenges for new appointments Make the succession plan for the key positions and potential loss of key employee to peers The Banking sector has been at risk for cyber security PBL is committed to ensure top-notch cyber security with the attacks since the inception of the internet growing use of technology with banking transactions

The Capitals Report

Financial Capital

Manufactured Capital

Intellectual Human Capital Capital

Social and Relationship Capital

Natural Capital

206 PRIME BANK An organization’s competitiveness depends to a great extent on 19th February and 19th August each year. Floating rate is on the capability to efficiently manage the different sorts of determined by calculating a benchmark rate i.e. peer banks’ capital, and that is what an integrated report is trying to capture. most recent average FDR rate and 2.75% margin with a floor at Delivering information about how the types of capital are 11.50% and capped at 14.00% p.a. managed is vital for capital providers. The bank cannot assume Total outstanding balance of Prime Bank Subordinated Bond-2 that its capital providers and other stakeholders will understand was 2,000,000,000 as on December 31, 2018. how different sorts of capital are linked to financial performance if the bank fails to communicate that information effectively. PBL has issued another unsecured non-convertible bond on August 12, 2018 namely “Prime Bank Subordinated Bond- Financial Capital 3” after obtaining approval from Bangladesh Bank and Bangladesh Securities & Exchange Commission respectively. Financial capital is the familiar form of capital. It is generally The bond shall bear interest with floating rate payable semi- understood as the pool of funds available to the organization. annually on 12th February and 12th August each year. Floating This includes both debt and equity finance. PBL uses both sort rate is determined by calculating a benchmark rate i.e. peer of finance to create value in short, medium and long term. banks’ most recent average FDR rate and 2.00% margin with a Financial capital is a medium of exchange that releases its value floor at 7.00% and capped at 10.50% p.a. through conversion into other forms of capital. Financial capital has an impact on the co-development and maintenance of Total outstanding balance of Prime Bank Subordinated Bond-3 capitals with other organization in the supply and value chain. was 7,000,000,000 as on December 31, 2018. PBL currently uses the following major equities and debts to Deposits create value in short, medium and long term. Currently a range of attractive products and services have Paid Up Capital been offered by PBL through 123 conventional branches, 5 Islamic banking branches and 18 SME branches. The major Paid up capital represents total amount of shareholders’ capital types of deposits are Current/Al-wadeeah current deposits, that has been paid in full by the ordinary shareholders. It is a Bills payable, Savings bank/ Mudaraba term deposits, Term measure of how much money investors have pumped into the deposits/Mudaraba term deposits. Total amount of deposits bank since inception in return for equity. The Paid up capital of and bills payable of the bank was Tk. 197,517,725,557 as on 31 PBL was Tk. 11,322,834,770 which played a significant role for December 2018. Deposits are the key source of finance that creating value for the stakeholders. played crucial role in value creation process of the bank.

Share Premium Manufactured Capital Share premium is the capital that the bank raises upon issuing This refers to our business structure and operational processes, shares that is in excess of the face value of the shares. The share including our physical and digital infrastructure, as well as premium may be applied by the Bank in paying up unissued information technology that provides the framework and shares to be allotted to members as fully paid bonus shares machines of how we do business and make profit. Having or writing-off the preliminary expenses of the Bank or the identified the importance of this important capital, which expenses of or the commission paid or discount allowed on, is easily identifiable due to its nature, the bank focuses in any issue of shares or debentures of the Bank or in providing developing infrastructure in order to support current business for the premium payable on the redemption of any redeemable activities and also meet future challenges given the importance preference shares or of any debentures of the Bank. The Share of this capital in the value creation process. premium of the bank was Tk. 1,211,881,786 which played a vital role in value creation process. The bank has already been able to gain benefits of money spent on strengthening infrastructure of the bank. The bank will Retained Earnings continuously invest in technology with the objective of delivering unmatchable customer experience through technology. Retained earnings refer to the percentage of net earnings not paid out as dividends to shareholders, but retained by the bank Further, the Bank is mindful of the requirement to maintain to be reinvested in its core business, or any other purposes. The the state of art work environment within the bank premises current retained earnings position of PBL was Tk. 1,759,002,003 and continuously invest sufficiently in upbringing the existing as on 31 December 2018. premises to be line with industry standards. Borrowings from other banks, financial institutions and agents Consequent to above initiatives the total amount invested in the Manufactured Capital of the Bank which are represented in the form The bank has borrowed Tk. 33,944,516,693 from different banks of Fixed Assets stood at Tk. 6,943,348,521 as on 31 December 2018. and agents inside Bangladesh and outside Bangladesh. PBL raised fund by issuing two Sub-ordinated bonds which Human Capital played vital role in value creation. It is represented by our people; our investment in management and leadership development; and the knowledge, skills and Prime Bank Sub-ordinated Bond experience they collectively bring to enable innovative, PBL has issued unsecured non-convertible bond on February convenient and competitive solutions for our customers. 19, 2015 namely “Prime Bank Subordinated Bond-2” after Human capital in an organizations and businesses are an obtaining approval from Bangladesh Bank and Bangladesh important and essential asset who contributes to development Securities & Exchange Commission respectively. The bond and growth, in a similar way as physical assets such as machines shall bear interest with floating rate payable semi-annually and money. The collective attitudes, skills and abilities of people

PRIME BANK 207 ANNUAL REPORT 2018 contribute to organizational performance and productivity. Any sharing culture, extensive training and human capital management expenditure in training, development, health and support is an tools contribute to how we manage and exploit knowledge. investment, not just an expense. We believe that knowledge used and shared also depends on An organization can’t survive if there are no employees. the unspoken norms of behavior that constitute PBL’s culture. Organization runs with the help of individuals who contribute in It is these norms and our family friendly working environment, their own way in its success and productivity. Employees spend rather than formal systems, which shape our employees’ maximum part of their day in offices and strive hard to achieve interaction with customers, colleagues and other stakeholders. the goals and objectives of the organization. Employees should Our brand reputation has been carefully built through the be motivated from time to time so that they develop a sense PBL differentiation strategy. We have sought to differ from our of attachment towards their organization and also deliver rivals through technological excellence, effective customer their best. Every employee in his/her tenure acquires some relationship management, market presence and strong sense set of skills through his experience, exposure, trainings and of responsibility and accountability. so on which further increase his/her productivity eventually benefitting the organization. Knowledge and expertise which Social and Relationship Capital employees develop in due course of time to further increase the productivity of organizations refer to human capital. Every These capital reflect our citizenship and the strong relationship employee tries his/her level best to sharpen his/her skills during we have with all our stakeholders, including the communities his turn with the organization. Human capital is defined as the we live in, as we recognize the important role that banks play in collective stock of skills, attributes, knowledge, and expertise of building a strong and thriving nation. employees which further plays an integral role in increasing the Relationship capital- made up of customers and business productivity of the organization. partners- has a significant role in the PBL value creation process. People should be treated as an asset rather than an expense Customers, and other interactions with them, thus have a item. Every effort should be taken, whether formally or strong influence on sustaining and enhancing PBL’s relationship informally, to develop skills and abilities and to provide capital. We believe that the new business environment requires opportunities for people to maximize their contribution. companies to shift from being product-centric to being customer-centric. At PBL, customer capital thus goes beyond Intellectual Capital long term customer relationships to be viewed as an asset that is a source of organizational competitiveness. The contribution of customers to current and future revenues Intellectual is therefore fundamental to assessing how successful PBL Capital is at converting customer relationships into a sustainable competitive advantage. Our attitude to sustaining and enhancing customer capital involves managing customers’ experiences and superseding their expectations with our products and services. Understanding client needs and aspiration allows us to gear our supply chain better to finally deliver products that satisfy Organization Brand the customer. This is supported by our focus on regular based Reputation engagement and ethical marketing. Intangibles PBL reaches its existing and potential clients across multiple platforms. Our branch networks and SME centers make up one Intellectual Capital refers to our intellectual assets, such as our of the largest, most modern banking networks in Bangladesh. brand, research and development, innovative capacity, our Relationships with our business partners are a key driver of reputation, and the knowledge of our employee. value and an important part of our strategy. We engaged in This capital is enhanced through two important elements- partnership with only those who share our core values. Once our brand reputation and the value created by organizational we begin a relationship with a business partner, high priority is intangibles. PBL is committed to learning and service given to managing every aspect of that relationship in a mutually excellence; we have thus generated several assets that do not beneficial manner. This approach has enabled PBL to secure appear in the Financial Statements. Our competitive strategy enriching relationships with local and global business partners. and differentiation have been leading facilitators to the creation Strong relationships cultivated over many years with the world’s of value in the form of Intellectual Capital. best, have enabled us to deliver on our strategic approach of During our glorious 23 years in business, we have collaborated collaboration while offering unique products and services to with employees to build a massive pool of expertise and diverse group of customers. experience which is a key component of PBL’s intellectual capital. This pool of knowledge consists of specialized expertise in Natural Capital business field, and in capital management and risk management. Natural Capital refers to naturally occurring biological, physical, We know however that knowledge gained is only as valuable as biophysical, chemical and mineral assets, as well as their its effect and influence on the work we do. At PBL we endeavor to interplay through healthy functioning ecosystems, on which document and share information in as many ways as possible to all life depends. Within the financial sector, the impact, both maximize the value of this most important element. Knowledge positive and negative, of our operations and business activity on natural resources are considered.

208 PRIME BANK Our Value-Creating Business Model (Creating value in a sustainable manner through our Strategy)

Our business model creates value by converting capital inputs very much aligned with the ‘value creation process’ which is (i.e. various types of capital e.g. financial, natural, human etc.). the key element of Integrated Reporting. These inputs include the skills and our talent of the people The financial resilience of this model is built on fair interest within our organization and money from the customers, via rates to savers; reasonable long-term returns for investors; and our core products and services. It transforms these inputs into deposits that are lent to sustainable entrepreneurs working in value outputs through value adding activities so that they make the real economy to deliver real impact. We seek to satisfy the a positive contribution to the development of a healthy society needs of our valued customers and valued clients by offering a that’s able to flourish within our planetary limits. A portion of well-rounded value proposition- a wide range of products and bank’s operating profit is spent every year for performing social services- and thereby deliver a smoother income stream and responsibilities which has a positive impact on social capital. sustainable returns. PBL is also generating relationship capital along with social capital by contributing to the unprivileged segment of the We endeavor to deliver a healthy balance between loans and deposits society through providing them with education, health support so we are able to mobilize as much of our deposits as possible. We also as well as creating job opportunities by transforming them as maintain healthy levels of capital, well above regulatory requirements. competent human resources. Hence, our business model is This makes us more resilient over the long-term.

PRIME BANK 209 ANNUAL REPORT 2018

OUR CAPITALS ENABLE VALUE ADDING ACTIVITIES Inputs ENABLE VALUE DELIVERING FINANCIAL (OUTPUTS) ADDING ACTIVITIES PERPORMANCE Employees (OUTPUTS) Produces Oer Savings and Created 73 new permanent job opportunities Financial Capital Net interest investment products Advances: BDT 205,810 million Increased average employee salaries by 26,181 million Equity income: BDT 7,650 Deposits: BDT 197,518 million BDT 0.10 million 197,518 million Deposits Generate fair returns on million less investments Incurred training and development spend of BDT 13.36 million Human Capital Extend credit to our Provision: Career advancement and ability to 3,212 talented employees valuable clients through BDT 1,782 million reach individual potential Created 73 new job opportunities responsible lending practices Customer and people centered culture Robust governance and Equals Customers compliance culture Reward performance Income from lending Loans and advances increased by and invest in attracting, activities: BDT 5,868 million developing and retaining BDT 7,486.79 million and grow Manufactured Capital our people at 3.78% over the year 170 ATMs Launched various innovative 146 digitally focused branches Facilitate payments and solutions that address the needs and 3 OBUs transactions oer global of our customers Digital channels and products standard services 02 New ATMs Non-interest income: Details have been illustrated in our Maintained competitive pricing BDT 5,249.91 million capital report Manage, protect and grow including Commission wealth through asset and Shareholders and fees: BDT 2,208.57 wealth management Yearly dividend 12.50 cash and net asset Intellectual Capital million solutions value per share BDT 23.12 Details have been demonstrated Investment income: Maintained a robust balance sheet in our capital report BDT 2,154.01 million to protect against unforeseen risks Other operating income: Regulators Social and Relationship Capital BDT 887.32 million Comply with regulation to Details have been explained Expenses: BDT 7,180.03 mitigate against system risk in our capital report million Adhere to sustainable banking Taxes: practices to protect our customers Natural Capital Direct Tax: BDT 491.56 million Support government through Carbon footprint reduction In-direct Tax: BDT 3,928.29 million BDT 4,419.85 million Tax contribution Growth in green inancing (direct, indirect, PAYE and other) Details have been described Communities in our capital report CSR BDT 703.04 million Carbon-neutral operations Provided signi icant amount of loan in renewable energy projects during the year. Almost 100% local procurement

210 PRIME BANK OUR CAPITALS ENABLE VALUE ADDING ACTIVITIES Inputs ENABLE VALUE DELIVERING FINANCIAL (OUTPUTS) ADDING ACTIVITIES PERPORMANCE Employees (OUTPUTS) Produces Oer Savings and Created 73 new permanent job opportunities Financial Capital Net interest investment products Advances: BDT 205,810 million Increased average employee salaries by 26,181 million Equity income: BDT 7,650 Deposits: BDT 197,518 million BDT 0.10 million 197,518 million Deposits Generate fair returns on million less investments Incurred training and development spend of BDT 13.36 million Human Capital Extend credit to our Provision: Career advancement and ability to 3,212 talented employees valuable clients through BDT 1,782 million reach individual potential Created 73 new job opportunities responsible lending practices Customer and people centered culture Robust governance and Equals Customers compliance culture Reward performance Income from lending Loans and advances increased by and invest in attracting, activities: BDT 5,868 million developing and retaining BDT 7,486.79 million and grow Manufactured Capital our people at 3.78% over the year 170 ATMs Launched various innovative 146 digitally focused branches Facilitate payments and solutions that address the needs and 3 OBUs transactions oer global of our customers Digital channels and products standard services 02 New ATMs Non-interest income: Details have been illustrated in our Maintained competitive pricing BDT 5,249.91 million capital report Manage, protect and grow including Commission wealth through asset and Shareholders and fees: BDT 2,208.57 wealth management Yearly dividend 12.50 cash and net asset Intellectual Capital million solutions value per share BDT 23.12 Details have been demonstrated Investment income: Maintained a robust balance sheet in our capital report BDT 2,154.01 million to protect against unforeseen risks Other operating income: Regulators Social and Relationship Capital BDT 887.32 million Comply with regulation to Details have been explained Expenses: BDT 7,180.03 mitigate against system risk in our capital report million Adhere to sustainable banking Taxes: practices to protect our customers Natural Capital Direct Tax: BDT 491.56 million Support government through Carbon footprint reduction In-direct Tax: BDT 3,928.29 million BDT 4,419.85 million Tax contribution Growth in green inancing (direct, indirect, PAYE and other) Details have been described Communities in our capital report CSR BDT 703.04 million Carbon-neutral operations Provided signi icant amount of loan in renewable energy projects during the year. Almost 100% local procurement

PRIME BANK 211 ANNUAL REPORT 2018

Strategy and Resource Allocation the financial capabilities of clients and potential clients, and supporting companies to make the transaction to more Our strategy is primarily aimed at creating value for our sustainable business model. shareholders (long-term capital providers) which has been described in “Strategic Priority” part of the annual . Our main differentiators that powers PBL competitive The described objectives will be achieved by advantage

• Satisfying the promises we make to our customers through We financially empower by making banking accessible and vigilantly planned and executed processes that are fully easier to understand in line with our customer needs. We see leveraged by our scale. sustainability as a source of competitive advantage of bank. • Crafting relentlessly excellent customer experience by We broadened our sustainability approach in corporate lending understanding our customers and offering the products, and in general lending and also extended it in retail banking. services and solutions they require to serve their purpose. The success of our strategy will ultimately depend on how • Serving our customers quickly, competently, consistently well it enables us to adopt to change and continue to deliver a and courteously in person and/or online, as they choose. superior experience for our customers.

• Continuing the investment in IT infrastructure to meet up PBL is focusing not on price leadership but on offering a the requirements of customers. superior customer experience, conforming that this is the area bank need to focus on to succeed. • Providing our employees with what they need to deliver outstanding customer experience. Consumers are rapidly turning to digital services for an increasing number of needs. What they are experiencing with • Fostering a deep connection among all our employees digital leading bank is shaping their expectations. with our purpose and our customers. Economic growth rate of the country hit the highest point • Creating state-of-the-art workstation in the history of Bangladesh. However, interest rates were • Empowering our employee to deliver against our declining, putting pressure on savings and lending margins, strategy by encouraging them to make the most of every which make up a large portion of our revenues. As a response, opportunity to achieve their full potential, and by rewarding we are increasing our focus on services to clients that generate their contribution. fee income.

• Honoring our strong culture attributes while encouraging Regulation is another challenging area for banking sector. and entrenching focused customer-centric behavior. Many regulations have introduced to increase the stability of • Continuing dynamic and engaged leadership teams who banking system. New regulatory initiatives in the pipeline could live our values and are focused on doing the right business further increase capital requirement for banks, putting pressure the right way, who hold themselves accountable for the on returns. This will require banks to look for new sources of business, and who celebrate success and learn from their income and to lower costs. mistakes. All these developments in the external environment confirm • Increasing research and development to deliver new to us that we are on the right track with our strategy to products and services which meet the contemporary create a differentiating customer experience based on digital demand of customers. banking. We support that through the clear and easy approach embodied in our customer promise. • Creating a great place to work.

At PBL we believe that our purpose as a bank is to contribute to OUTLOOK the sustainable development of society by empowering people to stay a step ahead in life and in business. In 2018, we made Challenges in executing our strategy good progress implementing our strategy and promoting The following challenges offer a board forward looking view of the organization and culture we need to deliver on our client what we need to manage as we carry out our strategy over the promise. short to medium term as well as long term, and are reflective of In 2018, we continued to build on our think forward strategy to the issues deliberated on by management across our business. empower customers and provide them with a differentiating To realize our vision we need to be proactive in how we plan customer experience. That includes a focus on being leading for and handle these challenges, allowing us to leverage the bank in the digital customer experience based on easy, 24/7 associated opportunities. access in ATMs, attractive products and services, and tools to Maintaining awareness of these challenges in our planning support customers make sound financial decisions. ensures that the way we do things is informed by strong decision Those goals are reflected in our customer promise to be clear making and ultimately results in better service to our customers, and easy, make financial services available anytime-anywhere, balanced by our commitments to our other stakeholders. empower, and to keep getting better for customers. Changing Regulatory Landscape Contributing to the sustainable development of the society is also an integral part of the think forward strategy. Our The number of new financial services regulations continues to sustainability direction focuses on two areas: enhancing grow. The various ways in which new regulations are circulated

212 PRIME BANK within country can lead to uncertainty. Ensuring an efficient Aligning Risk Management to Our Customer Focus customers experience while adhering to regulatory demands Understanding our customers forms a key part of managing is an ongoing consideration. Our customers focus align to risk on the continent and will benefit from our customer focus. the spirit of these regulations, which is ultimately protect A key initiative in this regard is bringing risk management customers. closure to the functions where risk arise, identifying risks early and, in our customer-facing functions, gaining deeper insight Technological Advancement into our customers. New technologies present us with reflective opportunities to Other projects include aligning the collection of financial compete more effectively by meeting changing customer and risk data to improve our view of the size and potential expectations. They also introduce major new challenges. consequences of exposures, and implementing measures to Building a digital financial bank needs to be managed in a better understand the complex interrelationships between way that does not compromise system stability and customer different risk types. experience. In addition to, the value of information as an asset makes it a potential target for cyber-attacks, furthermore, theft These initiatives are supported by our investment in technology, of fund. Globally, cyber-attacks are increasing in number and and will allow us to customize our products and services in sophistication, as is the utilization systems and people. a way that better manages our risk exposures and reduces related capital requirements. Increasing Competition Acting Ethically and Fairly in Everything We Do Private Banks are expanding their presence in different areas of the country and competition is being driven by advances in Conduct risk is the risk that the bank itself poses to our technology. In this context, we need to defend and grow our customers, and to the effective operation of financial markets, position by providing our best services at cost effective rate. through conduct that is not ethical or fair. The way we execute Our legacy and position as an integrated financial services our day-to-day activities-including how we design and market bank differentiates us in the banking industry. products, how we communicate with customers and how we meet their expectation-prescribes the culture we wish to build, Customer Expectations and therefore determines our ability to keep the promises we make to our customers and place them to the center of The competences of new technologies- and the speed everything we do. with which they are being adopted- mean that customers increasingly expect highly customized yet affordable products (Risk Management Framework & Mitigation Methodology and services that are available whenever they choose. The provides more details on the bank’s approach to risk emergence of new services from competitors, the simplicity management) with which customers can change to a different bank and the speed at which negative experiences can be shared through Determining Our Material Matters the social media greater focus on customer experience. Our proactive engagement with our stakeholders updates our business strategy and material issues, shapes our products and People and Culture services, assists us handle and respond to social expectations, Realizing our objectives of placing our customers at the center mitigates reputational risk and influences our operating of everything we do finally depends on our employees’ ability environment. to provide vast customer experience, whether directly through Business units enabling functions are authorized to connect their communications with customers, through the products directly with stakeholders and are responsible for identifying and services we develop or through the management of stakeholder concerns and taking suitable action. For strategic compliance processes that could impact on the perceived engagement, the stakeholder relations team undertakes quality of service. Structuring a digital financial services bank engagement based on the identified needs and concerns of requires us to employ and develop new skills, and for our our stakeholders. employees to adjust to new ways of working. In light of the We take the following steps to determine our material matters challenges in executing our strategy, and to maintain trust, we need to ensure a culture that values customer fairness and Investigate market integrity in everything we do. We identify all issues that have the potential to impact our Managing Associated Risks earning sustainability and the ability to create value for our stakeholders. The process of identifying potential material Building a Risk-aware Culture maters is a group wide responsibility, requiring input from all business units and divisions, and taking into account input and Building a flexible and steady risk-aware culture is vital in feedback from all our stakeholders. Areas of potential impact effectively managing the challenges that may arise in executing that are assessed include financial, environmental, social, our strategy. We build a risk-aware culture by ensuring strategic, competitive, legislative, reputational, and regulatory accountability, responsibility and sufficient coverage of the risk matters (including policy matters), as well as our stakeholders. landscape.

PRIME BANK 213 ANNUAL REPORT 2018

Rank • Our compliance on revised corporate governance code for the year ended 31 December 2018 has been audited by The issues identified are prioritized according to greatest Haque Fazlul & Co., Chartered Accountants. Auditor has relevance and highest potential to impact significantly on the certified that PBL has compiled with the conditions of the viability of our business and relationships with stakeholders. revised Corporate Governance Code issued by Bangladesh Integrate Securities and Exchange Commission (BSEC).

The material matters that have been identified and prioritized • The financial statements of Prime Bank Foundation for the inform our long-term business strategies and targets as well as year ended 31 December 2018 have been audited by S F short-to-medium term business plans. Ahmed & Co., Chartered Accountants and an unqualified opinion has been expressed on those financial statements Assess by the auditor.

Material matters are continuously assessed to ensure that our • Actuarial valuation for Prime Bank Employees’ Gratuity strategic focus areas remain relevant to our stakeholder needs Fund is performed by Z Halim & Associates, an actuarial and the environment. firm, every year.

(The details of determining material aspects of the Bank have • The credit rating report of Prime Bank is issued to the Bank been reported in Sustainability Report) Management upon assessment by two External Credit Assessment Institutions (ECAI) namely “Credit Rating ASSURANCE Information and Services Limited (CRISL)” and “Credit Rating Agency of Bangladesh (CRAB)”. External Assurance

PBL makes use of various independent service providers to get assurance on various aspects of the business operations including elements of internal and external reporting.

Annual integrated report includes information generated from various sources on which assurance has been provided by the external auditors, credit rating agencies and an independent professional actuary, such as:

• The consolidated annual financial statements and the financial statements of PBL for the year ended 31 December 2018 have been jointly audited by Hoda Vasi Chowdhury & Co., Chartered Accountants and Aziz Halim Khair Choudhury, Chartered Accountants and an unqualified opinion has been expressed on those financial statements by the auditors.

214 PRIME BANK STATEMENT OF VALUE ADDED AND ITS DISTRIBUTION

The value added statement provides a detailed account of total value addition and the distribution of the value created by the organization. Prime Bank contributes significantly to socio economic development by empowering employees through the payment of salaries and allowances; by paying attractive and consistent dividend to the providers of capital; by assisting the regulatory capacities through paying taxes and of course keeping in mind company’s continuous expansion and business growth. (BDT in million) 2018 2017 Particulars Amount % Amount % Net interest income 7,650 90.67 4,894 82.65 Commission, exchange & brokerage 2,154 25.53 4,246 71.70 Investment income 2,209 26.18 2,245 37.91 Other income 965 11.44 823 13.90 Management expenses excluding salaries & allowances, depreciation (2,759) (32.71) (2,722) (45.96) Provision for doubtful losses (1,782) (21.12) (3,564) (60.20) Total value added by the company 8,437 100 5,921 100

Value added contributed to- Employees: As salaries and allowance 4,169 49.41 3,835 64.77 Provider of capital: Dividend to shareholders 1,415 16.78 721 12.17 Government: Corporate tax 1,750 20.74 750 12.67 To expansion and growth: Retained income 772 9.16 338 5.71 Depreciation 330 3.91 277 4.68 Total distribution by the company 8,437 100 5,921 100

Value added statement Value added statement

10.39% 13.07% Employees Employees 12.67% Provider of capital Provider of capital 20.74% Government 49.41% Government 12.17% 64.77% To expansion and growth To expansion and growth

16.78%

ECONOMIC VALUE ADDED STATEMENT

Economic value added (EVA) is the financial performance measure of true economic profit of an organization. It provides a measurement of a company’s economic success (or failure) over a period of time. Such a metric is useful for investors who wish to determine how well a company has added value for its investors and it can be compared against company’s peers for a quick analysis of how well the company is operating in its industry. Economic value added is calculated by taking a company’s net profit after tax, adding with it, the amount of provision charged to absorb the probable losses intrinsic in the investments. EVA is calculated as under:

PRIME BANK 215 ANNUAL REPORT 2018

(BDT in million) Particulars 2018 2017 2016 2015 Shareholders’ equity at year end 26,181 24,708 25,285 26,415 Accumulated provision 10,280 10,893 9,055 9,204 Average shareholders’ equity 36,031 34,971 34,979 33,753 Cost of equity (%) 5.40% 6.35% 5.76% 6.11%

Economic value added Net profit after tax (before provision) 3,969 4,623 5,607 5,293 Less: Cost of equity 1,946 2,221 3,317 2,566 Economic value addition 2,024 2,403 2,290 1,738

Key ratios EVA/Operating revenue (%) 15.69 19.78 19.05 14.39 EVA/Average shareholders’ equity (%) 5.62 6.87 6.55 5.15 Net profit after tax/Operating revenue (%) 16.96 8.72 18.26 17.72

Economic alue added Eerae shareholders euity BDT in Million 3 7 0 40 6.8 55 2, 6. 4 2,29 62 02 5. 2, 8 15 5. 73 1,

2015 2016 2017 2018 2015 2016 2017 2018

MARKET VALUE ADDED STATEMENT

Unlike EVA, which measures internal performance, market value added (MVA) is a measure of external performance that indicate how the market has evaluated the company’s performance in terms of market value of shares compared to book value of shares. MVA is the difference between the market value of equity of a company and the book value of equity invested in the company. A positive MVA indicates that the company added value to shareholders wealth. The following statement indicates the MVA at the year ended on 31 December of 2018 and 2017 :

(BDT in million) Particulars 2018 2017 Market value of shares outstanding 20,155 28,204 Book value of shares outstanding 26,181 24,708 Market value added (6,026) 3,496

Explanation behind the negatige MVA Market Value Added (MVA) is the difference between the current market value of a firm and the capital contributed by investors. In an ideal scenario, if MVA is positive, the firm has added value. If it is negative, the firm has lost value. But in some cases due to volatile market scenario and unusual/abnormal decrease of market index market value of shares outstanding may be less than the book value.

216 PRIME BANK SHAREHOLDERS’ INFORMATION

Horizontal Analysis

Vertical Analysis

Graphical Presentation

Distribution of Shareholdings

Shares Held by Directors

Market Price Information

Financial Calendar 2018 ANNUAL REPORT 2018 1.45% 0.12% 3.21% 6.21% 4.78% 6.30% -7.58% 11.45% -0.75% -11.91% -5.68% -4.05% -4.80% 10.96% -17.63% 30.80% -45.10% -16.20% -33.70% -28.60% 14 vs 13 14 14 vs 13 14 887 806 806 2014 2014 6,157 6,157 2,461 2,461 6,194 6,613 6,613 2,877 2,872 2,872 5,750 5,750 3,288 2,393 2,393 2,033 2,033 3,280 11,906 11,906 24,461 24,461 18,446 18,446 147,367 147,367 (15,574) 269,218 269,218 204,838 204,838 (BDT in million except %) in million except (BDT 7.25% 1.40% 7.99% 9.53% 3.44% 9.66% 3.05% 4.20% -1.46% -3.79% -8.45% -0.70% -4.89% -4.06% 28.97% -16.10% -10.61% -15.70% -30.91% -54.95% 15 vs 14 15 vs 14 613 613 834 834 2015 2015 3,154 3,154 2,139 6,166 1,956 1,956 1,294 2,752 2,752 6,516 6,516 7,989 7,989 2,564 3,602 3,602 5,906 5,906 15,551 15,551 12,073 12,073 26,415 26,415 151,865 151,865 (14,257) 267,322 267,322 194,825 1.12% 1.61% 8.18% 1.65% 1.83% 1.56% 1.60% 2.62% -0.41% -2.47% -2.52% -4.28% 12.08% -25.12% -14.79% -13.44% -75.53% -10.04% -22.35% 156.07% 16 vs 15 16 vs 15 814 814 150 150 2016 2016 2,195 2,195 3,412 3,412 5,757 5,757 3,313 3,313 1,693 1,693 3,661 3,661 2,345 2,345 6,266 2,605 2,605 6,203 6,203 6,590 12,023 12,023 13,989 13,989 25,285 25,285 170,212 170,212 197,934 197,934 272,224 272,224 (10,676) 8.12% 1.04% 4.75% 3.32% 5.58% 0.55% 4.46% 47.71% -7.50% 12.87% -2.28% -6.67% -2.36% 16.52% -6.09% 32.58% -51.76% -31.56% -22.86% 17 vs 16 17 vs 16 400.00% 764 750 750 2017 2017 6,775 6,775 5,373 1,059 1,059 1,809 2,245 2,245 3,835 3,835 4,246 6,434 6,434 3,564 4,894 4,894 2,940 2,940 12,148 12,148 14,769 14,769 (9,875) 24,708 24,708 281,275 281,275 199,014 198,323 198,323 6.18% 7.92% 3.78% 8.76% 8.70% 5.98% 2.44% 5.96% 6.44% 4.49% -1.62% 16.14% -0.75% 56.31% 24.52% 117.68% 18 vs 17 18 vs 17 133.33% -49.26% -50.02% 106.60% 887 2018 2018 1,782 3,011 7,180 7,180 5,719 2,154 2,154 2,188 1,750 1,750 4,169 7,650 7,650 3,938 3,938 6,943 6,943 2,209 26,181 26,181 12,899 18,390 18,390 197,518 197,518 (10,741) 293,901 293,901 205,810 205,810 Particulars assets Total Loans and advance Loans plant and equipment Propery Deposits and other accounts equity Shareholders’ Operating profit Operating & other assets loans and advance for Provision taxes / (loss) before profit Total Net interest / net profit on investments / net profit Net interest income Investment and brokerage Commission, exchange tax for Provision taxation after Net profit HORIZONTAL ANALYSIS HORIZONTAL Balance Sheet Items Items & Loss Profit Particulars etc. paid on deposits, borrowings, / profit Interest income Other operating expenses Other operating expenses operating Total Interest income / profit on investments income / profit Interest income operating Total Salary expenses

218 PRIME BANK 8.71% 100% 100% 7.40% 2.93% 3.23% 2.46% 8.96% 11.97% 9.09% 11.94% 67.13% 10.47% 10.45% 54.74% 22.54% 43.33% 20.92% 76.09% 22.40% -56.67% % % 887 806 806 2014 2014 6,157 6,157 2,461 2,461 6,194 6,613 6,613 2,877 2,872 2,872 5,750 5,750 3,288 2,393 2,393 2,033 2,033 3,280 11,906 11,906 24,461 24,461 18,446 18,446 27,480 147,367 (15,574) 269,218 269,218 204,838 204,838 3.17% 8.12% 100% 100% 9.74% 4.91% 7.43% 2.33% 9.88% 2.44% 11.98% 13.68% 56.81% 10.45% 72.88% 23.42% 22.43% 45.85% -54.15% 30.34% 59.06% % % 613 613 834 834 2015 2015 3,154 3,154 2,139 2,139 6,166 1,956 1,956 1,294 2,752 2,752 6,516 6,516 7,989 7,989 2,564 3,602 3,602 5,906 5,906 15,551 15,551 12,073 12,073 26,415 26,415 26,330 26,330 151,865 151,865 (14,257) 267,322 267,322 194,825 100% 100% 7.46% 9.67% 2.42% 3.58% 9.29% 11.47% 0.66% 16.13% 72.71% 27.33% 61.63% 15.03% 10.33% 52.97% 14.60% 27.60% 25.36% 62.53% -47.03% % % BDT in million except % which represent percentage of total assets of total percentage % which represent in million except BDT 814 814 150 150 2016 2016 2,195 2,195 3,412 3,412 5,757 5,757 3,313 3,313 1,693 1,693 3,661 3,661 2,345 2,345 6,266 2,605 2,605 6,203 6,203 6,590 12,023 12,023 13,989 13,989 25,285 25,285 22,699 22,699 170,212 170,212 197,934 197,934 272,224 272,224 (10,676) BDT in million except % which represent percentage of gross operating revenue operating of gross percentage % which represent in million except BDT 100% 100% 3.41% 8.21% 4.81% 8.78% 3.47% 2.29% 17.41% 16.18% 10.19% 55.16% 19.28% 13.35% 70.51% 70.75% 22.22% 67.06% 30.76% 24.40% % % -44.84% 764 750 750 2017 2017 6,775 6,775 5,373 1,059 1,059 1,809 2,245 2,245 3,835 3,835 4,246 6,434 6,434 3,564 4,894 4,894 2,940 2,940 12,148 12,148 14,769 14,769 (9,875) 24,708 24,708 22,024 22,024 281,275 281,275 199,014 198,323 198,323 9.11% 100% 100% 8.91% 3.75% 7.54% 9.25% 7.40% 9.34% 2.36% 12.74% 17.63% 67.21% 24.19% 77.79% 16.66% 54.57% 30.37% 32.36% 70.03% -45.43% % % 887 2018 2018 1,782 3,011 7,180 7,180 5,719 2,154 2,154 2,188 1,750 1,750 4,169 7,650 7,650 3,938 3,938 6,943 6,943 2,209 26,181 26,181 12,899 18,390 18,390 197,518 197,518 23,640 23,640 (10,741) 293,901 293,901 205,810 205,810 Particulars VERTICAL ANALYSIS VERTICAL Balance Sheet Items Items & Loss Profit Loans and advance Loans plant and equipment Propery Particulars Total assets Total Deposits and other accounts equity Shareholders’ Interest income / profit on investments income / profit Interest Interest / profit paid on deposits, borrowings, etc. paid on deposits, borrowings, / profit Interest & other assets loans and advance for Provision Net interest / net profit on investments / net profit Net interest expenses operating Total profit Operating taxes / (loss) before profit Total Investment income Investment and brokerage Commission, exchange income Other operating expenses Other operating tax for Provision taxation after Net profit Gross operating revenue operating Gross Salary expenses Total operating income ( net operating revenue) income ( net operating operating Total

PRIME BANK 219 ANNUAL REPORT 2018

GRAPHICAL PRESENTATION

Loans and Advances Deposits hareholders Euity BDT in Million BDT in Million BT M 204,838 205,810 199,014 198,323 197,934 197,518 2181 194,825 21 228 208 21 170,212 151,865 147,367

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 201 201 201 201 2018

peratin eenue Operating Profit Net Profit After Tax BT M BDT in Million BDT in Million 393 128 2, 6,157 139 195 188 1218 5,906 120 2, 2, 2, 1202 110 5,757 5,719 5,373 05 9 1,

201 201 201 201 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

on performin loans eulatory Capital Earnings Per Share (BDT)

N T RA R

N BT M T BT M 0 1 1 1 0 11 82 1 2. 1 12 1 93 94 12 89 1. 1. 1. 12 94 0. 8 1 8 2 2 2 8 1 21 8 8 221 1 2 2 12 10 10 11 11

201 201 201 201 2018 201 201 201 201 2018 2014 2015 2016 2017 2018

220 PRIME BANK ield on dances Percent Cost of eposit Percent eturn on ssets Percent 120 01 1020 081 080 0 8 81 2 2 08

201 201 201 201 2018 201 201 201 201 2018 201 201 201 201 2018

eturn on Euity Percent iidend Percent et sset alue per hare BT 100 100 1008 100 100 0 2 0 1 2 80 2 8 8 1 120 2 2 2 2

201 201 201 201 2018 201 201 201 201 2018 201 201 201 201 2018

Deposits (by segments) Loans and Advances (by segments)

Consumer Corporate & & Others: Institutional 9% Banking: 18% MSME: 10% Commercial Corporate & Banking Institutional Division: 6% Banking: 2018 2018 55% MSME: 9% Consumer & Commercial Others: 67% Banking Division: 26%

PRIME BANK 221 ANNUAL REPORT 2018

DISTRIBUTION OF SHAREHOLDINGS

Amount % of shares Types 2018 2017 2018 2017 Sponsors 4,152,053,350 3,915,393,490 36.67% 38.04% Financial Institutions 3,076,157,170 2,503,815,050 27.17% 24.32% Foreign Investors 348,688,820 385,416,330 3.08% 3.75% Non- Resident Bangladeshi 2,6774,640 27,819,790 0.24% 0.27% General Public 3,719,160,790 3,461,041,500 32.84% 33.62% Total 11,322,834,770 10,293,486,160 100% 100%

Shareholding Positions

P 28

2018

NR B 02 I 08 I 21

SHARES HELD BY DIRECTORS

Sl. Name of the Director Designation 31-12-2017 31-12-2018 Change No. Mr. Azam J Chowdhury (Representative of East 01 Chairman 20,601,158 22,661,273 10% Coast Shipping Lines Limited) 02 Mr. Mafiz Ahmed Bhuiyan Vice Chairman 20,591,099 22,650,208 10% 03 Mr. Imran Khan Vice Chairman 20,588,337 22,647,170 10% 04 Mr. Md. Nader Khan Director 38,019,361 41,821,296 10% 05 Quazi Sirazul Islam Director 20,616,158 22,677,773 10% 06 Mrs. Marina Yasmin Chowdhury Director 24,225,000 27,288,000 13% 07 Mr. Md. Shahadat Hossain Director 20,611,583 22,672,741 10% 08 Mr. Shirajul Islam Mollah Director 20,644,922 22,709,414 10% 09 Mrs. Nasim Anwar Hossain Director 23,365,749 25,702,323 10% 10 Mrs. Salma Huq Director 32,254,341 35,479,775 10% 11 Mr. Nafis Sikder Director 25,826,178 28,408,795 10% Mr. Waheed Murad Jamil 12 Director 20,587,749 22,646,523 10% (Representative of Mawsons Limited) 13 Mr. Tarique Ekramul Haque Director 20,600,391 22,660,429 10% Mr. Mohammad Mushtaque Ahmed Tanvir 14 Director 20,760,250 22,836,275 10% (Representative of Uniglory Cycle Industries Ltd.) 15 Mr. Shamsuddin Ahmad, Ph.D Independent Director - - - 16 Dr. G. M. Khurshid Alam Independent Director - - - 17 Mr. M. Farhad Hussain, FCA Independent Director - - - 18 Dr. M. Shamim Z. Bosunia Independent Director - - - Total 329,292,276 362,861,995

222 PRIME BANK MARKET PRICE INFORMATION

The reported high and low prices and volume of shares of Prime Bank Limited traded during the year 2018 on Dhaka Stock Exchange and Chittagong Stock Exchange are given below:

DSE CSE Total Volume on Month High Taka Low Taka Volume High Taka Low Taka Volume DSE & CSE January 27.60 23.20 18643493 27.30 22.60 255655 18899148 February 24.00 20.50 9884555 24.40 20.50 209160 10093715

March 22.40 19.00 8096976 22.40 19.10 62617 8159593 April 22.50 19.40 13395766 23.00 18.90 283481 13679247 May 22.10 17.40 4608986 22.00 16.00 147137 4756123 June 18.30 15.80 11965235 18.20 16.10 226813 12192048 July 16.50 14.50 14837868 16.20 14.20 716734 15554602 August 18.90 15.30 42506010 19.00 15.40 1098701 43604711 September 18.30 15.60 33972653 17.60 15.50 566294 34538947 October 17.60 15.50 36071329 18.00 15.50 1884965 37956294 November 18.20 16.20 11993222 17.60 16.40 169156 12162378 December 18.50 16.70 16913821 18.80 16.80 366760 17280581

Total Trade Graph of PRIME BANK _ Trade

1000

900

800

700

600

500

400

300

200

100

0 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18

FINANCIAL CALENDAR 2018

Quarterly Results

Audited consolidated results for the 4th quarter ended 31 December 2017 Announced on 10th April 2018 Unaudited consolidated results for the 1st quarter ended 31 March 2018 Announced on 13th May 2018 Unaudited consolidated results for the 2nd quarter and half-year ended 30 June 2018 Announced on 26th July 2018 Unaudited consolidated results for the 3rd quarter ended 30 September 2018 Announced on 28th October 2018

Dividends

Distribution of cash dividend of 7.00% in respect of financial year ended 31 December 2017 28th May 2018 Notice of Annual General Meeting 10th April 2018 Annual General Meeting 24th May 2018

PRIME BANK 223 FINANCIAL STATEMENTS

Independent Auditors’ Report to the Shareholders

Consolidated Balance Sheet

Consolidated Profit and Loss Account

Consolidated Cash Flow Statement

Consolidated Statement of Changes in Equity

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements Independent Auditor’s Report To the Shareholders of Prime Bank Limited Report on the Audit of the Consolidated and Separate Financial Statements

Opinion

We have audited the consolidated financial statements of Prime Bank Limited and its subsidiaries (the “Group”) as well as the separate financial statements of Prime Bank Limited (the “Bank”), which comprise the consolidated and separate balance sheets as at 31 December 2018 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 and other explanatory information.

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 financial position of the Group and the separate financial position of the Bank as at 31 December 2018, and of its consolidated and separate financial performance 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.

Basis for Opinion

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.

Key Audit Matters

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.

Description of key audit matters Our response to key audit matters Measurement of provision for loans, advances and leases The process for estimating the provision for loans, We tested the design and operating effectiveness of key controls advances and leases portfolio associated with credit risk focusing on the following: is significant and complex. • Credit appraisal, loan disbursement procedures, monitoring and For the individual analysis for large exposure, provisions provisioning process; calculation consider the estimates of future business • Identification of loss events, including early warning and default performance and the market value of collateral provided warning indicators; for credit transactions. • Reviewed quarterly Classification of Loans (CL); For the collective analysis of exposure on portfolio basis, provision calculation and reporting are manually Our substantive procedures in relation to the provision for loans and processed that deals with voluminous databases, advances portfolio comprised the following: assumptions and estimates. • Reviewed the adequacy of the general and specific provisions in At year end the Group reported total gross loans and line with related Bangladesh Bank guidelines; advances of BDT 208,196 million (2017: BDT 200,619 • Assessed the methodologies on which the provision amounts are million) and provision for loans and advances of BDT based, recalculated the provisions and tested the completeness 8,728 million (2017: BDT 9,390 million). and accuracy of the underlying information;

• Evaluated the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines.

• Finally, compared the amount of provision requirement as determined by Bangladesh Bank inspection team to the actual amount of provision maintained. See note no 7 and 14 to the financial statements

PRIME BANK 225 ANNUAL REPORT 2018

Valuation of treasury bill and treasury bond The classification and measurement of T-Bill and T-Bond We assessed the processes and controls put in place by the Bank to require judgment and complex estimates. identify and confirm the existence of treasury bills and bonds.

In the absence of a quoted price in an active market, We obtained an understanding, evaluated the design and tested the the fair value of T-Bills and T-Bonds is determined using operating effectiveness of the key controls over the treasury bills and complex valuation techniques which may take into bonds valuation processes, including controls over market data inputs consideration direct or indirect unobservable market into valuation models, model governance, and valuation adjustments. data and complex pricing models which require an We tested a sample of the valuation models and the inputs used in elevated level of judgment. those models, using a variety of techniques, including comparing inputs to available market data.

Finally assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines. See note no 6 to the financial statements

Impairment assessment of unquoted investments In the absence of a quoted price in an active market, We have assessed the processes and controls put in place by the the fair value of unquoted shares and bonds, especially Company to ensure all major investment decisions are undertaken any impairment is calculated using valuation techniques through a proper due diligence process. which may take into consideration direct or indirect We tested a sample of investments valuation as at 31 December 2018 unobservable market data and hence require an elevated and compared our results to the recorded value. level of judgment. Finally, we assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines. See note no 6 to the financial statements

IT systems and controls Our audit procedures have a focus on IT systems and We tested the design and operating effectiveness of the Bank’s controls due to the pervasive nature and complexity of IT access controls over the information systems that are critical to the IT environment, the large volume of transactions financial reporting. processed in numerous locations daily and the reliance We tested IT general controls (logical access, changes management on automated and IT dependent manual controls. and aspects of IT operational controls). This included testing that Our areas of audit focus included user access requests for access to systems were appropriately reviewed and management, developer access to the production authorized. environment and changes to the IT environment. These We tested the Bank’s periodic review of access rights and reviewed are key to ensuring IT dependent and application based requests of changes to systems for appropriate approval and controls are operating effectively. authorization.

We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit.

Legal and regulatory matters We focused on this area because the Bank and its We obtained an understanding, evaluated the design and tested the subsidiaries (the “Group”) operates in a legal and operational effectiveness of the Bank’s key controls over the legal regulatory environment that is exposed to significant provision and contingencies process. litigation and similar risks arising from disputes and We enquired to those charged with governance to obtain their view regulatory proceedings. Such matters are subject to many on the status of all significant litigation and regulatory matters. uncertainties and the outcome may be difficult to predict. We enquired of the Bank’s internal legal counsel for all significant litigation These uncertainties inherently affect the amount and timing and regulatory matters and inspected internal notes and reports. of potential outflows with respect to the provisions which have been established and other contingent liabilities. We assessed the methodologies on which the provision amounts are based, recalculated the provisions, and tested the completeness and Overall, the legal provision represents the Group’s and accuracy of the underlying information. the Bank’s best estimate for existing legal matters that have a probable and estimable impact on the Group’s We also assessed the Bank’s provisions and contingent liabilities financial position. disclosure.

226 PRIME BANK Carrying value of investments in subsidiaries by the Bank The Bank has invested in equity shares of its five We have reviewed Management’s analysis of impairment assessment subsidiaries, namely Prime Bank Investment Limited, and recoverable value calculation of subsidiaries in accordance with Prime Bank Securities Limited, Prime Exchange Co (Pte) IAS 36. Limited, Singapore, PBL Exchange (UK) Limited, PBL In particular, our discussions with the Management were focused Finance (Hong Kong) Limited. As at 31 December 2018 on the continued appropriateness of the value in use model, the key the carrying value of this investment is BDT 3,814 million. assumptions used in the model, the reasonably possible alternative At the time of conducting our audit of the separate assumptions, particularly where they had the most impact on the financial statements of the Bank we have considered value in use calculation. the recoverable value of the Bank’s investments in all the We also checked mathematical accuracy of the model, recalculated above subsidiaries stated at cost. discount rate used within the model, inputs used in the determination Management has conducted impairment assessment of assumptions within the model were challenged and corroborating and calculated recoverable value of its individual information was obtained with reference to external market subsidiaries in accordance with IAS 36. information, third-party sources.

Revaluation of property, plant and equipment The Bank in prior year has undertaken revaluation of its We assessed the process of revaluation previously taken by the Bank. land and building. As a result of this revaluation exercise, We reviewed revaluation report of the independent valuer along with an amount of BDT 1,767 million is recognised as the fair relevant documents and applied our judgment to see whether the fair value gain in revaluation reserve and BDT 270 million value is still relevant. as resultant deferred tax liability. Determination of fair value in absence of any quoted price and active market We checked related accounting treatments of fair value gain and require significant judgment associated deferred tax as recognized by the Bank.

Reporting on other information

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.

In connection with our audit of the consolidated and separate 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.

If, based on the work we have performed, on the other information obtained prior to the date of this audit report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated and Separate Financial Statements and Internal Controls

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, 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 Bank. 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.

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

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.

PRIME BANK 227 ANNUAL REPORT 2018

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:

• 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.

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.

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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 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:

i. 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;

ii. to the extent noted during the course of our audit work performed on the basis stated under the Auditor’s Responsibility section in forming the above opinion on the consolidated financial statements 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:

a. internal audit, internal control and risk management arrangements of the Group as disclosed in the financial statements appeared to be materially adequate;

b. 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 Group and its related entities {other than matters disclosed in these financial statements};

iii. Consolidated financial statements of the Bank include five subsidiaries, namely Prime Bank Investment Limited, Prime Bank

228 PRIME BANK Securities Limited, Prime Exchange Co (Pte) Limited, Singapore, PBL Exchange (UK) Limited, PBL Finance (Hong Kong) Limited reflect total assets of BDT 295,011,325,205 as at 31 December 2018 and total revenue of BDT 24,235,857,493 for the year ended 31 December 2018. These five subsidiaries of the Bank have been audited by other component auditors who have expressed unqualified audit opinion. The results of these subsidiaries have been properly reflected in the Group’s consolidated financial statements;

iv. 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;

v. the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements;

vi. 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;

vii. the expenditures incurred were for the purpose of the Bank’s business for the year;

viii. the consolidated financial statements have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as related guidance issued by Bangladesh Bank;

ix. adequate provisions have been made for advance and other assets which are in our opinion, doubtful of recovery;

x. the information and explanations required by us have been received and found satisfactory;

xi. we have reviewed over 80% of the risk weighted assets of the Bank and spent over 8000 person hours; and

xii. Capital to Risk-weighted Asset Ratio (CRAR) as required by Bangladesh Bank has been maintained adequately during the year.

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & Co Chartered Accountants Chartered Accountants

Dated, April 03, 2019

PRIME BANK 229 ANNUAL REPORT 2018

Consolidated Balance Sheet as at 31 December 2018

Amount in Taka Particulars Notes 2018 2017 PROPERTY AND ASSETS Cash 3 Cash in hand (including foreign currencies) 3,132,734,166 3,140,588,297 Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) 14,539,287,480 14,973,037,651 17,672,021,646 18,113,625,948 Balance with other banks and financial institutions 4 In Bangladesh 10,300,411,247 7,471,466,377 Outside Bangladesh 3,327,554,977 2,773,249,334 13,627,966,225 10,244,715,711 Money at call on short notice 5 - 1,500,000,000 Investments 6 Government 24,646,806,239 23,657,686,975 Others 3,341,464,542 2,222,449,188 27,988,270,780 25,880,136,163 Loans, advances and lease /investments Loans, cash credits, overdrafts etc./ investments 7 196,586,141,191 184,066,239,687 Bills purchased and discounted 8 11,609,817,551 16,552,939,609 208,195,958,743 200,619,179,296 Fixed assets including premises, furniture and fixtures 9 6,996,504,016 6,487,041,211 Other assets 10 20,310,103,156 19,329,742,018 Non - banking assets 11 220,500,640 220,500,640 Total assets 295,011,325,205 282,394,940,987

LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents 12 33,944,516,693 22,137,997,510 Deposits and other accounts 13 Current / Al-wadeeah current deposits 32,720,490,917 33,182,700,323 Bills payable 3,045,875,590 4,212,571,458 Savings bank / Mudaraba savings deposits 41,478,074,475 38,397,699,341 Term deposits / Mudaraba term deposits 120,248,988,239 123,207,326,047 Bearer certificate of deposit - - Other deposits - - 197,493,429,221 199,000,297,169

Other liabilities 14 37,274,782,999 36,443,698,544 Total liabilities 268,712,728,913 257,581,993,222 Capital / Shareholders' equity Paid -up capital 15.2 11,322,834,770 10,293,486,160 Share premium 15.8 1,211,881,786 2,241,230,396 Non-controlling Interest 15.9 63 61 Statutory reserve 16 10,353,413,584 9,565,853,177 Revaluation gain / loss on investments 17 71,798,624 55,285,288 Revaluation reserve 18 1,496,759,104 1,496,759,104 Foreign currency translation gain 19 15,117,438 15,334,146 General reserve 28,002,888 28,002,888 Surplus in profit and loss account / Retained earnings 20 1,798,788,031 1,116,996,544 Total Shareholders' equity 26,298,596,289 24,812,947,765 Total liabilities and Shareholders' equity 295,011,325,205 282,394,940,987

230 PRIME BANK Consolidated Balance Sheet as at 31 December 2018

Amount in Taka Particulars Notes 2018 2017 OFF - BALANCE SHEET ITEMS Contingent liabilities 21 Acceptances and endorsements 21.1 52,944,055,583 49,721,797,256 Letters of guarantee 21.2 57,826,844,429 72,966,435,302 Irrevocable letters of credit 21.3 38,072,832,383 34,112,938,262 Bills for collection 21.4 11,613,890,781 10,766,851,918 Other contingent liabilities - - 160,457,623,176 167,568,022,737 Other commitments Documentary credits and short term trade -related transactions - - Forward assets purchased and forward deposits placed 2,095,175,884 240,823,450 Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities , credit lines and other commitments - - Liabilities against forward purchase and sale - - - - 2,095,175,884 240,823,450 Total Off-Balance Sheet items including contingent liabilities 162,552,799,060 167,808,846,187

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

See annexed auditors' report to the Shareholders of the date.

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & Co Chartered Accountants Chartered Accountants Dated, 03 April 2019

PRIME BANK 231 ANNUAL REPORT 2018

Consolidated Profit and Loss Account for the year ended 31 December 2018

Amount in Taka Particulars Notes 2018 2017

Interest income / profit on investments 23 18,524,318,925 14,853,354,233 Interest / profit paid on deposits, borrowings, etc. 24 (10,741,904,936) (9,885,293,129) Net interest / net profit on investments 7,782,413,989 4,968,061,104 Investment income 25 2,312,228,869 4,396,502,019 Commission, exchange and brokerage 26 2,379,034,115 2,453,506,591 Other operating income 27 942,121,164 827,182,771 Total operating income (A) 13,415,798,137 12,645,252,485

Salaries and allowances 28 4,328,098,311 3,966,047,129

Rent, taxes, insurance, electricity, etc. 29 1,030,304,013 963,386,657 Legal expenses 30 110,747,428 88,016,667 Postage, stamp, telecommunication, etc. 31 79,503,863 87,789,124 Stationery, printing, advertisements, etc. 32 231,584,903 202,304,048 Managing Director's salary and fees 33 10,131,935 11,528,936 Directors' fees 34 4,501,129 5,200,364 Auditors' fees 35 2,800,850 2,558,659 Charges on loan losses 36 - - Depreciation and repair of Bank's assets 37 422,261,737 375,487,188 Other expenses 38 1,385,429,678 1,353,717,503 Total operating expenses (B) 7,605,363,847 7,056,036,276 Profit / (loss) before provision (C=A-B) 5,810,434,290 5,589,216,209

Provision for loans & advances 39 1,781,500,000 3,255,500,000 Provision for diminution in value of investments 39 41,967,108 (141,676,723) Provision for impairment of client margin loan 39 (27,964,899) 106,528,754 Other provisions 39 (13,902,208) 372,364,941 Total provision (D) 1,781,600,001 3,592,716,972 Total profit / (loss) before taxes (C-D) 4,028,834,289 1,996,499,236 Provision for taxation: Current tax 40 1,775,174,401 781,212,608 Deferred tax 26,022 (241,630) 1,775,200,423 780,970,978 Net profit after taxation 2,253,633,866 1,215,528,259 Retained earnings brought forward from previous year 20.1 332,714,576 263,263,221 2,586,348,442 1,478,791,480

232 PRIME BANK Consolidated Profit and Loss Account for the year ended 31 December 2018

Amount in Taka Particulars Notes 2018 2017 Appropriations Statutory reserve 787,560,407 361,794,935 Non controlling interest 3.44 1.33 General reserve - - 787,560,411 361,794,936 Retained surplus 20 1,798,788,031 1,116,996,544

Earnings per share (EPS) 45 1.99 1.07

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

See annexed auditors' report to the Shareholders of the date

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & Co Chartered Accountants Chartered Accountants Dated, 03 April 2019

PRIME BANK 233 ANNUAL REPORT 2018

Consolidated Cash Flow Statement for the year ended 31 December 2018

Amount in Taka Particulars Notes 2018 2017 A) Cash flows from operating activities Interest receipts in cash 20,893,501,871 17,266,709,150 Interest payments (10,014,939,036) (10,329,512,430) Dividend receipts 88,098,460 135,923,182 Fees and commission receipts in cash 2,379,034,115 2,453,506,591 Recoveries of loans previously written off 203,780,138 409,904,161 Cash payments to employees (4,227,915,674) (4,093,129,740) Cash payments to suppliers (704,234,102) (745,612,408) Income taxes paid (491,561,431) (587,515,461) Receipts from other operating activities 41 1,139,444,273 2,742,217,905 Payments for other operating activities 42 (2,122,945,953) (2,108,218,281) Cash generated from operating activities before changes in operating assets and liabilities 7,142,262,661 5,144,272,670 Increase / (decrease) in operating assets and liabilities Purchase of trading securities (Treasury bills) (2,698,687,081) 16,912,134,608 Loans and advances to customers (10,235,424,998) (29,444,601,255) Other assets 43 45,363,165 6,883,801,999 Deposits from other banks / borrowings 6,933,521,555 8,313,001,382 Deposits from customers (2,671,173,267) 315,343,333 Other liabilities account of customers (1,166,695,868) (955,792,457) Other liabilities 44 (640,075,960) 315,079,735 (10,433,172,454) 2,338,967,345 Net cash from operating activities (3,290,909,793) 7,483,240,015 B) Cash flows from investing activities Payments for purchases of securities (116,933,132) 213,301,771 Purchase of property, plant and equipment (872,160,159) (285,131,076) Payment against lease obligation - - Proceeds from sale of property, plant and equipment 2,428,754 3,748,894 Net cash used in investing activities (986,664,537) (68,080,411) C) Cash flows from financing activities Receipts from issue of sub-ordinated bond 7,000,000,000 - Payments for redemption of sub-ordinated bond (500,000,000) (1,250,000,000) Dividend paid (788,631,461) (1,705,034,284) Net cash used in financing activities 5,711,368,539 (2,955,034,284) D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 1,433,794,209 4,460,125,319 E) Effects of exchange rate changes on cash and cash equivalents 9,174,203 41,104,854 F) Cash and cash equivalents at beginning of the year 29,860,716,759 25,359,486,586 G) Cash and cash equivalents at end of the year (D+E+F) 31,303,685,171 29,860,716,759 Cash and cash equivalents at end of the year Cash in hand (including foreign currencies) 3,132,734,166 3,140,588,297 Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) 14,539,287,480 14,973,037,651 Balance with other banks and financial institutions 13,627,966,225 10,244,715,711 Money at call and short notice - 1,500,000,000 Prize bonds (note-6a) 3,697,300 2,375,100 31,303,685,171 29,860,716,759

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director Dated , 03 April 2019

234 PRIME BANK ------2 4,132,781 4,132,781 Taka 69,525,414 69,525,414 Total (53,012,078) (788,631,461) 2,253,633,866 24,812,947,765 24,812,947,765 24,812,947,764 24,833,593,882 24,812,947,765 24,812,947,765 26,298,596,289 26,298,596,289 ------Managing Director Managing Taka 4,349,489 4,349,489 earnings Retained 1,116,996,544 1,116,996,544 (788,631,461) 1,121,346,033 1,116,996,544 1,116,996,544 (787,560,407) 2,253,633,866 1,798,788,031 1,798,788,031 1,116,996,544 ------F.C. gain Taka (216,708) 15,117,438 15,117,438 15,334,146 15,334,146 15,117,438 15,117,438 translation translation 15,334,146 15,334,146 ------Taka 71,798,624 71,798,624 69,525,414 69,525,414 55,285,288 55,285,288 71,798,624 71,798,624 55,285,288 55,285,288 (53,012,078) Revaluation investments gain / loss on ------Taka Director reserve Revaluation 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 ------2 61 61 61 63 Non Taka interest controlling controlling ------Taka Share premium 2,241,230,396 2,241,230,396 2,241,230,396 2,241,230,396 1,211,881,786 1,211,881,786 (1,029,348,610) 2,241,230,396 2,241,230,396 ------Taka reserve General General 28,002,888 28,002,888 28,002,888 28,002,888 28,002,888 ------Taka reserve 787,560,407 Statutory 9,565,853,177 9,565,853,177 9,565,853,177 9,565,853,177 9,565,853,177 9,565,853,177 10,353,413,584 10,353,413,584 ------Director These financial statements should be read in conjunction with the annexed notes 1 to 51. 1 to notes in conjunction with the annexed These should be read financial statements Taka capital Paid up Paid 1,029,348,610 1,029,348,610 10,293,486,160 10,293,486,160 10,293,486,160 10,293,486,160 11,322,834,770 11,322,834,770 10,293,486,160 10,293,486,160 Particulars Balance as at 1 January 2018 Balance Changes in accounting policy/Last year's profit year's Changes in accounting policy/Last Restated balance Restated Surplus / (deficit) on account of Surplus of properties revaluation Adjustment of last year revaluation of last year Adjustment gain on investments Surplus / (deficit) on account Surplus of investments of revaluation Currency translation differences translation Currency Net gains and losses not recognized in Net gains and losses not recognized the income statement Dividends (Bonus shares) Net profit for the year for Net profit Share Premium Share Cash dividend Minority interest Issue of share capital-right share Issue of share Appropriation made during the year Appropriation December 2018 Balance as at 31 December 2017 Balance as at 31 Consolidated Statement of Changes in Equity December 2018 ended 31 the year for Dated , 03 April 2019 Dated Chairman

PRIME BANK 235 ANNUAL REPORT 2018

Balance Sheet as at 31 December 2018

Amount in Taka Particulars Notes 2018 2017 PROPERTY AND ASSETS Cash 3a Cash in hand (including foreign currencies) 3,100,264,070 3,031,607,478 \Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) 14,539,287,480 14,973,037,651 17,639,551,549 18,004,645,129 Balance with other banks and financial institutions 4a In Bangladesh 10,174,200,785 7,380,647,955 Outside Bangladesh 3,230,634,401 2,701,942,497 13,404,835,186 10,082,590,452 Money at call on short notice 5 - 1,500,000,000 Investments 6a Government 24,646,806,239 23,657,686,975 Others 1,399,611,720 149,457,283 26,046,417,958 23,807,144,258 Loans, advances and lease / investments Loans, cash credits, overdrafts, etc./ investments 7a 196,456,187,502 183,593,663,315 Bills purchased and discounted 8a 9,353,331,214 14,729,065,476 205,809,518,716 198,322,728,791 Fixed assets including premises, furniture and fixtures 9a 6,943,348,521 6,434,047,671 Other assets 10a 23,836,555,730 22,903,009,700 Non - banking assets 11 220,500,640 220,500,640

Total assets 293,900,728,300 281,274,666,641 LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents 12a 33,944,516,693 22,087,479,113 Deposits and other accounts 13a.1.c Current / Al-wadeeah current deposits 32,742,551,758 33,196,233,861 Bills payable 3,045,875,590 4,212,571,458 Savings bank / Mudaraba savings deposits 41,478,074,475 38,397,699,341 Term deposits / Mudaraba term deposits 120,251,223,734 123,207,471,241 Bearer certificate of deposit - - Other deposits - - 197,517,725,557 199,013,975,901 Other liabilities 14a 36,257,586,840 35,465,414,699 Total liabilities 267,719,829,090 256,566,869,714 Capital / Shareholders' equity Paid up capital 15 .2 11,322,834,770 10,293,486,160 Share premium 15.8 1,211,881,786 2,241,230,396 Statutory reserve 16 10,353,413,584 9,565,853,177 Revaluation gain / (loss) on investments 17a 22,087,009 17,749,598 Revaluation reserve 18 1,496,759,104 1,496,759,104 Foreign currency translation gain 19a 14,920,954 13,414,088 Other reserve - - Surplus in profit and loss account / Retained earnings 20a 1,759,002,003 1,079,304,405

Total Shareholders' equity 26,180,899,209 24,707,796,928 Total liabilities and Shareholders' equity 293,900,728,300 281,274,666,641

236 PRIME BANK Balance Sheet as at 31 December 2018

Amount in Taka Particulars Notes 2018 2017 OFF - BALANCE SHEET ITEMS Contingent liabilities 21a Acceptances and endorsements 21a.1 52,944,055,583 49,721,797,256 Letters of guarantee 21a.2 57,826,844,429 72,966,435,302 Irrevocable letters of credit 21a.3 38,072,832,383 34,112,938,262 Bills for collection 21a.4 11,613,890,781 10,766,851,918 Other contingent liabilities - - 160,457,623,176 167,568,022,737 Other commitments Documentary credits and short term trade -related transactions - - Forward assets purchased and forward deposits placed 2,095,175,884 240,823,450 Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities , credit lines and other commitments - - Liabilities against forward purchase and sale - - 2,095,175,884 240,823,450

Total Off-Balance Sheet items including contingent liabilities 162,552,799,060 167,808,846,187

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

See annexed auditors' report to the Shareholders of the date.

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & Co Chartered Accountants Chartered Accountants Dated , 03 April 2019

PRIME BANK 237 ANNUAL REPORT 2018

Profit and Loss Account for the year ended 31 December 2018

Amount in Taka Particulars Notes 2018 2017 Interest income / profit on investments 23a 18,390,385,430 14,769,140,556 Interest / profit paid on deposits, borrowings, etc. 24a (10,740,853,932) (9,875,345,368) Net interest / net profit on investments 7,649,531,498 4,893,795,187 Investment income 25a 2,154,009,477 4,245,579,605 Commission, exchange and brokerage 26a 2,208,574,964 2,244,846,406 Other operating income 27a 887,322,424 764,028,440 Total operating income (A) 12,899,438,362 12,148,249,639 Salaries and allowances 28a 4,158,596,820 3,823,661,492 Rent, taxes, insurance, electricity, etc. 29a 961,285,687 906,160,291 Legal expenses 30a 105,967,130 83,038,972 Postage, stamp, telecommunication, etc. 31a 70,375,029 77,943,186 Stationery, printing, advertisements, etc. 32a 226,156,608 197,559,994 Managing Director's salary and fees 33 10,131,935 11,528,936 Directors' fees 34a 3,663,929 4,495,414 Auditors' fees 35a 1,380,000 1,380,000 Charges on loan losses 36 - - Depreciation and repair of Bank's assets 37a 406,514,271 365,042,696 Other expenses 38a 1,235,964,917 1,304,063,983 Total operating expenses (B) 7,180,036,326 6,774,874,964 Profit / (loss) before provision (C=A-B) 5,719,402,036 5,373,374,674 Provision for loans & advances 39a 1,781,500,000 3,255,500,000 Provision for diminution in value of investments 39a 18,700,000 (60,516,500) Other provisions 39a (18,600,000) 369,416,500 Total provision (D) 1,781,600,000 3,564,400,000 Total profit / (loss) before taxes (C-D) 3,937,802,036 1,808,974,674 Provision for taxation Current tax 40a 1,750,000,000 750,000,000 Deferred tax - - 1,750,000,000 750,000,000 Net profit after taxation 2,187,802,036 1,058,974,674 Retained earnings brought forward from previous years 20.1a 358,760,374 382,124,666 2,546,562,410 1,441,099,340 Appropriations Statutory reserve 787,560,407 361,794,935 General reserve - - 787,560,407 361,794,935 Retained surplus 20a 1,759,002,003 1,079,304,405 Earnings per share (EPS) 45a 1.93 0.94

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

See annexed auditors' report to the Shareholders of date

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & Co Chartered Accountants Chartered Accountants Dated , 03 April 2019

238 PRIME BANK Cash Flow Statement for the year ended 31 December 2018

Amount in Taka Particulars Notes 2018 2017 A) Cash flows from operating activities Interest receipts in cash 20,527,429,925 16,885,847,491 Interest payments (9,781,570,590) (10,022,462,361) Dividend receipts 88,098,460 80,601,232 Fees and commission receipts in cash 2,208,574,964 2,244,846,406 Recoveries of loans previously written off 203,780,138 409,904,161 Cash payments to employees (4,048,414,183) (3,950,744,104) Cash payments to suppliers (700,210,243) (723,477,625) Income taxes paid (491,561,431) (587,515,461) Receipts from other operating activities 41a 926,247,149 2,583,008,785 Payments for other operating activities 42a (1,888,295,683) (1,984,631,152) Cash generated from operating activities before changes in operating assets and liabilities 7,044,078,506 4,935,377,372 Increase / (decrease) in operating assets and liabilities Purchase of trading securities (Treasury bills) (2,698,687,081) 16,912,134,608 Loans and advances to customers (9,900,768,555) (29,772,028,217) Other assets 43a 92,178,274 6,944,608,143 Deposits from other banks / borrowings 6,739,373,030 8,766,832,663 Deposits from customers (2,671,173,267) 315,343,333 Other liabilities account of customers (1,166,695,868) (955,792,457) Other liabilities 44a (678,988,274) 222,731,088 (10,284,761,741) 2,433,829,160 Net cash from operating activities (3,240,683,235) 7,369,206,532 B) Cash flows from investing activities Proceeds from sale of securities (248,072,215) 263,688,699 Purchase of property, plant and equipment (841,204,209) (285,131,076) Proceeds from sale of property, plant and equipment 2,428,754 3,748,894 Net cash used in investing activities (1,086,847,670) (17,693,483) C) Cash flows from financing activities Receipts from issue of sub-ordinated bond 7,000,000,000 - Payments for redemption of sub-ordinated bond (500,000,000) (1,250,000,000) Dividend paid (720,544,031) (1,646,957,786) Net cash used in financing activities 5,779,455,969 (2,896,957,786) D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 1,451,925,064 4,454,555,264 E) Effects of exchange rate changes on cash and cash equivalents 6,548,290 42,470,948 F) Cash and cash equivalents at beginning of the year 29,589,610,681 25,092,584,469 G) Cash and cash equivalents at end of the year (D+E+F) 31,048,084,036 29,589,610,681 Cash and cash equivalents at end of the year Cash in hand (including foreign currencies) 3,100,264,070 3,031,607,478 Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) 14,539,287,480 14,973,037,651 Balance with other banks and financial institutions 13,404,835,186 10,082,590,452 Money at call and short notice - 1,500,000,000 Prize bonds (note-6a) 3,697,300 2,375,100 31,048,084,036 29,589,610,681

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

Dated , 03 April 2019

PRIME BANK 239 ANNUAL REPORT 2018 ------Taka 1,506,866 Total 57,349,488 57,349,488 (53,012,078) (720,544,031) 2,187,802,036 2,187,802,036 24,713,641,204 24,713,641,204 24,707,796,928 24,707,796,928 24,707,796,928 24,707,796,928 26,180,899,209 26,180,899,209 24,707,796,928 24,707,796,928 Managing Director Managing ------Taka earnings Retained (787,560,407) (720,544,031) 2,187,802,036 2,187,802,036 1,079,304,405 1,079,304,405 1,079,304,405 1,079,304,405 1,079,304,405 1,079,304,405 1,759,002,003 1,759,002,003 1,079,304,405 1,079,304,405 ------gain Taka 1,506,866 13,414,088 13,414,088 13,414,088 13,414,088 14,920,954 14,920,954 13,414,088 13,414,088 14,920,954 14,920,954 F.C. Translation F.C. ------17,749,598 17,749,598 17,749,598 17,749,598 57,349,488 57,349,488 Taka 17,749,598 17,749,598 22,087,009 22,087,009 (53,012,078) 22,087,009 Revaluation gain/ Revaluation loss on investments ------Taka reserve Revaluation 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 1,496,759,104 Director ------Taka reserve 787,560,407 Statutory 9,565,853,177 9,565,853,177 9,565,853,177 9,565,853,177 9,565,853,177 9,565,853,177 10,353,413,584 10,353,413,584 ------Taka Share premium 1,211,881,786 1,211,881,786 2,241,230,396 2,241,230,396 2,241,230,396 2,241,230,396 (1,029,348,610) 2,241,230,396 2,241,230,396 ------Taka Capital Paid-up Paid-up 1,029,348,610 1,029,348,610 10,293,486,160 10,293,486,160 10,293,486,160 10,293,486,160 11,322,834,770 11,322,834,770 10,293,486,160 10,293,486,160 Director These financial statements should be read in conjunction with the annexed notes 1 to 51. 1 to notes in conjunction with the annexed These should be read financial statements Particulars Balance as at 1 January 2018 Balance Restated balance Restated Changes in accounting policy / Last year's profit year's / Last Changes in accounting policy Surplus / deficit on account of revaluation of properties / deficit on account of revaluation Surplus Adjustment of last year revaluation gain on investments revaluation of last year Adjustment Surplus / deficit on account of revaluation of investments / deficit on account of revaluation Surplus Currency translation differences translation Currency Net gains and losses not recognized in the income statement Net gains and losses not recognized Net profit for the year for Net profit Dividends (Bonus shares) Cash dividend premium Share Issue of share capital (Right share) Issue of share Appropriation made during the year Appropriation December 2018 Balance as at 31 Balance as at 31 December 2017 Balance as at 31 Statement of Changes in Equity December 2018 ended 31 the year for Chairman , 03 April 2019 Dated

240 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

1 The Bank and its activities 1.1 Prime Bank Limited Prime Bank Limited ("the Bank") was incorporated as a public limited company in Bangladesh under Companies Act, 1994 with the registered office of the company at 119-120 Motijheel C/A, Dhaka-1000. It commenced its banking business with one branch from April 17, 1995 under the license issued by Bangladesh Bank. At present the Bank has 146 (One Hundred Forty Six) branches including 18 (Eighteen) SME Centres/ Branches all over Bangladesh and 2 (Two) booths located at Dhaka Club, Dhaka and at Chittagong Port, Chittagong. Out of the above 146 branches, 05 (five) branches are designated as Islamic Banking branch complying with the rules of Islamic Shariah. Also the Bank has 3 (Three) Off-shore Banking Units (OBU), 5 (Five) subsidiary Companies (3 Foreign subsidiaries & 2 Local subsidiaries). The Bank went for Initial Public Offering (IPO) in 1999 and its shares were listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly traded company for its general classes of share.

1.2 Principal activities The principal activities of the Bank are to provide all kinds of commercial banking services to customers through its branches and SME centres/ branches in Bangladesh. The Bank also provides off-shore banking services through its 3 (Three) Off-shore Banking Units (OBU).

1.3 Off-shore Banking Units The Bank commenced its off-shore banking operation after obtaining permission from Bangladesh Bank vide letter no. BRPD(P)744(84)/2001-868 dated March 19, 2001. The Bank commenced operation of its one unit from March 15, 2007. Presently, the Bank has 3 (Three) Off-shore Banking Units (OBU) located at Dhaka EPZ, Chittagong EPZ and Adamjee EPZ. The Off-shore Banking Units are governed under the rules and guidelines of Bangladesh Bank. Apart from the reporting of OBU with solo financial statements a separate financial statements of Off -shore Banking Units are shown inAnnexure-K.

1.4 The Bank has 5 (Five) Subsidiaries with following detail as presented in note no. 1.4.1 to 1.4.5:

1.4.1 Prime Bank Investment Limited Prime Bank Investment Limited is a subsidiary company of Prime Bank Limited incorporated as a public limited company on April 27, 2010 with the registrar of Joint Stock Companies, Dhaka vide certificate of incorporation no. C-84266/10, dated April 28, 2010 which has commenced its business on the same date. Total 299,999,994 shares (out of 300,000,000 shares) of Prime Bank Investment Limited are held by Prime Bank Limited and only 6 shares are held by 6 Senior Executives of Prime Bank Limited and Prime Bank Investment Limited. The main objectives of the company for which it was established are to carry out the business of full-fledged merchant banking activities like issue management, portfolio management, underwriting, corporate advisory services etc. Securities and Exchange Commission (SEC) thereafter issued a full fledged merchant banking license in favor of Prime Bank Investment Limited, vide letter no. SEC/Reg/MB/SUB/2010/03/208, dated June 02, 2010 with effect from June 01, 2010. Financial Statements of the company are shown inAnnexure-L.

1.4.2 Prime Bank Securities Limited Prime Bank Securities Limited was incorporated on April 29, 2010 as a private limited company under the Companies Act 1994 vide certificate of incorporation no.C-84302/10. Prime Bank Securities Limited became member of Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited for brokerage transaction vide Bangladesh Securities & Exchange Commission certificate no. 3.1/DSE-219/2010/429, dated September 16, 2010 and 3.2/CSE-141/2010/239, dated August 31, 2010 respectively. Prime Bank Securities Limited commenced its operation from May 2011. The main objectives of the company are to carry on business of stock brokers / dealers in relation to shares and securities dealings and other services as mentioned in the Memorandum and Articles of Association of the Company. Prime Bank Limited and Prime Bank Investment Limited hold 95% and 5% share of Prime Bank Securities Limited respectively. Financial Statements of the company are shown in Annexure-M.

1.4.3 Prime Exchange Co. (Pte) Limited, Singapore Prime Exchange Co. (Pte) Ltd., a fully owned subsidiary company of Prime Bank Limited was incorporated in Singapore on January 06, 2006 and commenced its remittance business from July 08, 2006 under the remittance license issued by the Monetary Authority of Singapore (MAS) under section 7A(3) of the Money Changing and Remittance Business Act (Chapter 187) with 1 (One) branch located at 2A Desker Road, (2nd floor), Singapore 209549. In 2011, the Company has also opened another Branch located at Jurong East Branch, Block: 134 #01-305 Jurong Gateway Road, Singapore 600134. The principal activities of the company are to carry on the remittance business and to undertake and participate in transactions, activities and operations commonly carried on or undertaken by remittance and exchange house. Financial Statements of the company are shown in Annexure-N.

PRIME BANK 241 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

1.4.4 PBL Exchange (UK) Limited PBL Exchange (UK) Limited was incorporated as a private limited company with Companies House of England and Wales under registration no. 7081093 dated November 19, 2009. The company is a wholly owned subsidiary of Prime Bank Limited. The company commenced its operation on August 02, 2010 with 3 (three) Branches located at Brick Lane of London, Coventry Road of Birmingham and North Oldham of Manchester. The registered office is located at 16 Brick Lane, London E1 6RF. Financial Statements of the company are shown in Annexure-O.

1.4.5 PBL Finance (Hong Kong) Limited PBL Finance (Hong Kong) Limited, a fully owned subsidiary of Prime Bank Limited. PBL Finance (Hong Kong) Limited was incorporated with Companies Registries of Hong Kong (Certificate of incorporation no. 1584971 and Business Registration no. 58197431 both dated April 7, 2011). PBL Finance (Hong Kong) Limited obtained Money Lending Licenses # 307/2011 issued by Honorable Court of Hong Kong on 28th July 2011. It has commenced its operation from August 2011 with one branch located at 608, 6/F, Admiralty Centre, Tower-2, 18 Harcourt Road, Hong Kong. Financial Statements of the company are shown in Annexure-P. 2.00 Significant accounting policies and basis of preparation of financial statements

2.1 Basis of accounting 2.1.1 Statement of compliance The financial statements of the Bank and its subsidiaries (the "Group") have been made for the year ended on December 31, 2018 and are prepared under the historical cost basis, except for certain investments which are stated at fair/market value and freehold land which are measured at revalued amount, in accordance with the First Schedule (Sec-38) of the Bank Companies Act 1991 (as Amended up to 2013), BRPD Circular # 14 dated June 25, 2003 and DFIM Circular # 11, dated December 23, 2009, other Bangladesh Bank Circulars, International Accounting Standards ("IAS") and International Financial Reporting Standards ("IFRS") adopted by the Institute of Chartered Accountants of Bangladesh ("ICAB"), the Companies Act 1994, the Securities and Exchange Rules 1987, Dhaka & Chittagong Stock Exchanges' listing regulations and other laws & rules applicable in Bangladesh. In cases where the requirements of Bangladesh Bank differ with those of IAS/IFRS, the requirements of Bangladesh Bank have been applied. In addition to foregoing directives and standards, the operation of Islamic Banking Branches are accounted for in accordance with Financial Accounting Standards issued by the Accounting and Auditing Organisation for Islamic Financial Institutions, Bahrain, and BRPD circular no-15, dated November 09, 2009. A separate balance sheet, profit and loss account and a statement of profit paid on deposits are shown in Annexure-G and G(1) and the figures appearing in the annexure have been incorporated in the related heads of these financial statements as recommended by the Central Shariah Board for Islamic Banks in Bangladesh.

The Financial Reporting Act 2015 (FRA) was enacted in 2015. Under the FRA, the Financial Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as banks. The Bank Companies Act 1991 has been amended to require banks to prepare their financial statements under such financial reporting standards. The FRC has been formed but yet to issue any financial reporting standards as per the provisions of the FRA and hence International Financial Reporting Standards (IFRS) as issued by the Institute of Chartered Accountants of Bangladesh (ICAB) are still applicable. Accordingly, the financial statements of the Bank continue to be prepared in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Bank Company Act 1991, the rules and regulations issued by Bangladesh Bank (BB), the Companies Act 1994. In case any requirement of the Bank Company Act 1991, and provisions and circulars issued by Bangladesh Bank differ with those of IFRS, the requirements of the Bank Company Act 1991, and provisions and circulars issued by Bangladesh Bank shall prevail.

2.1.2 Basis of consolidation The consolidated financial statements include the financial statements of Prime Bank Limited and its subsidiaries, i.e. Prime Bank Investment Limited, Prime Bank Securities Limited, Prime Exchange Co. (Pte) Limited, Singapore, PBL Exchange (UK) Limited and PBL Finance (Hong Kong) Limited.

The consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS)- 27: "Separate Financial Statements" and International Financial Reporting Standard (IFRS)- 10: "Consolidated Financial Statements". The consolidated financial statements are prepared to a common financiall year ended on December 31, 2018.

242 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Subsidiary Subsidiary is that enterprise which is 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 purchase method of accounting. The overseas subsidiary companies i.e. Prime Exchange Co. (Pte) Limited, Singapore, Prime Exchange (UK) Limited and PBL Finance (Hong Kong) Limited has a common financial year ending December 31, 2018. The conversion policy of subsidiary companies is given below:

Prime Exchange Co. PBL Exchange PBL Finance Particulars Price (Pte) Ltd., Singapore (UK) Ltd. (Hong Kong) Ltd.

For assets & liabilities Closing price 61.14270 105.98250 10.71657 For income & expenses Average price 61.48260 108.86335 10.65075

All intra-group transactions, balances, income and expenses are eliminated on consolidation. Profit and loss resulting from transactions between Group are also eliminated on consolidation.

2.1.3 Use of estimates and judgments In preparation of the financial statements management is required to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a going concern basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. The most significant areas where estimates and judgments have been applied are to calculate provision for loans, advances and investments as per Bangladesh Bank guidelines.

2.1.4 Foreign currency transaction a) Foreign currency Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates, i e. the functional currency. The financial statements of the group and the Bank are presented in BDT which is the Bank's functional and presentation currency.

b) Foreign currencies translation Foreign currency transactions are converted into equivalent BDT using the prevailing exchange rates on the dates of respective transactions as per IAS-21, "The Effects of Changes in Foreign Exchange Rates". Foreign currency balances held in US Dollar are converted into BDT at weighted average rate of inter-bank market as determined by Bangladesh Bank on the closing date of every month. Balances held in foreign currencies other than US Dollar are converted into equivalent US Dollar at buying rates of New York closing of the previous day and converted into equivalent BDT. Assets and liabilities & income and expenses of Off-shore Banking Units have been converted into BDT currency @ US$1 = BDT 83.90 (closing rate as at 31st December 2018) and BDT 83.4680 (average rate at year-end).

c) Commitments Commitments for outstanding forward foreign exchange contracts disclosed in these financial statements are translated at rates mentioned in contracts. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in BDT terms at the rates of exchange prevailing on the balance sheet date.

d) 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 subsidiary. e) Foreign operations The results and financial position of the Group's operations whose functional currency is not Bangladeshi Taka are translated into Bangladeshi Taka as follows: i) Assets and liabilities are translated at the exchange rate prevailing at the balance sheet date. ii) Income and expenses in the income statement are translated at an average rate approximating the exchange rates at the year end; iii) Resulting exchange differences are recognized as a separate component of equity.

PRIME BANK 243 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

iv) As per IAS 21, 'Foreign Currency Transactions' i.e. foreign currency denominated both monetary and non-monetary items of the OBUs are translated at historical rate because the OBUs are considered as an integral part of the Bank's operation not a foreign operation due to specific regulations governing the OBU and its unique nature. f) Consolidation of Financial Statements of foreign operations. In Consolidation, foreign exchange differences arising from the translation of net investments in foreign entities, as well as any borrowings are taken into capital reserve. When a foreign operation is disposed of, such currency translation differences are recognized in the income statement as part of the gain or loss on disposal.

2.1.5 Statement of cash flows Statement of cash flows have been prepared in accordance with the BRPD Circular No. 14, dated June 25, 2003 issued by the Banking Regulation & Policy Department of Bangladesh Bank. 2.1.6 Liquidity statement The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term as per the following basis, details are shown in [Annexure-I & I (1)]: i) Balance with other Banks and financial institutions, money at call and short notice, etc. are on the basis of their maturity term; ii) Investments are on the basis of their residual term; iii) Loans and advances / investments are on the basis of their repayment/maturity schedule; iv) Fixed assets are on the basis of their useful life; v) Other assets are on the basis of their realization / amortization; vi) Borrowing from other Banks, financial institutions and agents, etc. are as per their maturity / repayment terms; vii) Deposits and other accounts are on the basis of their maturity term and past trend of withdrawal by the depositors; viii) Provisions and other liabilities are on the basis of their payment / adjustments schedule. 2.1.7 Reporting period These financial statements cover one calendar year from 1st January to 31st December 2018. 2.1.8 Offsetting Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously (note-9a, 25a, 26a.1). 2.2 Assets and basis of their valuation 2.2.1 Cash and cash equivalents Cash and cash equivalents include notes and coins on hand, unrestricted balances held with Bangladesh Bank and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used by the Bank management for its short-term commitments. 2.2.2 Loans, advances and lease / investments a) Loans and advances are stated in the balance sheet on gross basis. b) Interest / profit is calculated on a daily product basis but charged and accounted for on accrual basis. Interest / profit on classified loans and advances / investments is kept in suspense account as per Bangladesh Bank instructions and such interest / profit is not accounted for as income until realised from borrowers [note - 7a.10 (x)]. Interest / profit is not charged on bad and loss loans / investments as per guidelines of Bangladesh Bank. Records of such interest amounts are kept in separate memorandum accounts. c) Commission and discounts on bills purchased and discounted are recognized at the time of realization. d) Provision for loans and advances / investments is made on the basis of the following instructions contained in Bangladesh Bank BRPD Circular no. 14, dated September 23, 2012, BRPD Circular no. 19, dated December 27, 2012, BRPD Circular no. 05, dated May 29, 2013, BRPD Circular no. 16, dated November 18, 2014, BRPD Circular no. 12, dated August 20, 2017, BRPD Circular no. 15, dated September 27, 2017 and BRPD Circular no. 1 dated February 2018. The rates of provision for loans and advances / investments are given below: Particulars Rate General provision on unclassified general loans and advances / investments 1% General provision on unclassified small and medium enterprise financing 0.25% General provision on interest receivable on loans / investments 1% General provision on unclassified loans / investments for housing finance 1% General provision on loans for professionals and loans to BHs/MBs against share etc. 2% General provision on unclassified consumer financing other than housing finance and professionals 5% General provision on short term Agriculture/Micro Credit 1% General provision on credit card 2% General provision on Special Mention Account (SMA) except Short Term Agriculture Loans 0.25%-5% Specific provision on substandard loans and advances / investments 20% Specific provision on doubtful loans and advances / investments 50% Specific provision on bad / loss loans and advances / investments 100%

244 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

e) Loans and advances/investments are written-off to the extent that (i) there is no realistic prospect of recovery, and (ii) against which legal cases are pending for more than five years as per guidelines of Bangladesh Bank. These write-off however will not undermine/affect the claim amount against the borrower. Detailed memorandum records for all such write off accounts are meticulously maintained and followed up. f) Amounts receivable on credit cards are included in advances to customers at the amounts expected to be recovered. 2.2.3 Investments All investment securities are initially recognised at cost, being fair value of the consideration given, including acquisition charges associated with the investment. Premiums are amortized and discounts accredited, using the effective yield method are taken to discount income. The valuation method of investments used are: Held to maturity (HTM) Investments which have 'fixed or determinable payments', and are intended to be 'held to maturity', other than those that meet the definition of 'held at amortized cost-others' are classified as held to maturity. Investment (HTM)-BHBFC is shown in the financial statements at cost price. Held for trading (HFT) Investments classified in this category are acquired principally for the purpose of selling or repurchasing -in short-trading or if designated as such by the management. After initial recognition, investments are measured at fair value and any change in the fair value is recognised in the statement of income for the period in which it arises. These investments are subsequently revalued at current market value on weekly basis as per Bangladesh Bank Guideline. Revaluation gain has been shown in revaluation reserve account & revaluation loss has been shown in Profit & Loss account. Value of investments has been enumerated as follows :

Items Applicable accounting value Government treasury bills-HTM Amortized value Government treasury bills-HFT Market value Government treasury bonds-HTM Amortized value Government treasury bonds-HFT Market value Prize bond At cost

Investment in listed securities These securities are bought and held primarily for the purpose of selling them in future, or held for dividend income. These are reported at cost. Unrealized gains are not recognized in the profit and loss account. But provision for diminution in value of investment is provided in the financial statements where market price is below the cost price of investments as per Bangladesh Bank guideline (note-14a). Investment in unquoted securities Investment in unlisted securities is reported at cost under cost method. Adjustment is given for any shortage of book value over cost for determining the carrying amount of investment in unlisted securities.

Investments in subsidiary Investment in subsidiaries is accounted for under the cost method of accounting in the Bank's financial statements in accordance with the IFRS-10. Accordingly, investments in subsidiaries are stated in the Bank's balance sheet at cost, less impairment losses (if any). 2.2.4 Property, plant and equipment Property, plant & equipment are recognized if it is probable that future economic benefits associated with the assets will flow to the Bank and the cost of the assets can be reliably measured. a) All fixed assets are stated at cost less accumulated depreciation as per IAS-16 " Property, Plant and Equipment". The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes.

b) The Bank recognises, in the carrying amount of an item of property, plant and equipment, the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the company and the cost of the item can be measured reliably. Expenditure incurred after the assets have been put into operation, such as repairs and maintenance, is normally charged off as revenue expenditure in the period in which it is incurred.

PRIME BANK 245 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

c) Revaluation of Land and Building: As per International Accounting Standard (IAS-16) revaluation should be made with sufficient regulatory compliance to ensure that the carrying amount does not differ materially from that which would be determined using the fair value at the end of reporting period. The fair value of Land and Buildings is usually determined from market based evidence by an appraisal that is normally undertaken by professionally qualified Valuers. Therefore, any upward increases of the assets have positive impact on the capital adequacy of the Bank (50% of the asset revaluation is considered as Tier-2 Capital subject to deduction as per roadmap for implementation of BASEL-III). With a view to qualify for higher capital adequacy, the bank revalued its Land and Buildings upon complying with all regulatory requirements. d) Depreciation is charged for the year at the following rates on reducing balance method on all fixed assets other than vehicles, software and all fixed assets of ATM related on which straight line depreciation method is followed and no depreciation is charged on land: Category of fixed assets Rate Land Nil Buildings 2.50% Furniture and fixtures 10% Office equipments 20% Vehicles 20% Category of fixed assets (ATM Assets) Rate Furniture and fixtures 10% Office equipment 20% e) For additions during the year, depreciation is charged for the remaining days of the year and for disposal depreciation is charged up to the date of disposal. f) On disposal of fixed assets, the cost and accumulated depreciation are eliminated from the fixed assets schedule and gain or loss on such disposal is reflected in the income statement, which is determined with reference to the net book value of the assets and net sale proceeds. g) Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset have been capitalized as part of the cost of the asset as per IAS-23. h) Leasehold properties are recorded at present value of minimum lease payments or fair market value, whichever is lower as per the provisions of IAS-17. The carrying value of leasehold properties is amortized over the remaining lease term or useful life of leasehold property, whichever is lower. 2.2.5 Intangible assets a) An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the assets can be measured reliably.

b) Software represents the value of computer application software licensed for use of the Bank, other than software applied to the operation software system of computers. Intangible assets are carried at its cost, less accumulated amortization and any impairment losses. Initial cost comprises license fees paid at the time of purchase and other directly attributable expenditure that are incurred in customizing the software for its intended use. c) 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. d) Software is amortized using the straight line method over the estimated useful life of 10 (ten) years commencing from the date of the application. Software is available for use over the best estimate of its useful economic life. 2.2.6 Impairment of Assets: The policy for all assets or cash-generating units for the purpose of assessing such assets for impairment is as follows: The Bank assesses at the end of each reporting period or more frequently if events or changes in circumstances indicate that the carrying value of an asset may be impaired, whether there is any indication that an asset may be impaired. If any such indication exits, or when an annual impairment testing for an asset is required, the bank makes an estimate of the asset's recoverable amount. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered as impaired and is written down to its recoverable amount by debiting to profit & loss account.

246 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Fixed assets are reviewed for impairment whenever events or charges in circumstances indicate that the carrying amount of an asset may be impaired. 2.2.7 Other assets Other assets include all balance sheet accounts not covered specifically in other areas of the supervisory activity and such accounts may be quite insignificant in the overall financial condition of the Bank. 2.2.8 Securities purchased under re-sale agreement Securities purchased under re-sale agreements are treated as collateralized lending and recorded at the consideration paid and interest accrued thereon. The amount lent is shown as an asset either as loans and advances to customers or loans to other banks. The difference between purchase price and re-sale price is treated as interest received and accrued evenly over the life of Repo agreement. 2.2.9 Receivables Receivables are recognised when there is a contractual right to receive cash or another financial asset from another entity. 2.2.10 Inventories Inventories measured at the lower of cost and net realizable value. 2.2.11 Leasing Leases are classified as finance leases whenever the 'terms of the lease' transfer substantially all the risks and rewards of ownership to the lessee as per BAS-17 " Leases". All other leases are classified as operating leases as per BAS-17 "Leases". The Bank as lessor Amount due from lessees under finance leases are recorded as receivables at the amount of the Bank's net investment in the leases (note-7a.2). Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the bank's net investment outstanding in respect of the leases. The Bank as lessee Assets held under finance leases are recognised as assets of the Bank at their fair value at the date of acquisition or, if lower, at the present value of the minimum lease payments (note-9a). Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. 2.2.12 Non-banking assets: Non-banking assets are acquired on account of the failure of a borrower to repay the loan on time after receiving the decree from the Court regarding the right and title of the mortgage property. The Bank has been awarded ownership of the mortgage properties according to the verdict of the Honorable Court in accordance with the section 33 (7) of “Artharin Adalat-2003”. The value of Non-Banking Assets has been determined and reported in the financial statements on the basis of valuation report of an Independent valuer. Details of which is presented in (note-11). 2.2.13 Reconciliation of inter-bank and inter-branch account Accounts with regard to inter-bank (in Bangladesh and outside Bangladesh) are reconciled regularly and there are no material differences which may affect the financial statements significantly. Un-reconciled entries / balances in the case of inter-branch transactions as on the reporting date are not material. 2.3 Share Capital Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets. 2.3.1 Authorised Capital Authorised capital is the maximum amount of share capital that the Bank is authorised by its Memorandum and Articles of Association. Details are shown in (note 15.1).

2.3.2 Paid up Capital Paid up capital represents total amount of shareholders' capital that has been paid in full by the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at shareholders’ meetings. In the event of a winding-up of the Bank, ordinary shareholders are ranked after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation. Details are shown in (note 15.2). 2.4 Statutory reserve As per Bank Companies Act, the Bank requires to transfer 20% of its current year's profit before tax to statutory reserve until such reserve equals to its paid up capital. The Bank does comply with this requirement of law every year.

PRIME BANK 247 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

2.5 Revaluation reserve When an asset's carrying amount is increased as a result of revaluation, the increase amount should be credited directly to equity under the head of revaluation surplus / reserve as per BAS-16: "Property, Plant and Equipment". The Bank revalued its land and buildings during the year 2008 & 2013 which are absolutely owned by the Bank and the increased amount was transferred to revaluation reserve account accordingly. The tax effects on revaluation gain are measured and recognised in the financial statements as per BAS-12: Income Taxes. 2.5.1 Non controlling interest in subsidiaries Non controlling interest in business is an accounting concept that refers to the portion of a subsidiary corporation's stock that is not owned by the parent corporation. The magnitude of the non controlling interest in the subsidiary company is always less than 50% of outstanding shares, else the corporation would cease to be a subsidiary of the parent. non controlling interest belongs to other investors and is reported on the consolidated balance sheet of the owning company to reflect the claim on assets belonging to other, non-controlling shareholders. Also, non controlling interest is reported on the consolidated income statement as a share of profit belonging to non controlling shareholders.

2.5.2 a) Prime Bank Sub-ordinated Bond Prime Bank has issued unsecured non-convertible sub-ordinated bond on 07 February 2010 after obtaining approval from regulatory bodies. The bond has been fully redeemed during the year of 2017.

b) Prime Bank Sub-ordinated Bond-2 Prime Bank has issued another subordinated bond on February 19, 2015 namely “Prime Bank Subordinated Bond-2” after obtaining approval from Bangladesh Securities & Exchange Commission and Bangladesh Bank vide their letter BSEC/CI/ DS-16/2014/735 dated October 29, 2014 and BRPD (BFIS) 661/14B (P)/2014-8043 dated December 18, 2014 respectively. The bond shall bear interest with floating rate payable semi-annually on 19th February and 19th August each year. Floating rate is determined by calculating a benchmark rate i.e. peer banks’ most recent average FDR rate and 2.75% margin with a floor at 11.50% and capped at 14.00% p.a.

c) Prime Bank Sub-ordinated Bond-3 Prime Bank has issued another subordinated bond on August 12, 2018 namely “Prime Bank Subordinated Bond-3” after obtaining approval from Bangladesh Securities & Exchange Commission and Bangladesh Bank vide their letter BSEC/CI/ DS-16/2014/230 dated April 03, 2018 and BRPD (BFIS) 661/14B (P)/2018-3296 dated May 22, 2018 respectively. The bond shall bear interest with floating rate payable semi-annually on 12 August and 12 February each year. Floating rate is determined by calculating a benchmark rate i.e. peer banks’ most recent average FDR rate and 2.00% margin with a floor at 7.00% and capped at 10.50% p.a.

2.5.3 Share premium Share premium is the capital that the Bank raises upon issuing shares that is in excess of the nominal value of the shares. The share premium may be applied by the Bank in paying up unissued shares to be allotted to members as fully paid bonus shares or writing-off the preliminary expenses of the Bank or the expenses of or the commission paid or discount allowed on, any issue of shares or debentures of the Bank or in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the Bank as per the provison of section 57 of the Companies Act 1994. Share premium was shown in accounts after deduction of income tax @ 3% on share premium as per finance Act-2010.

2.6 Contingent liabilities A contingent liability is a possible obligation that arises form past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or

A present obligation that arises from past events but is not recognised because: a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or b) the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognised but disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is reliably estimated. Contingent assets are not recognised in the financial statements as this may results in the recognition of income which may never be realised. 2.7 Deposits and other accounts Deposits by customers and banks are recognised when the Bank enters into contractual provisions of the arrangements with the counterparties, which is generally on trade date, and initially measured at the consideration received.

248 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

2.8 Borrowings from other banks, financial institutions and agents Borrowed funds include call money deposits, borrowings, re-finance borrowings and other term borrowings from banks, financial institutions and agents. These are stated in the balance sheet at amounts payable. Interest paid / payable on these borrowings is charged to the profit & loss account. Disclosures of borrowings against Repo are shown in notes- 6a.7 to 6a.8 and 47 2.9 Basis for valuation of liabilities and provisions 2.9.1 Provision for current taxation Provision for current income tax has been made as per prescribed rate in the Finance Act, 2018 on the taxable income as per income tax law and Bangladesh Accounting Standard (BAS) -12: " Income Taxes".

2.9.2 Deferred taxation Deferred tax is accounted for in accordance with IAS 12: "Income Taxes". Deferred tax normally results in a liability being recognized within the Statement of Financial Position. IAS 12 defines a deferred tax liability as being the amount of income tax payable in future periods. Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis. 2.9.3 Benefits to the employees The benefits accrued for the employees of the Bank as on reporting date have been accounted for in accordance with the provisions of International Accounting Standard-19, "Employee Benefit". Basis of enumerating the benefit schemes operated by the Bank are outlined below: a) Provident fund Provident fund benefits are given to the permanent employees of the Bank in accordance with Bank's service rules. Accordingly a trust deed and provident fund rules were prepared. The Commissioner of Income Tax, Taxes Zone-5, Dhaka has approved the Provident Fund as a recognized provident fund within the meaning of section 2(52), read with the provisions of part - B of the First Schedule of Income Tax Ordinance 1984. The recognition took effect from July 07, 1997. The Fund is operated by a Board of Trustees consisting six members (03 members from management and other 03 members from the Board of Directors) of the Bank. All confirmed employees of the Bank are contributing 10% of their basic salary as subscription to the Fund. The Bank also contributes equal amount of the employees' contribution. Interest earned from the investments is credited to the members' account on yearly basis. b) Gratuity fund The Bank operates a funded gratuity scheme on "Continuing Fund Basis", in respect of which provision is made regularlly according to the recommendation of Actuarial which is covering all its permanent eligible employees in accordance with Bank Service Rules. The Second Secretary (Tax Exemption), National Board of Revenue, Segun Bagicha, Dhaka has approved the Prime Bank Limited Employees' Gratuity Fund as a recognized Gratuity Fund (Letter Ref no. 08.01.0000.035.02.0016.2 013/217, dated 22/07/2013) within the meaning of Para 2,3 & 4, read with the provisions of Part - C of the First Schedule of Income Tax Ordinance 1984. The recognition took effect from July 22, 2013. The Fund is operated by a Board of Trustees consisting six members (03 members from the Board of Directors and other 03 members from management) of the Bank. Actuarial valuation of gratuity scheme has been made to assess the adequacy of the liabilities provided for the scheme as per BAS-19 “Employees Benefit".

c) Welfare fund Prime Bank's employees' welfare fund is subscribed by monthly contribution of the employees. The Bank also contributes to the Fund in accordance with Bank Service Rules. The Fund has been established to provide medical support and coverage in the event of accidental death or permanent disabilities of the employees. Disbursement of loan from the fund is done as per rules for employees' welfare fund. Retirement benefit are also provided from this fund. d) Incentive bonus 10% of net profit after tax is given to the employees in every year as incentive bonus. This bonus amount is distributed among the employees based on their performance. The bonus amount is paid annually, normally in first quarter of every following year and the costs are accounted for in the period to which it relates.

PRIME BANK 249 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

2.9.4 Other liabilities Other liabilities comprise items such as provision for loans and advances/investments, provision for taxation, interest payable, interest suspense, accrued expenses, obligation under finance lease etc. Other liabilities are recognised in the balance sheet according to the guidelines of Bangladesh Bank, Income Tax Ordinance 1984 and internal policy of the Bank.

2.9.5 Provision for liabilities A provision is recognised in the balance sheet when the Bank has 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 BAS 37 "Provisions, Contingent Liabilities and Contingent Assets". 2.9.6 Provision for Off-balance sheet exposures Off-balance sheet items have been disclosed under contingent liabilities and other commitments as per Bangladesh Bank guidelines. Banks are maintained provision against Off-balance sheet items as per BRPD Circular # 14, dated September 23, 2012 and BRPD Circular # 07 dated June 21, 2018. 2.9.7 Provision for nostro accounts As per instructions contained in the circular letter no. FEPD (FEMO) / 01 / 2005-677 dated 13 September 2005 issued by Foreign Exchange Policy Department of Bangladesh Bank, provision is to be maintained for the un-reconciled debit balance of nostro account more than 3 months as on the reporting date of these financials. Since there is no unreconciled entries which are outstanding more than 3 months, no provision is required to be maintained. 2.9.8 Provision for rebate to good borrower As per BRPD Circular No. 06 (19 March 2015) and BRPD Circular Letter No 03 (16 February 2016) issued by Bangladesh Banks are required to provide 10% rebate on the interest closed from "Good Borrowers" subject to some qualifying criteria. Accordingly, the Bank has kept provision in the financial statements.

2.9.9 Provision for climate risk fund As per GBCSRD Circular No 04 (9 July 2015) issued by Bangladesh Bank, instructs Banks to maintain a climate fund of 10% of the CSR budget. Accordingly, bank has kept provision against climate risk fund.

2.10 Revenue recognition 2.10.1 Interest income (Conventional Banking) Interest income is recognised on accrual basis. Interest on unclassified loans and advances are calculated at the prescribed rates to be taken into income. Interest is ceased to be taken into income when such loans and advances are marked as classified as per criteria prescribed by the Bangladesh Bank. It is then kept in interest suspense account. Interest/Profit on classified advances/investment is accounted for on a cash receipt basis.

2.10.2 Profit on investment (Islamic Banking Branches) Mark-up on investment is taken into income account proportionately from profit receivable account. Overdue charge / compensation on classified investments is transferred to profit suspense account instead of income account. 2.10.3 Investment income Interest income on investments is recognised on accrual basis. Capital gain on investments in shares is also included in investment income. Capital gain is recognised when it is realised.

2.10.4 Fees and commission income Fees and commission income arising on services provided by the Bank are recognised when those are realized. Commission charged to customers on letters of credit and letters of guarantee is credited to income at the time of transactions being recorded in the books of accounts.

2.10.5 Dividend income on shares Dividend income on shares is recognised during the period when right to receive is established. 2.10.6 Interest paid and other expenses (Conventional Banking Branches) In terms of the provisions of BAS-1 "Presentation of Financial Statements" interest and other expenses are recognised on accrual basis.

2.10.7 Profit paid on deposits (Islamic Banking Branches) Profit paid to mudaraba depositors is recognised on accrual basis as per provisional rate. However, the final profit is determined and to be paid to the depositors as per Annexure-F. 2.10.8 Dividend payments Interim dividend is recognised when they are paid to shareholders. Final dividend is recognized when it is approved by the shareholders.

250 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

The proposed dividend for the year 2018 has not been recognized as a liability in the balance sheet in accordance with the 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 payment is established. 2.11 Risk management Risk is inherent to the banking business and Bank adds shareholders' value by converting opportunities into profit. The Bank evaluates its opportunities in terms of risk-reward relationship. The risks that are taking by the Bank are reasonable, controlled, within its financial resources and credit competence. In Prime Bank, risk is managed through a clear organizational structure, risk management and monitoring process that are closely aligned with the activities of the Bank’s risk management policy and process as well as in line with the guidelines provided by the country's central bank, Bangladesh Bank. The Bank’s risk management policy and process is composed with all the structure, policies, process and strategies within the Bank so that it does not conflict with other risk management policies. The essential elements of an effective risk management framework are: 1. Clearly defined roles and responsibilities to avoid conflict of interest between business lines. 2. Developing a risk culture where everyone will understand the impact of risk before taking any business decision. 3. Robust risk management and governance by the board for understanding the risks taken by the Bank for safety and protection of the assets. 2.12 Core risk management BRPD circulars no. 17 dated 07 October 2003 and BRPD circular no. 04 dated 05 March 2007 require banks to put in place an effective risk management system. The risk management system of the bank covers the following risk areas. 2.12.1 Credit risk It arises mainly from lending, trade finance, leasing and treasury businesses. This can be described as potential loss arising from the failure of a counter party to perform as per contractual agreement with the Bank. The failure may result from unwillingness of the counter party or decline in his / her financial condition. Therefore, the Bank’s credit risk management activities have been designed to address all these issues. The Bank has segregated duties of the officers / executives involved in credit related activities. A separate Corporate Division has been formed at Head Office which is entrusted with the duties of maintaining effective relationship with the customers, marketing of credit products, exploring new business opportunities, etc. Moreover, credit approval, administration, monitoring and recovery functions have been segregated. For this purpose, three separate units have been formed within the credit division. These are (a) Credit Risk Management Unit (b) Credit Administration Unit and (c) Credit Monitoring and Recovery Unit. Credit Risk Management Unit is entrusted with the duties of maintaining asset quality, assessing risk in lending to a particular customer, sanctioning credit, formulating policy / strategy for lending operation, etc. Adequate provision has been made on classified loans / investments is shown in (note-14a.3). A thorough assessment is done before sanction of any credit facility at Credit Risk Management Unit. The risk assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer, security of the proposed credit facility, etc. The assessment process at Head Office starts at Corporate Division by the Relationship Manager / Officer and ends at Credit Risk Management Unit when it is approved / declined by the competent authority. Credit approval authority has been delegated to the individual executives. Proposals beyond their delegation are approved / declined by the Executive Committee and / or the Management of the Bank. Concentration of credit risk is shown in (note -7a. 4). In determining Single borrower / Large loan limit, the instructions of Bangladesh Bank are strictly followed. Internal audit is conducted at periodical intervals to ensure compliance of Bank’s and Regulatory polices. Loans are classified as per Bangladesh Bank’s guidelines. Concentration of single borrower / large loan limit is shown in (note-7a.8). 2.12.2 Foreign exchange risk Foreign exchange risk is the exposure of an institution to the potential impact of movements in foreign exchange rates. The risk is that adverse fluctuations in exchange rates may result in a loss in earnings. As per the guidelines of Bangladesh Bank, Prime Bank Limited has developed a detailed Foreign Exchange Risk Management policies to minimize different types of risks associated with foreign exchange transactions. The Bank has also developed different strategies to handle foreign exchange risk by setting different types of limits and risk parameters to measure and monitor foreign exchange risk exposure of the Bank.

The foreign exchange desk of treasury division is involved in foreign exchange dealing activities with different counterparts; the treasury back office is engaged in transfer of funds and passing of the transaction entries in the books of accounts, and the mid office is responsible for verification of the deals. All foreign exchange transactions are revalued at market rate as per the directive of Bangladesh Bank. All Nostro Accounts are reconciled on a monthly basis and outstanding entries beyond 30 days are reviewed by the management for its settlement.

PRIME BANK 251 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

2.12.3 Asset liability management Banks are exposed to the several risks such as Liquidity Risk, Interest Rate Risk, Foreign Exchange Risk, Credit Risk and Operational Risk etc. Monitoring and controlling of these risks is vital to the survival of a financial institution. Asset-Liability Management is a tool to oversee whether different balance sheet risks are properly identified, appropriate policies and procedures are well established to control and limit these risks. Asset-Liability Committee (ALCO) reviews country’s overall economic position, the Bank’s liquidity position, key performance ratios, interest rate risk, deposit and advance growth, cost of deposit & yield on advances, deposit & lending pricing strategy and different forecasted balance sheet risks of the Bank. 2.12.4 Money laundering risk Money laundering is the generic term used to describe the process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source. If money laundering is done successfully, it allows the criminals to maintain control over their proceeds and ultimately to provide a legitimate cover for their source of income. Money laundering plays a fundamental role in facilitating the ambitions of the drug trafficker, the terrorist, the organized criminal, the insider dealer, the tax evader as well as the many others who need to avoid the attention from the authorities that sudden wealth brings from illegal activities. By engaging in this type of activity it is hoped to place the proceeds beyond the reach of any asset forfeiture laws. Prime Bank Ltd (PBL) has implemented an enterprise-wide AML (Anti-Money Laundering) and CFT (Combating the Financing of Terrorism) compliance program, which covers all the activities of the Bank and is reasonably designed to comply with applicable laws and regulations. It is the policy of PBL to take all reasonable and appropriate steps to prevent persons engaged in money laundering, fraud, or other financial crime, including the financing of terrorists or terrorist operations, from utilizing PBL products and services. PBL makes every effort to remain in full compliance with all applicable AML and CFT laws, rules and standards in the jurisdictions in which it does business. In order to facilitate compliance with AML and CFT requirements, PBL has appointed one of its Senior Executives as the CAMLCO (Chief Anti-Money Laundering Compliance Officer) and a team of employees with experience on AML and CFT requirements under law, as well as money laundering detection and prevention, to oversee PBL AML and CFT program. PBL has developed and implemented written AML and CFT policies, procedures, internal controls and systems, which include (but are not limited) a customer identification program and procedures; procedures to collect and refresh, as appropriate, customer due diligence information; processes to assess risk; processes and systems to monitor customer transactions and activity; processes and systems to identify and report suspicious activity; and, processes to keep required records. PBL educates its all employees on AML and CFT requirements and activities and also subjects its AML and CFT program to regular independent testing. PBL cooperates fully with law enforcement and regulatory investigations and inquiries in identifying the criminals involve in Money Laundering and Terrorist Activities/Financing.

2.12.5 Internal control & compliance risk Internal control is fundamental to the successful operation and day-to-day running of a business and it assists the bank in achieving its business objectives. It encompasses all controls incorporated into the strategic, governance and management processes, covering the bank’s entire range of activities and operations, and not just those directly related to financial operations and reporting. Its scope is not confined to those aspects of a business that could broadly be defined as compliance matters, but extends also to the performance aspects of a business. Prime Bank Ltd has established a System of Internal Control, which is designed to manage all the risks of failure to a reasonable level, achieve aims and objectives/goals of the Bank and this System provides reasonable assurance of effective & efficient operations covering all controls including financial & operational controls, reliability of the financial information, compliance with applicable laws & regulations, adherence to management policies, safeguarding of Banks Assets, prevention & detection of fraud & errors, and accuracy & completeness of the accounting records.

The Board of Directors of Prime Bank Ltd regularly reviews the effectiveness of internal control process through its Audit Committee and Executive Committee and the Audit Committee plays an effective role amongst the Board of Directors, Management, Shareholders, Depositors and develops an efficient, powerful and a safe Banking System. The committee also performs a very important role for publishing Bank’s financial statements, developing an appropriate internal control system and maintains an effective communication with internal and external Auditors. It significantly contributes in controlling and monitoring various risks factors that arise from the business activities of the Bank. Board Audit Committee reviews the actions taken on internal control issues identified in the reports prepared by the Internal & External Auditors and Regulatory Authorities. It has active oversight on the internal audit’s independence, scope of work and resources and it also reviews the functions of Internal Control & Compliance Division of Head Office, particularly the scope of the annual audit plan and frequency of the internal audit activities.

252 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

2.12.6 Information and communication technology The rapid development of information and communication technologies (ICTs) has effectively facilitated in reorganizing business processes and streamlining the provision of its products and services in today’s dynamic business environment. Such adoption helps the bank to develop and maintain competitive advantage for ensuring bank’s profitability and survivability in the market place. The competitive advantage often brings bank numerous benefits including fast business transactions, increasing automation of business processes, improved customer service, and provision of effective decision support in a timely manner. However, the adoption of ICT applications has also brought organizations risks related to ICT such as strategic risk, financial risk, operational risk and technological risk. Risk management plays a critical role in protecting the bank’s information assets. An effective risk management process is an important component of a successful IT security program. ICT risk management is referred to as the essential process to aid enterprise achieving “the new business changes, future investment in information technology system, an increasing ICT threats and an increasing dependence on delivering information in system”. In order to minimize and control these risks successfully, The Bank has developed and implemented ICT risk management policies and strategies, strengthened ICT security infrastructure, acquired centralized real time security monitoring system, implemented centralized hardware system with high availability facility and implemented Disaster Recover Site (DRS), developed Business Continuity Plan (BCP) and human resource backup plan with segregation of duties for different ICT tasks.

2.12.7 Liquidity risk The object of liquidity risk management is to ensure that all foreseeable funding commitments and deposit withdrawals can be met when due. To this end, the Bank is maintaining a diversified and stable funding base comprising of core retail and corporate deposits and institutional balance (note - 13a). Management of liquidity and funding is carried out by Treasury Department under approved policy guidelines. Treasury front office is supported by a very structured Mid office and Back office. The Liquidity management is monitored by Asset Liability Committee (ALCO) on a regular basis. A written contingency plan is in place to manage extreme situation.

2.12.8 Market risk The exposure of market risk of the Bank is restricted to foreign exchange risk, interest rate risk and equity risk. Foreign exchange risk Foreign exchange risk is defined as the potential change in earnings due to change in market prices. The foreign exchange risk of the Bank is minimal as all the transactions are carried out on behalf of the customers against underlying L/C commitments and other remittance requirements. No foreign exchange dealing on Bank's account was conducted during the year. Treasury Department independently conducts the transactions and the back office of treasury is responsible for verification of the deals and passing of their entries in the books of account. All foreign exchange transactions are revalued at Mark-to- Market rate as determined by Bangladesh Bank at the month-end. All Nostro accounts are reconciled on a monthly basis and outstanding entry beyond 30 days is reviewed by the management for its settlement. The position maintained by the bank at the end of day was within the stipulated limit prescribed by the Bangladesh Bank. Interest rate risk Interest rate risk may arise either from trading portfolio or non-trading portfolio. The trading portfolio of the Bank consists of Government treasury bills of 28 days maturity. The short-term movement in interest rate is negligible or nil. Interest rate risk of non-trading business arises from mismatches between the future yield of an asset and its funding cost. Asset Liability Committee (ALCO) monitors the interest rate movement on a regular basis.

Equity risk Equity risk arises from movement in market value of equities held. The risks are monitored by Investment Committee under a well designed policy framework. The market value of equities held was, however, lower than the cost price at the balance sheet date (Annexure-B).

2.12.9 Reputation risk arising from money laundering incidents Money laundering risk is defined as the loss of reputation and expenses incurred as penalty for being negligent in prevention of money laundering. For mitigating the risks, 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. Manuals for prevention of money laundering have been established and transaction profile has been introduced. Training is continuously given to all category of Officers and Executives for developing awareness and skill for identifying suspicious activities / transactions.

PRIME BANK 253 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

2.12.10 Operational risk Operational risk may arise from error and fraud due to lack of internal control and compliance. Management through Internal Control and Compliance Division controls operational procedure of the Bank. Internal Control and Compliance Division undertakes periodical and special audit of the branches and divisions at the Head Office for review of the operation and compliance of statutory requirements. The Audit Committee of the Board subsequently reviews the reports of the Internal Control and Compliance Division. 2.12.11 Audit committee disclosures Audit Committee (AC) of the Board was formed and its roles and responsibilities were defined in line with Corporate Governance Code issued by Bangladesh Securities and Exchange Commission (BSEC) vide BSEC notification BSEC/ CMRRCD/2006-158/Admin/80 dated June 03, 2018 and BRPD Circular no.11 dated October 27, 2013 issued by Bangladesh Bank. The current Audit Committee (AC) was re-constitued by the Board of Directors of the Bank in its 463rd meeting held on 11 May 2017. Status with Sl No. Name Status with Bank Committee i) Mr. Shamsuddin Ahmad, Ph.D. Independent Director Chairman ii) Mr. Md. Nader Khan Director Member iii) Dr. G M Khurshid Alam Independent Director Member iv) Mr. M Farhad Hussain FCA Independent Director Member During the year 2018, the Audit Committee of the Board conducted 10 (Ten) meetings in which the important issues were discussed / reviewed are presented in (note no. 48).

2.12.12 Risk management committee disclosures The Board of Directors constituted with the following 4 (Four) members Risk Management Committee of the Board, the third Committee of the Board besides the Executive Committee and the Audit Committee in accordance with Bank Company (Amendment) Act 2013 and it does comply with the BRPD Circular no. 11, dated October 27, 2013. Status with Sl No. Name Status with Bank Committee i) Dr. G M Khurshid Alam Independent Director Chairman ii) Mr. Shamsuddin Ahmad, Ph.D. Independent Director Member iii) Mr. Mohammad Mushtaque Ahmed Tanvir Director Member iv) Mr. M Farhad Hussain FCA Independent Director Member The Risk Management Committee of the Board has been formed after the Central Bank’s instruction issued in October 27, 2013. The Committee conducted 4 (Four) meeting during the year where the following important issues were discussed / reviewed: i) Discussion of Sustainable Finance Activities ii) Review of restructured Large loans iii) Review of Information Security Policy and Procedures of the Bank iv) Review of Fraud Detection and Management Process v) Review of Comprehensive Risk Management Report vi) Review of Borrower Rating and Capital Management status vii) Review of Stress Testing of the Bank viii) Review of Green Banking Policy ix) Risk Appetite Statement of the Bank x) Internal Capital Adequacy Assessment Process of the Bank xi) Review of Quarterly Risk Management Report xii) Discussion on Annual Report of AML/CFT activities of last year

2.13 Earnings per share Basic earnings per share Basic earnings per share has been calculated in accordance with BAS 33 "Earnings per Share" which has been shown on the face of the 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.

Diluted earnings per share Diluted earnings per share is not required to be calculated for the year as there was no scope for dilution during the year under review.

254 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

2.14 Events after the reporting period Where necessary, all the material events after the reporting period have been considered and appropriate adjustment / disclosures have been made in the financial statements. 2.15 Memorandum items Memorandum items are maintained to have control over all items of importance and for such transactions where the Bank has only a business responsibility and no legal commitment. Bills for collection, savings certificates, wage earners bonds etc. fall under the memorandum items. However, Bills for Collection is shown under contingent liabilities as per Bangladesh Bank's format of reporting. 2.16 Related party transaction Related party transaction is a transfer of resources, services or obligation between related parties, regardless of whether a price is charged. Detail of related parties transaction are given in (note-49).

2.17 Information about business and geographical segments Segmental information is presented in respect of the Group's business and of Prime Bank Limited. Business segments Business segments report consists of products and services whose risks and returns are different from those of other business segments. These segments comprise Conventional Banking including Off-shore Banking Units, Islamic Banking, Prime Bank Investment Limited and Prime Bank Securities Limited. Business segments report are shown in Annexure-H. Geographical segments Geographical segments report consists of products and services within a particular economic environment where risks and returns are different from those of other economic environments. These segments comprise of Prime Bank Limited, Off- shore Banking Units, Prime Bank Investment limited, Prime Bank Securities Limited, Prime Exchange Co. (Pte.) Ltd. Singapore, PBL Exchange (UK) Ltd. and PBL Finance (Hong Kong) Limited. Geographical segments report are shown in Annexure-H. Inter-segment transactions are generally based on inter-branch fund transfer measures as determined by the management. Income, expenses, assets and liabilities are specifically identified with individual segments. Based on such allocation, segmental balance sheet as on 31 December 2018 and segmental profit and loss account for the year ended 31 December 2018 have been prepared.

2.18 Compliance report on International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) The Institute of Chartered Accountants of Bangladesh (ICAB) is the sole authority for adoption of Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS). While preparing the financial statements, Prime Bank applied all the applicable IAS and IFRS as adopted by ICAB. Details are given below: Name of the IAS IAS no Status Presentation of Financial Statements 1 Applied* Inventories 2 N/A Statement of Cash Flows 7 Applied Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied Events after the reporting period 10 Applied Construction Contracts 11 N/A Income Taxes 12 Applied Property, Plant and Equipment 16 Applied Leases 17 Applied Employee Benefits 19 Applied Accounting for Government Grants and Disclosure of Government Assistance 20 N/A The Effects of Changes in Foreign Exchange Rates 21 Applied Borrowing Costs 23 N/A Related Party Disclosures 24 Applied Accounting and Reporting by Retirement Benefit Plans 26 N/A ** Separate Financial Statements 27 Applied Interests in Joint Ventures 31 N/A Financial Instruments: Presentation 32 Applied * Earnings per share 33 Applied Interim Financial Reporting 34 Applied *** Impairment of Assets 36 Applied Provisions, Contingent Liabilities and Contingent Assets 37 Applied Intangible Assets 38 Applied Investment Property 40 N/A Agriculture 41 N/A

PRIME BANK 255 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Name of the IFRS IFRS no. Status First time adoption of Bangladesh Financial Reporting Standards 1 N/A Share Based Payment 2 N/A Business Combinations 3 Applied Insurance Contract 4 N/A Non-current Assets Held for Sale and Discontinued Operations 5 N/A Exploration for and Evaluation of Mineral Resources 6 N/A Financial Instruments: Disclosure 7 Applied Operating Segments 8 Applied Financial Instrument 9 Applied Consolidated Financial Statements 10 Applied Joint Arrangement 11 N/A Disclosure of Interest in other entities 12 N/A Fair Value Measurement 13 Applied Regulatory defrral accounts 14 N/A 14 N/A Revenue from contractors with customers 15 Applied 15 Applied N/A= Not Applicable * In order to comply with certain specific rules and regulations of the local Central Bank (Bangladesh Bank) which are different to IAS/IFRS, some of the requirements specified in these IAS/IFRSs are not applied. Refer below(note-2.19) for such recognition and measurement differences that are most relevant and material to the Bank and the Group.

** This Standard regards a retirement benefit plan as a reporting entity separate from the employers of the participants in the plan. Therefore, it is not applicable for the Bank’s annual report as it is the employer and not the retirement benefit plan itself.

*** The objective of IAS 34 is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in complete or condensed financial statements for an interim period and hence it is not applicable for annual financial statements. However, the Bank being a listed entity in Dhaka and Chittagong Stock Exchanges regularly publishes Interim Financial Report complying with IAS 34.

New accounting standards not yet adopted: The Bank has consistently applied the accounting policies as set out in Note 2 to all periods presented in these financial statements. The various amendments to standards, including any consequential amendments to other standards, with the date of initial application of 1 January 2018 have been considered. However, these amendments have no material impact on the financial statements of the Bank. A number of standards and amendments to standards are effective for annual periods beginning after 1 January 2018 and earlier application is permitted. However, the Bank has not early applied the following new standards in preparing these financial statements. (a) IFRS 16 Leases IFRS 16, issued in January 2016 replaces existing leases guidance and effective for reporting period beginning on or after 1 January 2019. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change. The Bank has not yet assessed any potential impact of IFRS 16 on its financial statements. (b) IFRS 17 Insurance Contracts IFRS 17 was issued in May 2017 and applies to annual reporting periods beginning on or after 1 January 2021. IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. The Bank has not yet assessed in potential impact of IFRS 17 on its financial statements. There are no other standards that are not yet effective and that would be expected to have a material impact on the Bank in the current or future reporting periods and on foreseeable future transactions.

256 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

2.19 Departures from IAS/IFRS The consolidated financial statements of the Group and the financial statements of the Bank as at and for the year ended 31 December 2018 have been prepared under the historical cost convention except investments and in accordance with the "First Schedule" (section 38) of the Bank Companies Act 1991, as amended by Bangladesh Bank (the Central Bank of Bangladesh) through BRPD Circular No. 14 dated 25 June 2003, other Bangladesh Bank Circulars, Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987, Dhaka and Chittagong Stock Exchange's listing regulations. In case, any requirement of provisions and circulars issued by Bangladesh Bank differs with those of other regulatory authorities, the provisions and circulars issued by Bangladesh Bank shall prevail. Material departures from the requirements of BFRS are as follows: i) Investment in shares and Securities IFRS: As per requirements of IFRS 9, classification and measurement of investment in shares and securities will depend on how these are managed (the entity’s business model) and their contractual cash flow characteristics. Based on these factors it would generally fall either under “at fair value through profit or 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 other comprehensive income respectively. Bangladesh Bank: As per Banking Regulation and Policy Department (BRPD) circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment; otherwise investments are recognised at cost. ii) Revaluation gain/loss on Government securities IFRS: As per requirement of IFRS 9 where securities will fall under the category of fair value through profit or loss account, any change in the fair value of assets is recognised through the profit and loss account. Securities designated as amortised cost are measured at effective interest rate method and interest income is recognised through the profit and loss account. T-bills and T-Bonds designated as "held to maturity" are measured at amortised cost method and interest income is recognised through the profit and loss account. Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognised in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortisation of discount are recognised in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortised at the year end and gains or losses on amortisation are recognised in other reserve as a part of equity. iii) Provision on loans and advances IFRS: As per IFRS 9 an entity shall recognise an impairment allowance on loans and advances based on expected credit losses. At each reporting date, an entity shall measure the impairment allowance for loans and advances at an amount equal to the lifetime expected credit losses if the credit risk on these loans and advances has increased significantly 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 the 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 reporting date. Bangladesh Bank: As per BRPD circular No.15 (27 September 2017), BRPD circular No.16 (18 November 2014), BRPD circular No.14 (23 September 2012), BRPD circular No. 19 (27 December 2012), BRPD circular No. 05 (29 May 2013) and BRPD circular No.1 (20 February 2018) a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also specific provision for sub-standard loans, doubtful loans and bad losses has to be provided at 5%, 20%, 50% and 100% respectively for loans and advances depending on time past due. Again as per BRPD circular no. 10 dated 18 September 2007 and BRPD circular no. 14 dated 23 September 2012, a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by IFRS 9. iv) Recognition of interest in suspense IFRS: Loans and advances to customers are generally classified at amortised cost as per IFRS 9 and interest income is recognised by using the effective interest rate method to the gross carrying amount over the term of the loan. Once a loan subsequntly become credit-impaired, the entity shall apply the effective interest rate to the amortised cost of these loans and advances. Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified, interest on such loans are not allowed to be recognised as income, rather the corresponding amount needs to be credited to an interest in suspense account, which is presented as liability in the balance sheet.

PRIME BANK 257 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

v) Other comprehensive income IFRS: 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. 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 include in a Single Comprehensive Income (OCI) Statement. As such the company does not prepare the other comprehensive income statement. However elements of OCI, if any, are shown in the statements of changes in equity. vi) Financial instruments – presentation and disclosure In several cases Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in IFRS 9. As such full disclosure and presentation requirements of IFRS 7 and IAS 32 cannot be made in the financial statements. vii) Repo and Reverse Repo transactions IFRS: As per IFRS 9 when an entity sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (repo), the arrangement is treated as a loan and the underlying asset continues to be recognised at amortised cost in the entitys financial statements. The difference between selling price and repurchase price will be treated as interest expense. The same rule applies to the opposite side of the transaction (reverse repo). Bangladesh Bank: As per DOS Circular letter no. 6 dated 15 July 2010 and subsequent clarification in DOS circular no.2 dated 23 January 2013, when a bank sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is accounted for as a normal sales transactions and the financial assets are derecognized in the seller’s book and recognized in the buyer’s book. However, as per DMD circular letter no.7 dated 29 July 2012, non primary dealer banks are eligible to participate in the Assured Liquidity Support (ALS) programme, whereby such banks may enter collaterallisedrepo arrangements with Bangladesh Bank. Here the selling bank accounts for the arrangement as a loan, thereby continuing to recognise the asset.

viii) Financial guarantees IFRS: As per IFRS 9, financial guarantees are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtors fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee liabilities are recognised initially at their fair value plus transaction costs that are directly attributable to the issue of the financial liabilities. The financial guarantee liability is subsequently measured at the higher of the amount of loss allowance for expected credit losses as per impairment requirement and the amount initially recognised less, income recognised in accordance with the principles of IFRS 15. Financial guarantees are included within other liabilities. Bangladesh Bank: As per BRPD 14, financial guarantees such as letter of credit, letter of guarantee will be treated as Off- Balance Sheet items. No liability is recognized for the guarantee except the cash margin. ix) Cash and cash equivalent IFRS: Cash and cash equivalent items should be reported as cash item as per IAS 7. Bangladesh Bank: Some highly liquid assets such as money at call and short notice, T-bills, prize bonds are not prescribed to be shown as cash and cash equivalents rather shown as face item in the balance sheet. However, in the cash flow statement, money at call and short notice and prize bonds are shown as cash and cash equivalents beside cash in hand, balance with Bangladesh Bank and other banks.

x) Non-banking asset IFRS: No indication of Non-banking asset is found in any IFRS. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, there must exist a face item named Non-banking asset. xi) Cash flow statement IFRS: Cash flow statement can be prepared either in direct method or in indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, cash flows is the mixture of direct and indirect method. xii) Balance with Bangladesh Bank: (CRR) IFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per BAS 7. Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.

258 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

xiii) Presentation of intangible asset IFRS: An intangible asset must be identified and recognized, and the disclosure must be given as per BAS 38. Bangladesh Bank: There is no requirement for regulation of intangible assets in BRPD 14. xiv) Off-balance sheet items IFRS: There is no concept of off-balance sheet items in any BFRS; hence there is no requirement of disclosure of off-balance sheet items. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.) must be disclosed separately on the face of balance sheet. xv) Disclosure of appropriation of profit IFRS: There is no requirement to show appropriation of profit in the face of statement of comprehensive income. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, an appropriation of profit should be disclosed in the face of profit and loss account. xvi) Loans and advance net of provision IFRS: Loans and advances should be presented net of provisions. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, provision on loans and advances are presented separately as liability and cannot be netted off against loans and advances. 2.20 The Bank’s compliance with related pronouncements by Bangladesh Bank: i) Internal Control The objective of internal control is to ensure that management has reasonable assurance that (i) operations are effective, efficient and aligned with strategy, (ii) financial reporting and management information is reliable, complete and timely accessible, (iii) the entity is in compliance with applicable laws and regulations as well as its internal policies and ethical values including sustainability, and (iv) assets of the company are safeguarded and frauds & errors are prevented or detected. Prime Bank Limited has established an effective internal control system whose primary aim is to ensure the overall control of risks and provide reasonable assurance that the objectives set by the Bank will be met. It has designed to develop a high level risk culture among the personnel of the Bank, establish efficient and qualified operating model of the Bank, ensure reliability of internal and external information including accounting and financial information, secure the Banks operations and assets, and comply with laws, regulatory requirements and internal policies.

The Board of Directors of Prime Bank, through its Audit Committee, periodically reviews the effectiveness of Bank’s internal control system covering all the material controls, including financial, operational and compliance controls, risk management systems, the adequacy of resources, qualifications and experience of staff of the accounting and financial reporting function, training programs, budget, etc. Audit Committee of the Board reviews the actions taken on internal control issues identified by the Internal & External Auditors and Regulatory Authorities. It has active oversight on the internal audit’s independence, scope of work and resources and it also reviews the functions of Internal Control & Compliance Division of Head Office, particularly the scope of the annual audit plan and frequency of the internal audit activities. ii) Internal Audit Internal Audit is the continuous and systematic process of examining and reporting on the activities of an organization undertaken by the specially assigned staff(s). Internal Auditor works as the Eyes & Ears of the management. It may therefore be used to bridge the gap between management & shop floor. It can assure the management that the Internal Controls are adequate and in operations, the policies and systems laid down are being adhered to and accounting records provided by the lower level are correct.

Internal Audit Mechanism is used as an important element to ensure good governance of PBL. Internal Audit Activity of PBL is effective and it provides senior management with a number of important services. These include detecting and preventing fraud, testing internal control, and monitoring compliance with own policies & procedures, applicable rules & regulations, instructions/ guidelines of regulatory authority etc.

During the year 2018, ICCD conducted inspection on many of the Branches/ Divisions of Head Office of the Bank and submitted reports presenting the findings of the audits/ inspections. Necessary control measures and corrective actions have been taken on the suggestions or observations made in these reports. The reports or key points of the Reports have also been discussed in the meetings of the Audit Committee of the Board and necessary steps have been taken according to the decision of the said Committee for correct functioning of Internal Controls & Compliance.

PRIME BANK 259 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

iii) Fraud and Forgeries The increasing wave of fraud and forgery cases in the banking sector in recent time calls for concerted steps in identifying ways for reducing or preventing frauds and forgeries by analyzing the causes and effect of frauds and forgeries, and prescribing effective control strategies for salvaging frauds in the banking sector. Prime Bank does always pay due attention on anti-fraud internal controls for prevention of fraud and forgery. The Bank has already implemented some strategies like Financial Control Strategy, Personnel Control Strategy, Accounting Control Strategy, Credit Control Strategy, Cost Control Strategy, Administrative Control strategy, Process Control Strategy etc. in order to strengthening the control system further. Although it is not possible to eliminate all frauds because of the inherent limitations of Internal Control System, the Board of Directors and Management have taken all the measures to keep the operational risk in a very minimum level. Internal Control and Compliance Division (ICCD) assesses and evaluates the effectiveness of Bank's anti-fraud internal control measures, recommends for further improvement in implementation of aforesaid strategies and reports to the Bangladesh Bank on effectiveness of controls at the end of each quarter following their prescribed format. 2.21 The financial statements were approved by the Board of Directors on 03 April 2019. Amount in Taka 2.22 Shareholders' Equity 2018 2017 Paid up capital 11,322,834,770 10,293,486,160 Share premium 1,211,881,786 2,241,230,396 Statutory reserve 10,353,413,584 9,565,853,177 Revaluation gain / (loss) on investments 22,087,009 17,749,598 Revaluation reserve 1,496,759,104 1,496,759,104 Foreign currency translation gain 14,920,954 13,414,088 Surplus in profit and loss account / Retained earnings 1,759,002,003 1,079,304,405

26,180,899,209 24,707,796,928

2.23 Earning Per Share (EPS) has been calculated in accordance with IAS-33: "Earnings Per Share (EPS)". Previous year/period figures have been adjusted for the issue of Bonus Shares during the year. Calculation of EPS Profit after tax for the year (Solo) 2,187,802,036 1,058,974,674 Profit after tax for the year (Consolidated) 2,253,633,866 1,215,528,259 Weighted average number of share 1,132,283,477 1,029,348,616 Earnings per share (Solo) 1.93 1.03 Earnings per share (Consolidated) 1.99 1.18 Calculation of EPS (Diluted) Profit after tax for the period (Solo) 2,187,802,036 1,058,974,674 Profit after tax for the period (Consolidated) 2,253,633,866 1,215,528,259 Weighted average number of share 1,132,283,477 1,132,283,477 Earnings per share (Solo) 1.93 0.94 Earnings per share (Consolidated) 1.99 1.07 2.24 Calculation of Net Asset value per Share (NAVPS) Shareholdersrs' Equity (Solo) 26,180,899,209 24,707,796,928 Shareholdersrs' Equity (Consolidated) 26,298,596,289 24,812,947,765 Weighted average number of share 1,132,283,477 1,132,283,477 Net Asset value per Share (NAVPS) (Solo) 23.12 21.82 Net Asset value per Share (NAVPS) (Consolidated) 23.23 21.91 2.25 Calculation of Net Cash Flow Per Share (NOCFPS) Net Cash from Operating Activities (Solo) (3,240,683,235) 7,369,206,532 Net Cash from Operating Activities (Consolidated) (3,290,909,793) 7,483,240,015 Weighted average number of share 1,132,283,477 1,132,283,477 Net operating cash flow per share (Solo) (2.86) 6.51 Net operating cash flow per share (Consolidated) (2.91) 6.61

260 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 2.26 Reconcilation of statement of cash flows from operating activities Profit before provision 5,719,402,036 5,373,374,674 Adjustment for non cash items Depreciation on fixed asset 277,008,743 256,178,233 Amortization on software 53,198,524 20,823,123 House Furnishing 3,183,630 2,965,506 Adjustment with non-operating activities 333,390,897 279,966,863 Recovery of writeoff loan 203,780,138 409,904,161 Accounts Receivable 111,948,340 (244,807,126) Accounts payable on deposits 959,283,342 (147,116,993) Gain on sale of asset (1,890,136) (567,374) Prime Bank Foundation 85,153,094 (21,442,675) Employees Welfare fund 4,257,654 (1,072,133) Incentive Bonus 120,314,572 (115,553,676) Incentive paid to good borrower - (9,792,890) 1,482,847,004 (130,448,705) Changes in operating assets and liabilities Changes in loans & advances (9,900,768,555) (29,772,028,217) Changes in deposit and other accounts (3,837,869,135) (640,449,124) Changes in investment (2,698,687,081) 16,912,134,608 Changes in borrowings 6,739,373,030 8,766,832,663 Changes in other assets 92,178,274 6,944,608,143 Changes in other liabilities (678,988,274) 222,731,088 (10,284,761,741) 2,433,829,161 Income Tax Paid (491,561,431) (587,515,461) Net cash flows from operating activities (3,240,683,235) 7,369,206,532

2.27 General

a) These financial statements are presented in Taka, which is the Bank's functional currency. Figures appearing in these financial statements have been rounded off to the nearest Taka.

b) The expenses, irrespective of capital or revenue nature, accrued / due but not paid have been provided for in the books of the Bank.

c) Figures of previous year have been rearranged whenever necessary to conform to current years presentation.

PRIME BANK 261 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 3 Consolidated cash i Cash in hand Prime Bank Limited (note-3a.1) 3,100,264,070 3,031,607,478 Prime Bank Investment Limited 32,496 13,263 Prime Bank Securities Limited 100,000 13,004 Prime Exchange Co. Pte. Ltd., Singapore 32,337,601 108,954,552 PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 3,132,734,166 3,140,588,297 ii Balance with Bangladesh Bank and its agent bank(s) Prime Bank Limited (note-3a.2) 14,539,287,480 14,973,037,651 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 14,539,287,480 14,973,037,651 17,672,021,646 18,113,625,948 3a Cash of the Bank 3a.1 Cash in hand In local currency 3,035,272,918 2,969,745,031 In foreign currency 64,991,152 61,862,447 3,100,264,070 3,031,607,478 3a.2 Balance with Bangladesh Bank and its agent bank(s) In local currency 11,860,895,553 13,327,279,601 In foreign currency 1,980,765,411 882,931,213 13,841,660,963 14,210,210,815 Sonali Bank as agent of Bangladesh Bank (Local currency) 697,626,516 762,826,836 14,539,287,480 14,973,037,651 17,639,551,549 18,004,645,129 Reconciliation statements regarding Bangladesh Bank balance are given Annexure-A-1 3a.3 Cash Reserve Requirement (CRR) and Statutory Liquidity Ratio (SLR) Cash Reserve Requirement and Statutory Liquidity Ratio have been calculated and maintained in accordance with section 33 of Bank Companies Act, 1991 and MPD circular nos.01 & 02, dated June 23, 2014 and December 10, 2013 & DOS circular no.1 dated 19 January 2014 and MPD Circular no.01 dated April 03, 2018. The Cash Reserve Requirement on the Bank's time and demand liabilities at the rate of 5.5% has been calculated and maintained with Bangladesh Bank and 13% Statutory Liquidity Ratio for conventional banking and 5.50% Statutory Liquidity Ratio for Islamic banking , excluding CRR, on the same liabilities has also been maintained in the form of treasury bills, bonds and debentures including FC balance with Bangladesh Bank. Both the reserves maintained by the Bank are in excess of the statutory requirements, as shown below: a) Cash Reserve Requirement Required reserve 11,399,365,000 12,819,834,250 Actual reserve maintained (note-3a.2) 11,860,895,553 13,327,279,601 Surplus / (deficit) 461,530,553 507,445,351 b) Statutory Liquidity Ratio Required reserve 25,888,369,000 24,618,572,690 Actual reserve maintained- (note-3a.5) 30,425,462,235 28,335,052,502 Surplus / (deficit) 4,537,093,235 3,716,479,812

Total required reserve 37,287,734,000 37,438,406,940 Actual reserve held 42,286,357,788 41,662,332,104 Total surplus 4,998,623,788 4,223,925,164 3a.4 Maturity grouping of cash Payable on demand - - Up to 1 month 6,240,186,549 5,184,810,879 Over 1 month but not more than 3 months - - Over 3 months but not more than 6 months - - Over 6 months but not more than 1 year - - Over 1 year but not more than 5 years - - Over 5 years 11,399,365,000 12,819,834,250 17,639,551,549 18,004,645,129

262 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

3a.5 Held for Statutory Liquidity Ratio Cash in hand (note -3a.1) 3,100,264,070 3,031,607,478 Balance with Bangladesh Bank and its agent bank(s) (note-3a.2) 2,678,391,927 1,645,758,050 Government securities (note-6a.ii) 5,000,000,000 - Government bonds (note-6a.ii) 19,646,806,239 21,356,374,056 Bangladesh Bank bills (note-6a.ii) - 2,301,312,919 Debenture of HBFC (note-6a.ii) - - 30,425,462,235 28,335,052,502 4 Consolidated balance with other banks and financial institutions In Bangladesh Prime Bank Limited (note-4a.1) 10,174,200,785 7,380,647,955 Prime Bank Investment Limited 16,805,232 5,988,774 Prime Bank Securities Limited 133,701,566 98,508,380 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 10,324,707,583 7,485,145,109 Less: Inter-company transaction 24,296,336 13,678,732 10,300,411,247 7,471,466,377 Outside Bangladesh Prime Bank Limited (note-4a.2) 3,230,634,401 2,701,942,497 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore 52,263,514 - PBL Exchange (UK) Ltd. 17,400,313 32,063,881 PBL Finance (Hong Kong) Limited 27,256,749 39,242,956 3,327,554,977 2,773,249,334 13,627,966,225 10,244,715,711 4a Balance with other banks and financial institutions of the Bank In Bangladesh (note-4a.1) 10,174,200,785 7,380,647,955 Outside Bangladesh (note-4a.2) 3,230,634,401 2,701,942,497 13,404,835,186 10,082,590,452 4a.1 In Bangladesh Current account Agrani Bank Ltd., Principal Branch, Dhaka 437,202 438,502 Agrani Bank Ltd., Purana Paltan Branch, Dhaka - 87,989 Agrani Bank Ltd., Bhairab Bazar, Kishoregonj - - Agrani Bank Ltd., Mirzapur Branch, Mirzapur 12,502,496 64,033,648 Agrani Bank Ltd., Takerhat Branch 4,537,425 - AB Bank Ltd. Principal Branch, Dhaka - 2,997,108 Bank Al-Falah, Motijheel Branch 640,000,000 770,000,000 The City Bank Ltd, Dhaka 269,069 272,289 Dutch-Bangla Bank Ltd., Mirzapur Branch, Tangail - - Exim Bank Ltd., Motijheel Branch, Dhaka - 1,695,541 Islami Bank BD Ltd., Local Office, Dhaka 7,252,671 7,265,821 Islami Bank BD Ltd., Jhikorgacha - 569 Janata Bank Ltd., Local Office, Dhaka 3,325,786 3,351,936 Janata Bank Ltd., Ishwardi Branch 64,984 175,548 Janata Bank Ltd., Corporate Branch, Bogra - - National Bank Ltd., Rangpur Branch 42,755 43,905 Pubali Bank Ltd., Dhaka Stadium Branch, Dhaka - 1,179,599 Rupali Bank Ltd. ,Motijheel Branch, Dhaka - 3,110,214 Sonali Bank Ltd., Rangpur Branch 74,833,784 35,012,289 Sonali Bank Ltd., Sunamganj Branch - - Sonali Bank Ltd., Local Office, Dhaka 7,014,140 7,041,308 Sonali Bank Ltd., Narayanganj 23,915 3,248,044 Sonali Bank Ltd., Fakirapool Branch, Dhaka - 490,928 Sonali Bank Ltd., Faridpur Branch, Faridpur 2,449,013 16,054,398 Sonali Bank Ltd., Narsingdi Branch 2,158,438 11,570,045 Sonali Bank Ltd., Satkhira - - Standard Chartered Bank, Bangladesh 11,386,185 37,309,911 United Commercial Bank Ltd., Principal Branch, Dhaka - 7,436,592 Off-shore Banking Units 799,683,971 243,518,761 Uttara Bank Ltd., Local Office, Dhaka - 168,541 1,565,981,835 1,216,503,484 Less: Off-shore Banking Units 799,683,971 243,518,761 766,297,864 972,984,724

PRIME BANK 263 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

Special notice deposit accounts Agrani Bank Ltd., Principal Branch, Dhaka 364,633 355,201 Agrani Bank Ltd., Takerhat Branch - 7 ICB Islamic Bank Ltd., Principal Office, Motijheel, Dhaka 13,069 13,069 ICB Islamic Bank Ltd., Sylhet 16,786 16,786 Dutch-Bangla Bank Ltd., Local Office 875,130 844,817 Janata Bank Ltd., Local Office, Dhaka 6,432,920 6,232,963 National Bank Ltd., Narayanganj Branch, Dhaka - 5 Sonali Bank Ltd., Bhairab Bazar, Kishoregonj 950 950 Social Islami Bank Ltd., Principal Branch, Dhaka - 10,158 7,703,487 7,473,954 Savings accounts

Al Arafah Islami Bank Ltd., Dhaka 74,667 74,667 Bank Al Falah Ltd., Dhaka 39,011 39,011 Social Islami Bank Ltd., Principal Branch, Dhaka 85,756 75,599 199,434 189,277 Fixed deposits NCC Bank Limited 500,000,000 - Shahjalal Islami Bank Limited 1,000,000,000 BRAC Bank Limited 1,000,000,000 1,900,000,000 Bank Al-falah 100,000,000 - The City Bank Limited 1,700,000,000 - Dhaka Bank Limited - 500,000,000 Southeast Bank Limited 500,000,000 500,000,000 IFIC Bank Limited - 1,000,000,000 EXIM Bank Limited 3,600,000,000 1,200,000,000 Commercial Bank of Ceylon - 300,000,000 IDLC Finance Limited 500,000,000 - Delta Brac Housing Finance Corporation 500,000,000 1,000,000,000 9,400,000,000 6,400,000,000 10,174,200,785 7,380,647,955 4a.2 Outside Bangladesh (NOSTRO Accounts) Current account AB Bank Ltd., Mumbai, India 212,047,667 60,485,930 Banca Nazionale, del Lavoro, Rome, Italy - - Bank of Bhutan Phuentsholing, Bhutan 844,572 2,272,171 The Bank of Tokyo Mitsubishi Ltd., Japan 15,545,921 13,095,533 SMBC, Tokyo, Japan 16,355,245 31,559,036 Citibank N.A., Mumbai, India - - Citibank N.A., London , UK 9,317,124 6,610,183 Citibank N.A., New York, USA 1,875,244,629 861,507,600 Citibank N.A., New York, USA (Off-shore Banking) - - Commerz Bank AG, Frankfurt , Germany (EURO) 91,921,420 32,985,576 Commerz Bank AG, Frankfurt , Germany (US$) 22,015,572 29,696,789 Commonwealth Bank of Australia, Australia - 5,229,892 Habib American Bank, New York, USA 99,008,962 18,577,471 Habib Metropolitan Bank Ltd, Karachi 3,333,740 40,702,396 Habib Bank Ltd, Karachi - - Habib Allied International Bank PLC London - - HDFC Bank Limited, Kolkata, India 58,356,086 46,318,239 HSBC Bank USA, New York, USA - - ICICI Bank Ltd, Mumbai, India 14,929,683 56,163,133 Intesa Sanpaolo SPA, Milano, Italy 4,283,613 394,565 J. P. Morgan Chase Bank, New York 101,625,582 10,698,366 Korea Exchange Bank Seoul 8,169,962 3,780,822 Kookmin Bank, Seoul, South Korea 84,068 - Mashreq Bank PSC, New York, USA 102,835,022 16,827,636 Mashreq Bank PSC, Mumbai, India 58,901,096 69,152,037 National Westminister Bank, London, UK 71,731,747 65,243,763 The National Commercial Bank, Jeddah 44,234,984 10,676,322 Nepal Bangladesh Bank Ltd., Kathmandu, Nepal 1,286,480 1,694,191 NCB, Zeddah - - People's Bank, Colombo, Sri Lanka 19,326,191 20,185,925 Skandinaviska Enskilda Banken, Sweden 4,004,757 2,112,730 Sonali Bank, Kolkata, India 25,493,074 26,084,971 Standard Chartered Bank, Kolkata, India 50,855,337 74,277,724

264 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 Outside Bangladesh (NOSTRO Accounts) Current account Standard Chartered Bank, New York, USA 61,308,210 1,013,196,068 Standard Chartered Bank, Singapore 122,362,627 86,720,335 Standard Chartered Bank, Frankfurt, Germany 7,823,551 3,346,778 Unicredito Italiano SPA, Milano, Italy 36,362,801 4,995,003 Wells Fargo Bank N. A. Newyork 79,311,246 79,472,060 Zuercher Kantonal Bank, Zurich 11,713,433 7,879,253 (Annexure -A) 3,230,634,401 2,701,942,497 4a.3 Maturity grouping of balance with other banks and financial institutions Payable on demand 4,004,817,237 3,682,573,417 Up to 1 month 17,949 17,035 Over 1 month but not more than 3 months 9,400,000,000 6,400,000,000 Over 3 months but not more than 6 months - - Over 6 months but not more than 1 year - - Over 1 year but not more than 5 years - - Over 5 years - - 13,404,835,186 10,082,590,452 5 Money at call and short notice - 1,500,000,000 6 Consolidated investments Government Prime Bank Limited (note-6a) 24,646,806,239 23,657,686,975 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 24,646,806,239 23,657,686,975

Others Prime Bank Limited (note-6a) 1,399,611,720 149,457,283 Prime Bank Investment Limited 1,209,235,975 1,286,057,720 Prime Bank Securities Limited 732,616,847 786,934,185 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 3,341,464,542 2,222,449,188 27,988,270,780 25,880,136,163 6a Investments of the Bank i) Investment classified as per Bangladesh Bank Circular: Held for trading (HFT) 5,981,242,329 2,301,312,919 Held to maturity (HTM) 18,661,866,610 21,353,998,956 Other securities 1,403,309,020 151,832,383 26,046,417,958 23,807,144,258 ii) Investment classified as per nature: a) Government securities: 28 days treasury bills - - 91 days treasury bills 5,000,000,000 - 182 days treasury bills - - 364 days treasury bills - - 5 years treasury bills - - 5,000,000,000 - 30 days Bangladesh Bank bills - 2,301,312,919 Government bonds: Prize bonds 3,697,300 2,375,100 Government bonds - (note-6a.2) 19,643,108,939 21,353,998,956 19,646,806,239 21,356,374,056 24,646,806,239 23,657,686,975 b) Other investments: Alarafah Islami Bank Subordinated Bond interest rate @ 9.37% (note-6a.3) 1,002,082,222 - National Bank Subordinated Bond interest rate @ 11.50% (note-6a.4) - - Lanka Bangla Finance Zero coupon bond interest rate @ 11.50% (note-6a.5) - - Shares (note-6a.6) 397,529,498 149,457,283 1,399,611,720 149,457,283 26,046,417,958 23,807,144,258

PRIME BANK 265 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 6a.1 Maturity grouping of investments On demand - - Up to 1 month 6,869,361,474 2,835,989,800 Over 1 month but not more than 3 months 350,000,000 482,388,935 Over 3 months but not more than 6 months 856,702,690 983,406,822 Over 6 months but not more than 1 year 1,281,628,165 1,557,246,079 Over 1 year but not more than 5 years 10,567,335,899 11,222,086,597 Over 5 years 6,121,389,731 6,726,026,025 26,046,417,958 23,807,144,258 6a.2 Government bonds Name of the bonds HTM 3 years T & T bonds - - 2 years Bangladesh Government Islami Investment Bonds 800,000,000 800,000,000 5 years Bangladesh Government treasury bonds (9.66%) 204,145,443 204,094,416 10 years Bangladesh Government treasury bonds(8.75%-11.72%) 10,887,446,655 13,575,624,899 15 years Bangladesh Government treasury bonds(8.69%-14.00%) 4,982,734,122 4,986,920,433 20 years Bangladesh Government treasury bonds(9.10%-10.25%) 1,787,540,389 1,787,359,208 18,661,866,610 21,353,998,956 HFT 3 years T & T bonds - - 2 years Bangladesh Government treasury bonds (8.40%-8.75%) - - 5 years Bangladesh Government treasury bonds (6.24%-9.40%) 922,782,783 - 10 years Bangladesh Government treasury bonds (11.75%) 58,459,546 - 15 years Bangladesh Government treasury bonds(11.60%-12.30%) - - 20 years Bangladesh Government treasury bonds - - 981,242,329 - 19,643,108,939 21,353,998,956 6a.3 Alarafah Islami Bank Ltd. Subordinated Bond Opening balance - - Add: Investment during the year 1,000,000,000 Add: Interest accrued during the year 2,082,222 - Less: Principal redemption during the year - - Less: Interest received during the year - - Redeemable value 1,002,082,222.22 - 6a.4 National Bank Ltd. Subordinated Bond Opening balance - 82,600,391 Add: Interest accrued during the year - 8,871,253 Less: Principal redemption during the year - (81,920,000) Less: Interest received during the year - (9,551,644) Redeemable value - - 6a.5 Lanka Bangla Finance Zerocoupon Bond Opening balance - 31,089,440 Add: Interest accrued during the year - 2,242,560 Less: Principal redemption during the year - (24,518,222) Less: Interest received during the year - (8,813,778) Redeemable value - - 6a.6 Investment in shares Quoted Activefine 8,234,068 - KPCL 8,156,284 - UPGDCL 11,849,780 - DESCO 19,262,511 19,262,511 Dhaka Bank Ltd. - - Eastern Bank Ltd. - - Jamuna Bank Ltd. - - Mutual Trust Bank Ltd. - - National Bank Ltd. 27,970,098 27,970,098 One Bank Ltd. - - Uttara Bank Ltd. 37,009,980 37,009,980 112,482,721 84,242,590 Unquoted Central Depository Bangladesh Limited (CDBL) 15,694,430 15,694,430 Investment in SWIFT 4,184,430 4,184,430 Market Stabilization Fund 5,000,000 5,000,000 Star Ceramics Preference Share 20,167,917 40,335,833 Share Money Deposit (Golden Harvest Ice Cream Ltd) 240,000,000 - 285,046,776 65,214,693 (Annexure -B) 397,529,498 149,457,283

266 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka

2018 2017 6a.7 (i) Disclosure regarding outstanding Repo Counterparty name Agreement date Reversal date Amount - - Total - 6a.7 (ii) Disclosure regarding outstanding Reverse Repo Counterparty name Agreement date Reversal date Amount AB Bank Limited 27-December-2018 01-January-2019 990,968,699 Total 990,968,699 6a.8 Disclosure regarding Overall transaction of Repo and Reverse Repo Minimum Maximum Daily average Counterparty name Outstanding outstanding outstanding during the year during the year during the year

Securities sold under Repo With Bangladesh Bank - - - With other Banks & FIS Securities purchased under Reverse Repo From Bangladesh Bank - - - From other Banks & FIS 406,409,307 5,769,478,177 1,473,340,395 7 Consolidated loans, advances and lease / Investments Prime Bank Limited (note-7a) 196,456,187,502 183,593,663,315 Prime Bank Investment Limited 5,555,902,000 5,559,563,333 Prime Bank Securities Limited 209,100,070 303,394,498 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 202,221,189,572 189,456,621,146 Less: Inter-company transactions 5,635,048,381 5,390,381,459 196,586,141,191 184,066,239,687 Consolidated bills purchased and discounted (note-8) 11,609,817,551 16,552,939,609 208,195,958,743 200,619,179,296 7a Loans, advances and lease / investments of the Bank i) Loans, cash credits, overdrafts, etc. Inside Bangladesh Secured overdraft / Quard against TDR 34,158,050,229 31,689,318,860 Cash credit / Murabaha 25,398,766,903 27,491,571,481 Loans (General) 65,419,172,348 43,307,835,504 House building loans 2,135,880,724 2,377,824,399 Loans against trust receipt 9,898,090,701 7,549,221,685 Payment against document 10,570,751 5,473,814 Retail loan 15,647,508,179 16,502,624,225 Lease finance / Izara (note - 7a.2) 4,216,164,877 4,574,176,766 Credit card 889,193,726 943,911,975 Hire purchase 11,625,437,610 8,258,639,171 Other loans and advances 27,057,351,455 40,893,065,436 196,456,187,502 183,593,663,315 Outside Bangladesh - - 196,456,187,502 183,593,663,315 ii) Bills purchased and discounted (note-8a) Payable Inside Bangladesh Inland bills purchased 5,976,457,767 10,305,266,336 Payable Outside Bangladesh Foreign bills purchased and discounted 3,376,873,447 4,423,799,140 9,353,331,214 14,729,065,476 205,809,518,716 198,322,728,791

PRIME BANK 267 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 7a.1 Residual maturity grouping of loans, advances and lease / investments including bills purchased and discounted Repayable on demand - - Up to 1 month 29,157,534,079 23,144,262,450 Over 1 month but not more than 3 months 39,103,808,556 31,295,326,603 Over 3 months but not more than 1 year 57,799,704,441 83,989,675,643 Over 1 year but not more than 5 years 52,666,655,839 45,614,227,622 Over 5 years 27,081,815,801 14,279,236,473 205,809,518,716 198,322,728,791 7a.2 Lease finance / Izara Lease rental receivable within 1 year 8,188,288 244,836,425 Lease rental receivable within 5 years 3,628,901,926 3,798,348,175 Lease rental receivable after 5 years 579,340,035 638,973,778 Total lease / Izara rental receivable 4,216,430,249 4,682,158,378 Less: Unearned interest receivable 265,371 107,981,612 Net lease / Izara finance 4,216,164,877 4,574,176,766 7a.3 Loans, advances and lease / investments under the following broad categories Loans 136,899,370,370 124,412,772,975 Cash credits 25,398,766,903 27,491,571,481 Overdrafts 34,158,050,229 31,689,318,860 196,456,187,502 183,593,663,315 Bills purchased and discounted (note-8) 9,353,331,214 14,729,065,476 205,809,518,716 198,322,728,791 7a.4 Loans, advances and lease / investments on the basis of significant concentration including bills purchased and discounted. a) Loans, advances and lease / investments to Directors of the Bank - - b) Loans, advances and lease / investments to Chief Executive and other senior executives 1,585,332,990 1,636,356,279 c) Loans, advances and lease / investments to customer groups: i) Commercial lending 21,402,828,923 17,627,433,722 ii) Export financing 12,646,307,936 10,129,882,686 iii) House building loan 2,135,880,724 2,377,824,399 iv) Retail loan 15,647,508,179 16,502,624,225 v) Small and medium enterprises 21,120,427,019 22,231,588,927 vi) Special program loan - - vii) Staff loan 5,087,552 7,732,483 viii) Industrial loans / investments detail (note-7a.4 d) 116,741,211,670 109,857,118,491 ix) Other loans and advances 14,524,933,723 17,952,167,579 204,224,185,726 196,686,372,513 205,809,518,716 198,322,728,791 d) Details of Industrial loans / investments i) Agricultural industries 3,560,515,101 6,283,463,091 ii) Textile industries 18,031,708,413 6,011,362,136 iii) Food and allied industries 6,490,120,166 10,289,786,237 iv) Pharmaceutical industries 4,512,883,566 3,885,498,731 v) Leather, chemical, cosmetics, etc. 1,599,424,308 1,083,580,056 vi) Tobacco industries 704,309,679 847,605,401 vii) Cement and ceramic industries 4,677,228,243 3,941,484,392 viii) Service Industries 23,230,202,318 25,641,663,347 ix) Transport and communication industries 5,334,170,299 5,116,391,088 x) Other industries including bills purchase and discounted 48,600,649,576 46,756,284,011 116,741,211,670 109,857,118,491

268 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

7a.5 Loans, advances and leases / investments -geographical location-wise Inside Bangladesh Urban Dhaka Division 164,990,041,043 149,538,338,568 Chittagong Division 24,240,077,235 29,925,870,752 Khulna Division 3,651,277,404 5,471,505,539 Rajshahi Division 4,586,418,614 4,779,369,324 Barisal Division 104,612,625 146,758,907 Sylhet Division 1,497,137,414 1,719,183,890 Rangpur Division 1,929,889,391 1,846,482,273 200,999,453,727 193,427,509,253 Rural Dhaka Division 1,967,700,720 2,156,302,898 Chittagong Division 1,182,314,336 1,127,151,461 Khulna Division 76,784,961 78,185,093 Rajshahi Division 1,162,391,550 1,025,031,309 Rangpur Division 161,132,665 153,584,182 Sylhet Division 259,740,757 354,964,595 4,810,064,989 4,895,219,538 Outside Bangladesh - - 205,809,518,716 198,322,728,791

7a.6 Sector-wise loans, advances and lease / investments including bills purchased and discounted Public sector 50,475,310 342,952,738 Co-operative sector - - Private sector 205,759,043,407 197,979,776,053 205,809,518,716 198,322,728,791

7a.7 Details of pledged collaterals with the Bank Collateral of movable / immovable assets 103,698,747,416 88,446,175,401 Local banks and financial institutions guarantee 20,199,488,160 6,232,329,801 Government guarantee - - Foreign banks guarantee - 1,778,513,368 Export documents 4,082,620,864 1,073,179,498 Fixed deposit receipts 7,774,653,686 17,136,628,698 FDR of other banks 10,314,677 2,733,767,420 Government bonds - 70,873,554 Personal guarantee 17,988,201,327 8,826,197,321 Other securities 52,055,492,585 72,025,063,730 205,809,518,716 198,322,728,791

PRIME BANK 269 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

7a.8 Details of large loans, advances and lease / investments Number of clients with outstanding amount and classified loans / investments exceeding 10% of total capital of the Bank. Total capital of the Bank was Taka 38,259.02 million as at 31 December 2018 (Taka 32,250.88 million in 2017).

Number of clients 46 29 Amount of outstanding advances / investments 132,469,800,000 117,967,600,000 Amount of classified advances / investments - - Measures taken for recovery N/A N/A

Outstanding (Tk. in million) Total Total Name of clients Funded Non-funded (Tk. in million) (Tk. in million) Abdul Monem Group 364.80 865.80 1,230.60 3,350.00 ACI Group 2,809.10 2,204.80 5,013.90 4,861.70 Annata Apparel Group 1,396.40 1,733.90 3,130.30 3,170.60 Abul Khair Group 2,012.90 3,610.30 5,623.20 4,474.10 BSRM Group 896.70 3,470.00 4,366.70 4,405.30 BSRM Limited 517.90 250.30 768.20 947.50 BRAC 4,648.40 21.00 4,669.40 4,226.70 BSM Group - - - 1,223.40 BSA Group 81.80 488.60 570.40 150.70 BPC Group - 90.80 90.80 1,155.30 BRB Group 140.50 535.60 676.10 2,726.40 Birds Group 1,426.40 809.50 2,235.90 - City Group 1,512.70 1,344.70 2,857.40 4,685.90 Confidence Group 2,183.20 4,457.30 6,640.50 5,781.10 CPCL Group 146.50 990.50 1,137.00 - Dipon Group 1,257.70 616.50 1,874.20 1,367.10 DBL Group 982.30 191.40 1,173.70 - Energypac Group - - - 1,179.10 Envoy Group 595.70 270.80 866.50 554.70 FGS Group 1,097.70 1,930.50 3,028.20 - Globe Group - - - 2,015.70 GMS Group 1,146.50 1,646.50 2,793.00 622.90 Hameem Group 1,291.60 924.70 2,216.30 1,402.00 Index Group 1,616.50 3,759.00 5,375.50 - Kabir Group 2,824.90 1,453.10 4,278.00 4,155.10 KDS Group 2,202.60 1,548.90 3,751.50 3,775.40 Labib Group 1,844.20 1,018.60 2,862.80 2,988.90 Meghna Group - 4,722.80 4,722.80 4,800.60 Molla Group 2,085.00 1,327.20 3,412.20 3,310.00 Monico Group 144.70 982.70 1,127.40 - Nasir Group 2,538.90 706.30 3,245.20 4,283.60 Noman Group 2,441.20 850.90 3,292.10 3,075.60 NZ Group 1,511.20 622.80 2,134.00 - NDE Group 905.30 1,778.70 2,684.00 3,011.20 Prime Bank Investment Ltd & Prime 3,420.10 100.00 3,520.10 3,711.90 Bank Securities Ltd. Pran-RFL Group 2,087.20 1,636.50 3,723.70 4,018.20 Pakiza Group 2,293.40 80.40 2,373.80 2,307.40 Reedisha Group 704.60 944.00 1,648.60 1,404.00 RB Group 1,471.70 1,056.00 2,527.70 2,053.40 Square Group 224.40 700.60 925.00 1,180.70 Seacom Group 555.20 1,364.80 1,920.00 - Standard Group 5,394.20 2,270.50 7,664.70 3,576.80 Summit Group 1,331.10 4,869.40 6,200.50 10,608.70 TK Group 969.60 2,370.40 3,340.00 2,493.00 Transcom Group 1,612.60 1,325.80 2,938.40 1,612.90 Toma Group 1,399.70 536.60 1,936.30 3,462.10 Uttara Group 25.80 2,258.50 2,284.30 2,743.50 Youth Group 1,160.20 559.70 1,719.90 - Viyellatex Group 889.90 1,009.10 1,899.00 1,094.40 66,163.00 66,306.80 132,469.80 117,967.60

270 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

7a.9 Large loan restructuring i) The outstanding liability against the restructured Loan (General) of Jamuna Denims Limited stands at BDT 170,54,61,356.43 as on 31.12.2018. Earlier, the said liability was restructured on 19.11.2015 with the approval of Bangladesh Bank vide their letter dated 02.09.2015 for a period of 12 years (including 12 months’ moratorium period) under the purview of BRPD Circular No. 04 dated 29.01.2015 on “Large Loan Restructuring”. ii) The outstanding liabilities against the restructured Loan (General) of S. A. Oil Refinery Limited and Samannaz Super Oil Limited amounting to BDT 75,92,08,244.16 have been written-off on 30.11.2018. Earlier, the said liabilities were restructured on 15.02.2016 with the approval of Bangladesh Bank vide their letter dated 27.09.2015 for a period of 6 years (including 12 months’ moratorium period) under the purview of BRPD Circular No. 04 dated 29.01.2015 on “Large Loan Restructuring”. 7a.10 Particulars of loans, advances and lease / investments i) Loans/investments considered good in respect of which the Bank is fully secured 128,320,244,922 120,031,688,735 ii) Loans/investments considered good against which the Bank holds no security other than the debtors' personal guarantee 20,717,880,162 18,886,692,414 iii) Loans/investments considered good secured by the personal undertaking

of one or more parties in addition to the personal guarantee of the debtors 56,771,393,633 59,404,347,642 iv) Loans/investments adversely classified; provision not maintained there against - - 205,809,518,716 198,322,728,791 v) Loans / investments due by directors or officers of the banking company or any of them either separately or jointly with any other persons 1,590,420,542 1,644,088,762 (note-7a.4b+7a.4c.vii) 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 - - vii) Maximum total amount of advances / investments, including temporary advances 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. 1,590,420,542 1,644,088,762 viii) 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 - - ix) Due from banking companies - - x) Classified loans and advances / investments a) Classified loans and advances / investments on which interest has not been charged (note-7a.11) 12,685,766,955 10,799,049,005 b) Provision on classified loans and advances / investments 4,567,284,783 4,269,942,337 (for details see note-14a.3 & 14a.5) c) Provision kept against loans / investments classified as bad debts 3,489,303,892 4,116,989,852 d) Interest credited to Interest Suspense Account (note-14a.6) 4,026,761,377 4,693,505,469 xi) Cumulative amount of written off loans / investments Opening Balance 18,236,775,825 15,428,923,708 Amount written off during the year 3,941,444,000 3,378,479,304 22,178,219,825 18,807,403,012 Amount realised against loans / investments previously written off 267,057,851 570,627,187 21,911,161,974 18,236,775,825 The amount of written off / classified loans / investments for which law suits have been filed (note-7a.14) 31,968,454,595 27,933,517,037

PRIME BANK 271 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

7a.11 Classification of loans, advances and lease / investments Unclassified Standard including staff loan 184,598,901,214 183,760,782,299 Special mention account (SMA) 8,524,850,547 3,762,897,487 193,123,751,761 187,523,679,786 Classified Sub-standard 1,372,812,160 1,263,564,872 Doubtful 2,603,299,522 441,392,332 Bad / Loss 8,709,655,272 9,094,091,802 12,685,766,955 10,799,049,005 205,809,518,716 198,322,728,791 7a.12 Particulars of required provision for loans, advances and lease / investments Base Rate Status for provision (%) General Provision Loans/investments 193,123,751,761 *Various 3,700,870,137 4,635,009,488 (Including SMA) Interest receivable on loans/ 629,742,526 1 6,297,425 6,978,955 investments (Less: Staff loan) 3,707,167,562 4,641,988,443

*General provision is kept @ 1% on general loans and advances / investments and 0.25% on small enterprise financing, 2% on certain other types of lending and 5% on consumer financing.

Base Rate Status for provision (%) Specific provision Sub-standard 817,140,224 20 163,428,045 92,552,409 Doubtful 1,820,512,780 50 910,256,390 56,575,819 Bad / Loss 3,489,303,892 100 3,489,303,892 4,116,989,852 4,562,988,327 4,266,118,080 Required provision for loans, advances and lease / investments 8,270,155,889 8,908,106,523 Total provision maintained (note - 14, 14a3 & 14a.5) 8,293,445,807 8,915,603,361 Excess / (short) provision at 31 December 2018 23,289,918 7,496,838

7a.13 Particulars of required provision on Off-balance Sheet Exposures Base Rate for provision 1% Acceptances and endorsements 52,944,055,583 529,440,556 497,217,973 Letter of guarantee 57,826,844,429 578,268,444 729,664,353 Letter of credit 38,072,832,383 380,728,324 341,129,383 Bills for collection - - 107,668,519 Forward assets purchased and forward deposits placed 2,095,175,884 20,951,759 2,408,235 Required provision on Off-balance Sheet Exposures 1,509,389,083 1,678,088,462 Total provision maintained (note - 14a.4) 1,513,090,000 1,678,090,000 Excess / (short) provision at 31 December 2018 3,700,917 1,538

272 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 7a.14 Suits filed by the Bank (Branch wise details) Agrabad Branch 1,716,337,121 692,305,532 Aganagar SME Branch 1,088,682 - Adamjee EPZ Branch 4,666,098 4,082,489 Asad Gate Branch 992,814,700 193,769,474 Ashugonj Branch 1,506,854 1,506,854 Ashulia Branch 43,619,421 7,494,867 Banani Branch 1,325,720,369 29,396,548 Baridhara Branch 4,628,918 4,628,918 Baneswar Branch 30,056,919 19,606,885 Bangshal Branch 70,768,397 64,317,413 Banshkhali Branch 1,158,246 647,875 Barisal Branch 545,085 545,085 Bashaboo Branch 151,674,495 8,477,376 Barelekha Branch 690,540 616,180 Bashundhara Branch 12,463,323 12,643,147 Beani Bazar Branch - - Bhairab Bazar Branch 27,622,000 18,128,714 Biswanath Bracnh 2,659,792 904,834 Bogra Branch 522,870,322 158,028,634 Boalmari Branch 144,527 811,952 Bijoynagar Branch 4,554,562 3,081,752 Head Office, FAD,FMD,CBD & Card 154,074,816 1,856,974,074 Chaumuhani Branch 52,736,750 3,560,816 Chaudagram Branch 5,099,438 2,914,012 Chapai Nawabgonj Branch 2,827,406 - Comilla Branch 25,432,722 3,314,780 Court Road Branch 4,474,906 6,660,446 Cox's Bazar Branch 25,058,342 22,290,295 Damudya Branch 557,489 1,148,617 Dhanmondi Branch 9,517,290 6,892,292 Dagonbhuiyan Branch 3,078,598 - Dinajpur Branch 18,214,219 29,458,667 Elephant Road Branch 1,403,884,142 1,297,155,209 Fatickchari Branch 1,481,393 553,169 Faridpur Branch 114,679,187 141,488,899 Foreign Exchange Branch 48,874,585 149,220,985 Ganakbari Branch 3,600,000 4,100,000 Garib-e-Newaz Branch 14,527,992 13,747,889 Gulshan Branch 1,976,883,575 1,761,037,856 Hajigonj Branch 116,839 1,424,380 Halishahar Branch 16,415,954 20,097,408 Hathazari Branch 2,166,294 3,766,490 Hobiganj Branch 3,717,961 735,107 Hemayetpur Branch 500,000 - IBB, Amberkhana Branch 8,445,243 9,434,520 IBB, Dilkusha Branch 1,487,789,799 1,496,574,340 IBB, Mirpur Branch 377,319,559 447,801,558 IBB, O.R. Nizam Road Branch 484,514,975 481,498,474 IBB, Pahartali Branch 96,490,039 100,594,841 Ibrahimpur Branch 1,169,950 2,852,450 Ishwardi Branch 18,932,725 19,276,422 Islampur Branch - 738,175 Jamalpur Branch 7,051,256 2,434,493 Jatrabari Branch 462,355 6,807,034 Jessore Branch 518,194,472 1,474,495,409 Joypara Branch 1,399,000 1,399,000 Joydevpur Chowrasta Branch - - Joypurhat Branch 12,287,551 9,489,398

PRIME BANK 273 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

Suits filed by the Bank (Branch wise details) Jikorgacha Branch 760,282 1,463,573 Jubilee Road Branch 3,415,115,501 3,220,024,882 Kadomtoli Branch 1,639,593 1,639,593 Kawran Bazar Branch 233,428,706 89,514,577 Khatunganj Branch 1,796,533,826 1,773,622,169 Khulna Branch 1,296,416,094 1,297,403,290 Khajanagar SME Branch 497,250 - Kishoreganj 4,514,158 4,514,158 Kustia Branch 63,144,139 123,452,204 Laldighi East Branch 1,339,297,606 1,342,446,934 Madhabdi Branch 87,253,576 48,788,555 Madhabpur Branch 4,508,531 1,057,930 Mirpur-1 Branch 119,690,010 141,907,012 Motijheel Branch 5,528,368,125 4,832,966,325 Modhukhali Branch 195,443 - Mohakhali Branch 487,970,876 484,640,847 Mouchak Branch 819,264,039 21,915,354 Modhunaghat Branch 425,000 2,030,545 Moulvibazar Branch, Dhaka 110,060,588 84,005,965 Muradpur Branch 4,195,460 2,197,743 Mymensingh Branch 60,810,381 99,296,368 Nabiganj Branch 37,031,429 39,831,964 Natore Branch 49,790,106 6,835,670 Naogaon Branch 36,576,050 33,365,892 Narayanganj Branch 44,657,833 44,657,833 New Eskaton Branch 113,102,974 1,359,559 Oxygen More Branch 4,611,696 3,089,696 Off-shore Banking Unit, CEPZ 905,255,530 905,255,530 Pabna Branch 24,848,846 10,742,582 Pallabi Branch 51,699,039 15,548,584 Panthapath Branch 1,057,484,729 1,058,406,742 Pragati Sarani Branch 21,733,216 14,061,665 Prabortak More Branch 30,599,697 25,613,821 Rajshahi Branch 789,557,450 217,126,312 Rangpur Branch 9,289,604 3,431,513 Retail Banking Division 255,835,320 240,292,691 Ring Road Branch 216,898,203 226,611,409 Satkhira Branch 1,377,625 840,146 Sat Masjid Road Branch 170,811,800 165,937,724 Savar Branch 335,087,706 236,229,343 SBC Tower Branch 230,637,073 171,847,201 Sherpur Branch 176,797 - Shibpur Branch 18,432,371 2,588,636 Simrail Branch 10,197,144 10,070,627 Sirajdikhan Branch 6,154,700 6,469,700 SME Banking, Dhaka 117,824,556 115,291,681 Sunamganj Branch 1,760,503 - Sremangal Branch 38,524,232 39,135,560 Sylhet Branch 4,571,214 4,571,214 Subidbazar Branch, Sylhet 54,513,305 61,693,478 Tangail Branch 2,820,796 3,146,348 Takerhat SME Branch 533,465 - Tajpur Branch 8,117,901 709,840 Tongi Branch 9,022,266 9,022,266 Uposhahar Branch, Sylhet 253,000 253,000 Uttara Branch 27,491,957 31,825,048 Vatiari Branch 83,340,683 49,775,104 Wari Bracnh 6,177,400 4,058,600 31,968,454,595 27,933,517,037

274 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

8 Consolidated bills purchased and discounted Prime Bank Limited (note-8a) 9,353,331,214 14,729,065,476 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited 2,256,486,337 1,823,874,133 11,609,817,551 16,552,939,609 8a Bills purchased and discounted Payable in Bangladesh 5,976,457,767 10,305,266,336 Payable outside Bangladesh 3,376,873,447 4,423,799,140 9,353,331,214 14,729,065,476 8a.1 Maturity grouping of bills purchased and discounted Payable within one month - 3,425,855,329 Over one month but less than three months - 6,799,206,546 Over three months but less than six months - 3,966,558,122 Six months or more - 537,445,480 - 14,729,065,476 9 Consolidated fixed assets including premises, furniture and fixtures Prime Bank Limited (note-9a) 6,943,348,521 6,434,047,671 Prime Bank Investment Limited 34,308,053 30,507,630 Prime Bank Securities Limited 10,584,742 9,902,298 Prime Exchange Co. Pte. Ltd., Singapore 1,954,177 3,702,920 PBL Exchange (UK) Ltd. 6,103,108 8,707,332 PBL Finance (Hong Kong) Limited 205,415 173,360 6,996,504,016 6,487,041,211 9a Fixed assets including premises, furniture and fixtures of the Bank Property, Plant & Equipment Land 3,719,444,788 3,719,444,788 Building 1,861,157,701 1,725,237,651 Furniture and fixtures 1,090,342,100 986,584,385 Office equipment and machinery 2,343,057,650 2,004,869,646 Vehicles 443,738,007 424,505,118 Library books 1,820,037 1,820,037 9,459,560,283 8,862,461,626 Less: 2,800,589,304 2,538,930,494 Accumulated depreciation 6,658,970,979 6,323,531,132 Intangibles assets Software-core banking 565,524,078 353,144,552 Software-ATM 57,892,614 43,212,614 Cost of intangibles assets 623,416,692 396,357,165 Less: Accumulated amortization 339,039,150 285,840,626 284,377,542 110,516,539 Net book value at the end of the year (See annexure-C for detail) 6,943,348,521 6,434,047,671

The fixed assets recognised and measurements policy are described in note 2.2.4

PRIME BANK 275 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 10 Consolidated other assets Prime Bank Limited (note-10a) 23,836,555,730 22,903,009,700 Less: Investment in Prime Bank Investment Limited (note-10a.5) (2,999,999,940) (2,999,999,940) Less: Investment in Prime Bank Securities Limited (note-10a.5) (712,500,000) (712,500,000) Less: PBIL investment in Prime Bank Securities Ltd.(below) (37,500,000) (37,500,000) Less: Investment in PBL Exchange (UK) Ltd. (note-10a.5) (56,352,624) (56,352,624) Less: Investment in Prime Exchange Co. Pte. Ltd., Singapore (note-10a.5) (10,993,235) (10,993,235) Less: Investment in PBL Finance (Hong Kong) Limited (note-10a.5) (34,365,722) (34,365,722) Less: Dividend of Prime Bank Investment Limited (note-10a) - - Less: Interest receivable from PBL Finance (Hong Kong) Limited - - Less: Due from Investment in PBL Finance (Hong Kong) Limited - - 19,984,844,209 19,051,298,179 Prime Bank Investment Limited (investment in PBSL) 37,500,000 37,500,000 Prime Bank Investment Limited 97,132,285 101,594,607 Prime Bank Securities Limited 141,520,263 96,018,372 Prime Exchange Co. Pte. Ltd., Singapore 5,145,002 5,204,094 PBL Exchange (UK) Ltd. 6,829,618 7,347,628 PBL Finance (Hong Kong) Limited 37,131,779 30,779,137 325,258,948 278,443,839 20,310,103,156 19,329,742,018 10a Other assets of the Bank Stationery and stamps 50,406,794 38,027,828 Exchange adjustment account 13,996,548 - Investment in subsidiary (note-10a.5) 3,814,211,521 3,814,211,521 Off-shore Banking Units 8,886,688,000 9,360,494,044 Due from Off-shore Banking Units 292,652,897 248,339,125 Prepaid expenses 44,754,439 20,129,129 Interest / profit receivable on loan (note-10a.1) 884,460,124 963,842,394 Interest receivable on Govt. securities 582,323,336 614,889,406 Advance deposits and advance rent 284,080,601 355,000,715 Prepaid expenses against house furnishing 11,344,418 8,460,103 Balance with PBSL 71,760,010 - Branch adjustments account 18,517,480 18,516,520 Suspense account (note-10a.2) 244,727,208 283,396,487 Encashment of PSP / BSP 997,709,958 457,207,387 Advance income tax paid (note-10a.6) 16,673,978,174 16,182,416,743 Credit card 96,028,502 92,911,810 Sundry assets (note-10a.3) 48,256,616 53,999,656 33,015,896,627 32,511,842,870 Less: Off-shore Banking Units 9,179,340,897 9,608,833,170 23,836,555,730 22,903,009,700 10a.1 Interest / profit receivable: Amount represents interest / profit receivable on loans, advances and lease / investments, interest on term placement, Government securities & foreign currency balance, etc. 10a.2 Suspense account includes TT / DD in transit, advance against Land/ Building, advance against new branch, advance against TA/ DA, printing and stationery, postage, suspense- others, clearing adjustment account etc. 10a.3 Sundry assets Protested Bills 17,978,649 17,827,354 Islamic Transit Account 5,894,000 2,876,066 Others 24,383,967 33,296,235 48,256,616 53,999,656 10a.4 Particulars of required provision for other assets Rate Purchase of credit card bills 71,000,000 100% 71,000,000 71,000,000 Protested bills 17,978,649 100% 17,978,649 17,827,354 Legal Expenses 2,139,894 100% 2,139,894 1,170,272 Others 166,253,245 100% 166,253,245 114,085,282 Required provision for other assets 257,371,788 204,082,908 Total provision maintained (note - 14a.8) 257,383,148 204,083,148 Excess / (short) provision at 31 December 11,359 239

276 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

10a.5 Investment in subsidiaries Prime Bank Investment Limited 2,999,999,940 2,999,999,940 Prime Bank Securities Limited 712,500,000 712,500,000 Prime Exchange Co. Pte. Ltd., Singapore 10,993,235 10,993,235 PBL Exchange (UK) Ltd. 56,352,624 56,352,624 PBL Finance (Hong Kong) Limited 34,365,722 34,365,722 3,814,211,521 3,814,211,521

As per the provision of the Exchange Demutualization Act-2013 and in accordance with the Bangladesh Security Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange Ltd. (DSE) alloted total 72,15,106 ordinary shares at a face value of Tk 10.00 each and Chittagong Stock Exchange Ltd. (CSE) alloted total 42,87,330 ordinary Shares at face value of Tk 10.00 each against the Membership of DSE and CSE respectively. Out of the above DSE transferred 2,886,042 shares and CSE transferred 1,714,932 shares directly to the credit of the Beneficiary Owner's account of the company. The remaining shares were credited to blocked accounts as per provisions of the Exchange Demutualization Act, 2013. As there is no active market for shares of DSE and CSE, we have shown the value at original cost as investment. However, during the year 31 December 2018 DSE sold 25% of DSE's shares to strategic investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) Consortium which equivalents to 18,03,777 no. of shares. As such current holding of Prime Bank Securities Ltd. in DSE's shares came down to 54,11,330 no. of shares. 10a.6 Advance income tax paid Opening Balance 16,182,416,743 15,594,901,282 Add: Paid during the year 491,561,431 587,515,461 16,673,978,174 16,182,416,743 11 Non-Banking Assets Name of Parties Possession date M/s Rima Flour Mills 18.03.2014 124,438,400 124,438,400 M/s Ripon Motors 18.03.2014 51,902,240 51,902,240 M/s Megna Bangla Trade 28.04.2014 18,399,360 18,399,360 M/s Ampang Food Industries 28.04.2014 25,760,640 25,760,640 220,500,640 220,500,640

The Bank has been awarded ownership of the mortgage properties of the above mentioned parties according to the verdict of the Honorable Court in accordance with the section 33(7) of “Artharin Adalat-2003”. An amount of Tk.220,500,640/- is reported in the financial statements as Non -Banking assets. The value of Non-Banking Assets has been determined on the basis of valuation report of an Independent valuer. 12 Consolidated borrowings from other banks, financial institutions and agents Prime Bank Limited (note-12a) 33,944,516,693 22,087,479,113 Prime Bank Investment Limited 3,026,635,625 3,228,886,961 Prime Bank Securities Limited 393,452,756 433,499,527 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited 2,214,960,000 1,778,513,368 39,579,565,074 27,528,378,969 Less: Inter-company transactions 5,635,048,381 5,390,381,459 33,944,516,693 22,137,997,510

12a Borrowings from other banks, financial institutions and agents of the Bank In Bangladesh (note-12a.1) 18,612,725,751 8,728,345,506 Outside Bangladesh (note-12a.2) 15,331,790,942 13,359,133,607 33,944,516,693 22,087,479,113

12a.1 In Bangladesh Priem Bank Subordinated Bond 9,000,000,000 2,500,000,000 Financial Sector Support Program 1,079,099,944 762,068,738 EDF borrowings from Bangladesh Bank 8,439,710,789 5,397,210,402 Refinance against SME loan from Bangladesh Bank 93,915,018 69,066,366 18,612,725,751 8,728,345,506

PRIME BANK 277 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 12a.2 Outside Bangladesh Emirates NBD, Dubai, UAE - 573,524,500 Emirates Islami Bank - 1,930,032,752 Abudhabi Commercial Bank 1,468,250,000 Bank MUSCAT - 855,696,900 Bank of Montreal, CANADA 1,187,185,000 - ICD, GULF 367,805,022 - HDFC Bank, Mumbai 776,075,000 First Gulf Bank, UAE - - First Abu Dhabi Bank 1,119,393,800 643,406,000 FMO, Netherlands 699,166,666 1,378,333,333 Noor Bank Limited 570,520,000 827,000,000 SCB, Singapore 3,408,830,455 691,195,022 SCB, Hong Kong - 1,293,924,200 National Bank of Rash-Al Khaima 167,800,000 481,065,900 Commercial Bank of Qatar 1,037,004,000 - International Finance Corporation 4,529,761,000 4,684,955,000 15,331,790,942 13,359,133,607 12a.3 Security against borrowings from other banks, financial institutions and agents Secured (Treasury bills) - - Unsecured 33,944,516,693 22,087,479,113 33,944,516,693 22,087,479,113 12a.4 Maturity grouping of borrowings from other banks, financial institutions and agents Payable on demand - - Up to 1 month 12,086,159,157 6,159,279,140 Over 1 month but within 3 months 3,791,928,339 4,940,887,452 Over 3 months but within 1 year 9,454,562,558 8,918,246,155 Over 1 year but within 5 years 5,700,000,000 2,069,066,366 Over 5 years 2,911,866,639 - 33,944,516,693 22,087,479,113 13 Consolidated deposits and other accounts Current deposits and other accounts Prime Bank Limited (note-13a.1.c) 32,742,551,758 33,196,233,861 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 32,742,551,758 33,196,233,861 Less: Inter-company transactions 22,060,841 13,533,538 32,720,490,917 33,182,700,323 Bills payable Prime Bank Limited (note-13a.1.c) 3,045,875,590 4,212,571,458 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 3,045,875,590 4,212,571,458 Savings bank / Mudaraba savings deposits Prime Bank Limited (note-13a.1.c) 41,478,074,475 38,397,699,341 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 41,478,074,475 38,397,699,341 Term / Fixed deposits Prime Bank Limited (note-13a.1.c) 120,251,223,734 123,207,471,241 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 120,251,223,734 123,207,471,241 Less: Inter-company transactions 2,235,495 145,194 120,248,988,239 123,207,326,047 197,493,429,221 199,000,297,168

278 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

13a Deposits and other accounts of the Bank Deposits from banks (note -13a.1.a) 3,554,678,702 2,172,343,252 Deposits from customers (note-13a.1.b) 193,963,046,856 196,841,632,649 197,517,725,557 199,013,975,901

13a.1 a) Deposits from Banks Current deposits and other accounts 5,178,979 18,742,909 Savings bank / Mudaraba savings deposits 762,515,592 711,519,437 Special notice deposits 285,077,673 940,174,448 Fixed deposits 2,501,906,458 501,906,458 3,554,678,702 2,172,343,252 b) Customer Deposits i) Current deposits and other accounts Current / Al-wadeeah current deposits 14,344,791,527 15,235,757,391 Foreign currency deposits 6,348,181,790 6,458,348,587 Security deposits 7,945,616 8,362,116 Sundry deposits (note - 13a.2) 12,836,137,818 11,718,541,620 33,537,056,750 33,421,009,713 Less: Off-shore Banking Units 799,683,971 243,518,761 32,737,372,779 33,177,490,952 ii) Bills payable Pay orders issued 3,033,276,813 4,193,952,419 Pay slips issued 2,484,749 2,484,749 Demand draft payable 9,783,228 15,806,529 Foreign demand draft 313,592 313,592 T. T. payable - - Bill Pay ATM 17,208 14,169 3,045,875,590 4,212,571,458 iii) Savings bank / Mudaraba savings deposits 40,715,558,882 37,686,179,903 iv) Term / Fixed deposits Fixed deposits / Mudaraba fixed deposits 71,458,093,658 62,175,439,920 Special notice deposits 12,652,594,309 12,567,863,806 Non resident Taka deposits 1,698,132,023 1,516,641,540 Scheme deposits 31,655,419,613 45,505,445,071 117,464,239,603 121,765,390,336 193,963,046,856 196,841,632,649 197,517,725,557 199,013,975,901

c) Deposits and other accounts Current deposits and other accounts Deposits from banks (note -13a.1.a) 5,178,979 18,742,909 Deposits from customers (note-13a.1.b.i) 32,737,372,779 33,177,490,952 32,742,551,758 33,196,233,861 Bills payable Deposits from banks (note -13a.1.a) - - Deposits from customers (note-13a.1.b.ii) 3,045,875,590 4,212,571,458 3,045,875,590 4,212,571,458 Savings bank / mudaraba savings deposits Deposits from banks (note -13a.1.a) 762,515,592 711,519,437 Deposits from customers (note-13a.1.b.iii) 40,715,558,882 37,686,179,903 41,478,074,475 38,397,699,341 Term / Fixed deposits Deposits from banks (note -13a.1.a) 2,786,984,131 1,442,080,906 Deposits from customers (note-13a.1.b.iv) 117,464,239,603 121,765,390,336 120,251,223,734 123,207,471,241 197,517,725,557 199,013,975,901

PRIME BANK 279 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

13a.2 Sundry deposits F.C. held against back to back L/C 5,311,288,453 5,258,292,710 Sundry creditors 767,157,404 728,433,241 Risk fund and service charges (CCS and lease finance) 55,094,400 56,200,155 Sale proceeds of PSP / BSP 362,071,050 217,085,000 Margin on letters of guarantee 884,411,352 956,397,206 Margin on letters of credit 1,887,199,994 1,891,208,659 Margin on FDBP / IDBP, export bills, etc 118,163,254 167,063,116 Lease deposits 57,823,429 64,845,357 Interest / profit payable on deposits 1,825,658,414 866,375,072 Withholding VAT/Tax /Excise duty payable to Government Authority 562,791,382 546,056,541 Others 1,004,478,687 966,584,562 12,836,137,818 11,718,541,620 13a.3 Payable on demand and time deposits a) Demand deposits Current deposits 14,349,970,506 15,254,500,299 Savings deposits (9%) 3,733,026,703 3,455,792,941 Foreign currency deposits (Non interest bearing) 5,548,497,819 6,214,829,826 Security deposits 7,945,616 8,362,116 Sundry deposits 12,836,137,818 11,718,541,620 Bills payable 3,045,875,590 4,212,571,458 39,521,454,051 40,864,598,260 b) Time deposits Savings deposits (91%) 37,745,047,772 34,941,906,400 Fixed deposits 73,960,000,116 62,677,346,377 Special notice deposits 12,937,671,982 13,508,038,254 Deposits under schemes 31,655,419,613 45,505,445,071 Non resident Taka deposits 1,698,132,023 1,516,641,540 157,996,271,506 158,149,377,641 197,517,725,557 199,013,975,901

13a.4 Sector-wise break-up of deposits and other accounts Government 2,609,413,915 1,690,935,354 Deposit money banks 3,554,678,702 2,172,343,252 Other public 2,454,425,525 3,261,805,417 Foreign currency 5,548,497,819 6,214,829,826 Private 183,350,709,597 185,674,062,052 197,517,725,557 199,013,975,901

13a.5 Unclaimed deposits and valuables Current deposits 1,067 - Savings deposits 4,942 42,537 Demand Draft - - SND 18 - Pay order 7,681,828 - Sundry Deposit 815,778 87,274 8,503,633 129,811 13a.6 Maturity analysis of deposits a) Maturity analysis of deposits from Banks Payable on demand - - Up to 1 month 5,178,979 18,742,909 Over 1 month but within 3 months 788,172,583 796,135,138 Over 3 months but within 1 year 2,501,906,458 501,906,458 Over 1 year but within 5 years 259,420,683 855,558,748 Over 5 years but within 10 years - - Over 10 years - - 3,554,678,702 2,172,343,252

280 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

b) Maturity analysis of customer deposits excluding bills payable Payable on demand - - Up to 1 month 28,481,210,911 24,021,106,165 Over 1 month but within 3 months 42,690,754,047 38,703,976,533 Over 3 months but within 1 year 49,540,944,626 66,433,874,081 Over 1 year but within 5 years 60,631,173,763 32,883,887,194 Over 5 years but within 10 years 9,564,584,284 30,586,087,406 Over 10 years 8,503,633 129,811 190,917,171,265 192,629,061,191 c) Maturity analysis of bills payable Payable on demand 3,045,875,590 4,212,571,458 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 - - 3,045,875,590 4,212,571,458 197,517,725,557 199,013,975,901 14 Consolidated other liabilities Prime Bank Limited (note-14a) 36,257,586,840 35,465,414,699 Prime Bank Investment Limited 724,298,400 697,688,931 Prime Bank Securities Limited 238,146,149 169,586,547 Prime Exchange Co. Pte. Ltd., Singapore 40,958,922 57,330,044 PBL Exchange (UK) Ltd. 7,767,563 28,492,648 PBL Finance (Hong Kong) Limited 6,025,124 25,185,674 37,274,782,999 36,443,698,544 Less: Inter-company transactions - - 37,274,782,999 36,443,698,544

14a Other liabilities of the Bank Exchange adjustment account - 29,385 Expenditure and other payables 147,779,820 142,722,657 Provision for bonus 227,293,459 106,978,887 Provision for income tax (note - 14a.1) 20,085,551,971 18,335,551,971 Deferred tax liability (note-14a.2) 930,373,650 930,373,650 Unearned commission on bank guarantee 7,820,643 32,536,560 Unearned profit (Markup) 291,233,755 156,808,065 Provision for off-balance sheet exposures(note-14a.4) 1,513,090,000 1,678,090,000 Provision for Off-shore Banking Units(note-14a.5) 743,550,000 716,350,000 Fund for employee welfare fund (EWF) 7,875,604 3,617,950 Fund for Prime Bank Foundation (PBF) 157,512,081 72,358,987 Provision for loans and advances / investments (note - 14a.3) 7,540,378,507 8,189,736,061 Provision for Interest receivable on loans and advances / investments 9,517,300 9,517,300 Provision for diminution in value of investments 35,628,249 16,928,249 Interest suspense account (note - 14a.6) 4,026,761,377 4,693,505,469 Provision for Impairement loss for investment in subsidiaries 180,094,092 93,994,092 Provision for climate risk fund 10,000,000 8,000,000 Provision of rebate for good borrower 15,207,111 10,207,111 Other liabilities 70,536,074 64,025,157 Other provision (note - 14a.7) 257,383,148 204,083,148 36,257,586,840 35,465,414,699

PRIME BANK 281 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

14a.1 Provision for income tax Opening Balance 18,335,551,971 17,585,551,971 Add: Addition during the year 1,750,000,000 750,000,000 20,085,551,971 18,335,551,971 * Corporate tax position of the bank is shown in annexure-D 14a.2 Deferred tax liability Balance as on 1 January 930,373,650 932,054,703 Add/(Less): Provision for revaluation of land and building - (1,681,053) Add: Addition / Adjustment during the year (note-40a) - - Balance as on 31 December 930,373,650 930,373,650 14a.3 Provision for loans, advances and lease / investments Movement in specific provision on classified loans / investments: Provision held as on 1 January 3,773,742,337 3,400,363,411 Less: Fully provided debts written off during the year (2,607,437,692) (2,112,525,235) Add: Recoveries of amounts previously written off 203,780,138 409,904,161 Add: Specific provision made during the year for other accounts - - Add: Transferred from General Provision - - Less: Provision no longer required - - Add: Net charge to profit and loss account (note-39a) 2,690,300,000 2,076,000,000 Provision held as on 31 December 4,060,384,783 3,773,742,337 Movement in general provision on unclassified loans / investments Provision held as on 1 January 4,415,993,724 3,359,993,724 Add: Amount transferred to classified provision - - Add: General provision made during the year (note-39a) (936,000,000) 1,056,000,000 Provision held as on 31 December 3,479,993,724 4,415,993,724 7,540,378,507 8,189,736,061 14a.4 Provision for off-balance sheet exposures Provision held as on 1 January 1,678,090,000 1,385,640,000 Add: Amount transferred from classified provision - - Add: Provision made during the year (note-39a) (165,000,000) 292,450,000 Provision held as on 31 December 1,513,090,000 1,678,090,000 14a.5 Provision for Off-shore Banking Units Movement in specific provision on classified loans / investments: Provision held as on 1 January 496,200,000 423,700,000 Add: Transferred from Unclassified Provision of OBU - - Add: Net charge to profit and loss account (note-39a) 10,700,000 72,500,000 Provision held as on 31 December 506,900,000 496,200,000 Movement in general provision on unclassified loans / investments

Provision held as on 1 January 220,150,000 169,150,000 Add: Amount transferred to classified provision of OBU - - Add: General provision made during the year (note-39a) 16,500,000 51,000,000 Provision held as on 31 December 236,650,000 220,150,000 743,550,000 716,350,000 14a.6 Interest suspense account Balance as on 1 January 4,693,505,469 4,488,241,878 Add: Amount transferred to "interest suspense" account during the year 1,671,697,733 1,875,009,156 Less: Amount recovered from "interest suspense" account during the year (994,628,843) (246,136,963) Less: Amount written-off during the year (1,343,812,981) (1,423,608,602) Balance as on 31 December 4,026,761,377 4,693,505,469 14a.7 Other provision for classified assets Balance as on 1 January 204,083,148 120,116,648 Add: Addition during the year (note-39a) 53,300,000 83,966,500 Less: Adjustment during the year - - Balance as on 31 December 257,383,148 204,083,148

282 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 15 Share capital 15.1 Authorized capital 2,500,000,000 ordinary shares of Taka 10 each 25,000,000,000 25,000,000,000 15.2 Issued, subscribed and fully paid up capital 30,000,000 ordinary shares of Taka 10 each issued for cash 300,000,000 300,000,000 986,756,137 ordinary shares of Taka 10 each issued as bonus shares 9,867,561,370 8,838,212,760 115,527,340 ordinary shares of Taka 10 each issued as right shares 1,155,273,400 1,155,273,400 11,322,834,770 10,293,486,160 15.3 History of paid-up capital Given below the history of raising of share capital of Prime Bank Limited: Accounting year Declaration No of share Value in capital Cumulative 1995 Opening capital 10,000,000 100,000,000 100,000,000 1996 60% Bonus share 6,000,000 60,000,000 160,000,000 1997 25% Bonus share 4,000,000 40,000,000 200,000,000 1999 Initial Public Offer (IPO) 20,000,000 200,000,000 400,000,000 2000 25% Bonus share 10,000,000 100,000,000 500,000,000 2001 20% Bonus share 10,000,000 100,000,000 600,000,000 2002 16.67% Bonus share 10,000,000 100,000,000 700,000,000 2003 42.86% Bonus share 30,000,000 300,000,000 1,000,000,000 2004 40% Bonus share 40,000,000 400,000,000 1,400,000,000 2005 25% Bonus share 35,000,000 350,000,000 1,750,000,000 2006 30% Bonus share 52,500,000 525,000,000 2,275,000,000 2007 25% Bonus share 56,875,000 568,750,000 2,843,750,000 2008 25% Bonus share 71,093,750 710,937,500 3,554,687,500 2009 30% Bonus share 106,640,620 1,066,406,200 4,621,093,700 25% right share 115,527,340 1,155,273,400 5,776,367,100 2010 35% Bonus share 202,172,848 2,021,728,480 7,798,095,580 2011 20% Bonus share 155,961,911 1,559,619,110 9,357,714,690 2012 10% Bonus share 93,577,147 935,771,470 10,293,486,160 2017 10% Bonus share 102,934,861 1,029,348,610 11,322,834,770 1,132,283,477 11,322,834,770 15.4 Percentage of shareholdings at the closing date

2018 2017 2018 2017 Particulars Taka Taka % % Sponsors 4,152,053,350 3,915,393,490 36.67% 38.04% Financial Institutions 3,076,157,170 2,503,815,050 27.17% 24.32% Foreign Investors 348,688,820 385,416,330 3.08% 3.75% Non-resident Bangladeshi 26,774,640 27,819,790 0.24% 0.27% General Public 3,719,160,790 3,461,041,500 32.84% 33.62% 11,322,834,770 10,293,486,160 100.00% 100.00% 15.5 Shareholding range on the basis of shareholdings as at 31 December 2018 Number of share Taka Shareholding range holders Shares Percentage Less than 500 5,177 959,141 0.08% 500 - 5,000 6,352 11,986,539 1.06% 5,001 - 10,000 1,168 8,588,987 0.76% 10,001 - 20,000 857 12,283,372 1.08% 20,001 - 30,000 318 7,857,888 0.69% 30,001 - 40,000 158 5,522,982 0.49% 40,001 - 50,000 102 4,765,815 0.42% 50,001 - 100,000 253 17,868,784 1.58% 100,001 - 1,000,000 354 106,916,630 9.44% Over 1,000,000 156 955,533,339 84.39% 14,895 1,132,283,477 100.00%

PRIME BANK 283 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

15.6 Name of the Directors and their shareholdings as at 31 December 2018

Name of the directors % of shares as at Sl Status Opening position Closing position 31.12.2018 1 Mr. Azam J Chowdhury Chairman 20,601,158 22,661,273 2.00

(Representative of East Coast (Share holding of Shipping Lines Ltd.) East Cost Shipping Lines Ltd.) 2 Mr. Mafiz Ahmed Bhuiyan Vice Chairman 20,591,099 22,650,208 2.00

3 Mr. Imran Khan Vice Chairman 20,588,337 22,647,170 2.00 4 Mr. Md. Nader Khan Director 38,019,361 41,821,296 3.69 5 Quazi Sirazul Islam Director 20,616,158 22,677,773 2.00 6 Mrs. Marina Yasmin Chowdhury Director 24,225,000 27,288,000 2.41

7 Mr. Md. Shahadat Hossain Director 20,611,583 22,672,741 2.00

8 Mr. Shirajul Islam Mollah Director 20,644,922 22,709,414 2.01

9 Mrs. Nasim Anwar Hossain Director 23,365,749 25,702,323 2.27

10 Mrs. Salma Huq Director 32,254,341 35,479,775 3.13 11 Mr. Nafis Sikder Director 25,826,178 28,408,795 2.51 12 Mr. Waheed Murad Jamil Director 20,587,749 22,646,523 2.00

(Representative of Mawsons (Share holding of Limited.) Mawsons Limited) 13 Mr. Tarique Ekramul Haque Director 20,600,391 22,660,429 2.00

14 Mr. Mohammad Mushtaque Director 20,760,250 22,836,275 2.02 Ahmed Tanvir

(Representative of Uniglory (Share holding Cycle Industries Ltd.) of Uniglory Cycle Industries Ltd.) 15 Mr. Shamsuddin Ahmad, Ph.D Independent - - - Director 16 Dr. G. M. Khurshid Alam Independent - - - Director 17 Mr. M. Farhad Hussain, FCA Independent - - - Director 18 Dr.M.Shamim Z. Bosunia Independent Director 19 Mr. Rahel Ahmed Managing - - - Director 329,292,276 362,861,995

Directors of the Bank complies with the requirements at SEC notification no-SEC/CMRRCD/2009-193/119/Admin/34 dated 21/11/2011 regarding holding of shares which states that "each Director other than Independent Directors of any listed company shall hold minimum 2% (Two percent) share of the Paid-up Capital otherwise there shall be a casual vacancy of Directors".

284 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

15.7 Capital to risk weighted assets ratio (Consolidated) In terms of section 13 (2) of the Bank Companies Act, 1991 and Bangladesh Bank BRPD circulars no. 35 dated December 29, 2010, BRPD Circular no. 07 dated March 31, 2014, BRPD Circular no.18 dated 21 December 2014 and BRPD Circular Letter no. 05 dated May 31, 2016, required capital of the Bank (Consolidated) at the close of business on 31 December 2018 was Taka 27,440,402,113 as against available Tier-I capital of Taka 24,375,723,704 and Tier-II capital of Taka 13,926,265,060 making a total capital of Taka 38,301,988,764 thereby showing a surplus capital / equity of Taka 10,861,586,650 at that date. Details are shown below: Tier-1 Capital Common Equity Tier-1 (CET-1) Capital Paid-up capital (note-15.2) 11,322,834,770 10,293,486,160 Share premium (note-15.8) 1,211,881,786 2,241,230,396 Non-controlling interest(note-15.9) 63 61 Statutory reserve (note-16) 10,353,413,584 9,565,853,177 General reserve 28,002,888 28,002,888 Surplus in consolidated profit and loss account / Retained earnings (note- 20) 1,798,788,031 1,116,996,544 24,714,921,122 23,245,569,226 Additional Tier-1 (AT-1) Capital Non-cumulative irredeemable preference shares - - - - Less: Regulatory Adjustments for CET-1 Capital Goodwill and all other intangible assets 285,218,428 110,516,539 Reciprocal Crossholdings 53,978,990 25,271,120 339,197,418 135,787,659 Total Tier-1 Capital 24,375,723,704 23,109,781,567

Tier-2 Capital General provision maintained against unclassified loan/investments (note-14a.3) 3,479,993,724 4,415,993,724 General provision on off-balance sheet exposures(note-14a.4) 1,513,090,000 1,678,090,000 General provision on off-shore Banking Units(note-14a.5) 236,650,000 220,150,000 Revaluation gain / loss on investments-50% of total 230,897,400 230,897,400 Revaluation reserve-50% of total 751,759,278 751,759,278 Prime Bank Sub-ordinated Bond 8,500,000,000 2,500,000,000 14,712,390,402 9,796,890,402 Less: Regulatory Adjustments Revaluation Reserves for fixed assets, securities and equity securities 786,125,342 589,594,007 Total Tier-2 Capital 13,926,265,060 9,207,296,395 A) Total Regulatory capital 38,301,988,764 32,317,077,962

Total assets including off-balance sheet exposures 457,564,124,265 450,203,787,174 B) Total risk weighted assets 231,077,070,428 235,119,393,387 C) Required capital based on risk weighted assets (11.875% on B) 27,440,402,113 23,511,939,339 D) Surplus (A-C) 10,861,586,650 8,805,138,624 Capital to risk weighted assets ratio 16.58% 13.74% Common Equity Tier-I (Against Standard of minimum 6.00%) 10.55% 9.83% Total Capital to Risk Weighted Asset Ratio (Against Standard of 16.58% 13.74% minimum 10% with Capital conservation buffer of 1.875%)

Leverage Ratio Particulars Required Held Required Held Leverage ratio 3.00% 6.51% 3.00% 6.31%

PRIME BANK 285 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

Capital to risk weighted assets ratio (Solo) Tier-1 Capital Common Equity Tier-1 (CET-1) Capital Paid-up capital (note-15.2) 11,322,834,770 10,293,486,160 Share premium (note-15.8) 1,211,881,786 2,241,230,396 Statutory reserve (note-16) 10,353,413,584 9,565,853,177 Surplus in consolidated profit and loss account / Retained earnings (note-20a) 1,759,002,003 1,079,304,405 24,647,132,143 23,179,874,138 Additional Tier-1 (AT-1) Capital Non-cumulative irredeemable preference shares - - - - Less: Regulatory Adjustments for CET-1 Capital Goodwill and all other intangible assets 284,377,542 110,516,539 Reciprocal Crossholdings 27,970,098 21,707,400 312,347,640 132,223,939 Total Tier-1 Capital 24,334,784,503 23,047,650,199

Tier-2 Capital General provision maintained against unclassified loan / investments (note-14a.3) 3,479,993,724 4,415,993,724 General provision on off-balance sheet exposures(note-14a.4) 1,513,090,000 1,678,090,000 General provision on off-shore Banking Units(note-14a.5) 236,650,000 220,150,000 Revaluation gain / loss on investments-50% of total 220,734,813 220,734,813 Revaluation reserve-50% of total 751,759,278 751,759,278 Prime Bank Sub-ordinated Bond 8,500,000,000 2,500,000,000 14,702,227,815 9,786,727,815 Less: Regulatory Adjustments Revaluation Reserves for fixed assets, securities and equity securities 777,995,273 583,496,455 Total Tier-2 Capital 13,924,232,542 9,203,231,360 A) Total Regulatory capital 38,259,017,045 32,250,881,559

Total assets including off-balance sheet exposures 456,453,527,360 449,083,512,828 B) Total risk weighted assets 224,516,533,725 230,211,415,637 C) Required capital based on risk weighted assets (11.875% on B) 26,661,338,380 23,021,141,564 D) Surplus (A-C) 11,597,678,665 9,229,739,995 Capital to risk weighted assets ratio 17.04% 14.01%

Common Equity Tier-I (Against Standard of minimum 6.00%) 10.84% 10.01% Total Capital to Risk Weighted Asset Ratio (Against Standard of minimum 10% with Capital conservation buffer of 1.875%) 17.04% 14.01%

Leverage Ratio

Particulars Required Held Required Held

Leverage ratio 3.00% 6.52% 3.00% 6.61%

286 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka

2018 2017

15.8 Share premium 11,552,734 ordinary shares of Taka 200 each per share 2,310,546,800 2,310,546,800 Less: Income tax deduction at source @ 3% on total premium 69,316,404 69,316,404 2,241,230,396 2,241,230,396 Less: Transferred to Paid-up Capital 1,029,348,610 - 1,211,881,786 2,241,230,396 15.9 Non controlling interest Share capital 60 60 Retained earnings 3 1.33 63 61 16 Statutory reserve Balance on 1 January 9,565,853,177 9,204,058,242 Addition during the year ( 20% of pre-tax profit) 787,560,407 361,794,935 Balance at 31 December 2018 10,353,413,584 9,565,853,177

17 Consolidated revaluation gain / loss on investments Prime Bank Limited (note-17a) 22,087,009 17,749,598 Gain on revaluation of Investment at Prime Exchange Co. Pte. Ltd., Singapore 38,209,946 38,757,000 Gain on revaluation of Investment at Prime Exchange (UK) Ltd. (3,361,374) (480,524) Gain on revaluation of Investment at PBL Finance (Hong Kong) Limited 14,863,043 (740,786) 71,798,624 55,285,288

17a Revaluation gain / loss on investments of the Bank Opening balance on 1 January 17,749,598 15,278,978 Add: Amortized/Revaluation Gain 57,349,488 39,631,941 Less: Adjustment of amortization/revaluation gain against sale/maturity (52,987,310) (37,076,239) Add: Adjustment of revaluation gain/(loss) of OBU fixed assets (24,768) (85,082) Less: Adjustment of Revaluation loss - - 22,087,009 17,749,598

18 Revaluation reserve Balance on 1 January 1,767,012,161 1,778,219,183 Adjustment during the year - (11,207,022) Balance at 31 December 2018 1,767,012,161 1,767,012,161 Less: Provision for deferred tax (270,253,057) (270,253,057) 1,496,759,104 1,496,759,104

The Bank revalued the assets of Land and Buildings details described in note 2.5

19 Consolidated foreign currency translation gain/ (loss) Prime Bank Limited (note-19a) 14,920,954 13,414,088 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore (8,551) 660,837 PBL Exchange (UK) Ltd. (107,404) 93,100 PBL Finance (Hong Kong) Limited 312,440 1,166,122 15,117,438 15,334,146

19a Foreign currency translation gain/ (loss) Balance on 1 January 13,414,088 6,637,162 Addition during the year 1,506,866 6,776,926 Balance at 31 December 2018 14,920,954 13,414,088

PRIME BANK 287 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 20 Consolidated retained earnings / movement of profit and loss account Prime Bank Limited (note-20a) 1,760,508,869 1,086,081,331 Prime Bank Investment Limited 171,979,126 66,646,548 Prime Bank Securities Limited (153,975,418) (58,315,338) Prime Exchange Co. Pte. Ltd., Singapore 12,441,761 13,487,817 PBL Exchange (UK) Ltd. (30,425,774) (36,245,907) PBL Finance (Hong Kong) Limited 108,050,252 112,115,577 1,868,578,815 1,183,770,029 Less: Minority Interest (3.44) (1.33) Less: Transfer to statutory reserve - - Less: Profit Remitted by Prime Exchange Co. Pte. Ltd., Singapore (10,903,571) (2,706,530) Less: Profit Remitted by PBL Finance (Hong Kong) Limited (57,183,859) (55,369,969) Less: Foreign currency translation gains (1,703,351) (8,696,984) 1,798,788,031 1,116,996,544 20a Retained earnings / movement of profit and loss account of the Bank Balance on 1 January 1,079,304,405 2,017,875,429 Revaluation reserve - 11,207,022 Addition during the year 2,187,802,036 1,058,974,674 Transfer to statutory reserve (787,560,407) (361,794,935) Cash dividend (720,544,031) (1,646,957,786) Issue of bonus shares - - Balance at 31 December 2018 1,759,002,003 1,079,304,405 Add: Foreign currency translation gain/ (loss) 1,506,866 6,776,926 1,760,508,869 1,086,081,331 20.1 Consolidated retained earnings brought forward from previous year Prime Bank Limited (note-20.1 a) 358,760,374 382,124,666 Prime Bank Investment Ltd. 66,646,548 (22,307,687) Prime Bank Securities Ltd. (58,315,338) (58,968,820) Prime Exchange Co. Pte. Ltd., Singapore (122,277) (225,043) PBL Exchange (UK) Ltd. (36,245,907) (32,358,465) PBL Finance (Hong Kong) Limited (438,251) (1,715,278) 330,285,148 266,549,373 Foreign currency translation gain on 1 January 2,429,428 (3,286,152) 332,714,576 263,263,221 20.1.a Retained earnings brought forward from previous year of the Bank Balance on 1 January 1,079,304,405 2,017,875,429 Transferred from revaluation reserve - 11,207,022 Bonus shares issued - - Cash dividend paid (720,544,031) (1,646,957,786) Balance at 31 December 2018 358,760,374 382,124,666 Foreign currency translation gain on 1 January - - 358,760,374 382,124,666

21 Consolidated contingent liabilities 21.1 Acceptances and endorsements Prime Bank Limited (note-21a.1) 52,944,055,583 49,721,797,256 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 52,944,055,583 49,721,797,256

288 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 21.2 Letters of guarantee Prime Bank Limited (note-21a.2) 57,826,844,429 72,966,435,302 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 57,826,844,429 72,966,435,302 21.3 Irrevocable Letters of Credit Prime Bank Limited (note-21a.3) 38,072,832,383 34,112,938,262 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 38,072,832,383 34,112,938,262 21.4 Bills for collection Prime Bank Limited (note-21a.4) 11,613,890,781 10,766,851,918 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 11,613,890,781 10,766,851,918 160,457,623,176 167,568,022,737 21a Contingent liabilities of the Bank 21a.1 Acceptances and endorsements Back to back bills (Foreign) 46,572,419,905 45,317,201,322 Back to back bills (Local) 5,444,080,575 3,919,321,492 Back to back bills (EPZ) 927,555,103 485,274,442 52,944,055,583 49,721,797,256 Less: Margin (5,311,288,453) (5,258,292,710) 47,632,767,130 44,463,504,546

21a.2 Letters of guarantee Letters of guarantee (Local) 20,135,357,878 18,760,045,926 Letters of guarantee (Foreign) 37,691,486,551 54,206,389,376 Foreign counter guarantees - - 57,826,844,429 72,966,435,302 Less: Margin (884,411,352) (956,397,206) 56,942,433,077 72,010,038,095 Money for which the Bank is contingently liable in respect of guarantees given favoring: Directors or officers - - Government 991,787 - Banks and other financial institutions 531,591,860 433,397,375 Others 57,294,260,782 72,533,037,927 57,826,844,429 72,966,435,302 Less: Margin (884,411,352) (956,397,206) 56,942,433,077 72,010,038,095 21a.3 Irrevocable Letters of Credit Letters of credit (Sight) 9,246,043,120 10,929,931,499 Letters of credit (Deferred) 21,554,689,067 16,474,904,713 Back to back L/C 7,272,100,196 6,708,102,050 38,072,832,383 34,112,938,262 Less: Margin (1,887,199,994) (1,891,208,659) 36,185,632,390 32,221,729,603 21a.4 Bills for collection Outward bills for collection 11,613,890,781 10,766,851,918 11,613,890,781 10,766,851,918 Less: Margin (118,163,254) (167,063,116) 11,495,727,527 10,599,788,801

160,457,623,176 167,568,022,737

PRIME BANK 289 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 22 Income statement Income: Interest, discount and similar income (note-22.1) 20,456,296,447 18,934,118,929 Dividend income (note-25a) 88,098,460 80,601,232 Fees, commission and brokerage (note-22.2) 1,096,753,337 1,189,898,112 Gains less losses arising from dealing in securities - - Gains less losses arising from investment securities - - Gains less losses arising from dealing in foreign currencies (note-26a.1) 1,111,821,627 1,054,948,294 Income from non-banking assets - - Other operating income (note-27a) 887,322,424 764,028,440 Profit less losses on interest rate changes - - 23,640,292,294 22,023,595,007 Expenses: Interest / profit paid on deposits, borrowings, etc. (note-24a) 10,740,853,932 9,875,345,368 Losses on loans, advances and lease/ investments - - Administrative expenses (note-22.3) 5,613,864,142 5,193,809,625 Other operating expenses (note-38a) 1,235,964,917 1,304,063,983 Depreciation on banking assets (note-37a) 330,207,267 277,001,356 17,920,890,258 16,650,220,333 5,719,402,036 5,373,374,674

22.1 Interest, discount and similar income Interest income / Profit on investments (note-23a) 18,390,385,430 14,769,140,556 Interest income on treasury bills / reverse repo / bonds (note-25a) 2,011,547,238 2,312,012,468 Gain on Discounted bond / bills (note-25a) 106,804,316 363,253,515 Gain on sale of shares (note-25a) - 45,767,648 Gain on Govt. security trading (note-25a) 19,149,000 1,558,585,966 Interest on debentures (note-25a) 13,548,918 23,452,633 20,541,434,901 19,072,212,786 Less: Loss on revaluation of security trading (note-25a) 85,138,454 138,093,857 20,456,296,447 18,934,118,929

22.2 Fees, commission and brokerage Commission (note-26a) 1,096,753,337 1,189,898,112 Settlement fee-PBIL (note-26a) - - 1,096,753,337 1,189,898,112

22.3 Administrative expenses Salary and allowances (note-28a) 4,158,596,820 3,823,661,492 Rent, taxes, insurance, electricity, etc. (note-29a) 961,285,687 906,160,291 Legal expenses (note-30a) 105,967,130 83,038,972 Postage, stamp, telecommunication, etc. (note-31a) 70,375,029 77,943,186 Stationery, printing, advertisement, etc. (note-32a) 226,156,608 197,559,994 Managing Director's salary and fees (note-33) 10,131,935 11,528,936 Directors' fees (note-34a) 3,663,929 4,495,414 Auditors' fees (note-35a) 1,380,000 1,380,000 Repair of Bank's assets (note-37a) 76,307,004 88,041,340 5,613,864,142 5,193,809,625

23 Consolidated interest income / profit on investment Prime Bank Limited (note-23a) 18,390,385,430 14,769,140,556 Prime Bank Investment Limited 204,509,907 228,663,893 Prime Bank Securities Limited 35,658,560 38,781,210 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited 125,903,479 113,416,557 18,756,457,376 15,150,002,215 Less: Inter-company transactions 232,138,451 296,647,983 18,524,318,925 14,853,354,233

290 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 23a Interest income / profit on investment of the Bank Loans (General) / Musharaka 4,354,242,269 2,332,224,449 Loans against trust receipts 862,165,886 545,264,437 Packing credit 30,445,555 30,587,404 House building loan 224,070,370 241,614,388 Lease finance / Izara 403,970,698 371,923,591 Hire purchase 949,356,732 709,280,624 Payment against documents 1,882,601 486,990 Cash credit / Bai-Muajjal 2,414,728,893 2,226,030,916 Secured overdraft 2,353,597,073 1,905,603,343 Consumer credit scheme 1,848,861,555 1,835,855,104 Staff loan 104,080,421 109,528,687 Agricultural Loan 340,099,740 338,435,076 Forced loan 70,841,967 10,906,250 Documentary bills purchased 677,248,968 662,156,052 Interest income from credit card 193,734,429 191,397,526 Other loans and advances / Investments 2,365,197,395 2,167,776,750 Total interest / profit on loans and advances / investments 17,194,524,552 13,679,071,587 Interest / profit on balance with other banks and financial institutions 750,383,658 725,912,786 Interest on call loans 85,698,819 43,802,000 Interest / profit received from foreign banks 359,778,401 320,354,183 18,390,385,430 14,769,140,556 24 Consolidated interest / profit paid on deposits, borrowings, etc. Prime Bank Limited (note-24a) 10,740,853,932 9,875,345,368 Prime Bank Investment Limited 145,820,201 224,300,298 Prime Bank Securities Limited 19,614,470 27,658,506 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited 67,933,775 55,091,265 10,974,222,378 10,182,395,437 Less: Inter-company transactions 232,317,442 297,102,308 10,741,904,936 9,885,293,129 24a Interest / profit paid on deposits, borrowings, etc. of the Bank i) Interest / profit paid on deposits: Savings bank / Mudaraba savings deposits 985,917,450 830,159,718 Special notice deposits 294,835,127 339,861,568 Term deposits / Mudaraba term deposits 4,550,173,262 2,428,032,520 Deposits under scheme 3,448,613,099 5,181,353,430 Foreign currency deposits (note-24a.1) 35,836,332 45,121,211 Others 35,606,726 33,804,682 9,350,981,996 8,858,333,129 ii) Interest / Profit paid for borrowings: Call deposits 7,437,222 4,422,333 Bangladesh Bank-refinance 6,455,038 (26,055,023) Local bank accounts 199,811,797 268,018,126 Foreign bank accounts 675,836,098 470,951,256 PBL bond 500,331,781 299,675,546 1,389,871,936 1,017,012,239 10,740,853,932 9,875,345,368 24a.1 Foreign currency deposits Interest / profit paid on F.C 28,366,790 37,368,651 Interest / profit paid on N.F.C.D 7,469,542 7,752,559 Interest / profit paid on R. F.C.D - - 35,836,332 45,121,211

PRIME BANK 291 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 25 Consolidated investment income Prime Bank Limited (note-25a) 2,154,009,477 4,245,579,605 Prime Bank Investment Limited 133,478,474 130,852,413 Prime Bank Securities Limited 24,740,918 20,070,001 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 2,312,228,869 4,396,502,019 Less: Inter-company transactions - - 2,312,228,869 4,396,502,019 25a Investment income of the bank Interest on treasury bills / Reverse repo / bonds 2,011,547,238 2,312,012,468 Interest on debentures / bonds 13,548,918 23,452,633 Gain on discounted bond / bills 106,804,316 363,253,515 Gain on sale of shares - 45,767,648 Gain on Govt. security trading 19,149,000 1,558,585,966 Dividend on shares 88,098,460 80,601,232 2,239,147,930 4,383,673,462 Less: Loss on sale/revaluation of security trading 85,138,454 138,093,857 2,154,009,477 4,245,579,605 26 Consolidated commission, exchange and brokerage Prime Bank Limited (note-26a) 2,208,574,964 2,244,846,406 Prime Bank Investment Limited 40,974,108 60,231,933 Prime Bank Securities Limited 18,031,770 35,429,471 Prime Exchange Co. Pte. Ltd., Singapore 51,488,074 63,746,807 PBL Exchange (UK) Ltd. 59,965,199 49,251,974 PBL Finance (Hong Kong) Limited - - 2,379,034,115 2,453,506,591 26a Commission, exchange and brokerage of the Bank Commission on L/Cs 296,691,261 291,934,820 Commission on L/Cs-back to back 379,315,318 404,973,354 Commission on L/Gs 311,633,745 390,140,349 Commission on remittance 72,645,024 81,128,241 Underwriting Commission regarding Treasury bill/ Bond 3,865,587 6,187,413 Commission from sale of BSP /PSP/Others 32,602,402 15,533,935 1,096,753,337 1,189,898,112 Exchange gain (note - 26a.1) - including gain from FC dealings 1,111,821,627 1,054,948,294 Settlement fees / Brokerage - - 2,208,574,964 2,244,846,406 26a.1 Exchange gain Exchange gain 1,125,880,475 1,060,424,884 Exchange gain-credit card - - Less: Exchange loss (14,058,848) (5,476,591) 1,111,821,627 1,054,948,294 27 Consolidated other operating income Prime Bank Limited (note-27a) 887,322,424 764,028,440 Prime Bank Investment Limited 9,995,441 11,451,309 Prime Bank Securities Limited 361,559 205,468 Prime Exchange Co. Pte. Ltd., Singapore 304,944 574,238 PBL Exchange (UK) Ltd. 738,094 - PBL Finance (Hong Kong) Limited 43,577,694 51,377,641 942,300,155 827,637,096 Less: Inter-company transactions 178,991 454,325 942,121,164 827,182,771

292 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 27a Other operating income of the Bank Locker rent 13,211,290 9,038,754 Service and other charges 265,614,811 159,395,958 Retail Income 246,950,893 207,702,689 Income from ATM service 84,922,844 81,769,391 Credit card income (note-27a.2) 70,583,165 74,957,222 Postage / telex / SWIFT/ fax 28,175,709 49,819,209 Rebate from foreign Bank outside Bangladesh 74,970,816 61,313,177 Profit on sale of fixed assets 1,890,136 567,374 Miscellaneous earnings (note-27a.1) 101,002,762 119,464,667 887,322,424 764,028,440 27a.1 Miscellaneous earnings include syndication fee, commission from foreign remittance house / bank, notice fee and sale proceeds of various items, etc.

27a.2 Credit card income Annual fees 15,373,960 22,069,890 Inter-change fees 27,238,099 26,595,506 Others 27,971,106 26,291,826 70,583,165 74,957,222 28 Consolidated salaries and allowances Prime Bank Limited (note-28a) 4,158,596,820 3,823,661,492 Prime Bank Investment Limited 59,085,758 49,861,605 Prime Bank Securities Limited 35,565,224 19,882,869 Prime Exchange Co. Pte. Ltd., Singapore 25,407,603 26,676,133 PBL Exchange (UK) Ltd. 22,911,272 19,954,135 PBL Finance (Hong Kong) Limited 26,531,634 26,010,894 4,328,098,311 3,966,047,129 28a Salaries and allowances of the Bank Basic pay 1,865,562,360 1,745,093,391 Allowances 1,252,394,654 1,180,091,308 Bonus 553,557,883 424,296,530 Bank's contribution to provident fund 177,197,328 167,193,128 Retirement benefits/ Leave encashment 36,632,252 24,868,055 Gratuity 273,252,343 282,119,080 4,158,596,820 3,823,661,492

29 Consolidated rent, taxes, insurance, electricity, etc. Prime Bank Limited (note-29a) 961,285,687 906,160,291 Prime Bank Investment Limited 24,887,863 16,517,556 Prime Bank Securities Limited 10,352,950 8,664,115 Prime Exchange Co. Pte. Ltd., Singapore 12,980,926 12,861,296 PBL Exchange (UK) Ltd. 11,604,398 10,427,747 PBL Finance (Hong Kong) Limited 9,192,189 8,755,653 1,030,304,013 963,386,657

29a Rent, taxes, insurance, electricity, etc. of the Bank Rent, rates and taxes 661,251,081 616,511,195 Lease rent 136,204 100,229 Insurance 146,869,324 147,851,952 Power and electricity 153,029,078 141,696,916 961,285,687 906,160,291 30 Consolidated legal expenses Prime Bank Limited (note-30a) 105,967,130 83,038,972 Prime Bank Investment Limited 876,950 678,500 Prime Bank Securities Limited 466,100 681,206 Prime Exchange Co. Pte. Ltd., Singapore 931,032 997,647 PBL Exchange (UK) Ltd. 2,484,915 2,537,403 PBL Finance (Hong Kong) Limited 21,301 82,939 110,747,428 88,016,667

PRIME BANK 293 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

30a Legal expenses of the Bank Legal expenses 53,910,650 77,411,730 Other professional charges 52,056,480 5,627,242 105,967,130 83,038,972 31 Consolidated postage, stamp, telecommunication, etc. Prime Bank Limited (note-31a) 70,375,029 77,943,186 Prime Bank Investment Limited 1,633,225 1,167,069 Prime Bank Securities Limited 4,912 782,939 Prime Exchange Co. Pte. Ltd., Singapore 1,527,366 1,417,168 PBL Exchange (UK) Ltd. 882,991 633,103 PBL Finance (Hong Kong) Limited 5,080,341 5,845,658 79,503,863 87,789,124 31a Postage, stamp, telecommunication, etc. of the Bank Postage & Courier 290,516 226,773 Telegram, telex, fax and internet 1,725,274 3,279,800 Data communication 32,198,709 33,840,555 Telephone - office 35,855,655 40,161,267 Telephone - residence 304,874 434,792 70,375,029 77,943,186 32 Consolidated stationery, printing and advertisements, etc. Prime Bank Limited (note-32a) 226,156,608 197,559,994 Prime Bank Investment Limited 1,943,607 1,388,901 Prime Bank Securities Limited 718,191 320,813 Prime Exchange Co. Pte. Ltd., Singapore 1,861,453 2,091,687 PBL Exchange (UK) Ltd. 550,087 604,406 PBL Finance (Hong Kong) Limited 354,957 338,247 231,584,903 202,304,048 32a Stationery, printing and advertisements, etc. of the Bank Office and security stationery 53,943,014 54,069,356 Computer consumable stationery 100,839,578 72,559,959 Publicity and advertisement 71,374,016 70,930,679 226,156,608 197,559,994 33 Managing Director's salary and fees Basic salary 6,029,032 7,199,033 Bonus 1,100,000 1,210,000 House rent allowance 1,200,000 1,200,000 Bank's contribution to provident fund 602,903 719,903 Utility allowance 360,000 360,000 House maintenance allowance 480,000 480,000 Others 360,000 360,000 10,131,935 11,528,936 34 Consolidated Directors' fees Prime Bank Limited (note-34a) 3,663,929 4,495,414 Prime Bank Investment Limited 496,800 504,850 Prime Bank Securities Limited 340,400 200,100 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 4,501,129 5,200,364 34a Directors' fees of the Bank Meeting fees 1,936,000 2,656,000 Other benefits 1,727,929 1,839,414 3,663,929 4,495,414

294 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 As per BRPD circular letter no. 11 dated 04 October 2015 Taka 8,000/- has been paid as Honorarium to the Directors, for attending per Board Meeting, Board Audit Committee Meeting and Risk Management Committee Meeting held during the year 2018.

35 Consolidated Auditors' fees Prime Bank Limited (note-35a) 1,380,000 1,380,000 Prime Bank Investment Limited 201,250 115,000 Prime Bank Securities Limited 172,500 115,000 Prime Exchange Co. Pte. Ltd., Singapore 245,930 232,132 PBL Exchange (UK) Ltd. 502,949 478,077 PBL Finance (Hong Kong) Limited 298,221 238,450 2,800,850 2,558,659 35a Auditors' fees of the Bank External Audit fee 1,380,000 1,380,000 1,380,000 1,380,000

36 Charges on loan losses Loan -written off - - Interest waived - - - - 37 Consolidated depreciation and repair of Bank's assets Prime Bank Limited (note-37a) 406,514,271 365,042,696 Prime Bank Investment Limited 7,663,210 3,793,896 Prime Bank Securities Limited 2,553,230 1,253,339 Prime Exchange Co. Pte. Ltd., Singapore 2,570,717 2,238,221 PBL Exchange (UK) Ltd. 2,846,559 2,814,601 PBL Finance (Hong Kong) Limited 113,750 344,436 422,261,737 375,487,188

37a Depreciation and repair of Bank's assets Depreciation - (see annexure-C for detail)

Fixed assets 277,008,743 256,178,233 Leased assets - 277,008,743 256,178,233 Amortization-(see annexure-C for detail) Software-core banking 49,878,083 17,823,268 Software-ATM 3,320,441 2,999,856 53,198,524 20,823,123 Repairs Building 13,000,362 16,306,568 Furniture and fixtures 12,453,873 18,447,887 Office equipment 36,999,278 38,397,331 Bank's vehicles 11,172,735 10,229,300 Maintenance 2,680,757 4,660,253 76,307,004 88,041,340 406,514,271 365,042,696 38 Consolidated other expenses Prime Bank Limited (note-38a) 1,235,964,917 1,304,063,983 Prime Bank Investment Limited 31,676,438 21,662,760 Prime Bank Securities Limited 97,704,116 9,586,399 Prime Exchange Co. Pte. Ltd., Singapore 4,761,651 6,956,312 PBL Exchange (UK) Ltd. 13,390,192 9,698,779 PBL Finance (Hong Kong) Limited 1,932,365 1,749,271 1,385,429,678 1,353,717,503

PRIME BANK 295 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017 38a Other expenses of the Bank Security and cleaning 181,040,250 190,730,775 Entertainment 29,185,987 39,679,632 Car expenses 184,346,159 187,506,794 ATM expenses (note-38a.1) 188,506,382 151,802,042 Retail expenses (note-38a.2) 11,765,091 49,001,212 Books, magazines and newspapers, etc. 1,703,388 1,797,923 Liveries and uniforms 1,470,846 2,077,762 Medical expenses 110,718 107,511 Bank charges and commission paid 9,967,835 9,238,599 Loss on sale of fixed assets 1,157,475 75,138,098 House furnishing expenses 3,183,630 2,965,506 Subscription to institutions 20,516,835 11,266,286 Donations 84,797,444 140,540,489 Sponsorship 27,775,451 27,356,812 Prime Bank Cricket Club 46,288,395 65,049,148 Traveling expenses 29,074,473 49,671,722 Corporate action fees 3,576,528 1,450 Local conveyance, labor, etc. 22,057,885 20,640,566 Business development 42,977,446 47,801,448 Training and internship 13,362,160 20,670,880 Remittance charges 9,525,412 10,092,716 Cash reward to branches 14,348,747 2,547,000 Laundry, cleaning and photographs, etc. 6,660,918 6,266,013 Credit card expenses 45,911,946 39,193,078 Consolidated salary (staff) 33,252,822 32,745,626 Annual General Meeting 2,747,900 3,179,500 Exgratia 16,536,777 16,638,380 Welfare fund 7,875,604 3,617,950 Prime Bank Foundation 157,512,081 72,358,987 Miscellaneous expenses 38,728,332 24,380,079 1,235,964,917 1,304,063,983

38a.1 ATM expenses NPSB-Issuing Commission 4,165,090 4,236,325 ATM Cash Management Service 17,604,696 15,742,196 VISA/Master Card Service 26,371,223 19,396,708 Salary & Allowances 54,172,124 51,802,313 Rent Rates & Taxes 22,430,568 23,660,328 Insurance & Utility Expenses 9,130,078 9,347,535 Internet/Link Charge 2,530,547 3,048,040 Rep Renovation & Maintenance 37,645,021 22,643,999 Soft. Maintenance Fee - 30,000 Computer/Printing Expense 547,500 221,352 Office Stationery and others 13,909,534 1,673,246 188,506,382 151,802,042

38a.2 Retail expenses DSE Salary 7,065,454 27,606,727 Service charge 4,699,637 21,394,485 11,765,091 49,001,212

296 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

39 Consolidated provision for loans, investments, off balance sheet exposure & other assets Provision for bad and doubtful loans and advances/investments-PBL (note-39a) 2,690,300,000 2,076,000,000 Provision for unclassified loans and advances/investments-PBL (note-39a) (936,000,000) 1,056,000,000 Provision for bad and doubtful loans and advances (OBU) (note-39a) 10,700,000 72,500,000 Provision for unclassified loans and advances/investments (OBU) (note-39a) 16,500,000 51,000,000 Provision for off-balance sheet exposure-PBL(note-39a) (165,000,000) 292,450,000 Provision for diminution in value of investments-PBL (note-39a) 18,700,000 (60,516,500) Provision for diminution in value of investments-PBIL 23,267,108 (83,335,464) Provision for impairment of client margin loan-PBIL (27,964,899) 95,843,663 Provision for impairement loss for investment (PBSL)-PBIL 4,697,792 2,948,441 Provision for diminution in value of investments-PBSL - 2,175,241 Provision for impairment of client margin loan-PBSL - 10,685,091 Provision for impairment loss for investment in subsidiaries (note-39a) 86,100,000 (15,000,000) Provision for climate risk fund (note-39a) 2,000,000 3,000,000 Provision for Good Borrower rebate (note-39a) 5,000,000 5,000,000 Provision for other assets (note-39a) 53,300,000 83,966,500 1,781,600,001 3,592,716,972 As per BSEC instruction circular reference # BSEC/Mukhopatro (3rd Khondo)/2011/06 dated July 02, 2018 and BSEC/ CMRRCD/2009-193/212 dated December 10, 2018 , provision has been made by Prime Bank Securities Limited and Prime Bank Investment Limited against diminution in value of investments and impairment of client margin loan. 39a Provision for loans, investments, off balance sheet exposure & other assets of the Bank Provision for bad and doubtful loans and advances / investments 2,690,300,000 2,076,000,000 Provision for unclassified loans and advances / investments (936,000,000) 1,056,000,000 Provision for bad and doubtful loans and advances (OBU) 10,700,000 72,500,000 Provision for unclassified loans and advances / investments (OBU) 16,500,000 51,000,000 Provision for off-balance sheet exposure (165,000,000) 292,450,000 Provision for diminution in value of investments 18,700,000 (60,516,500) Provision for impairment loss for investment in subsidiaries 86,100,000 (15,000,000) Provision for climate risk fund 2,000,000 3,000,000 Provision for Good Borrower rebate 5,000,000 5,000,000 Provision for other assets 53,300,000 83,966,500 1,781,600,000 3,564,400,000 40 Consolidated tax expenses Current tax Prime Bank Limited (note-40a) 1,750,000,000 750,000,000 Prime Bank Investment Limited 9,876,612 7,035,706 Prime Bank Securities Limited 6,357,815 11,831,212 Prime Exchange Co. Pte. Ltd., Singapore - 729,998 PBL Exchange (UK) Ltd. 1,471,288 857,793 PBL Finance (Hong Kong) Limited 7,468,686 10,757,898 1,775,174,401 781,212,608 Deferred tax Prime Bank Limited (note-40a) - - Prime Bank Investment Limited (536,563) (237,468) Prime Bank Securities Limited 602,979 (4,162) Prime Exchange Co. Pte. Ltd., Singapore (40,394) - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - - 26,022 (241,630) 1,775,200,423 780,970,978 40a Tax expenses of the Bank Current tax 1,750,000,000 750,000,000 Deferred tax - - 1,750,000,000 750,000,000 41 Consolidated receipts from other operating activities Prime Bank Limited (note-41a) 926,247,149 2,583,008,785 Prime Bank Investment Limited 143,473,915 99,224,798 Prime Bank Securities Limited 25,102,477 8,032,443 Prime Exchange Co. Pte. Ltd., Singapore 304,944 574,238 PBL Exchange (UK) Ltd. 738,094 - PBL Finance (Hong Kong) Limited 43,577,694 51,377,641 1,139,444,273 2,742,217,905

PRIME BANK 297 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

41a Receipts from other operating activities of the Bank Locker rent 13,211,290 9,038,754 Service and other charges 265,614,811 175,479,365 Retail Income 246,950,893 207,702,689 Income from ATM services 84,922,844 81,769,391 Credit card income 70,583,165 48,908,262 Postage / Telex / Fax / SWIFT charge recoveries 28,175,709 49,819,209 Rebate from foreign Bank outside Bangladesh 74,970,816 61,313,177 Gain from sale of treasury bond / shares 40,814,862 1,829,513,273 Miscellaneous earnings 101,002,762 119,464,666 926,247,149 2,583,008,785 42 Consolidated payments for other operating activities Prime Bank Limited (note-42a) 1,888,295,683 1,984,631,152 Prime Bank Investment Limited 59,772,526 40,645,735 Prime Bank Securities Limited 109,040,978 20,029,759 Prime Exchange Co. Pte. Ltd., Singapore 20,446,904 22,464,555 PBL Exchange (UK) Ltd. 28,865,444 23,775,109 PBL Finance (Hong Kong) Limited 16,524,418 16,671,971 2,122,945,953 2,108,218,281 42a Payments for other operating activities of the Bank Rent, rates and taxes 961,285,687 906,160,291 Legal expenses 105,967,130 83,038,972 Postage and communication charges, etc. 70,375,029 77,943,186 Directors' fees 3,663,929 4,495,414 Other expenses 747,003,908 912,993,289 1,888,295,683 1,984,631,152 43 (Increase) / decrease of consolidated other assets Prime Bank Limited (note-43a) 92,178,274 6,944,608,143 Inter-company capital - - Prime Bank Investment Limited 4,462,322 (26,559,787) Prime Bank Securities Limited (45,501,891) (9,949,810) Prime Exchange Co. Pte. Ltd., Singapore 59,092 501,529 PBL Exchange (UK) Ltd. 518,010 (797,181) PBL Finance (Hong Kong) Limited (6,352,642) (24,000,895) 45,363,165 6,883,801,999 43a (Increase)/ decrease of other assets of the Bank T & T bonds 20,645,191,161 21,353,998,956 Stationery and stamps 50,406,794 38,027,828 Advance deposits and advance rent 284,080,601 355,000,715 Branch adjustment account 18,517,480 18,516,520 Suspense account 244,727,208 283,396,487 Encashment of PSP / BSP 997,709,958 457,207,387 Credit card 96,028,502 92,911,810 Sundry assets 4,069,789,153 3,899,569,427 26,406,450,857 26,498,629,131 92,178,274 6,944,608,143 44 Increase / (decrease) of consolidated other liabilities Prime Bank Limited (note-44a) (678,988,274) 222,731,088 Prime Bank Investment Limited 26,609,469 13,628,159 Prime Bank Securities Limited 68,559,602 20,999,791 Prime Exchange Co. Pte. Ltd., Singapore (16,371,122) 41,575,504 PBL Exchange (UK) Ltd. (20,725,084) 12,972,568 PBL Finance (Hong Kong) Limited (19,160,550) 3,172,624 (640,075,960) 315,079,735

44a Increase / (decrease) of other liabilities of the Bank Expenditure and other payables 147,779,820 142,722,657 Provision for bonus 8,593,459 1,178,887 Unearned commission on bank guarantee 7,820,643 32,536,560 Interest suspense account 4,026,761,377 4,693,505,469 4,190,955,299 4,869,943,573 (678,988,274) 222,731,088

298 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

Amount in Taka 2018 2017

45 Consolidated earnings per share (CEPS) Net profit after tax (Numerator) 2,253,633,866 1,215,528,259 Number of Ordinary shares outstanding (Denominator) 1,132,283,477 1,132,283,477 Consolidated earnings per share (CEPS) 1.99 1.07

Earnings per share has been calculated in accordance with IAS - 33: "Earnings Per Share (EPS)". Previous year's figures have been adjusted for the issue of bonus shares during the year.

45a Earnings per share (EPS) of the Bank Net profit after tax (Numerator) 2,187,802,036 1,058,974,674 Number of Ordinary shares outstanding (Denominator) 1,132,283,477 1,132,283,477 Earnings per share (EPS) 1.93 0.94

Earnings per share has been calculated in accordance with IAS - 33: "Earnings Per Share (EPS)". Previous year's figures have been adjusted for the issue of bonus shares during the year.

46 Number of employees of the Bank The number of employees engaged for the whole year or part thereof who received a total remuneration of Tk. 36,000 p.a. or above were 3,212.

47 Assets pledged as security for liabilities of the Bank Treasury bills & bonds to Bangladesh Bank for Repo - -

48 Disclosure on Audit Committee of the Bank a) Particulars of Audit Committee Audit Committee (AC) of the Board was formed and its roles and responsibilities were defined in line with Corporate Governance Code issued by Bangladesh Securities and Exchange Commission (BSEC) vide BSEC notification BSEC/CMRRCD/2006-158/Admin/80 dated June 03, 2018 and BRPD Circular no.11 dated October 27, 2013 issued by Bangladesh Bank. The current Audit Committee (AC) was re-constitued by the Board of Directors of the Bank in its 463rd meeting held on 11 May 2017 Composition and Qualification of the Audit Committee mention as stated below:

Status with Name Status with bank Educational Qualification committee

Mr. Shamsuddin Ahmad, Ph.D Independent Chairman Ph.D (Economic Development), Director University of Hawaii, USA Mr. Md. Nader Khan Director Member B.Sc Dr. G. M. Khurshid Alam Independent Member Ph.D (Economic), Boston Director University, USA Mr. M Farhad Hussain FCA Independent Member GEC "A" level from Greenmore Director College, Birmingham, UK. Accountancy Foundation Course, Institute of Chartered Accountants of England and Wales.

PRIME BANK 299 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

b) Meetings held by the Audit Committee during the year by date:

Sl No Meeting No Held on 1 134th February 27, 2018 2 135th March 27, 2018 3 136th April 9, 2018 4 137th May 10, 2018 5 138th June 3, 2018 6 139th July 25, 2018 7 140th September 19, 2018 8 141st October 25, 2018 9 142nd November 27, 2018 10 143rd December 20, 2018

c) Activities of the Committee during the year 2018:

Financial Reporting: • Reviewed Draft Annual Financial statements for the year ended December 31, 2017. • Reviewed Un-audited quarterly (Q1) financial statements of the Bank as on March 31, 2018. • Reviewed Un-audited quarterly (Q2) financial statements of the Bank as on 30 June, 2018. • Reviewed Un-audited quarterly (Q3) financial statements of the Bank as on 30 Sep, 2018. Internal Control: • Reviewed self-assessment report on Anti Fraud Internal Controls (SAAFIC) for the half year ended on December 31, 2017.

• Reviewed self-assessment report on Anti Fraud Internal Controls (SAAFIC) for the half year ended on June 30, 2018. • Reviewed/Evaluated overall effectiveness of the Internal Control Systems and Policies & procedures of the Bank and recommended it to the Board for endorsement. • Reviewed of internal Control & Compliance Manual of Prime Bank Limited Internal Audit: • Reviewed and approved Audit Plan for the year 2018 • Reviewed major Audit findings and observations on Information Security Division conducted by IT Audit • Reviewed Draft Internal Audit Manual • Reviewed & recommended Draft Internal Audit Charter to the Board for approval • Reviewed Summary Report of the Audit Findings for the year-2017 • Approved the Annual Audit Plan – 2019

• Approved 03 years (2018-2020) Departmental Strategic Planning of the Internal Audit & Inspection division and recommended to the Board • Reviewed revision of Internal Audit Charter of the Audit & Inspection Division

External Audit& Auditors: • Met with the External Auditors in the 136th AC meeting held on 09.04.2018: Representatives of the Audit Firms namely M/S. Hoda Vasi Chowdhury & Co and Aziz Halim Khair Choudhury on invitation joined the meeting for sharing their observations/ findings upon completion of the Auditing on the bank’s operational activities and financials for the year 2017. • Scrutinized applications of the aspiring External Auditors of the Bank for the year 2018 and recommending to the Board for consideration at the AGM for final appointment. • Inspections (Internal& BB): • Reviewed Inspection Report on the documentation status of different customers of the Bank (branch-wise) • Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on 31.12.2017. • Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on 31.03.2018.

300 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

• Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on 30.06.2018. • Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on 30.09.2018.

Periodical Reporting: • Reviewed quarterly status report on Complaints received by Service Quality and Central Complaint Management Cell Compliance Functions: • Reviewed Compliance Policy of the Bank • Reviewed Compliance of the Minutes of the respective Audit Committee Meetings • Reviewed outstanding compliance status of the Board and EC decisions

Other functions: • Suggested training for the officials through setting up an ideal Training Academy to suit the purpose and requirement of the Bank • Annual Integrated Report on the Health of Prime Bank Limited for the year 2017 • Reviewed status of Deferral(s) given to customers for execution of documentation and other purposes (up to December 31,2017) • Reviewed status of Deferral(s) given to customers for execution of documentation and other purposes (up to March 31,2018) • Reviewed status of Deferral(s) given to customers for execution of documentation and other purposes (up to June 30,2018) • Reviewed status of Deferral(s) given to customers for execution of documentation and other purposes (up to Sep 30,2018) • Suggested recirculation of the ‘Whistleblower Protection Policy’ of the Bank.

49 Related Party Disclosures of the Bank

i) Names of the Directors together with a list of entities in which they have Interest Annexure-E

ii) Significant contracts where Bank is a party and wherein Directors have interest during the year 2018

(Figure in Taka) Relationship with Approve Outstanding Name of Directors Nature of transaction the Bank limit amount Azam J Chowdhury Chairman Credit Card 1,000,000 10,949 Mr. Imran Khan Vice Chairman Credit Card 1,000,000 221,419 Mr.Md.Nader Khan Director Credit Card 500,000 75,692 Mrs. Marina Yasmin Chowdhury Director Credit Card 1,000,000 43,520 Mrs. Nasim Anwar Hossain Director Credit Card 500,000 122,208 Mrs. Salma Huq Director Credit Card 500,000 59,382 Mr.Nafis Sikder Director Credit Card 500,000 29,783 Mr. Tarique Ekramul Haque Director Credit Card 500,000 216,996 Quazi Sirazul Islam Director Credit Card 500,000 865 Mr. Waheed Murad Jamil Director Credit Card 500,000 164,506 Dr. G. M. Khurshid Alam Independent Director Credit Card 500,000 309,356

iii) Shares issued to Directors and Executives without consideration or exercisable at a discount Nil

PRIME BANK 301 ANNUAL REPORT 2018

Notes to the Financial Statements as at and for the year ended 31 December 2018

iv) Related party transactions

Lease agreement Common Director 4,788,540 Lease agreement Common Director 2,760,000

v) Lending policies in respect of related party

a) Amount of transaction regarding loans and advances, deposits, guarantees and Nil commitment as on 31.12.2018 b) Amount of transactions regarding principal items of deposits, expenses and commission Nil c) Amount of provision against loans and advances given to related party Nil d) Amount of guarantees and commitments arising from other off-balance sheet Nil exposures

vi) Disclosure of transaction regarding Directors and their related concerns Nil

vii) Business other than banking business with any relation concern to the Directors as per Section 18(2) of the Bank Companies Act, 1991.

a) Lease agreement made with the Sponsor Director & Independent Director

Name of Director and related Nature of contract Branch Name Remarks by Jubilee Road Mr. Md. Nader Khan Director & Lease period: 01.08.2015 Lease agreement Branch owner of the premises to 31.07.2021 ATM Booth Mr. Md. Nader Khan Director & Lease period: 12.10.2011 Lease agreement Jubilee Road Branch owner of the premises to 11.10.2021 Mr. Md. Nader Khan Director & Lease period: 13.12.2014 Lease agreement Store Room (Regional) owner of the premises to 12.12.2020 Mr. Md. Nader Khan Director & Lease period: 28.11.2017 Lease agreement ATM Booth owner of the premises to 27.11.2027 Mrs. Marina Yasmin Chowdhury Lease period: 01.09.2013 Lease agreement Kulaura Branch Director & owner of the premises to 31.08.2019 Quazi Sirajul Islam Lease period: 10.07.2016 Lease agreement Head Office Director & owner of the premises to 09.07.2022 Mr. Azam J Chowdhury & Mrs. Lease period: 01.01.2017 Lease agreement Halishahar Branch Marina Yasmin Chowdhury to 31.12.2025 Director & owner of the premises

b) Service receiving companies where the Directors interest subsisted during the year

Name of party Relationship Nature of transaction Amount - - - - viii) Investment in the Securities of Directors and their related concern Nil

302 PRIME BANK Notes to the Financial Statements as at and for the year ended 31 December 2018

ix) Business with subsidiary

50 Workers Participation Fund and Welfare Fund SRO-336-AIN/2010 dated 5-10-2010 issued by the ‘Ministry of Labour and Employment’ declares the status of business of certain institutions and companies along with Bank & insurance companies as “Industrial Undertakings” for the purposes of Chapter-XV of the Bangladesh Labour Act, 2006 (as amended up to 2013) which deals with the workers’ participation in company’s profit by way of ‘Workers Participation Fund’ and ‘Welfare Fund’. This Act requires the “Industrial Undertakings” to maintain provision for workers’ profit participation fund @ 5% on net profit. Since this requirement contradicts with the ‘Section 11’ of the ‘Bank Companies Act 1991 (as amended up to 2013)’, Banks in Bangladesh took up the issue collectively and sought opinion from ‘Association of Bankers Bangladesh Limited (ABB)’ on the same. ABB wrote a letter to the ‘Ministry of Finance’ of Government of People’s Republic of Bangladesh on 09.03.2016 to draw attention of the honorable Finance Minister regarding relevance and applicability of Chapter XV of the Bangladesh Labour Act, 2006 (as amended up to 2013) for Bank Companies and to obtain a direction on the issue. The ‘Ministry of Finance’ revealed their opinion that WPPF should not be relevant for Bank Companies and therefore, it should not be applied there. They also sought for an opinion on this issue from Bangladesh Bank. Subsequently, Bangladesh Bank agreed on all the logics and legal opinion collected by the ABB and expressed their consensus with them on 29.11.2016. In this backdrop, the ‘Ministry of Finance’ has given their instruction, vide letter no. 53.00.0000.311.22.002.17.130 dated 14.02.2017, for not applying Chapter XV of the Bangladesh Labour Act, 2006 (as amended up to 2013) in Bank Companies. Therefore, no provision in this regard has been made in the financial statements for the year ended on December 31, 2018.

51 Events after the Reporting Period The Board of Directors in its 489th meeting recommend to payment of 12.50% (Twelve and half percent) Cash dividend for the year 2018. The total amount of dividend is Taka 1,415,354,346 (One hundred forty one crore fifty three lac fifty four thousand three hundred forty six) only.

Chairman Director Director Managing Director

PRIME BANK 303 ANNUAL REPORT 2018 - 394,565 2,272,171 2,272,171 1,694,191 1,694,191 2,112,730 2,112,730 6,610,183 6,610,183 7,879,253 7,879,253 3,346,778 18,577,471 3,780,822 3,780,822 5,229,892 5,229,892 74,277,724 74,277,724 56,163,133 56,163,133 4,995,003 4,995,003 16,827,636 16,827,636 69,152,037 69,152,037 10,676,322 10,676,322 20,185,925 20,185,925 26,084,971 26,084,971 46,318,239 46,318,239 13,095,533 13,095,533 31,559,036 31,559,036 65,243,763 65,243,763 32,985,576 32,985,576 86,720,335 86,720,335 10,698,366 10,698,366 29,696,789 79,472,060 79,472,060 40,702,396 40,702,396 60,485,930 60,485,930 861,507,600 861,507,600 Annexure-A 1,013,196,068 1,013,196,068 2,701,942,497 Equivalent Taka Equivalent - 0.73 0.73 61.82 61.82 111.74 111.74 99.21 99.21 99.21 99.21 99.21 99.21 10.07 99.21 99.21 99.21 99.21 64.51 84.87 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 22.05 22.05 2017 Exchange rate Exchange - 3,977 45,717 45,717 27,475 27,475 33,735 81,066 81,066 92,836 92,836 20,486 315,417 315,417 679,119 50,349 50,349 66,630 66,630 836,179 836,179 898,159 898,159 129,364 129,364 484,165 484,165 492,169 492,169 224,637 224,637 731,390 731,390 359,091 359,091 583,867 203,478 203,478 209,867 332,493 332,493 560,075 244,086 244,086 960,968 960,968 1,402,731 1,402,731 17,846,189 17,846,189 10,417,262 10,417,262 12,251,464 12,251,464 43,007,681 43,007,681 FC amount FC - 84,068 84,068 844,572 844,572 9,317,124 9,317,124 7,823,551 7,823,551 71,731,747 8,169,962 8,169,962 4,283,613 11,713,433 11,713,433 1,286,480 19,326,191 19,326,191 3,333,740 3,333,740 4,004,757 4,004,757 79,311,246 15,545,921 15,545,921 22,015,572 22,015,572 91,921,420 91,921,420 16,355,245 16,355,245 61,308,210 61,308,210 14,929,683 14,929,683 25,493,074 36,362,801 36,362,801 50,855,337 50,855,337 58,901,096 58,901,096 58,356,086 44,234,984 212,047,667 101,625,582 101,625,582 122,362,627 122,362,627 99,008,962 99,008,962 102,835,022 102,835,022 1,875,244,629 1,875,244,629 3,230,634,401 3,230,634,401 Equivalent Taka Equivalent - 9.22 9.22 0.75 0.75 0.75 0.75 61.14 61.14 22.36 22.36 95.23 95.23 95.23 95.23 84.24 95.23 95.23 95.23 95.23 95.23 95.23 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 83.90 105.98 105.98 Exchange rate Exchange 2018 - 1,002 1,002 97,377 15,333 15,333 82,150 82,150 97,833 97,833 39,735 39,735 10,066 10,066 44,979 44,979 177,946 177,946 381,822 381,822 139,053 139,053 606,142 606,142 303,851 303,851 434,577 676,826 730,730 730,730 945,307 945,307 965,207 965,207 230,348 230,348 695,543 695,543 262,403 262,403 702,039 702,039 1,211,270 1,180,083 1,180,083 1,978,238 1,978,238 1,225,686 1,225,686 2,527,386 2,527,386 21,711,463 21,711,463 2,001,263 2,001,263 20,637,091 22,350,949 22,350,949 FC amount FC JP¥ JP¥ SEK SAR US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ GBP SG$ CHF AUD EURO EURO EURO EURO EURO Currency type Currency CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD type Account Account Balance with Other Banks-Outside Bangladesh (Nostro Account) Account) Bangladesh (Nostro Balance with Other Banks-Outside December 2018 of Prime Bank Limited as at 31 Total Zuercher Kantonal Bank, Zurich Kantonal Zuercher Wells Fargo Bank N. A., York Bank New Fargo Wells Unicredito Italiano SPA, Milano, Italy Milano, Italiano SPA, Unicredito Standard Chartered Bank, Frankfurt, Germany Bank, Frankfurt, Chartered Standard Standard Chartered Bank, Singapore Chartered Standard Standard Chartered Bank, New York, USA York, Bank, New Chartered Standard Standard Chartered Bank, Kolkata, India Bank, Kolkata, Chartered Standard Skandinaviska Enskilda, Banken, Sweden Sweden Enskilda, Banken, Skandinaviska India Sonali Bank, Kolkata, People’s Bank, Colombo, Sri Lanka Sri Lanka Bank, Colombo, People’s Nepal Bangladesh Bank Ltd., Kathmandu, Nepal Kathmandu, Ltd., Bank Nepal Bangladesh The National Commercial Bank, Jeddah The National Commercial National Westminister Bank, London, UK Bank, London, National Westminister Mashreq Bank PSC, Mumbai, India PSC, Bank Mashreq Mashreq Bank PSC, New York, USA York, New PSC, Bank Mashreq Kookmin Bank, Seoul, Southkorea Kookmin Korea Exchange Bank Seoul Bank Exchange Korea J. P. Morgan Chase Bank, New York Chase Bank, New Morgan P. J. Intesa Sanpaolo SPA, Milano, Italy Milano, Intesa Sanpaolo SPA, ICICI Bank Ltd, Mumbai, India Ltd, ICICI Bank HDFC Bank Limited, Kolkata, India Kolkata, Limited, Bank HDFC Habib Metropolitan Bank, Karachi Habib Metropolitan Habib American Bank, New York, USA York, Habib American Bank, New Commerz Bank AG, Frankfurt , Germany Frankfurt AG, Bank Commerz Australia of Australia, Bank Commonwealth Commerz Bank AG, Frankfurt , Germany Frankfurt AG, Bank Commerz Citibank N.A., New York, USA Citibank N.A., York, New Citibank N.A., , UK London SMBC, Tokyo, Japan Tokyo, SMBC, Bank of Tokyo Mitsubishi, Japan of Tokyo Bank Bank of Bhutan, BhutanBank Name of the Bank Name Mumbai, India Ltd., AB Bank

304 PRIME BANK Reconciliation Statement of Balance with Bangladesh Bank As at 31 December 2018 Annexure-A-1 1) Balance with Bangladesh Bank-Taka account of the Bank

Detail Total Balance as per Bank ledger 11,860,895,553

Unresponded debit entries in Bangladesh Bank statement 55,843,735 Prime Bank’s ledger 7,221,539 63,065,274 11,797,830,279 Unresponded credit entries in Bangladesh Bank statement 10,335,993 Prime Bank’s ledger 56,100 10,392,093 Balance as per Bangladesh Bank statement 11,808,222,372

2) Balance with Bangladesh Bank-Foreign currency of the Bank

Balance as per Bank ledger 1,980,765,411

Unresponded debit entries in Bangladesh Bank statement 280,035,332 Prime Bank’s ledger 20,915,221 300,950,553 1,679,814,857 Unresponded credit entries in Bangladesh Bank statement 562,620,666 Prime Bank’s ledger 574,640,692 1,137,261,358 Balance as per Bangladesh Bank statement 2,817,076,215

PRIME BANK 305 ANNUAL REPORT 2018

Investment in Shares of the Bank As at 31 December 2018 Annexure-B

Quoted Total market SL. Face No of Cost / present Average rate per Name of the Company value as at No. Value shares value of holdings cost share as on 31.12.18 31.12.18

Quoted:

1 DESCO 10 329,700 19,262,511 58.42 40.40 13,319,880 2 National Bank Ltd. 10 1,870,176 27,970,098 14.96 9.30 17,392,637 3 Uttara Bank Ltd. 10 968,000 37,009,980 38.23 28.50 27,588,000 4 Activefine 10 271,882 8,234,068 30.29 28.20 7,667,072 5 KPCL 10 79,112 8,156,284 103.10 59.30 4,691,342 6 UPGDCL 10 40,128 11,849,780 295.30 290.70 11,665,210 Sub Total 112,482,721 82,324,140 Unquoted:

1 Central Depository 10 5,711,804 15,694,430 2.75 - 15,694,430 Bangladesh Ltd. 2 Investment in SWIFT 4,184,430 - - 4,184,430 3 Market Stabilization Fund 5,000,000 5,000,000 4 Star Ceramics Preference Share 20,167,917 20,167,917 5 Sharemoney Deposit 240,000,000 240,000,000 Sub Total 285,046,776 285,046,776 Total 397,529,498 367,370,917

306 PRIME BANK - 13,373,156 13,373,156 Taka Taka 66,070,895 700,117,298 700,117,298 271,004,385 271,004,385 Annexure-C 284,377,542 284,377,542 500,408,056 3,719,444,788 3,719,444,788 1,672,929,942 1,672,929,942 as at 31.12.18 6,434,047,671 6,943,348,521 6,943,348,521 6,658,970,979 Net book value book value Net - 1,820,037 377,667,112 44,519,457 44,519,457 Taka 188,227,759 188,227,759 294,519,693 294,519,693 589,934,044 589,934,044 339,039,150 339,039,150 at 31.12.18 1,642,940,352 1,642,940,352 2,824,771,120 2,824,771,120 3,139,628,455 3,139,628,455 2,800,589,304 2,800,589,304 Total balance as Total ------4,961,751 4,961,751 1,772,780 8,615,402 8,615,402 Taka 31,291,999 15,349,933 15,349,933 15,349,933 Disposals/ Disposals/ adjustments during the year - DEPRECIATION 228,618 228,618 Taka Taka 3,320,441 3,320,441 16,306,126 16,306,126 the year 34,425,301 34,425,301 55,278,238 55,278,238 49,878,083 170,770,461 53,198,524 Charge for for Charge 277,001,356 277,001,356 277,008,743 277,008,743 330,207,267 330,207,267 - 1,591,419 41,199,017 41,199,017 Taka 01.01.18 244,641,610 244,641,610 366,322,737 366,322,737 153,802,458 153,802,458 Opening 536,428,586 536,428,586 1,480,785,293 285,840,626 285,840,626 2,824,771,120 2,824,771,120 2,579,061,763 2,579,061,763 balance as on 2,538,930,494 2,538,930,494 1,820,037 Taka 57,892,614 57,892,614 1,861,157,701 1,861,157,701 565,524,078 443,738,007 443,738,007 623,416,692 623,416,692 3,719,444,788 3,719,444,788 1,090,342,100 1,090,342,100 2,343,057,650 2,343,057,650 as at 31.12.18 9,258,818,792 9,258,818,792 Total balance Total 9,459,560,283 9,459,560,283 10,082,976,975 ------year Taka 9,611,049 4,961,752 4,961,752 2,473,225 2,473,225 17,046,026 17,046,026 17,046,026 17,046,026 during the Disposals/ Disposals/ adjustments 195,056,456 195,056,456 - - COST year Taka 24,194,641 24,194,641 212,379,527 212,379,527 14,680,000 14,680,000 Additions Additions 347,799,052 347,799,052 during the 135,920,050 135,920,050 285,131,076 285,131,076 106,230,940 106,230,940 614,144,682 614,144,682 227,059,527 227,059,527 841,204,209 841,204,209 1,820,037 43,212,614 43,212,614 Taka 424,505,118 424,505,118 353,144,552 353,144,552 1,725,237,651 1,725,237,651 986,584,385 396,357,165 396,357,165 3,719,444,788 3,719,444,788 9,168,744,172 9,168,744,172 2,004,869,646 2,004,869,646 9,258,818,792 9,258,818,792 8,862,461,626 8,862,461,626 as on 01.01.18 Opening balance Schedule of Fixed Assets of the Bank Schedule of Fixed December 2018 as at 31 Software-ATM Sub-total December 2018 As at 31 Software-Amortization Banking Software-Core December 2017 As at 31 Building Sub-total Land Land and fixtures Furniture Office equipment and machinery Vehicles books Library Particulars

PRIME BANK 307 ANNUAL REPORT 2018 Annexure-D Present status Present Submission of Tax return is yet not due. is yet return of Tax Submission Return filed but the assessment is yet to completed. to filed but the assessment is yet Return completed. to filed but the assessment is yet Return Completed Completed Completed Completed Completed Completed Case High Court file to before DCT the by made Appealeddisallowances some against Tribunal. the Appellate Case High Court file to before DCT the by made Appealeddisallowances some against Tribunal. the Appellate Appealed against some disallowances made by the DCT before before DCT the by made Appealeddisallowances some against Tribunal. the Appellate before DCT the by made Appealeddisallowances some against Tribunal. the Appellate Appealed against some disallowances made by the DCT before before DCT the by made Appealeddisallowances some against Bench the Appellate Completed Assessment year 1999-2000 is final but the Tax Authority referred referred Authority is final but the Tax 1999-2000 Assessment year High Court Division. it to Completed ------24,947,215 24,947,215 (6,146,733) 24,548,375 24,548,375 Taka 123,519,726 123,519,726 (57,129,470) (21,287,668) 256,193,645 256,193,645 (43,882,852) (102,313,148) Excess/ Excess/ 198,449,090 198,449,090 (shortage) of tax paid ------Taka 110,950,071 210,861,463 210,861,463 Excess/ (61,933,945) (shortage) (259,877,589) of provision 24,947,215 24,947,215 478,121,977 915,627,471 915,627,471 Taka 342,757,186 342,757,186 337,138,495 337,138,495 224,647,577 224,647,577 866,864,811 470,158,263 470,158,263 247,455,962 247,455,962 737,606,389 737,606,389 2,193,417,798 2,193,417,798 683,420,639 683,420,639 1,432,194,785 1,432,194,785 438,405,004 438,405,004 Tax paid Tax 1,354,221,954 1,354,221,954 1,019,804,475 1,019,804,475 2,033,288,558 2,033,288,558 1,000,000,000 1,000,000,000 14,800,078,559 14,800,078,559 ------411,652 411,652 Taka 481,412,744 481,412,744 312,590,120 312,590,120 482,287,856 482,287,856 268,743,630 268,743,630 346,638,537 346,638,537 348,903,919 348,903,919 1,076,933,945 Tax as per Tax 3,317,922,403 3,317,922,403 assessment order 411,652 411,652 Taka 312,590,120 312,590,120 592,362,815 592,362,815 482,287,856 482,287,856 268,743,630 268,743,630 348,903,919 348,903,919 557,500,000 557,500,000 713,000,000 713,000,000 1,012,449,724 1,012,449,724 150,000,000 150,000,000 750,000,000 750,000,000 2,866,502,255 2,866,502,255 1,180,000,000 1,180,000,000 1,616,000,000 1,616,000,000 1,015,000,000 1,015,000,000 1,735,000,000 1,735,000,000 1,750,000,000 1,750,000,000 2,449,800,000 2,449,800,000 2,285,000,000 2,285,000,000 per accounts 20,085,551,971 20,085,551,971 Tax provision as provision Tax - year 2011-2012 2010-2011 2010-2011 2017-2018 2017-2018 2012-2013 2016-2017 2014-2015 2013-2014 2018-2019 2015-2016 2019-2020 2009-2010 2009-2010 2007-2008 2007-2008 2006-2007 2006-2007 2002-2003 2002-2003 2004-2005 2004-2005 2003-2004 2003-2004 2008-2009 2008-2009 2005-2006 2005-2006 Assessment Total 2011 year 2017 2012 2015 2013 2018 2014 2016 2010 2001 2007 2002 2005 2003 2008 2004 2009 2006 Accounting Accounting 1995 to 2000 to 1995 Statement of Tax Position of the Bank Position Statement of Tax December 2018 as at 31

308 PRIME BANK Name of Directors and their Interest in different entities Annexure-E Sl no. Name of Directors Status with PBL Entities where they have interest East Coast Shipping Lines Ltd. EC Distribution Ltd. East Coast Trading (Pvt.) Ltd. EC Securities Ltd. EC Holdings Limited EC Aviation Limited (Corporate Interest) EC Bulk Carriers Ltd. Unicom Clean Energy Limited Clean Fuel Filling Station Limited (Corporate Interest) Omera Chemicals Limited (Corporate Interest) Mr. Azam J Chowdhury Radiant Alliance Limited (Corporate Interest) 1 Chairman MJL Bangladesh Ltd. (Corporate Interest) Bangladesh Trade Syndicate Ltd. Green Delta Insurance Co. Ltd. Omera Fuels Ltd. (Corporate Interest) Nordic Woods Ltd. (Corporate Interest) ASP Omera Crew Management Ltd. (Corporate Interest) Union Capital Limited (Corporate Interest) Consolidated Tea & Plantation Limited (Corporate Interest) Baraoora (Sylhet) Tea Company Limited (Corporate Interest) The Consolidated Tea & Lands Co. (BD) Limited (Corporate Interest) Prime Finance & Investment Ltd. (Corporate Interest) International Holdings Limited IPE Technologies Limited Shepherd World Trade Limited 2 Mr. Mafiz Ahmed Bhuiyan Vice Chairman Shephered Consultant & Management Limited Native Holdings Limited Citizen Securities & Investment Limited ( Representing Shephered World Trade Limited) Prima Enterprise PNL Holdings Limited Polyexprint Limited Halda Valley Tea Co. Limited PNL Water Management Limited 3 Mr. Imran Khan Vice Chairman Pedrollo NK Limited Pedrollo Dairy & Horticulture Limited Polyexlaminate Limited Hill Plantation Ltd. Halda Fisheries Ltd. Polytape Limited Pragati Corporation Pedrollo NK Limited PNL Water Management Limited Polyexprint Limited PNL Holdings Limited 4 Mr. Md. Nader Khan Director Halda Valley Tea Company Limited Pedrollo Dairy & Horticulture Limited Polytape Limited Hill Plantation Ltd. Cider Education Services Ltd. Halda Fisheries Ltd. Amin Jewelers Limited City Hospital Limited 5 Quazi Sirazul Islam Director Bangla Gold (Pvt.) Limited Ducaty Apparels Limited Parkensine Products Ltd. East Coast Trading (Pvt.) Ltd. EC Securities Ltd. Mrs. Marina Yasmin EC Bulk Carriers Ltd. 6 Director Chowdhury East Coast Shipping Lines Ltd. EC Holdings Limited EC Aviation Ltd. EC Distribution Ltd VIP Shahadat Cold Storage 7 Mr. Md. Shahadat Hossain Director VIP Shahadat Poultry & Hatchery

PRIME BANK 309 ANNUAL REPORT 2018

Sl no. Name of Directors Status with PBL Entities where they have interest China-Bangla Ceramic Industries Limited Bengal Tiger Cement Industries Ltd. Bajnabo Testiles Mills Limited 8 Mr. Md. Shirajul Islam Mollah Director Trustee Securities Limited United Shipping Lines Limited SR Telecom Limited Dhaka-Foshan Mould Company Limited Prime Cement Ltd. 9 Mrs. Nasim Anwar Hossain Director Lubricants Asia Ltd. Bengal Tiger Cement Industries Ltd. GQ Ball Pen Industries Limited GQ Industries Ltd. (PP Woven Bag) 10 Mrs. Salma Huq Director Maladesh International (Pvt.) Ltd. (Mosquito Coil) GQ Foods Limited GQ Enterprise Limited Marina Apparels Ltd. Nafa Apparels Ltd. Ayesha Clothing Co. Ltd. Ayesha Washing Limited Ayesha Fashion Limited Safaa Sweaters Ltd Aswad Composite Mills Limited Cortz Apparels Limited 11 Mr. Nafis Sikder Director K.M. Apparels (Pvt.) Ltd. Hamza Clothing Ltd. Hamza Trims Ltd. Modern Needlecraft Ltd. Palmal Garments Ltd. Palmal Garments Hosiery Ltd. Palmal Logistics Dy-Chroma (BD) Limited Hamza Fashion Limited Everest Homes Limited The Everest Trading Limited Mr. Waheed Murad Jamil Everest Lancers Security and Logistics Limited Neon Consumers Products Limited 12 (Representative of Mawsons Director Exuberant Developers Limited Limited) Prime Islami Life Insurance limited Nowhata Green Bricks Limited Fareast Islami Securities Limited Bangla Trac Limited Bangla Trac Communication Limited Acorn Infrastructure Services Limited B-Trac Engineering Limited Prime Islami Life Insurance Limited PFI Securities Limited Asian Gate Ltd 13 Mr. Tarique Ekramul Haque Director Acorn Limited Thane Technology B-Trac FMCG Limited Tiffin Box Limited B-Trac Technoligies Limited NBM Telecom limited Bangla ICX Limited Uniglory Cycle Components Ltd. Mr. Mohammad Mushtaque Antics Graphics Limited Uniglory Paper & Packaging Limited Ahmed Tanvir 14 Director Uniglory Packaging Industries Limited (Representative of Uniglory Uniglory Button Limited Cycle Industries Ltd.) Fashion Pro Limited Satori Limited None 15 Mr. Shamsuddin Ahmad, Ph.D Independent Director None 16 Dr. G. M. Khurshid Alam Independent Director Bay Asset Management Company Limited 17 Mr. M Farhad Hussain FCA Independent Director Abode of Consultants (Pvt.) Limited 18 Prof. Dr. M. Shamim Z. Bosunia Independent Director

310 PRIME BANK Distribution of Profit Under Islamic Banking operation

Annexure-F Prime Bank Limited has 05 (five) Islamic Banking branches based on Islamic Shariah, which absolutely prohibits receipts and payments of interest in any form. The operation of these 05 (five) branches are totally different from other conventional banking branches as they operate on the basis of profit sharing arrangement.

Fixation of final profit rate for the year 2018 Provisional profit are applied to the different types of deposit accounts at the rates decided by the Bank from time to time taking into consideration of the industry trend and that of the rates of other Islamic Banks in Bangladesh. Final rates of profit are declared annually as at 31 December in every year on the basis of income earned from different investments and other business by individual branches and distributed as per weightage of the different deposit products wise weightage are properly disclosed and make available in all of our islamic banking branches. For the year ended 31 December 2018, 70% of total investment income has been allocated to the diffrent types of Mudaraba depositors (except no cost fund) according to the weightage. The remaining 30% of the investment income is retained by the Bank as Management fee (25%) and Investment loss Off-setting Reserve (5%).

PRIME BANK 311 FINANCIAL STATEMENTS OF ISLAMIC BANKING BRANCHES

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements Prime Bank Limited-Islamic Branches Balance Sheet as at 31 December 2018

Annexure-G Amount in Taka Particulars Notes 2018 2017 PROPERTY AND ASSETS Cash in hand 1 Cash in hand (including foreign currencies) 77,287,386 93,632,734 Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) - - 77,287,386 93,632,734 Balance with other banks and financial institutions 2 In Bangladesh 229,289 229,289 Outside Bangladesh - - 229,289 229,289 Placement with banks & other financial institutions 3 - - Investments in share & securities 4 Government - - Others - - - - Investments General investments etc 5 16,190,147,908 14,684,333,361 Bills purchased and discounted 6 71,299,314 220,116,921 16,261,447,222 14,904,450,282 Fixed assets including premises 7 16,520,812 18,952,884 Other assets 8 3,494,470,435 2,839,487,287 Non - banking assets - -

Total assets 19,849,955,144 17,856,752,477

LIABILITIES AND CAPITAL Liabilities Placements from other banks, financial institutions and agents 9 1,152,554,632 1,423,446,539 Deposits and other accounts 10 Mudaraba savings deposits 3,015,944,673 2,915,742,955 Mudaraba term deposits 12,993,580,813 11,045,473,448 Other mudaraba deposits - - Al-wadeeah current deposits and other deposits accounts 2,208,976,990 1,905,030,556 Bills payable 66,193,519 283,966,377 18,284,695,994 16,150,213,335 Other liabilities 11 412,704,518 283,092,603

Total liabilities 19,849,955,144 17,856,752,477 Capital / Shareholders’ equity Paid up capital - - Statutory reserve - - Revaluation gain / (loss) on investments - - Revaluation reserve - - Other reserve - - Surplus in profit and loss account / Retained earnings - -

Total Shareholders’ equity - -

Total liabilities and Shareholders’ equity 19,849,955,144 17,856,752,477

PRIME BANK 313 ANNUAL REPORT 2018

Prime Bank Limited-Islamic Branches Balance Sheet as at 31 December 2018

Amount in Taka Particulars Notes 2018 2017 OFF- BALANCE SHEET EXPOSURE

Contingent liabilities 12 Acceptances and endorsements 12.1 8,377,052,169 4,968,005,506 Letters of guarantee 12.2 679,695,241 467,277,310 Irrevocable letters of credit 12.3 7,070,204,030 5,557,272,523 Bills for collection 12.4 936,084,936 958,404,759 Other contingent liabilities - - 17,063,036,376 11,950,960,098 Other commitments 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 - - Other commitments - -

- -

Total Off-Balance Sheet exposure including contingent liabilities 17,063,036,376 11,950,960,098

314 PRIME BANK Prime Bank Limited-Islamic Branches Profit and Loss Account for the year ended 31 December 2018

Annexure-G(I) Amount in Taka Particulars Notes 2018 2017

Investment income 13 1,453,381,426 1,425,832,680 Profit paid on deposits 14 (933,597,766) (766,173,726) Net investment income 519,783,660 659,658,954 Income from investment in shares / securities - - Commission, exchange and brokerage 15 136,365,229 115,797,589 Other operating income 16 53,606,191 48,091,308 Total operating income (A) 709,755,080 823,547,850

Salaries and allowances 17 87,692,033 91,352,918 Rent, taxes, insurance, electricity, etc. 18 26,448,120 26,649,155 Legal expenses 19 526,645 2,313,038 Postage, stamp, telecommunication, etc. 20 3,272,853 5,534,643 Stationery, printing, advertisements, etc. 21 4,232,500 3,746,988 Chief Executive’s salary and fees - - Directors’ fees & expenses - - Shariah supervisory committee’s fees and expenses - - Auditors’ fees - - Charges on investment losses 22 - - Depreciation and repair of Bank’s assets 23 6,923,317 5,718,746 Zakat expenses - - Other expenses 24 13,060,033 14,113,816

Total operating expenses (B) 142,155,501 149,429,305 Profit / (loss) before provision (C=A-B) 567,599,579 674,118,545 Provision for investments 25 Specific provision - - General provision - - Provision for off-balance sheet exposures - - - - Provision for diminution in value of investments - - Other provisions - -

Total provision (D) - -

Total profit / (loss) before taxes (C-D) 567,599,579 674,118,545

PRIME BANK 315 ANNUAL REPORT 2018

Prime Bank Limited-Islamic Branches Cash Flow Statement for the year ended 31 December 2018

Amount in Taka Particulars 2018 2017 A) Cash flows from operating activities Investment income receipts in cash 1,318,653,952 1,076,381,733 Profit paid on deposits (972,028,051) (800,713,044) Dividend receipts - - Fees and commission receipts in cash 136,365,229 115,797,589 Recoveries of investments previously written off - - Cash payments to employees (87,692,033) (91,352,918) Cash payments to suppliers (4,232,500) (3,746,988) Income taxes paid - - Receipts from other operating activities 53,606,191 48,091,308 Payments for other operating activities (47,271,522) (51,292,966) Cash generated from operating activities before changes in operating assets and liabilities 397,401,265 293,164,713 Increase / (decrease) in operating assets and liabilities Statutory deposits - - Purchase of trading securities (Treasury bills) - - Investment to other banks - - Investment to customers (1,648,230,695) (3,941,681,086) Other assets (914,999,276) (201,165,926) Deposits from other banks/borrowings 58,751,828 1,906,636,778 Deposits from customers 1,804,838,923 110,062,658 Other liabilities account of customers - - Trading liabilities - - Other liabilities 286,419,980 1,366,896,546 (413,219,240) (759,251,029) Net cash from operating activities (15,817,975) (466,086,316)

B) Cash flows from investing activities Debentures - - Proceeds from sale of securities - - Payments for purchases of securities - - Purchase of property, plant and equipment (527,374) (896,085) Payment against lease obligation - - Proceeds from sale of property, plant and equipment - - Net cash used in investing activities (527,374) (896,085) C) Cash flows from financing activities Dividend paid - - Net Cash from financing activities - - D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) (16,345,348) (466,982,401) E) Effects of exchange rate changes on cash and cash equivalents - - F) Cash and cash equivalents at beginning of the year 93,862,023 560,844,424 G) Cash and cash equivalents at end of the year (D+E+F) 77,516,675 93,862,023

Cash and cash equivalents at end of the year Cash in hand (including foreign currencies) 77,287,386 93,632,734 Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) - - Balance with other banks and financial institutions 229,289 229,289 Placement with banks & other financial institutions - - Prize bonds - - 77,516,675 93,862,023

316 PRIME BANK ------Taka Total ------Taka earnings Retained Retained ------Taka Revaluation gain / Revaluation loss on investments ------Taka reserve Revaluation Revaluation ------Taka reserve Statutory ------Taka Paid-up Capital Paid-up Balance as at 1 January 2018 Balance Changes in accounting policy balance Restated of properties / deficit on account of revaluation Surplus gain on investments revaluation of last year Adjustment of investments / deficit on account of revaluation Surplus differences translation Currency in the income statement Net gains and losses not recognized the year for Net profit Dividends (Bonus shares) Cash dividend capital Issue of share made during the year Appropriation December 2018 Balance as at 31 December 2017 Balance as at 31 Prime Bank Limited-Islamic Branches Statement of Changes in Equity December 2018 ended 31 the year for Particulars

PRIME BANK 317 ANNUAL REPORT 2018

Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018 Please see PBL notes 1-2 Amount in Taka 2018 2017 1 Cash in hand i) In local currency 75,869,476 92,739,574 ii) In foreign currency 1,417,910 893,160 Sub-total (a) 77,287,386 93,632,734 Cash with Bangladesh Bank and its agents Balance with Bangladesh Bank - - Balance with Sonali Bank (as agent of Bangladesh Bank) - - Sub-total (b) - - Grand total (a+b) 77,287,386 93,632,734 Required CRR and SLR of Islamic Branches are maintained at Head Office 2 Balance with other banks and financial institutions In Bangladesh (note-2.1) 229,289 229,289 Outside Bangladesh (note-2.2) - - 229,289 229,289 2.1 In Bangladesh Short-term deposit accounts ICB Islamic Bank Ltd., Motijheel, Dhaka 13,069 13,069 ICB Islamic Bank Ltd, Sylhet 16,786 16,786 Social Islami Investment Bank Ltd. Dhaka 10,158 10,158 40,012 40,012 Savings accounts Al Arafah Islami Bank Ltd. Dhaka 74,667 74,667 Bank Al Falah Ltd. Dhaka 39,011 39,011 Social Islami Investment Bank Ltd. Dhaka 75,599 75,599 189,277 189,276 Fixed deposit receipt The City Bank Ltd - - 2.2 Outside Bangladesh (NOSTRO Accounts) - - 229,289 229,289 3 Placement with banks & other financial institutions - - 4 Investment in share & securities - - 5 Investments a) In Bangladesh Quard against TDR 1,622,336,171 1,517,106,695 Bai-Murabaha (cc pledge) 9,460,763,620 3,352,867,944 Bai-Muajjal (cc hypo) 628,904,303 7,256,339,657 Retail investment 448,755,150 540,362,128 Izara (note-5.2) 809,625,772 778,480,535 Bai-Salam (packing credit) 141,970,000 135,516,034 Staff investment 87,314,744 92,096,935 Hire purchase 2,990,478,147 1,011,563,435 16,190,147,908 14,684,333,361 b) Outside Bangladesh - - 16,190,147,908 14,684,333,361 Payable Inside Bangladesh Inland bills purchased 22,876,468 29,531,644 Payable Outside Bangladesh Foreign bills purchased and discounted 48,422,847 190,585,277

71,299,314 220,116,921 16,261,447,222 14,904,450,282

318 PRIME BANK Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018

Amount in Taka 2018 2017 5.1 Investments under the following broad categories Investments 4,478,143,813 2,558,019,067 Bai-Murabaha / Bai-Muajjal 10,089,667,923 10,609,207,600 Quard against TDR 1,622,336,171 1,517,106,695 16,190,147,908 14,684,333,361 Bills purchased and discounted (Note-6) 71,299,314 220,116,921 16,261,447,222 14,904,450,282 5.2 Izara Lease rental receivable within 1 year - - Lease rental receivable within 5 years 809,625,772 779,200,531 Lease rental receivable after 5 years - - Total lease / Izara rental receivable 809,625,772 779,200,531 Less: Unearned interest receivable - 719,996 Net lease / Izara finance 809,625,772 778,480,535 5.3 Investments on the basis of significant concentration including bills purchased and discounted. a) Investments to Directors of the Bank - - b) Investments to Chief Executive and other executives & officers 83,453,913 91,972,410 c) Investments to customer groups: i) Commercial investment 4,632,391,570 4,422,421,319 ii) Export financing 1,671,585,592 2,055,907,773 iii) House building investment 83,364,439 292,515,323 iv) Retail investment 448,755,150 540,362,128 v) Small and medium enterprises 1,139,127,406 1,340,849,834 vi) Special program investment - - vii) Staff investment 107,441 124,525 viii) Industrial investments 7,553,930,718 5,808,276,299 ix) Other investment 648,730,991 352,020,671 16,177,993,309 14,812,477,872 16,261,447,222 14,904,450,282 d) Details of Industrial investments i) Agricultural industries - - ii) Textile industries 902,278,734 95,143,616 iii) Food and allied industries 452,643,010 756,265,450 iv) Pharmaceutical industries 162,836,178 137,384,650 v) Leather, chemical, cosmetics, etc. - - vi) Tobacco industries - - vii) Cement and ceramic industries 509,174,749 - viii) Service Industries 299,836,487 141,192,974 ix) Transport and communication industries 226,553,819 229,098,771 x) Other industries including bills purchase and discounted 5,000,607,741 4,449,190,838 7,553,930,718 5,808,276,299 5.4 Investments -geographical location-wise Inside Bangladesh Urban Dhaka Division 13,123,471,417 9,912,857,150 Chittagong Division 3,034,044,879 4,818,979,989 Khulna Division - - Rajshahi Division - - Barisal Division - - Sylhet Division 103,930,925 172,613,144 16,261,447,222 14,904,450,282 Rural Dhaka Division - - Chittagong Division - - Sylhet Division - - - - Outside Bangladesh - - 16,261,447,222 14,904,450,282

PRIME BANK 319 ANNUAL REPORT 2018

Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018

Amount in Taka 2018 2017 5.5 Details of pledged collaterals Collateral of movable / immovable assets 11,038,808,977 10,276,773,697 Local banks and financial institutions guarantee 618,460,274 - Export documents 271,463,930 - Fixed deposit receipts 392,231,702 401,127,511 FDR of other banks - 812,679 Personal guarantee 861,770,380 306,016,373 Other securities 3,078,711,959 3,919,720,023 16,261,447,222 14,904,450,282

5.6 Particulars of investments i) Investments considered good in respect of which the Bank is fully secured 10,811,052,460 10,678,713,887 ii) Investments considered good against which the Bank holds no security other than the debtors’ personal guarantee 665,156,705 321,798,507 iii) Investments considered good secured by the personal undertaking 4,785,238,057 3,903,937,889 of one or more parties in addition to the personal guarantee of the debtors iv) Investments adversely classified; provision not maintained there against - - 16,261,447,222 14,904,450,282 v) Investments due by directors or officers of the banking company or any of them either separately or jointly with any other persons 83,561,354 92,096,935 vi) 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 - - vii) Maximum total amount of investments, including temporary investment 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. 83,561,354 92,096,935 viii) Maximum total amount of investments, including temporary 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 - - ix) Due from banking companies - - x) Classified investments a) Classified investments on which profit has not been charged (note-5.7) 424,601,888 458,553,319 b) Provision on classified investments (note-5.8) 66,669,555 78,925,196 c) Provision kept against investments classified as bad debts 60,933,886 67,554,949 d) Profit Suspense Account (note-11) 121,226,422 125,812,975 xi) Cumulative amount of written off investments Opening Balance - - Amount written off during the year - - - - Amount realised against investments previously written off - - The amount of written off investments for which law suits have been filed - -

320 PRIME BANK Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018

Amount in Taka 2018 2017 5.7 Classification of investments Unclassified Standard including staff investment 15,692,656,028 14,428,964,000 Special mention account (SMA) 144,189,306 16,932,963 15,836,845,334 14,445,896,963 Classified Sub-standard 131,220,916 157,198,564 Doubtful 598,054 8,653,052 Bad / Loss 292,782,918 292,701,704 424,601,888 458,553,319 16,261,447,222 14,904,450,282 5.8 Particulars of required provision for investments Status General Provision Base for provision Rate (%) Investments (Including SMA) 15,836,845,334 *Various 164,489,546 149,672,882 164,489,546 149,672,882 *General provision is kept @ 1% on general investments and 2% on small enterprise financing and 5% on consumer financing. Specific provision Sub-standard 28,309,783 20 5,661,957 9,252,200 Doubtful 147,425 50 73,713 2,118,047 Bad / Loss 60,933,886 100 60,933,886 67,554,949 66,669,555 78,925,196 Required provision for investments 231,159,102 228,598,079 Provision maintained by Head Office 231,159,102 228,598,079 Excess / (short) provision at 31 December 2018 - - 5.9 Particulars of required provision for Off-balance Sheet Exposures Base for provision Rate 1% Acceptances and endorsements 8,377,052,169 83,770,522 49,680,055 Letter of guarantee 679,695,241 6,796,952 4,672,773 Letter of credit 7,070,204,030 70,702,040 55,572,725 Bills for collection - - 9,584,048 Forward assets purchased and forward deposits placed - - Required provision on Off-balance Sheet Exposures 161,269,514 119,509,601 Provision maintained by Head Office 161,269,514 119,509,601 Excess / (short) provision at 31 December 2018 - - 6 Bills purchased and discounted Payable in Bangladesh 22,876,468 29,531,644 Payable outside Bangladesh 48,422,847 190,585,277 71,299,314 220,116,921 7 Fixed assets including premises, furniture and fixtures Property, Plant & Equipment Furniture and fixtures 8,509,967 9,448,492 Office equipment and machinery 8,010,838 9,503,687 Vehicles 6 5 Library books - 700 Net book value at the end of the year 16,520,812 18,952,884

PRIME BANK 321 ANNUAL REPORT 2018

Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018

Amount in Taka 2018 2017 8 Other assets Stationery and stamps 1,230,978 885,636 Profit receivable 134,727,474 349,450,947 Advance income tax 215,278 215,278 Advance deposits and advance rent 148,416 487,916 Branch adjustments account 3,350,680,863 2,478,879,519 Suspense account 515,244 729,364 Islamic transit account 5,894,000 2,876,066 Sundry assets 1,058,183 5,962,561 3,494,470,435 2,839,487,287 9 Borrowings from other banks, financial institutions and agents In Bangladesh 1,152,554,632 1,423,446,539 Outside Bangladesh - - 1,152,554,632 1,423,446,539 10 Deposits and other accounts Deposits from banks (note -10.1.a) 2,286,914,378 1,957,270,642 Deposits from customers (note-10.1.b) 15,997,781,616 14,192,942,693 18,284,695,994 16,150,213,335 10.1 a) Deposits from Banks Al-wadeeah current deposits - - Bills payable - - Mudaraba savings deposits 762,413,775 711,441,716 Mudaraba special notice deposits 14,500,603 745,828,926 Mudaraba fixed deposits 1,510,000,000 500,000,000 2,286,914,378 1,957,270,642 Sl No Name of Bank Type of Account 1 Bank Al-Falah MSB 755,151,371 704,502,594 2 Islami Bank Bangladesh Ltd MSB 7,262,404 6,939,122 Sub Total 762,413,775 711,441,716 3 Exim Bank Ltd MSND 288,387 715,824,644 4 ICB Islamic Bank Ltd MSND 102,581 99,365 5 Social Islami Bank Ltd MSND 7,209 6,983 6 Shahjalal Islami Bank Ltd MSND 1,039,484 484,169 7 Islami Bank Bangladesh Limited MSND 6,651,474 13,605,109 8 The City Bank Limited MSND 2,260,357 844,273 9 Modhumati Bank Limited MSND - 1,584,473 10 Al-Arafah Islami Bank Limited MSND 4,151,113 13,379,910 Sub Total 14,500,603 745,828,926 11 Islami Bank Bangladesh Limited MTDR - 500,000,000 12 The City Bank Limited MTDR 10,000,000 - 13 Exim Bank Limited MTDR 500,000,000 - 14 Shahjalal Islami Bank Ltd MTDR 1,000,000,000 - Sub Total 1,510,000,000 500,000,000 Grand Total 2,286,914,378 1,957,270,642 b) Customer Deposits i) Al wadeeah current deposits and other accounts Al-wadeeah current deposits 582,152,523 649,322,780 Foreign currency deposits 132,313,768 51,657,619 Security deposits 123,869 123,869 Sundry deposits 1,494,386,830 1,203,926,288 2,208,976,990 1,905,030,556

322 PRIME BANK Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018

Amount in Taka 2018 2017 ii) Bills payable Pay orders issued 64,982,042 282,754,900 Pay slips issued 70,594 70,594 Demand draft payable 1,140,883 1,140,883 66,193,519 283,966,377 iii) Mudaraba savings deposits 2,253,530,898 2,204,301,239 iv) Mudaraba term deposits Mudaraba fixed deposits 8,185,407,257 6,294,478,918 Mudaraba special notice deposits 1,484,538,984 719,473,088 Non resident Taka deposits 1,576,159 249,648 Mudaraba special scheme deposits 1,797,557,810 2,785,442,867 11,469,080,209 9,799,644,521 15,997,781,616 14,192,942,693 18,284,695,994 16,150,213,335 c) Deposits and other accounts Current deposits and other accounts Deposits from banks (note -10.1.a) - - Deposits from customers (note-10.1.b.i) 2,208,976,990 1,905,030,556 2,208,976,990 1,905,030,556 Bills payable Deposits from banks (note -10.1.a) - - Deposits from customers (note-10.1.b.ii) 66,193,519 283,966,377 66,193,519 283,966,377 Savings bank / mudaraba savings deposits Deposits from banks (note -10.1.a) 762,413,775 711,441,716 Deposits from customers (note-10.1.b.iii) 2,253,530,898 2,204,301,239 3,015,944,673 2,915,742,955 Term / Fixed deposits Deposits from banks (note -10.1.a) 1,524,500,603 1,245,828,926 Deposits from customers (note-10.1.b.iv) 11,469,080,209 9,799,644,521 12,993,580,813 11,045,473,448 18,284,695,994 16,150,213,335 11 Other liabilities Expenditure and other payables 80,424 439,934 Unearned commission on Bank gurantee 20,442 - Unearned Profit 291,233,756 156,808,065 Other liability 143,474 31,628 Interest suspense account 121,226,422 125,812,975 412,704,518 283,092,603 12 Contingent liabilities 12.1 Acceptances and endorsements Back to back bills (Foreign) 7,788,445,624 4,648,105,612 Back to back bills (Local) 563,715,780 268,106,850 Back to back bills (EPZ) 24,890,766 51,793,044 8,377,052,169 4,968,005,506 Less: Margin (653,440,335) (687,707,675) 7,723,611,835 4,280,297,831 12.2 Letters of guarantee Letters of guarantee (Local) 677,891,391 449,438,920 Letters of guarantee (Foreign) 1,803,850 17,838,390 Foreign counter guarantees - - 679,695,241 467,277,310 Less: Margin (32,948,687) (27,069,649) 646,746,553 440,207,661

Money for which the Bank is contingently liable in respect of guarantees given favoring: Directors or officers - - Government - - Banks and other financial institutions Others 679,695,240 467,277,310 679,695,240 467,277,310 Less: Margin (32,948,687) (27,069,649) 646,746,553 440,207,661

PRIME BANK 323 ANNUAL REPORT 2018

Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018

Amount in Taka 2018 2017 12.3 Irrevocable Letters of Credit Letters of credit (Sight) 618,389,955 1,029,060,015 Letters of credit (Deferred) 5,559,380,705 3,185,578,448 Back to back L/C 892,433,370 1,342,634,060 Bank’s liabilities PAD - - 7,070,204,030 5,557,272,523 Less: Margin (440,676,285) (315,684,559) 6,629,527,745 5,241,587,964 12.4 Bills for collection Outward bills for collection 936,084,936 958,404,759 Inward local bills for collection - - Inward foreign bills for collection - - 936,084,936 958,404,759 Less: Margin (34,299) (21,008,400) 936,050,637 937,396,359 13 Investment income i) Income from general investment Quard against TDR 32,006,066 21,270,985 Bai-Murabaha (cc pledge) 343,292,715 354,197,127 Bai-Muajjal (cc hypo) 517,906,493 597,141,201 Retail investment loan 48,658,317 44,382,691 Izara 82,781,880 70,647,155 Bai-Salam (packing credit) 7,790,742 6,381,182 Staff loan 5,420,127 4,378,790 Hire purchase 110,597,030 93,865,863 Other investments 302,540,796 225,585,778 Inland bills purchased 2,387,260 5,822,612 Sub-total (i) 1,453,381,426 1,423,673,383 ii) Profit on deposits with other Islamic banks In Bangladesh - 2,159,297 Out side Bangladesh - - Sub-total (ii) - 2,159,297 Grand total (i+ii) 1,453,381,426 1,425,832,680 14 Profit paid on deposits a) Profit paid on deposits: Mudaraba savings deposits 62,086,761 55,086,298 Mudaraba special notice deposits 21,305,394 31,097,662 Mudaraba term deposits 489,395,236 265,115,306 Mudaraba special scheme deposits 255,809,875 322,713,736 Foreign currency deposits - - Others 105,000,500 92,160,724 933,597,766 766,173,726 b) Interest / Profit paid for borrowings: Bangladesh Bank/ Other Bank/ FI/Agents bank - - Islamic Bond Fund - - - - 933,597,766 766,173,726

324 PRIME BANK Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018

Amount in Taka 2018 2017 15 Commission, exchange and brokerage Commission on L/Cs-sight 46,537,218 29,806,337 Commission on acceptance 42,984,913 - Commission on L/Cs-back to back 14,303,434 47,344,629 Commission on L/Gs 7,099,807 4,888,926 Commission on remittance 4,517,432 4,068,374 Other commission 1,829,444 13,794 117,272,247 86,122,059 Exchange gain (note - 15.1) - including gain from FC dealings 19,092,982 29,675,530 Settlement fees / Brokerage - - 136,365,229 115,797,589 15.1 Exchange gain Exchange gain 19,192,261 29,855,100 Less: Exchange loss (99,280) (179,570) 19,092,982 29,675,530 16 Other operating income Rent recovered 1,008,125 558,813 Service and other charges 18,633,706 15,794,574 Retail Income 9,616,921 11,186,579 Income from ATM Service 2,831,583 2,689,093 Postage / telex / SWIFT/ fax recoveries 8,927,502 8,133,916 Gain on sale of assets 177 - Rebate from foreign Bank 5,816,308 5,092,358 Miscellaneous earnings (note-16.1) 6,771,870 4,635,975 53,606,191 48,091,308 16.1 Miscellaneous earnings include syndication fee, commission from foreign remittance house / bank and sale proceeds of various items, etc. 17 Salaries and allowances Basic pay 44,220,907 46,345,302 Allowances 31,047,433 31,956,816 Bonus 8,039,819 8,471,481 Bank’s contribution to provident fund 4,383,874 4,579,319 87,692,033 91,352,918 18 Rent, taxes, insurance, electricity, etc. Rent, rate and taxes 22,096,532 22,227,516 Lease rent 24,000 24,000 Insurance 502,257 543,132 Power and electricity 3,825,331 3,854,507 26,448,120 26,649,155 19 Legal expenses Legal expenses 526,645 2,256,568 Other professional charges - 56,470 526,645 2,313,038 20 Postage, stamp, telecommunication, etc. Postage 406,966 376,008 Telegram, telex, fax and e-mail 640,586 2,911,724 Data communication 1,902,724 1,958,635 Telephone - office 317,954 277,211 Telephone - residence 4,623 11,065 3,272,853 5,534,643 21 Stationery, printing and advertisements, etc. Office and security stationery 1,334,428 1,870,621 Computer consumable stationery 2,606,546 1,577,054 Publicity and advertisement 291,526 299,313 4,232,500 3,746,988 22 Charges on loan losses Loan -written off - - Interest waived - - - -

PRIME BANK 325 ANNUAL REPORT 2018

Prime Bank Limited-Islamic Branches Notes to the Financial Statements as at and 31 December 2018

Amount in Taka 2018 2017 23 Depreciation and repair of Bank’s assets Depreciation Fixed assets 2,959,446 3,036,433 Leased assets - - 2,959,446 3,036,433 Repairs Building 1,839,096 363,335 Furniture and fixtures 264,761 622,235 Office equipment 1,350,438 1,045,308 Bank’s vehicles 361,201 449,835 Maintenance 148,375 201,601 3,963,871 2,682,313 6,923,317 5,718,746 24 Other expenses Security and cleaning 5,477,188 5,605,864 Entertainment 658,652 736,686 Car expenses 3,561,907 3,813,386 Books, magazines and newspapers, etc. 39,182 44,193 Subscription - 1,505 Donation 10,000 - Bank charges and commission paid - 32,900 Loss on sale of assets 128,423 - Retail Expenses 116,750 617,387 Traveling expenses 58,259 596,890 Local conveyance, labor, etc. 471,619 499,849 Business development 49,461 20,507 Training and internship 190,550 203,060 Remittance charges 376,506 268,991 Laundry, cleaning and photographs, etc. 215,154 248,540 Exgratia 403,300 406,500 Miscellaneous expenses 1,303,084 1,017,558 13,060,033 14,113,816 25 Provision for investments & off -balance sheet exposure Provision for bad and doubtful investments - - Provision for unclassified investments - - Provision for off-balance sheet exposure - - Provision for other assets - - - -

326 PRIME BANK - Total Total Annexure-H (297,881,932) 13,415,798,137 13,415,798,137 13,415,798,137 13,415,798,137 13,415,798,137 13,415,798,137 13,415,798,137 13,415,798,137 13,415,798,137 13,415,798,137 2,253,633,865 2,253,633,865 2,253,633,866 4,028,834,288 4,028,834,289 (1,781,600,001) (1,781,600,001) 13,713,680,069 13,713,680,069 (1,775,200,423) (1,775,200,423) (7,605,363,847) (7,605,363,847) 295,011,325,205 295,011,325,205 295,011,325,205 295,011,325,205 295,011,325,205 295,011,325,205 - - - (1) 9,672,498 Ltd. 25,973,341 (7,468,686) 58,022,639 58,022,639 50,553,953 50,553,953 101,547,398 101,547,398 101,547,398 101,547,398 101,547,398 101,547,398 (43,524,759) 302,316,066 302,316,066 302,316,066 302,316,066 302,316,066 (16,300,843) (276,342,724) (PBIL+PBSL) PBL Finance PBL Finance (Hong Kong) Kong) (Hong 2,321,080,281 2,321,080,281 2,321,080,281 2,321,080,281 8,178,539,529 8,178,539,529 8,178,539,529 ** Investment ** Investment - - - - Outside Bangladesh 5,529,932 4,058,643 4,058,643 (1,471,288) 56,159,332 56,159,332 65,058,912 65,058,912 60,703,293 60,703,293 60,703,293 (55,173,361) (8,899,580) 214,043,709 214,043,709 214,043,709 214,043,709 214,043,709 (UK) Ltd. 30,333,039 30,333,039 30,333,039 30,333,039 (148,984,797) 2,443,113,614 2,443,113,614 2,443,113,614 PBL Exchange PBL Exchange - - 40,394 40,394 1,546,736 1,546,736 1,506,342 1,506,342 51,793,018 51,793,018 51,793,018 51,793,018 51,793,018 51,793,018 91,700,294 91,700,294 91,700,294 91,700,294 Pte. Ltd. (50,286,677) * Remittance (Outside BD) * Remittance (Singapore) Prime Exchange Prime Exchange - - - - 59,178,337 59,178,337 59,178,337 59,178,337 59,178,337 59,178,337 PBSL (6,960,794) 567,599,579 567,599,579 567,599,579 567,599,579 (147,877,623) (142,155,501) 709,755,080 709,755,080 709,755,080 709,755,080 709,755,080 709,755,080 (88,699,286) (95,660,080) 1,227,623,488 1,227,623,488 1,227,623,488 1,227,623,488 19,849,955,144 19,849,955,144 19,849,955,144 (1) Islamic Banking PBIL 114,672,627 243,137,729 243,137,729 243,137,729 243,137,729 243,137,729 243,137,729 (9,340,049) 105,332,578 105,332,578 (128,465,101) 6,950,916,041 6,950,916,041 6,950,916,041 6,950,916,041 - - Inside Bangladesh 291,146,031 291,146,031 291,146,031 291,146,031 (43,120,578) 334,266,609 334,266,609 334,266,609 (297,881,932) Off Shore Off Shore 1,620,202,457 1,620,202,457 3,370,202,457 3,370,202,457 12,487,565,214 12,487,565,214 12,189,683,282 12,189,683,282 12,189,683,282 12,189,683,282 (7,037,880,825) (1,781,600,000) Banking Units (1,750,000,000) 24,987,512,548 24,987,512,548 24,987,512,548 24,987,512,548 264,539,716,918 264,539,716,918 264,539,716,918 - including OBU Conventional Banking Conventional 12,565,171,753 12,565,171,753 12,565,171,753 12,565,171,753 12,565,171,753 12,565,171,753 (7,136,915,748) 1,896,656,005 1,896,656,005 3,646,656,005 3,646,656,005 (1,781,600,000) (1,750,000,000) PBL(Conventional PBL(Conventional 259,402,159,514 259,402,159,514 259,402,159,514 259,402,159,514 & Islamic Banking) Particulars Particulars Allocated expenses Allocated Others against loans and advances, Provision Profit / (loss) before tax / (loss) before Profit tax Income tax including deferred Net profit Segment assets Segment liabilities Ltd (Hong Kong) & PBL Finance (UK) Ltd PBL Exchange Singapore, Ltd Pte. Company * Prime Exchange Limited Investment Prime Bank ** PBIL- Securities Limited Bank ** PBSL-Prime Net profit Segment assets Allocated expenses Allocated others against loans and advances, Provision tax / (loss) before Profit tax Income tax including deferred Segment liabilities II) Business Segment Operating profit (Profit before unallocated expenses and tax) expenses unallocated before (Profit profit Operating Operating profit (Profit before unallocated expenses and tax) expenses unallocated before (Profit profit Operating Financial Reporting by Segment of the Group by Reporting Financial Segment I) Geographical Income Less: Inter segmental income Inter Less: income Total Total income Total Income income Inter-segmental Less:

PRIME BANK 327 ANNUAL REPORT 2018 - Annexure-I Total Total 220,500,640 220,500,640 6,943,348,521 6,943,348,521 17,639,551,549 17,639,551,549 3,045,875,590 3,045,875,590 13,404,835,186 13,404,835,186 26,046,417,958 26,046,417,958 33,944,516,693 33,944,516,693 23,836,555,730 23,836,555,730 36,257,586,840 194,471,849,967 205,809,518,716 205,809,518,716 26,180,899,209 26,180,899,209 267,719,829,090 267,719,829,090 293,900,728,300 293,900,728,300 Managing Director Managing - - - 6,121,389,731 6,121,389,731 220,500,640 220,500,640 9,573,087,917 9,573,087,917 2,911,866,639 2,911,866,639 5,901,846,242 5,901,846,242 27,081,815,801 27,081,815,801 15,485,996,243 15,485,996,243 11,399,365,000 11,399,365,000 26,285,738,464 26,285,738,464 66,210,913,657 66,210,913,657 Above 5 years 5 years Above 27,440,220,637 38,770,693,020 - - - - - 408,868,916 798,485,080 798,485,080 1-5 years 1-5 years 2,224,552,298 2,224,552,298 10,567,335,899 10,567,335,899 5,700,000,000 5,700,000,000 52,666,655,839 52,666,655,839 68,815,146,744 68,815,146,744 60,890,594,446 60,890,594,446 64,441,345,734 64,441,345,734 (4,373,801,010) - - - - - 170,112,039 170,112,039 2,138,330,854 2,138,330,854 4,963,803,174 4,963,803,174 9,454,562,558 9,454,562,558 57,799,704,441 57,799,704,441 6,058,333,420 6,058,333,420 (294,736,062) 52,042,851,084 52,042,851,084 3-12 months 3-12 66,461,216,816 66,461,216,816 66,166,480,754 66,166,480,754 Director - - - - 38,188,417 1,859,386,753 1,859,386,753 3,791,928,339 3,791,928,339 350,000,000 350,000,000 1,005,076,559 1,005,076,559 2,475,452,198 2,475,452,198 1-3 months 1-3 39,103,808,556 39,103,808,556 43,478,926,630 43,478,926,630 9,400,000,000 9,400,000,000 50,751,383,726 50,751,383,726 48,275,931,528 48,275,931,528 - - 34,716,743 23,970,398 23,970,398 1,778,416,345 933,763,447 6,869,361,474 12,086,159,157 12,086,159,157 6,240,186,549 6,240,186,549 4,004,835,186 4,004,835,186 3,045,875,590 3,045,875,590 29,157,534,079 29,157,534,079 28,486,389,890 Up to 1 month Up 45,396,840,982 45,396,840,982 46,330,604,429 46,330,604,429 Particulars Liquidity Statement of the Bank (Analysis of maturity assets and liabilities) December 2018 As at 31 Assets: Cash in hand (note-3a.4) Balance with other banks and financial institutions (note-4a.3) with other banks Balance at call and short notice Money (note-6a.1) Investments (note-7a.1) / investments and advances Loans Other assets Fixed assets including premises, furniture and fixtures furniture assets including premises, Fixed Non banking assets assets (A): Total Liabilities: financial institutions and Bank, Bangladesh other banks, from Borrowings agents (note-12a.4) Chairman Director Deposits (note-13a.6) liabilities (B): Total liquidity gap (A-B): Net Other accounts (note-13a.6) and other liabilities Provision

328 PRIME BANK - Total Total 220,500,640 220,500,640 Annexure-I(1) 17,672,021,646 17,672,021,646 3,045,875,590 3,045,875,590 20,310,103,156 20,310,103,156 6,996,504,016 13,627,966,225 13,627,966,225 37,274,782,999 27,988,270,780 27,988,270,780 33,944,516,693 33,944,516,693 194,447,553,631 194,447,553,631 208,195,958,743 208,195,958,743 268,712,728,913 268,712,728,913 26,298,596,289 26,298,596,289 295,011,325,205 295,011,325,205 - - - 220,500,640 220,500,640 2,911,866,639 2,911,866,639 8,152,240,704 8,152,240,704 9,569,150,568 9,569,150,568 5,946,714,050 27,081,815,801 27,081,815,801 11,959,543,669 11,959,543,669 11,399,365,000 11,399,365,000 26,283,106,496 26,283,106,496 38,764,123,703 38,764,123,703 25,996,056,161 25,996,056,161 64,760,179,864 64,760,179,864 Above 5 years 5 years Above - - - - - 408,868,916 804,925,270 2,114,190,644 1-5 years 1-5 years 10,567,335,899 10,567,335,899 5,700,000,000 5,700,000,000 52,666,655,839 52,666,655,839 60,890,594,446 60,890,594,446 64,447,785,924 64,447,785,924 (4,256,999,166) 68,704,785,090 68,704,785,090 - - - - - 171,405,287 171,405,287 975,511,495 975,511,495 2,138,330,854 2,138,330,854 9,454,562,558 9,454,562,558 6,058,333,420 6,058,333,420 6,093,992,955 6,093,992,955 60,178,489,544 60,178,489,544 52,022,492,097 52,022,492,097 67,571,047,610 67,571,047,610 3-12 months 3-12 68,546,559,105 68,546,559,105 - - - 38,478,738 609,175,118 609,175,118 1,859,386,753 1,859,386,753 3,791,928,339 3,791,928,339 8,858,178,053 350,000,000 350,000,000 1,005,076,559 1,005,076,559 1,324,745,454 1,324,745,454 1-3 months 1-3 39,103,808,556 39,103,808,556 43,478,926,630 43,478,926,630 48,885,106,646 48,885,106,646 50,209,852,100 50,209,852,100 - - 34,980,671 34,980,671 23,970,398 23,970,398 1,778,416,345 4,769,788,172 4,769,788,172 12,086,159,157 12,086,159,157 2,436,700,472 2,436,700,472 6,780,363,323 6,780,363,323 6,272,656,646 6,272,656,646 29,165,189,003 29,165,189,003 2,259,282,349 2,259,282,349 28,486,389,890 Up to 1 month Up 47,046,948,213 47,046,948,213 44,787,665,864 44,787,665,864 Particulars Consolidated Liquidity Statement (Analysis of maturity assets and liabilities) December 2018 As at 31 Assets: Cash in hand and financial institutions with other banks Balance at call and short notice Money Investments / investments and advances Loans and fixtures furniture assets including premises, Fixed Other assets Non banking assets assets (A): Total Liabilities: financial institutions and Bank, Bangladesh other banks, from Borrowings agents Deposits Other accounts and other liabilities Provision liabilities (B): Total Net liquidity gap (A-B): Net

PRIME BANK 329 ANNUAL REPORT 2018

HIGHLIGHTS OF THE BANK Annexure-J (Taka in million)

Sl. # Particulars 2018 2017

1 Paid-up capital 11,323 10,293

2 Total capital (Consolidated) 38,302 32,317

3 Total capital (Solo Basis) 38,259 32,251

4 Capital surplus / (deficit) [Consolidated] 10,862 8,805

5 Capital surplus / (deficit) [Solo Basis] 11,598 9,230

6 Total assets 293,901 281,275

7 Total deposits 197,518 199,014

8 Total loans and advances / investments 205,810 198,323

9 Total contingent liabilities and commitments 162,553 167,809

10 Credit deposit ratio (Conventional)* 82.65% 84.43%

11 Credit deposit ratio (Islamic)* 82.71% 83.25%

12 Percentage of classified loans / investments against total loans and advances / investments 6.16% 5.45%

13 Profit after tax and provision 2,188 1,059

14 Amount of classified loans / investments during the year 12686 10799

15 Provisions kept against classified loans / investments 4,567 4,270

16 Provision surplus / (deficit) against classified loans / investments 23.29 7.50

17 Cost of Deposit 4.72% 4.46%

18 Interest earning assets 245,261 233,712

19 Non-interest earning assets 48,640 47,562

20 Return on investment (ROI) 8.64% 11.78%

21 Return on assets (ROA) [PAT/Average Assets] 0.76% 0.38%

22 Income from investment 2,154 4,246

23 Earnings per share (Taka) [Previous year’s figure restated] 1.93 0.94

24 Net income per share (Taka) [Previous year’s figure restated] 1.93 0.94

25 Price earning ratio (times) [Market price per share/EPS] 9.21 29.30

* Credit deposit ratio has been computed as per Bangladesh Bank guideline.

330 PRIME BANK FINANCIAL STATEMENTS OF OFF-SHORE BANKING UNITS

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Notes to the Financial Statements ANNUAL REPORT 2018

Off-Shore Banking Units Balance Sheet as at 31 December 2018

Annexure-K 2018 2017 Particulars Notes USD Taka Taka PROPERTY AND ASSETS Cash In hand (including foreign currencies) - - - Balance with Bangladesh Bank and its agent bank (s) - - - (including foreign currencies) ------

Balance with other banks and financial institutions In Bangladesh 3 9,531,394 799,683,971 243,518,761 Outside Bangladesh - - - 9,531,394 799,683,971 243,518,761 Loans and advances Loans, cash credits, overdrafts, etc. 4 183,376,735 15,385,308,083 8,880,936,782 Bills purchased and discounted 5 100,678,403 8,446,917,982 13,935,500,218 284,055,138 23,832,226,066 22,816,437,000 Fixed assets including premises, furniture and fixtures 6 20,727 1,739,015 1,778,119 Other assets 7 4,217,682 353,863,497 303,277,819 Non - banking assets - - - Total assets 297,824,941 24,987,512,548 23,365,011,699

LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents Deposits and other accounts 8 288,658,867 24,218,478,942 22,719,627,651

Current deposits 9 4,536,845 380,641,294 326,214,865 Bills payable - - - Savings bank deposits - - - Term deposits - - - Bearer certificate of deposit - - - 4,536,845 380,641,294 326,214,865 Other liabilities 10 4,629,229 388,392,312 319,169,183 Total liabilities 297,824,941 24,987,512,548 23,365,011,699 Capital / Shareholders’ equity Paid up capital - - - Statutory reserve - - - Foreign currency gain - - - Other reserve - - - Deficit in profit and loss account / Retained earnings - - - Total Shareholders’ equity - - - Total liabilities and Shareholders’ equity 297,824,941 24,987,512,548 23,365,011,699

332 PRIME BANK Off-Shore Banking Units Balance Sheet as at 31 December 2018

2018 2017 Particulars Notes USD Taka Taka OFF- BALANCE SHEET EXPOSURES Contingent liabilities 11 Acceptances and endorsements 888,532 74,547,826 - Letters of guarantee - - - Irrevocable letters of credit 1,601,064 134,329,237 418,846,066 Bills for collection 12,231,485 1,026,221,630 865,086,893 Other contingent liabilities - - - 14,721,081 1,235,098,693 1,283,932,959 Other commitments 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 - - - Liabilities against forward purchase and sale - - - Other commitments - - - - - Total Off-Balance Sheet exposures including contingent liabilities 14,721,081 1,235,098,693 1,283,932,959

PRIME BANK 333 ANNUAL REPORT 2018

Off-Shore Banking Units Profit and Loss Account for the year ended 31 December 2018

2018 2017 Particulars Notes USD Taka Taka

Interest income 12 14,072,491 1,174,602,685 965,189,886 Interest paid on deposits, borrowings, etc. 13 (10,492,514) (875,789,150) (739,076,233) Net interest 3,579,977 298,813,534 226,113,653 Commission, exchange, brokerage, etc. 14 120,180 10,031,208 21,688,249 Other operating income 15 304,570 25,421,866 25,641,011 Total operating income (A) 4,004,728 334,266,609 273,442,913

Salaries and allowances 16 162,904 13,597,302 13,172,594 Rent, taxes, insurance, electricity, etc. 17 21,051 1,757,044 1,574,207 Legal expenses 3,856 321,913 590,684 Postage, stamp, telecommunication, etc. 18 3,977 331,936 269,444 Stationery, printing, advertisements, etc. 19 6,220 519,135 553,996 Auditors’ fees - - - Depreciation and repair of Bank’s assets 20 2,705 225,822 339,516 Other expenses 21 315,899 26,367,427 15,380,272 Total operating expenses (B) 516,612 43,120,578 31,880,713 Profit / (loss) before provision (C=A-B) 3,488,116 291,146,031 241,562,200 Provision for loans and advances / investments Specific provision - - - General provision - - - - - Provision for diminution in value of investments - - - Other provision - - - Total provision (D) - - - Total profit / (loss) before taxes (C-D) 3,488,116 291,146,031 241,562,200 Provision for taxation Current tax - - - Deferred tax ------Net profit / (loss) after taxation 3,488,116 291,146,031 241,562,200

334 PRIME BANK Off-Shore Banking Units Cash Flow Statement for the year ended 31 December 2018

2018 2017 Particulars USD Taka Taka A) Cash flows from operating activities

Interest receipts in cash 14,072,491 1,174,602,685 965,189,886 Interest payments (10,492,514) (875,789,150) (739,076,233) Fees and commission receipts in cash 120,180 10,031,208 21,688,249 Cash payments to employees (162,904) (13,597,302) (13,172,594) Cash payments to suppliers (38,188) (3,187,497) (3,282,001) Receipts from other operating activities 304,570 25,421,866 25,641,011 Payments for other operating activities (313,128) (26,136,178) (15,199,742) Cash generated from operating activities before changes in operating assets and liabilities 3,490,507 291,345,632 241,788,577

Increase / (decrease) in operating assets and liabilities Loans and advances to other banks - - - Loans and advances to customers (8,161,099) (684,716,220) (4,048,825,225) Other assets (550,477) (46,185,033) (81,467,600) Deposits from other banks / borrowings - - - Deposits from customers (394,601) (33,107,060) 53,830,893 Other liabilities (1,731,359) (145,260,981) (280,543,055) (10,837,536) (909,269,293) (4,357,004,988) Net cash from operating activities (7,347,029) (617,923,661) (4,115,216,411)

B) Cash flows from investing activities Purchase / sale of property, plant and equipment (1,618) (135,728) (119,437) Proceeds from sale of property, plant and equipment - - - Net cash used in investing activities (1,618) (135,728) (119,437) C) Cash flows from financing activities Borrowing from Prime Bank Limited, Other Bank and Bangladesh Bank 13,935,437 1,169,183,175 3,754,012,743 Net cash use in financing activities 13,935,437 1,169,183,175 3,754,012,743

D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 6,586,790 551,123,786 (361,323,105) E) Effects of exchange rate changes on cash and cash equivalents - 5,041,424 35,694,022 F) Cash and cash equivalents at beginning of the year 2,944,604 243,518,761 569,147,844 G) Cash and cash equivalents at end of the year (D+E+F) 9,531,394 799,683,971 243,518,761

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 9,531,394 799,683,971 243,518,761 9,531,394 799,683,971 243,518,761

PRIME BANK 335 ANNUAL REPORT 2018

Off-Shore Banking Units Notes to the Financial Statements for the year ended 31 December 2018

1.1 Status of the units Off-shore Banking Units of Prime Bank Limited, governed under the rules and guidelines of Bangladesh Bank. The Bank obtained the Off-shore Banking Unit permission vide letter no. BRPD (P) 744 (84)/2001-868 dated 19 March 2001. The Bank commenced the operation of its Off-shore Banking Unit from March 15, 2007. Presently the Bank has 3 (Three) units in Dhaka, Adamjee EPZ and Chittagong. 1.1.1 Principal activities The principal activities of the units are to provide all kinds of commercial banking services to its customers through its Off-shore Banking Units in Bangladesh. 1.2 Significant accounting policies and basis of preparation of financial statements

1.2.1 Basis of accounting The Off-shore Banking Units maintain its accounting records in USD from which accounts are prepared according to the Bank Companies Act 1991 (Amendment 2013), Bangladesh Accounting Standards and other applicable directives issued by Bangladesh Bank.

1.2.2 Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. 1.2.3 Foreign currency transaction a) Foreign currencies translation

Foreign currency transactions are converted into equivalent Taka using the ruling exchange rates on the dates of respective transactions as per BAS-21” The Effects of Changes in Foreign Exchange Rates”. Foreign currency balances held in US Dollar are converted into Taka at weighted average rate of inter-bank market as determined by Bangladesh Bank on the closing date of every month. Balances held in foreign currencies other than US Dollar are converted into equivalent US Dollar at buying rates of New York closing of the previous day and converted into Taka equivalent. b) Commitments Commitments for outstanding forward foreign exchange contracts disclosed in these financial statements are translated at contracted rates. Contingent liabilities / commitments for letter of credit and letter of guarantee denominated in foreign currencies are expressed in Taka terms at the rates of exchange ruling on the balance date. 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 subsidiary. 1.2.4 Cash flow statement Cash flow statement has been prepared in accordance with the Bangladesh Accounting Standard-7 “Cash Flow Statement” under direct method as recommended in the BRPD Circular No. 14, dated June 25, 2003 issued by the Banking Regulation & Policy Department of Bangladesh Bank. 1.2.5 Reporting period These financial statements cover from January 01 to December 31, 2018. 1.3 Assets and basis of their valuation 1.3.1 Cash and cash equivalents Cash and cash equivalents include notes and coins on hand, unrestricted balances held with Bangladesh Bank and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used by the unit management for its short-term commitments. 1.3.2 Loans and advances / investments a) Loans and advances of Off-shore Banking Units are stated in the balance sheet on gross basis. b) Interest is calculated on a daily product basis but charged and accounted for on accrual basis. Interest is not charged on bad and loss loans as per guidelines of Bangladesh Bank. Records of such interest amounts are kept in separate memorandum accounts.

336 PRIME BANK Off-Shore Banking Units Notes to the Financial Statements for the year ended 31 December 2018

1.3.3 Fixed assets and depreciation a) All fixed assets are stated at cost less accumulated depreciation as per BAS-16 “ Property, Plant and Equipment”. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes. b) Depreciation is charged for the year at the following rates on reducing balance method on all fixed assets. Category of fixed assets Rate Furniture and fixtures 10% Office equipment 20% c) For additions during the year, depreciation is charged for the remaining days of the year and for disposal depreciation is charged up to the date of disposal. 1.4 Basis for valuation of liabilities and provisions 1.4.1 Benefits to the employees The retirement benefits accrued for the employees of the units as on reporting date have been accounted for in accordance with the provisions of Bangladesh Accounting Standard-19, “Employee Benefit”. Bases of enumerating the retirement benefit schemes operated by the Bank are outlined below: a) Provident fund Provident fund benefits are given to the permanent staffs of the OBU under the Provident Fund Rules of the Bank. The Commissioner of Income Tax, Taxes Zone - 5, Dhaka has approved the Provident Fund as a recognized provident fund within the meaning of section 2(52) read with the provisions of part - B of the First Schedule of Income Tax Ordinance 1984. The recognition took effect from 07 July 1997. The Fund is operated by a Board of Trustees consisting six members (03 members from management and other 03 members from the Board of Directors) of the Bank. All confirmed employees of the Units are contributing 10% of their basic salary as subscription to the Fund. The units also contribute equal amount of the employees’ contribution. Interest earned from the investments is credited to the members’ account on yearly basis. b) Gratuity fund The Bank operates a funded gratuity scheme on “Continuing Fund Basis”, in respect of which provision is made annually according to the recommendation of Actuarial which is covering all its permanent eligible employees in accordance with Bank Service Rules. The Second Secretary (Tax Exemption), National Board of Revenue, Segun Bagicha, Dhaka has approved the Prime Bank Limited Employees’ Gratuity Fund as a recognized Gratuity Fund (Letter Ref no. 08.01.0000.03 5.02.0016.2013/217, dated 22/07/2013) within the meaning of Para 2,3 & 4, read with the provisions of Part - C of the First Schedule of Income Tax Ordinance 1984. The recognition took effect from July 22, 2013. The Fund is operated by a Board of Trustees consisting six members (03 members from the Board of Directors and other 03 members from management) of the Bank. Actuarial valuation of gratuity scheme has been made to assess the adequacy of the liabilities provided for the scheme as per BAS-19 “Employees Benefit”.

c) Welfare fund Prime Bank’s employees’ welfare fund is subscribed by monthly contribution of the employees. The Bank also contributes to the Fund from time to time. The Fund has been established to provide coverage in the event of accidental death or permanent disabilities of the employees. Disbursement from the fund is done as per rules for employees’ welfare fund. Welfare fund for Off-shore Banking Units are maintained with Head Office, Prime Bank Limited. d) Incentive bonus Prime Bank started a incentive bonus scheme for its employees. 10% of net profit after tax is given by the Board of directors in every year for its employees. These bonus amount distributed among the employees as per performance. The bonus amount are paid annually, normally first quarter of every following year and the cost are accounted for the period to which it relates. Provision for incentive bonus for Off-shore Banking Units is kept with Head Office, Prime Bank Limited.

PRIME BANK 337 ANNUAL REPORT 2018

Off-Shore Banking Units Notes to the Financial Statements for the year ended 31 December 2018

1.4.2 Provision for liabilities

A provision is recognized in the balance sheet when the unit 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 BAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.

1.5 Revenue recognition

1.5.1 Interest income In terms of the provisions of the BAS-18 “Revenue”, the interest income is recognized on accrual basis.

1.5.2 Fees and commission income

Fees and commission income arises on services provided by the units are recognized on a cash receipt basis. Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of effecting the transactions.

1.5.3 Interest paid and other expenses

In terms of the provisions of the BAS - 1 “Presentation of Financial Statements” interest and other expenses are recognized on accrual basis.

2 General

a) These financial statements are presented in Taka, which is the Bank’s functional currency. Figures appearing in these financial statements have been rounded off to the nearest Taka. b) Assets and liabilities & income and expenses have been converted into Taka currency @ USs1 = Taka 83.90 (closing rate as at 31st December 2018) and Taka 83.4680 (average rate which represents the year end).

338 PRIME BANK Off-Shore Banking Units Notes to the Financial Statements for the year ended 31 December 2018

2018 2017 USD Taka Taka 3 Balance with other banks and financial institutions In Bangladesh (note-3.1) 39,531,394 3,316,683,971 2,724,518,761 Outside Bangladesh (note-3.2) - - - 39,531,394 3,316,683,971 2,724,518,761 Less: Inter company transaction 30,000,000 2,517,000,000 2,481,000,000 9,531,394 799,683,971 243,518,761 3.1 In Bangladesh Prime Bank Limited 39,531,394 3,316,683,971 2,724,518,761 Other Banks and Financial Institutions - 39,531,394 3,316,683,971 2,724,518,761

3.2 Outside Bangladesh (Nostro accounts) Current account Citibank N.A., New York, USA - - - 4 Loans and advances i) Loans, cash credits, overdrafts, etc. Loan (General) 126,003,525 10,571,695,779 4,663,068,686 Hire purchase 11,837,345 993,153,212 558,090,162 Lease finance 4,602,563 386,155,047 528,876,064 Over Draft 1,848,598 155,097,333 235,394,069 T.R Loan 12,684,705 1,064,246,713 1,116,994,433 Others 26,400,000 2,214,960,000 1,778,513,368 183,376,735 15,385,308,083 8,880,936,782

ii) Bills purchased and discounted (note-5)

Payable Inside Bangladesh Inland bills purchased 62,392,953 5,234,768,752 9,932,247,248 Payable Outside Bangladesh Foreign bills purchased and discounted 38,285,450 3,212,149,231 4,003,252,970 100,678,403 8,446,917,982 13,935,500,218 284,055,138 23,832,226,066 22,816,437,000 5 Bills purchased and discounted Payable in Bangladesh 62,392,953 5,234,768,752 9,932,247,248 Payable outside Bangladesh 38,285,450 3,212,149,231 4,003,252,970 100,678,403 8,446,917,982 13,935,500,218

6 Fixed assets including premises, furniture and fixtures cost

Furniture and fixtures 14,326 1,201,920 1,314,608 Office equipment and machinery 6,402 537,094 463,511 Vehicle - - - 20,727 1,739,015 1,778,119

PRIME BANK 339 ANNUAL REPORT 2018

Off-Shore Banking Units Notes to the Financial Statements for the year ended 31 December 2018

2018 2017 USD Taka Taka 7 Other assets Advance deposits and advance rent 1,339 112,345 110,738 Stationery A/c & Stamp in hand 269 22,601 12,347 Prepaid expenses 377,800 31,697,420 - Suspense 202 16,923 45,705,987 Interest receivable on deposits and other securities - - 11,459,201 Interest receivable on loans and advances 3,838,072 322,014,208 245,989,546 4,217,682 353,863,497 303,277,819

8 Borrowings from other banks, financial institutions and agents Bangladesh Bank - - - Prime Bank Limited 105,920,000 8,886,688,000 9,360,494,044 Other Bank & Financial Institutes 212,738,867 17,848,790,942 15,840,133,607 318,658,867 26,735,478,942 25,200,627,651 Less: Inter company transaction 30,000,000 2,517,000,000 2,481,000,000 288,658,867 24,218,478,942 22,719,627,651

9 Deposits and other accounts Bank deposits - - - Customer deposits and other accounts (note-9.1) 4,536,845 380,641,294 326,214,865 4,536,845 380,641,294 326,214,865

9.1 Customer deposits and other accounts Current deposits 2,205,403 185,033,287 202,121,107 Foreign currency deposits 188,575 15,821,420 16,181,453 Fixed Deposit 46,953 3,939,347 3,844,384 Security deposits receipts - - - Sundry deposits (note-9.1.1) 2,095,915 175,847,240 104,067,920 4,536,845 380,641,294 326,214,865

9.1.1 Sundry deposits Sundry Creditors 585,268 49,103,958 7,324,407 Margin on L/G 48,000 4,027,200 3,969,600 Margin on L/C 162,939 13,670,557 36,743,510 Margin on Export Bill 1,802 151,179 341,493 Interest/Profit Payable on Deposit 987,099 82,817,596 41,546,031 Withholding VAT/TAX Payable to Govt. Authority 31,189 2,616,735 11,770,249 Others 279,619 23,460,015 2,372,629 2,095,915 175,847,240 104,067,920

10 Other liabilities Provision for Expenses/adjusting A/C credit 925,612 77,658,847 53,037,500 Interest Suspense A/c 215,501 18,080,568 17,792,558 Due to Head Office 3,488,116 292,652,897 248,339,125 4,629,229 388,392,312 319,169,183

340 PRIME BANK Off-Shore Banking Units Notes to the Financial Statements for the year ended 31 December 2018

2018 2017 USD Taka Taka 11 Contingent liabilities 11.1 Acceptance & endorsement Back to Back bills 888,532 74,547,826 - 888,532 74,547,826 - Less: Margin - - - 888,532 74,547,826 - 11.2 Letters of guarantee Letters of guarantee (Local) - - - Letters of guarantee (Foreign) - - - Foreign counter guarantees ------Less: Margin ------11.3 Irrevocable Letters of credits Letters of credits 1,601,064 134,329,237 418,846,066 Back to Back letter of credit - - - 1,601,064 134,329,237 418,846,066 Less: Margin - - - 1,601,064 134,329,237 418,846,066 11.4 Bills for collection Outward local bills for collection - - - Outward foreign bills for collection 12,231,485 1,026,221,630 865,086,893 Inward local bills for collection - - - Inward foreign bills for collection - - - 12,231,485 1,026,221,630 865,086,893 Less: Margin - - - 12,231,485 1,026,221,630 865,086,893 12 Interest income Loan (general) 4,833,532 403,445,283 170,567,743 SOD 56,466 4,713,092 1,339,810 LTR loan 185,281 15,465,032 26,725,523 Lease finance 249,807 20,850,930 26,139,174 Hire purchase 666,959 55,669,745 10,298,852 Payment against documents - - - Documentary bills purchased 7,263,087 606,235,355 613,739,585 Others 813,858 67,931,110 55,285,077 Interest on loans and advances 14,068,991 1,174,310,547 904,095,764

Interest on balance with other banks and financial institutions 1,657,439 138,343,122 60,610,355 Interest received from FC account - - 483,767 1,657,439 138,343,122 61,094,122 15,726,430 1,312,653,668 965,189,886 Less: Inter Bank transaction 1,653,939 138,050,984 - Total Interest income 14,072,491 1,174,602,685 965,189,886

PRIME BANK 341 ANNUAL REPORT 2018

Off-Shore Banking Units Notes to the Financial Statements for the year ended 31 December 2018

2018 2017 USD Taka Taka 13 Interest on deposits, borrowings, etc. a) Interest paid on deposits 1,692 141,255 106,851 b) Interest paid on local bank accounts 2,393,873 199,811,797 268,018,126 c) Interest paid on foreign bank accounts 9,750,888 813,887,082 470,951,256 d) Interest paid on Bangladesh Bank - - - 12,146,453 1,013,840,134 739,076,233 Less: Inter Bank transaction 1,653,939 138,050,984 - 10,492,514 875,789,150 739,076,233 14 Commission, exchange and brokerage Commission on L/Cs 71,879 5,999,603 9,784,590 Commission on L/Gs - - - Commission on export bills - - 4,995,047 Commission on bills purchased - - - Commission on accepted bills 11,789 983,990 2,697,614 Commission on OBC, IBC, etc. - - - Commission on PO, DD, TT, TC, etc. 29,808 2,488,014 594,877 Commission for services rendered to issue of shares - - - Other commission 550 45,907 2,844,555 114,026 9,517,515 20,916,685 Exchange gain including gain from FC dealings 6,154 513,694 771,565 Brokerage - - - 120,180 10,031,208 21,688,249 15 Other operating income Postage charge recovery 5,712 476,792 519,147 Service & other charge 213,380 17,810,370 - SWIFT charge recovery 11,569 965,641 1,042,530 Miscellaneous earnings 73,909 6,169,063 24,079,334 304,570 25,421,866 25,641,011 16 Salaries and allowances Basic pay 85,700 7,153,236 6,834,651 Allowances 58,872 4,913,891 4,463,852 Bonus 10,003 834,938 1,216,909 Unit’s contribution to provident fund 8,329 695,237 657,183 Retirement benefits and gratuity - - - 162,904 13,597,302 13,172,594 17 Rent, taxes, insurance, electricity, etc. Rent, rate and taxes 12,082 1,008,463 899,703 Insurance 1,227 102,429 105,229 Power and electricity 7,741 646,152 569,276 21,051 1,757,044 1,574,207 18 Postage, stamp, telecommunication, etc. Postage 3,463 289,086 213,273 Telegram, telex, fax and e-mail - - - Telephone - office 513 42,849 56,171 Telephone - residence - - - 3,977 331,936 269,444

342 PRIME BANK Off-Shore Banking Units Notes to the Financial Statements for the year ended 31 December 2018

2018 2017 USD Taka Taka 19 Stationery, printing and advertisements, etc. Office and security stationery 4,487 374,481 380,093 Computer consumable stationery 1,591 132,823 165,287 Publicity and advertisement 142 11,832 8,617 6,220 519,135 553,996

20 Depreciation and repair of Bank’s assets Depreciation Fixed assets 2,391 199,601 226,377 Leased assets - - - 2,391 199,601 226,377 Repairs Furniture and fixtures 14 1,200 1,496 Office equipment 300 25,020 104,669 Vehicle - - - Maintenance - - 6,974 314 26,221 113,139 2,705 225,822 339,516 21 Other expenses Security and cleaning 17,183 1,434,241 1,348,979 Entertainment 1,072 89,488 60,568 Bank charge & Commission 33,038 2,757,622 2,033,903 Car expenses 13,432 1,121,115 1,301,457 Books, magazines and newspapers, etc. - - 5,758 Travel expenses 213 17,799 42,518 Local conveyance, labor, etc. 720 60,084 73,890 Training & internship - - - Other Professional Charges - - - Exgratia 282 23,517 17,000 Laundry and Cleaning 497 41,474 24,465 Miscellaneous expenses 249,462 20,822,086 10,471,733 315,899 26,367,427 15,380,272

PRIME BANK 343 FINANCIAL STATEMENTS OF PRIME BANK INVESTMENT LIMITED

Auditors’ Report to the Shareholders

Statement of Financial Position

Statement of Profit or Loss & Other Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS of PRIME BANK INVESTMENT LIMITED

Opinion

We have audited the accompanying financial statements of Prime Bank Investment Limited which comprise the Statement of Financial Position as at 31 December 2018 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 a summary of significant accounting policies and other explanatory information disclosed in Note 1 to 45 to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2018, and their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note # 04 to the financial statements.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s 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) and Bangladesh Securities and Exchange Commission (BSEC), 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 Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended on 31 December 2018. There are no key audit matters to communicate in our report.

Other Matter

The financial statements of Company for the year ended 31 December 2017 were audited by ACNABIN Chartered Accountants, who expressed an unmodified opinion on those statements on 15 March 2018.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Company is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards (IFRSs), as explained in note # 04 to the financial statements, 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 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

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 financial statements

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• 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.

PRIME BANK 345 ANNUAL REPORT 2018

• 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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

We also report that: a. we have obtained all the material information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; b. in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books; and c. the Company’s statement of financial position and statement of profit or loss and other comprehensive income together with the Note 1 to 45 dealt with by the report are in agreement with the books of account.

Dated, Dhaka ACNABIN 04 March 2019 Chartered Accountants

346 PRIME BANK Statement of Financial Position As at 31 December 2018

Amount in Taka Particulars Notes 31.12.18 31.12.17 ASSETS Non-Current Assets Property, plant and equipment 5 34,308,053 30,507,630 Investment in Prime Bank Securities Ltd 6 37,500,000 37,500,000 Investment in bond 30,000,000 - Deferred tax asset 7 1,880,175 1,343,612 Total non-current assets 103,688,228 69,351,242 Current Assets Advances, deposits and prepayments 8 5,639,014,044 5,639,941,099 Investment in shares 9 1,179,235,975 1,286,057,720 Preliminary and pre-operational expenses 10 522,911 1,045,826 Advance corporate income tax 11 11,617,155 18,827,403 Cash and bank balances 12 16,837,728 6,002,037 Total current assets 6,847,227,812 6,951,874,085

Total Assets 6,950,916,040 7,021,225,328 EQUITY AND LIABILITIES Capital and Reserve Share capital 13 3,000,000,000 3,000,000,000 General reserve 28,002,888 28,002,888 Retained earnings 171,979,126 66,646,548 Total equity 3,199,982,014 3,094,649,436 Current Liabilities Loan facilities 14 3,026,635,625 3,228,886,961 Liability for withholding taxes 15 1,415,528 3,151,784 Client’s dividend suspense A/C 16 371,242 231,494 Security deposit receipt 17 125,761 294,250 Provision for expenses 18 12,022,896 14,262,991 Provision for investment and margin loan 19 550,000,000 550,000,000 Corporate income tax payable 20 9,887,613 16,885,515 Accounts payable 21 1,476,171 1,198,941 Dividend payable 22 10 10 Other payables 23 148,999,179 111,663,946 Total current liabilities 3,750,934,025 3,926,575,892 Total Equity and Liabilities 6,950,916,040 7,021,225,328

The notes 1 to 45 are an integral part of these financial statements.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka ACNABIN 04 March 2019 Chartered Accountants

PRIME BANK 347 ANNUAL REPORT 2018

Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2018

Amount in Taka Particulars Notes 31.12.18 31.12.17 INCOME Interest income 24 204,509,907 228,663,893 Settlement fee 29,484,108 60,181,933 Management fee 25 8,295,189 10,161,484 BO A/C Maintenance fee 1,411,650 - Gain on sale of shares 82,370,261 87,773,489 Dividend on shares 26 51,108,213 43,078,924 Underwriting commission 27 40,000 50,000 Issue management fee & Corporate Advisory Fee 28 11,450,000 800,000 Bank interest on STD accounts 29 240,602 454,325 Documentation fees 48,000 35,500 388,957,930 431,199,548 EXPENDITURE Interest expenses 30 145,820,201 224,300,298 Settlement and other fees 3,153,155 5,752,173 Salary and allowances 31 59,085,758 49,861,605 Rent, Taxes, Insurance and Electricity 32 24,887,863 16,517,556 Legal & Professional expenses 33 876,950 678,500 Postage, Stamp and Telecommunication 34 1,633,225 1,167,069 Stationery & Printing 35 1,943,607 1,388,901 Directors remuneration 496,800 504,850 Auditor’s fee 201,250 115,000 Depreciation and Repair of assets 36 7,663,210 3,793,896 Entertainment, Travelling & Conveyance 37 4,845,922 1,956,278 Security expense 2,991,220 2,251,970 Development and Marketing Expenses 17,681,595 9,838,256 Other expenses 38 3,004,545 1,864,083 274,285,302 319,990,435 Profit before provision and tax 114,672,628 111,209,113 Add/(Reverse): Provision for diminution in value of investments 19.1 23,267,108 (83,335,464) Provision for impairment of client margin loan 19.2 (27,964,899) 95,843,663 Provision for impairment of Investment in PBSL 19 4,697,792 2,948,441 Profit before tax 114,672,627 95,752,473 Less: Tax expenses 39 (9,340,049) (6,798,238) Current Tax expense 9,876,612 7,035,706 Deferred Tax expense/(income) (536,563) (237,468) Profit after tax 105,332,578 88,954,235 Earnings per share 40 0.35 0.30

The notes 1 to 45 are an integral part of these financial statements.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka ACNABIN 04 March 2019 Chartered Accountants

348 PRIME BANK Statement of Changes in Equity For the year ended 31 December 2018

Paid up capital Retained Particulars General Reserve Total Taka earnings Balance as at 01 January 2018 3,000,000,000 28,002,888 66,646,548 3,094,649,436

Retained Profit for the year - - 105,332,578 105,332,578

Balance as at 31 December 2018 3,000,000,000 28,002,888 171,979,126 3,199,982,014

Balance as at 31 December 2017 3,000,000,000 28,002,888 66,646,548 3,094,649,436

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka 04 March 2019

PRIME BANK 349 ANNUAL REPORT 2018

Statement of Cash Flows For the year ended 31 December 2018

Amount in Taka 2018 2017 Cash Flows from Operating Activities:

Cash generated from operations (4,947,198) (35,739,861) Advance Income Tax (95,000) (65,000) Advance to branches 75,211 (100,573) Payment for withholding taxes (12,711,070) (5,154,940) Payment for Security Deposit (1,421,630) - Advance deposit (2,386,228) (195,092)

Net cash used operating activities (21,485,914) (41,255,466)

Cash Flows from Investing Activities:

Purchase of property, plant and equipment (10,378,005) (25,992,841) Dividend received 35,763,463 34,795,542 Investment in Bond (30,000,000) - Sale of shares during the year 544,994,175 935,569,612 Purchase of shares during the year (321,845,472) (878,779,266) Margin Loan recovered/(provided) 14,664,862 12,791,744

Net cash from investing activities 233,199,024 78,384,791

Cash Flows from Financing Activities:

Proceeds/(Repayments) of loan facilities (200,877,418) (76,972,036)

Net cash used in financing activities (200,877,418) (76,972,036)

Net Cash Inflow/(Outflow) for the Year 10,835,691 (39,842,711)

Opening cash and bank balances 6,002,037 45,844,747

Closing cash and bank balances 16,837,728 6,002,037

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka 04 March 2019

350 PRIME BANK Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

1. Reporting Entity 1.1 Prime Bank Investment Limited is a subsidiary company of Prime Bank Limited, incorporated as a public limited company on 28 April 2010 with the Registrar of Joint Stock Companies, Dhaka vide certificate of incorporation no. C-84266/10 dated 28 April 2010 which has commenced its business on the same date. The functions of investment banking were separated from Prime 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 (SEC) thereafter issued a full fledged merchant banking license in favour of Prime Bank Investment Limited, vide letter no. SEC/Reg/ MB/SUB/2010/03/208 dated 02 June 2010 with effect from 01 June 2010. 1.2 Principal Activities The main objectives of the Company for which it was established are to carry out the business of full-fledged merchant banking activities like issue management, portfolio management, underwriting, corporate advisory services etc. 2. Basis of Preparation 2.1 Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the Companies Act 1994, Securities and Exchange Rules 1987 and other applicable laws in Bangladesh. 2.2 Basis of presentation of financial statements The financial statements are prepared on a going concern basis under historical cost convention in accordance with generally accepted accounting practice under IFRS. Wherever appropriate, such principles are explained in succeeding notes: (i) Statement of Financial Position (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 3. Reporting period The financial year of the Company covers twelve (12) months from 01 January 2018 to 31 December 2018. 4. Significant Accounting Policies The accounting policies set out below have been applied consistently to all periods. 4.1 Property, plant and equipment 4.1.1 Recognition and measurement Items of property, plant and equipment (PPE) are initially measured at cost. After initial recognition, an item of PPE is carried at cost less accumulated depreciation and impairment losses. 4.1.2 Depreciation Depreciation is recognised in the statement of profit or loss and other comprehensive income on monthly basis at straight-line method over the estimated useful lives of each item of property, plant and equipment. Items of property, plant and equipment are depreciated when these come into use or are capitalised. Rate of depreciation on various items of property, plant and equipment considering the useful lives of assets are as follows:

Asset category Rate of Depreciation Furniture and fixtures 10 Office and electrical equipment 20 Books 20 Vehicles 20 4.2 Preliminary and pre-operating expenses 4.2.1 Recognition and measurement These are recognised as an asset if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and cost of the asset can be measured reliably. 4.2.2 Amortisation of preliminary and pre-operating expenses

PRIME BANK 351 ANNUAL REPORT 2018

Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

These are amortised over 10 years from the year of their first utilisation at the rate of Taka 522,915 per year starting from the year ended 31 December 2010. 4.3 Advance, deposits and prepayments Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments or charges to other account heads such as property, plant and equipment, inventory, etc. Deposits are measured at payment value. Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to Statement of Comprehensive Income. 4.4 Cash and cash equivalents Cash and cash equivalents comprise cash in hand and bank balances, which were held and available for use of the Company without any restriction. 4.5 Statement of cash flows Statement of cash flows has been prepared in accordance with the International Accounting Standard-7 “Statement of Cash Flows” under direct method. 4.6 Investments All investments in securities were initially recognised at fair value, being fair value of the consideration given, including acquisition charges associated with the investments. Transaction costs have been treated as expenses in accordance with IFRS 9, without considering the same. The valuation methods of investments used are: 4.6.1 Investment in listed securities These are acquired and held primarily for the purpose of selling them in future or held for dividend income and are reported at cost. Unrealised gains are not recognised in the statement of profit or loss and other comprehensive income. Provision for diminution in value of investment is provided in the financial statements on those securities whose market price is below the cost of investment by netting off with those whose value is more than cost. 4.6.2 Investment in Prime Bank Securities Limited Investment in Prime Bank Securities Limited is stated at cost in the Company’s financial statements as the fair market value of the investment is not available. Provision for impairment in value of investment is provided in the financial statements as the investment is having a negative equity (i.e. total equity is less than total paid up share capital). 4.7 Intangible assets (a) An intangible asset is recognised if it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the assets can be measured reliably. (b) Software represents the value of computer application software licensed for use of the Company other than those applied for the operating system of computers. Intangible assets are carried at their cost less accumulated amortisation and impairment loss, if any. Initial cost comprises license fees paid at the time of its acquisition and other directly attributable expenditures that are incurred in customising the software for its intended use. (c) Expenditure incurred for software is capitalised only when it enhances and extends the economic benefits of software beyond its original specification and life and such cost is recognised as capital improvement and added to the original cost of software. (d) Software is amortised using the straight-line method over the estimated useful life of 10 (ten) years commencing from the date when it becomes available for use. 4.8 Receivables Receivables are recognised when there is a contractual right to receive cash or another financial asset from another entity and it is probable that economic benefits will flow to the entity. 4.9 Share capital Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.

352 PRIME BANK Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

4.10 Borrowing funds Borrowing funds include borrowings from Prime Bank Limited and Bank Asia Limited, which is stated in the statement of financial position at amounts payable. 4.11 Provision for current taxation Provision for current income tax has been made @ 37.5% on business income as per Income Tax Ordinance- 1984, and the last year’s assessment has also been made at the same rate. Rates of tax on other categories of income applicable for the company are stated in note 39. It is to be noted that the company has duly paid the assessed tax by Deputy Commissioner of Taxes, LTU, Dhaka for the financial year 2010,2011, 2012, 2013 & 2014 and submitted tax return for the financial year 2015, 2016 & 2017. 4.12 Provision for Deferred Taxation Deferred tax liabilities are amount of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible temporary differences. Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences arising between the carrying values of asset, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the date of statement of financial position. The impact on the account of changes in the deferred tax assets and liabilities has also been recognised in the statement of comprehensive income as per IAS-12 “Income Taxes”. 4.13 Benefits to the Employees The retirement benefits accrued for the employees of the Company as on reporting date have been accounted for in accordance with the provisions of International Accounting Standard-19, “Employee Benefits”. Bases of enumerating the retirement benefit schemes operated by the Company are outlined below: (a) Provident Fund Provident fund benefits are given to the permanent employees of the Company in accordance with the Company’s service rules. All confirmed employees of the Company are contributing 10% of their basic salary as contribution to the Fund. The Company also contributes equal amount of the employees’ contribution. Interest earned from the investments is credited to the members’ account on yearly basis. The fund is administered by Prime Bank Limited. (b) Gratuity Fund The Company operates an unfunded gratuity scheme, provision in respect of which is made annually covering all its permanent eligible employees. Actuarial valuation of gratuity scheme had been made to assess the adequacy of the liabilities provided for the scheme as per BAS-19 “Employee Benefits”. The fund is administered by Prime Bank Limited. (c) Welfare Fund Prime Bank Investment Employees’ Welfare Fund is subscribed by monthly contribution of the employees. The Company also contributes to the fund from time to time. The fund has been established to provide financial assistance in the event of death or permanent disabilities of the employees. Disbursement of loan from the fund is regulated as per rules of said fund. The fund is administered by Prime Bank Limited.

(d) Incentive Bonus

Prime Bank Investment Limited started an incentive bonus scheme for its employees. Maximum 10% of net profit after tax is given to the employees in every year as incentive bonus. This bonus amount is being distributed among the employees based on their performance and is paid annually, normally first quarter of every following year and the costs are accounted for in the period in which it relates. 4.14 Provision for Liabilities 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”.

PRIME BANK 353 ANNUAL REPORT 2018

Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

4.15 Revenue Recognition The PBIL has applied IFRS 15 in the current year’s financial statements where it is applicable and comparative information has not been restated. Under IFRS 15, revenue is measured based on the consideration specified in a contract with a customer. The company recognised revenue when it satisfies a performance obligation by transferring control over service to the customer. 4.15.1 Investment income Interest income on investments is recognised on an accrual basis. Capital gains on investments in shares are also included in investment income. Capital gains are recognised when these are realised. 4.15.2 Fees and commission income Fees and commission income arising on services provided by the PBIL are recognised when it expects to be entitled in exchange for arranging for other parties to provide services to the clients and customers as per IFRS 15. 4.16 Interest income Interest income is accrued on a time proportion basis that reflects an effective yield on the gross outstanding loans. 4.17 Dividend income on shares Dividends are recognized in profit or loss as per IFRS 9 only when: - the entity’s right to receive payment of the dividend is established; - it is probable that the economic benefits associated with the dividend will flow to the entity; and - the amount of the dividend can be measured reliably. 4.18 Earnings per share Basic earnings per share have been calculated in accordance with IAS-33 “Earnings per Share” which have been shown on the face of statement of comprehensive income. This has been calculated by dividing the basic earnings by the number of ordinary shares outstanding during the year. 4.19 Events after the reporting period Where necessary, all the material events after the reporting period date have been considered and appropriate adjustment/disclosures have been made in the financial statements. 4.20 Managements’ responsibility on financial statements The management of the company is responsible for the preparation and presentation of these financial statements. 4.21 Related party transactions Related party transaction is a transfer of resources, services or obligation between related parties, regardless of whether a price is charged. Details of related party transactions are given in note 45. 4.22 Compliance report on International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) While preparing the financial statements, Prime Bank Investment Limited applied most of IAS and IFRS as adopted by The Institute of Chartered Accountants of Bangladesh. Details are given below: Name of IAS No. Status Presentation of Financial Statements 1 Applied Inventories 2 N/A Statement of Cash Flows 7 Applied Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied Events after the Reporting Period 10 Applied Income Taxes 12 Applied Property, Plant and Equipment 16 Applied Leases 17 Applied Employee Benefits 19 Applied Accounting of Government Grants and Disclosure of Government Assistance 20 N/A The Effects of Changes in Foreign Exchange Rates 21 N/A Borrowing Costs 23 Applied Related Party Disclosures 24 Applied Separate Financial Statements 27 N/A Investment in Associates and Joint Ventures 28 N/A Financial Reporting in Hyperinflationary Economies 29 N/A Financial Instruments: Presentation 32 Applied Earnings per Share 33 Applied

354 PRIME BANK Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Name of the IFRS No. Status Interim Financial Reporting 34 Applied Impairment of Assets 36 Applied Provisions, Contingent Liabilities and Contingent Assets 37 Applied Intangible Assets 38 Applied Investment Property 40 N/A First-time Adoption of International Financial Reporting Standards 1 N/A Share-based Payment 2 N/A Business Combinations 3 N/A Insurance Contracts 4 N/A Non-current Assets Held for Sale and Discontinued Operations 5 N/A Exploration for and Evaluation of Mineral Resources 6 N/A Financial Instruments: Disclosures 7 Applied Operating Segments 8 N/A Financial Instruments 9 Applied Financial Statements 10 N/A Joint Arrangements 11 N/A Disclosure of Interests in Other Entities 12 N/A Fair Value Measurement 13 Applied Regulatory Deferral Accounts 14 N/A Revenue from contracts with customers 15 Applied 4.23 Departures from IFRS The Financial Reporting Act 2015 (FRA) was enacted in 2015 and the Financial Reporting Council (FRC) under the FRA is formed in 2017 which, among other things, will issue financial reporting standards for public profit entities including Merchant banks. The FRC has been formed, but no financial reporting standards have yet been issued as per the provisions of the FRA. Hence, the financial statements of the Company as at and for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) and the requirements of The Bangladesh Securities and Exchange Commission provisions, circulars, rules and regulations issued by Bangladesh Securities and Exchange Commission (BSEC) and The Companies Act 1994. In case any requirement of Bangladesh Securities and Exchange Commission provisions, circulars, rules and regulations differ with those of IFRS, the requirements of BSEC provisions, circulars rules and regulations shall prevail, and such departures from IFRS have been followed accordingly. In addition, there has been a departure from the provisions of IFRS 9 with regard to interest income. Material departures from the requirements of IFRS are as follows: i) Provision for impairment of client margin loan IFRS: In accordance with IFRS 9, an entity should recognize a loss allowance for expected credit losses on a financial asset and shall not reduce the carrying amount of the financial asset in the statement of financial position. The objective of the impairment requirements is to recognize lifetime expected credit losses for all financial instruments for which there have been significant increases in credit risk since initial recognition whether assessed on an individual or collective basis considering all reasonable and supportable information, including that which is forward-looking. An entity shall directly reduce the gross carrying amount of a financial asset when the entity has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. BSEC: As per BSEC instruction circular reference #BSEC/Mukhopatro(3rd Khondo)/2011/06 dated July 02, 2018, provision has been made for impairment of margin loan arising out of year-end (31.12.2018) revaluation of shares purchased through margin loan complying the relevant instruction. Prime Bank Investment Limited has opted the option to maintain minimum 20% of total impairment of margin loan arising from diminution in value of investments as provision as on 31.12.2018 in accordance with the aforesaid circular. ii) Recognition of interest income from margin loan IFRS: In accordance with IFRS 9, interest revenue should be calculated by using the effective interest method by applying the effective interest rate to the gross carrying amount of the financial asset. Interest income should be recognized when the financial asset is no longer credit-impaired and the improvement can be related objectively. Departure: In accordance with IFRS 9, the Company recognized interest from margin loan when the loan is no longer credit-impaired (negative equity). However, some margin loan interest was recognized as income from credit- impaired (negative equity) portfolios considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already been occurred, foreign strategic investment has been done in DSE, stability in political environment and other favorable macroeconomic indicators in Bangladesh.

PRIME BANK 355 ANNUAL REPORT 2018

Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 5. Property, Plant and Equipment Cost Opening balance 63,444,863 37,452,022 Add: Additions during the year 24,720,272 25,992,841 Less : Disposals/Adjustments (14,342,266) - Closing balance (A) 73,822,869 63,444,863 Accumulated Depreciation: Opening balance 32,937,233 30,022,519 Add: Charge for the year 6,577,583 2,914,714 Closing balance (B) 39,514,816 32,937,233 Written down value (A-B) 34,308,053 30,507,631 Category-wise details of PPE are shown in Annex-A. 6. Investment in Prime Bank Securities Limited 37,500,000 37,500,000 An amount of Taka 37,500,000 was invested by the company in 3,750,000 ordinary shares of Taka 10 each of Prime Bank Securities Limited (PBSL), a subsidiary company of Prime Bank Limited PBSL holds two memberships of Dhaka Stock Exchange Limited, membership no. 219 and Chittagong Stock Exchange Limited, membership no. 141. 7. Deferred Tax Assets Deferred tax liabilities recognized in accordance with the provisions of IAS 12: Income Taxes, is arrived as follows: Balance as at 1 January 2018 1,343,612 1,106,144 (Addition)/Reversal during the year 536,563 237,468 Deferred tax asset as at 31 Dec 2018 1,880,175 1,343,612 As per section 38(b) of ITO 1984, (b) if the loss cannot be wholly so set off, the amount of the loss not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years. This carry forward of loss will create a temporary tax difference in deferred tax calculation. But para 35 of IAS 12 suggest that the entity recognizes a deferred tax asset arising from unused tax losses or tax credits only to the extent that the entity has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilized by the entity. Being there is no such indication regarding sufficient taxable profit availability; no deferred tax asset was recognized on the business loss. 8. Advances, Deposits and Prepayments Clients’ margin loan (9.01) 5,555,902,000 5,559,563,333 Advance office rent 6,486,258 10,446,853 Advance deposit 2,613,020 226,792 Advance to branches 30,508 105,719 Receivable from brokers (own) 4,223,691 38,180,418 Receivable from brokers (clients) 47,671,418 19,565,746 Dividend Receivable 6,072,382 - Receivable income including interest on AIBL Bond 6,061,611 - Security Deposit 10,000 - Utility receivable from brokers 6,579,718 6,854,580 Car loan 3,236,121 4,281,969 CCS Staff Loan 127,315 190,688

5,639,014,044 5,639,416,099

8.1 Client margin loan Gross client margin loan 5,620,207,138 5,632,902,945 Less: Suspense account 64,305,138 73,339,612

5,555,902,000 5,559,563,333

356 PRIME BANK Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 9. Investment in Shares 31.12.2018 31.12.2017 Cost Price Market Price Cost Price Market Price AB Bank 1st MF - - 4,622,924 4,620,000 Aamra Network Ltd - - 535,533 1,338,490 Active Fine Chemicals Ltd 5,036,243 4,500,720 - - ADN Telecom Limited 574,040 574,040 - - Aftab Automobiles Ltd 2,088,628 1,377,000 2,088,628 1,926,000 Apex Tannery Ltd - - 5,457,613 5,349,600 Bangladesh Building System Ltd 14,858,716 9,902,200 13,801,633 11,135,300 Bangladesh Shipping Corporation 9,525,499 6,825,000 9,525,499 8,172,500 Bangladesh Submarine Cable Co. Ltd 12,052,160 9,350,000 12,654,769 10,825,500 Bashundhara Paper Mills Limited 864,560 905,627 3,458,000 3,458,000 Bata Shoe company (BD) Ltd 12,613,867 11,951,062 15,129,570 15,045,912 BBS Cables Ltd 18,214,168 16,611,750 14,407,549 12,155,500 BD Finance & Inv. Co. Ltd 2,875,807 2,852,500 - - BEXIMCO Pharmaceuticals Ltd 26,011,850 18,984,000 26,011,850 24,912,000 Confidence Cement Ltd 2,683,619 2,691,000 2,471,439 3,050,000 DESCO Limited 72,807,178 39,198,108 72,807,178 44,049,359 Doreen Power General & System Ltd - - 4,976,098 4,510,900 Dhaka Bank Ltd. 2,180,766 2,130,000 - - Eastern Bank Ltd. 9,352,782 6,912,180 5,117,665 5,110,000 Esquare Knit Composite Ltd 1,885,145 1,885,145 - - Evince Textiles Limited - - 1,631,213 1,394,000 Fareast Islami Life Insurance Limited 24,544,975 15,089,000 31,664,302 22,022,000 Genex Infosys Limited 107,601 107,601 Grameen Phone Ltd. 10,644,919 9,182,500 10,986,837 11,063,800 Grameen Mutual Fund Two 0 0 4,688,322 4,913,500 Green Delta MF 12,900,556 9,588,750 12,900,556 11,762,200 Heidelberg Cement BD Ltd. 22,718,536 14,726,800 22,718,536 18,695,600 IDLC Ltd 22,801,199 20,580,877 7,706,069 8,530,000 Information Technology Consultants Ltd - - 15,791,919 11,977,452 Intraco Refueling Station Limited 2,611 7,148 - - Investment Corporation of Bangladesh 3,340,302 2,440,258 3,340,302 3,200,080 IFIL Islamic MF-1 39,213,709 28,019,400 39,213,709 30,903,750 Indo-Bangla Pharmaceuticals Limited 2,744 9,159 - - IPDC Finance Limited - - 9,235,855 9,769,500 Kattali Textile 111,424 305,541 - - KDS Accessories Ltd - - 7,302,564 6,293,700 KPCL 14,469,283 7,560,157 8,419,796 7,020,000 LankaBangla Finance Ltd 22,259,231 13,740,000 8,410,003 10,755,000 Linde Bangladesh Ltd 30,318,185 27,232,442 30,318,185 29,193,523 M.L. Dyeing Limited (MLDL) 36,114 125,572 - - Mercantile Bank Limited 6,457,672 5,103,000 - - Nahee Aluminum Composite Panel Ltd - - 62,246 502,577 Oimex Electrode Limited - - 64,800 464,746 Olympic Industries Ltd. 27,358,182 20,171,460 27,358,182 26,898,390 Popular Life 1st MF - - 3,859,781 3,720,000 Popular Life Insurance Co. Limited - - 40,064,780 26,452,197 Power Grid Company Limited 41,126,436 26,693,424 41,126,436 29,029,099 Pragati Insurance Limited 40,654,940 11,657,682 40,654,940 11,858,642 Prime Bank 1st ICB AMCL MF 401,456,697 210,276,100 401,456,697 250,974,700 RAK Ceramics Ltd 20,202,354 13,338,000 30,747,747 28,344,680 Runner Automobiles Ltd. 1,085,869 1,085,869 - - S.S. Steel Limited 137,920 137,920 - - Shahjibazar Power Co. Ltd. 9,080,092 6,930,869 9,466,291 8,591,400 Silva Pharmaceuticals Ltd 93,450 276,739 - - SK Trims & Industries Limited 51,933 256,789 - - Square Pharma 145,074,382 149,060,084 129,798,517 150,900,000 The ACME Laboratories Limited 2,768,478 2,577,000 - - The City Bank Ltd. 21,172,032 14,971,650 8,024,825 7,980,000 Titas Gas Co. Ltd. 58,126,253 24,516,346 58,126,253 29,769,849 VFS Thread Dyeing Limited 39,195 244,078 - - Unique Hotel & Resorts Limited 1,386,016 1,325,280 - - Uttara Bank Ltd. 5,867,657 5,700,000 - - United Power Generation & Distribution - - 87,852,111 95,258,600 1,179,235,975 779,687,824 1,286,057,720 1,013,898,045 Investment in shares has been recorded at cost and adequate provision has been maintained as per BSEC circular reference #BSEC/MUKHOPATRO(3rd Khando)/2011/06 dated 02 December 2018 and BSEC/CMRRCD/2009-193/212 dated December 10, 2018 irrespective of compliance of IFRS-9.

PRIME BANK 357 ANNUAL REPORT 2018

Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 10 Preliminary and Pre-Operational Expenses Opening Balance 1,045,826 1,568,741 Less : Amortised during the year 522,915 522,915 Closing Balance 522,911 1,045,826 11 Advance Corporate Income Tax Opening balance 18,827,403 10,428,589 Addition during the year: Income tax withheld from Advance Income Tax Dividend of Aman Feed Limited - 8,000 Dividend of Aamra Network 2,740 - Dividend of Aftab Automobiles Ltd 9,600 - Dividend of Apex Tannery Ltd 16,000 - Dividend of Bata Shoe Co. Ltd 86,028 35,700 Dividend of BBS Cables 10,000 - Dividend of BDBS 26,500 - Dividend of Beximco Pharmaceuticals 60,000 - Dividend of BSC 35,000 - Dividend of BSCCL 10,000 24,000 Dividend of City General Insurance - 60,000 Dividend of Confidence Cement 30,000 62,000 Dividend of DBBL 600 - Dividend of DESCO 194,048 194,048 Dividend of Eastern Bank Ltd 70,000 400,000 Dividend of Doreen Power 7,160 - Dividend of GrameenPhone 84,500 - Dividend of Green Delta MF 225,130 122,850 Dividend of Fareast Islami Life Ins co. Ltd. - 76,995 Dividend of Heidelberg Cement 132,000 180,000 Dividend of ICB 11,228 - Dividend of IDLC 153,000 52,694 Dividend of IFIL Islamic MF-1 736,690 741,690 Dividend of ITCL 30,600 - Dividend of Jamuna Oil Ltd - 200,000 Dividend of KPCL 132,000 39,200 Dividend of Lanka Bangla Finance 66,750 60,000 Dividend of Linde Bangladesh Ltd 63,627 124,000 Dividend of Nahee Aluminum 1,141 - Dividend of Meghna Cement Mills Ltd - 6,300 Dividend of Mercantile Bank Ltd 91,800 - Dividend of Olympic Industries 41,985 - Dividend of Popular Life Insurance Co. Ltd. - 295,963 Dividend of Power Grid Company 166,834 133,372 Dividend of PBL 1st ICB AMCL MF 4,738,170 4,748,170 Dividend of Pragati Insurance Limited 103,465 75,798 Dividend of RAK Ceramics Ltd 94,640 60,000 Dividend of Social Islami Bank Ltd - 223,190 Dividend of SPCL 20,800 42,000 Dividend of Toshrifa 17,294 - Dividend of The City Bank Ltd 119,700 48,000 Dividend of Titas Gas 296,351 269,410 Dividend of UPGD 1,036,800 - Dividend of Square Pharma 350,186 Corporate advisory fee for Shamajik 100,000 - Healthcare Complex One Project. Underwriting commission of IDLC Finance Ltd - 5,000 Registrar to the issue & underwriting 54,000 - commission from Aman Cotton Fibrous Corporate advisory fee of PBL 100,000 - Subordinated Bond 3 Corporate advisory fee of Regent Spinning 25,000 - AIT for cars 95,000 65,000 Interest on bank deposit 17,899 45,433 9,664,266 8,398,814 Less: Adjustment of Advance tax (16,874,515) - payment for years 2016 & 2017 Closing balance 11,617,155 18,827,403

358 PRIME BANK Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 12 Cash and Bank Balances Cash in hand 32,496 13,263 Bank balances with Prime Bank Limited, Prime Bank Invest Limited Client Withdraw (A/C # 54501) 2,060,733 1,554,486 Prime Bank Invest Limited Broker Payment (A/C # 54500) 8,446,001 544,876 Prime Bank Invst Limited Client Deposit (A/C # 54503) 1,132,086 1,751,480 Prime Bank Invst Limited Broker Deposit (A/C # 54502) 814,458 819,474 Prime Bank Invst Limited Own(A/C # 54544) 2,492,406 1,283,451 PBIL Public Issue Application A/C 1,770,432 35,006 Credit Balance of OD facilities from Bank Asia Limited 89,117 - 16,837,728 6,002,037 13 Share Capital This represents amount received from Prime Bank Limited as well as sponsor-directors which was subsequently transferred to the Company’s bank account. As at 31 December 2010, a total of 300,000,000 ordinary shares of Tk. 10 each were issued subscribed and fully paid up. Details are as follows: Authorized capital: 1,000,000,000 ordinary shares of Tk. 10 each 10,000,000,000 10,000,000,000 Issued, subscribed and paid up capital:

No. of shares Percentage (%) Taka

Prime Bank Limited 299,999,994 99.99 2,999,999,940 Individuals 6 0.01 60 300,000,000 100 3,000,000,000 14 Loan Facilities Balance of OD facilities from Prime Bank Limited 3,026,635,625 3,178,368,564 Balance of OD facilities from Bank Asia Limited - 50,518,397 3,026,635,625 3,228,886,961 PBIL is enjoying OD (General) limit of Tk. 325.00 Crore from Prime Bank Limited, Motijheel Branch bearing interest @ 4.5% per annum on quarterly basis . PBIL has discontinued the OD (General) limit of Tk. 15.00 Crore from Bank Asia Limited, Paltan Branch vide reference no. BA/ PAL/CR/2018/2195 dated July 31, 2018.

15 Liability for Withholding Taxes Opening balance 3,151,784 52,202 Add: Additions during the year 10,969,775 8,155,898 Less: Payment during the year (12,706,032) (5,056,316) Closing balance 1,415,528 3,151,784 16 Client’s dividend suspense A/C Opening balance 231,494 192,107 Add: Additions during the year 139,748 39,387 Less: Payment during the year - - Closing balance 371,242 231,494 In order to comply with BSEC (Merchant Banker & Portfolio Manager Rules) 1996 under section- 28 (3) & 36 (11), PBIL maintained Client’s dividend suspense A/C until claimed from any MSDA & NMSDA clients till 12 years after which PBIL will book any outstanding amount as its income. 17 Security Deposit Receipt Opening balance 294,250 44,100 Add: Additions during the year 1,253,141 250,150 Less: Payment the year (1,421,630) - Closing balance 125,761 294,250

PRIME BANK 359 ANNUAL REPORT 2018

Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 18 Provision for Expenses CDBL charges 142,086 546,090 Auditor’s fee 201,250 115,000 Office Rent 66,167 982,253 Electric bill 288,516 341,669 Wasa bill,Dilkusha,Oct-Dec’17 50,166 52,347 Service & maintenance, Datacraft,Jan-Dec’17 - 36,000 Chauffeur Expenses,Dec’18 17,500 - TVC Broadcasting, Dec’18 687,240 - Commission share with Infinity Finance(Arif),Q4-2018 2,850 - Ad on Financial Express - 23,000 Alpine Water bill 76 19,480 Printing & Stationary - 4,600 Sponsorship - 10,000 Plant Maintenance - 29,625 Security Expense 54,000 332,100 Business Development - 1,678,534 Telephone Bill Dec’18 8,600 25,067 Link charge to IT Nov & Dec’17 462 66,800 Internet Bill 425 425 Incentive Bonus 10,503,558 10,000,000 12,022,896 14,262,991 19 Provision for investment and clients’ margin loan Provision for diminution in value of investments (19.1) 112,693,920 89,426,813 Provision for impairment of client margin loan (19.2) 429,659,847 457,624,746 Provision for impairment of Investment in PBSL (19.3) 7,646,233 2,948,441 550,000,000 550,000,000 19.01 Provision for diminution in value of investments Investments have been recorded at cost and adequate provision for probable future losses has been made. Market value of securities has been determined on the basis of the value of securities at the last trading date’s closing price of the year i.e. 27 December 2018. Opening balance 89,426,813 172,762,277 Add: Provision made for the year 23,267,108 - Less: Reversal of provision during the year - (83,335,464) Closing Balance 112,693,920 89,426,813 As per BSEC instruction circular reference # BSEC/Mukhopatro(3rd Khondo)/2011/06 dated July 02, 2018 and BSEC/ CMRRCD/2009-193/212 dated December 10, 2018, Prime Bank Investment Limited has the option to maintain minimum 20% of total unrealized loss arising from diminution in value of investments as provision as at 31.12.2018 i.e. Tk. 75,129,280/-. We have maintained provision amounting to Tk. 112,693,920/- as on 31.12.2018. The instruction prohibits payment of cash dividend if the company makes less than 100% provision on such unrealized loss. 19.02 Provision for impairment of client margin loan As per BSEC instruction circular reference #BSEC/Mukhopatro(3rd Khondo)/2011/06 dated July 02, 2018, provision has been made for impairment of margin loan arising out of year-end (31.12.2018) revaluation of shares purchased through margin loan complying the relevant instruction. Prime Bank Investment Limited has the option to maintain minimum 20% of total impairment of margin loan arising from diminution in value of investments as provision as at 31.12.2018, i.e. Tk. 288,366,430/-. We have maintained provision amounting to Tk. 429,659,847/- as on 31.12.2018. The instruction prohibits payment of cash dividend if the company makes less than 100% provision on such impairment of margin loan. Opening balance 457,624,746 361,781,083 Add: Provision made for the year - 95,843,663 Less: Reversal of provision during the year (27,964,899) - 429,659,847 457,624,746 19.03 Provision for impairment of Investment in PBSL Opening balance 2,948,441 - Add: Provision made for the year* 4,697,792 2,948,441 Less: Reversal of provision during the year - 7,646,233 2,948,441

360 PRIME BANK Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 20 Corporate Income Tax Payable Balance as of 1 January 2018 16,885,515 9,849,809 Add: Tax expenses for the year 2018 9,876,612 7,035,706 Less: Adjusted for the year 2016 & 2017 (16,874,515) - 9,887,613 16,885,515 21 Accounts Payable Payable to A.M. Printers 11,645 3,825 Payable to ANYADIN 14,400 - Payable to BEXIMCO - 5,750 Payable to BTCL 15,158 11,046 Payable to CDBL 490,841 908,636 Payable to Commissioner of Taxes,Taxes Zone-14,Dhaka - 13,181 Payable to Commissioner of Taxes,Taxes Zone-5,Dhaka 8,143 - Payable to COLORS 19,200 - Payable to Cooper’s - 80,000 Payable to DSE - 6,000 Payable to Exclusive Communication 42,478 - Payable to Global Brand Private Ltd 6,534 - Payable to Grameen Phone 10,000 32,947 Payable to ICAB 150,000 - Payable to ICT Plus Technologies 13,519 - Payable to K.I. Trading - 5,130 Payable to Kinsman Printers 4,410 - Payable to Mahbubul Haque Shakil Shangshad 24,000 - Payable to Marshal Security Ltd 151,487 - Payable to National Garden Center 1,330 - Payable to NKN Security & Employees Service Ltd 89,140 Payable to Ornate Security Service Ltd - 26,730 Payable to Pink Creative Ltd 256,046 - Payable to Ratasa Company Ltd 108,461 - Payable to The Financial Express 25,044 - Payable to Tremendous Media 18,000 9,000 Payable to Watermark 16,335 96,696 1,476,171 1,198,941 22 Dividend Payable Opening balance 10 10 Add: Dividend payable during the year - - Less: Payment during the year - - Closing balance 10 10 23 Other Payables Payable to Brokers 20,282,836 1,335,917 Payable to Clients (Receivables) 47,671,418 19,565,746 Payable to Clients (Withdrawals) 8,467,608 1,468,706 Payable to Clients (Credit Balance) 72,577,316 88,768,577 148,999,179 111,138,946 24 Interest Income

IFRS 9 requires that interest revenue shall be calculated by using the effective interest method. This shall be calculated by applying the effective interest rate to the gross carrying amount of a financial asset. Due to the downward trend of the capital market over the years, there is significant uncertainty about the inflow of economic benefits from interest on margin loan against most of the loanees with negative equity. However, departing from IFRS 9, in some negative equity portfolios, the company recognised interest as income amounting to Tk. 44,990,888 considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already been occurred, foreign strategic investment has been done in DSE, stability in political environment and other favorable macroeconomic indicators in Bangladesh. Subsequently, the majority of the said negative equity portfolios has become positive (recoverable). However, the company has adequate provision (Note 19.02) against the negative equity.

PRIME BANK 361 ANNUAL REPORT 2018

Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 2018 2017 25 Management Fee IFRS 9 requires that management fees income arising on services provided by the PBIL are recognised when it expects to be entitled in exchange for arranging for other parties to provide services to the clients and customers as per IFRS 15. Due to the downward trend of the capital market over the years, there is significant uncertainty about the inflow of economic benefits from management fee against most of the loanees with negative equity. Hence we did not recognize management fee from margin loan as income in such cases where it is probable that such income will not flow to the company. However, departing from IFRS 9, in some negative equity portfolios, the company recognised management fee as income amounting to Tk. 724,328 considering the considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already been occurred, foreign strategic investment has been done in DSE, stability in political environment and other favorable macroeconomic indicators in Bangladesh. Subsequently, the majority of the said negative equity portfolios has become positive (recoverable). However, the company has adequate provision (Note 19.02) against the negative equity. 26 Dividend on Shares Aman Feed Ltd - 40,000 Aamra Networks 13,700 - Aftab Automobiles* 84,000 - Apex Tannery* 80,000 - Bangladesh Shipping Corporation* 280,000 - Bashundhara Paper Mills Limited 21,614 - BSCCL 50,000 120,000 Bata Shoe Co (BD) Ltd* 450,804 414,756 BBS Cables* 200,000 - BDBS* 132,500 - Beximco Parma* 600,651 - City General Insurance Co Ltd - 300,000 Confidence Cement Ltd 150,000 310,000 DBBL 3,000 - DESCO 970,241 970,241 Eastern Bank Ltd 350,000 2,000,000 Fareast Islami Life Ins co. Ltd. 596,875 384,975 Green Delta MF 1,150,650 639,250 GP* 422,500 - Heidelberg Cement 660,000 900,000 ICB* 116,550 - IDLC Finance Ltd. 765,000 263,472 IFIL Islamic MF-1 3,708,450 3,708,450 Intraco Refueling Station Limited 2,667 - ITCL* 153,000 - Doreen Power* 35,800 - Jamuna Oil Ltd - 1,000,000 Khulna Power Company Limited* 1,007,700 196,000 Lanka Bangla Finance 333,750 300,000 Linde BD Ltd 318,136 620,000 Meghna Cement Mills Ltd - 31,500 Mercantile Bank Ltd 459,000 - Nahee Aluminum 5,712 - Olympic Industries* 867,690 - PBL 1st ICB AMCL MF 23,740,850 23,740,850 Power Grid Company 834,170 666,860 Pragati Insurance Ltd 517,323 379,008 Popular Life Insurance Co Ltd - 1,479,816 RAK Ceramics Ltd 473,200 300,000 Social Islami Bank Ltd - 1,115,950 Shahjibazar Power Co. Ltd. 104,000 210,000 SK Trims & Industries Limited 1,008 - Square Pharma* 2,303,906 1,400,743 Toshrifa* 86,471 - The ACME Laboratories Limited 105,000 - The City Bank Ltd 598,500 240,000 Titas Gas Transmission & Dist. Co. Ltd.* 3,165,572 1,347,052 VFS Thread Dyeing Limited 4,223 - United Power Generation & Distribution Company Ltd. 5,184,000 - 51,108,213 43,078,924 *Due to oversight, the company did not recognize dividend income of Tk. 4,361,101 in the prior year which was recognized subsequently in the current year. The financial statements were not restated as per IAS 8 due to immateriality

362 PRIME BANK Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018 Amount in Taka 2018 2017 27 Underwriting Commission IDLC Finance Ltd - 50,000 Aman Cotton Fibrous Ltd 40,000 - 40,000 50,000 28 Issue Management & Corporate Advisory Fee Corporate advisory fee-Regent Spinning Mills Ltd 150,000 100,000 Issue Mgt & Lead Arranger’s Fee-Al-Arafah Islami Bank Ltd 8,500,000 - Issue Mgt & Corporate Advisory Fee-Everway Yarn Dyeing Ltd - 100,000 Corporate Advisory Fee - Genvio Pharma Ltd - 50,000 Issue Mgt & Corporate Advisory Fee-Flagship Dhaka CETP (BD) Ltd 450,000 300,000 Corporate advisory fee-Baraka Potenga 100,000 - Corporate Advisory Fee-from PBL for PBL Bond-3 1,000,000 - Registrar to the issue fee of Aman Cotton Fibrous Ltd 500,000 - Corporate advisory fee for Health Complex One Project 750,000 250,000 11,450,000 800,000 29 Bank Interest on STD Accounts Prime Bank Limited Clients’ deposit 59,791 105,379 Broker’s deposit 25,351 153,411 Own Investment 69,877 89,378 Public Issue Application A/C 23,973 106,158 Interest on AIBL 2nd Mudaraba Subordinated Bond 61,611 - 240,602 454,326 30 Interest expenses Interest on loan from Prime Bank Limited 144,590,206 213,898,212 Interest on loan from Bank Asia Limited 1,229,995 10,266,121 Interest on loan from ICB - 135,965 145,820,201 224,300,298 31 Salary and Allowances Basic pay 26,502,299 19,057,974 Allowances includes House rent, Medical, Conveyance 17,652,932 14,633,703 Bonus 13,595,821 13,290,643 Bank’s contribution to provident fund 1,131,706 1,267,301 Gratuity - 1,371,984 Leave Encashment 63,000 240,000 Chauffeur Expenses 140,000 - 59,085,758 49,861,605 32 Rent, Taxes, Insurance and Electricity Rent, rate and taxes 20,901,661 13,804,355 Insurance 217,482 140,516 Electricity, water & service maintenance bill 3,768,720 2,572,685 24,887,863 16,517,556 33 Legal & professional expenses Professional charges 681,950 563,500 Legal fees 195,000 115,000 876,950 678,500 34 Postage, Stamp and Telecommunication Postage & Newspaper 188,013 82,933 Internet Bill & TV Dish bill 786,371 211,432 Link Charge 166,964 456,794 Telephone-office 491,878 415,910 1,633,225 1,167,069

PRIME BANK 363 ANNUAL REPORT 2018

Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 2018 2017 35 Stationery, Printing and Advertisement Office and printing stationery & Photocopy 1,943,607 1,388,901 1,943,607 1,388,901 36 Depreciation, Amortization and Repair of assets Depreciation/amortization 6,577,583 2,914,704 Amortization of preliminary expenses 522,915 522,915 Networking & Cabling 101,504 - Repair and maintenance 461,208 356,277 7,663,210 3,793,896

37 Entertainment, Traveling & Conveyance Entertainment 1,960,577 1,665,765 Traveling Expenses 2,649,399 78,693 Conveyance 235,946 211,820 4,845,922 1,956,278 38 Other Expenses Bank charges 200,566 132,068 Annual renewal fee 170,000 168,600 Car expenses 819,950 417,726 Cleaning Expense 182,499 151,940 Exgratia 351,300 229,300 Subscription 62,775 145,499 Labor Charge 246,050 46,100 Miscellaneous 109,396 25,347 Plant Maintenance 67,850 125,825 Training and internship 790,313 410,128 NITA A/C Commission Expense 3,845 - Souvenir/Calendar/Diary - 11,550 3,004,545 1,864,083 39 Tax Expenses Current tax expenses Head of Income Applicable tax Tax Liability Tax Liability

(Tk.) rate (%) 31.12.18 (Tk.) 31.12.17 (Tk.)

Capital gains on sale of shares 82,370,261 - Less: Capital gain of UPGDL as per SRO No:211/law/Income tax/2013 dated July (73,625,798) 01, 2013 of Internal Asset Department of Finance Ministry Less: Carry forward capital loss - 8,744,463 10% 874,446 2,359,285 Dividend on shares 51,108,213 Receivable Dividend (6,072,382) Less: Exemption (25,000) 45,010,831 20% 9,002,166 8,610,785 Business income - 37.5% - - 9,876,612 10,970,070 Adjustment for the AY 2014-2015 - (3,934,364) Current Tax Expenses 9,876,612 7,035,706 Deferred tax expense/(Income) (536,563) (237,468) 9,340,049 6,798,238 40 Earnings per share Net profit after tax 105,332,578 88,954,235 Weighted average outstanding number of shares 300,000,000 300,000,000

0.35 0.30

364 PRIME BANK Prime Bank Investment Limited Notes to the Financial Statements For the year ended 31 December 2018

41 Payments to Director and Officers Disclosure as per requirement of schedule XI, Part II, Para 4 of Company Act 1994

Payment to Directors 2018 2017 Basic Salary 5,841,756 4,879,215 House Rent 1,797,468 1,501,302 Medical 1,348,092 1,125,971 Bonus/ incentives 3,699,779 4,291,095 Board meeting attendance fees 496,800 504,850 Total 13,183,895 12,302,433

42 Employee position for Prime Bank Investment Limited Disclosure as per requirement of schedule XI part II of Company Act 1994 2018 2017 Officer/Staff Worker Total Employees Total Employees 28 - 28 27

43 Aging analysis of Debtors: Particulars 1-3 Months 4-6 Months Above 6 months Receivable from brokers (own) 4,223,691 N/A N/A Receivable from brokers (clients) 47,671,418 N/A N/A Other Receivable 458,438 480,964 5,550,688

44 Others 44.1 Figures in these notes and in the annexed financial statements have been rounded off to the nearest Taka. 44.2 These notes form an integral part of the annexed financial statements and accordingly are to be read in conjunction therewith. Wherever considered necessary, previous year’s figures have been rearranged to conform to current year’s presentation and 44.3 for the purpose of comparison.

PRIME BANK 365 ANNUAL REPORT 2018 - - 73,600 73,600 82,800 82,800 64,400 64,400 92,000 92,000 92,000 37,500,000 37,500,000 3,026,635,625 3,026,635,625 Closing Balance ------Credit 1,270,500,000 1,270,500,000 - - - 73,600 73,600 82,800 82,800 64,400 64,400 92,000 92,000 92,000 Debit 1,118,767,061 1,118,767,061 Transaction During the Period Transaction ------37,500,000 37,500,000 Balance Opening 3,178,368,564 3,178,368,564 Nature of Transaction Nature Collection of Facility charges charges Collection of Facility OD (General) facility OD (General) charges Collection of Facility of total (5% investment Equity equity Tk. 75 Cr) charges Collection of Facility fee meeting attendance Board fee meeting attendance Board fee meeting attendance Board fee meeting attendance Board fee meeting attendance Board Nature of Relationship Nature Prime Bank Securities Ltd is a Securities Ltd Prime Bank the shared & PBIL of broker enlisted % on Dilkusha 16.67 charges facility Wasa) Electricity & office (Rent, Parent Company Parent sharing for Mutual agreement br (2nd fl) space of Uttara 27.65% company Associate 50% sharing for agreement Mutual br (2nd fl)space of Uttara Chairman Chairperson Vice Former Director Independent Director Director Related Party Transactions: Party Related parties, nature related of name The basis. length parties businessof arms’ and course normal the in related with transactions of number a out carried Company the review, under year the During Disclosure”: Party “Related 24 of BAS with the provision in accordance been set out below have and their value of these transactions Prime Bank Investment Limited Prime Bank Investment Statements Notes to the Financial Name of Party Name Prime Bank Securities Ltd. Prime Bank Prime Bank Ltd. Prime Bank Head office Ltd, Prime Bank Securities Ltd. Prime Bank br. Uttara Ltd, Prime Bank Representing Hussain, FCA M Farhad Mr. Ltd. Prime Bank Prime Representing Trisha Ms. Saheda Pervin Ltd. Bank Hossain Representing Capt. Imam Anwar Ltd. Prime Bank Alam GM Khurshid Dr. FCA M Habibur Rahman Chowdhury Mr. For the year ended 31 December 2018 ended 31 the year For 45

366 PRIME BANK - 73,145 73,145 134,678 816,686 816,686 682,008 682,008 9,947,612 7,059,145 7,059,145 2018 1,242,804 1,242,804 16,411,464 16,411,464 Written Written 29,264,826 at 31 Dec at 31 33,491,366 33,491,366 30,507,629 30,507,629 34,308,052 34,308,052 down value value down Annexure- A Annexure- - Amount in Taka Amount in Taka 17,153 17,153 95,322 95,322 3,018,372 3,018,372 3,349,168 3,349,168 6,594,389 6,594,389 14,826,287 29,918,862 14,632,499 14,632,499 39,514,817 39,514,817 3,444,490 3,444,490 Dec 2018 32,937,234 32,937,234 Total at 31 at 31 Total 36,070,327 36,070,327 ------period Disposal Disposal during the Adjustment/ Adjustment/ - 8,671 426,118 426,118 23,000 23,000 403,118 403,118 426,118 426,118 1,562,722 1,562,722 1,606,146 1,606,146 2,973,927 2,914,714 2,914,714 2,488,596 2,488,596 6,151,466 6,151,466 period 6,577,583 6,577,583 Charge Charge the period during the Depreciation - 8,482 8,482 72,322 72,322 2018 2,592,255 4,988,243 2,946,050 2,946,050 3,018,372 13,069,777 13,069,777 11,852,360 11,852,360 27,430,266 27,430,266 29,918,862 29,918,862 30,022,521 30,022,521 32,937,234 32,937,234 Balance at 01 January 01 January - 10 10 10 20 20 20 Rate % Rate - 90,298 90,298 230,000 230,000 4,261,176 4,031,176 4,031,176 31,237,751 31,237,751 4,261,176 4,261,176 21,691,644 59,183,688 59,183,688 16,542,000 16,542,000 Dec 2018 69,561,693 69,561,693 Total at 31 at 31 Total 73,822,869 63,444,864 63,444,864 ------period Disposal Disposal (14,342,266) during the Adjustment/ Adjustment/ (14,342,266) (14,342,266) - - - - - Cost 80,126 5,453,113 5,453,113 3,972,000 3,972,000 15,215,033 15,215,033 25,992,841 25,992,841 24,720,272 24,720,272 24,720,272 24,720,272 25,992,841 25,992,841 Additions 10,172 10,172 230,000 230,000 4,261,176 4,031,176 4,031,176 2018 4,261,176 4,261,176 16,022,718 16,022,718 16,238,531 16,238,531 14,342,266 33,190,846 33,190,846 12,570,000 12,570,000 59,183,688 59,183,688 37,452,022 37,452,022 Balance at 01 January 01 January 63,444,864 63,444,864 Prime Bank Investment Limited Prime Bank Investment Statements Notes to the Financial December 2018 ended 31 the year For December 2018 plant and equipment at 31 Details of property, Particulars Vehicles Books Dec 2017 total as at 31 Grand Office equipment Capital Work-In-Progress Sub-total (a) Furniture and fixtures Furniture Amortization Software (a+b) Dec 2018 at 31 Total Grand PPE as at December 2017 as at December 2017 Software Website Sub-total (b)

PRIME BANK 367 FINANCIAL STATEMENTS OF PRIME BANK SECURITIES LIMITED

Auditors’ Report to the Shareholders

Statement of Financial Position

Statement of Profit or Loss & Other Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements INDEPENDENT AUDITOR’S REPORT To The Shareholders of Prime Bank Securities Limited

Opinion

We have audited the accompanying financial statements of Prime Bank Securities Limited which comprise the Statement of Financial Position as at 31 December 2018 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 a summary of significant accounting policies and other explanatory information disclosed in Note 1 to 33 to the financial statements.

Basis for Opinion

Key Audit Matter

Emphasis of Matter

Without qualifying our opinion, we draw attention to note # 5 to the financial statements, where the Company explain the valuation procedure of investment in shares of DSE and CSE.

Other Matter

The financial statements of Company for the year ended 31 December 2017 were audited by ACNABIN Chartered Accountants, who expressed an unmodified opinion on those statements on 21 March 2018.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Company is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards (IFRSs), as explained in note # 1.3 to the financial statements, and for such internal control as management determines it is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the audit of the 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. 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 financial statements

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

PRIME BANK 369 ANNUAL REPORT 2018

• 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 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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

We also report that:

a. we have obtained all the material information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books; and

c. the Company’s statement of financial position and statement of profit or loss and other comprehensive income together with the Note 1 to 33 dealt with by the report are in agreement with the books of account.

Dated, Dhaka ACNABIN 04 March 2019 Chartered Accountants

370 PRIME BANK Prime Bank Securities Limited Statement of Financial Position As at 31 December 2018

Amount in Taka Particulars Notes 31.12.18 31.12.17

ASSETS Non-Current Assets Property, Plant & Equipment 3.00 10,425,864 9,799,540 Intangible assets 4.00 158,878 102,758 Deferred tax 16.02 177,507 780,486 Long Proprietary Securities Positions 5.01 271,524,965 398,400,000 Total Non-Current Assets (A) 282,287,214 409,082,784

Current Assets Long Proprietary Securities Positions 5.02 265,600,000 265,600,000 Advances, deposits and prepayments 6.00 12,331,380 4,019,080 Advance income tax 7.00 74,730,135 64,342,135 Investment in securities 8.00 195,491,882 122,934,185 Accounts receivable 9.00 54,281,240 26,876,671 Loan to customers 10.00 209,100,070 303,394,498 Cash and cash equivalents 11.00 133,801,566 98,521,384 Total Current Assets (B) 945,336,273 885,687,953 Total Assets (A+B) 1,227,623,487 1,294,770,736

EQUITY & LIABILITIES Capital & Reserves Share capital 12.00 750,000,000 750,000,000 Retained earnings 13.00 (153,975,417) (58,315,338) Shareholders equity (C) 596,024,583 691,684,662

Non-Current Liabilities Loan from Bank 14.00 393,452,756 433,499,527 Total Non-Current Liabilities (D) 393,452,756 433,499,527

Current Liabilities Accounts payable 15.00 167,930,364 97,903,151 Provision for taxation 16.00 41,787,639 35,429,824 Provision for diminution in value of investment 17.00 8,348,609 8,348,609 Provision for impairment of margin loan 18.00 14,682,620 25,885,007 Provision for expenses 19.00 5,396,917 2,019,956 Total Current Liabilities (E) 238,146,149 169,586,547

Total Equity & Liabilities (C+D+E) 1,227,623,487 1,294,770,736

These financial statements should be read in conjunction with annexed notes 1 to 33.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka ACNABIN 04 March 2019 Chartered Accountants

PRIME BANK 371 ANNUAL REPORT 2018

Prime Bank Securities Limited Statement of Profit or loss and Other Comprehensive income For the year ended on 31 December 2018

Amount in Taka Particulars Notes 2018 2017

Operating Income Revenue from brokerage commission 20.00 18,031,770 35,429,471 Interest income 21.00 35,658,560 38,781,210 Other income 22.00 361,559 205,468 Capital Gain 23.00 10,191,253 7,826,975 Dividend Income 24.00 14,549,665 12,243,026 Total operating income (A) 78,792,808 94,486,150

Operating expenses 25.00 54,779,944 35,965,346 Financial expenses 26.00 20,236,100 27,995,991 Direct expenses 27.00 3,480,332 5,183,949 Total operating expenses (B) 78,496,376 69,145,286

Operating profit before provision C=(A-B) 296,432 25,340,864

Less: Loss on Sell of DSE Share to Strategic Investor 28.00 88,995,718 - Provision for diminution in value of investment in shares 17.00 - 2,175,241 Provision for impairment of margin loan 18.00 - 10,685,091 Total provision and loss on sell of DSE share to strategic investor (D) 88,995,718 12,860,332

Operating profit before taxation E=(C-D) (88,699,286) 12,480,532 Current tax 16.01 6,357,815 11,831,212 Deferred tax 16.02 602,979 (4,162) Total provision for tax (F) 6,960,793 11,827,050 Net profit after tax [G=E-F] (95,660,080) 653,482

Earnings per share 28.00 (1.2755) 0.0087

These financial statements should be read in conjunction with annexed notes 1 to 33.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka ACNABIN 04 March 2019 Chartered Accountants

372 PRIME BANK Prime Bank Securities Limited Statement of Changes in Equity For the period ended on 31 December 2018

Retained Particulars Share capital Total earnings

Balance as at January 01, 2017 750,000,000 (58,968,820) 691,031,180

Profit for the year 2017 - 653,482 653,482

Balance as at December 31 2017 750,000,000 (58,315,338) 691,684,662 Balance as at January 01, 2018 750,000,000 (58,315,337) 691,684,663

Profit for the year 2018 - (95,660,080) (95,660,080)

Balance as at December 31 2018 750,000,000 (153,975,417) 596,024,583

These financial statements should be read in conjunction with annexed notes 1 to 33.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka 04 March 2019

PRIME BANK 373 ANNUAL REPORT 2018

Prime Bank Securities Limited Statement of Cash Flows for the year ended 31 December 2018

Amount in Taka Particulars Note 31.12.18 31.12.17 A Cash flow from operating activities Cash inflows from Brokerage Commission & charges 18,393,329 40,781,118 Cash inflows from Investment Income 13,487,458 58,851,210 Cash Outflows to Suppliers & Employees 12,865,159 (45,515,088) Commission & charges Paid (3,480,332) (5,183,949) Income taxes paid (10,388,000) (11,304,045) Financial expenses Paid (20,236,100) (27,995,991) Net cashflow from operating activities 10,641,515 9,633,255

B Cash flow from investing activities Acquisition of Property plant and equipment (3,150,103) (10,775,352) Acquisiton of Intangible assets (85,575) (52,250) Disposal of Property plant and equipment 650,000 3,329,150 Investments in securities (72,557,697) (44,820,992) Long Proprietary Securities Positions 37,879,317 - Net cash flows from investing activities (37,264,058) (52,319,444)

C Cash flows from financing activities Issue of share capital - - Dividend paid - - Borrowing/ (Paid) Loan from Bank (40,046,771) (17,428,124) Loans to customers 101,949,496 51,234,562 Net cash from financing activities 61,902,725 33,806,438

D Net cash increase / (decrease) (A+B+C) 35,280,182 (8,879,751) E Cash and cash equivalents at the beginning of the year 98,521,384 107,401,135 F Cash and cash equivalents at the end of the year (D+E) 133,801,566 98,521,384

Cash in hand 100,000 13,004 Cash at Bank 133,701,566 98,508,380

133,801,566 98,521,384

These financial statements should be read in conjunction with annexed notes 1 to 33.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka 04 March 2019

374 PRIME BANK Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

1.1 Status of the Company

Prime Bank Securities Limited (“the Company”) was incorporated as a private limited company in Bangladesh under The Companies Act, 1994 vide certificate of incorporation no. C-84302 /10. It commenced its broker business with one extension office from May 18, 2011 under license issued by Bangladesh Securities and Exchange Commission. Presently the company has 2 (two) offices including Head Office at Dhaka, Bangladesh. The registered office of the company is located at people’s Insurance Bhaban (11th floor) 36, Dilkusha Commercial Area, Dhaka-1000.

1.2 Nature of Business

Principal objectives of the Company are to act as a member of Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. to carry on the business of stock brokers / dealers in relation to shares and securities dealings and other services as mentioned in the Memorandum and Articles of Association of the Company.

1.3 Significant accounting policies and basis of preparation of financial statements

1.3.1 Basis of accounting

1.3.2 Statement of compliance

These financial statements have been prepared under the historical cost convention on a going concern basis and in accordance with Bangladesh Financial Reporting Standards (IFRS), The Companies Act-1994, Securities and Exchange Rules-1987 and other laws and rules applicable in Bangladesh.

1.3.3 Components of Financial Statements

The financial statements referred to here comprises: a) Statement of Financial Position b) Statement of Profit or Loss and Other Comprehensive Income c) Statement of Changes in Equity d) Statement of Cash Flows and e) Notes to the Financial Statements

1.3.4 Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. It also requires disclosures of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing concern basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

1.3.5 Statement of cash flows

Statement of cash flows is prepared in accordance with the International Accounting Standard-7 “ Statement of Cash Flows” and the cash flows from operating activities have been presented under indirect method.

1.3.6 Reporting period

These financial statements cover one calendar year from 1 January 2018 to 31 December 2018

1.3.7 Share capital

Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.

1.3.8 Property, plant and equipment

All fixed assets are stated at cost less accumulated depreciation as per IAS-16 “ Property, Plant and Equipment”. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes.

PRIME BANK 375 ANNUAL REPORT 2018

Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

The Company recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the company and the cost of the item can be measured reliably. Expenditure incurred after the assets have been put into operation, such as repairs and maintenance is normally charged off as revenue expenditure in the period in which it is incurred.

Depreciation is charged on the basis of straight line method on all fixed assets at the following rate:

Category of assets Rate(%) Furniture and fixtures 20 Office equipment 25 Air conditioners 25 Computer and hardware 25 Vehicle 20

For additions during the year, depreciation is charged for the remaining days of the year and for disposal depreciation is charged up to the date of disposal.

On disposal of fixed assets, the cost and accumulated depreciation are eliminated from the fixed assets schedule and gain or loss on such disposal is reflected in the income statement, which is determined with reference to the net book value of the assets and net sale proceeds.

1.3.9 Intangible assets and amortization of intangible assets

An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the assets can be measured reliably.

Software represents the value of computer application software licensed for use of the Company other than those applied for the operating system of computers. Intangible assets are carried at their cost, less accumulated amortization and impairment loss, if any.

Initial cost comprises license fees paid at the time of its acquisition and other directly attributable expenditures that are incurred in customizing the software for its intended use.

Expenditure incurred for software is capitalized only when it enhances and extends the economic benefits of software beyond its original specification and life and such cost is recognized as capital improvement and added to the original cost of software.

Software is amortized using the straight-line method over the estimated useful life of 5 (five) years commencing from the date of the acquisition available for use over the best estimates of its useful economic life.

1.3.10 Advance, deposits and prepayments - Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments or charges to other account heads such as property, plant and equipment, inventory, etc.

- Deposits are measured at payment value.

- Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to Statement of Comprehensive Income.

1.3.11 Advance Income tax

The amount of advance income tax are mainly deduction at sources by DSE & CSE on daily transaction of broker & dealer operation. Tax deduction on interest income and dividend income are also included here.

1.3.12 Investments in securities

Investment in marketable and non-marketable ordinary shares has been shown at cost. Full provision for diminution in value of shares (Quoted) as on closing of the year on an aggregate portfolio basis has been made in the account.

376 PRIME BANK Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

1.3.13 Account receivables

Receivables are recognized when there is a contractual right to receive cash or another financial asset from another entity.

1.3.14 Loans to customers

Loans to customers are stated in the balance sheet on gross basis. Interest is calculated on a daily product basis but charged and accounted for on accrual basis. Interest on customer loans is realized quarterly.

1.3.15 Preliminary and pre-operating expenses

These are recognized as an asset if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and cost of the asset can be measured reliably. These are amortized over 3 years from the year of their first utilization at the rate of Tk. 631,372, Tk. 614,122 and Tk. 614,121 for the year 2011, 2012 and 2013 respectively.

1.3.16 Cash and cash equivalents

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with Banks and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used by the Company management for its short-term commitments.

1.3.17 Provision for taxation

Provision for current income tax has been made in compliance with relevant provisions of Income Tax law.

1.3.18 Deferred taxation

Deferred tax liabilities are the amount of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. 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 impact on the account of changes in the deferred tax assets and liabilities has also been recognized in the profit and loss account as per IAS-12 “Income Taxes”.

1.3.19 Incentive bonus

Prime Bank Securities Ltd. started a incentive bonus scheme for its employees based on profitability. This bonus amount is being distributed among the employees based on their performance. The cost are accounted for the period to which it relates.

1.3.20 Provision for liabilities

A provision is recognized in the balance sheet 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”.

1.3.21 Brokerage commission

Brokerage commission is recognized as income when selling or buying order executed

1.3.22 Interest income on marginal loan

Interest income on margin loan is recognized on accrual basis. Such income is calculated on daily margin loan balance of the respective customers. Income is recognized on monthly but realized quarterly except negative equity clients where interest is recognized based on effective interest rate which is estimated recoverable amount as per IFRS 9.

1.3.23 Capital gain on sale of share

Capital gain on investments in shares is recognized when it is realized.

1.3.24 Fees income

Fees income arises on services provided by the Company are recognized on accrual basis.

1.3.25 Dividend income on shares

Dividend income on shares is recognized when the shareholder’s right to receive payment is established.

PRIME BANK 377 ANNUAL REPORT 2018

Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

1.3.26 Interest paid and other expenses

In terms of the provisions of IAS-1 “Presentation of Financial Statements” interest and other expenses are recognized on accrual basis.

1.3.27 Earnings per share

Basic earnings per share has been calculated in accordance with IAS 33 “Earnings per Share” which has been shown on the face of the profit and loss account. This has been calculated by dividing the profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

1.3.28 Events after the reporting period

Where necessary, all the material events after the reporting period date have been considered and appropriate adjustment/disclosures have been made in the financial statements.

1.3.29 Management’s responsibility on financial statements

The management’s of the company is responsible for the preparation and presentation of these financial statements.

1.3.30 Departures from IFRS The Financial Reporting Council (FRC) has been formed in 2017, but no financial reporting standards have yet been issued as per the provisions of the Financial Reporting Act (FRA) 2015. Hence, the financial statements of the Company as at and for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) and as per the requirements of the provisions, circulars, rules and regulations issued by the Bangladesh Securities and Exchange Commission (BSEC) and The Income Tax Ordinance 1984. In case any requirements of the BSEC provisions, circulars, rules and regulations differ from those of IFRS, the requirements of BSEC provisions, circulars rules and regulations shall prevail, and such departures from IFRS have been followed accordingly. In addition, there has been a departure from the provisions of IFRS 9 with regard to interest income. Material departures from the requirements of IFRS are as follows:

i) Provision for impairment of client margin loan

IFRS: In accordance with IFRS 9, an entity should recognize a loss allowance for expected credit losses on a financial asset and shall not reduce the carrying amount of the financial asset in the statement of financial position. The objective of the impairment requirements is to recognize lifetime expected credit losses for all financial instruments for which there have been significant increases in credit risk since initial recognition, whether assessed on an individual or collective basis considering all reasonable and supportable information, including that which is forward-looking. An entity shall directly reduce the gross carrying amount of a financial asset when the entity has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

BSEC: As per BSEC press release #BSEC/Mukhopatro(3rd Khondo)/2011/06 dated July 02, 2018, provision has been made for impairment of margin loan arising out of year-end (31.12.2018) revaluation of shares purchased through margin loan complying with the relevant instruction. Prime Bank Securities Limited has opted for the option to maintain minimum 20% of total impairment of margin loan arising from diminution in value of investments as provision as on 31.12.2018 in accordance with the aforesaid press release.

ii) Recognition of interest income from margin loan

IFRS: In accordance with IFRS 9, interest revenue should be calculated by using the effective interest method by applying the effective interest rate to the gross carrying amount of the financial asset. Interest income should be recognized when the financial asset is no longer credit-impaired and the improvement can be related objectively.

Departure: The Company recognized interest from margin loan when the loan is no longer credit-impaired (negative equity). However, some margin loan interest was recognized as income from credit-impaired (negative equity) portfolios considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already occurred, foreign strategic investor has already invested in the shares in DSE, political environment has been stabilized and other favorable macroeconomic indicators have been acclaimed under the present Government in Bangladesh.

378 PRIME BANK Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

iii) Valuation of shares of DSE and CSE

IFRS: As per para-5.2.2 of IFRS-9, an entity shall apply the impairment requirements to financial assets that are measured at amortized cost in accordance with paragraph 4.1.2 of IFRS-9 and to financial assets that are measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A of IFRS-9.

Depurture: There is no active market for shares in DSE and CSE and the sale price to Strategic Investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE), has been determined through negotiation. The sale had to be made within the time limit as given in the Exchange Demutualization Act-2013 and approved by the Bangladesh Securities and Exchange Commission (BSEC). This was not a transaction in active market. And we strongly believe that with the involvement of the strategic partners and the development of capital market under the guidance of the BSEC, the share price of the exchanges will increase significantly.

2.00 General

a) These financial statements are presented in Taka, which is the Company’s functional currency. Figures appearing in these financial statements have been rounded off to the nearest Taka.

b) The expenses, irrespective of capital or revenue nature, accrued / due but not paid have been provided for in the books of the Company.

c) Figures of previous year have been rearranged whenever necessary to conform to current years presentation.

PRIME BANK 379 ANNUAL REPORT 2018

Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 3.00 Property, Plant & Equipment less depreciation Office equipment 2,280,460 1,523,534 Vehicle 3,033,000 3,371,700 Computer & hardware 6,654,264 5,728,004 Furniture & fixtures 8,422,409 6,955,492 20,390,133 17,578,730 Depreciation - Opening balance 7,779,190 9,914,339 Less : Sale/Disposal of Fixed Assists 338,696 3,320,098 7,440,494 6,594,241 Add: Charged during the year 2,523,775 1,184,949 Closing balance 9,964,269 7,779,190 10,425,864 9,799,540 4.00 Intangible assets Back office software-Broker 1,163,250 1,163,250 Back office software-Dealer 150,000 150,000 Web development 200,000 200,000 Anti virus software 152,450 66,875 IPO Module 69,000 69,000 1,734,700 1,649,125 Amortization - Opening balance 1,546,367 1,481,427 Add: Amortization during the year 29,455 64,940

Closing balance 1,575,822 1,546,367 158,878 102,758 Details shown in Annexure-A 5.00 Long proprietary securities positions at market value* Shares in DSE 380,624,965 507,500,000 Shares in CSE 156,500,000 156,500,000 537,124,965 664,000,000 This represents total share value of investment in DSE (currently held 75% by the Company including 35% blocked shares) and in (CSE currently held 100% by the Company including 60% blocked shares). The share investment value has been shown at cost as disclosed in note #1.3.30 to the financial statements. The total amount Tk. 664,000,000 is our original investment at cost for DSE and CSE memberships in exchange of which shares at face value of Tk. 10 each was allotted in favour of the Company in November 2013 for DSE and in October 2013 for CSE. As per the provision of the Exchange Demutualization Act-2013 and in accordance with the Bangladesh Securities and Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange Ltd. (DSE) allotted total 72,15,106 ordinary Shares (including 25% shares for sale to strategic partner and 35% block shares) at face value of Tk.10.00 each and Chittagong Stock Exchange Ltd. (CSE) allotted total 42,87,330 ordinary Shares (including 25% shares for sale to strategic partner and 35% block shares) at face value of Tk.10.00 each against the membership of DSE and CSE respectively. The Company has also received a Trading Right Entitlement Certificate (TREC) from Dhaka Stock Exchange Limited (DSE) and also from Chittagong Stock Exchange Limited (CSE) against their DSE and CSE memberships, as stated in Note# 5.01 below. Such TRECs allow the Company to operate as broker and dealer in the DSE and CSE platforms. This is in addition to the Company’s right to receive dividend, etc. as shareholders of DSE and CSE. Though these two TRECs are intangible assets, no value has been assigned to and recorded against, the same. This is because TREC is not a commonly tradable instrument and fair market value cannot be measured reliably. In accordance with the provision of the Exchange Demutualization Act-2013 and Bangladesh Security Exchange Commission (BSEC) approved Demutualization Scheme, DSE has sold 25% of it’s share to Strategic Investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) Consortium @ Tk. 21 per share. Subsequently, Prime Bank Securities has received Tk. 37,879,317 from DSE against the sale proceeds. The approximate cost price of each share is Tk. 70.34 excluding the value of TREC License. As such, by considering a conservative approach, we have realized the loss against sale of 25% shares of DSE in our books of accounts.

380 PRIME BANK Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 5.01 Long Proprietary securities positions at market value (Blocked Share) Shares in DSE (35% Blocked Share) 177,624,965 304,500,000 Shares in CSE (60% Blocked Share) 93,900,000 93,900,000 271,524,965 398,400,000 The 35% DSE shares (i.e. 25,25,287 shares) and 60% CSE shares (i.e. 25,72,398 shares) were kept in blocked accounts as per the provisions of the Exchange Demutualization Act, 2013. As such the value of these shares have been classified as Long Proprietary Securities Position (Blocked Share) and considered under non-current assets in the books of accounts on a relevant historical basis. By considering a conservative approach, we have realized the loss against sale of 25% shares of DSE in our books of accounts. The spirit of stock exchange demutualization and involving the strategic investor is to strengthen the capital market and to become an international grade stock exchange. As such, The strategic Investor’s will get some additional benefits as per their investment as Strategic Investor in DSE, i.e. a) Get Directorship in the Board of Dhaka Stock Exchanges, b) Run the management of Stock Exchanges, c) Co-operation & Investment on Technological advancement of DSE, d) Co-operation on market cultivation and product development (Like Commodity Market and Derivative Market). Overall the sale has been incurred to achieve higher-quality growth of the market and the economy. The sale is expected to eventually contribute to take forward the business of DSE and Bangladesh capital market into a growth path and assist DSE in its transformational journey to becoming an international grade stock exchange. So, the selling price @Tk. 21 cannot be considered as a fair market price. Thus the investment has been shown in cost. There is no active market for shares in DSE and CSE and the sale price to Strategic Investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE), has been determined through negotiation. The sale had to be made within the time limit as given in the Exchange Demutualization Act-2013 and approved by the Bangladesh Securities and Exchange Commission (BSEC). This was not a transaction in active market. And we strongly believe that with the involvement of the strategic partners and the development of capital market under the guidance of the BSEC, the share price of the exchanges will increase significantly.

5.02 Long Proprietary securities positions at market value (Free Share)

Shares in DSE (40% Free Share) 203,000,000 203,000,000 Shares in CSE (40% Free Share) 62,600,000 62,600,000

265,600,000 265,600,000

This represents total share value of investments in DSE (currently held 40% by the Company) and in CSE (currently held 40% by the Company). The share investment value has been shown at cost as disclosed in note # 1.3.30 to the financial statements. The total amount Tk. 664,000,000 is our original investment at cost for DSE and CSE memberships in exchange of which shares at face value of Tk. 10 each was allotted (including 60% blocked shares) in favour of the Company in November 2013 for DSE and in October 2013 for CSE. As per the provision of the Exchange Demutualization Act-2013 and in accordance with the Bangladesh Securities and Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange Ltd. (DSE) allotted total 72,15,106 ordinary Shares (including 25% shares for sale to strategic partner from 60% blocked shares and remaining 35% blocked shares) at face value of Tk.10.00 each and Chittagong Stock Exchange Ltd. (CSE) allotted total 42,87,330 ordinary Shares (including 25% shares for sale to strategic partner from 60% blocked shares and remaining 35% blocked shares) at face value of Tk.10.00 each against the membership of DSE and CSE respectively. Out of the above DSE transferred 2,886,042 shares and CSE transferred 1,714,932 shares, directly credited to the Beneficiary Owner’s account of the Company which is 40% of the total holding of the shares (i.e., excluding 60% blocked shares). Meanwhile, PBSL has intended to sell 40% of it’s current holding and take initiative accordingly and explored in the market for potential buyers. But, we could not execute the sale as we have not yet got our expected price from the potential buyers. Besides, we are also expecting a positive market movement in 2019 as per our investment outlook 2019. In view of that, we are expecting that price will increase within next year and we can then be able to sell it by September 2019.

6.00 Advances, deposits and prepayments

Security deposit with CDBL 200,000 200,000 Security deposit with CSE 25,000 25,000 Security deposit with T&T 6,300 6,300 Advance Against IPO 2,809,535 553,280

PRIME BANK 381 ANNUAL REPORT 2018

Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 Advance Rent 1,606,500 3,034,500 Loan to Employee 6,884,045 - Advance to LEAD Soft Bangladesh Limited 200,000 200,000 Advance against Salary 600,000 -

12,331,380 4,019,080

7.00 Advance income tax Dhaka Stock Exchange-Broker 7.01 55,423,301 51,515,661 Chittagong Stock Exchange-Broker 7.02 217,988 198,537 Dhaka Stock Exchange-Dealer 7.03 771,873 454,538 Income from dividend 7.04 3,045,996 2,412,176 Income from interest on deposit-Broker 7.05 1,257,664 973,885 Income from interest on deposit-Dealer 7.06 90,347 41,896 Direct Income Tax 7.07 8,537,194 4,823,463 Chittagong Stock Exchange-Dealer 7.08 27,749 6,977 Income from Dividend -DSE & CSE 7.09 5,358,023 3,915,002 74,730,135 64,342,135

7.01 Dhaka Stock Exchange-Broker

Opening Balance 51,515,661 43,127,417 Add: AIT for the year 3,907,640 8,388,244 55,423,301 51,515,661 7.02 Chittagong Stock Exchange-Broker Opening Balance 198,537 193,399 Add: AIT for the year 19,451 5,138 217,988 198,537 7.03 Dhaka Stock Exchange-Dealer Opening Balance 454,538 338,753 Add: AIT for the year 317,335 115,785 771,873 454,538 7.04 Income from dividend Opening Balance 2,412,176 1,947,197 Add: AIT for the year 633,820 464,979 3,045,996 2,412,176 7.05 Income from interest on deposit-Broker Opening Balance 973,885 643,757 Add: AIT for the year 283,779 330,128 1,257,664 973,885 7.06 Income from interest on deposit-Dealer Opening Balance 41,896 5,617 Add: AIT for the year 48,451 36,279 90,347 41,896 7.07 Direct Income Tax Opening Balance 4,823,463 4,823,463 Add: AIT for the year 3,713,731 - 8,537,194 4,823,463 7.08 Chittagong Stock Exchange-Dealer Opening Balance 6,977 986 Add: AIT for the year 20,772 5,991 27,749 6,977 7.09 Income from Dividend -DSE & CSE Opening Balance 3,915,002 1,957,501 Add: AIT for the year 1,443,021 1,957,501

5,358,023 3,915,002 74,730,135 64,342,135 195,491,882 122,934,185

382 PRIME BANK Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 8.00 Investment in securities All investments in marketable securities are valued on an aggregate portfolio basis at cost price, at the balance sheet date. As on 31 December, 2018 there unrealized loss Tk. 29,212,803.68. Sufficient provision has maintained as per SEC guidelines against this unrealized loss. Please see note 17.00 for details. Cost Price Market Price Details of Marketable Securities are given below, Business Segments Bank 15,407,867 15,244,032 Cement 911,674 840,551 Engineering 13,632,884 12,598,044 Financial Institutions 26,956,691 22,036,931 Food & Allied 240,946 216,200 Fuel & Power 75,701,364 64,842,937 IT & Miscelleneous 305,640 231,942 Mutual Fund 32,342,572 22,270,869 Pharmaceuticals & Chemicals 22,420,921 21,068,838 Paper & Printing 7,117,103 5,594,320 IPO Investment 454,220 1,334,415 195,491,882 166,279,078

31.012.2018 31.12.2017 9.00 Accounts receivable Receivable from Dhaka Stock Exchange Ltd. 42,992,205 22,449,801 Receivable from Dhaka Stock Exchange Ltd. (Dealer Account) 4,187,463 4,382,849 Receivable from Prime Bank Investment Ltd. 3,036,379 44,021 Receivable from Dividend_Dealer 1,921,528 - Receivable from Dividend _CSE 2,143,665 - 54,281,240 26,876,671 Aging Schedule of Accounts Receivable Name of Clients 0- 30 Days 30- 60 Days 60-90 Days Above 90 Days Dhaka Stock Exchange Ltd. 42,992,205 - - - Dhaka Stock Exchange Ltd. (Dealer A/c) 4,187,463 - - - Prime Bank Investment Ltd. 3,036,379 - - - Receivable from Dividend_Dealer 1,921,528 - - - Receivable from Dividend _CSE 2,143,665 - - - 54,281,240 - - - 10.00 Loan to Customer Opening balance 303,394,498 354,629,060 Add: Accrued Interest 18,857,455 - Add: Addition during the year - - 322,251,953 354,629,060 Less: Adjustment during the year 101,949,496 51,234,562 Less: Written off during the year 11,202,387 - Closing balance 209,100,070 303,394,498 11.00 Cash and cash equivalents Cash in Hand 100,000 13,004 Cash at Bank: One Bank Limited (SND)-DSE Broker 125,700,854 79,053,159 One Bank Limited (SND)-DSE Dealer 420,502 11,765,262 Prime Bank Limited (CD)-Operation 978,865 1,332,065 Prime Bank Limited (CD)-CSE Dealer 205,364 1,775,714 Prime Bank Limited (CD)-CSE Broker 5,930,918 4,471,992 Prime Bank Limited (SND)-IPO A/C 37,119 110,188 Prime Bank Limited (SND)-Principal 427,944 - 133,701,566 98,508,380 133,801,566 98,521,384

PRIME BANK 383 ANNUAL REPORT 2018

Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 12.00 Share capital Authorized capital 150,000,000 ordinary shares of Tk.10 each 1,500,000,000 1,500,000,000 Issued, subscribed and paid-up capital 75,000,000 ordinary shares of Taka 10 each issued and fully paid each 750,000,000 750,000,000 Shareholding position of the company is as under Number of shares Taka Prime Bank Limited 71,250,000 712,500,000 Prime Bank Investment Limited 3,750,000 37,500,000 75,000,000 750,000,000 13.00 Retained earnings Opening balance (58,315,338) (58,968,820) Add: Net profit during the year (95,660,080) 653,482 (153,975,417) (58,315,338) Less: Dividend - - Closing balance (153,975,417) (58,315,338) 14.00 Loan from Bank 393,452,756 433,499,527 This amount represents a renewable OD (Gen) facility from Prime Bank Limited, the parent company of Prime Bank Securities Limited. The loan has renewed vide sanction advise no. Prime/HO/CAD/CnIB/2018/69, Dated: January 02, 2018 for a period of 12 Months. The facility was initially provided on September 2011 with a limit of Tk.24 crore. The amount of facility was increased to the current limit of Tk 550,000,000 on 18 March 2013. The bank has extended the loan facility to PBSL to repay the loan after 24 months of being called, if required, on its 474th Board Meeting dated 25 February 2018. As per BAS 1, Para 73 & 75, the loan has been shown as Non-current liability instead of Current Liability on a historical basis. 15.00 Accounts Payable Security Deposits 237,496 165,680 Payable to DSE 679,249 183,902 Payable to DSE DLR 2,384 2,534 Payable to CDBL 62,567 21,848 Payable to Customer (Credit Balance) 115,790,428 37,290,483 Payable in transit (General) 46,340,504 16,578,351 Cheque in transit (PBIL) 3,790,561 20,306,902 Cheque in transit (026) 686,002 23,103,137 VAT Payable 178,430 111,753 Tax Payable 162,743 138,561 167,930,364 97,903,151 16.00 Provision for taxation 16.01 Current tax Opening balance 35,429,824 23,598,612 Add: Provision for the during year 6,357,815 11,831,212 Less: Settlement during the period - - Closing balance 41,787,639 35,429,824 16.02 Deferred tax Opening balance (780,486) (776,323) Add: Provision for the during year - (4,162) Less: Adjustment during the year 602,979 - Closing balance (177,507) (780,486) 41,610,132 34,649,339 The provision for income tax has been calculated based on the profit before provision considering admissible & inadmissble expenses as per provision of the Income Tax Ordinance 1984. 17.00 Provision for diminution in value of investment in shares Opening balance 8,348,609 6,173,367 Add: Addition during the year - 2,175,241 8,348,609 8,348,609 * As per BSEC instruction circular reference SEC/CMRRCD/2009-193/196 dated 28 December 2016 and SEC/ CMRRCD/2009-193/203 dated 28 December 2017 and subsequent press release no. BSEC/Mukhopatro(3rd Khondo)/2011/60; Date: 19 December, 2018 Prime Bank Securities Ltd has the option to maintain provision @ 20% of total unrealized loss arising from diminution in value of investments as at 31/12/2018. i.e. Tk. 3,828,727. But, we have maintained provision amounting to Tk. 8,348,609.00 which is 29% of total unrealized loss as of 31/12/2018. See Details in note 8.

384 PRIME BANK Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 31.12.18 31.12.17 18.00 Provision for impairment of margin loan Opening balance 25,885,007 15,931,966 Add: Addition during the year - 10,685,091 Less : Written Off during the year (11,202,387) (732,049) 14,682,620 25,885,007 * As per BSEC instruction circular reference SEC/CMRRCD/2009-193/196 dated 28 December 2016 and SEC/ CMRRCD/2009-193/203 dated 28 December 2017, subsequent press release no. BSEC/Mukhopatro(3rd Khondo)/2011/61; Date: 26 December, 2018, Prime Bank Securities Ltd has the option to maintain provision @ 20% of total negative equity arising from margin loan as at 31/12/2018. i.e. Tk. 81,65,495.40 But, we have maintained provision amounting to Tk. 14,682,620 which is around 36% of total negative equity balance as of 31/12/2018. 19.00 Provision for expenses

Water bill 4,450 4,000 Telephone bill 35,000 35,000 Electricity bill 165,000 130,000 Wasa bill 40,000 28,000 Audit fee 172,500 115,000 Software maintenance 120,000 120,000 Internet bill - 20,000 Fuel Expenses-Generator - 2,000 Incentive bonus - 1,517,556 WAN Connectivity - 48,400 Professional fees 74,750 - Gratuity Fund 4,100,000 - Howla & Commission 578,887 Driver Allowance 4,355 - Internship Allowance 5,400 - Business Associate Commission 96,574 - 5,396,917 2,019,956 20.00 Revenue from brokerage commission Commission from Merchant Bank Dhaka Stock Exchange 6,662,783 17,516,727 Chittagong Stock Exchange 1,575 2,063 6,664,358 17,518,790 Commission from PBSL Dhaka Stock Exchange 11,260,104 17,874,066 Chittagong Stock Exchange 107,308 36,615

11,367,412 17,910,681

18,031,770 35,429,471 21.00 Interest income Interest income from margin loan 32,354,840 35,117,057 Interest on deposits 3,293,316 3,664,153 Interest on EHBL Loan 10,404 - 35,658,560 38,781,210 IFRS 9 requires that interest revenue shall be calculated by using the effective interest method. This shall be calculated by applying the effective interest rate to the gross carrying amount of a financial asset. Due to the downward trend of the capital market over the years, there is significant uncertainty about the inflow of economic benefits from interest on margin loan against most of the loanees with negative equity. However, departing from IFRS 9, in some negative equity portfolios, the company recognised interest as income amounting to Tk. 18,857,455 considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already been occurred, foreign strategic investment has been done in DSE, stability in political environment and other favorable macroeconomic indicators in Bangladesh. Subsequently, the majority of the said negative equity portfolios has become positive (recoverable). However, the company has adequate provision (Note 18) against the negative equity.

PRIME BANK 385 ANNUAL REPORT 2018

Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 2018 2017 22.00 Other operating income BO Opening charge 76,000 25,000 CDBL income 56,109 11,897 BO Account Maintenance Fee 120,350 69,500 Margin A/C Annul Maintenance Fee 97,500 93,500 Account Closing Charge 8,455 3,536 IPO Income 2,345 2,035 Cheque Dishonor Charge 800 - 361,559 205,468 23.00 Capital Gain Gain from Investment in Share 9,541,257 7,570,227 Gain on Sale of Fixed Assets 649,996 256,748 10,191,253 7,826,975 24.00 Dividend Income Dividend Income from DSE 7,215,106 7,215,106 Dividend Income from CSE 2,143,665 2,572,398 Dividend Income from Investment in Share 5,190,894 2,455,522 14,549,665 12,243,026 25.00 Operating expenses Salary & allowances 25.01 32,753,172 17,747,130 Festival Bonus 2,812,052 1,731,742 Incentive Bonus - 1,351,381 Office rent 7,813,302 7,470,725 Utility bills 25.02 2,539,648 1,967,694 Conveyance Bill 90,411 76,765 Postage & Courier 4,912 8,635 Board Meeting Attendance Fees 340,400 200,100 Business Development Expenses 564,847 150,927 Advertisement 46,000 39,150 Audit Fee 172,500 115,000 Legal Fee 80,850 - Fees and renewal 25.03 335,146 429,404 Professional fee 385,250 681,206 Training expenses 132,000 78,210 Security & Cleaning 986,208 666,169 Newspaper & magazine 23,308 26,037 Internship Allowance 160,500 - Entertainment 619,516 462,689 Vehicle expenses 1,260,589 920,128 Travelling Alloawnce 106,208 - Computer Consumables 260,205 144,834 Cleaning Material 112,291 67,124 Office Supply 181,413 90,672 Stationery 187,400 114,289 Printing 224,586 22,540 Car Parking Expenses 34,000 - Depreciation and amortization 25.04 2,553,230 1,249,889 Repair & maintenance - 3,450 Donation - 40,000 Bidding Fee - 5,000 Misc Expenses - 10,000 Office Shifting Cost - 94,456 54,779,944 35,965,346

386 PRIME BANK Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 2018 2017 25.01 Salary & allowances

Basic salary 15,249,000 9,470,046 House rent 6,185,988 3,987,075 Conveyance allowance 744,270 349,226 Medical allowance 2,182,129 1,248,987 Leave fare assistance 1,433,439 816,773 Provident fund 1,246,893 927,639 Car Alloawnce 1,560,158 947,384 Cessation Adjustment Allowance 1,388 - Gratuity Fund 4,100,000 - Earned Leave Encashment 49,907 - 32,753,172 17,747,130 25.02 Utility bills Electricity bill 1,376,424 1,028,679 Telephone bill 345,179 273,904 Wasa bill 148,971 125,872 Water bill (Drinking) 54,257 38,626 Fuel-Generator 3,517 213 Internet bill 145,978 118,000 WAN Connectivity 465,322 382,400 2,539,648 1,967,694 25.03 Fees & renewal Dhaka Stock Exchange Ltd 1,700 20,700 Chittagong Stock Exchange Ltd - 122,000 Bangladesh Securities Exchange Commission 43,500 - Register of Joint Stock Companies & Firms 24,046 20,414 Central Depository Bangladesh Limited 4,600 4,600 Trade Licence Fees 17,000 24,490 TREC Renewal - Dhaka Stock Exchange Ltd 50,000 50,000 TREC Renewal - Chittagong Stock Exchange Ltd 50,000 50,000 Trade Certificates Renewal 75,000 115,000 DBA Membership Subscription 12,500 - IPO Bidding & Subscription Fee 15,000 - Entrance Fee 4,800 1,200 IPO Subscription Fee (DLR) 30,000 11,000 TWS Shifting Charge 7,000 5,000 New Branch Application Fee - 2,500 Office Relocation Fee - 2,500 335,146 429,404 25.04 Depreciation & amortization Furniture & fixture 1,489,619 964,426 Computer & hardware 267,867 111,422 Office equipment 159,689 25,016 Vehicles 606,600 84,085 2,523,775 1,184,949 Software 29,455 64,940 2,553,230 1,249,889 26.00 Financial Expenses Bank charge & commission 161,630 107,485 BG charge & commission 460,000 230,000 Interest on Bank loan 19,614,470 27,658,506 20,236,100 27,995,991 27.00 Direct expenses Howla & Commission 578,957 211,364 Laga 2,113,452 4,255,143 CDBL charge 621,931 700,055 Investor protection fund 6,850 17,387 Business Associate Commission 159,142 - 3,480,332 5,183,949

PRIME BANK 387 ANNUAL REPORT 2018

Prime Bank Securities Limited Notes to the Financial Statements For the year ended 31 December 2018

Amount in Taka 2018 2017

28.00 Loss on Sale of DSE Share to Strategic Investor 88,995,718 - In accordance with the provision of the Exchange Demutualization Act-2013 and Bangladesh Security Exchange Commission (BSEC) approved Demutualization Scheme, DSE has sold 25% of it’s share to Strategic Investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) Consortium @ Tk. 21 per share. Subsequently, Prime Bank Securities has received Tk. 37,879,317 from DSE against sale proceeds. But, the cost price of each share of DSE cannot be measured reliably, as no value has been assigned to, and recorded against, the TREC License as mentioned in note # 5. However, the approximate cost price of each share is Tk. 70.34 excluding the value of TREC License. As such, by considering a conservative approach, we have realized the loss against sell of 25% share of DSE in our books of accounts. 29.00 Earnings per share

Net profit after tax (95,660,080) 653,482 Weighted average outstanding number of shares 75,000,000 75,000,000 Earnings per share (1.275) 0.009 30.00 Bank guarantee Prime Bank Limited has issued Prime Bank Securities Limited a Bank Guarantee no. Prime/BG(L)/MTJ/04/2018 dated 11.01.2018 for maintaining additional member’s margin as specified in sub-regulation (3) of regulation (4) of Dhaka Stock Exchange (TREC HOLDER’S MARGIN) Regulataions 2013 worth of Tk. 100,000,000 (Taka Ten Crore) from dated 12.01.2018 to 31.12.2018 under sanctioned advice no. Prime/HO/CAD/CnIB/2018/69, Dated: January 02, 2018.

31.00 Disclosure on Payments/Perquisites to Directors and Key Management Personnel (As per requirement of Companies Act 1994, Schedule-XI, part-II)

31.01 Paid to Directors Board Meeting Attendance Fees 340,400 200,100 340,400 200,100 31.02 Paid to Key Management Personnel Short Term Employee Benefits 13,029,247 6,021,250 Post Employment Benefits 457,721 313,048 13,486,968 6,334,298 Key management Personnel are those Persons having authority and responsibility for Planning, Directions and Controlling the activities of the Company. i) No Compensation/ Other allowance/ commission was allowed to Directors including Managing Director, Managing Agent or manager of the company except as stated above. ii) There is no amount payable to Directors including including Managing Director, Managing Agent or manager of the Company for any sort of commission on purchases, profit or guarantee. iii) BOD Meeting attendance fee for attending each Board Meeting was Tk 5,000 for each director. The remuneration was enhanced to Tk. 8,000 for each director in it’s 33rd Board of Directors Meeting held on July 20, 2017.

32.00 Disclosure regarding Information of Employees (As per requirement of Companies Act 1994, Schedule-XI, part-II) The number of employees and expenses incurred for employees during the year as follows. Particulars Number of employees: (i) Below Tk. 36,000 p.a. - - (ii) Tk. 36,000 p.a. and above 36 24 Salary & Allowance Paid/ Payable to Employees: (i) Below Tk. 36,000 p.a. - - (ii) Tk. 36,000 p.a. and above 35,565,224 19,882,869 35,565,224 19,882,869

388 PRIME BANK 73,600 73,600 73,600 73,600 82,800 82,800 64,400 64,400 46,000 46,000 3,790,561 3,790,561 2,776,302 2,776,302 3,036,379 3,036,379 37,500,000 37,500,000 393,452,756 393,452,756 712,500,000 712,500,000 Closing Balance ------856,587,777 245,288,122 245,288,122 Credit 258,308,082 - - 73,600 73,600 73,600 73,600 82,800 82,800 64,400 64,400 46,000 46,000 2,776,302 2,776,302 873,104,117 Debit 261,300,440 205,241,350 205,241,350 Transaction During the Period Transaction ------44,021 44,021 20,306,901 20,306,901 37,500,000 37,500,000 Balance 433,499,527 433,499,527 Opening 712,500,000 712,500,000 Nature of Transaction Nature Equity investment(95% of investment(95% Equity 75 Crore) Taka total Equity OD (General) facility OD (General) of investment(5% Equity 75 Crore) Taka total Equity Expense Rent Transaction Brokerage (Payable) meeting attendance Board fee meeting attendance Board fee meeting attendance Board fee Board meeting attendance meeting attendance Board fee Board meeting attendance meeting attendance Board fee Nature of Relationship Nature Parent Company Parent Parent Company Parent Shareholder Shareholder Shareholder Shareholder & Independent Director Chairman Director Director Director Director Related Party Transaction: Party Related parties, nature length basis. The name of related parties of business and arms’ in the normal course with related carried out a number of transactions the Company under review, During the year been set out below have and their value of these transactions of Party Name Prime Bank Limited Prime Bank Prime Bank Limited Prime Bank Limited Investment Prime Bank Limited. Investment Prime Bank Limited. Investment Prime Bank Limited. Investment Prime Bank Ltd. Prime Bank Representing Shamsuddin Ahmed Ph.D. Ltd. Prime Bank Md. Shahadat Hossain Representing Md. Tabarak Hossain Bhuiyan Representing Prime Bank Prime Bank Representing Hossain Bhuiyan Md. Tabarak Ltd. Investment Mohammad Habibur Rahman Chowdhury, FCA FCA Mohammad Habibur Rahman Chowdhury, Ltd. Prime Bank Representing MBM Lutful Hadee, FCA Representing Prime Bank Ltd. Prime Bank Representing FCA Hadee, MBM Lutful Prime Bank Securities Limited Statements Notes to the Financial December 2018 ended 31 the year For 33

PRIME BANK 389 ANNUAL REPORT 2018 158,878 840,198 840,198 158,878 1,228,338 1,228,338 5,970,816 2,386,514 10,425,865 10,425,865 Annexure-A down value down down value down Total written Total Total written Total Amount in Taka 646,486 646,486 1,575,822 1,575,822 Total Total Total Total 2,451,593 2,451,593 1,440,262 1,440,262 5,425,926 5,425,926 1,575,822 9,964,268 9,964,268 amortization depreciation - - - - - 338,696 338,696 338,696 338,696 Disposal Disposal during the year during the year during the year 29,455 29,455 29,455 29,455 267,867 267,867 159,689 159,689 606,600 606,600 1,489,619 2,523,775 2,523,775 Charged Charged Charged Charged Depreciation during the year during the year 961,973 961,973 378,582 378,582 7,77,190 1,280,573 1,280,573 1,546,367 5,158,060 5,158,060 1,546,367 balance balance Opening Opening 25% 25% 20% 20% 20% Rate Rate Rate Amortization 1,734,700 6,654,264 8,422,409 8,422,409 2,280,460 2,280,460 1,734,700 3,033,000 3,033,000 Total cost Total Total Cost Total 20,390,133 20,390,133 - - - - - 338,700 338,700 338,700 338,700 Disposal Disposal during the year during the year - Cost Cost 85,575 85,575 85,575 85,575 756,926 756,926 926,260 1,466,917 1,466,917 3,150,103 3,150,103 Addition Addition Addition Addition during the year during the year 1,649,125 1,523,534 3,371,700 1,649,125 1,649,125 6,955,492 6,955,492 5,728,004 5,728,004 17,578,730 17,578,730 balance balance Opening Opening Furniture & fixtures Furniture Computer & hardwares Computer Vehicles Software Office equipment Prime Bank Securities Limited Asset Schedule Fixed December 2018 As at 31 Prime Bank Securities Limited Intangible Asset Schedule December 2018 As at 31 Particulars Particulars

390 PRIME BANK FINANCIAL STATEMENTS OF PRIME EXCHANGE CO. PTE. LTD., SINGAPORE

Independent Auditors’ Report to the Member of Prime Exchange Co. Pte. Ltd.

Statement of Profit or Loss & Other Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements ANNUAL REPORT 2018

INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF Prime Exchange Co. Pte. Ltd. (Incorporated in the Republic of Singapore)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Prime Exchange Co. Pte. Ltd. (the “Company”), which comprise the statement of financial position as at 31 December 2018, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act”) and Financial Reporting Standards in Singapore (FRSs) so as to give a true and fair view of the financial position of the Company as at 31 December 2018 and of the financial performance, changes in equity and cash flows of the Company for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises the Directors’ Statement set out on pages 1 and 2.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Directors for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Act and FRSs, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets.

The directors’ responsibilities include overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the 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 assurance, but is not a guarantee that an audit conducted in accordance with SSAs 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.

392 PRIME BANK INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF Prime Exchange Co. Pte. Ltd. (Incorporated in the Republic of Singapore)

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism 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, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• 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 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.

We communicate with the directors 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.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

C. C. YANG & CO.

PUBLIC ACCOUNTANTS AND

CHARTERED ACCOUNTANTS

SINGAPORE

04 March 2019

PRIME BANK 393 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Statement of Profit or Loss and other Comprehensive Income FOR THE YEAR ENDED 31 DECEMBER 2018

(Expressed in Singapore Dollars)

$ Note 2018 2017

Revenue 3 330,401 348,459

Other Items of Income

Other Income 4 4,960 9,895 Foreign Currency Gains 507,040 749,997

Other Items of Expense

Employee Benefits Expense 5 (412,472) (459,671) Depreciation 8 (32,407) (29,643) Other Expenses 6 (373,022) (432,067)

Profit Before Tax from Continuing Operations 24,500 186,970

Income Tax Expense 7 657 (12,579)

Profit from Continuing Operations, Net of Tax 25,157 174,391

Other Comprehensive Income

Other Comprehensive Income, Net of Tax - -

Total Comprehensive Income $ 25,157 $ 174,391 The accompanying notes form an integral part of these financial statements

394 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Statement of Financial Position As At 31 December 2018

(Expressed in Singapore Dollars)

$ Note 2018 2017

ASSETS

Non-Current Assets Property, Plant and Equipment 8 31,961 59,896

Total Non-Current Assets 31,961 59,896

Current Assets Deposits 73,190 73,287 Prepayments 10,957 10,891 Cash and Bank Balances 9, 10 1,383,667 1,762,377

Total Current Assets 1,467,814 1,846,555

Total Assets $ 1,499,775 $ 1,906,451

EQUITY AND LIABILITIES

Equity Share Capital 11 804,727 804,727 Retained Earnings 25,157 174,391

Total Equity 829,884 979,118

Non-Current Liabilities Deferred Tax Liabilities 12 3,632 4,677

Total Non-Current Liabilities 3,632 4,677

Current Liabilities Income Tax Payable 3,105 11,715 Trade and Other Payables 13 663,154 910,941

Total Current Liabilities 666,259 922,656

Total Liabilities 669,891 927,333

Total Equity and Liabilities $ 1,499,775 $ 1,906,451

The accompanying notes form an integral part of these financial statements

PRIME BANK 395 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Statement of Changes in Equity For The Year Ended 31 December 2018

(Expressed in Singapore Dollars)

$ Note Share Retained Total Equity Capital Earnings

Balance at 1/1/2018 979,118 804,727 174,391

Distributions to Owner

Dividends 14 (174,391) - (174,391)

Total Distributions to Owner (174,391) - (174,391)

Total Comprehensive Income for the Year - 2018 25,157 - 25,157

Balance at 31/12/2018 $ 829,884 $ 804,727 $ 25,157

Balance at 1/1/2017 850,474 804,727 45,747

Distributions to Owner

Dividends 14 (45,747) - (45,747)

Total Distributions to Owner (45,747) - (45,747)

Total Comprehensive Income for the Year - 2017 174,391 - 174,391

Balance at 31/12/2017 $ 979,118 $ 804,727 $ 174,391

The accompanying notes form an integral part of these financial statements

396 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Statement of Cash Flows For The Year Ended 31 December 2018

(Expressed in Singapore Dollars)

$ Note 2018 2017

Operating Activities Profit Before Tax from Continuing Operations 24,500 186,970

Total Adjustment 32,407 29,643

Depreciation 32,407 29,643

Operating Cash Flows Before Changes In Working Capital 56,907 216,613

Decrease in Other Receivables 97 21,453 Increase in Prepayments (66) (446) Increase (Decrease) in Trade and Other Payables (247,787) 626,185

Cash Flows From (Used In) Operations (190,849) 863,805 Income Tax Paid (8,998) (1,871)

Net Cash Flows From (Used In) Operating Activities (199,847) 861,934

Investing Activities Purchase of Property, Plant and Equipment (4,472) (33,595)

Net Cash Flows Used In Investing Activities (4,472) (33,595)

Financing Activities Dividends Paid on Ordinary Shares (174,391) (45,747)

Net Cash Flows Used In Financing Activities (174,391) (45,747)

Net Increase (Decrease) in Cash and Cash Equivalents (378,710) 782,592 Cash and Cash Equivalents, Statement of Cash Flows, Beginning Balance 1,762,377 979,785

Cash and Cash Equivalents, Statement of Cash Flows, Ending Balance 10 $ 1,383,667 $ 1,762,377

The accompanying notes form an integral part of these financial statements

PRIME BANK 397 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. CORPORATE INFORMATION

Prime Exchange Co. Pte. Ltd. is a limited liability company incorporated and domiciled in the Republic of Singapore whose registered office and principal place of business is located at 2A Desker Road Singapore 209549 and another two branches at Block 134 #01-305 Jurong Gateway Road Singapore 600134 and 55 Benoi Road #01-14 Joo Koon Bus Interchange Singapore 629907.

The Company is a wholly-owned subsidiary of Prime Bank Limited, incorporated in Bangladesh, which is also the Company’s ultimate holding company.

The principal activities of the Company are to carry on the remittance business and to undertake and participate in transactions, activities and operations commonly carried on or undertaken by remittance and exchange house.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

Functional currency

The management has determined the currency of the primary economic environment in which the Company operates i.e. functional currency, to be the Singapore dollars. Revenue and major costs of providing services including major operating expenses are primarily influenced by fluctuations in Singapore dollars.

The financial statements are presented in Singapore dollars.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Company has adopted all the new and revised standards that are relevant to its operations and effective for annual financial periods beginning on or after 1 January 2018. The adoption of these standards did not have any effect on the financial performance or position of the Company except as discussed below.

FRS 109 Financial Instruments

FRS 109 replaces FRS 39 Financial instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting.

The Company applied FRS 109 retrospectively, with an initial application date of 1 January 2018. The Company has not restated comparative information which continues to be reported under FRS 39 and the disclosure requirements of FRS 107 Financial Instruments: Disclosures relating to items within the scope of FRS 39.The adoption did not have any significant impact to the Company’s opening retained earnings and net assets.

Classification and measurement

Under FRS 109, debt instruments are subsequently measured either at fair value through profit or loss (FVPL), amortised cost or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the Company’s business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding.

The assessment of the Company’s business model was made as of the date of initial application, 1 January 2018. The assessment of whether contractual cash flows on debt instruments solely comprised principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.

398 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

The classification and measurement requirements of FRS 109 did not have a significant impact to the Company. The following are the changes in the classification and measurement of the Company’s financial assets:

• Other receivables classified as loans and receivables as at 31 December 2017 are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. These were classified and measured as debt instruments at amortised cost beginning 1 January 2018.

The Company has not designated any financial liabilities at FVPL. These are no changes in classification and measurement for the Company’s financial liabilities.

Impairment

The adoption of FRS 109 has fundamentally changed the Company’s accounting for impairment losses for financial assets by replacing FRS 39’s incurred loss approach with a forward-looking expected credit loss (ECL) approach. FRS 109 requires the Company to recognise an allowance for ECLs for all debt instruments not held at FVPL. Upon adoption of FRS 109, no further impairment loss was provided for the previous financial year.

FRS 115 Revenue from Contracts with Customers

FRS 115 supersedes FRS 11 Construction Contracts, FRS 18 Revenue and related interpretations and it applies, with limited exceptions, to all revenue arising from contracts with customers. FRS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflect the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

FRS 115 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

The Company adopted FRS 115 using the modified retrospective method of adoption with the date of initial application of 1 January 2018. Under this method, the standard can be applied either to all contracts at the date of initial application or only to contracts that are not completed at this date. The Company elected to apply the standard to all contracts as at 1 January 2018.

The cumulative effect of initially applying FRS 115 is recognised at the date of initial application as an adjustment to the opening balance of retained earnings. Therefore, the comparative information was not restated and continues to be reported under FRS 11, FRS 18 and related interpretations. The adoption did not have any significant impact to the Company’s opening retained earnings and net assets.

2.3 Standards issued but not yet effective

The Company has not adopted the following standards and interpretations that have been issued but are only effective for annual financial periods beginning on or after the respective dates.

Effective 1 January 2019 Amendments to FRS 19 Plan Amendment, Curtailment or Settlement Amendments to FRS 109 Prepayment Features With Negative Compensation FRS 116 Leases INT FRS 123 Uncertainty Over Income Tax Treatments Improvements to FRSs (March 2018) Amendments to FRS 12 Income Taxes

PRIME BANK 399 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

Except for FRS 116, the directors expect that the adoption of the other standards above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of FRS 116 is described below.

FRS 116 Leases

FRS 116 supersedes FRS 17 Leases and introduces a new single lease accounting model which eliminates the current distinction between operating and finance leases for lessees. FRS 116 requires lessees to recognise right-of-use assets and lease liabilities for all leases with a term of more than 12 months, except where the underlying asset is of low value. The right- of-use asset is depreciated and interest expense is recognised on the lease liability. The accounting requirements for lessors have not been changed substantially, and continue to be based on classification as operating and finance leases. Disclosure requirements have been enhanced for both lessors and lessees. The directors are currently assessing the impact of FRS 116 on the financial statements.

2.4 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost includes the cost of replacing part of the property, plant and equipment. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Other subsequent expenditure is recognised as repair and maintenance expense in the profit or loss during the financial year in which it is incurred.

Depreciation is computed on the straight-line method to write off the cost of property, plant and equipment over the estimated useful lives. The estimated useful lives of property, plant and equipment are as follows:

Furniture & fittings 3 years Office equipment 3 years Renovation 3 years

Fully depreciated assets are retained in the accounts until they are no longer in use and no further charge for depreciation is made in respect of these assets.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at the end of each reporting year to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in the profit or loss in the financial year the asset is de-recognised.

2.5 Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Company makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Impairment losses of continuing operations are recognised in the profit or loss, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

400 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

2.6 Financial instruments

These accounting policies are applied on and after the initial application date of FRS 109, 1 January 2018:

(a) Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when the Company becomes a party to the contractual provisions of the instruments.

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Trade receivables are measured at the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third party, if the trade receivables do not contain a significant financing component at initial recognition.

Subsequent measurement

Investments in debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the contractual cash flow characteristics of the asset. The three measurement categories for classification of debt instruments are amortised cost, FVOCI and FVPL. The Company only has debt instruments at amortised cost.

Financial assets that are held for the collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Financial assets are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the assets are de-recognised or impaired, and through the amortisation process.

De-recognition

A financial asset is de-recognised where the contractual right to receive cash flows from the asset has expired. On de- recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income for debt instruments is recognised in profit or loss.

(b) Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at FVPL, directly attributable transaction costs.

Subsequent measurement

After initial recognition, financial liabilities that are not carried at FVPL are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised, and through the amortisation process.

De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expired. On de- recognition, the difference between the carrying amounts and the consideration paid is recognised in profit or loss.

These accounting policies are applied before the initial application date of FRS 109, 1 January 2018:

PRIME BANK 401 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

(a) Financial assets

Financial assets are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial assets at initial recognition.

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Such assets are initially recognised at fair value, plus directly attributable transaction costs and subsequently carried at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in the profit or loss when the loans and receivables are de-recognised or impaired, and through the amortisation process.

A financial asset is de-recognised when the contractual right to receive cash flows from the asset has expired. On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised directly in other comprehensive income is recognised in the profit or loss.

The Company classifies the following financial assets as loans and receivables:

• Cash and bank balances

• Other receivables

(b) Financial liabilities

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at FVPL, directly attributable transaction costs.

Subsequent to initial recognition, derivatives are measured at fair value. Other financial liabilities (except for financial guarantee) are measured at amortised cost using the effective interest method.

For financial liabilities other than derivatives, gains and losses are recognised in the profit or loss when the liabilities are de- recognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in the profit or loss. Net gains or losses on derivatives include exchange differences.

A financial liability is de-recognised when the obligation under the liability is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.

Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position, when and only when, there is a currently enforceable legal right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

2.7 Impairment of financial assets

These accounting policies are applied on and after the initial application date of FRS 109, 1 January 2018:

The Company recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at FVPL and financial guarantee contracts. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is recognised for credit losses expected over the remaining life of the exposure, irrespective of timing of the default (a lifetime ECL).

For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward- looking factors specific to the debtors and the economic environment which could affect debtors’ ability to pay.

402 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

These accounting policies are applied before the initial application date of FRS 109, 1 January 2018:

The Company assesses at the end of each reporting year whether there is any objective evidence that a financial asset or group of financial assets is impaired and recognises an allowance for impairment when such evidence exists.

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the financial asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the profit or loss.

2.8 Cash and cash equivalents

Cash and cash equivalents comprise cash and bank balances that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

2.9 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting year and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.10 Employee benefits

Defined contribution plan

As required by law, the Company makes contributions to the Central Provident Fund (CPF) scheme in Singapore, a defined contribution pension scheme. CPF contributions are recognised as compensation expenses in the same period as the employment that gives rise to these contributions.

2.11 Leases

As lessee

Operating leases

Leases where substantially all the risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over the lease term.

The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

2.12 Revenue recognition

These accounting policies are applied on and after the initial application date of FRS 115, 1 January 2018:

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

PRIME BANK 403 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

Revenue is recognised when the Company satisfies a performance obligation by transferring a promised good or service to the customer, which is when the customer obtains control of the good or service. A performance obligation may be satisfied at a point in time or over time. The amount of revenue recognised is the amount allocated to the satisfied performance obligation.

Commission income

Commission income is recognised when the entity satisfies the performance obligation at a point of time when the significant acts have been completed as the services are provided.

These accounting policies are applied before the initial application date of FRS 109, 1 January 2018:

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured regardless of when the payment is made. Revenue is measured at the fair value consideration received or receivable, taking into account contractually defined terms of payments and excluding taxes or duty.

Commission income

Commission income is recognised upon completion and delivery of the service to the customers.

2.13 Government grants

Government grants are recognised when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Where the grant relates to an expense item, the fair value is recognised as income in the profit or loss over the periods necessary to match them on a systematic basis to the costs for which the grants are intended to compensate.

2.14 Income taxes

(i) Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Income Tax Authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting year.

Current taxes are recognised in the profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(ii) Deferred tax

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting year between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax asset is reviewed at the end of each reporting year and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at the end of each reporting year and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of each reporting year.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

404 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

(iii) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

2.15 Foreign currency transactions

Transactions in foreign currencies are measured and recorded in Singapore dollars on initial recognition at exchange rates approximating those ruling at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting year. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non- monetary items measured at fair value in foreign currency are translated using the exchange rates at the date when the fair value was measured.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting year are recognised in the profit or loss.

2.16 Share capital

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.

2.17 Dividend

Interim dividend is recorded in the financial year in which it is declared payable. Final dividend is recorded in the financial year in which the dividend is approved by the shareholders.

2.18 Significant accounting judgements and estimates

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting year. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting year are discussed below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Useful lives of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment estimated useful lives. Management estimates the useful lives of these property, plant and equipment to be 3 years. Changes in the expected level of usage and technological developments could impact the economic useful lives of these assets, therefore, future depreciation charges could be revised. The carrying amounts of the Company’s property, plant and equipment at the end of the reporting year are disclosed in Note 8 to the financial statements.

Income taxes

Significant judgement is involved in determining the Company’s provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of the Company’s income tax payable and deferred tax liabilities at 31 December 2018 were $3,105 (2017 – $11,715) and $3,632 (2017 – $4,677) respectively.

PRIME BANK 405 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

3. REVENUE

$ 2018 2017 Commission income $ 330,401 $ 348,459

The above revenue from commission income is recognised at a point in time. The contract is for a duration of less than 12 months.

4. OTHER INCOME

$ 2018 2017 Government grants $ 4,960 $ 9,895

5. EMPLOYEE BENEFITS EXPENSE

$ 2018 2017

Salaries, bonuses and other related costs 391,773 438,398 Employer’s contributions to Central Provident Fund 20,699 21,273

$ 412,472 $ 459,671

The above includes remuneration of key management personnel as shown in Note 16(b) to the financial statements.

6. OTHER EXPENSES

The following items have been included in arriving at other expenses:

$ 2018 2017

Advertisement 21,335 27,202 Bank and nets charges 34,378 65,942 Casual labour 7,190 14,429 Entertainment 7,659 8,471 General expenses 4,285 8,761 Insurance 31,335 29,112 Licence fees 6,000 6,250 Printing and stationery 8,941 8,841 Professional and legal fees 10,213 11,191 Rental of premises 162,860 175,110 Repair & maintenance 9,405 8,925 Telephone charges 23,897 23,081 Transportation 9,300 9,197 Travelling 5,326 5,874 Utilities 16,937 17,398

406 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

$ 2018 2017 7. INCOME TAX EXPENSE Based on results for the year Current tax 3,118 11,728 Deferred tax (Note 12) (2,619) (428) 499 11,300 Under (Over) provision in respect of prior years Current tax (2,730) (13) Deferred tax (Note 12) 1,574 1,292 $ (657) $ 12,579

The reconciliation between the tax expense (benefit) and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2018 and 2017 is as follows:

Profit before income tax $ 24,500 $ 186,970

Tax expense calculated at tax rate of 17% (2017 – 17%) 4,165 31,785

Expenses not deductible for tax purposes 2,147 778

Income not subject to tax (285) (1,156)

Productivity and innovation credit - (1,665)

Singapore statutory stepped income exemption (4,748) (15,510)

Corporate income tax rebate (780) (2,932)

Under (Over) provision in respect of prior years Current tax (2,730) (13) Deferred tax (Note 12) 1,574 1,292 $ (657) $ 12,579

PRIME BANK 407 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

8. PROPERTY, PLANT AND EQUIPMENT

$ Furniture Office Renovation Total & fittings equipment 2018 Cost:

At 1.1.2018 10,781 161,741 265,082 437,604 Additions 949 3,523 - 4,472

At 31.12.2018 11,730 165,264 265,082 442,076 Accumulated depreciation:

At 1.1.2018 10,591 145,650 221,467 377,708 Depreciation for the year 287 9,293 22,827 32,407

At 31.12.2018 10,878 154,943 244,294 410,115 Net book value:

At 31.12.2018 $ 852 $ 10,321 $ 20,788 $ 31,961

2017 Cost: At 1.1.2017 10,781 155,626 237,602 404,009 Additions - 6,115 27,480 33,595

At 31.12.2017 10,781 161,741 265,082 437,604 Accumulated depreciation:

At 1.1.2017 9,953 137,182 200,930 348,065 Depreciation for the year 638 8,468 20,537 29,643

At 31.12.2017 10,591 145,650 221,467 377,708 Net book value:

At 31.12.2017 $ 190 $ 16,091 $ 43,615 $ 59,896

408 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

9. CASH AND BANK BALANCES

The cash and bank balances include an amount of $647,144 (2017 – $880,412) (Note 13) received from customers for outward remittance at year end date. The amount was subsequently remitted on 4 January 2019 (2017 – 4 January 2018).

10. CASH AND CASH EQUIVALENTS

Cash and cash equivalents are denominated in the following currencies:

$ 2018 2017

Singapore Dollars 1,167,225 1,426,216 Taka 178,851 177,001 Indian Rupees 21,265 143,375 Philippine Peso 16,326 15,785 $ 1,383,667 $ 1,762,377

11. SHARE CAPITAL

$ 2018 2017 Issued and fully paid 804,727 (2017 – 804,727) ordinary shares $ 804,727 $ 804,727

The holder of ordinary shares is entitled to receive dividends as and when declared by the Company. All ordinary shares of no par value carry one vote per share without restriction.

12 DEFERRED TAX LIABILITIES

$ 2018 2017 Deferred tax liabilities $ 3,632 $ 4,677

The movements in deferred tax liabilities during the year are as follows:

$ Accelerated Tax Total Depreciation

Balance at 1.1.2017 3,813 3,813

Charged (Credited) to profit or – 2017 - Current year (Note 7) (428) (428) - Under provision in prior year (Note 7) 1,292 1,292

Balance at 31.12.2017 4,677 4,677

Charged (Credited) to profit or loss – 2018 - Current year (Note 7) (2,619) (2,619) - Under provision in prior year (Note 7) 1,574 1,574

Balance at 31.12.2018 $ 3,632 $ 3,632

PRIME BANK 409 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

13. TRADE AND OTHER PAYABLES

$ 2018 2017

Accruals 15,405 30,529 Funds received from customers (Note 10) 647,144 880,412 Advance receipt 605 - $ 663,154 $ 910,941

14. DIVIDENDS

$ 2018 2017

Exempt one-tier final dividend of $0.21671 (2017 – $0.05685) per ordinary share in respect of year ended 31 December 2017 (2017 – 31 December 2016) $ 174,391 $ 45,747

15. OPERATING LEASE COMMITMENTS

At the end of the reporting year, the Company was committed to making the following payments in respect of rental commitments under non-cancellable operating leases:

$ 2018 2017

Leases which expire: Within one year 149,210 159,500 Later than one year but within five years 310,000 457,250 $ 459,210 $ 616,750

16. RELATED PARTY TRANSACTIONS

An entity or individual is considered a related party for the purpose of these financial statements if it has the ability (directly or indirectly) to control or exercise significant influence over the operating and financial decisions of the Company or vice versa, or where it is subject to common control or common significant influence.

The Company has the following significant related party transactions entered with its related parties and the effect of these transactions at terms agreed between the parties are reflected in these financial statements:

(a) Transactions with related parties

$ 2018 2017

Related party Professional fee 5,618 5,350 Other expenses 495 794

410 PRIME BANK PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

(b) Compensation of key management personnel

$ 2018 2017 Key Executive Officer Salary, bonus and other related costs $ 111,522 $ 119,065

17. CATEGORIES OF FINANCIAL INSTRUMENTS

The categories of financial instruments as at the end of the reporting year are as follows:

$ 2018 2017

Financial assets

Financial assets at amortised cost 1,456,857 - Loans and receivables (including cash and bank balances) - 1,835,664 $ 1,456,857 $ 1,835,664

Financial liabilities

Financial liabilities at amortised cost $ 663,154 $ 910,941

18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to financial risks arising from its operations and the use of financial instruments. The Company’s financial instruments comprise financial assets and liabilities. Financial assets and liabilities mainly relate to receivables and payables which arise directly from its operations.

The main purpose for holding or issuing financial instruments is to raise and manage the finances for the Company’s operating, investing and financing activities. There is exposure to the financial risks on the financial instruments such as credit risk, liquidity risk and market risk comprising interest rate risk, foreign currency risk and other price risk exposures. The management has certain practices for the management of financial risks. However, these are not documented in formal written documents. The following guidelines are followed: All financial risk management activities are carried out and monitored by senior management staff. All financial risk management activities are carried out following good market practices.

The Company does not hold or issue derivative financial instruments for trading purposes or to hedge against fluctuations in interest and foreign exchange rates.

The following sections provide details regarding the Company’s exposure to the above mentioned financial risks and the objectives, policies and processes for the management of these risks. There has been no change to the Company’s exposure to these financial risks or the manner in which it manages and measures the risks.

Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Company’s exposure to credit risk arises primarily from other receivables. For other financial assets (including cash and cash equivalents), the Company minimises credit risk by dealing exclusively with high credit rating counterparties.

The Company has no significant concentration of credit risk. The Company has policies in place to ensure that transactions are entered into only with counterparties that are of acceptable credit quality. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant.

The maximum exposure to credit risk is represented by the net carrying amount of financial assets recorded in the financial statements.

Other receivables that are neither past due nor impaired are with creditworthy debtors with good payment record with the Company. Cash and cash equivalents that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

PRIME BANK 411 ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORE Notes to the Financial Statements 31 December 2018

Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Company maintains sufficient cash and cash equivalents, and internally generated cash flows to finance their activities. As at the end of the reporting year, the expected contractual undiscounted cash outflows of financial liabilities are due in less than a year. Interest rate risk The Company has no exposure to movements in market interest rates. Foreign currency risk The Company’s remittance activities are transacted in Taka (BDT), Indian Rupees (INR), United States dollars (USD) and Philippine Peso (PESO). Exchange rate movements in Taka, the Indian Rupees, the United States dollars, Philippine Peso and the Singapore dollars, the Company’s functional currency, exposed the Company to foreign currency risk. The Company does not use derivative financial instruments to hedge against the volatility associated with foreign currency transactions as the Company’s exposure to foreign currency risk is minimal. Sensitivity analysis for foreign currency risk

$ 2018 2017 Increase Increase (Decrease) in (Decrease) in profit net of tax profit net of tax

BDT/SGD - strengthened Nil % (2017 – 9%) - 13,222 - weakened Nil% (2017 – 9%) - (13,222) INR/SGD - strengthened 6% (2017 – 1%) 1,090 1,190 - weakened 6% (2017 – 1%) (1,090) (1,190) PESO/SGD strengthened 5% (2017 – 7%) 625 917 weakened 5% (2017 – 7%) (625) (917) Equity price risk The Company has no exposure to equity price risk. Capital risk management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The total capital of the Company as at the end of the reporting year is the “Total equity” as presented on the statement of financial position. The Company is not subject to any externally imposed capital requirements.

19. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction, other than in a forced or liquidation sale. Financial instruments whose carrying amounts approximate fair values Management has determined that the carrying amounts of cash and bank balances, deposits and trade and other payables, based on their notional amounts, reasonably approximate their fair values because these are mostly short term in nature.

20. AUTHORISATION OF FINANCIAL STATEMENTS The financial statements for the year ended 31 December 2018 were authorised for issue in accordance with a resolution of the directors on 4 March 2019.

412 PRIME BANK FINANCIAL STATEMENTS OF PBL EXCHANGE (UK) LTD.

Independent Auditors’ Report to the Members of PBL Exchange (UK) Ltd.

Profit and Loss Account

Balance Sheet

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITED Independent Auditor’s Report To the Members of PBL Exchange (UK) Limited

Opinion

We have audited the financial statements of PBL EXCHANGE (UK) LIMITED (the ‘company’) for the Period ended 31 December 2018 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company’s affairs as at 31 December 2018 and of its profit for the Period then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information The directors are responsible for the other information. The other information comprises the information included 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, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors’ report for the financial Period for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

414 PRIME BANK PBL EXCHANGE (UK) LIMITED Independent Auditor’s Report To the Members of PBL Exchange (UK) Limited

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors’ Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit; or

• the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies’ exemption in preparing the Directors’ Report. Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine 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, the directors are 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 the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the 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 (UK) 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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Seema Siddiqui (Senior Statutory Auditor) for and on behalf of Reddy Siddiqui LLP 18 February 2019

Chartered Accountants Statutory Auditor 183-189 The Vale Acton London W3 7RW

PRIME BANK 415 ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITED Profit and Loss Account For the year ended 31 December 2018

£ 2018 2017 Turnover 550,830 473,691 Administrative expenses (506,805) (453,452) Other operating income 6,780 _ Operating profit 50,805 20,239 Interest payable and similar expenses (8) (6) Profit before taxation 50,797 20,233 Tax on profit (13,515) (8,250) Profit for the financial Period 37,282 11,983

416 PRIME BANK PBL EXCHANGE (UK) LIMITED Statement of Comprehensive Income For the year ended 31 December 2018

£ 2018 2017 Profit for the year 37,282 11,983 Other comprehensive income - - Total comprehensive income for the Period 37,282 11,983

PRIME BANK 417 ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITED Balance Sheet As at 31 December 2018

£ Notes 2018 2017 Fixed assets Tangible assets 4 57,586 77,922 Current assets Debtors - deferred tax 46,322 59,838 Debtors - other 5 18,119 5,916 Cash at bank and in hand 164,181 286,940 228,622 352,694 Creditors: amounts falling due within one year 6 (73,291) (254,981) Net current assets 155,331 97,713 Total assets less current liabilities 212,917 175,635 Capital and reserves Called up share capital 7 500,000 500,000 Profit and loss reserves (287,083) (324,365) Total equity 212,917 175,635

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 18 February 2019 and are signed on its behalf by:

Gazi Mohammed Khurshid Alam Rahel Ahmed Director Director

Company Registration No. 07081093

418 PRIME BANK PBL EXCHANGE (UK) LIMITED Statement of Changes in Equity For the year ended 31 December 2018 £ Profit and Share capital Total loss reserves Balance at 1 January 2017 500,000 (336,348) 163,652 Year ended 31 December 2017: Profit and total comprehensive income for the period - 11,983 11,983 Balance at 31 December 2017 500,000 (324,365) 175,635 Year ended 31 December 2018: Profit and total comprehensive income for the period - 37,282 37,282 Balance at 31 December 2018 500,000 (287,083) 212,917

PRIME BANK 419 ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITED Statement of Cash Flows For the year ended 31 December 2018

£ Notes 2018 2017

Cash flows from operating activities Cash (absorbed by)/generated from operations 9 (121,743) 131,115 Interest paid (8) (6) Income taxes refunded/(paid) 1 - Net cash (outflow)/inflow from operating activities (121,750) (131,109) Investing activities Purchase of tangible fixed assets (1,009) (1,060) Net cash used in investing activities (1,009) (1,060) Net cash used in financing activities - - Net (decrease)/increase in cash and cash equivalents (122,759) 130,049 Cash and cash equivalents at beginning of Period 286,940 156,891 Cash and cash equivalents at end of Period 164,181 286,940

420 PRIME BANK PBL EXCHANGE (UK) LIMITED Notes to the Financial Statements For the year ended 31 December 2018

1 Accounting policies

Company information PBL EXCHANGE (UK) LIMITED is a private company limited by shares incorporated in England and Wales. The registered office is 16 Brick Lane, London, UK, E1 6RF. 1.1 Accounting convention These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2 Turnover Turnover represents amounts received as commission from customers.

Turnover is recognised at the fair value of the consideration received or receivable in the form of consumers’ money transfer transaction fees. The transaction fees are based on the principal amount of the money transfer transaction and the locations from and to which funds are transferred. Transaction fees are set by the Company and recorded as revenue at the time of sale. The Company does not charge VAT on transactions owing to money transfer services being an exempt supply.

The Company also generates revenue based on the difference between the exchange rate set by the Company to the customer and the rate at which the Company or its agents are able to acquire the currency. This foreign exchange revenue is recognised at the same time at which the related money transfer transaction fee revenue is recognised.

1.3 Tangible fixed assets Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Land and buildings Leasehold 10 years over the life of the lease

Fixtures, fittings & equipment 25% straight line

Computer equipment 25% srtaight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.4 Impairment of fixed assets At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash- generating unit to which the asset belongs.

PRIME BANK 421 ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITED Notes to the Financial Statements For the year ended 31 December 2018

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.5 Cash at bank and in hand

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks, other short- term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.6 Financial instruments The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company’s balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

422 PRIME BANK PBL EXCHANGE (UK) LIMITED Notes to the Financial Statements For the year ended 31 December 2018

1.7 Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.8 Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

1.9 Taxation

The tax recoverable represents the sum of deferred tax calculated based on accumulated losses brought forward. The deferred tax asset balance was £46,322 as at 31.12.2018 (2017 was £59,838).

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.10 Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits. 1.11 Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.12 Leases

Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

1.13 Foreign Currency Transactions Transactions in foreign currency are measured and recorded in Sterling by use of the exchange rate in effect at the date of transaction. At each statement of financial position date, recorded monetary balances that are denominated in a foreign currency are adjusted to reflect the rate at the statement of financial position date. All realized and unrealized exchange adjustment gains and losses are taken to the statement of movements on profit and loss account.

PRIME BANK 423 ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITED Notes to the Financial Statements For the year ended 31 December 2018

2 Auditor’s remuneration

£ 2018 2017 Fees payable to the company's auditor and associates: For audit services Audit of the financial statements of the company 4,620 4,598 For other services All other non-audit services 4,620 4,598

3 Employees

The average monthly number of persons (including directors) employed by the company during the Period was 14 (2017 - 14).

4 Tangible fixed assets £ Land and Fixtures, fittings Computer buildings Total & equipment equipment Leasehold Cost At 1 January 2018 173,332 7,621 9,033 189,986 Additions - - 1,009 1,009 At 31 December 2018 173,332 7,621 10,042 190,995 Depreciation and impairment At 1 January 2018 96,759 7,480 7,825 112,064 Depreciation charged in the Period 21,017 64 264 21,345 At 31 December 2018 117,776 7,544 8,089 133,409 Carrying amount At 31 December 2018 55,556 77 1,953 57,586 At 31 December 2017 76,573 141 1,208 77,922

5 Debtors £ 2018 2017 Amounts falling due within one year: Other debtors 18,119 5,916 Amounts falling due after more than one year: Deferred tax asset 46,322 59,838 Total debtors 64,441 65,754

6 Creditors: amounts falling due within one year £ 2018 2017 Trade creditors 71,863 245,301 Other taxation and social security 340 2,554 Other creditors 1,088 7,126 73,291 254,981

424 PRIME BANK PBL EXCHANGE (UK) LIMITED Notes to the Financial Statements For the year ended 31 December 2018

7. Called up share capital

£ 2018 2017 Ordinary share capital Issued and fully paid 500,000 500,000 500,000 Ordinary of £1 each 500,000 500,000

8. Operating lease commitments

Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non- cancellable rent operating leases, as follows:

£ 2018 2017 58,848 58,848

9 Cash generated from operations £ 2018 2017

Profit for the year after tax 37,282 11,983 Adjustments for: Taxation charged/(credited) 13,515 8,250 Finance costs 8 6 Depreciation and impairment of tangible fixed assets 21,345 23,134 Movements in working capital: (Increase) in debtors (12,203) (5,916) Increase/(decrease) in creditors (181,690) 93,658 Cash (absorbed by)/generated from operations (121,743) 131,115

PRIME BANK 425 FINANCIAL STATEMENTS OF PBL FINANCE (HONG KONG) LTD.

Independent Auditors’ Report to the Members of PBL Finance (Hong Kong) Ltd.

Statement of Income and Retained Earnings

Statement of Financial Position

Statement of Cash Flows

Notes to the Financial Statements INDEPENDENT AUDITOR’S REPORT To The Members of PBL Finance (Hong Kong) Limited (incorporated in Hong Kong with limited liability)

Opinion

We have audited the financial statements of PBL Finance (Hong Kong) Limited (“the Company”) set out on pages 6 to 17, which comprise the statement of financial position as at 31st December, 2018, and the statement of income and retained earnings and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31st December, 2018, and of its financial performance and its cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standard for Private Entities (“HKFRS for Private Entities”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

Basis for Opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information Other than the Financial Statements and Auditor’s Report Thereon

The directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include 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.

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. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Directors and Those Charged with Governance for the Financial Statements

The directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRS for Private Entities issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine 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, the directors are 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 the directors either intend to liquidate the Company or to cease operations, or have 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

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. Our report is made solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs 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 HKSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also :-

-- 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.

PRIME BANK 427 ANNUAL REPORT 2018

INDEPENDENT AUDITOR’S REPORT To The Members of PBL Finance (Hong Kong) Limited (incorporated in Hong Kong with limited liability)

-- Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.

-- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

-- Conclude on the appropriateness of the directors’ 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

T. O. Yip & Co. Limited Certified Public Accountants (Practising) Hong Kong

Samuel Ming Sum Yip Practising Certificate Number : P05704 26th February 2019

428 PRIME BANK PBL FINANCE (HONG KONG) LIMITED Statement of Income and Retained Earnings for the year ended 31st December, 2018

HK$ Notes 2018 2017

Interest income 11,821,096 10,939,730

Interest expenses 4 (6,378,312) (5,313,894)

Net interest income 5,442,784 5,625,836

Other operating income 5 4,091,516 4,955,692

Total operating income 9,534,300 10,581,528

Staff costs (2,491,059) (2,508,912) Depreciation 11 (9,550) (31,165) Other operating expenses (1,585,937) (1,642,799)

Total operating expenses (4,086,546) (4,182,876)

Profit before taxation 8 5,447,754 6,398,652

Income tax expense 9 (701,236) (1,037,666)

Profit for the year 4,746,518 5,360,986

Retained earnings at start of the year 5,360,986 5,286,239

Dividends 10 (5,360,986) (5,286,239)

Retained earnings at end of the year 4,746,518 5,360,986

The notes on pages 9 to 17 form part of these financial statements.

PRIME BANK 429 ANNUAL REPORT 2018

PBL FINANCE (HONG KONG) LIMITED Statement of Financial Position As At 31St December, 2018

HK$ Notes 2018 2017

Non-current assets

Property, plant and equipment 11 19,168 16,378

Current assets

Discounted bills receivable 210,560,500 172,308,731 Deposits, prepayments and other receivables 3,303,464 2,907,829 Income tax refundable 161,430 - Cash and bank balances 2,543,421 3,707,440

216,568,815 178,924,000

Current liabilities

Accrued liabilities and other payables 562,225 2,371,236 Amount due to ultimate holding company 12 207,779,240 167,700,000 Income tax payable - 8,156

208,341,465 170,079,392

Net current assets 8,227,350 8,844,608

8,246,518 8,860,986

Equity

Share capital 13 3,500,000 3,500,000 Retained earnings 4,746,518 5,360,986

8,246,518 8,860,986

The financial statements on pages 6 to 17 were approved and authorised for issue by the Board of Directors on 26 February 2019 and are signed on its behalf by :-

Rahel Ahmed Shamsuddin Ahmad Director Director

26 February 2019 The notes on pages 9 to 17 form part of these financial statements.

430 PRIME BANK PBL FINANCE (HONG KONG) LIMITED Notes to Statement of Cash Flows For The Year Ended 31St December, 2018

HK$ Notes 2018 2017 Operating activities

Profit before taxation 5,447,754 6,398,652

Adjustments for : Depreciation 11 9,550 31,165 Loss on disposal of property, plant and equipment 1,088 -

Operating profit before changes in working capital 5,458,392 6,429,817

(Increase)/Decrease in discounted bills receivable (38,251,769) 32,039,499 Increase in deposits, prepayments and other receivables (395,635) (2,609,714) (Decrease)/Increase in accrued liabilities and other payables (1,809,011) 202,437 Increase/(Decrease) in amount due to ultimate holding company 40,079,240 (40,598,653)

Cash generated from/(used in) operations 5,081,217 (4,536,614) Tax paid (870,822) (659,810)

Net cash generated from/(used in) operating activities 4,210,395 (5,196,424)

Investing activities

Purchase of property, plant and equipment 11 (13,428) (9,280)

Net cash used in investing activities (13,428) (9,280)

Financing activities

Dividend paid to equity shareholders of the Company 10 (5,360,986) (5,286,239)

Net cash used in financing activities (5,360,986) (5,286,239)

Net decrease in cash and cash equivalents (1,164,019) (10,491,943)

Cash and cash equivalents at start of year 3,707,440 14,199,383

Cash and cash equivalents at end of year 2,543,421 3,707,440

Analysis of cash and cash equivalents

Cash and bank balances 2,543,421 3,707,440

The notes on pages 9 to 17 form part of these financial statements.

PRIME BANK 431 ANNUAL REPORT 2018

PBL FINANCE (HONG KONG) LIMITED Accounting Policies and Explanatory Notes to the Financial Statements For The Year Ended 31St December, 2018

1. GENERAL INFORMATION

PBL Finance (Hong Kong) Limited (“the Company”) is a limited company incorporated in Hong Kong. The address of its registered office and principal place of business is Suite 1407, 14th Floor, Admiralty Centre, Tower-One, 18 Harcourt Road, Hong Kong. The principal activities of the Company are money lending in Hong Kong and provides the following services :-

- Advising of documentary credits; - Endorsing confirmation to the credit upon request of issuing bank; - Negotiating/discounting of documents; and - Remittance business.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

These financial statements have been prepared in accordance with the Hong Kong Financial Reporting Standard for Private Entities (HKFRS for Private Entities) issued by the Hong Kong Institute of Certified Public Accountants and the requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention.

(a) Property, plant and equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to allocate the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The following annual rates are used for the depreciation of property, plant and equipment :-

Office equipment 33 1/3% Furniture and fixtures 33 1/3% Leasehold improvement Over the leased term

If there is an indication that there has been a significant change in the depreciation rate, useful life or residual value of an asset, the depreciation of that asset is revised prospectively to reflect the new expectations.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

(b) Trade and other receivables

Trade and other receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.

432 PRIME BANK PBL FINANCE (HONG KONG) LIMITED Accounting Policies and Explanatory Notes to the Financial Statements For The Year Ended 31St December, 2018 (c) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, demand deposits and other short-term highly liquid investments with original maturities of three months or less. Bank overdraft is shown within borrowings in current liabilities on the statement of financial position.

(d) Trade and other payables

Trade and other payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

(e) Borrowings

Borrowings are recognised initially at the transaction price and are subsequently stated at amortised cost. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Interest expense is recognised on the basis of the effective interest method and is included in finance costs.

(f) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is shown net of discounts, rebates, returns, sales-related taxes.

Revenue is recognised in statement of income and retained earnings provided it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably, as follows :-

(i) from the rendering of confirming and advising, checking, telex, postage and other services, when the services are rendered; and

(ii) interest income; on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.

(g) Borrowing costs

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

(h) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income and retained earnings because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases using in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

(i) Foreign currency translation -- transaction and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in statement of income and retained earnings.

PRIME BANK 433 ANNUAL REPORT 2018

PBL FINANCE (HONG KONG) LIMITED Accounting Policies and Explanatory Notes to the Financial Statements For The Year Ended 31St December, 2018

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in statement of income and retained earnings within “finance costs”. All other foreign exchange gains and losses are presented in statement of income within “other operating expenses”.

(j) Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the period in which the dividends are approved by the Company’s shareholders.

(k) Related parties

A related party is a person or entity that is related to the Company if :-

(a) A person or a close member of that person’s family is related to the Company if that person :- (i) has control or joint control of the Company; (ii) has significant influence over the Company; or (iii) is a member of the key management personnel of the Company or of a parent of the Company.

(b) An entity is related to the Company if any of the following conditions applies :-

(i) the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). (ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). (iii) both entities are joint ventures of the same third entity.

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company. (vi) the entity is controlled or jointly controlled by a person identified in (a).

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). (viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity.

(l) Impairment of non-financial assets

At each reporting date, property, plant and equipment is reviewed to determine whether there is any indication that such has suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset (or group of related assets) is estimated and compared with its carrying amount. If an estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.

If an impairment loss subsequently reverses, the carrying amount of the asset (or group of related assets) is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset (group of related assets) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

(m) Operating leases

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

3. KEY SOURCES OF ESTIMATION UNCERTAINTY

Property, plant and equipment and depreciation

The Company determines the estimated useful lives and related depreciation charges for the Company’s property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. The Company will revise the depreciation charge where useful lives are different to those previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.

434 PRIME BANK PBL FINANCE (HONG KONG) LIMITED Accounting Policies and Explanatory Notes to the Financial Statements For The Year Ended 31St December, 2018

HK$ 2018 2017

4. INTEREST EXPENSES Bank charges and interest 31,821 38,687 Interest on amount due to ultimate holding company 6,346,491 5,275,207

6,378,312 5,313,894

5. OTHER OPERATING INCOME

Advising commission income 302,996 353,055 Handling and checking fee 409,383 542,453 Other charges and commission fee 1,297,499 3,352,650 Exchange gain/(loss) 45,141 (4,891) Other income 2,036,497 712,425

4,091,516 4,955,692

6. DIRECTORS’ REMUNERATION

Remuneration of the directors disclosed pursuant to the Section 383 of the Hong Kong Companies Ordinance (Cap. 622) and Companies (Disclosure of Information about Benefits of Directors) Regulation (Cap. 622G) is as follows :-

Fees - - Other emoluments - -

7. EMPLOYEE BENEFIT OBLIGATIONS

The Company operates a Mandatory Provident Fund Scheme (“the MPF scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong Employment Ordinance and not previously covered by the defined benefit retirement plan. The MPF scheme is a defined contribution retirement plan administered by independent trustees. Under the MPF scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees’ relevant income, subject to a cap of monthly relevant income of HK$30,000. Contributions to the plan vest immediately.

8. PROFIT BEFORE TAXATION

The following items have been recognised as expenses in determining profit before tax :-

Auditors’ remuneration 28,000 23,000 Depreciation 9,550 31,165

9. INCOME TAX EXPENSE

Taxation in the statement of income and retained earnings represents :-

Current tax – Hong Kong Profits Tax Provision for the year 701,236 1,037,666

The provision for Hong Kong Profits Tax is calculated at 8.25% for the first HK$2 million of estimated assessable profit and 16.5% for the remaining estimated assessable profit (2017 : 16.5% of the estimated assessable profit) for the year.

No deferred tax has been provided as the effect of all temporary difference is immaterial.

PRIME BANK 435 ANNUAL REPORT 2018

PBL FINANCE (HONG KONG) LIMITED Accounting Policies and Explanatory Notes to the Financial Statements For The Year Ended 31St December, 2018

HK$ 2018 2017

10. DIVIDENDS

Dividends payable to equity shareholders of the Company attributable to the year :- Interim dividend declared and paid of HK$ 1.53171 per ordinary share (2017: HK$ 1.510354 per ordinary share)

5,360,986 5,286,239

11. PROPERTY, PLANT AND EQUIPMENT

Office Furniture Leasehold Total equipment HK$ improvement HK$ HK$ HK$ Cost

At 31st December, 2017 261,339 81,701 238,742 581,782 Additions 13,428 - - 13,428

Written off (5,598) - - (5,598)

At 31st December, 2018 269,169 81,701 238,742 589,612

Accumulated depreciation and impairment

At 31st December, 2017 252,683 73,979 238,742 565,404 Charge for the year 5,314 4,236 - 9,550

Written back (4,510) - - (4,510)

At 31st December, 2018 253,487 78,215 238,742 570,444

Carrying amount

At 31st December, 2018 15,682 3,486 - 19,168

At 31st December, 2017 8,656 7,722 - 16,378

12. AMOUNT DUE TO ULTIMATE HOLDING COMPANY

The amount due to ultimate holding company (Note 16) is unsecured, interest-bearing at agreed rates and repayable within agreed maturity.

13. SHARE CAPITAL

Issued and fully paid :-

3,500,000 ordinary shares 3,500,000 3,500,000

436 PRIME BANK PBL FINANCE (HONG KONG) LIMITED Accounting Policies and Explanatory Notes to the Financial Statements For The Year Ended 31St December, 2018

HK$ 2018 2017

14. OPERATING LEASE COMMITMENTS

The Company rents an office under an operating lease for a fixed period of two years, with fixed rental over the same period.

Minimum lease payments under operating leases recognised as an expense during the year

818,064 795,040 At the year-end, the Company had outstanding commitments under non-cancellable operating leases that fall due as follows :-

Within one year 303,475 818,064

In the second to fifth years, inclusive - 303,475

303,475 1,121,539

15. RELATED PARTY TRANSACTIONS

In addition to the transactions, balances and guarantees disclosed elsewhere in these financial statements, the Company has the following material related party transactions during the year :-

Transactions and balances with ultimate holding company :-

Discounted bills receivable 169,790,395 106,786,146 Bank balance 526,002 827,270

Interest expenses 6,346,491 5,275,207

16. PARENT AND ULTIMATE HOLDING COMPANY

At 31st December, 2018, the directors consider the immediate parent and ultimate controlling party of the Company to be Prime Bank Limited, which is incorporated in Bangladesh. This entity produces financial statements available for public use.

PRIME BANK 437 FINANCIAL STATEMENTS OF PRIME BANK FOUNDATION

Independent Auditors’ Report to the Members of the Foundation

Statement of Financial Position (Balance Sheet)

Statement of Profit or Loss and other Comprehensive Income (Income and Expenditure Statement)

Receipts and Payments Statement Prime Bank Foundation Independent Auditors’ Report to the Members of the Foundation For the year ended 31 December 2018

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Prime Bank Foundation (the Foundation), which comprise the statement of financial position (balance sheet) as at 31 December 2018, and the related statement of profit or loss and other comprehensive income (income and expenditure statement) and receipts and payments statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

In our opinion, the financial statements give a true and fair view of the financial position of the Foundation as at 31 December 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act 1994 and other applicable laws and regulations.

Basis of Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Foundation 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 [jurisdiction], and we have fulfilled our other ethical responsibilities in accordance with these requirements and 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.

We have determined the matter described below to be the key audit matter to be communicated in our report.

Key Audit Matter How our audit addressed the key audit matter

Information technology (IT) systems and controls over financial reporting A significant part of the financial reporting process is We focused our audit on those IT systems and controls heavily reliant on IT systems with automated processes that are significant for the financial reporting process. As and controls over the capture, storage and extraction of Audit procedures over IT systems and controls require information. A fundamental component of these processes specific expertise, we involved IT specialists in our audit. and controls is ensuring appropriate user access and change We assessed and tested the design and operating effectiveness management protocols exist, and are being adhered to. of the IT controls, including those over user access and changed These protocols are important because they ensure management as well as data reliability. In a limited number that access and changes to IT systems and related data of cases we adjusted our planned audit approach as follows: are made and authorised in an appropriate manner. As our audit sought to place a high level of reliance on i) we extended our testing of identify whether there IT systems and application controls related to financial had been unauthorised or inappropriate access or reporting, a high proportion of overall audit effort was in changes made to critical IT systems and related data; this area. ii) whether automated procedures were supported by systems with identified deficiencies, we extended our procedures to identify and test alternative controls; and iii) whether required, we performed a greater level of testing to validate the integrity and reliability of associated data and reporting.

Responsibilities of Management and Those Charged with Governance for the Financial Statements and Internal Controls

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, 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 Foundation’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 Foundation or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Foundation’s financial reporting process.

PRIME BANK 439 ANNUAL REPORT 2018

Prime Bank Foundation Independent Auditors’ Report to the Members of the Foundation For the year ended 31 December 2018

Auditor’s Responsibilities for the Audit of the 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. Misstatements can arise from fraud or error and are considered material if, individually or in 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: • 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, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. • 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 Foundation’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 Foundation to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 account as required by law have been kept by the Foundation so far as it appeared from our examination of those books; and

(c) the statement of financial position (balance sheet) and statement of profit or loss and other comprehensive income (income and expenditure statement) dealt with by this report are in agreement with the books of account and returns.

Dhaka, Bangladesh S. F. AHMED & CO Dated, 07 March 2019 Chartered Accountants

440 PRIME BANK Prime Bank Foundation Statement of Financial Position (Balance Sheet) As at 31 December 2018

2018 2017 Particulars BDT BDT Sources of funds

Fund account 1,760,333,576 1,687,884,889 Retained earnings/(losses) (348,716,782) (314,693,893) 1,411,616,794 1,373,190,996 Applications of funds

Non-current assets Property, plant and equipment 919,242,663 485,512,929

Current assets Investment in fixed deposit 422,924,259 465,417,814 Interest receivable 28,804,878 14,533,231 Advance income tax 36,453,195 33,371,994 Stock - Prime Bank Eye Hospital 909,099 1,031,908 Advances, deposits and prepayments 3,884,939 378,750,584 Cash and bank balances 8,375,997 2,019,693 501,352,366 895,125,223 Less: Current liabilities Provision for expenses 3,120,994 3,582,558 Other payable 2,648,035 1,496,492 Security money 3,209,206 2,368,106 Net current assets 492,374,131 887,678,066 Net assets 1,411,616,794 1,373,190,996

For and on behalf of Prime Bank Foundation

Member Secretary Member Chairman

See annexed report of the date

Dhaka, Bangladesh S. F. AHMED & CO Dated, 07 March 2019 Chartered Accountants

PRIME BANK 441 ANNUAL REPORT 2018

Prime Bank Foundation Statement of Profit or Loss and other Comprehensive Income (Income and Expenditure Statement) For the year ended 31 December 2018

2018 2017 Particulars BDT BDT Income Interest on fixed deposit 41,686,880 32,719,037 Income from Prime Bank Eye Hospital 27,552,651 27,415,320 Income from Prime Bank English Medium School (PBEMS), Uttara 29,843,685 24,269,553 Income from Prime Bank College of Nursing (PBCN) 12,542,930 7,186,093 Income from PBEMS, Mirpur 5,302,015 4,037,983 Interest on short-term deposit 51,089 121,439 Other income 429,512 1,731,345 Profit on sale of vehicle 125,125 - 117,533,887 97,480,770 Expenditure Salary and allowances 56,213,337 52,235,650 Awardees stipend 35,574,400 39,348,000 Depreciation 6,275,534 8,827,035 Office rent 11,217,412 11,080,312 Repair and office maintenance 4,844,633 5,346,965 OT expenses 7,455,443 8,882,028 Car maintenance 2,155,779 2,346,330 Security service 2,178,486 2,115,143 Utility 2,816,191 2,496,551 Legal and professional fees 111,800 233,800 Advertisement 1,864,785 1,498,806 Seminar, training and workshop 284,912 312,277 Printing and stationery 1,326,782 1,288,970 Award giving ceremony 919,139 2,436,283 Gratuity 1,842,000 2,970,200 Telephone and internet 519,206 740,335 Expenses - Medicine shop 1,644,814 1,628,542 Expenses - Eye camp 420,545 525,732 Expenses - Optic shop 1,110,681 998,123 Travelling and conveyance 293,127 312,152 Education affairs expenses 1,717,363 1,196,056 Books and teaching materials 1,812,459 1,418,382 Entertainment 470,955 450,895 Feasibility study 7,710,175 - Excise duty 340,950 228,450 Audit fee 115,000 115,000 Honorarium 137,500 45,000 Newspaper 59,363 48,405 Communication expense 62,593 87,671 Pathology 36,783 23,765 Bank charges 24,629 34,977 151,556,776 149,271,835 Deficit for the year (34,022,889) (51,791,065)

For and on behalf of Prime Bank Foundation

Member Secretary Member Chairman See annexed report of the date

Dhaka, Bangladesh S. F. AHMED & CO Dated, 07 March 2019 Chartered Accountants

442 PRIME BANK Prime Bank Foundation Receipts and Payments Statement For the year ended 31 December 2018

2018 2017 Particulars BDT BDT Opening cash and bank balances Cash in hand 321,126 84,624 Bank balances 1,698,566 3,787,846 Fixed deposit 465,417,814 530,462,798 467,437,506 534,335,268

Receipts

Contribution from Prime Bank Limited 72,358,987 93,801,662 Collection from Prime Bank Eye Hospital 27,489,941 26,716,440 Interest on fixed deposit 27,415,234 35,561,910 Sales proceed of non-current assets 125,125 - Collection from PBEMS 34,411,113 14,946,009 Collection from PCND 14,031,264 48,483 Interest on short-term deposit 51,089 121,439 Security money 953,200 556,000 Prime sight fund 28,000 23,000 VAT Students - 122,543 Suspense Account 90 Award giving ceremony from bank - 1,500,000 Other Income 132,949 - 176,996,902 173,397,575 644,434,408 707,732,843 Payments

Salary and allowances 55,209,210 50,259,817 Awardees stipend 35,512,700 39,348,000 Office rent 11,089,214 9,438,586 Advances 70,436,794 106,377,801 Stock 18,000 - Repair and office maintenance 2,733,625 3,445,723 Car maintenance 1,891,594 2,049,997 Advertisement 1,470,352 1,187,500 Security service 1,695,638 2,014,140 Advance income tax 2,776,200 3,595,657 Income tax (salaries) 105,295 - Income tax (vendors) 128,227 - Books and teaching materials 1,643,399 1,336,079 Printing and stationery 1,156,168 1,231,757 Gratuity 2,970,200 - Telephone 472,887 700,237 Award giving ceremony 531,839 1,001,772 Optic shop 68,400 538,270

PRIME BANK 443 ANNUAL REPORT 2018

Prime Bank Foundation Receipts and Payments Statement For the year ended 31 December 2018

2018 2017 Particulars BDT BDT Eye camp 344,609 171,286 OT expenses 2,949,701 3,698,008 Provision for expenses - 7,781,463 Furniture & fixtures 404,862 252,621 Other payables - 3,428,697 Travelling and conveyance 268,327 293,152 Entertainment 395,554 433,684 Seminar, training and workshops 61,718 145,333 Education affairs expenses 342,775 162,269 Office equipment 239,077 100,673 Utility 285,692 272,702 Legal and professional fees 111,800 167,550 Medical equipment - 300,840 Audit fee 115,000 90,000 Security money 15,000 29,880 Computer 66,982 10,800 Accounts payable 9,018,884 - Library and books - 19,131 Bank charges 24,629 34,895 Excise duty 340,950 228,450 VAT (vendors) 181,585 - Secured Loans (UFL) 163,350 - Feasibility Study 7,710,175 - Honorarium 25,000 - Communication expenses 62,593 76,397 Newspaper 59,363 48,405 Pathology 36,783 23,765 213,134,151 240,295,337

Closing cash and bank balances Cash in hand 227,897 321,126 Bank balances 8,148,100 1,698,566 Fixed deposit 422,924,260 465,417,814 431,300,257 467,437,506 644,434,408 707,732,843

For and on behalf of Prime Bank Foundation

Member Secretary Member Chairman

Dhaka, Bangladesh Dated, 07 March 2019

444 PRIME BANK SUPPLEMENTARY INFORMATION

Human Resource Accounting

Glimpses of 23rd Annual General Meeting

Branch Network

Notable Activities During 2018

Redressal of Investors Complaints

Minutes of 23rd Annual General Meeting

Notice of the 24th Annual General Meeting

List of Acronyms

Proxy Form ANNUAL REPORT 2018

HUMAN RESOURCE ACCOUNTING

Human resource accounting is accounting for people as an replacement cost of an executive in middle management level organizational resource. It involves measuring the costs incurred is about 1.5 to 2 times the current salary paid in that position. by business firms and other organizations to recruit, select, hire, Replacement cost is much better indicator of value of human train and develop human assets. It also involves measuring the assets though it may present certain operational problems. economic value of people to the organization. Standard Cost Concept of Human Resource Accounting Instead of using historical or replacement cost, many companies Thus, human resource accounting is primarily involved in use standard cost for the valuation of human assets just as measuring the various aspects related to human assets. Its basic used for physical and financial assets. For using standard cost, purpose is to facilitate the effective management of human employees of an organization are categorized into different resources by providing information to acquiring, develop, retain, groups based on their hierarchical positions. utilize, and evaluate human resources. Present value of future earnings Objectives of human resource accounting are as follows In this method, the future earnings of various groups of To provide cost value date for managerial decisions regarding employees are estimated up to the age of their retirement and acquiring, developing, allocating and maintaining human are discounted at a predetermined rate to obtain the present resource so as to attain cost effective organizational objectives. value of such earnings. This method is similar to the present value of future earnings used in the case of financial assets. 1. To provide information for effectiveness of human resource However, this method does not give correct value of human utilization. assets as it does not measure their contributions to achieving 2. To provide information for determining the status of human organizational effectiveness. asset whether it is conserved properly; it is appreciating or depleting. Acquisition Cost Method

3. To assist in the development of effective human resource Under this method the costs of acquisition, namely, the costs Management practices by classifying the financial incurred in recruitment, hiring and induction of employees consequences of these practices. are taken into account. The process involves capitalization of historic costs. The cost so capitalized has to be written off Methods of Valuation of Human Assets over a period of time for which the employee remains with the There are a number of methods suggested for the valuation of firm. If for some reason the employee leaves the organization human assets. Many of these methods are based on the valuation prematurely, the unamortized cost remaining in the books of physical and financial assets while others take into account has to be written off against the profit and loss account of the human consideration. Major methods of valuation of human particular year. assets are historical cost, replacement cost, standard cost, present value of future earnings, and expected realizable value. Replacement Cost Method While in the case of acquisition cost past costs are considered, Historical Cost under this approach one takes in to account how much it costs Historical cost is based on actual cost incurred on human to replace a firm’s existing resources and thus represents a resources. Such a cost may be of two types – acquisition cost current value approach. So this is a method resource and thus and learning cost. Acquisition cost is the expense incurred represents a current market conditions. This exercise may on training and development. This method is very simple in be redundant unless the management desires to replace its its application but it does not reflect the true value of human present resources. It is also difficult exercise as in many cases assets. For example, an experienced employee may not require the replacement may not be exactly similar. much training and, therefore, his value may appear to below though his real value is much more than what is suggested by Present Value of Future Earnings Method historical cost method. This is also known as capitalization of salary method. Under this method the future earnings of an employee or grades of Replacement Cost employees are estimated up to the age of retirement and are As against historical cost method which takes into account the discounted at a rate appropriate to the person or the group in actual cost incurred on employees, replacement cost takes order to obtain the present value. into account the national cost that may be required to acquire a new employee to replace the present one. In calculating Expected realizable value the replacement cost, different types of expenses are taken The above methods discussed so far are based on cost into account which may be in the form of acquisition and consideration. Therefore, these methods may provide learning cost. Replacement cost is generally much higher than information for record purpose but do not reflect the true value the historical cost. For example, XYZ has estimated that the of human assets. As against these methods,

446 PRIME BANK Expected realizable value is based on the assumption that 1. There is no well-set standard accounting practice for there is no direct relationship between cost incurred on an measuring the Value of human resources. In the case of individual and his value to organization can be defined as the financial accounting, there are certain specified standards present worth of the set of future services that he is expected which every organization follows. However, in the case of to provide during the period he remains in the organization. human resource accounting, there are no such standards. Therefore, various organizations that adopt human asset Economic Value Method valuation use their own models. With the result, value of The economist’s concept of the value of an asset is equal to human assets of two organizations may not be comparable. the present worth of its estimated future economic benefits. 2. The valuation of human assets is based on the assumption This approach has a strong theoretical appeal. But this method that the Employees may remain with the organization for involves the following steps: certain specified period. However, this assumption may not

BDT in million Particulars 2018 2017 2016 2015 2014 Operating cost per employee 2.26 1.95 2.12 2.10 2.01 Training cost per employee 0.004 0.01 0.01 0.005 0.01 Operating profit per employee 1.78 1.54 1.94 2.01 2.15 Gross turn over per employee 7.38 6.31 7.67 8.97 9.58

Competitive Bidding Method hold true in today’s context because of increased human This is also known as the opportunity cost method. Opportunity resource mobility. cost is defined as the measurable value of benefits that could 3. There is also a possibility that trade unions may oppose the be obtained by choosing an alternative course of action. In the use of human resource accounting. They may want parity case of HRA. Opportunity costs are determined by a process of of wages/ salaries and value of employees. competitive bidding in which various divisions and departments bid for the services of various officers. The amount of bid is added to the capital employed of the successful bidder for determining the return on investment.

Financial reporting standards

IFRS do not currently contain any standards regarding HRA. It could be argued that they are moving closer to providing more flexible approaches to accounting measurements and reporting. For example, the international standards IAS 38 Intangible Assets and IFRS 3 on Business Combinations allows for the recognition of the intangible asset goodwill, which indicates a willingness to allow for valuation of assets that are not traditional tangible assets, such as human resources.

Practice in Prime Bank

In Prime Bank, as there are no specific accounting standards, we are following conventional accounting practice and not capitalizing any HR cost, rather amortize it over service life of employees. However, we are taking benefits of HR accounting concepts and using HR accounting information (such as per employee cost to the company, expected service life of employees, per employee productivity and its growth over periods and many more) in making important management decisions that will benefit the long-run strategic goals and profitability of the Company.

Problems in Human Resource Accounting

There are certain operational problems in human accounting because it attempts to measure intangibles. Therefore, subjective factors may play crucial role.

Thus, the major operational problems involved in human resource accounting are of the following types:

PRIME BANK 447 ANNUAL REPORT 2018

GLIMPSES OF 23rd AGM

448 PRIME BANK BRANCH NETWORK Dhaka Division

Md. Shahidul Islam Md. Abdur Rouf Md Rabiul Islam First Assistant Vice President & Head(CC) First Assistant Vice President & Head First Assistant Vice President & Head Baridhara Branch Damudya Branch Adamjee EPZ Branch, Narayanganj Concord I. K Tower(1st Floor) Holding # 264 (1st & 2nd floor), Sadar Road Adamjee EPZ Holding # 4 Plot #02, Block # CEN(A) North P.S: Damudya, Dist: Shariatpur Siddirganj, Narayanganj Avenue, Gulshan – 2 Dhaka-1212 Cell : 01730-096615 Cell : 01730-076155 Cell : 01730-781181 Phone : 06023- 56396 Phone 02- 7692025-26, 7692024 Phone : 02-9850376,9850392 Fax : 06023- 56390 Fax : 02- 7692027 Fax:02-9850384

Saifuddin Ahmed Md. Nasimuzzaman Md. Nazrul Islam Assistant Vice President & Head First Assistant Vice President & Head Vice President & Head Asad Gate Branch Bashaboo Branch Dhanmondi Branch 2/6, Sir Sayed Road, Mohammadpur (Mirpur Shapnil (2nd & 3rd Floor), 60-61 South Mamtaz Plaza (1st Floor) Road), Dhaka. Bashaboo, Dhaka House # 7, Road # 4, Dhanmondi R/A, Dhaka Cell : 01730-031819 Cell : 01709-655689 Cell : 01714-133777 Phone: 02-9125400, 8142106, 8142134, 9136214 Phone : 02- 7219201, 7219205, 7219206 Phone : 02- 8622304, 8621556, 9662704, Fax : 02- 9122640 Fax : 02- 7219205 8621557 Fax : 02- 9662705

Mollah Asaduzzaman Sabina Easmin Nazneen Akhter Assistant Vice President & Head Assistant Vice President & Head Bashundhara Senior Assistant Vice President & Head Ashulia Branch Branch Elephant Road Branch Sharif Mansion (1st floor) Plot # 236, Block – B Ananta Plaza, 136,Elephant Road Diakhali, Jamgora Bazar, P.S. Ashulia, Dist. : Bashundhara R/A, Dhaka Dhaka-1205 Dhaka Cell : 01730-373920 Cell : 01730-016896 Cell : 01713-409183 Phone : 02-8845213, 8415276, 8845215 Phone : 02- 9662776-7, 8622592,9673783, Phone: 02- 7788290, 7788326, 7788325 Fax : 02- 8845214 9673786 Fax : (02) 7788291 Fax :02- 8622591

Faria Azad Sheme Mohammad Mazharul Islam Siddique Ahmed Assistant Vice President & Head First Assistant Vice President & Head Assistant Vice President & Head Banani Branch Bhairab Bazar Branch, Kishoreganj Foreign Exchange Branch House # 62, Block – E, Kemal Ataturk Avenue 181, Tin Potty Road, Bhairab Pawrashava, Al-Haj Mansion, 82, Motijheel CIA Banani Dhaka-1212 Bhairab, Kishoregonj Dhaka-1000 Cell : 01711-218967 Cell : 01709-648747 Cell : 01701-204140 Phone: 02- 8815754, 9889868, 8854988, Phone : 02-9470723, 9470771, 9470733 Phone : 02- 9551682, 9570751, 7161146 8852899, 8850329, 8836890 Fax : 02- 9471755 Fax : 02- 9553078 Fax: 02- 8853616

Syed Delwar Hossain Masood Mizan Mohammad Harunar Rashid Senior Assistant Vice President & Head Senior Assistant Vice President & Head First Assistant Vice President & Head Banasree Branch Bijoy Nagar Branch Faridpur Branch Arcadia (1st Floor), Plot # 14, Block-C Akram Tower (1st Floor) KMA Arcadia (1st floor), Holding # 60/116/A, Banasree Main Road, Rampura, Dhaka 15/5 Bijoy Nagar, Dhaka Moirapotty, Faridpur Cell : 01708-466534 Cell : 01709-658447 Cell : 0173 0-327673 Phone: 02- 8399548, 8399591 Phone : 02- 9335732 ,9335762, 9334123 Phone : 0631- 65133 Fax:02-8399547 Fax : 02- 9332639 Fax : (0631) 65128

Mohammad Ashraf –Us-Salehin Md. Abdur Razzaque Afsana Kishwar First Assistant Vice President & Head First Assistant Vice President & Head Assistant Vice President Jamalpur Branch Boalmari Branch Gareb-E-Newaz Avenue Branch Jibon Mantion, Station Road, Jamalpur Ajhar Tower, 503 Station Road, Boalmari Bazar, Holding # 1, Gareb-E-Newaz Avenue Cell : 01755-524165 Faridpur Sector # 11, Uttara R/A, Dhaka Phone : 0981-65361, 0981-65360 Cell : 01755-607991 Cell : 01730-312515 Tele-Fax : 0981- 65362 Phone : 06324-56132, 56130 Phone : 02- 8950997, 8921161,8991781 Fax : 06324-56139 Fax : 02-8931687

Md. Rabiul Islam Mohammad Abdus Sattar Md. Azharul Islam Senior Assistant Vice President & Head Assistant Vice President & Head Assistant Vice President & Head Ganakbari Branch Bangshal Branch Kishoreganj Branch Somsher Plaza (1st floor), (Opposite Dhaka Holding # 23 (old), 4(new), Mazed Sardar Road Shamsuddin Bhuiyan Plaza, EPZ), Balibhadra Bazar Bas stand, Dhamsona, Bangshal, Dhaka-1100 Teripotty, Kishoreganj Ganakbari Savar Dhaka-1340 Cell : 01715-416860 Cell : 01730-727296 Cell : 01709-655683 Phone : 02- 7123480, 9561501, 9556635, Phone : 0941-62590, 0941-62592 Phone : 02-789863, 7789378-9, 7788100 7175185, 7113310 Fax: 0941-62591 Fax : 02-7789378 Fax : 02- 7123480

PRIME BANK 449 ANNUAL REPORT 2018

Md. Ramiz Uddin Miah Md. Jafar Hasan AKM Amirul Islam Senior Vice President & Head Vice President & Head First Assistant Vice President & Head Gulshan Branch Jatrabari Branch Madhabdi Branch Plot # 01, Block-CEN(H), Road # 109 Gulshan Nur Tower, 76/Ga, Bibir Bagicha Plot # 17, Madhabdi Bazar Avenue (Near Wonder Land), Dhaka-1212 North Jatrabari, Dhaka-1204 Narsingdi-1604 Cell : 01700-711458 Cell : 01730-338785 Cell : 01713-082807 Phone : 02- 9890898, 9886171, 8815885, Phone :02- 7552158, 7552178 Phone : 02-9446682,9446683 8829975 , 8817460, 9884977, 9862937, 8817460 Fax :02- 7552169 Fax : 02-9446683 Fax : 02- 9884977

Abu Zafar Md. Sheikhul Islam Mollah Farid Ahmed Md. Aminur Rahman Akanda Executive Vice President & Head Vice President & Head Senior Assistant Vice President & Head Islamic Banking Branch, Dilkusha Joydevpur Chowrasta Branch Mirpur-1 Branch 19, Dilkusha Commercial Area Shapla Masnion (1st Floor) Rabiul Plaza (1st floor), Plot # Shee-1/Kha, Dhaka-1000 Joydevpur Chowrasta Section # 1, Mirpur Cell : 01711-612438 P.O. Chandana Dhaka-1216 Phone : 02- 9567227, 9514927, 9567228, Dhaka-Tangail Road Gazipur Cell : 01730-086827 9587494, 9577582, 9576414, 9514928, Cell : 01713-068094 Phone : 02- 8034590, 8034126, 8054007 9587506 & 9551678 Phone : 02- 9164103, 9264135 Fax : (02) 8034591 Fax : 02- 9567228 Tele-Fax : 02- 9264097

Md. Emdadul Haque Md.Monir Hossain Mian Golam Mostofa Assistant Vice President & Head First Assistant Vice President & Head First Assistant Vice President & Head Hemayetpur Branch Joypara Branch Mirzapur Brach Madhu Bhaban, Hemayetpur, Saver, Dhaka Azahar Ali Mozahar Ali Shopping Complex, Nazmul traders Building Cell : 01730-781154 Latakhola, Joypara, Dohar, Dhaka 1215 College Road Phone : 02-7742096 Cell : 01730-034861 Mirzapur, Tangail Tele Fax : 02-7742096 Phone : 02-7768053 & 7768054,7768055 Cell : 01730-727297 Fax : 02-7768052 Phone : 09229- 56591, 09229- 56592 Fax: 09229- 56593

A.K.M. Abdul Alim Ibne Khabir Md. Abul Kalam Azad K M Nazmul Islam Vice President Vice President & Head First Assistant Vice President & Head Islamic Banking Branch, Mirpur Kawran Bazar Branch, Modhukhali Branch Mamoni Tower, 1244 East Monipur 54, Kawran Bazar C/A., Dhaka-1215 Modhuban Shopping Mall(1st Floor) Begum Royeya Sarani, Mirpur, Dhaka-1216 Cell : 01787-688695 Modhukhali ,Faridpur Cell : 01713-019530 Phone : 02-9124296–7, 9145397 Cell : 01730-791547 Phone : 02- 9031711, 9030180 Fax : 02- 9129004 Phone : 06326- 56018, 56017 Fax : 02- 9031700 Fax : 06326- 56019

Md. Nazimuddin Sheikh Mohammad Feroz Alam Md. Amanullah Assistant Vice President & Head Senior Executive Officer & Head Senior Vice President & Head Ibrahimpur Branch Kaliakoir Branch Mohakhali Branch Sumona Sahadat Center Ahmed Ali Plaza (1st Floor) 69,Mohakhali C/A. Dhaka-1212 80, Ibrahimpur, Kafrul College Road, Kaliakoir, Gazipur. Cell : 01730-320022 Dhaka-1206 Cell : 01709-655673 Phone : 02- 9882291, 8826483, 8817210, Cell : 01755-582852 Phone : 06822-51622, 06822-51620 9850302, 9887188 Phone : 02- 8872503, 8872423, 8872557 Fax: 06822-51621 Fax :02- 9886052 Fax : 02- 8872501

Md. Salah Uddin Kazi Azaharul Islam Nazrul Islam Senior Vice President & Head Vice President & Head Vice President & Head Motijheel Branch New Eskaton Branch Sat Masjid Road Branch Adamjee Court Annexe Building-2 133, New Eskaton Road House # 99, Road # 11/A 119-120, Motijheel C/A, Dhaka-1000 Dhaka- 1000 Dhanmondi RIA, Dhaka-1209 Cell : 01730-794632 Cell : 01708-149555 Cell : 01709-655672 Phone : 02- 9567265, 7175491, 9567225, Phone : 02- 9354738, 9354044, 9359683 Phone : 02- 9122374, 58153602, 9130466, 9559876, 9515341, 7175492, 9562982 Fax : 02- 9354826 9135982,58151936 Fax : 9567223 Fax: 02- 8121652

Sbubir Kumar Barua Md. Rezaul Karim Md. Adil Uddin Senior Assistant Vice President & Head Assistant Vice President & Head Assistant Vice President & Head Mouchak Branch Pallabi Branch Savar Branch Manhattan Tower (1st Floor) Setara’s Dream, 1/11 & 1/12 Pallabi K.K. Plaza (1st floor), A-91, Savar Bazar Road, 83, Siddaswari Circular Road, Malibagh, Mirpur, Dhaka Savar, Dhaka Dhaka-1217 Cell : 01755-534924 Cell : 01709-658411 Cell : 01709-658422 Phone : 02-9000559, 02-9001913, 9013629 Phone : 02- 7744862, 7744861 Phone : 02-9347757, 8352832, 9360292, Fax : 02-9001813 Fax :02- 7744863 8352831, 9360162 Fax : 880-2-9338883

Md. Abdul Bari Mollah B M Touhiduzzaman Md. Shahtab Rizvi Vice President & Head Assistant Vice President & Head Assistant Vice President & Head Moulvi Bazar Branch Panthapath Branch SBC Tower Branch 77/4, Moulvi Bazar, Dhaka-1100 Firoz Tower, 152/3-B, Green Road Sadharan Bima Tower Cell : 01701-204151 Panthapath, Dhaka 37/A, Dilkusha C/A, Dhaka Phone : 02 - 7311017, 7313407, 7316696 Cell : 01708-130725 Cell : 01714-014890 Fax : 02-7318305 Phone : 02-9142879, 8128100, 8152852 Phone : 02- 9559943, 9571250, 9561221 Fax : (02) 9137887 Fax : 02-9564189

450 PRIME BANK Md.Shariful Ahsan Mohammad Mahfuzur Rahman Md. Anowar Hossain Assistant Vice President & Head Assistant Vice President & Head First Assistant Vice President & Head Mymensingh Branch Patuatuli Branch Shibpur Branch 10, Swadeshi Bazar, Mymensingh Bishal Hafiz Market (1st & 2nd Floor) Khan Tower, Shibpur Bazar, Narsingdi. Cell : 01713-069631 10, Wayse Ghate Road, Patuatuly, Dhaka Cell : 01755-645474 Phone : 091- 52390, 62228, 52391, 62243 Cell : 01708-130755 Phone : 06256- 75130, 06256- 75131 Tele-Fax : (091) 52391 Phone : 02--7343474, 57396161 Fax : 06256- 75134 Fax : 88-02-57396161

B M Mizanur Rahman Md. Arman Uddin Bhuiyan Shakil Ahmed Khan First Assistant Vice President & Head Vice President & Head Assistant Vice President & Head Narayanganj Branch Pragati Sarani Branch Wari Branch Modern Model Complex, 56,S.M.Maleh Road, Facilities Tower, Kha-199/2 Tanin Roseate, 43 Rankin Street, Wari, Dhaka Narayanganj-1400 Maddhya Badda, Dhaka Cell : 01709-658412 Cell : 01709-658421 Cell : 01711-439003 Phone : 02- 9512085,7118169, 7118311 Phone : 02- 7630150, 7646894 Phone : 02- 98406895,8816938, 9840685 Fax :02- 9512084 Fax : 02- 7630140 Fax : 02- 8837531

Md. Moshiar Rahman Shamima Pervin Mohammod Ashaduzzaman Senior Executive Officer & Head Senior Assistant Vice President & Head Senior Executive Officer & Head Nawabgonj Branch Ring Road Branch Sirajdikhan Branch B.K.N. Point Baitul Aman Tower (1st Floor) Hazi Mustafa Plaza, (1st floor) Dag # 284, Kasimpur, Nawabgonj, Dhaka. Holding # 840/841, Ring Road, Adabor, Dhaka Bazar Road, Sirajdikhan, Munshiganj Cell : 01709-658436 Cell : 01711-824628 Cell : 01730-317443 Phone : 02- 7765298, 7765299 Phone : 02- 8158866, 58150666 Phone : 02- 7628320, 7628381 Fax : 02- 7765297 Fax : 02- 8117010 Fax : 02-7628310

Md. Mukter Hossain Md. Shahadat Hossain Md.Hashmot Ali Mollah Senior Executive Officer & Head Senior Executive Officer & Head Senior Assistant Vice President & Head Sreenagar Branch Tangail Branch Tongi Branch Rahman Complex, Sreenagar Bazar, Main Building, Ward # 6 Sena Kalyan Commercial Complex (1st floor) Munshigonj Holding # 414-417, Main Road, Tangail Plot # 09, Block-F, Tongi, Gazipur. Cell : 01730-781191 Cell : 01713-082745 Cell : 01701-204081 Phone : 02-7627210, 7627202 Phone : 0921-61248, 0921-61271 Phone : 02- 9813811, 9813874 Fax : 0921- 61322 Fax : 02-9813835

Sharmin Akther K. M. Sakhawat Hossain Md. Monirul Haque Bhuiyan Vice President & Head Senior Assistant Vice President & Head Assistant Vice President & Head Uttara Branch Shimrail Branch Tejgaon Branch Siaam Tower (1st Floor), Plot # 15, Sector # 03, Haji A. Rahman Super Market and Shopping Shanta Western Tower (Level-2) Dhaka Mymensingh Road, Uttara Model Town, Tower, Holding No.96, Shimrail Morr, Chattogram 186, Bir Uttam Mir Shawkat Sarak, Tejgaon, Dhaka Road Chowrastha, Siddirganj, Narayanganj Dhaka Cell : 01709-658441 Cell : 01714-039543 Cell : 01709-658414 Phone : 02-58956233, 02-8950341-2, Phone : 02-7691670,02-7692913, 7692912 Phone : 02- 8879157-8, 8879160 8950016 Fax : 02-7691671 Fax : 02- 8879156 Fax : 02-58954248

Chattogram Division

Sirajul Hoque Suman Kanti Dhar AKM Shah Arefin Senior Assistant Vice President & Head First Assistant Vice President & Head First Assistant Vice President & Head Agrabad Branch Fatickchari Branch Ashugonj Branch B.M.Heights (1st floor), 318 Sheikh Mujib Road Haji Hossain Plaza, College Road, Bibirhat, Seriya Sayed Tower, Post Office Road, Badamtoli, Agrabad, Chattogram Dhurang Union, Fatickchari, Chattogram Ashugonj Bazar, Ashugonj, Brahamanbaria Cell : 01709-658464 Cell : 01713-103661 Cell : 01755-534933 Phone : 031-716724-5, 2521659, 2526396, Phone : 03022- 56006 Phone : 08528-74596, 08528-74595 2526397, 727018, 710970, 2526160 Tele-Fax : 03022- 56006 Fax: 08528-74594 Fax : 031-718971

Abu Jafar Md. Iqbal Md. Mizanur Rahman Md. Tajul Islam First Assistant Vice President & Head Senior Executive Officer & Head First Assistant Vice President & Head Cox’s Bazar Branch Chaumuhani Branch Hajigonj Branch Hajera Shopping Center Holding # 180-182 (1st floor); Feni Road, Ananda Complex, Holding#191, Hajiganj Holding # 256, Main Road, Cox’s Bazar Chaumuhani, Begumganj; Noakhali. Bazar, Hajiganj, Chandpur Cell : 01713-129263 Cell : 01730-338459 Cell : 01730-338463 Phone : 0341- 51085,0341- 51083 Phone : 0321- 54096 Phone : 08424 -75110, 08424-75111 Fax : 0341- 51084 Fax : 0321- 56096 Fax : 08424- 75111

S. M. Shahidul Islam Md. Shoharab Khan Md. Abul Hasanat Senior Assistant Vice President & Head First Assistant Vice President & Head Assistant Vice President & Head Halishahar Branch Keranihat Branch Race Course Branch Mobil House,Plot-2,Road-3,Block-K, Halishahar Hazi Ulamia Market (1st Floor) Anandodhara Hamidum Mazid Plaza Housing Estate, Halishahar, Chattogram. Keranihat, Satkania, Chattogram Holding # 1369/1 Cell : 01713-255773 Cell : 01755-551601 Race Course, Comilla Phone : 031- 2512039, 031- 2512064 Phone : 03036-56134, 03036-56133 Cell : 01755-645483 Fax : 031- 2512054 Fax: 03036-56135 Phone : 081-73964, 081-73963 Fax : 081-73965

PRIME BANK 451 ANNUAL REPORT 2018

Md. Nurul Amin Md. Mainul Kabir Md. Younus First Assistant Vice President & Head Senior Assistant Vice President & Head Assistant Vice President & Head Hathazari Branch Khatunganj Branch Raozan Branch N. Zahur Shopping Center (1st Floor) Kachari 142, Chand Mia Lane Fazal Tower (1st Floor), Jalil Nagar Raozan, Road, Hathazari Chattogram Khatunganj, Chattogram-4000 Chattogram Cell : 01711-809292 Cell : 01711-430916 Cell : 01730-031850 Phone : 031-2601524,031- 2601525 Phone : 031- 623213-14,031- 623212, 627297 Phone : 03026- 56214,03026- 56168 Fax : 031- 2601526 Fax : 031- 610848 Fax : 03026- 56215

Md. Nurul Afsar Mohammad Ruhul Quish Md. Shamsul Alom First Assistant Vice President & Head Senior Assistant Vice President & Head First Assistant Vice President & Head Islamic Banking Branch, O. R. Nizam Road Laldighi East Branch Bhatiary Branch Hazrat Garibullah City Corporation Bhaban 8, Laldighi East Khaleque Tower, Bhatiary, Sitakunda, (1st Floor) 739/804 CDA Avenue, Bagmoniram, Chattogram Chattogram Chattogram Cell : 01711-400380 Cell : 01755-545810 Cell : 01714-020266 Phone : 031- 2850773, 2850774,031- 2850771 Phone : 08528-74596, 08528-74595 Phone : 031- 639855, 2861437 Fax : 031- 2850772 Fax: 08528-74594 Fax : 031- 2861434

Mohammad Abu Ali Mohammad Ansarul Karim Shahed Md. Masud Alom Senior Assistant Vice President & Head Assistant Vice President & Head Assistant Vice President & Head IBB, Pahartali Muradpur Branch Comilla Branch B S Plaza, Plot # 305/1390 Abdul Ali Hat, Sorai Shah Alam Plaza,129, CDA Avenue, Muradpur, 10/8 & 9/7 Chatipatti (1st Floor) Rajgonj, Para Alanker Morr, P. S. Pahartali, Chattogram Chattogram Comilla Cell : 01714-025275 Cell : 01755-594840 Cell : 01713-082803 Phone : 031-753143, 031- 2771751 - 2, 2773541 - 2 Phone : 031-652505, 031-652503 Phone : 081-72611, 72612 Fax : 031- 753144 Fax: 031-652504 Fax : 081-72646

Shahid Uddin Ahmed Mohammad Majharul Islam Mohammed Nurul Momen Assistant Vice President & Head First Assistant Vice President & Head – CC Senior Executive Officer & Head (CC) Jubilee Road Branch Oxygen More Banshkhali Branch Pedrollo Plaza, 5, Jubilee Road 405 Sekander Center G.S. Plaza (1st floor), Chattogram-Banshkhali Chattogram-4000 Chattogram Cantonment, Oxygen More, Highway Jaldi, Banshkhali, Chattogram Cell : 01714-080929 Chattogram Cell : 01730-338465 Phone : 031-613939, 031-614649, 031- Cell : 01730-317446 Phone : 0303-756222 2850319, 031-613650 Phone : 031-2583181, 031-2584181, 031-2584180 Fax: 0303-756223 Fax : 031-618689 Fax : 031-2583180

Shakhawat Hossain Kazi Foorkan Uddin Manash Pal First Assistant Vice President & Head Assistant Vice President & Head First Assistant Vice President & Head Karnaphuli EPZ Branch, Prabartak More Branch Dagonbhuiyan Branch Karnaphuli EPZ, North Patenga, 12/12 O. R. Nizam Road, Prabartak More, R.B Plaza, 391 Falizer Ghat, Dagonbhuiyan, Chattogram-4204 Panchlish Chattogram Feni Cell : 01755-607994 Cell : 01730-303555 Cell : 01730-704145 Phone : 031-2502382, 031-2502381 Phone : 031- 2553593, 031- 2553591-2, Phone : 03323- 79248, Direct: 03323- 79249 Fax: 031-2502383 Fax : 031- 2553594 Fax: 03323- 79250

Md. Mahbub Morshed Mohammad Ramjan Shakh Mohammad Rafiqul Haque Senior Executive Officer & Head First Assistant Vice President & Head First Assistant Vice President & Head Chauddagram Branch Feni Branch Brahmanbaria Branch Abdul Gani Shopping Complex (1st floor) Kazi Center, K Das Bhaban, K Das Square Chauddagram Bazar, Comilla Holding # 106, S. S. K. Road, Feni Brahmanbaria Cell : 01730-318791 Cell : 01713-069623 Cell : 01755-645488 Phone : 08020-56364, 08020-56363 Phone : 0331- 63091, 63093,0331- 63092 Phone : 0851-61698, 0851-61699 Fax : 08020-56362 Tele-Fax : 0331- 63092 Fax: 0851-58849

Rajshahi Division

Md. Nazmul Hasan Rojina Parvin Md. Moyen Uddin Senior Executive Officer & Head Assistant Vice President & Head First Assistant Vice President & Head Joypurhat Branch Baneswar Branch Pabna Branch Tahera Complex, 306 Main Road, Joypurhat Baneswar, Puthia, Rajshahi 423/1 Sonapatty Road, Pabna Cell : 01730-704142 Cell : 01755-534922 Cell : 01730-359665 Phone : 0571-51156, 0571-51157 Phone : 08224-56017,038911-82480 Phone : 31- 66426, 0731- 66425 Fax: 0571-51158 Fax: 08224-56004 Fax : 0731- 66399

Abu Hena Md. Mostofa Kamal Md. Zahangir Alam Md. Safikul Islam Senior Executive Officer & Head First Assistant Vice President & Head First Assistant Vice President & Head Mohadevpur Branch Sherpur Branch Bogura Branch Charmatha Boker More, Bridge Road Azhar Complex (1st Floor), 331/364, Rangpur Road, Borogola Mohadebpur, Naogaon Sherpur Bus Stand, Sherpur, Bogura. Bogura-5800 Cell : 01755-545814 Cell : 01730-791549 Cell : 01730-034948 Phone : 07426-75041, 07426-75088 Phone : 05029- 77229, 05029- 77228 Phone : 051- 78203, 67172 Fax: 07426 - 75044 Fax: 05029- 77225 Fax : 051- 61142

452 PRIME BANK Shah Md. Abushaleh Md. Abdul Halim Md. Sayeed Imam First Assistant Vice President & Head Assistant Vice President & Head First Assistant Vice President & Head Naogaon Branch Ishwardi Branch Chapai Nawabganj Branch Jagannath Bhaban (1st & 2nd Floor) Holding # 1335/982 Puraton Bazar, Ishwardi Holding No. 29 (1st floor) Islampur, Daudpur Holding # 320, Main Road, Bridge-er-More, Pabna Road Bara Indira Moor, Chapai Nawabgonj. Naogaon Cell : 01730-338461 Cell : 01730-061491 Cell : 01713-068095 Phone : 07326-64435, 07326-64650 Phone : 0781-51125, 0781-51126 Phone : 0741-62150, 0741-62151 Fax : 07326-64436 Fax : 0781-51127 Fax : 0741-62152

Md. Obaidul Haque Md. Showkat Kamal Sarker Assistant Vice President & Head Vice President & Head Natore Branch Rajshahi Branch 1052, Kanaikhali, Dhaka-Rajshahi Highway 138/144, Shaheb Bazar, Rajshahi-6100 Cell : 01730-338466 Cell : 01713-082804 Phone : 0771- 67001 Phone : 0721- 773981, 774582, 774583 Fax : 0771- 67002 Fax : 0721- 773980

Sylhet Division

Nasir Uddin Ahmed Arunangshu Kumar Das A F M Fakharuddin Jaigirdar First Assistant Vice President & Head First Assistant Vice President & Head First Assistant Vice President & Head Barolekha Branch Habiganj Branch Dhaka Dakshin Branch Hazi Abdul Ali Trade Center Holding # 3794, Commercial Area Bakul Mansion (1st floor). College Road, 842, Barelekha Pawrashava Habiganj Golapganj, Sylhet Barelekha, Moulvibazar Cell : 01730-351427 Cell : 01755-545817 Cell : 01730-311433 Phone : 0831- 62814,0831- 62813 Phone : 08227-56180, 08227-56187 Phone : 08622- 56519,08622- 56520 Fax : 0831- 62815 Fax : 08227-56308 Fax : 08622- 56522

Mohammad Abdul Mumit Md. Taj Uddin Ahmed Md. Nazrul Islam Senior Executive Officer & Head Senior Assistant Vice President & Head Senior Asstt. Vice President & Head Fenchugonj Branch Beanibazar Branch IBB, Amberkhana Akul Shah Shopping City (1st Floor), Thana Zaman Plaza (1st Floor) Kasablanca Tower (1st Floor) Road Point, Fenchugonj Bazar Fenchugonj, P. O. &. P. S. : Beanibazar, Dist : Sylhet 982, Dargah Gate, Sylhet-3100 Sylhet Cell : 01714-100497 Cell : 01711-824365 Cell : 01755-630318 Phone : 08223- 56139, 08223- 56140 Phone : 0821- 717332, 0821- 728944 Phone : 08226-56415, 08226-56414 Fax : 08223- 56141 Fax : 0821 - 717337 Fax : 08226-56416

Mohammad Zayed Parvez Harunur Rashid Chowdhury Ibrahim Ali Senior Executive Officer & Head Vice President & Head Assistant Vice President & Head Biswanath Branch Court Road Branch Islampur Branch Al-Burak Shopping Center (1st Floor) Court Road, Moulvi Bazar-3200 Century Park (1st Floor), Majortila Biswanath Bazar, Biswanath Sylhet Cell : 01711-824364 Sylhet 3100. Cell : 01714-073330 Phone : 0861- 53877, 0861- 53878, 64940 Cell : 01755-645464 Phone : 08224- 56017,038911- 82480 Fax : 0861- 53878 Phone : 0821-761174, 0821-761157 Fax : 08224- 56004 Fax : 0821-761115

Ranabir Chowdhury Kamrul Hossain Wasim Ahmed Choudhury First Assistant Vice President & Head Senior Executive Officer & Head First Assistant Vice President & Head Kadamtali Branch Kulaura Branch Tajpur Branch Motin Complex Marina Square Maya View Super Market (1st Floor) Fenchugonj Road, Kadamtali 232, Dakkhin Bazar, Kulaura, Moulvibazar P. O. : Tajpur. P. S. : Osmaninagar South Surma Sylhet Cell : 01730-794631 Upozilla : Balaganj, Sylhet Cell : 01755-534926 Phone : 08624-57082, 08624-57081 Cell : 01714-100498 Phone : 0821-728910, Direct : 0821-841319 Fax : 08624-57080 Phone : 08242-56211, 08242-56210 Fax : 0821-728630 Fax : 08242-56212

Md. Abu Sufian Ashis Bhattacharjee Ekhlasur Rahman (FAVP) First Assistant Vice President & Head Senior Assistant Vice President & Head First Assistant Vice President & Head Nabiganj Branch Sylhet Branch Sreemangal Branch Anowara Biponi, Osmani Road, Nabiganj, Laldighirpar, Sylhet-3100 Saptadinga Complex (1st Floor) Habiganj Cell : 01708-466505 145, Moulvibazar Road, Sreemangal Cell : 01713-255774 Phone : 0821-721127, 0821-710208 Moulvibazar Phone : 08328-56025,08328- 56029 Fax : 0821-710673 Cell : 01714-011578 Fax :08328- 56015 Phone : 08626-71183, 08626-71181 Fax : 08626- 71182

Bishwajit Chandra Paul (FAVP) Mohammad Hanif Md. Rezwan Uddin Swhel First Assistant Vice President & Head Assistant Vice President & Head Senior Assistant Vice President & Head Sunamganj Branch Subidbazar Branch Upashahar Branch Subakth Raja Complex Corner View (1st Floor, West side) Alif Center (1st Floor-Front Portion) 414 Old Station Road, Sunamganj 980, Subidbazar, Sylhet Subhanighat, Upashahar, P. S. Sylhet Cell : 01730-373945 Cell : 01714-069967 Cell : 01714-100499 Phone : 0871- 62516, 0871 – 62515 Phone : 0821- 727688, 0821- 727629 Phone : 0821- 723524, 0821- 811366 Fax: 0871- 62514 Tele-Fax : 0821- 2830942 Fax : 0821- 710094

PRIME BANK 453 ANNUAL REPORT 2018

Khulna Division

Florence Sutopa Majumder Md. Abdur Raafi Md. Saidur Rahman Senior Assistant Vice President & Head Senior Assistant Vice President & Head Assistant Vice President & Head Daulatpur Branch Jessore Branch Khulna Branch Akankha Tower, 454, Khan-A-Sabur Road 47, Netaji Subhas Chandra Road 7, Old Jessore Road, Khulna-9100 Daulatpur, Khulna Jessore Town, Jessore-7400 Cell : 01730-320020 Cell : 01755-545812 Cell : 01714-074014 Phone : 041-725100, 811459, 041-720071 Phone : 041-2850877, 041-2850876 Phone : 0421- 68815,0421- 68814 Fax : (041) 731195 Fax : 041-2850875 Fax : 0421- 68816

Md. Wahidul Islam Mostafa Mhamud Md. Shayed Hasan Khan First Assistant Vice President & Head First Assistant Vice President & Head First Assistant Vice President & Head Kushtia Branch Magura Branch Satkhira Branch Bangabandhu Super Market Monowara Complex (1st Floor), 219 Syed Ator Ali Islam Plaza, 0801/00, Abul Kashem Road, 2,N S Road, Kustia Road, Magura Sadar, Magura Satkhira Cell : 01730-727290 Cell : 01730-791545 Cell : 01755-582853 Phone : 071- 72431, 071-72432 Phone : 0488-51005, 0488-51105 Phone : 0471-62450,0471- 63007 Fax: 071- 72430 Fax - 0488-51200 Fax : 0471- 63001 Rangpur Division

Pijuce Kumar Roy Abu Khaled Md. Waliullah Md.Rejaul Karim Assistant Vice President & Head Executive Officer & Head - CC Assistant Vice President & Head Dinajpur Branch Hatibandha Branch Rangpur Branch Mazeda laza (1st floor) Arif Plaza, Medical More Hatibandha, Shah-Amanat Super Market (1st Floor) 1131/1091 Ganashtala (near Fire Service), Jail Lalmonirhat 268 Station Road Road, Dinajpur Cell : 01709-658465 Jahaj Companier More, Rangpur Cell : 01730-061493 Phone : 5923-56101, 5923-56102 Cell : 01714-069972 Phone : 0531- 51289, 0531- 51291 Fax : 5923-56103 Phone : 0521- 64119, 0521- 64120 Fax : 0531- 51296 Fax : 0521- 64118

Md. Mahafuzul Islam First Assistant Vice President & Head Saidpur Branch Ali Plaza Shahid Dr. Zikrul Haque Road Saidpur, Nilphamari Cell : 01709-658453 Phone : 05526-71202, 05526-71201 Fax- 05526-71203 Barishal Division

Md. Rezwan Ul kader Senior Executive Officer & Head- CC Barishal Branch 37, Hemayet Uddin Road Barishal-8200 Cell : 01711-824362 Phone : 0431- 64011, 0431- 64012 Fax : 0431- 63712

454 PRIME BANK SME Branches

Fayek Ahmed Md. Muzibur Rahman Md.Ekramul Hoque Senior Executive Officer & Head First Assistant Vice President First Assistant Vice President & Head Aganagar SME/Agri. Branch Madunaghat SME/Agri. Branch Sonargaon SME/Agri. Branch Golden Plaza, Purbo Aganagar Keranigonj, Mabia Emporium Rozzab Ali Mention, Mograpara Chowrasta, Dhaka Madunaghat Bazar Habibpur, Sonagaon, Narayanganj Cell : 01730-096612 Hathazari, Chattogram Cell : 01713-255770 Phone : 02- 9571896 Cell : 01755-534932 Phone : 02-7656359 Tele-Fax : 02- 9571896 Phone : 031-2573206 Fax : 02-76 56362 Fax: 031-2573205

Rumal Borua (SEO) Zahid Mahamud Md. Joynal Abedin Chowdhary Senior Executive Officer & Head First Assistant Vice President & Head Senior Executive Officer & Head Bhujpur SME/Agri. Branch Narsingdi SME/Ag. Branch Syedpur SME/Agri. Branch Mokka Shoping Center (1st Floor) Molla Tower, 8 West Kandha Para (2nd Floor), Radhis Shopping Complex Kazirhat, East Bhujpur Bazirmore, Narsingdi Syedpur, Jagannathpur Fatickchari Chattogram Cell : 01730-096613 Sunamgonj Cell : 01713-255771 Phone : 02- 9463343 Cell : 01713-255776

Saiful Islam Shamsul Haque Md. Amzad Hossain Executive Officer & Head First Assistant Vice President & Head First Assistant Vice President & Head Chatkhil SME/Agri. Branch Nawabpur SME Service Center Takerhat SME/Agri. Branch Mamtaz Shopping Center, CNB Road Mollick Plaza (2nd floor) Haji Lalchand Bepari Super Market (North side) Chatkhil, Noakhali 243-244, Nawabpur Road, Dhaka Takerhat, Rajoir, Madaripur Cell : 01730-373921 Cell : 01730-096610 Cell : 01713-255772 Phone : 03222- 75113 Phone : 02- 9571896 Phone : 6623-56377, 6623-56338 Fax : 03222- 75119 Tele-Fax : 02- 9571896

Khandaker Md. Mahbubur Rahman Afjal Sharif Md. Abdul Wahed Miah Senior Executive Officer & Head First Assistant Vice President & Head Executive Officer & Head Companygonj SME/Agri. Branch Posta SME Service Center Thakurgaon SME/Ag. Branch Mother Shopping Complex (1st floor), Trish, 90, Water Tank Road, Posta Chowdhury Complex(1st Floor) Companygonj, Muradpur, Comilla Lalbag, Dhaka 272, College Road, Thakurgaon Cell : 01730-096614 Cell : 01730-096611 Cell : 01730-373940 Phone : 02-659090 Phone : 02-7343663 Phone : 0561- 52295 Fax : 02-659090 Fax: 0561- 52538

Mir Ahmed Md. Anisuzzaman Md. Salah Uddin Kader First Assistant Vice President & Head Senior Executive Officer & Head Senior Executive Officer & Head Heyoko SME/Ag. Branch Poradaha SME/Agri Branch. Ramgarh Branch, Khagrachari Chowdhury Market (1st floor) Sikder Super Market (1st floor), Holding No # 847 Heakobazar, Bhujpur Poradaha Puraton Bazar, Munshi Market (1st Floor) Fatickchari, Chattogram P.S. Mirpur, Dist. Kushtia Ward no #09 Cell : 01730-794626 Cell : 01730-373919 Ramgarh Branch,Khagrachari Cell - 01730-086828

Md. Mehedi Hasan Abu Sadath Mohammad Mostafizur Rahman Bhanu Ranjan Das Senior Executive Officer & Head Executive Officer Senior Executive Officer & Head Jhikorgacha SME/Agri. Branch Raipur SME SME/Agri. Branch Sherpur SME/Agri. Branch Zaman Market (1st Floor) Queen Complex, Holding # 514/15 Main Road, 819 Municipal Road Holding No. 522, Raipur, Laxmipur Chakbazar, Sherpur Jhikorgacha, Jessore Cell : 01730-706703 Cell : 01730-373938 Cell : 01755-582854 Phone : 03822-56396 Phone : 0931- 62176 Phone : 04225- 71780 Fax: 03822- 56397 Fax: 0931-62175 Fax : 04225- 71788

Choudhury Md. Zafar Iqbal Executive Officer & Head Madhabpur SME/Agri. Branch Madahbpur Purbo Bazar Dhaka Sylhet Highway Madhabpur, Habiganj Cell : 01713-187920 Phone : 08327- 56342 Fax : 08327- 56343

PRIME BANK 455 ANNUAL REPORT 2018

NOTABLE ACTIVITIES DURING 2018

Donation of taka five crore to Prime Minister’s relief and Welcome reception to the first ever Bangladeshi Speaker to welfare fund London Tower Hamlet

Inauguration of Prime Bank Cup Golf Tournament 2018 Participatory Agreement signing with Bangladesh Bank

Prime Bank Celebrates 23rd Anniversary Prime Bank Wins Best SME Deal Award from ADB

Prime Bank celebrates Earth Day 2018 Inauguration of Prime Bank National School Cricket Tournament

456 PRIME BANK NOTABLE ACTIVITIES DURING 2018

Receiving Financial Branding Award ‘School Banking Conference-2018’

Discussion Session on Ramadan Prize Distribution Ceremony of Prime Bank Cup Golf Tournament 2018

Extending Medical Services at Biswa Ijtema MOU singing with Dhaka North City Corporation

Loan disbursement among the ten taka (10 Taka) account Distributing blankets to cold-stricken people holders.

PRIME BANK 457 ANNUAL REPORT 2018

REDRESSAL OF INVESTORS COMPLAINTS

Prime Bank Limited is strongly committed to equitable The bank provides a channel for minority shareholders treatment of every shareholder, whether they are major to propose issues deemed important and appropriate to or minority shareholders, institutional investors, or foreign include in the agenda of the bank’s annual general meeting shareholders. To ensure equal treatment of all shareholders the of shareholders and to nominate candidates with appropriate bank created various mechanisms, such as: knowledge, abilities and qualifications to be considered for the position of Director. Shareholders who are unable to attend the shareholders’ meeting, the bank provides proxy forms which allow The bank continues to have regular communication with the shareholders to specify their vote on each agenda. The proxy shareholders through periodic updates of performance and at forms, which are in accordance with the standard format, are any other time when it believes it to be in the best interest of sent along with the annual report. shareholders generally.

The shareholders’ meetings proceed according to the order Investors’ inquiries/Complaint of the agenda, without adding new and uniformed agenda, Any queries relating to shareholdings for example transfer in order to give the opportunity to shareholders to study the of shares, changes of name and address, and payment of information on the given agenda before making a decision. dividend should be sent to the following address: Moreover, there are no changes to the important information in the shareholders’ meeting.

The bank sees the importance of the consideration of transactions which may have conflict of interest or may Share Department be connected or related transactions, and abides by good Sarker Mansion (8th Floor) corporate governance principles, including the rules and 29, Rajuk Avenue, Dhaka – 1000 regulations of the Bangladesh Securities and Exchange Phone: 9567265/261 Commission and the Dhaka Stock Exchange and the Chittagong Stock Exchange transactions, Directors, management and those who are related persons do not participate in the consideration to approve such transactions.

458 PRIME BANK cÖvBg e¨vsK wjwg‡UW 23Zg evwl©K mvaviY mfvi Kvh©weeiYx cÖvBg e¨vsK wjwg‡UW Gi m¤§vwbZ †kqvi‡nvìvi‡ì 23Zg evwl©K mvaviY mfv cl©` Ges eë¯’vcbv KZ©„c‡ÿi Dci †kqvi‡nvìvi‡ì GB wek¦vm I Av¯’v 24 †g, 2018 †ejv 11.00 NwUKvq †KAvBwe Kg‡cø·, Lvgvi evox, dvg©‡MU, i‡q‡Q| AZtci Rbve wUUz Dcw¯’Z mKj †kqvi‡nvìvi‡ì cÿ †_‡K †Pqvig¨vb XvKvq AbywôZ nq| g‡nv`q‡K mfvi evwl©K mvaviY mfvi Av‡jvP¨m~Px †kqvi‡nvìvi‡ì Aby‡gv`‡bi e¨vs‡Ki msNwewai 71 aviv †gvZv‡eK cwiPvjbv cl©‡ì m¤§vwbZ †Pqvig¨vb Rb¨ †ck Ki‡Z Aby‡iva K‡ib| Rbve AvRg †R †PŠayix mfvq mfvcwZZ¡ K‡ib| D³ mfvq cwiPvjbv cl©‡ì AZtci †Pqvig¨vb g‡nv`q Av‡jvP¨m~Px Abymv‡i mfvi Kvh©µg cwiPvjbvq wbgœwjwLZ m`më„›` Dcw¯’Z wQ‡jb: AMÖmi nb, hv mswÿßvKv‡i wb‡¤œ D‡jøL Kiv n‡jvt 1. wg‡mm bvwmg Av‡bvqvi †nv‡mb : fvBm †Pqvicvimb Av‡jvP¨m~Px - 1 2. wg‡mm mvjgv nK : cwiPvjK ÒcwiPvjKgÛjxi cÖwZ‡e`b Ges e¨vs‡Ki 31†k wW‡m¤î 2017 Zvwi‡L mgvß 3. Rbve †gvt wmivRyj Bmjvg †gvjøv : cwiPvjK erm‡ii wbixwÿZ Avw_©K cÖwZ‡e`b Zrm‡½ wbixÿv cÖwZ‡e`b MÖnY, we‡ePbv I 4. Rbve gvwdR Avn‡g` f‚uBqv : cwiPvjK Aby‡gv`b|Ó 5. Rbve †gvt kvnv`vZ †nv‡mb : cwiPvjK Rbve Avey mywdqvb wUUz (we.I. AvBwW 1202490004426478) D³ Av‡jvP¨m~Px Aby‡gv`‡bi Rb¨ cÖ¯Íve K‡ib Ges Rbve AvRv` Avnmvb (we. I. 6. Rbve †gvnv¤§` gykZvK Avn‡g` Zvbfxi : cwiPvjK AvBwW 1204820043854201) KZ©„K D³ cÖ¯Íve mg_©‡bi †cÖwÿ‡Z wbgœwjwLZ 7. Rbve kvgmyÏxb Avn‡g` : wcGBPwW ¯^Zš¿ cwiPvjK Ges wm×všÍ M„nxZ nq: †Pqvig¨vb, AwWU KwgwU

8. Wt wR. Gg. Lyikx` Avjg : ¯^Zš¿ cwiPvjK wm×všÍ: 9. Rbve Gg. dinv` ûmvBb, GdwmG : ¯^Zš¿ cwiPvjK Ò2017 mv‡ji 31 wW‡m¤^i Zvwi‡L mgvß erm‡ii wbixwÿZ Avw_©K weeiYx 10. Rbve iv‡nj Avn‡g` : e¨e¯’vcbv cwiPvjK Zrm‡½ wbixÿv cÖwZ‡e`b Ges cwiPvjKgÛjxi cÖwZ‡e`bmg~n M„nxZ nj|Ó

†Kv¤úvbx mwPe Rbve †gvnv¤§` Gnmvb nvexe mfvq Dcw¯’Z wQ‡jb| Av‡jvP¨m~Px - 2 AwaKš‘ 185 (GKkZ cuPvwk) Rb †kqvi‡nvìvi/cÖw·/A¨vUwb© mfvq Dcw¯’wZ ÒcwiPvjKgÛjx KZ©„K mycvwikK…Z 31 wW‡m¤î 2017 mv‡ji mgvß erm‡ii wQ‡jb| jf¨vsk †NvlYv|Ó mfvi Kvh©m~Px †gvZv‡eK cweÎ †KviAvb †_‡K †ZjvIqv‡Zi gva¨‡g mfvi †Pqvig¨vb g‡nv`q †kqvi‡nvìvi‡ì AewnZ K‡ib †h, 10†k GwcÖj 2018 Kvh©µg ïiæ nq| Zvwi‡L AbywôZ e¨vs‡Ki cwiPvjbv cl©‡ì 477Zg mfvq 2017 mv‡ji Rb¨ ïiæ‡ZB †Kv¤úvbx mwPe mfvq Dcw¯’Z e¨vs‡Ki cwiPvjbve„›` I be wbhz³ †kqvi‡nvìvi‡ì Aby‡gv`b mv‡c‡ÿ 17% jf¨vsk (10% †evbvm Ges 7% eë¯’vcbv cwiPvjK‡K †kqvi‡nvìvi‡ì mv‡_ cwiPq Kwi‡q †`b| bM`) mycvwik Kiv nq| AZtci Av‡jvP¨m~PxwU †kqvi‡nvìvi‡ì Aby‡gv`‡bi Rb¨ Dc¯’vcb Kiv nq| †Kvivg c~Y© nIqvq †Pqvig¨vb g‡nv`q 23Zg evwl©K mvaviY mfvi Kvh©µg ïiæ K‡ib| Rbve Gm. Gg. gwbiæ¾vgvb (we.I. AvBwW 1201720000010083) D³ Av‡jvP¨m~Px Aby‡gv`‡bi Rb¨ cÖ¯Íve K‡ib Ges Rbve ‡gv: Avdmvi DÏxb miKvi †Pqvig¨vb g‡nv`q Dcw¯’Z †kqvi‡nvìvi‡ì ¯^vMZ Rvwb‡q 2017 mv‡j e¨vswKs (we. I. AvBwW 1202640000050339 KZ©„K D³ cÖ¯Íve mg_©‡bi †cÖwÿ‡Z Lv‡Zi mswÿß `„k¨cU Dc¯’vcb K‡ib Ges e¨vs‡Ki Kvh©µ‡g †m¸‡jvi cÖwZdjb wbgœwjwLZ wm×všÍ M„nxZ nq: Zz‡j a‡ib| wZwb D‡jøL K‡ib †h, wewfbœ KviY †hgb, Zvij¨ msKU, Low Pricing & Spread, ê‡`wkK gy`ªv evRv‡ii Aw¯’wZkxjZv Ges m‡e©vcwi Kz- wm×všÍ: F‡Yi wecix‡Z ewa©òz cÖwfkwbs Gi †evSv BZ¨vw` Kvi‡Y 2017 mvj wQ‡jv e¨vs‡Ki Rb¨ P¨v‡jwÄs| GZ`&m‡Ë¡I mg¯Í cÖwZeÜKZv AwZµg K‡i cÖvBg e¨vsK Ò2017 mv‡ji 31 wW‡m¤î Zvwi‡L mgvß erm‡ii Rb¨ 17% jf¨vsk (10% MZ eQ‡ii Zzjbvq AwaK jf¨vsk †NvlYv Ki‡Z mg_© n‡q‡Q| wZwb †Rvi w`‡q †evbvm Ges 7% bM`) GZØviv †NvlYv Kiv nj Ges †h mKj †kqvi‡nvìviM‡Yi D‡jøL K‡ib †h, wewfbœ cÖwZeÜKZv m‡Ë¡I e¨vsK Zvi k³wfwËi Kvi‡Y wb‡Ri bvg †iKW© †WU A_©vr 6B †g 2018 Zvwi‡L m`m¨ ewn‡Z we`¨gvb wQj Zviv D³ Ae¯’vb eRvq ivL‡Z †c‡i‡Q| e¨vsK wbqš¿K ms¯’vi wb‡`©kbvmg~n cwic~Y©fv‡e jf¨vsk cÖvc¨ n‡eb|Ó cwicvjb K‡i‡Q| wZwb Avkv K‡ib †h, e¨vs‡Ki cwiPvjbv cl©` Ges eë¯’vcbv fMœvsk †evbvm †kqvi weµq I weZiY: KZ©„c‡ÿi Kvh©µ‡gi Dci †kqvi‡nvìviM‡Yi c~Y© Av¯’v fwel¨Z mdj Kvh©µg Dcw¯’Z †kqvi‡nvìvi‡ì m¤§wZ‡Z mfvq wbgœwjwLZ wm×všÍ M„nxZ nqt cwiPvjbvq mnvqZv Ki‡e| ÒmKj GKxf~Z fMœvsk †evbvm †kqvi XvKv ÷K G·‡PÄ wjwg‡UW I PÆMÖvg ÷K cwi‡k‡l †Pqvig¨vb g‡nv`q Rvbvb †h, 2017 mv‡ji evwl©K cÖwZ‡e`b mKj G·‡PÄ wjwg‡UW Gi gva¨‡g weµq Kivi Rb¨ m‡e©v”P msL¨K c~Y© †kqv‡i iƒcvšÍi m¤§vwbZ †kqvi‡nvìvi‡ì wbKU †cÖiY Kiv n‡q‡Q, hv‡Z Zuviv †h †Kvb welq ev Kiv n‡e Ges weµqjä A_© 6B ‡g 2018 Zvwi‡L we`¨gvb †kqvi‡nvwìs-Gi cÖwZ‡e`‡bi Dci ¯^vaxbfv‡e Av‡jvPbv Ki‡Z cv‡ib| AvbycvwZK nv‡i †kqvi‡nvìvi‡ì cÖvc¨Zv Abyhvqx weZiY Kiv n‡e| Rbve †gvt Avey mywdqvb wUUz (we.I. AvBwW 1202490004426478) g‡Â GB g‡g© Av‡iv wm×všÍ M„nxZ nq †h, fMœvsk †kqvimg~‡ni Uªvw÷‡nvìvi wnmv‡e Av‡ivnY K‡i e¨vs‡Ki mvwe©K Kvh©µg Ges 2017 mv‡j 17 kZvsk jf¨vsk †Kv¤úvbx mwP‡ei bv‡g D‡jøwLZ †kqvimg~n Bmy¨ Kiv n‡e|Ó †NvlYvq m‡šÍvl cÖKvk K‡ib| wZwb Avkv K‡ib †h, cl©‡ì cÖwZkÖæwZ Abyhvqx e¨vsK mg‡qi mv‡_ mv‡_ AwaKZi mdjZv AR©b Ki‡e, e¨vs‡Ki cwiPvjbv

PRIME BANK 459 ANNUAL REPORT 2018

Av‡jvP¨m~Px - 3 Av‡jvP¨m~Px - 4 ÒcwiPvjK wbe©vPb/ cybtwbe©vPbÓ ÒcieZ©x evwl©K mvaviY mfv ch©šÍ wbixÿK wb‡qvM Ges Zv‡ì cvwikªwgK †Pqvig¨vb g‡nv`q †kqvi‡nvìviMY‡K AewnZ K‡ib †h, wbgœwjwLZ cwiPvjKMY wba©viY|Ó AvBb †gvZv‡eK evwl©K mvaviY mfvq Aemi MÖnY Ki‡eb Ges Zuviv cyb:wbe©vP‡bi/ †Pqvig¨vb g‡nv`q mfv‡K AewnZ K‡ib 8B †g 2017 Zvwi‡L AbywôZ e¨vs‡Ki cyb:wb‡qv‡Mi †hvM¨: 22Zg evwl©K mvaviY mfvq wb¤œwjwLZ wbixÿv dvg©Øq‡K †hŠ_fv‡e e¨vs‡Ki 1. Rbve AvRg †R †PŠayix (cÖwZwbwa, B÷ †Kv÷ wkwcs jvBÝ wjwg‡UW) ewntwbixÿK wn‡m‡e wb‡qvM cÖ`vb Kiv n‡qwQjt 2. Rbve bvwdm wmK`vi 1. †gmvm© û`v fvmx †PŠayix GÛ †Kvs, PvU©vW© GKvD›U¨v›Um Ges 3. Rbve Bgivb Lvb 2. †gmvm© AvwRR nvwjg Lv‡qi †PŠayix, PvU©vW© GKvD›U¨v›Um 4. Rbve kvgmyÏxb Avn‡g` wcGBPwW ¯^Zš¿ cwiPvjK Zviv 31 wW‡m¤î 2017 Zvwi‡L mgvß erm‡ii ewntwbixÿK wn‡m‡e e¨vs‡Ki wnmve wbixÿv K‡i‡Qb Ges cieZ©x evwl©K mvaviY mfv ch©šÍ ewntwbixÿK wn‡m‡e 5. W. wR Gg Lyikx` Avjg ¯^Zš¿ cwiPvjK cybtwb‡qv‡Mi Rb¨ Av‡e`b K‡i‡Qb| 6. Rbve Gg dinv` †nv‡mb GdwmG ¯^Zš¿ cwiPvjK †Pqvig¨vb g‡nv`q Av‡iv AewnZ K‡ib evsjv‡`k e¨vs‡Ki weAviwcwW Dc‡iv³ cwiPvjKM‡Yi g‡a¨ 3 Rb ¯^Zš¿ cwiPvjK cwiPvjbv cl©` KZ…©K mvKz©jvi bs-12 ZvwiL 11-07-2001 Ges weGmBwm wb‡`©kbv bs GmBwm/ c~btwb‡qvM cÖvß n‡q‡Qb Ges D³ wb‡qvM †kqvi‡nvìvi‡ì Aby‡gv`‡bi Rb¨ wmGgAviAviwmwW/2009-193/G¨vWwgb ZvwiL 27.07.2011 Abymv‡i D³ Dc¯’vcb Kiv nq| dvg©Øq e¨vs‡Ki ewntwbixÿK wn‡m‡e cybtwb‡qv‡Mi †hvM¨| Z`ycwi AwWU KwgwU †Pqvig¨vb g‡nv`q †kqvi‡nvìviMY‡K cybivq AewnZ K‡ib †h, e¨vs‡Ki Ges cwiPvjbv cl©` D‡jøwLZ AwWU dvg©Øq‡K ewntwbixÿK wn‡m‡e cybtwb‡qv‡Mi msNwewai 103.2 wewa Ges e¨vsK †Kv¤úvbx (ms‡kvwaZ) AvBb 2018 †gvZv‡eK Rb¨ mycvwik K‡i| AZtci wZwb D³ cÖ¯Íve †kqvi‡nvìvi‡ì Aby‡gv`‡bi Rb¨ wbgœwjwLZ cwiPvjKMY cwiPvjbv cl©‡` bZzbfv‡e cwiPvjK wn‡m‡e AšÍf©y³ Dc¯’vcb K‡ib| n‡q‡Qb Ges G wel‡q †kqvi‡nvìvi‡ì Aby‡gv`b / cybtwbe©vP‡bi Rb¨ Dc¯’vcb Rbve wek¦wRr †Nvl (we. I. AvBwW 1202050002386324) D³ Av‡jvP¨m~Px Kiv nqt Aby‡gv`‡bi Rb¨ cÖ¯Íve K‡ib Ges Rbve †gvt Ave`yj Kv‡ì miKvi (we. I. 1. Rbve †gvt kvnv`vZ †nv‡mb AvBwW 1203710020402932) KZ©„K D³ cÖ¯Íve mg_©‡bi †cÖwÿ‡Z wbgœwjwLZ wm×všÍ M„nxZ nq: 2. Rbve gvwdR Avn‡g` f‚uBqv 3. Rbve †gvt wmivRyj Bmjvg †gvjøv wm×všÍ: †kqvi‡nvìviMY wb‡qvM/cybtwb‡qvM/cybtwbe©vPb cÖwµqv Aby‡gv`b cÖ`vb K‡ib Ò1. †gmvm© û`v fvmx †PŠayix GÛ †Kvs, PvU©vW© GKvD›U¨v›Um Ges 2. †gmvm© Ges me©m¤§wZµ‡g wbgœwjwLZ wm×všÍ M„nxZ nqt AvwRR nvwjg Lv‡qi †PŠayix, PvU©vW© GKvD›U¨v›Um dvg©Øq‡K †hŠ_fv‡e e¨vs‡Ki ewntwbixÿK wnmv‡e cieZ©x evwl©K mvaviY mfv ch©šÍ dvg© cÖwZ evwl©K wm×všÍ: 6,00,000/- (Qq jÿ) UvKv nv‡i cvwikªwgK wba©viYc~e©K †gvU 12,00,000/- Òwm×všÍ M„nxZ n‡jv †h, wb¤œwjwLZ ¯^Zš¿ cwiPvjKMY; (evi jÿ) UvKvq wb‡qvM Kiv nj|Ó 1. Rbve kvgmyÏxb Avn‡g` wcGBPwW Ab¨ †Kvb Av‡jvP¨m~Px bv _vKvq †Pqvig¨vb g‡nv`q m¤§vwbZ mKj †kqvi‡nvìvi, cwiPvjK Ges wewkóRb‡ì m`q Dcw¯’wZi Rb¨ K…ZÁZv cÖKvk K‡ib| wZwb 2. Wt wR Gg Lyikx` Avjg 23Zg evwl©K mvaviY mfv mdjfv‡e m¤úbœ Kivq e¨vs‡Ki eë¯’vcbv KZ©„cÿ, 3. Rbve Gg dinv` †nv‡mb GdwmG wgwWqv cÖwZwbwa, e¨vs‡Ki wbe©vnx I Kg©KZ©vMYmn mswkøó mKj‡K abëv` cieZ©x †gqv‡ì Rb¨ cybtwb‡qvM cÖvß n‡jb|Ó Ávcbc~e©K mfvi mgvwß †NvlYv K‡ib| Òcybtwm×všÍ M„nxZ n‡jv †h, wb¤œwjwLZ cwiPvjKMY; 1. Rbve AvRg †R †PŠayix (cÖwZwbwa, B÷ †Kv÷ wkwcs jvBÝ wjwg‡UW) 2. Rbve bvwdm wmK`vi 3. Rbve Bgivb Lvb AvRg †R †PŠayix 4. Rbve †gvt kvnv`vZ †nv‡mb †Pqvig¨vb 5. Rbve gvwdR Avn‡g` f‚uBqv 6. Rbve †gvt wmivRyj Bmjvg †gvjøv e¨vs‡Ki cwiPvjK wnmv‡e wbqš¿Y KZ©„c‡ÿi Aby‡gv`b mv‡c‡ÿ Ges e¨vsK †Kv¤úvbx AvBb 1991, †Kv¤úvbx AvBb 1994 Ges weGmBwm K‡cv©‡iU mykvmb bxwZgvjv cwicvjb mv‡c‡ÿ cybtwbe©vwPZ n‡jbÓ|

460 PRIME BANK PRIME BANK LIMITED Registered Office Adamjee Court Annex Building-2, 119-120, Motijheel C/A, Dhaka-1000 Minutes of the 23rd (twenty third) Annual General Meeting:

The Twenty third Annual General Meeting of the shareholders Finally, he informed that bank’s Annual Report 2017 has been of Prime Bank Limited was held on Thursday, 24th May 2018 at duly sent to all esteemed shareholders, as such, they are 11:00 A.M. at KIB Complex, Khamar Bari, Farm gate, Dhaka. at liberty to discuss on any issue or observation which the meeting would be obliged to respond. Mr. Azam J Chowdhury, Chairman, Board of Directors, Prime Bank Limited, presided over the meeting as per Article # 71 of Mr. Abu Sufian Titu (BO ID 1202490004426478), one of the the Company where following Directors were present: shareholders on taking the floor expressed satisfaction at the performance of the Bank and declaration of 17% dividend for 1. Mrs. Nasim Anwar Hossain : Vice Chairman the year 2017. He hoped that Chairman’s assurance for better 2. Mrs. Salma Huq : Director performance in time ahead would be translated in deeds 3. Mr. Shirajul Islam Mollah : Director as they have full faith and confidence on the Board and the Management of the bank. He, therefore, on behalf of the 4. Mr. Mafiz Ahmed Bhuiyan : Director shareholders requested the Chairman to move the Agenda of 5. Mr. Md. Shahadat Hossain : Director the AGM for their endorsement.

6. Mr. Mohammad Mushtaque : Director The Chairman then moved the Agenda of the Meeting in the Ahmed Tanvir chronological order resolutions of which are summarised as under: 7. Dr. G.M. Khurshid Alam : Independent Director Agenda # 1: 8. Mr. M. Farhad Hossain, FCA : Independent Director “To receive, consider and adopt the Directors’ Report and 9. Mr. Shamsuddin Ahmed PhD : Independent & Director Audited Financial Statements of the Bank for the year ended Chairman, Audit Committee December 31, 2017 together with the Auditors’ Report 10. Mr. Rahel Ahmed : Managing Director thereon”

Company Secretary, Mr. Mohammed Ehsan Habib was also Mr. Md. Abu Sufian Titu (BOID NO: 1202490004426478) present at the AGM. proposed for approval of the Agenda while Mr. Azad Ahasan In addition, one hundred and eighty five (185) Shareholders / (BOID NO: 1204820043854201) seconded it. Therefore, proxy / attorney recorded their attendance in the meeting. following resolution was adopted:

The Meeting commenced as per schedule with the address Resolution: of welcome by the Company Secretary followed by recitation “Resolved that the Directors’ Report and Audited Financial from the Holy Quran. Statements of the Bank for the year ended 31 December, 2017 Before proceeding to the businesses /Agenda of the AGM, together with the Report of the Auditors’ are hereby adopted.” Company Secretary introduced the Board Members present in the Meeting including the newly appointed Managing Director Agenda # 2: of the Bank to the shareholders. “To declare dividend for the year ended December 31, 2017 The Chairman then taking over and receiving confirmation on as recommended by the Board of Directors” the Quorum, called the 23rd Annual General Meeting to order. The Chairman informed the Shareholders that the Board of The Chairman welcomed the shareholders and presented a Directors in its 477th Meeting held on 10.04.2018 recommended brief on the industry scenario of 2017 and its reflections on 17% dividend (10% stock and 7% cash) for the year 2017 subject the performance of the Bank. He mentioned that 2017 was to approval of the shareholders. The proposal was, therefore, a challenging year for various reasons like liquidity crunch, placed before the shareholders for their endorsement. low pricing & spread, volatility of Foreign Exchange market Mr. S.M. Moniruzzaman (BOID NO: 1201720000010083) and top of everything the increasing burden of NPL causing proposed the resolution on behalf of the Shareholders while disproportionate allocation of profit for provisioning purposes. Mr. Md. Afsar Uddin Sarkar (BOID NO: 1202640000050339) But overcoming all these difficulties, Prime Bank has been able seconded it. Therefore, following resolution was adopted: to declare more dividend than last year. He emphasized that despite the odds bank has been successful in withstanding the Resolution: unfavorable circumstances because of its strong fundamentals. Bank also succeeded in maintaining regulatory compliance “Resolved that 17% dividend (10% stock and 7% cash) be and and all these have been possible due to unflinching support of are hereby declared to be paid as dividend for the year ended all, particularly the shareholders. He hoped shareholders could 31st December 2017 to those Members whose name appear in maintain their confidence on the Board and Management of the Register of Members on the Record Date i.e. 6th May, 2018” the Bank and help it demonstrate better performance in future. About Sale and Distribution of Fractional Bonus Shares:

PRIME BANK 461 ANNUAL REPORT 2018

With the consent of the shareholders the Meeting adopted 4. Mr. Md. Shahadat Hossain following resolution: 5. Mr. Mafiz Ahmed Bhuiyan “Resolved that all accumulated fractional bonus share be 6. Mr. Md. Shirajul Islam Mollah converted into maximum whole share to sell the same through Dhaka Stock Exchange Limited and Chittagong Stock be and are re-elected Directors of the Bank subject to approval Exchange Limited. The sale proceeds thereof be distributed of the regulatory authority and compliance with the Banking among the shareholders in proportion of their shareholdings Companies Act 1991, the Companies Act 1994, and BSEC as on 6th May, 2018. Guidelines on Corporate Governance”

It was further resolved that the said shares be issued in the Agenda # 4: name of the Company Secretary as trustee holder of the fractional shares.” “To appoint Auditors for the term until the next Annual General Meeting and to fix their remuneration”

Agenda # 3: The Chairman informed the Meeting that following Auditing nd “To elect/re-elect Directors” Firms were jointly appointed in the 22 Annual General Meeting of the Bank held on 8th May 2017: The Chairman informed the Meeting that following Directors would retire by operation of law and are eligible for re-election/ 1) M/S Hoda Vasi Chowdhury & Co. and re-appointment: 2) M/S. Aziz Halim Khair Choudhury, Chartered Accountants

1. Mr. Azam J Chowdhury (representing East Coast Shipping as External Auditors of the Bank and they have audited Bank’s Lines Ltd) Accounts for the year ended 31 December 2017. Now they have 2. Mr. Nafis Sikder applied for re-appointment until next AGM.

3. Mr. Imran Khan The Chairman also informed that as per BRPD Circular letter No. 12 dated July 11, 2001 and BSEC order no. SEC/ 4. Mr. Shamsuddin Ahmad Ph.D, Independent Director CMRRCD/2009-193/104/Admin dated July 27, 2011; both the 5. Dr. G M Khurshid Alam, Independent Director firms are eligible for re-appointment. In addition, both the Audit Committee and the Board has recommended the proposal 6. Mr. M Farhad Hussain FCA,Independent Director for re-appointment. He, thereafter, placed the agenda for Among the names noted above, 3 Independent Directors (ID) endorsement of the shareholders. have been re-appointed by the Board and now placed for Mr. Bishwajit Ghosh (BO ID NO: 1202050002386324) proposed endorsement of the Shareholders. the resolution for approval while Mr. Md. Abdul Kader Sharker The Chairman further informed that following Directors have (BOID NO: 1203710020402932) seconded it, as such, following been newly inducted in the Board as per article 103.2 of the resolution was adopted: Articles of Association of the Bank and the Bank Companies (amendment) Act 2018, and now placed for endorsement/ re- Resolved that: election by the shareholders: 1) M/S Hoda Vasi Chowdhury & Co., Chartered Accountants 1. Mr. Md. Shahadat Hossain and

2. Mr. Mafiz Ahmed Bhuiyan 2) M/S. Aziz Halim Khair Choudhury, Chartered Accountants

3. Mr. Md. Shirajul Islam Mollah be and are hereby re-appointed External Auditors of the Bank The shareholders endorsed the process of appointment/re- at an Annual fee of Tk.6.00 lac (Taka six lac) each totaling appointment/re-election and following resolution was adopted Tk.12.00 lac only (Excluding VAT) until the next Annual General unanimously: Meeting of the Bank.” As there was no further agenda for discussion, the Chairman Resolution: thanked the valued Shareholders, Directors and dignitaries for “Resolved that the following Independent Directors namely; their kind presence. He also thanked the Management, Media personnel, the Executives and Officers of the Bank and all those 1) Mr. Shamsuddin Ahmad Ph.D, who were instrumental in successful holding of the 23rd Annual 2) Dr. G.M. Khurshid Alam, General Meeting of the Company. 3) Mr. M Farhad Hussain FCA be and are reappointed for the next term.”

“Further resolved that the following Directors namely;

1. Mr. Azam J Chowdhury (representing East Coast Shipping Azam J Chowdhury Lines Limited) Chairman 2. Mr. Nafis Sikder

3. Mr. Imran Khan

462 PRIME BANK NOTICE OF THE 24th ANNUAL GENERAL MEETING

Registered Office: Adamjee Court Annex Building-2 119-120 Motijheel C/A, Dhaka-1000

Notice is hereby served to all Members of Prime Bank Limited that the 24th Annual General Meeting of the Company will be held on Thursday, 16th May 2019 at 11:00 a.m. at the following Venue to transact undernoted businesses:

Venue: Krishibid Institution KIB Complex Krishi Khamar Sarak Farmgate, Dhaka-1215

AGENDA

1. To receive, consider and adopt Directors’ Report and Audited Financial Statements of the Bank for the year ended 31st December 2018 together with the Auditors’ Report thereon.

2. To declare dividend for the year ended 31st December 2018 as recommended by the Board of Directors.

3. To elect/re-elect Directors and endorse appointment of Independent Director.

4. To appoint Auditors for the term until the next Annual General Meeting and fix their remuneration.

5. To appoint Certified Professionals (Compliance Auditors) for the year 2019 for certification on corporate governance status and fix their remuneration. By order of the Board of Directors Sd/- April 03, 2019 Mohammed Ehsan Habib Company Secretary Notes:

The ‘Record Date’ shall be Sunday, April 28, 2019.

Shareholders whose names appear in the Members Register of the Company and/or in the Depository on the Record Date will be eligible to attend the meeting and qualify for dividend.

The Board of Directors has recommended 12.50% cash for the year 2018.

A Member eligible to attend and vote at the Annual General Meeting may appoint a proxy on his/her behalf for which duly stamped Proxy Form must be submitted to Share Department of the Company at least 72 hours before the scheduled Meeting.

Proxy Form will be available at Bank’s official website and at the Share Department of the Bank.

Practicing Professional Accountants/Secretaries are requested to send applications by April 21, 2019 for appointment as Compliance Auditor of the Bank for the year 2019 at the AGM.

Shareholders and Proxies are requested to record their entry at the AGM venue well in time.

Directors’ Report and Audited Financial Statements of the Bank for the year ended 31st December 2018 together with the Auditors’ Report thereon shall be available on bank’s website from May 02, 2019 onwards.

Hon’ble Members are requested to update particulars of their Bank Account with e-TIN and email addresses through Depository Participants (DP) before the “Record Date”.

Members failing to update their e-TIN details before the “Record Date,” Income Tax at source will be deducted from payable Dividend @15% (Fifteen percent) instead of 10% (ten percent) as per amended Income Tax Ordinance 1984 under Section #54.

Concerned Brokerage Houses are requested to provide us with statement of margin loan account holders along with relevant details of Prime Bank Shareholders as on the ‘Record date’ to the company’s Share Department on or before May 02, 2019 in the event dividend to be credited to the respective Loan accounts in compliance with the BSEC rules.

PDF copy of Annual report 2018 will be sent through email addresses of respective shareholders available in their beneficial owner (BO) accounts with the depository as per BSEC notification No. EC/CMRRCD/2006-158/208/admin/81 dated 20 June 2018.

N.B: No gift or benefit in cash or kind shall be paid/offered to the Shareholders at the 24th AGM as per BSEC Directive No. SEC/CMRRCD/2009-193/154 dated 24.10.2013.

PRIME BANK 463 ANNUAL REPORT 2018

ACRONYMS

AD Authorized Dealer IPO Initial Public Offering ALCO Asset Liability Committee LC Letter of Credit ATM Automated Teller Machine MBID Merchant Banking and Investment Division BB Bangladesh Bank MTMF Medium Term Macro Economic Framework B/L Bad/Loss SMT Senior Management Team BAS Bangladesh Accounting Standards NII Net Interest Income BIBM Bangladesh Institute of Bank Management NPL Non Performing Loan CRR Cash Reserve Requirement NCBs Nationalized Commercial Banks CRG Credit Risk Grading OBU Offshore Banking Unit CSR Corporate Social Responsibility PCBs Private Commercial Banks CPI Consumer Price Index PBL Prime Bank Limited CDBL Central Depository Bangladesh Limited PECL Prime Exchange Co. Pte. Ltd. CBS Core Banking Software PBIL Prime Bank Investment Ltd. CRISL Credit Rating and Information Services Ltd. PBSL Prime Bank Securities Ltd. DCFCL Departmental Control Function Check List POS Point of Sale DEPZ Dhaka Export Processing Zone PV Present Value DP Depository Participants RWA Risk Weighted Assets EPS Earnings Per Share RMG Readymade Garments EPZ Export Processing Zone ROA Return on Assets (excluding contingent items) FY Fiscal Year (July to June) ROE Return on Equity GDP Gross Domestic Product R&D Research and Development GRI Global Reporting Initiative ROD Rights Share Offer Document HOB Head of Branch SAFA South Asian Federation of Accountants ICAB Institute of Chartered Accountants of Bangladesh MSME Micro, Small and Medium Enterprise IT Information Technology SOP Standard Operating Procedure IMF International Monetary Fund SLR Statutory Liquidity Ratio IAS International Accounting Standards

464 PRIME BANK Prime Bank Limited Registered Office Adamjee Court Annex Building -2 119-120 Motijheel C/A, Dhaka - 1000 PROXY FORM

I/We……………………………………………………………………………………………………………………………………………...... of (address) ………………………………………………………………………………………………………………………………...... being the Member of Prime Bank Limited do hereby appoint Mr./Ms. ………………………………………………………………………………………………………………………………………...... of ………………………………………………………………………………………………………………………………………………...... or (failing him/her) Mr./ Ms. ………………………………………………………………………………………………………...... of ………………………………………………………………………………………………………………………………………………...... as my/our proxy to attend and vote on my/our behalf at the 24th Annual General Meeting of the Company to be held on Thursday, 16th May 2019 at 11.00 a.m. at the Krishibid Institution, KIB Complex, Krishi Khamar Sarak, Farmgate, Dhaka-1215 and at any adjournment thereof. Signed this ……………………………………… day of May 2019.

Revenue Stamp

Signature of the Member ……………………………………………………………………………...... ………..

Folio/BO ID Number

Number of Shares held

Signature of the Proxy …………………………………………………………………………………………………………………...... ……………………………………………………….

Folio/BO ID Number

Number of Shares held

Notes:

I. Signature must be in accordance with the Specimen Signature recorded with the CDBL. II. A duly completed Proxy Form must be submitted at least 72 hours before the Meeting at the Share Department of the Company. Incomplete Proxy Form will not be entertained.

……………………………………………………………………………………………………………………………………………………………………………………...... ……………......

Prime Bank Limited ATTENDANCE SLIP

I/We hereby record my/our presence at the 24th Annual General Meeting of the Company to be held on Thursday, 16th May 2019 at 11.00 a.m. at the Krishibid Institution, KIB Complex, Krishi Khamar Sarak, Farmgate, Dhaka-1215.

Name of the Member (in block letters) ………………………………………………………………………………………………………………………………...... ………………

Folio/BO ID Number

Number of Shares held

Signature of the Member/Proxy…………………………………………………………………………………………………………………………………………...... ……......

Attendance of the Members/Attorney/Proxy shall be recorded from 9:30 a.m. to 11.30 a.m. at the entrance of the Hall. N.B: No Gift or Entertainment shall be offered to the Shareholders in the 24th AGM as per BSEC Directive No.SEC/CMRRCD/2009-193/154 Dated 24.10.2013. Prime Bank

Prime Bank nk

Prime Bank Prime Bank Prime Ba

an ime Bank Pr Prime Bank Prime B

Prime Bank Prime Bank

nk rime Bank P Prime Bank Prime Ba

Prime Bank Prime Bank