7KLUW\\HDUV RI ,VODPL %DQN¶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¶V 7RS %DQNV 6XUHO\WKHLQFOXVLRQRI,VODPL%DQNLQWKHSUHVWLJLRXVFOXE RI ZRUOG¶V EHVW EDQNV LVWDQWDPRXQW WR JOREDO UHFRJQLWLRQRIWKHPDUNHGGHYHORSPHQWWDNHQSODFHLQWKH EDQNLQJVHFWRURI%DQJODGHVK %DVHGRQ,VODPLF6KDULµDK Annual Report 2012 1 REGISTERED OFFICE: Islami Bank Bangladesh Limited, 40, Dilkusha Commercial Area, Dhaka-1000, Bangladesh; GPO Box No.233; Phone : PABX (88-02) 9563040, 9560099, 9567161, 9567162; Mobile : 88-01711-435638-9 FAX : 88-02-9564532, 9568634; SWIFT : IBBLBDDH, E-mail : [email protected]; Web-site : www.islamibankbd.com 2 Annual Report 2012 The Messages from The Holy Qur’an $QGVD\ 20XKDPPDG 'RGHHGV$OODKZLOOVHH\RXU GHHGV DQG VR ZLOO +LV 0HVVHQJHU DQG WKH EHOLHYHUV $QG \RX ZLOO EH EURXJKW EDFN WR WKH$OO.QRZHU RI WKH ,QYLVLEOHDQGWKH9LVLEOH7KHQ+HZLOOLQIRUP\RXRIZKDW \RXXVHGWRGR 6XUDK$W7DREDK $OODK ZLOO DQQLKLODWH 5LED XVXU\ DQG ZLOO JLYH LQFUHDVH IRU6DGDTDW GHHGVRIFKDULW\DOPVHWF $QG$OODKOLNHV QRWWKHGLVEHOLHYHUVVLQQHUV 6XUDK$O%DTDUDK 2\RXZKREHOLHYH%HDIUDLGRI$OODKDQGJLYHXSZKDW UHPDLQV GXHWR \RX IURP 5LED XVXU\ IURP QRZ RQZDUG LI\RXDUH UHDOO\ EHOLHYHUV 6XUDK$O%DTDUDK Annual Report 2012 3 Guidance from The Holy Hadith &ƌŽŵ:Ăďŝƌ;ZͿ͗dŚĞWƌŽƉŚĞƚ͕ŵĂLJƉĞĂĐĞďĞŽŶŚŝŵ͕ ĐƵƌƐĞĚ ƚŚĞ ƌĞĐĞŝǀĞƌ ĂŶĚ ƉĂLJĞƌ ŽĨ ŝŶƚĞƌĞƐƚ͕ ƚŚĞ ŽŶĞ ǁŚŽƌĞĐŽƌĚƐƚŚĞƚƌĂŶƐĂĐƟŽŶĂŶĚƚŚĞƚǁŽǁŝƚŶĞƐƐĞƐ ƚŽ ƚŚĞ ƚƌĂŶƐĂĐƟŽŶ ĂŶĚ ƐĂŝĚ͗ ΗdŚĞLJ ĂƌĞ Ăůů ĂůŝŬĞ ΀ŝŶ ŐƵŝůƚ΁Η͘ ;^ĂŚŝŚůƵŬŚĂƌŝͿ &ƌŽŵďƵ,ƵƌĂŝƌĂ;ZͿ͗dŚĞDĞƐƐĞŶŐĞƌŽĨůůĂŚ;^tͿ ƐĂŝĚ͗ ǀŽŝĚ ƚŚĞ ƐĞǀĞŶ ŶŽdžŝŽƵƐ ƚŚŝŶŐƐ͘ /ƚ ǁĂƐ ƐĂŝĚ ;ďLJ ƚŚĞŚĞĂƌĞƌƐͿ͗tŚĂƚĂƌĞƚŚĞLJ͕DĞƐƐĞŶŐĞƌŽĨůůĂŚ͍,Ğ ;ƚŚĞ,ŽůLJWƌŽƉŚĞƚͿƌĞƉůŝĞĚ͗ƐƐŽĐŝĂƟŶŐĂŶLJƚŚŝŶŐǁŝƚŚ ůůĂŚ͕ ŵĂŐŝĐ͕ ŬŝůůŝŶŐ ŽĨ ŽŶĞ ǁŚŽŵ ůůĂŚ ŚĂƐ ĚĞĐůĂƌĞĚ ŝŶǀŝŽůĂƚĞ ǁŝƚŚŽƵƚ Ă ũƵƐƚ ĐĂƵƐĞ͕ ƚĂŬŝŶŐ ƚŚĞ ƉƌŽƉĞƌƚLJ ŽĨ ĂŶŽƌƉŚĂŶ͕ĂŶĚĞĂƟŶŐƵƉŽĨƵƐƵƌLJ͕ƚƵƌŶŝŶŐďĂĐŬǁŚĞŶ ƚŚĞĂƌŵLJĂĚǀĂŶĐĞƐ͕ĂŶĚƐůĂŶĚĞƌŝŶŐĐŚĂƐƚĞǁŽŵĞŶǁŚŽ ĂƌĞďĞůŝĞǀĞƌƐ͕ďƵƚƵŶǁĂƌLJ͘ ;^ĂŚŝŚůƵŬŚĂƌŝͿ &ƌŽŵďƵ^ĂLJĞĚ<ŚƵĚƌŝ;ZͿ͗dŚĞDĞƐƐĞŶŐĞƌŽĨůůĂŚ ;^tͿ ƐĂŝĚ͗ dŚĞ ƚƌƵƚŚĨƵů ŵĞƌĐŚĂŶƚ ǁŝůůďĞ ĂƐƐĞŵďůĞĚŽŶ ƚŚĞĂLJŽĨ :ƵĚŐŵĞŶƚ ǁŝƚŚ ƚŚĞ ƉƌŽƉŚĞƚƐ͕ŚŝŐŚůLJƚƌƵƚŚĨƵůĂŶĚŵĂƌƚLJƌƐ͘ ;:ĂŵĞƚdŝƌŵŝĚŚŝͿ 4 Annual Report 2012 Contents Standard Disclosure Index 6 Directors Report Recognition par Excellence 10 Report of the Board of Directors 72 Looking Forward 12 Corporate Governance 79 CEO and CFO’s Declaration to the Board 98 Corporate Objectives Values Structure Certificate Regarding Compliance of BSEC 106 Vision 13 Notification Mission 14 Green Banking 107 Strategic Objectives 15 Performance Review 112 Core Values & Commitments 16 Case Study 134 Code of Conduct and Ethical Principles 17 Market Disclosure under Pillar III of Basel II 141 Risk Management 152 Corporate Profile 18 ICT and Automation 161 Milestones 20 Corporate Communication and Business 167 Sponsors 21 Promotion Board of Directors and its Committees 22 Financial Review 174 Short Profile of Directors 23 CSR: Sustainability Report 177 Shari‘ah Supervisory Committee 31 Islami Bank Foundation 187 Management Committee 32 Audit Committee Report 193 Executives 33 Report of the Shari‘ah Supervisory 195 Corporate Structure 36 Committee Products and Services 37 Financial Statements Media Highlights 39 Auditors’ Report 197 Stakeholders’ Information 41 Consolidated Financial Statements Consolidated Balance Sheet 199 Consolidated Profit and Loss Account 201 Performance Analysis Consolidated Cash Flow Statement 202 Graphical Representation 46 Consolidated Statement of Changes in Equity 203 Segment Information 48 Financial Statements of IBBL Horizontal & Vertical Analysis 49 Balance Sheet 205 Profitability, Dividends, Performance & 50 Profit and Loss Account 207 Liquidity Ratios Cash Flow Statement 208 Statement of Value Added and its 51 Statement of Changes in Equity 209 Distribution Liquidity Statement 210 Financial Highlights 53 Notes to the Financial Statements 212 Five Years Performance at a Glance 54 Financial Statements of Offshore Banking Unit 272 Financial Statements of IBSL 279 Financial Calendar 56 Financial Statements of IBCML 297 Management Report and Commentary Chairman’s Message 57 Branch Network 305 Notice of 30th Annual General Meeting 313 Managing Director’s Round up 63 Proxy Form & Attendance Slip 315 Management Report and Analysis 67 Annual Report 2012 5 Standard Disclosure Index Disclosure Checklist to the Key Sections of the Annual Report 2012 Items Ref. Page No. Corporate Objectives, Values & Structure Clarity and Presentation: • Vision and Mission 13-14 • Overall strategic objectives 15 • Core values and code of conduct/ethical principles 16-17, 85 • Profile of the company 18-19, 75-78 • Director’s profiles and their representation on Board of other companies & organization chart 22-30, 231-232, 36 Management Report / Commentary and Analysis including Director’s Report / Chairman’s Review/CEO’s Review etc. • A general review of the performance of the company 112-133, 57-70, 161-166 • Description of the performance of the various activities/products/segments of the company 112-133, 161-166, 48 and its group companies during the period under review. • A brief summary of the Business and other risks facing the organization and steps taken to 83-85, 152-160, effectively manage such risks 225-228 • A general review of the future prospects/outlook 12, 70, 165-166 • Social responsibility initiatives (CSR) 60, 66, 70, 177-191 • Environment related initiatives 59, 66, 91, 107-111, 181-186 • Information on how the company contributed to its responsibilities towards the staff (including 86-90, 178, 222-223 health & safety) • Information on company’s contribution to the national exchequer & to the economy 58-61, 176, 177-191 Appropriateness of Disclosure of Accounting Policies and General Disclosure • Disclosure of adequate and properly worded accounting policies relevant to assets, liabilities, 212-232 income and expenditure in line with best reporting standards • Any specific accounting policies 213-217 • Impairment of Assets 220 • Changes in accounting policies/changes in accounting estimates 215 Segment Information • Comprehensive segment related information bifurcating segment revenue, segment results 48, 68-69, and segment capital employed 235-239, 271 • Availability of information regarding different segments and units of the entity as well as non- 48, 145-146, 271 segmental entities/units 6 Annual Report 2012 Items Ref. Page No. Segment analysis of • Segment revenue 48, 271 • Segment results 48, 271 • Turnover 271 • Operating profit 271 • Carrying amount of net segment assets 271 Financial Statements • Disclosures of all contingencies and commitments 200, 206, 224 • Comprehensive related party disclosures 231-232 • Disclosures of remuneration & facilities provided to Directors & CEO 86, 201, 207, 264 • Statement of Financial Position/Balance Sheet and relevant schedules 199-200, 205-206 • Income Statement/Profit and Loss Account and relevant schedules 201, 207 • Statement of Changes in Equity/Reserves & Surplus Schedule 203-204, 209-210 • Disclosure of Types of Share Capital 42-43, 249-252 • Statement of Cash Flow 202, 208 • Consolidated Financial Statement (CFS) 199-204 • Extent of compliance with the core IAS/IFRS or equivalent National standards 228-230 • Disclosures/Contents of Notes to Accounts 212-277 Information about Corporate Governance • Board of Directors, Chairman and CEO 18, 22, 79-80 • Audit Committee (composition, role, meetings, attendance, etc.) Internal Control & Risk 22, 81-85, 95, Management. 193-194, 230 • Ethics and Compliance. 17, 85 • Remuneration and other Committees of Board 22, 79-80,86 • Human Capital 86-90 • Communication to Shareholders & Stakeholders 90-91 - Information available on website 44 - Other information • Environmental and Social Obligations 91, 107-111, 177-191 • Management Review and Responsibility 93 • Disclosure by Board of Directors or Audit Committee on evaluation of quarterly reports 82 • Any other investor friendly information 41-44, 91 Stakeholders Information • Distribution of shareholding (Number of shares as well as category wise, e.g. Promoter group, 42, 96, 250 FII etc.) • Shares held by Directors/Executives and relatives of Directors/Executives 96-97 • Redressal of investors complaints 44-45 Graphical/Pictorial Data • Earnings per Share 46 • Net Assets 46 Annual Report 2012 7 Items Ref. Page No. • Stock Performance 52 • Shareholders’ Funds 46 • Return on Shareholders Fund 50 Horizontal/Vertical Analysis including following Operating Performance (Income Statement) • Total Revenue • Operating profit • Profit before Tax • Profit after Tax • EPS 49 Statement of Financial Position (Balance Sheet) • Shareholders Fund • Property, Plant & Equipment • Net Current Assets • Long Term Liabilities/Current liabilities Profitability/Dividends/Performance and Liquidity Ratios • Gross Profit Ratio • Earning before Profit, Depreciation and Tax • Price earning ratio 46, 50 • Current Ratios • Return of Capital Employed • Debt Equity Ratio Statement of Value Added and Its Distribution • Government as Taxes • Shareholders as