Standard Chartered Bank Bangladesh Branches Financial Statements 2017 Independent Auditor's Report Profit and Loss Account Notes to the Financial Statements Independent Auditor's Report to the Management of Standard Chartered Bank Standard Chartered Bank Standard Chartered Bank Bangladesh Branches Bangladesh Branches Bangladesh Branches Notes to the Financial Statements Report on the Financial Statements Profit and Loss Account as at and for the year ended 31 December 2017 We have audited the accompanying financial statements of Standard Chartered Bank, Bangladesh Branches (“the Bank") which comprise the balance sheet as at 31 December 2017, the profit and loss account, cash flow statement and for the year ended 31 December 2017 1 The Bank and its activities statement of changes in equity for the year then ended and a summary of significant accounting policies and other 1.1 Name of the bank explanatory information. 2017 2016 Standard Chartered Bank (SCB), Bangladesh Branches (‘the bank’) commenced its banking operations Management’s Responsibility for the Financial Statements and Internal Controls Taka Taka Notes in Bangladesh in 1948 after obtaining licence from the Central Bank of Bangladesh. SCB is incorporated Management is responsible for the preparation of financial statements that give a true and fair view in accordance with in England with limited liability by Royal Charter 1853. The head office of the bank is situated in England Bangladesh Financial Reporting Standards as explained in note 3.2 and for such internal control as management Interest income 19 13,214,502,602 12,149,179,980 at 1 Basinghall Avenue, London EC2V5DD and Bangladesh country head office is situated at 67 Gulshan determines is necessary to enable the preparation of financial statements that are free from material misstatement, Interest expense on deposits and borrowings 20 2,797,336,420 2,646,696,776 Avenue, Dhaka. whether due to fraud or error. The Bank Companies Act, 1991 and Bangladesh Bank regulations require the Net interest income 10,417,166,182 9,502,483,204 management to ensure effective internal audit, internal control and risk management functions of the Bank. The 1.2 Offshore Banking Unit (OBU) management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report Income from investments 21 2,704,672,215 4,750,605,762 Offshore Banking Unit (OBU) of the Bank commenced its banking operations in Bangladesh on 16 August to Bangladesh Bank on instances of fraud and forgeries. Commission, exchange and brokerage income 22 6,724,778,749 5,815,877,464 1994 after obtaining banking licence from Bangladesh Bank on 20 December 1993. 23 Auditor's Responsibility Other operating income 3,282,946 5,817,528 1.3 Islamic Banking Window Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in 9,432,733,910 10,572,300,754 On 18 November 2003, the Bank received permission from Bangladesh Bank to provide Islamic banking accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements Total operating income 19,849,900,092 20,074,783,958 services. The Bank commenced providing such services from 26 February 2004 on Islamic Shariah and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from principles based banking which is governed by the SCB Shariah Supervisory Committee based in Dubai. material misstatement. Salaries and allowances 3,980,508,399 3,453,709,734 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial Rent, taxes, insurance, lighting, etc. 649,041,080 627,721,104 2.0 Principal activities of the Bank statements. The procedures selected depend on the auditor’s judgement including the assessment of the risks of Legal expenses 133,084,780 83,937,261 SCB offers a comprehensive range of financial services in Bangladesh including retail banking and wealth material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we Postage, stamps, telephone, telex, etc. 210,034,361 208,726,889 management, commercial banking, corporate and institutional banking, financial markets, global trade consider internal controls relevant to the entity’s preparation of financial statements that give a true and fair view in order Auditors' fee 1,150,000 1,150,000 and trade services, cash management, securities custodial services, etc. There have been no significant to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion Printing, stationery and advertisement 295,332,273 305,186,020 changes in the nature of the principal activities of the Bank during the financial year under review. on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting Chief executive officer's salary 43,820,049 39,598,962 3.0 Basis of preparation of Financial Statements policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall 24 presentation of the financial statements of the Bank. Repair, maintenance and depreciation 487,067,266 525,868,612 25 3.1 Reporting period & Approval of financial statements We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Other expenses 1,183,104,424 1,169,770,559 The financial statements cover a calendar year from 1 January 2017 to 31 December 2017. The financial Opinion Total operating expenses 6,983,142,631 6,415,669,141 statements are authorized for issue by management of the Bank on 28 February 2018. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bank as at 31 Profit before provision 12,866,757,461 13,659,114,817 3.2 Statement of compliance and basis of preparation December 2017, and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in note 3.2. Provision for loans and advances and off-balance sheet exposures 16.1 1,774,825,226 1,294,797,704 The Financial Reporting Act 2015 (FRA) was enacted in 2015 and the Financial Reporting Council (FRC) Report on Other Legal and Regulatory Requirements under the FRA is formed in 2017 which, among other things, will issue financial reporting standards for Total profit before income tax 11,091,932,235 12,364,317,113 In accordance with the Companies Act, 1994, the Bank Companies Act, 1991 and the rules and regulations issued by public interest entities such as banks. The Bank Companies Act 1991 has been amended to require Bangladesh Bank, we also report the following: Provision for income tax banks to prepare their financial statements under such financial reporting standards. (a) we have obtained all the information and explanation which to the best of our knowledge and belief were Current tax 16.4 3,566,199,182 4,817,978,620 The FRC is formed but as such no financial reporting standards have been issued as per the provisions necessary for the purpose of our audit and made due verification thereof; Deferred tax 13.3 51,514,402 (461,985,313) of the FRA. Hence, the financial statements of the Bank as at and for the year ended 31 December 2017 have been prepared in accordance with Bangladesh Financial Reporting Standards (BFRSs) as adopted (b) to the extent noted during the course of our audit work performed on the basis stated under the Auditor’s 3,617,713,584 4,355,993,307 by The Institute of Chartered Accountants of Bangladesh (ICAB) and the requirements of The Bank Responsibility section in forming the above opinion on the financial statements of the Bank and considering Net profit after tax 7,474,218,651 8,008,323,806 the reports of the management to Bangladesh Bank on anti-fraud internal controls and instances of fraud and Companies Act 1991, the rules and regulations issued by Bangladesh Bank (BB) and the Companies Act forgeries as stated under the Management’s Responsibility for the Financial Statements and Internal Controls The accompanying notes 1 to 30 form an integral part of these financial statements. 1994. The Securities and Exchange Rules 1987 is not mandatorily applicable for non-listed foreign banks section: in Bangladesh. In case any requirement of the Bank Company Act 1991 and provisions and circulars issued by the central bank (herein after called Bangladesh Bank (BB)) differ with those of BFRS, the i) internal audit, internal control and risk management arrangements of the Bank as disclosed in note 30.2 requirements of the Bank Company Act 1991 and provisions and circulars issued by BB shall prevail. to the financial statements appeared to be materially adequate; and The financial statements of the Bank have been prepared in accordance with the “First Schedule ii) nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Bank. (sec-38)” of The Bank Companies Act 1991 as amended therein 2007 and 2013, BRPD Circular no. 14 Naser Ezaz Bijoy Mohammod Masud Rana FCA dated 25 June, 2003, other Bangladesh Bank Circulars, International Accounting Standards (IAS) and (c) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appeared Chief Executive Officer, Bangladesh Chief Financial Officer, Bangladesh International Financial Reporting Standards (IFRS) as adopted by the Institute of Chartered Accountants from our examination of those books; of Bangladesh (ICAB) as Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting (d) the balance sheet and the profit and loss account dealt with by the report are in agreement with the books of As per our report of same date.