Annual Report 2013 speedy journey to definite roadmap with green and crystal clear mission 9/D Dilkusha Commercial Area, Dhaka-1000 www.agranibank.org Table of Contents Contents Page No. Glossary of Acronyms 9 District-wise Number of Branches in Map 12 Corporate Profile 13 Vision, Mission, Motto, Values 14 Strategic Objectives, Ethical Standards 18 Letter of Transmittal 19 Notice of the Seventh Annual General Meeting 20 Origin and Growth of Agrani : Key Indicators from 1972 to 2013 21 Origin and Growth of Agrani : Chairmans of the Board from 1972 to 2013 22 Origin and Growth of Agrani : Managing Directors from 1972 to 2013 23 Board of Directors 24 Executive Committee, Audit Committee, Risk Management Committee of the Board 26 Board of Trustees of ABL Employees’ Provident Fund 27 Auditors, Credit Rating Company, Income Tax Advisor, Legal Consultant, Chief Medical Officer 27 Management Team 28 Five Years’ Performance at a Glance 32 Spotlight of 2013 34 ABL’s Participation and Contribution to the Nation : A Count of the Year 2013 35 Graphical Presentation of Performance 36 Chairman’s Message 39 Managing Director & CEO’s Overview 43 Shareholders' Information 46 Picture of Annual General Meetings 47 Picture of Signing of Accounts 49 Financial Highlights of 2013 and 2012 50 Key Ratios 51 Graphical Presentation of Key Financial Information 52 Capital Adequacy 55 Value Added Statement 56 Economic Impact Report 57 Products and Services 58 Risk Management 61 Disclosure Under BASEL II 69 Annual Report 2013 t 3 Contents Page No. Corporate Social Responsibility 81 Green Banking 87 Directors’ Report to the Shareholders 91 World Economic Scenario 92 Impressive Track Record of Bangladesh Economy 93 Macro Economic Scenario of Bangladesh 94 Economic Growth 94 Savings and Investment 94 Inflation 94 Balance Budget and Financing 95 Financial Sector 95 Monetary and Credit Scenario 95 Interest Rate 96 Export 96 Import 96 Overseas Employment and Remittance 97 Balance of Trade 97 Money, Banking and Financial Sector 97 Medium Term Prospect of Bangladesh Economy 98 Digital Bangladesh 100 Perspective Plan 2010 - 2021 101 Emergence of Agrani Bank Limited 102 Shareholder’s Equity 103 Funding Structure 103 Asset Portfolio 103 Business Performance 103 Deposits 103 Import-Export Business 104 Foreign Remittance Business 104 Guarantee Business 107 Fund Management and Treasury Operation 107 Investment 109 Loans and Advances 110 Industrial Credit 111 Credit Lines 112 4 Contents Page No. Loan to Power and Health Sector 113 Syndication Financing 114 SME Financing 114 NGO Linkage Program of ABL 116 Foreign Aided Credit Programs of ABL 116 Agriculture and Rural Credit 117 Loan Classification 118 Loan Recovery Activities 118 Financial Performance 120 Total Operating Income and Operating Expenditure 120 Net Interest Income, Operating Profit 120 Capital Adequacy Ratio 121 Automation and Modernization 121 Overall Automation 121 Online Banking 122 BACH, BEFTN 124 SWIFT, e-GP 124 ATM, Mobile Banking, Agent Banking 125 Distribution of SEQAEP Stipend 126 Online CIB Reporting 127 Newsletter 127 Internal Control & Compliance 128 Credit Rating 129 HR Management and Development 129 Existing Manpower Strength 130 Action Plan for 2014 131 Training and Development 131 Subsidiary Companies of ABL 134 Agrani Equity & Investment Limited 134 Agrani SME Financing Company Limited 135 Agrani Exchange House Private Limited, Singapore 137 Agrani Remittance House Sdn. Bhd., Malaysia 138 Contribution to National Exchequer 140 Preparation of Financial Statements 142 Dividend Declaration 142 Appointment of Auditors 142 Annual Report 2013 t 5 Contents Page No. Acknowledgements 142 Corporate Governance 145 Board Structure 146 Meetings of the Board 146 Independent Directors 146 Committees of the Board 147 Bangladesh Bank’s Guideline for Corporate Governance 149 Directors’ Statement of Responsibilities 152 Report of the Board Audit Committee 153 Auditors’ Report & Audited Financial Statements 155 Auditors’ Report 156 Consolidated Balance Sheet 158 Consolidated Off Balance Sheet Items 159 Consolidated Profit and Loss Account 160 Consolidated Cash Flow Statement 161 Consolidated Statement of Changes in Equity 162 Consolidated Liquidity Statement 163 Notes to the Financial Statements 170 Highlights on the Overall Activities of the Bank 230 Nostro Accounts outside Bangladesh 237 Details of Advance Tax and Provision of Taxation 238 Fixed Assets Including Land, Buildings, Furniture and Fixtures 239 Islamic Banking Unit of ABL 246 Intra-Company Transaction 249 Auditors’ Report & Financial Statements of Subsidiary Companies of ABL Agrani Equity & Investment Limited 251 Agrani SME Financing Company Limited 271 Agrani Exchange House Private Limited, Singapore 303 Agrani Remittance House Sdn. Bhd., Malaysia 327 Head Office Divisions 348 Corporate Organogram of ABL 349 Circles 350 Zones 351 Corporate Branch Offices 352 AD Branch Offices 353 Zone-wise List of Branches 356 6 List of Graphs Name of Graphs Page No. District-wise Number of Branches in Map 12 Spotlight 2013 34 Graphical Presentation of Performance 36 Operating Profit 36 Deposits 36 Net Loans and Advances 36 Net Asset Value Per Share 36 Cost to Income Ratio 37 Shareholders’ Equity 37 Non Performing Assets 37 Non Interest Income 37 Key Financial Information 52 Deposit Mix 52 Advance Deposit Ratio 52 Loans & Advances Matrix 52 Total Classified Loans in Percentage 52 Net Classified Loans to Net Loans in Percentage 52 Constituent of Assets 52 Current Ratio 53 Debt Equity Ratio 53 Return on Equity 53 Total Assets 53 Fixed Assets Growth 54 Capital Growth 54 Growth of Advance 54 Growth of Deposit 54 Distribution of Value Addition 56 Asset Portfolio 103 Deposit Mix 104 Deposit Mix of 2013 & 2012 104 Country-wise Remittance 107 Investment 109 Sector-wise Position of Loans 111 Annual Report 2013 t 7 List of Tables Name of Table Page No. Origin and Growth of Agrani : Key Indicators from 1972 to 2013 23 Five Years’ Performance at a Glance 32 Distribution of Shares 46 Shares held by Directors as on 31 December 2013 46 Financial Highlights 50 Key Ratios 51 Capital Adequacy as per BASEL II 55 Value Added Statement 56 Balance Sheet Exposure : Region-wise 75 Off Balance Sheet Exposure : Region-wise 76 Credit Exposure : Sector-wise 76 Contribution to CSR Activities 86 Green Financing 89 Sources of Fund 103 Asset Portfolio 103 Types of Deposits 104 Country-wise Remittance 107 Item-wise Income of Treasury 108 Investment 2013 and 2012 109 Sector-wise Loans 2013 and 2012 110 Comparative Study of Project Loans 111 Credit Lines 113 SME Financing 115 Recovery Position of Classified and Overdue Loans and Advances 119 Appropriation of Profit 120 Audit Plan for the Year 2014 129 Credit Rating 129 Training Courses 133 Contribution to National Exchequer 141 Meetings of the Board 146 Meetings of the Board Audit Committee 147 8 Glossary of Acronyms ABL Agrani Bank Limited CAR Capital Adequacy Ratio ABS Agrani Bank Sanchaya Scheme CBS Core Banking Software AD Authorized Dealer CCR Credit Concentration Risk ADBS Agrani Double Benefit Scheme CDBL Central Depository Bangladesh Limited ADO Asian Development Outlook CDR Credit Deposit Ratio ADP Annual Development Program CFO Chief Financial Officer AEIL Agrani Equity & Investment Limited CFP Contingency Funding Plans AFSL Australian Financial Services Lisence CFT Combating Finance of Terrorism AGEX Agrani Exchange House Private Ltd., Singapore CIB Credit Information Bureau ALCOM Asset-Liability Management Committee CIE Cottage Industry/ Enterprise ALM Asset-Liability Management CMU Capital Management Unit AML Anti-Money Laundering CP Credit Policy AMLC Anti-Money Laundering Committee CP Core Principles APS Agrani Bank Pension Shanchaya Scheme CPF Contributory Provident Fund ASIC Australian Securities & Investment Commission CPI Consumer Price Index ATA Anti-Terrorism Act CPTU Central Procurement Technical Unit ATM Automated Teller Machine CRAB Credit Rating Agency of Bangladesh Limited BACH Bangladesh Automated Clearing House CRECOM Credit Committee BACPS Bangladesh Automated Cheque Processing System CRG Credit Risk Grading BAMLCO Branch Anti-Money Laundering Compliance Officer CRISL Credit Rating Information Services Limited BAS Bangladesh Accounting Standards CRM Credit Risk Management BB Bangladesh Bank CRMC Credit Risk Management Committee BBS Bangladesh Bureau of Statistics CRMD Credit Risk Management Department BCBS BASEL Committee on Banking Supervision CRMG Core Risk Management Guidelines BDT Bangladesh Taka CRMO Chief Risk Management Officer BEFTN Bangladesh Electronic Fund Transfer Network CRO Chief Risk Officer BFRS Bangladesh Financial Reporting Standards Crore 1 Crore is equivalent to 10 Million BIA Basic Indicator Approach CRR Cash Reserve Requirement BIS Bank for International Settlements CSP Customer Service Provider B/L Bad/Loss CSR Corporate Social Responsibility BMRE Balancing, Modernization, Rehabilitation & Expansion CTR Cash Transaction Report BOD Board of Directors DCFCL Departmental Control Function Check List BOEE A/C Balance of Exchange Equalization A/C DMS Debt Management Strategy BRPD Banking Regulation and Policy Department DP Depository Participants BSA Bangladesh Standards on Auditing DRS Disaster Recovery Site BSEC Bangladesh Securities & Exchange Commission DSE Dhaka Stock Exchange BSP Bangladesh Sanchaya Patra DTL Demand and Time Liabilities CAMLCO Chief Anti-Money Laundering Compliance Officer EAD Exposure at Default Annual Report 2013 t 9 ECAI External Credit Assessment Institution EAS Early Alert