FOR GROWTH OPTIMIZING ANNUAL REPORT 2018 OPTIMIZING FOR GROWTH Amãna Bank Annual Report 2018 Amãna Bank PLC Amãna 3, Sri486, Galle Colombo Lanka Road, www.amanabank.lk CONTENTS CORPORATE INFORMATION 2 Financial Highlights FINANCIAL INFORMATION Name of the Institution 3. Mr. Mohamed Jazri Magdon Ismail (Non- 4. Mr. Mohamed Azmeer (CEO ) - Member 4 Other Highlights 144 Independent Auditors’ Report Amãna Bank PLC Executive, Independent Senior Director) 5. Mr. Ajmal Naleer (CRO) - Member 6 Chairman’s Message 148 Statement of Profit or Loss 4. Mr. Harsha Amarasekera, PC (Non-Executive, Legal Form Non-Independent Director) Ì Board Nomination Committee 10 iNdm;sjrhdf.a mKsjqvh 149 Statement of Comprehensive Income A Public Limited Liability Company incorporated 5. Mr. Rajiv Nandlal Dvivedi (Non-Executive, 1. Mr. Dilshan Hettiaratchi - Chairman (appointed 12 jiytupd; nra;jp 150 Statement of Financial Position in Sri Lanka on 5 February 2009 under the Independent Director) as Chairman w.e.f. 17 February 2018) 14 Chief Executive Officer’s Review 151 Statement of Changes in Equity Companies Act No. 07 of 2007 and listed on the 6. Mr. Pradeep Dilshan Rajeeva Hettiaratchi (Non- 2. Mr. Mohamed Jazri Magdon Ismail - Member 20 Board of Directors 152 Statement of Cash Flows Diri Savi Board of the Colombo Stock Exchange Executive, Independent Director) 3. Mr. Tyeab Akbarally - Member 25 Independent Sharia Supervisory Council 153 Notes to the Financial Statements on 29 January 2014 and re-registered under the 7. Mr. Aaron Russell-Davison (Non-Executive, 4. Mr. Rajiv Nandlal Dvivedi - Member 27 Profiles of Strategic Shareholders 215 Financial Summary Companies Act No. 07 of 2007 on 28 August Independent Director) - appointed w.e.f. 4 January 5. Mr. Adeeb Ahmad - Member (appointed w.e.f. 17 28 Management Committee 217 Compliance with Disclosure Requirements of Central 2014. Amãna Bank PLC is a Licensed Commercial 2018 February 2018) Bank under the Banking Act No. 30 of 1988 and 8. Mr. Mohammed Ataur Rahman Chowdhury 30 Assistant Vice Presidents and Heads of Departments Bank of Sri Lanka amendments thereto (Non-Executive, Non-Independent Director) Ì Board Human Resources and Remuneration 31 Senior Managers 226 Pillar III Market Disclosures - appointed w.e.f. 16 January 2018 Committee 34 Business and Operations Review 236 Investor Relations Company Registration Number 9. Mr. Adeeb Ahmad (Non-Executive, Non- 1. Mr. Tyeab Akbarally - Chairman 48 Human Resources Management Review 240 Correspondent Banks PB 3618 PQ Independent Director) - appointed w.e.f. 16 2. Mr. Mohamed Jazri Magdon Ismail - Member 53 Report on Sharia Supervision 242 Glossary of Banking and Financial Terms January 2018 3. Mr. Dilshan Hettiaratchi - Member 57 Corporate Social Responsibility 246 Branch Network Information Accounting Year End 10. Mr. Syed Muhammed Asim Raza (Non-Executive, 4. Mr. Aaron Russell-Davison - Member (appointed 59 Risk Management 248 Notes 31 December Non-Independent Director) - appointed w.e.f. 20 w.e.f. 17 February 2018) October 2018 5. Mr. Mohammed Ataur Rahman Chowdhury 84 Corporate Governance 250 Notice of Annual General Meeting Business 11. Mr. Khairul Muzamel Perera Bin Abdullah (Non- - Member (appointed w.e.f. 17 February 2018) 112 Bank’s Compliance with Prudential Requirements 251 Form of Proxy Commercial banking and related services Executive, Non-Independent Director) - appointed 114 Directors Statement on Internal Control over Financial Inner Back Cover Corporate Information w.e.f. 17 November 2018 Ì Related Party Transactions Review Reporting External Credit Rating Committee 116 Independent Assurance Report on Directors’ The Bank is rated by Fitch Ratings Lanka Limited as Alternate Directors (As at 31 December 2018) 1. Mr. Mohamed Jazri Magdon Ismail - Chairman Statement on Internal Control Over Financial BB(lka) Positive Outlook 1. Mr. Huzefa Inayetally Akbarally - Alternate 2. Mr. Rajiv Nandlal Dvivedi - Member Reporting Director to Mr. Tyeab Akbarally 3. Mr. Dilshan Hettiaratchi - Member Industry Memberships 2. Mr. Mohamed Faizel Mohamed Haddad 4. Mr. Aaron Russell-Davison - Member (appointed 118 Annual Report of the Board of Directors on the Affairs Ì The Accounting and Auditing Organization - Alternate Director to Mr. Osman Kassim w.e.f. 15 September 2018) of the Bank for Islamic Financial Institutions(AAOIFI) 122 Directors’ Interest in Contracts Ì The Islamic Financial Services Board (IFSB) Sharia Supervisory Council Company Secretary 124 Board Audit Committee Report Ì The Association of Alternate Financial a) Ash-Sheikh Dr. Mufti Muhammad Imran Ashraf Mrs. Samitha Dayani de Silva, FCIS, FCCS 126 Board Integrated Risk Management Committee Report Institutions (AAFI) Usmani 128 Board Human Resources and Remuneration b) Ash-Sheikh Nazri Bin Chik Auditors Committee Report Registered Office c) Ash-Sheikh M. M. A. Mubarak Messrs Ernst & Young 486, Galle Road, Colombo 3, Sri Lanka d) Ash-Sheikh Mufti M. I. M. Rizwe Chartered Accountants 129 Board Nomination Committee Report Tel : (94) - (11) - 7756000 e) Ash-Sheikh Mufti Muhammad Hassaan Kaleem No. 201, De Saram Place, 131 Related Party Transactions Review Committee Report Fax : (94) - (11) – 2574419 Colombo 10, Sri Lanka 132 Statement of Directors’ Responsibility Board Committees (As at 31 December 2018) 134 Independent Sharia Supervisory Council Report SWIFT Ì Board Audit Committee Lawyers 135 iajdëk YÍhd wëlaIK iNd jd¾;dj AMNALKLX 1. Mr. Mohamed Jazri Magdon Ismail - Chairman Messrs F J & G de Saram 136 RahjPd ~hpM Nkw;ghh;itr; rigapd; mwpf;if 2. Mr. Rajiv Nandlal Dvivedi - Member Attorneys-at-Law & Notaries Public 137 Sharia Governance Web 3. Mr. Aaron Russell-Davison - Member (appointed No. 216, De Saram Place, www.amanabank.lk w.e.f. 17 February 2018) Colombo 10, Sri Lanka 4. Mr. Mohammed Ataur Rahman Chowdhury Tax Payer Identification Number (TIN) - Member (appointed w.e.f. 17 February 2018) For investor relations and clarifications on 134036184 the report, please contact: Ì Board Integrated Risk Management Company Secretarial Division VAT Registration Number Committee Amãna Bank PLC 134036184-7000 1. Mr. Rajiv Nandlal Dvivedi - Chairman 486, Galle Road, Colombo 3, Sri Lanka 2. Mr. Mohamed Jazri Magdon Ismail - Member Tel : +94 11 7757511 Board of Directors (As at 31 December 2018) 3. Mr. Adeeb Ahmad - Member (appointed w.e.f. 17 1. Mr. Osman Kassim (Chairman, Non-Executive, February 2018) Non-Independent Director) 2. Mr. Tyeab Akbarally (Deputy Chairman, Non- Executive, Non-Independent Director) OPTIMIZING FOR GROWTH With our mission of enabling growth and enriching lives, we continue to strive in our cause of promoting non-interest based participatory financial solutions, centered on Islamic banking principles, which derives its values from Sharia. As a result of our pioneering initiative, we are happy to witness Sri Lanka being endowed with global recognition and honour for the growth and the industry status it has attained. The Bank has evolved in stature through its unrelenting passion and hard work by investing on reach, model awareness, product solutions, services, digital outlook and resources. This in turn resulted in the Bank being able to reciprocate its shareholders for their long standing confidence and trust. Going forward, we will focus on optimizing on opportunities, ensuring that our growth will be rewarding to all stakeholders. VISION To be an admired leader in providing equitable financial solutions, not limited to numerics, but also in earning the trust of our customers, employees, shareholders and country. MISSION To adopt a unique and people friendly approach with a passion for continuous improvement, enabling growth and enriching lives of our customers. 2 | AMÃNA BANK PLC | ANNUAL REPORT 2018 FINANCIAL HIGHLIGHTS 2018 2017 Change Change % Operating Results for the Year - LKR '000 Financing Income 6,883,222 5,544,237 1,338,985 24 Net Financing Income 3,360,333 2,753,619 606,713 22 Total Operating Expenses 2,305,652 2,039,573 266,079 13 Operating Profit Before VAT on Financial Services, NBT and DRL 1,322,237 1,058,565 263,673 25 Profit Before Tax 902,199 739,319 162,880 22 Tax Expenses 345,753 236,491 109,262 46 Profit for the Year 556,446 502,828 53,618 11 Assets and Liabilities - LKR '000 Financing and Receivables to Other Customers (Advances) 52,853,663 42,914,144 9,939,520 23 Total Assets 77,269,767 63,540,083 13,729,685 22 Due to Depositors 61,722,683 50,922,561 10,800,122 21 Total Liabilities 65,635,667 52,226,280 13,409,387 26 Shareholders' Funds 11,634,100 11,313,802 320,298 3 Key Ratios - % Net Financing Margin 4.4 4.2 Return on Assets (after Tax) 0.7 0.8 Return on Equity 4.6 5.8 Dividend Yield 2.3 - Cost to Income Ratio 56.2 60.2 Gross Non Performing Advances Ratio 2.8 1.9 Net Non Performing Advances Ratio 0.9 0.7 Investor Information - LKR Net Asset Value Per Share 4.65 4.52 Market Value Per Share - as at 31 December 3.10 3.70 Earnings Per Share - Basic/Diluted 0.22 0.29 Dividend Per Share 0.07 - Regulatory Ratios - % Capital Adequacy Ratios Common Equity Tier 1 Capital Ratio (Minimum Requirement - 6.375%) 17.6 20.0 Tier I Capital Ratio (Minimum Requirement - 7.875%) 17.6 20.0 Total Capital Ratio (Minimum Requirement - 11.875%) 19.0 21.5 Statutory Liquid Assets Ratio DBU (Minimum Requirement - 20%). 23.0 22.2 OBU (Minimum Requirement - 20%) 35.1 41.5 Liquidity Coverage Ratio Rupee (Minimum Requirement - 90%) 141.8 200.7 All Currency (Minimum Requirement - 90%) 117.5 174.7 AMÃNA BANK PLC | ANNUAL REPORT 2018 | 3 Total Assets Advances Deposits LKR Bn LKR