2 Social Islami Bank Limited

Transcription

1 Annual Report

2 2 Social Islami Bank Limited

3 CONTENTS Standard Disclosure Checklist 5 Letter of transmittal 9 SIBL Brand Values 10 Our Vision 11 Our Mission 12 Strategic Objectives and commitments 13 Code of Conducts and ethical principles 14 Corporate profile 16 Milestones 18 Board and Committees 19 (i) Founder of the Bank 20 (ii) Sponsors of SIBL 21 (iii) Board of Directors 22 (iv) Directors Profile 23 (v) Executive Committee 26 (vi) Audit Committee 26 (vii) Shariah Supervisory Committee 26 Management & Committees 27 (i) Present Management Team 28 (ii) Core Decision Making Committee 29 (iii) Asset Liability Committee 29 (iv) Tender Evaluation Committee 29 (v) MRS (Management Reporting System) Committee 30 (vi) Investment Committee 30 (vii) MANCOM 30 Functions of Social Islami Bank Limited 31 Corporate Structure 32 Products and Services 34 Media Accolade 35 Stakeholders Information 36 (i) Capital Pattern of SIBL 37 (ii) Pattern of Shareholding 37 (iii) Distributions of Shareholder by holding in (iv) Shares held by the Directors in (v) Financial Calendar 39 Analysis & Value Added Statements 40 (i) Performance of the Bank 41 (ii) SIBL at a Glance 42 (iii) Graphical Presentation of SIBL 43 (iv) Report & Statements of Value addition and its Distributions. 46 (v) Economic Value Added (EVA) Statements 48 (vi) Market Value Added (MVA) Statements 49 Responsibility Statements 49 Chairman s Foreword 50 From the Desk of the Managing Director 54 Management report & Analysis 58 Competence Recognised 59 Report of the Board of Directors 61 Compliance Report under Condition no: 7.00 of BSEC 99 The Report of Audit Committee of the Board 106 Report on Risk Management 107 Market Disclosure under Pillar-III of BASEL-II th Annual General Meeting Highlights 121 SIBL Events 123 Corporate Finance 131 SME Finance 132 Promoting Sports 133 Report of the Shariah Supervisory Committee 135 Auditors Report and financial statements to the Shareholders for the year ended 31st December SIBL Network 220 Notice of the 18th Annual General Meeting 225 Form of Proxy 227 Annual Report

4 4 Social Islami Bank Limited

5 Standard 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 11,12 Overall Strategic Objectives 13 Core Values and Code of Conduct / Ethical Principles 10,14, Management Report / Commentary and Analysis including Director s Report/Chairman s Review/CEO s Review etc. 41, , , Social Responsibility initiatives (CSR) health and safety) Appropriateness of Discloser of Accounting policies and General Discloser , Segment Information n.a. Annual Report

6 Items Ref. Page No Turnover n.a. Financial Statements , , Disclosures of types of Share Capital Information about Corporate Governance , , , , 58, 83 49, Stakeholders Information , 85 6 Social Islami Bank Limited

7 Items Ref. Page No Graphical /Pictorial Data Earnings per Share Horizontal/Vertical Analysis including the following Total Revenue EPS Statement of Financial Position (Balance sheet) Price Earning ratio 45 Current ratios Statement of Value Added and its Distribution Shareholders as Dividend Retrained by the entity Annual Report

8 Items Ref. Page No Additional Disclosures 58 Human Resource Accounting 88 Disclosure of Ratings given by various rating agencies 42, Business Ratio / Information 70, Return on Average asset Dividend Cover Ratio , Disclosure under regulatory guidelines , n.a. n.a Social Islami Bank Limited

9 Subject: st Md. Humayun Kabir, ACS Annual Report

10 Honesty regulators, shareholders and others. Accountability-accountable to the Transparency-transparent in each and Flexibility Innovation-continuous innovative idea products and services. Reliability-developing a wide scale public Security-protecting assets and services Technology-providing upgraded technological 10 Social Islami Bank Limited

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13 Strategic Objectives & Commitments Our Strategic Objectives resources. To invest in the priority sector for the overall Ensure best CSR (Corporate Social Responsibilities) practices. Our Commitments To the Shariah To the Regulators To the Shareholders Annual Report

14 Code of Conduct & Ethical Principles Code of Conduct for the Employees Adhere to the Shariah Principles. their positions and titles, 14 Social Islami Bank Limited

15 for the trading purposes. Annual Report

16 Chartered Accountants 16 Social Islami Bank Limited

17 rd th Annual Report

18 Milestones Starting of 1 st 1 st 2 nd 3 rd Opening of 50 th a) b) Opening of 75 th Opening of 86 th 18 Social Islami Bank Limited

19 Board & Committees Founder of the Bank Board of Directors Executive Committee Audit Committee Shariah Supervisory Committee Annual Report

20 Founder of the Bank The Architect of 'Three Sector Banking Model' Prof. Dr. M.A. Mannan 20 Social Islami Bank Limited

21 Foreign Sponsors Prof. Dr. M. A. Mannan, MA (Econ) (Michigan), Ph.D Dr. Md. Jahangir Hossain Dr. Abalet Djabiev Mr. Abdul Awal Patwary Mr. Sadat Sobhan 31. Annual Report

22 Board of Directors 22 Social Islami Bank Limited

23 Chairman in the 277 th years. Mr. Ali has widely traveled in several countries in connection with business and participated in different trade fairs. Currently he is the Managing Director of Alhaj Sk. Mohammad Rabban Ali Vice Chairman and engaged in various social activities in the country. Mr. Md. Sayedur Rahman Vice Chairman Annual Report

24 engaged in various social activities as a philanthropist. Director with various religious, social and welfare activities. Currently he is the Managing Alhaj Sultan Mahmood Chowdhury Director Mr. Abdul Awal Patwary Director Alhaj Nasiruddin Director 24 Social Islami Bank Limited

25 as Director, he is associated with various social welfare activities in Chittagong as well as other parts of the country. Currently he is also the Proprietor of M/S. Mr. Mohammad Azam Director Mr. Mohammad Fazlay Morshed Director Mr. A. Jabbar Mollah Independent Director Annual Report

26 Executive Committee Audit Committee Shariah Supervisory Committee 26 Social Islami Bank Limited

27 Management & Committees Present Management Team Core Decision Making Committee (CDMC) Tender Evaluation Committee MRS (Management Reporting System) Committee Investment Committee MANCOM Annual Report

28 Managing Director Present Management Team Deputy Managing Director Principal Senior Executive Vice President Senior Vice President Mr. Mahbub Hossain Executive Vice President Mr. Ziauddin Sawlet Ghani Vice President Mr. Md. Abdul Mottaleb Mr. Md. Towhid Hossain Mr. Md. Mesbahul 28 Social Islami Bank Limited

29 Core Decision Making Committee Tender Evaluation Committee Annual Report

30 MRS (Management Reporting System) Committee Investment Committee MANCOM 30 Social Islami Bank Limited

31 Functions of Social Islami Bank Limited Deposit procurement & management under Shariah Principles Financial Services i.e. Letter of Credit, Guarantee, Money Transfer etc. Functions of Social Islami Bank Limited. Social Services (CSR) Investment using Islamic Financial Contract Annual Report

32 Board of Directors Executive Committee of the Board of Directors Managing Director Board Secretariat SEVP/EVP (Chittagong Regional Office) Board Affairs Shares Board Audit Cell Deputy Managing Director Deputy Managing Director Retail & Trade Finance Division RMG & Textile Division IT Division Investment Risk Management Division Corporate Customer Relationship Department International Division Treasury Front Office Marketing, Branding and Communication Division Card Division Support Service Approval Unit (Corporate, /Retail/RMG) Correspondent Banking Foreign & Local Currency Business Dealing Marketing Communication Security & Compliance Administration Unit SWIFT Operation Exchange Rate Fixation & Profit Rate Fixation Branding Software Development & Maintenance Monitoring Unit Central Bank & Other Regulatory Approval Foreign Remittance Cell Market Research Alternative Delivery Channel BACH Centralized Clearing Unit Remittance Products Development OBU Centralized Trade Processing Unit MIS/R&D Centralized Remittance Processing Unit Premises, Decoration & Dead Stock Printing, Stationery & Stores 32 Social Islami Bank Limited

33 Board Audit Committee Shariah Supervisory Committee Secretariat Member Secretary MD s Secretariat Muraquib Administrative Unit Vigilance & Inspection Unit Deputy Managing Director Logistic Support Division Treasury Back Office Financial Administration Division SME & Agricultural Finance Division Branches Control & General Banking Division Special Asset Management Division Human Resources Division Internal Control & Compliance Division (Treasury Mid Office) Foreign Currency Market Information Analysis & Strategy Daily Statement of Treasury Operations Vouchers & Profit/Loss Findings Budget & Financial Control FC & Taka Dealing Reconciliation Nostro A/c Management & Reconciliation Statement & Returns SME (Relationship) Reconciliation Central Accounts Agriculture (Relationship) Risk Management Unit AML Unit Recovery Cell Affairs Legal Affairs HR Personnel Management HR Policy Audit & Inspection Unit Monitoring Unit Compliance Unit MIS of Treasury Operations ALCO Desk Monitoring Unit CTR/STR HR Training Basel-II Implementation Cell Disciplinary Action Cell B. Bank Returns Security Services Transport & Maintenance Annual Report

34 Products & Services Deposit Products Mudaraba Savings Account Investment Products Mudaraba Quard Service Products ATM 24/ 7 34 Social Islami Bank Limited

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36 36 Social Islami Bank Limited

37 Year Declaration No. of Share Face Value per Share (Taka) Cumulative no. of Shares Value of issued Capital for the year (Taka) Cumulative value of Capital (Taka) 1995 Initial Capital 118,380 1, , ,380, ,380, , ,380, ,620 1, ,000 7,620, ,000, , ,000, Capital Raised 74,000 1, ,000 74,000, ,000, ,000 1, ,000 50,000, ,000,000 Initial Public Offer 10,000 1, ,000 10,000, ,000, , ,000, , ,000, , ,000, ,000 1, , ,000, ,000, , ,000, , ,000, ,345, ,195, ,555,000 1,119,555, ,903, ,098, ,324,300 1,309,879, ,309, ,408, ,987,900 1,440,867,200 12,508, ,917,259 1,250,858,700 2,691,725, ,960, ,878, ,089,850 2,987,815, ,829, ,610, ,294,200 3,406,109, ,781, ,392,570 2,987,815,750 6,393,925,700 Pattern of Shareholdings Sl No Investor Group Number of Shareholders as on Number of Shares as on Percentage as on Number of Shareholders as on Number of Shares as on Percentage as on ,65,10, % 33 11,69,06, % ,20, % 8 41,79, % ,26,70, % 5 2,63,14, % 04. General Public ,34,70, % 92,207 40,09,61, % ,18,74, % 67 3,61,98, % 06. Institutions (Others) 346 7,36,48, % 423 4,45,18, % ,83, % 83 40,23, % ,56, % 1 13,97, % ,79, % 1 44,90, % ,38, % 9 1,60, % ,40, % 14 2,40, % 78,513 63,93,92, % 92,851 63,93,92, % Annual Report

38 Distribution of Shareholders by holdings in 2012 Share holding range Number of Shareholders as on Number of Shares as on Percentage as on Number of Shareholders as on Number of Shares as on Percentage as on , % 32,742 7,229, % , % 50,838 86,927, % , % 4,837 34,598, % ,724 23,145, % 2,407 32,642, % ,988, % 1,281 38,655, % ,171, % ,339, % 78, ,392, % 92, ,392, % Shares held by the Directors in 2012 Sl no Name of the Director Position held in the Bank as on Number of Shares held on Percentage of total holding Total number of Shares as on ,27,87, % 02. 1,28,20, % 03. 1,27,88, % 04. Director 1,27,88, % 05. Director 1,27,88, % 06. Mr. Abdul Awal Patwary Director 1,27,94, % 639,392, Director 1,27,90, % 08. Director 1,27,88, % 09. Director 3,20,00, % 10. Mr. A Jabbar Mollah Independent Director 26,57, % Total 13,70,03, % 38 Social Islami Bank Limited

39 Financial Calendar Year 2012 st Quarter announced on nd Quarter announced on rd Quarter announced on st approved on Declaration of Dividend for the year Declaration of Record date for holding of 18 th Annual General Meeting th Annual General Meeting Served on th Annual General Meeting to be held on Dividend for the year 2012 to be paid on Year 2013 st Quarter to be announced on nd Quarter to be announced on rd Quarter to be announced on st approved on th Annual General Meeting th th Annual Report

40 Analysis & Value Added Statements Performance of the Bank Reports & Statements of Value Addition and its Distribution Economic Value Added (EVA) Statements Market Value Added (MVA) Statements 40 Social Islami Bank Limited

41 Performance of the Bank encouraging towards the journey for the year of Indicators Target 2012 Actual Actual-2011 Achievement percentage Growth % Deposits % 43.12% % 41.03% % 16.81% % 30.66% Annual Report

42 Sl No. Particulars Paid-up Capital Total Deposits Client Deposits Securities) Total Assets Cash Dividend 15 total deposits 16 Client deposits % - 10% - 11% - 14% % 10.00% 05.00% 89.53% 94.70% 83.23% 82.79% 84.15% 81.78% 80.63% 81.23% % 95.43% 87.89% 90.42% 96.08% 92.08% 94.65% 89.19% 6.77% 7.19% 10.71% 10.87% 14.97% 9.33% 13.17% 11.52% 7.54% 4.92% 4.93% 4.38% 3.19% 4.76% 3.93% 3.33% Correspondents Earning per Share Credit Rating by ST-3 ST-3 A- ST-2 ST-2 ST-2 ST-2 AA- 42 Social Islami Bank Limited

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44 9, Client Deposit (Taka in million) Foreign Exchange Business (Taka in Million) 44 Social Islami Bank Limited

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46 Report & Statements of Value Addition and its Distribution Value Added Report for the year ended 31 st December 2012 the operation of the business houses. values for distribution to the society year to year. Value Added Statement for the year ended 31st December 2012 Value Added Statement Particulars Year 2012 Year Value added by Banking Services Provision for other assets Total Net Total Value Addition Social Islami Bank Limited

47 Distribution of Value Addition Year 2012 Percentage Year 2011 Percentage % % % % % % To the growth of the entity (-) % % as Statutory Reserve (-) % % as Retained Earnings (-) % % % % as Depreciation (-) % % % % % % Distribution of Value added (%) 2011 Graphical presentation of Distribution of Value Added by Annual Report

48 Economic Value Added (EVA) Statements Particulars Year-2012 Year Sub Total % 11.51% Capital Charges Economic Value Added Social Islami Bank Limited

49 Market Value Added (MVA) Statements Particulars Year-2012 Year , , , ,392, D Annual Report

50 Chairman s Foreword Assalamu-Alaikum brought us together once again. 50 Social Islami Bank Limited

51 Dear Shareholders, Dear Shareholders, Dear Shareholders, Annual Report

52 country have joined with us as our business partners. Early Warning System in running a financial institution. Dear Shareholders, and by practicing high degree of planned corporate, good governance. 52 Social Islami Bank Limited

53 Annual Report

54 From the Desk of Managing Director Assalamu Alaikum Wa Rahmatullah. business success despite all odds, pitfalls and challenges. nd 54 Social Islami Bank Limited

55 st st 40.00% and 36.44% respectively over , crore in crore in 2012 with 32.86% growth over the previous year. Shariah compliance Our efforts to serve the customers better year 2012, we have enriched our card product line with Visa Electron, Hajj Card, Gift Card and Travel Card. Very soon we are Annual Report

56 through which our valued 56 Social Islami Bank Limited

57 Recognitions Managing Director Annual Report

58 Management Report & Analysis Debt Equity Ratio (Times) Outlook 2013 st st To increasing ATM facilities. Special recovery drive. 58 Social Islami Bank Limited

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60 60 Social Islami Bank Limited

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62 Honourable Shareholders, Assalamu Alaikum Wa Rahmatullah th st Global Economy levels at least until late Bangladesh Economy 62 Social Islami Bank Limited

63 Banking Sector Review Annual Report

64 sectors. Islamic Banking around the world 64 Social Islami Bank Limited

65 Islamic Banking and its Development in Bangladesh Genesis of Islamic Banking in Bangladesh Formation of IBCF Formation of CSBIBB (Central Shariah Board for Islami Banks of Bangladesh) Bangladesh Government Islamic Investment Bond Annual Report

66 Islami Bank s Fund Market Temporary arrangement of funds through MSD (Mudaraba Savings Deposit) and MND (Mudaraba Notice Deposit) Accounts. Introduction of Islamic Inter Bank Fund Market (IIFM) An Overview of the Bank 66 Social Islami Bank Limited

67 Capital Management of the Bank Year Paid up Capital Total Capital Growth (over the previous year) Source of Capital , ,168, % Internal generation , , % , , % Internal generation , , % , % Internal generation Annual Report

68 Capital Base (Tier-i & Tier-ii) st July Tier-I capital consists of (a) paid up capital (b) statutory reserves (c) position of capital base of the year 2011 and 2012 is given as under. Particulars Yr-2012 Yr-2011 Tier-I 1. Paid up Capital 2. Statutory Reserve 3. Retained Earnings Sub-total Tier-II Sub-total 6, , , , , , Total 10, , Yr-2012 Yr-2011 i. 9.86% 11.43% ii % 13.17% 68 Social Islami Bank Limited

69 st st Stress Result of the Bank as on December 2012 CAR Maintained 11.52% CAR after Minor Shock (%) CAR after Moderate Shock (%) CAR after Major Shock (%) Interest Rate Minor Moderate Major Combined Shock Changes in CAR Changes in CAR Changes in CAR Interest Rate Total Change th Annual Report

70 Placement & Funding Deposits 70 Social Islami Bank Limited

71 D Deposit mix Year-2012 Year-2011 Growth 10, , % Mudaraba Savings Deposit 4, , % 62, , % Other Mudaraba Deposit 15, , % % Total 93, , % ensured a positive growth in revenue earning. Annual Report

72 Sl. No. Mode of Deposits the Year 2012 the Year Mudaraba Savings Deposit 4.10% 3.50% 2 4%-10% 2.75%-3.50% 3 a) 1 Month 12.50% - b) 3 Months 12.50% 12.00% c) 6 Months 12.50% 12.00% d) 12 Months 12.50% 12.00% 4 a) 12.50% 12.00% b) 12.50% 10.00% c) 12.50% 10.00% d) 13.50% - e) 12.50% 11.50% f) 12.50% 10.00% g) 13.50% 10.00% h) 14.00% 12.25% I) 12.50% 11.00% j) 12.50% 12.25% 13.43% - l) 12.50% 10.00% 12.50% 10.00% n) 12.50% 10.00% o) 8.00% 5.00% p) 13.50% 12.00% p) 13.50% 12.50% r) 13.50% 12.00% s) 13.50% 12.50% t) 13.50% - u) 13.50% - v) 10.00% - 72 Social Islami Bank Limited

73 Investment Annual Report

74 Status Provision Rate Amount Composition Amount Composition % % Special Mention Account 5% % % 20% % % 50% % % 100% % % Total % % Investment Plan for Social Islami Bank Limited

75 Green Banking Strategy Framework of Green Banking Phase Compliances Phase Green strategic planning 2.3 Setting up green branches Phase - 02 Phase Designing and introducing innovative products G Annual Report

76 Achievements in Green Banking Sl No Issue Achievement 1 activities 2 3 Diligence (EDD) Rating (ERR) Instruction Circular no. 2011/23 dated May 23, no. 2011/23 dated May 23, th 6 endeavor has widely been accepted and applauded. country last year. Future plan To introduce Video Conferencing individual position we belong to. Appreciation 76 Social Islami Bank Limited

77 Special Asset Management Investment Income Mode Year 2012 Year 2011 Growth Murabaha % , % Hire Purchase , % % % Quard against MTDR % % Ijarah % % Mudaraba % Total 11, , % Annual Report

78 Non Funded Investment Income from Investment in Shares & Securities the closing date of VAT Collection at Sources Total 2, , Risk Management 78 Social Islami Bank Limited

79 Correspondent Banking Relationship on a reciprocal basis. our absence. Centralized Trade Processing Unit (CTPU) Centralized Remittance Processing Unit (CRPU) Off Shore Banking Centralized Clearing Unit (CCU) th th Annual Report

80 Corporate Governance Board of Directors by the Managing Director or CEO. Independent Director th 80 Social Islami Bank Limited

81 Appointment of Directors th th Mr. Abdul Awal Patwary; and Retirement of Directors Executive Committee Remuneration Committee Annual Report

82 Audit Committee Monitor choice of accounting policies and principles. Related Party Transaction party transactions refer to those transactions with the entity / person as stated by way of transfer of resources, services regardless Credit Rating AA- 2 Stable. Date of Declaration Valid Till Rating Action Rating Short Term Rating Outlook May 29, 2013 May 28, 2014 Initial AA- Stable 82 Social Islami Bank Limited

83 st i) a) b) ii) Annual Report

84 Board Meeting held during the year 2012 and attended by each Director Sl. No. 1. Composition of the Board No. of Board Meetings in 2012 Held Attended Mr. Abdul Awal Patwary, Director Mr. A. Jabbar Mollah, Independent Director Parent / Subsidiary /Associated Companies and other related parties Sl. No. Name of Subsidiary Companies % of holding of shares by the Bank % % 84 Social Islami Bank Limited

85 ist of Directors of the Bank with their Shareholding Position as on Sl. No. Name of Sponsor/Directors/Shareholders Designation No. of Shares % of total share 1. 1,27,87, % 2. 1,28,20, % 3. 1,27,88, % 4. Director 1,27,88, % 5. Director 1,27,88, % 6. Mr. Abdul Awal Patwary Director 1,27,94, % 7. Director 1,27,90, % 8. Director 1,27,88, % 9 Director 3,20,00, % 10. Mr. A. Jabbar Mollah Independent Director 26,57, % Internal Audit and other top Executives of the Bank and their spouse and minor children: Sl. No. Name Nos. of Share(s) held 01. Managing Director and CEO Sl. No. Name Nos. of Share(s) held Deputy Managing Director Deputy Managing Director Annual Report

86 86 Social Islami Bank Limited

87 Foreign Exchange Business Particulars Growth Rate Total % 22.12% 32.86% 16.81% International Trade Financing (Export & Import) Foreign Remittance Annual Report

88 Human Resource Development Human Resource Accounting Descriptions Yr-2012 Yr-2011 Yr-2010 Yr-2009 Yr % 32.66% 38.90% 37.39% 41.96% 88 Social Islami Bank Limited

89 Total Other Facilities General Quard facilities Safety Measures Annual Report

90 Information and Communication Technology accountability to our clients are fair enough to build a relationship of trust. Any Branch Banking Internet Banking. fund with allied accounts and also pay utility bills. SMS Banking IP Phone ATM Network 90 Social Islami Bank Limited

91 Managing Information Technology Risk Green Banking Support Non Formal Sector Micro-Finance, Micro Enterprise and SME Programs Annual Report

92 Particulars 31/12/ /12/ /12/2012 SME Outstanding The Guidelines for operation of this scheme 92 Social Islami Bank Limited

93 in this account. st crore in the previous year, registering a growth of 31% than the preceding year. Voluntary Sector: Corporate Social Responsibility (ii) Donation to the individuals, covering Annual Report

94 Sectors (January - June 12) (July - December 12) Total Contribution Health 643, , ,443, CSR activities Education 958, ,503, ,462, Rehabilitation) 2,506, ,266, ,773, Sports 10,300, ,982, ,282, , , , ,787, ,797, Total 14,418, ,366, ,784, A short list of our stakeholders Sight Savers International Mosabbir Cancer Care Centre Center for Rehabilitation of privileged children supported Modhupur, Tangail 94 Social Islami Bank Limited

95 CSR activities of the Bank during 2012 at a glance Sl. No. Event Particulars Donation to Ms. Athoi Das D/O of journalist late Dinesh Das, Senior Donation of Motor Cycle to Journalist 05. individuals 06. Coal Mining School, Dinajpur and schools created a awareness in the society Annual Report

96 On going CSR activities of the Bank 1. (School for underprivileged Pathshala (School for underprivileged children) in 04 (four) basis. 2. (School for underprivileged 3. Distribution of Scholarship distressed in different parts of the country poor and distressed people of different parts of the country This Report Also States That (a) (b) (c) (d) (e) Appropriate accounting policies have been consistently applied in preparation and presentation of the financial (f) 96 Social Islami Bank Limited

97 (g) (h) continue as a going concern. (i) Particulars Growth Rate % % % % % % % % % Particulars i. 3.99% 3.38% ii. Return on Assets (ROA) 2.75% 2.70% iii 14.15% 11.51% v. th Annual Report

98 Appointment of Auditors Gratitude 98 Social Islami Bank Limited

99 Compliance Report under Condition No: 7.00 of BSEC Condition No. Title 1.1 than 20) 1.2 (i) one) 1.2 (ii) a) holds less than one percent (1%) shares of the total 1.2 (ii) b) Compliance Status Complied Not Complied Remarks independent directors, One was appointed before and another was appointed on brother, sister, son-in-law and daughter-in-law shall 1.2 (ii) c) who does not have any other relationship, whether 1.2 (ii) d) 1.2 (ii) e) 1.2 (ii) f) 1.2 (ii) g) 1.2 (ii) h) 1.2 (ii) i) Annual Report

100 1.2 (iii) the independent director(s) shall be appointed by the board of directors and approved by the shareholders in the Annual General Meeting (AGM) 1.2 (iv) Independent Director will be approved by the shareholders in the ensuing AGM. independent directors, One was appointed before and another was appointed on (v) to be recorded 1.2 (vi) 1.3 (i) individual with integrity who is contribution to business 1.3 (ii) 1.3 (iii) (i) the industry 1.5 (ii) 1.5 (iii) 1.5 (iv) 1.5 (v) or loss 1.5 (vi) related party transactions should be disclosed in the annual report 1.5 (vii) 100 Social Islami Bank Limited

101 1.5 (viii) Repeat Public Offering (RPO), Rights Offer, Direct variance on their Annual Report directors Appropriate accounting policies have been concern, the fact along with reasons thereof should be disclosed given and attendance by each director shall be disclosed Annual Report

102 The pattern of shareholding shall be reported to wise details) of the board 2.1 of Internal Audit and the CS (i) 3(ii) 3(iii) 3.1(i) 3.1(ii) within the business shall be clearly set forth in writing and shall include at least 1 (one) independent director 102 Social Islami Bank Limited

103 3.1(iii) 3.1(iv) 3.1(v) 3.1(vi) not constitute without at least 1 (one) independent director. 3.2(i) independent director under process. 3.2(ii) in the Annual General Meeting (AGM) 3.3(i) 3.3(ii) Monitor choice of accounting policies and principles 3.3(iii) 3.3(iv) AGM 3.3(v) for approval 3.3(vi) the board for approval 3.3(vii) 3.3(viii) Annual Report

104 3.4.1(i) 3.4.1(ii)a) 3.4.1(ii)b) 3.4.1(ii)c) 3.4.1(ii)d) (IPO)/Repeat Public Offering (RPO)/Rights Issue the related laws, rules and regulations Reporting to the Authority 3.5 Reporting to the Shareholders and General Investors 4.(i) Appraisal or valuation services or fairness opinions 4.(ii) 4.(iii) 4.(iv) 4.(v) Actuarial services 4.(vi) Internal audit services 4.(vii) 4.(viii) 5.(i) 5.(ii) on Social Islami Bank Limited

105 5.(iii) 5.(iv) 5.(v) 6.(i)a) 6.(i)b) 6.(ii) 7.(i) 7.(ii) year which are fraudulent, illegal or violation of the Professional Accountant/Secretary (Chartered conditions of Corporate Governance Guidelines shareholders along with the Annual Report on a yearly basis with these conditions Annual Report

106 The Report of Audit Committee of the Board Sl. No. Name Status with the Bank Status with the Committee 01. Director 02. Mr.Abdul Awal Patwary Director 03. Director 04. Director 05. Mr. A Jabbar Mollah Independent Director Internal Audit. Committee Meetings 106 Social Islami Bank Limited

107 Report on Risk Management i. ii. iii. 1) 2) Revaluation Reserves for Securities 3) Supervisory Review Process i) ii) iii) processes. Annual Report

108 iv) (e.g., business cycle effects). v) Main Features of Review Process and review. Market Discipline Scope and purpose a) b) Disclosure framework 108 Social Islami Bank Limited

109 Comparative Analysis of Capital maintained throughout the year 2012 Particulars Capital Maintained 1, Core Capital % 10.27% 9.26% 9.86% 1.66% 1.81% 1.75% 1.66% 8, a) b) c) % 12.07% 11.01% 11.52% 10% 10% 10% 10% 4.72%. Mohammad Shoeb FCA Senior Vice President Annual Report

110 Scope of Application Qualitative Disclosures which this guidelines applies (b) An outline of difference in the basis of consolidation for accounting and regulatory purposes, with a brief description of the entities within the group (i) that are fully (iii) that are neither consolidated nor deducted (e.g. where funds or regulatory capital within the group. Quantitative Disclosures subsidiaries not included in the consolidation that are Capital Structure Qualitative Disclosures or Tier-II. a) Paid up capital b) Statutory reserve c) Retained earnings a) General Provision b) Assets Revaluation Reserve up to 50%. 110 Social Islami Bank Limited

111 Quantitative Disclosures Particulars Solo Consolidated i 6, , ii Statutory Reserve 1, , iii - - iv General Reserve v Retained Earnings vi Minority interest in subsidiaries - - vii shares - - viii , , Particulars a)tier 2 and Tier 3 capital i Tier 2 capital 1, , ii c 10, , Qualitative Disclosers and future activities. Annual Report

112 Quantitative Disclosures Particulars Solo Consolidated b) 8, , c) d) e) 9, , % 11.55% Tier-I CAR 9.86% 9.88% Tier-II CAR 1.66% 1.67% Investment Risk Qualitative Disclosures date will be treated as Past due/ Overdue. 112 Social Islami Bank Limited

113 ii) Description of approaches i) Annual Report

114 for lending operation etc. guidelines. Quantitative Disclosures As on Murabaha 5, Mudaraba Quard 6, Ijarah Visa Card Total 76, Social Islami Bank Limited

115 d) Industry or counterparty type distribution As on Chittagong 16, Sylhet 4, Rajshahi Rangpur Total 76, Sector As on Agricultural Industries Construction Industries Service Industries Other Industries Total Particulars As on Over 5 years Total Annual Report

116 Particulars As on Past due -- Special Mention Account 6.95 Sub-standard Doubtful Total Particulars As on Opening balance Addition Reduction Closing balance Social Islami Bank Limited

117 Qualitative Disclosures a) Differences between holdings on which relationship and strategic reasons ;and covering the valuation and accounting of in these practices. when such dividend is received or right to receive such dividend is established. Quantitative Disclosures Particulars Solo Consolidated a) b) 0 0 c) d) Total latest revaluation gains (losses) e) Annual Report

118 Qualitative Disclosures Quantitative Disclosures by currency (as relevant) Particulars 1-90 days over 3 Month - up to 6 Months Over 6 Month - Up to 1 years RSA Gap Market Risk Qualitative Disclosures 118 Social Islami Bank Limited

119 iv) Policies and processes for Quantitative Disclosures Solo Consolidated Operational Risk Qualitative Disclosures and staffs iv) Policies and process for segregated and there is at least dual control on every transaction to protect against Annual Report

120 v) Approach to calculating capital as of the reporting date. Quantitative Disclosures As on Solo Consolidated Stress testing liabilities portfolio of the institution Social Islami Bank Limited

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137 Auditors Report Management s Responsibility for the Financial Statements Auditors Responsibility Opinion Annual Report

138 We also report that: i) ii) iii) iv) branches not visited by us; v) have been prepared in accordance with the generally accepted accounting principles; vi) vii) viii) ` Syful Shamsul Alam & Co. Chartered Accountants 138 Social Islami Bank Limited

139 Note(s) Taka Taka PROPERTY AND ASSETS Cash Cash in hand (Including Foreign Currencies) 3(a) 1,104,657,620 1,065,645,367 Balance with Bangladesh Bank & its Agent Banks 3.1 (Including Foreign Currencies) 10,020,554,834 4,601,857,225 11,125,212,454 5,667,502,592 Balance with other Banks and Financial Institutions 4(a) In Bangladesh 2,726,839,850 3,317,446,597 Outside Bangladesh 849,779, ,982,002 3,576,619,225 3,936,428,599 Placement with Banks & other Financial Institutions 5 9,015,879,564 7,457,379,564 Investments in Shares & Securities 6(a) Government 2,900,000,000 2,050,000,000 Others 1,764,016,584 1,711,359,758 4,664,016,584 3,761,359,758 Investments 7 General Investment etc. 66,459,100,077 48,926,507,517 Bills Purchased and Discounted 9,565,873,831 4,982,068,255 76,024,973,908 53,908,575,772 Fixed Assets including Premises, Furnitures and Fixtures 8(a) 2,256,597,940 2,135,203,543 Other Assets 9(a) 8,165,811,105 7,095,197,636 Non Banking Assets - - Total Assets 114,829,110,780 83,961,647,464 LIABILITIES AND CAPITAL Liabilities Placement from Banks & other Financial Institutions 10 4,700,000,000 3,700,000,000 Deposits and Other Accounts 11 Mudaraba Savings Deposits 4,905,319,144 3,925,740,731 Mudaraba Term Deposits 62,267,653,508 42,699,279,530 Other Mudaraba Deposits 13,984,000,422 10,498,361,467 Al-Wadeeah Current & Other Deposit Accounts 11.2 (a) 10,585,704,537 8,379,160,525 Bills Payable ,465,257, ,702,290 Cash Waqf Fund 68,903,770 53,477,204 93,276,838,609 66,461,721,747 Other Liabilities 12(a) 6,699,267,451 4,446,691,591 Deffered Tax Liablities/(Assets) 13 70,528 (5,101,777) Total Liabilities 104,676,176,587 74,603,311,561 Shareholders Equity Paid-up Capital ,393,925,700 6,393,925,700 Statutory Reserve 15 1,718,062,455 1,168,484,261 General reserve 742,431 - Revaluation reserve on Fixed Assets 16 1,109,979,121 1,138,496,825 Retained Earnings 17(a) 930,222, ,427,567 Total Shareholders Equity of Parent Company, SIBL 10,152,932,622 9,358,334,353 Non controlling Interest ,570 1,550 Total Liabilities & Shareholders Equity of the Group 114,829,110,780 83,961,647,464 Annual Report

140 Note(s) Taka Taka ,634,753,997 8,405,119, ,395,594,893 6,784,252, ,949,826,296 3,277,969, ,784,274,732 1,784,609, Total 27,764,449,918 20,251,950,570 OTHER COMMITMENTS Total - - Total Off Balance Sheet Items including 27,764,449,918 20,251,950,570 Chairman Director Director Managing Director e 11 May 2013 Syful Shamsul Alam & Co. Chartered Accountants 140 Social Islami Bank Limited

141 Note(s) Taka Taka 19(a) 11,325,266,334 6,922,205, ,541,679,221 4,541,152,612 Net Investment Income 3,783,587,112 2,381,052, ,816, ,112,797 22(a) 1,194,479,560 1,206,193,086 23(a) 337,568, ,895,790 1,765,864,659 1,765,201,672 Total Operating Income 5,549,451,771 4,146,254,649 Salaries and Allowances 24(a) 1,081,286, ,781,104 25(a) 181,760, ,776,905 26(a) 8,618,710 3,448,249 27(a) 28,799,564 21,878,753 28(a) 80,776,376 54,687,078 Managing Director s Salary and Allowances 29 10,000,000 11,160,000 30(a) 4,094,874 6,112, , , , ,825 32(a) 149,523,899 82,184,470 33(a) 360,733, ,633,377 Total Operating Expenses 1,906,621,541 1,428,413,609 3,642,830,229 2,717,841, ,356, ,898, ,483, ,954, ,482,499 47,821, ,432 - Provision for other assets 222,654, ,630,000-57,706, ,146,894 25,600,000 Provisions for Gratuity 53,811,215 43,907,230 Total Provision 35(a) 870,676, ,518,146 2,772,153,541 1,850,322,894 Provision for Income Tax 36(a) 1,306,935, ,861,073 1,465,218,057 1,032,461,820 Non-controlling Interest 20 (41) 1,465,218,037 1,032,461,861 Appropriation Statutory Reserve 549,578, ,256,045 Retained Earnings 915,639, ,205,816 1,465,218,037 1,032,461,861 Earning Per Share (EPS) 37(a) Net Operating Cash Flow per share (NOCFPS) Net Asset Value (Crore Taka) 1, Net Asset Value (NAV) per share Chairman Director Director Managing Director e 11 May 2013 Syful Shamsul Alam & Co. Chartered Accountants Annual Report

142 Note(s) Taka Taka Cash Flow from operating activities 38(a) 11,325,266,334 6,922,205,589 (5,247,109,745) (4,541,152,612) Dividend receipts 233,816, ,112, ,843, ,496,519 (1,091,286,476) (905,941,104) (109,575,940) (76,565,831) (929,894,508) (621,735,692) 39(a) 930,204,521 1,031,643,737 40(a) (569,670,338) (371,088,973) 5,143,593,986 2,161,974,430 Changes in operating assets and liabilities Statutory deposits - - (902,656,827) (2,191,633,165) - - (22,116,398,136) (17,228,289,827) Other assets 41(a) (140,718,961) (3,556,197,954) 2,311,519,035 5,173,989,284 22,209,028,350 16,936,840, Trading liabilities - - Other liabilities 42(a) 80,878,423 (82,861,899) Sub Total 1,441,651,884 (948,152,591) A. 6,585,245,870 1,213,821, ,924,800 (257,483,184) (154,064,037) Purchase/Sale of subsidiaries - - B. (257,483,184) (144,139,237) 1,000,000, ,000, ,967,815,750 Dividend paid in cash (671,362,199) - C. 328,637,802 4,387,815,750 D. 6,656,400,487 5,457,498,352 E. 17,061,310,755 11,603,812,403 F. 43(a) 23,717,711,242 17,061,310,755 Chairman Director Director Managing Director 11 May Social Islami Bank Limited

143 Particulars Paid-up Capital Share Premium Account Statutory Reserve General / Other Reserves Asset Revaluation Reserve Retained Earnings Non- Controlling Interest Total =(2 to 7) Balance as at 01 January ,393,925,700-1,168,484,261-1,138,496, ,427,567 1,550 9,358,335,904 Changes in Accounting Policy Currency translation difference ,465,218,037-1,465,218, ,578, ,431 - (549,578,194) - 742,431 Issue of Share Capital (Cash Dividend) (671,362,199) - (671,362,199) Issue of Share Capital (Right Share) Transferred to retained earnings (28,517,705) 28,517, December ,393,925,700-1,718,062, ,431 1,109,979, ,222,916 1,570 10,152,934, ,527, ,989,560 Total eligible capital as on 31 December ,567,472,193 Chairman Director Director Managing Director 11 May 2013 Annual Report

144 Note(s) Taka Taka PROPERTY AND ASSETS Cash 3 1,104,528,222 1,065,642, ,020,554,834 4,601,857,225 11,125,083,056 5,667,499,359 Balance with other Banks and Financial Institutions 4 2,713,496,766 3,317,446, ,779, ,982,002 3,563,276,141 3,936,428,598 Placement with Banks & other Financial Institutions 5 9,015,879,564 7,457,379,564 Investments in Shares & Securities 6 2,900,000,000 2,050,000,000 Others 3,244,014,984 3,191,358,158 6,144,014,984 5,241,358,158 Investments 7 66,459,100,077 48,926,507,517 9,565,873,831 4,982,068,255 76,024,973,908 53,908,575,772 Fixed Assets including Premises, Furnitures and Fixtures 8 2,249,954,737 2,134,872,562 Other Assets 9 7,042,770,623 6,060,065,086 Non Banking Assets - - Total Assets 115,165,953,013 84,406,179,099 Placement from Banks & other Financial Institutions 10 4,700,000,000 3,700,000,000 Deposits and Other Accounts 11 Mudaraba Savings Deposits 4,905,319,144 3,925,740,731 62,267,653,508 42,699,279,530 Other Mudaraba Deposits 13,984,000,422 10,498,361, ,903,158,399 8,769,989, ,465,257, ,702,290 68,903,770 53,477,204 93,594,292,471 66,852,551, ,689,618,137 4,446,522, ,528 (5,101,777) 104,983,981,136 74,993,972,300 Paid-up Capital ,393,925,700 6,393,925,700 Statutory Reserve 15 1,718,062,455 1,168,484, ,109,979,121 1,138,496,825 Retained Earnings ,004, ,300,013 10,181,971,877 9,412,206, ,165,953,013 84,406,179, Social Islami Bank Limited

145 Note(s) Taka Taka ,634,753,997 8,405,119, ,395,594,893 6,784,252, ,949,826,296 3,277,969, ,784,274,732 1,784,609, Total 27,764,449,918 20,251,950,570 OTHER COMMITMENTS Total - - Total Off Balance Sheet Items including 27,764,449,918 20,251,950,570 Chairman Director Director Managing Director e 11 May 2013 Syful Shamsul Alam & Co. Chartered Accountants Annual Report

146 Note(s) Taka Taka 19 11,319,014,211 6,922,205, ,541,679,221 4,541,152,612 Net Investment Income 3,777,334,989 2,381,052, ,816, ,112, ,178,954,865 1,206,193, ,986, ,895,790 1,737,758,432 1,765,201,672 Total Operating Income 5,515,093,421 4,146,254,649 Salaries and Allowances 24 1,078,563, ,193, ,239, ,776, ,618,710 3,430, ,130,288 21,872, ,593,969 54,667,648 Managing Director s Salary and Allowances 29 10,000,000 11,160, ,795,874 5,480, , , , , ,750,842 82,155, ,575, ,053,176 Total Operating Expenses 1,897,268,196 1,377,456,279 3,617,825,225 2,768,798, ,356, ,898, ,483, ,954, ,482,499 47,821,392 Provision for other assets 222,654, ,630,000-57,706, ,146,894 25,600,000 Provisions for Gratuity 53,811,215 43,907,230 Total Provision ,934, ,518,146 2,747,890,968 1,901,280,224 Provision for Income Tax 36 1,306,763, ,861,073 1,441,127,276 1,083,419,151 Appropriation Statutory Reserve 549,578, ,256,045 Retained Earnings 891,549, ,163,106 1,441,127,276 1,083,419,151 Earning Per Share (EPS) Net Operating Cash Flow per share (NOCFPS) Net Asset Value (Crore Taka) 1, Net Asset Value (NAV) per share Chairman Director Director Managing Director e 11 May 2013 Syful Shamsul Alam & Co. Chartered Accountants 146 Social Islami Bank Limited

147 Note(s) Taka Taka Cash Flow from operating activities 38 11,319,014,211 6,922,205,589 (5,247,109,745) (4,541,152,612) Dividend receipts 233,816, ,112, ,318, ,496,519 (1,088,563,216) (904,353,904) (108,724,257) (76,539,683) (926,823,440) (621,735,692) ,622,990 1,031,643, (564,664,993) (321,773,887) 5,120,886,993 2,212,902,865 Changes in operating assets and liabilities Statutory deposits - - (902,656,827) (2,191,633,165) - - (22,116,398,136) (17,228,289,827) Other assets 41 (55,882,097) (2,518,337,954) 2,311,519,035 5,173,989,284 22,135,652,878 16,827,793, Trading liabilities - - Other liabilities 42 71,569,496 (82,956,044) Sub Total 1,443,804,349 (19,434,262) A. 6,564,691,342 2,193,468, ,924,800 (250,397,905) (153,704,159) Purchase/Sale of subsidiaries - - B. (250,397,905) (143,779,359) 1,000,000, ,000, ,987,815,750 Dividend paid in cash (671,362,199) - C. 328,637,802 3,407,815,750 D. 6,642,931,239 5,457,504,993 E. 17,061,307,522 11,603,802,529 F ,704,238,761 17,061,307,522 Chairman Director Director Managing Director 11 May 2013 Annual Report