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Sailing Through Success

We have continued to achieve awards which we dedicate to our valued stakeholders You!
We received these prestigious accolades in 2012, we present them to you as well. Thank
you for staying with our journey towards excellence.

These achievements include SAFA (South Asian Federation of Accountants) Best

Presented Annual Report Awards 2011 (Winner in Private Sector Banks category and

Winner- 1st Runner up in Overall category), ICAB (Institute of Chartered Accountants of


Bangladesh) National Awards for Best Presented Annual Reports 2011, ICMAB (Institute
of Cost & Management Accountants of Bangladesh) Best Corporate Award 2012, Bizz

2012- Inspirational Company Award from WORLDCOB (World Confederation of Business)


in recognition of consistent growth, corporate social responsibilities (CSR) and use of

technology and Bangladesh Business Awards-2011 from DHL-The Daily Star in the

category of Best Financial Institution.

ICAB National Award


8th consecutive
victory
1st Prize

Bangladesh
Business
Awards-2011
DHL-The Daily Star

The Bizz 2012


Inspirational Company
Award

ICMAB Best Corporate


Award
3rd consecutive victory
1st Prize

Contents

Letter of Transmittal

03

Notice of the 18th Annual General Meeting

04

Standard Disclosure Index

05

Vision

08

Mission

09

Corporate Philosophy

10

Strategic Priority

11

Ethics, Integrity and Trust

12

Green Banking

13

Statement Regarding Forward Looking Approach 14


Corporate Profile

15

Milestones

17

Board of Directors & Profile

18

Governance
Composition of Board and Committees

27

Group Chairman's Message

28

Managing Director & CEO's Roundup

32

Shareholders' Information
Financial Highlights- Group & PBL

136

Financial Highlights- PBL

137

Key financial Data & Key Ratios- PBL

138

Graphical Presentation- PBL

140

Segment Analysis

142

Distribution of Shareholdings in 2012

143

Shares held by the Directors in 2012

143

Economic Impact Report

144

- Capital Adequacy

144

- Value Added Statement

145

- Economic Value Added Statement

146

- Payment of Dividends

147

Market Price Information

148

Financial Calendar 2012

149

Investors' Relation & Inquiries

149

Glimpses of 17th AGM

150

Directors' Report on Financial Statements and Internal Control 37


Report of the Audit Committee

38

Report of Prime Bank Shari'ah Supervisory Committee 40


CEO / CFO's Declaration to the Board

41

Corporate Governance

42

Sustainability Report

64

Sustainability Report - Green Banking

72

Corporate Management

75

Corporate Organogram

78

Group Corporate Structure

79

Management Discussion & Analysis

80

Risk Management

107

Report on Risk Management by Chief Risk Officer

118

Market Discipline Disclosures on Risk Based Capital (Basel-II) 120

Rationale of the Cover


Two Thousand Twelve did not
Turn out to be as predicted.
Yet the hard-work and strive
Of yester years has kept
Prime Bank sailing
Through success.

Other Information
Media Highlights 2012

151

Customer Care

153

Prime Bank Foundation

169

Products and Services

164

(Corporate Social Responsibility)

Financial Reports
Directors' Report

193

Certificate regarding compliance of BSEC Notification

205

Auditors' Report to the Shareholders

206

Financial Statements- Group & PBL

208

Financial Statements- OBU

310

Financial Statements- PBIL

322

Financial Statements- PBSL

342

Financial Statements- PECL, Singapore

360

Financial Statements- PBL Exchange (UK) Ltd.

384

Financial Statements- PBL Finance (Hong Kong) Ltd. 395


Album of some significant events 2012

407

Branch Network

410

Glossary

415

Letter of Transmittal

All Shareholders,
Bangladesh Securities and Exchange Commission,
Registrar of Joint Stock Companies & Firms,
Dhaka Stock Exchange Limited and
Chittagong Stock Exchange Limited
Dear Sir(s),
Annual Report of Prime Bank Limited for the year ended December 31, 2012
Enclosed please find a copy of the Annual Report of Prime Bank Limited along
with the Audited Financial Statements as at the position of December 31, 2012. The
Report includes Income Statements, Cash Flow Statements along with notes
thereon of Prime Bank Limited, its Subsidiaries namely Prime Exchange Co. Pte.
Limited, Singapore, PBL Exchange (UK) Limited, PBL Finance (Hong Kong)
Limited, Prime Bank Investment Limited and Prime Bank Securities Limited.
This is for your kind information and record please.
Best regards.
Yours sincerely,

Mohammed Ehsan Habib


Company Secretary

Annual Report 2012 3

Annual Report 2012 4

Standard Disclosure Index


The table given below provides a cross reference to the standard disclosures to the key sections of the Annual Report-2012:

Items

Page No.

Corporate Objectives, Values & Structure


Vision and Mission

8, 9

Overall strategic objectives

11

Core values and code of conduct/ethical principles

12

Profile of the Company

15

Directors profiles and their representation on Board of other companies & Organization Chart

18-27, 78-79, 286-288

Management Report and analysis including Directors Report / Chairmans Review/ CEOs Review
A general review of the performance of the company

28-35, 80-105, 193, 202

Description of performance of various activities/products/segments of the Bank and Group during the period under review 80, 105, 136-148, 193-202
A brief summary of the Business and other Risks facing the organization and steps taken to effectively manage such risks
A general review of the future prospects/outlook.

107-134
35, 82

Social Corporate Responsibility (CSR) Initiatives

64-74, 169-191

Environment related Initiatives

72-74

Information on contribution of the Bank to its responsibilities towards the staff (including health & safety)

65-68

Information on Bank's contribution to the national exchequer & to the economy

64-74, 145-146

Disclosure of Accounting policies and General Disclosure


Disclosure of accounting policies relevant to assets, liabilities, Income and expenditure in line with best reporting standards
Any Specific accounting policies

222-238

Impairment of Assets
Changes in accounting policies/ Changes in accounting estimates
Segment Information
Comprehensive segment related information bifurcating segment revenue, segment results and segment capital employed
Availability of information regarding different segments and units of the entity as well as non-segmental entities/units

100, 142, 305

Segment analysis of
- Segment Revenue, Segment Results, Turnover, Operating profit, Carrying amount of Net Segment assets
Financial Statements
Disclosures of all contingencies and commitments
Comprehensive related party disclosures
Disclosures of Remuneration & Facilities provided to Directors & CEO

209, 216, 264-265


278-279
44, 52-53, 271

Statement of Financial Position / Balance Sheet and relevant schedules


Income Statement / Profit and Loss Account and relevant schedules
Statement of Changes in Equity / Reserves & Surplus Schedule
Disclosure of Types of Share Capital
Statement of Cash Flow

206-406

Consolidated Financial Statement (CFS)


Extent of compliance with the core IAS/IFRS or equivalent National Standards
Disclosures / Contents of Notes to Accounts
Information about Corporate Governance
Board of Directors, Chairman and CEO
Vision, Mission and Strategy

18-27
8-9, 11, 194-195

Annual Report 2012 5

Standard Disclosure Index

Items
Audit Committee (Composition, role, meetings, attendance, etc.), Internal Control & Risk Management
Ethics and Compliance
Remuneration and other Committees of Board
Human Capital

Page No.
27, 42-62
12, 27-62
44, 52-53, 271
65-68

Communication to Shareholders & Stakeholders


Environmental And Social Obligations
Management Review and Responsibility
Any other investor friendly information

64-74, 169-191
80-105
149

Stakeholders Information
Distribution of shareholders (Number of shares as well as category wise, e.g Sponsors, FII etc)
Shares held by Directors/Executives and relatives of Directors/Executives
Redressal of investors complaints

143, 262
52-53, 143, 262
149

Graphical/ Pictorial Data


Earnings per Share
Net Assets
Stock Performance

140-148

Shareholders Funds
Return on Shareholders Fund
Horizontal/Vertical Analysis including following.
Operating Performance (Income Statement)
- Total Revenue, Operating profit, Profit Before Tax, Profit after Tax, EPS
Statement of Financial Position (Balance Sheet)

99, 101, 136-148,


199-202

- Shareholders Fund, Property, Plant & Equipment, Net Current Assets, Long Term Liabilities/ Current Liabilities
Profitability/Dividends/ Performance and Liquidity Ratios
Gross Profit Ratio
Earning before Interest, Depreciation and Tax
Price earning ratio
Current Ratios

136-148

Return on Capital Employed


Debt Equity Ratio
Statement of Value Added and Its Distribution
Government as Taxes
Shareholders as dividend
Employees as bonus/remuneration

144-148

Retained by the entity


Market share information of Banks product/services
Economic value added
Additional Disclosures
Sustainability Development Reporting
Human Resource Accounting

Annual Report 2012 6

64-74, 169-191
68

Items

Page No.

Specific Disclosures
Disclosure of Ratings given by various rating agencies for Instruments issued by/of the Bank

15, 51

Details of Advances portfolio Classification wise as per the direction issued by the central bank
Disclosure for Non Performing assets
- Movements in NPA
- Sector-wise breakup of NPA

245-251, 258-259

- Movement of Provisions made against NPA


- Details of accounts restructured as per regulatory guidelines
Maturity Pattern of Key Assets and Liabilities (ALM)
Classification and valuation of investments as per regulatory guidelines/Accounting Standards

307
242-245, 283

Business Ratio/Information
- Statutory Liquidity Reserve (Ratio)
- Net interest income as a percentage of working funds / Operating cost efficiency ratio
- Return on Average Asset
- Cost / Income ratio
- Net Asset Value Per Share
- Profit per employee

99-101, 136-148
199-202

- Capital Adequacy ratio


- Operating profit as a percentage of working funds
- Cash Reserve Ratio / Liquid Asset ratio
- Dividend Cover ratio
- Gross Non-Performing assets to gross advances/ Non-Performing Loans (Assets) to Total Loans (Assets)
Details of credit concentration / Sector vise exposures
The break-up of Provisions and contingencies included in the Profit and Loss Account
Disclosure under regulatory guidelines (Market Discipline- Pillar 3 Disclosures under Basel-II)
Details of Non-Statutory investment portfolio

245-251
258-259, 273
120-134
242-245, 283

Disclosure in respect of assets given on operating & finance lease

252, 284

Disclosures for derivative investments

242-245

Bank's Network: List of Branches or Centers

410-415

Annual Report 2012 7

Our Vision
To be the best Private
Commercial Bank in Bangladesh
in terms of eficiency, capital
adequacy, asset quality, sound
management and profitability
having strong liquidity.

Annual Report 2012 8

Our Mission
To build Prime Bank Limited into
an efficient, market driven,
customer focused institution with
good corporate governance
structure.
Continuous improvement of our
business policies, procedure and
efficiency through integration of
technology at all levels.

Annual Report 2012 9

Corporate Philosophy
For our Customers
To provide the most courteous and efficient service in every aspect of its business
To be innovative in the development of new banking products and services
For our Employees
By promoting their well-being through attractive remuneration and fringe benefits
By promoting good staff morale through proper staff training and development,
and provision of opportunities for career development
For our Shareholders
By forging ahead and consolidating its position as a stable and progressive
nancial institution
By generating profits and fair return on their investment
For our Community
By assuming our role as a socially responsible corporate citizen in a tangible manner
By adhering closely to national policies and objectives thereby contributing towards the
progress of the nation
........upholding ethical values and best practices

Constantly seeking to improve performance by aligning our goals with stakeholders


expectations. Because we value them.

Strategic Priority

Maintain strong capital base by expediting borrowers rating, concentrating on lending


portfolio having lower capital charge, strengthening Internal Capital Adequacy Assessment
Process (ICAAP).

Continuation of diversification of credit portfolio in corporate exposure, emphasize on retail,


SME and agricultural loan, address gender issue by providing loans to women entrepreneurs
in SME segment and emphasize on geographical diversification.

Improvement of deposit mix by maintaining efficient deposit mix, increase share of low cost
and no cost deposit in total deposit, increase non-funded business.

Maintain adequate level of liquidity through minimizing asset-liability mismatch and recovery
of past due loans.

Diversification of products and services by introducing IT based innovative products and


alternate delivery channels.

Increase share of inward remittance by expansion of existing exchange houses, opening of


new exchange houses, increase in domestic network for the beneficiaries through strategic
alliance, development of new products for the NRBs.

Increase non-funded (non-interest fee based) income.

Extend banking services to un-banked and under banked people for inclusive growth.

Innovative approach in dealing with complex and large transactions / fund requirements with
strategic alliance.

Improve internal governance through strengthening good corporate cultures, motivation,


training and supervision as per KPIs in all levels of management.

Strengthening internal control and monitoring.

Conduct BPR (Business Process Re-engineering) in different functional areas to improve


efficiency and bring in required structural change.

Improvement of IT infrastructure in order to develop new IT based products and services.

Integrated marketing effort by creating a customer-orientated culture, Brand archaeology


study (in-depth research for brand strategy development), Brand Repositioning and extensive
marketing for branding Hasanah.

Development in Human Resources Management System to motivate and retain the Human
Resources and transform Human Resources to Human Capital through proper training in
every aspects of working area.

Cost optimization at all levels of operation by ensuring budgetary control.

Expansion of activities related to Corporate Social Responsibility and Green Banking.

Annual Report 2012 11

Eth
ics

Ethics, Integrity and Trust

rity
eg
nt

Tru st

Banking deals with public money where Ethics, Integrity and


Trust is utmost important. Prime Bank upholds these
principles in every section by its management and customer
service. The following are the key principles of Employee
Codes of Ethics and Business Conduct:

Provide service to customers with uncompromising


integrity, utmost respect, unwavering responsibility and
dedicated citizenship
Protect privacy and confidentiality of customer
information
Prevent money laundering and fraud
Demonstrate workplace respect
Annual Report 2012 12

Green Banking

The environmental degradation needs to be tackled


in a concerted manner by all.
Society demands that business also
take responsibility in safeguarding the planet.
As a responsible Corporate Citizen,
Prime Bank reinforced its Green Banking initiatives.

Annual Report 2012 13

Statement Regarding Forward Looking Approach


The Annual Report contains some forward looking statements regarding the business environment and its likely
effect in the financial conditions of PBL. Statements which are not historical facts including statement of PBLs
belief, expectation are forward looking statements. Words such as plan, anticipate are forward looking statements.
Forward looking statements involve inherent risks and uncertainties. Some factors may actually cause actual result
to differ and some may significantly deviate from the forward looking approach. Some of the factors that may affect
the business environment are given below:
Changes in general economic condition resulting from natural calamities and political disturbances;
Changes in government policy issues;
Increase in Tax, VAT on banking services;
Increase in corporate tax rate;
Increase in CRR and SLR of the banks;
Withdrawal of incentives given to some thrust sectors which may make the projects slow moving;
Directives to reduce the lending rates to finance essential items;
Increase in provisioning requirement may reduce the ROA and ROE;
Reducing the margin ratio for investment accounts;
Volatility in interest rate;
Volatility in capital market arising from speculations;
Compliance issues raised by the international forums which are likely to affect the export growth;
Rise in international prices of essentials which may result to volatility in Foreign Exchange Market;
International embargo/unrest in Middle-East countries may affect remittances and trade;
Risk management of lending portfolio often requires stress testing which is based on sophisticated mathematical
tools and cannot solely be dependent on existing MIS. The level of technology in banking industry is yet to
acquire that sophistication.

Annual Report 2012 14

Corporate Profile
WHO WE ARE

FOCUSED BUSINESS STRATEGY

Established in April 1995 by a group of visionary entrepreneurs,


Prime Bank Limited (PBL) is known for its superior service quality,
brand image, strong corporate governance and corporate culture.
Committed for excellence, PBL is a top-tier bank in Bangladesh
and reputed among regulators as distinctly compliant and among
customers as agile and responsive to change. The bank is aligned
to its vision, mission, values and strategic priorities.

The bank is focused on few strategic issues encompassing


change management in the short to long period through the
implementation of various policies, processes and activities to
ensure continuous, sustainable and qualitative growth, with the
sole objective of Institution Building. An effective Cluster
Management (Mentorship) program was implemented. Branch
management is now being continually exposed to mature thoughts
and ideas through Mentors resulting in qualitative improvement of
their business and operational activities.

OUR CORE BUSINESS


PBL focuses on a wide range of financial products and services
which include commercial banking through both conventional and
Islamic mode, merchant and investment banking, SME and retail
banking, credit card and off-shore banking. The bank plays the
leading role in syndicated and structured financing. It has
expertise in corporate credit and trade finance and made
extensive market penetration with continuous growth in corporate,
commercial and trade finance sectors. It has fully owned exchange
houses in Singapore, UK and a fully owned finance company in
Hong Kong.

Organizational and structural changes were made in managing the


banks operations more effectively. Business Units like
Corporate/Commercial, Retail, SME, Cards were restructured and
established to provide sharper business focus to each of these
revenue earning sources. Credit approvals, quality and recovery
departments were strengthened and separated from business sales
to facilitate faster growth and maintain quality simultaneously.
Support services to ensure greater customer satisfaction with a
wider range of products and services were implemented. New
departments like Alternate Delivery Channels, Cards back office,
Call Centers, operational support were established.

CORPORATE RANKING

THE PBL BRAND

PBL ranked 9th in the Dhaka Stock Exchange (DSE) by market


capitalization which stood at Tk 34,624 million as at the end of
2012. The bank has been ranked as 3rd company by DSE-20
Index. Balance sheet size of PBL was around Tk. 474 billion
equivalent to USD 5.9 billion. With wide customer-base PBL
established itself as the Market Leader among the conventional
private commercial banks for deposits and advances.

PBLs superior service quality, strong corporate governance has


given it an Excellent Brand Image. To continue to reinforce the
PBL Brand, the bank is continuously improving its customer
service, corporate governance and CSR activities by remaining
innovative and caring.

CREDIT RATING

PBL continues to earn recognition and trust for its strong and
sustained financial performance and product management. In
2012, PBL received 4 most valued awards for its published
accounts and reports and corporate governance viz.

CRISL reaffirmed long term rating of PBL to AA+ and short term
rating to ST-1 based on financials up to December 31, 2011.
RATING BY CRISL
Long Term
Surveillance Rating 2011
Surveillance Rating 2010
Outlook
Date of Declaration of rating

AA+

AA+

AWARDS AND ACCOLADES

SAFA Best Presented Annual Report Awards 2011 from


SAFA (South Asian Federation of Accountants) for Annual
Report-2011. Winner in Private Sector Banks category and
Winner- 1st Runner up in Overall category;

ICAB National Awards for Best Presented Annual Reports


2011 from ICAB (Institute of Chartered Accountants of
Bangladesh) for Annual Report 2011;

ICMAB Best Corporate Award 2012 from ICMAB (Institute


of Cost & Management Accountants of Bangladesh) for
Annual Report 2011;

Bizz 2012- Inspirational Company Award from WORLDCOB


(World Confederation of Business) in recognition of
consistent growth, corporate social responsibilities (CSR)
and use of technology.

DHL-The Daily Star Bangladesh Business Awards-2011 in


the category of Best Financial Institution.

Short Term

ST-1
ST-1

Stable
May 30, 2012

NETWORK
PBL has a large and well distributed network of branches in
Bangladesh. It has 113 branches and 17 SME branches covering
strategic financial centers. It has 3 Off-shore Banking Units at
different EPZs in Bangladesh. The bank has fully owned exchange
houses at Singapore and UK facilitating inward remittance to
Bangladesh. It has a fully owned finance company in Hong Kong.
It has active presence in capital market through Prime Bank
Investment Limited and Prime Bank Securities Limited.
EFFICIENT CAPITAL AND STRONG ASSET QUALITY
PBL has a strong capital base and capital adequacy stands at
12.64 percent of the risk weighted assets against the regulatory
requirement of 10 percent. The bank is also well positioned to
maintain capital under Basel-II.

OUR COMMITMENTS
PBL is committed to deliver value to its stakeholders. The bank will
continue to provide effective and competitive financials solutions and
services to its customers. It will continue to enhance the shareholders
value through consistent financial performance and efficient capital
management. PBL will foster a strong performance and learning
culture that allows the development and talents of its employees so
that they can effectively play the role of PBL Brand Ambassador.

Annual Report 2012 15

18

Milestones
Memorandum and Articles of Association signed by the Sponsors

05.02.1995

Incorporation of the Company

12.02.1995

Certificate of Commencement of Business

12.02.1995

License issued by Bangladesh Bank

20.02.1995

License issued for opening the first Branch, Motijheel

08.04.1995

Formal launching of the Bank

17.04.1995

Commencement of business from the Motijheel Branch

17.04.1995

Commencement of Islamic banking business from IBB, Dilkusha

18.12.1995

Initial Public Offerings (IPO)


Publication of Prospectus

29.08.1999

Subscription Opened

09.09.1999

Subscription Closed

22.09.1999

Listed with Chittagong Stock Exchange Limited

15.11.1999

Listed with Dhaka Stock Exchange Limited

27.03.2000

Trading of Shares on Dhaka Stock Exchange Limited

29.03.2000

Trading of Shares on Chittagong Stock Exchange Limited

29.03.2000

Dividend declared in the 5th AGM (First after the IPO)

14.03.2000

Registered as Merchant Banker with the Securities and Exchange Commission

29.03.2001

License issued from the Bangladesh Bank as Primary Dealer

11.12.2003

Registered as Depository Participant of CDBL

29.03.2004

Trading of Shares started in Demat Form in Stock Exchanges

15.06.2004

Completion of 10 years of Service

17.04.2005

Agreement with Temenos for Core Banking Software Temenos T24

30.06.2005

Incorporation of Prime Exchange Co. Pte. Ltd., Singapore

06.01.2006

Prime Exchange Co. Pte. Ltd., Singapore formally started business

08.07.2006

Opening of first Off-shore Banking Unit at DEPZ, Savar, Dhaka

15.03.2007

Launching of ATM

11.03.2008

Launching of Internet Banking

01.08.2009

Opening of first SME Centre

04.08.2009

Recipient of SAFA Best Bank Award

05.12.2009

Incorporation of PBL Exchange (UK) Ltd.

19.11.2009

Obtained Permission for issuance of Subordinated Bond


for Tk 2,500 Million for Basel-II Compliance

31.12.2009

Incorporation of PBIL

28.04.2010

Incorporation of PBSL

29.04.2010

Obtained permission for issuance of Rights Share

25.05.2010

Launching of SMS Banking

25.08.2010

Ground breaking of Prime Tower

22.09.2010

Change of Face Value and Market Lot of Shares of PBL

06.01.2011

Launching of Phone Banking

02.08.2011

Commencement of business of PBL Finance (Hong Kong) Ltd.

01.09.2011

Launching of Mobile Banking

25.03.2012

Launching of Biometric Smart Card

20.05.2012

Annual Report 2012 17

Board of Directors

Protecting Shareholders Value

Md. Shirajul Islam Mollah


Chairman

Mr. Md. Shirajul Islam Mollah, a Sponsor Director of


Prime Bank Limited was elected Chairman of the
Board of Directors in the 367th Meeting of the Board
held on August 24, 2011. He was Chairman of the
Executive Committee prior to his election as
Chairman. He was also the Chairman of the Executive
Committee during May 2003 to May 2004. A very
successful business personality, Mr. Md. Shirajul
Islam Mollah is the Managing Director of China-Bangla
Ceramic Industries Limited, Bengal Tiger Cement
Industries
Limited,
Bajnabo
Textile
Mills
Limited,United Shipping Lines Limited and Director of
Peoples Leasing & Financial Services Limited.
He is also one of the Sponsor Shareholders of
Peoples Leasing & Financial Services Limited. Widely
traveled, Mr. Mollah is involved with many social and
educational activities and earned recognitions from a
number of organizations. He is the founder of Bajnabo
Abul Faiz Mollah High School, Shibpur, Narsingdi. He
is a Member of Dhaka Stock Exchange Limited
(Trustee Securities Ltd.). He is the President of
Bangladesh
Ceramic
Wares
Manufacturers
Association. A philanthropic personality, Mr. Md.
Shirajul Islam Mollah is also the Chairman of Shirajul
Islam Mollah Samaj Seba Foundation.

Annual Report 2012 18

M.A. Khaleque
Vice-Chairman

Mr. M. A. Khaleque is the founder and Sponsor Director of Prime Bank Limited. He
has been elected Vice Chairman of the Board in the 367th Meeting of the Board of
Directors held in August 24, 2011. During the last 25 years, he has set an enviable
standard by establishing high end institutions ranging from banks, non-banks, life
and general insurance in the country. Mr. M. A. Khaleques name has now become
synonymous with some of the finest institutions having high professional outlook
and vision in the nation. Spanning over a period of around 20 years, success came
as a matter of choice through Prime Finance & Investment Ltd, Fareast Islami Life
Insurance Company Ltd., Prime Insurance Ltd., Fareast Finance & Investment Ltd.,
PFI Securities Ltd., Fareast Stocks and Bonds Ltd., Prime Islami Securities Ltd.,
Prime Prudential Fund Ltd., Prime Financial Securities Ltd. some of which are
already market leaders in their respective fields. Having set epoch making
standards in the financial arena, he set his sight into the emerging information
technology, booming property sector and promising Agro-based sector of the
country and his dreams were fulfilled through promotion of GETCO Limited /
GETCO Agrovision Ltd., GETCO Telecommunications Ltd., HRC Technologies Ltd.,
Prime Property Holdings Limited and PFI Properties Ltd. He is a member of the
Board of Governors, Primeasia University. His social contribution came through his
foundation under the name and style of MAK Foundation through establishment of
a good number of educational institutions such as University, Degree College,
Technical College, Krishi College, High School, Girls High School, Kindergartens
and Madrasahs imparting quality education in the society. He is actively involved
with SEBA, a benevolent organization in Bangladesh. He is currently the Chairman
of Fareast Finance & Investment Limited, Fareast Stocks and Bonds Ltd., Prime
Property Holdings Ltd. and PFI Properties Ltd.
He is also a Member of the Audit Committee of the Board of Directors of Prime Bank
Limited.

Mr. Mizanur Rahman Bhuiyan is a renowned industrialist in Bangladesh. He


started business since 1987. Through his strong leadership & aptitude, he expanded
& diversified the business and formed the company as todays Meghna Group, one
of the renowned & largest business conglomerates in Bangladesh.
Presently Mr. Rahman is the Chairman of Meghna Group. The core business of
Meghna Group is to manufacture & export bicycle & components to Europe.
Meghna manufactures full range of bicycle & motorcycle tires & tubes and recently
started manufacturing of automobile tires. Meghna has also a steel tube
manufacturing unit that produce quality steel pipe for bicycle frame & steel furniture.

Mizanur Rahman Bhuiyan


Vice Chairman

Besides involvement in the bicycle industry, Meghna has a joint venture of Hanger
manufacturing unit with the renowned Mainetti of Italy. The group also has business
stake in a white cement manufacturing unit, a joint venture with eminent Sian Group of
Thailand. In the recent years, Meghna has started a new line of business of
manufacturing garments accessories; where fully automated corrugated carton factory
is already in operation and other related manufacturing units like button, poly bags,
printed & woven labels and tags, tapes & elastics, yarn & dyeing etc. are in the pipeline.
Meghna Group is very successful in the automotive sector in Bangladesh. Mehgna
is the sole distributor of prestigious German Brand BMW. KIA Motors from Korea is
also represented by the group in the country.
For its excellent performance & contribution to national economy Meghna Group has
been awarded many times by the Govt. & non govt. bodies. For the export
performance in the year 2008. Transworld Bicycle Co. Limited received the National
Export Trophy Gold and Meghna Bangladesh limited received National Export
Trophy Silver. Meghna was awarded with the Business Enterprise of the year
2009 in the Daily star DHL Bangladesh business award. In the year 2005 Meghna
received the BMW Best Facility in the region Award from BMW Asia Limited.
Mr. Mizanur Rahman is one of the Sponsor Directors of the best performing private
sector Bank Prime Bank Limited. Mr. Rahman was the Chairman of the Board of
Directors in the year 2003-2004.
Widely traveled Mr. Rahman is a member of Kurmitola Golf Club, Dhaka
Cantonment.

Annual Report 2012 19

Board of Directors - Protecting Shareholders Value

Mafiz Ahmed Bhuiyan

Chairman, Executive Committee

Tanjil Chowdhury

Mr. Mafiz Ahmed Bhuiyan was elected Chairman, Executive Committee of the
Board of Directors of Prime Bank Limited in the 367th Meeting of the Board. A
Sponsor Director, Mr. Bhuiyan was Vice Chairman of the Board prior to his present
position. Mr. Bhuiyan is an entrepreneur and has the distinction of making
substantial contribution in the Backward Linkage Industry setup in the RMG sector
in its early years. He also pioneered in setting up joint-venture projects in the country
with the collaboration of the developed countries like Taiwan and Korea. Currently,
he is Director of Australian International School (International Holdings Ltd), Life
Member & Vice Chairman of Eastern University Foundation (Eastern University),
Life Member of South East Foundation (Southeast University) and Managing
Director, Shepherd World Trade Ltd. He is also representing Shepherd World Trade
Limited to the Board of Citizen Securities & Investment Limited as Chairman.
Besides, he is Life Member of numerous educational and social welfare
organizations. A widely traveled person, Mr. Bhuiyan is also a keen lover of Games
& Sports and actively participates in the Golfing events.

Mr. Tanjil Chowdhury is the Director of Prime Bank Limited and currently serves as
the Vice Chairman of the Executive Committee. He is the Managing Director of East
Coast Group of companies, a diversified conglomerate with primary focus on Oil &
Energy. Mr. Chowdhury is the Vice President of Bangladesh Merchant Bankers
Association (BMBA) and President of Solar Module Manufacturers Association of
Bangladesh (SMMAB). He is also Chairman of Prime Exchange Singapore Pte Ltd,
the banks remittance arm in Singapore. He is the Secretary General of Prime Bank
Cricket Club, an initiative of Prime Bank Foundation (PBF). He is a guest lecturer at
American International University Bangladesh (AIUB), Faculty of Business
Administration. His lecture topics include Financial Derivatives and Investment
Management. Mr. Chowdhury did his BA (Hons) in Accounting and Finance and
went on to complete MSc. in International Management (Finance), from Kings
College London, University of London. Mr. Chowdhury is an active member of BBC
Film Society. He is also a keen golfer and his current handicap is 21.

Vice-Chairman, Executive Committee

Prof. Ainun Nishat, a renowned personality in the arena of Water Management,


Climate Change, Environment and Disaster Management was appointed Depositor
Director of Prime Bank Limited on 19th March 2009. Presently, he is Vice Chancellor
of BRAC University, Dhaka. He obtained Ph.D. in Civil Engineering from University
of Strathclyde, Glasgow, U.K. He is a graduate of Bangladesh University of
Engineering and Technology (BUET) in Civil Engineering. Earlier in his career he
was Professor, Dept. of Water Resources Engineering and Director, Institute of
Water and Flood Modeling BUET, Dhaka, and Country Representative of
International Union for Conservation of Nature and Natural Resources. A widely
traveled person Prof. Nishat has authored many books and articles at home and
abroad.

Prof. Ainun Nishat

Chairman, Audit Committee

Annual Report 2012 20

Mrs. Marina Yasmin Chowdhury is a Sponsor Director and former Vice


Chairperson of Prime Bank Limited. She is the director of East Coast Group (ECG),
a diversified conglomerate that has been engaged in Oil and Energy business for
last thirty years. She is also the Chairman of Clean Fuel Filling Stations Limited and
Parkesine Products Limited, both of which are subsidiaries of ECG.
Mrs. Chowdhury is also former-director of Green Delta Insurance Company Limited,
one of the leading general insurance companies of Bangladesh.
Outside of business life Mrs. Marina Y. Chowdhury is deeply engaged in Social
Welfare programs conducted through East Coast Groups Foundation and is also
personally involved in other philanthropic and charitable causes such as accessible
education and medical treatment for the underprivileged.
Marina Yasmin Chowdhury
Director

In her leisure time she enjoys working out, shopping and cooking variety of culinary
dishes for her family.

Mrs. Nazma Haque is one of the Sponsor Directors of Prime Insurance Company
Limited. Mrs. Nazma Haque, Graduate in Economics, under Dhaka University, is a
successful business personality as well. She is Executive Director of Bangla Trac
Limited, Chairman of Anirban Enterprise Limited and also Director of Asian Gate
Limited, ACORN Limited And THANE Technology Limited.
Outside business life, Mrs. Nazma Haque is an active social worker and deeply
engaged in Social Welfare programs in Rajshahi. She is one of the founders of
Bangla Trac Cricket Academy, located in Rajshahi and engaged in training
underprivileged boys of the locality.
She is also a Member of the Audit Committee of the Board of Directors of Prime
Bank Limited.

Nazma Haque
Director

Quazi Sirazul Islam is a Sponsor Director & Former Chairman of Prime Bank
Limited. He took part in countrys liberation war in 1971 and later elected as Member
of Parliament in 1996 and 2001. Mr. Islam is the Managing Director of Amin
Jewelers Limited, one of the famous Jewelry House in the country. He is the Chief
Advisor of Sonar Bangla Insurance Limited. He is also the Member of Gulshan Club
Limited. Mr. Islam is the Chairman of City Hospital (Burn Hospital), which is the only
Private Sector Hospital of this kind in Bangladesh. He is a Member of the Board of
Governors of Peoples University of Bangladesh. A philanthropist by nature Mr.
Islam was awarded Kabi Jasimuddin Gold Medal, Maulana Akram Khan Gold
Medal, Sufi Motahar Hossain Gold Medal and Atish Dipankar Gold Medal for
remarkable contribution in education. He was also awarded MJF (Melvin Jones
Fellow) Medal by the Lions International Foundation for his contribution to the
Society.
Quazi Sirazul Islam
Director

He is also a Member of the Executive Committee of the Board of Directors of Prime


Bank Limited.

Annual Report 2012 21

Board of Directors - Protecting Shareholders Value


Mrs Salma Huq is one of the Sponsor Directors and former Chairman of the
Executive Committee of Prime Bank Ltd. She is a Director of GQ Group since 1986,
which is engaged in manufacturing pen, plastic furniture, disposable plastic wares,
pp woven sacks, mosquito coils and snack foods. GQ Group is also one of the
sponsors of Prime Insurance Co Ltd, Prime Finance and Investment Ltd, PFI
Securities Ltd and Prime Capital Management Ltd.
She is actively engaged in philanthropic activities mainly providing scholarship to
needy students and providing free medicine and arranging treatment to poor
patients. She is one of the founders of Qazi Saleema Huq Womens College and
Qazi Saleema Huq Girls High School.

Salma Huq

She is also a Member of the Executive Committee of the Board of Directors of Prime
Bank Limited.

Director

Mrs. Nasim Anwar Hossain is one of the Sponsor Directors of Prime Bank Limited.
Mrs. Hossain, Masters in Political Science from Dhaka University, is a successful
business personality as well. She is Director of Prime Cement Ltd., Lubricants Asia
Ltd., Bengal Tiger Cement Industries Limited.
Mrs. Hossain is an active social worker and takes keen interest in different
benevolent and philanthropic activities.
She is also a Member of the Executive Committee of the Board of Directors of Prime
Bank Limited.

Nasim Anwar Hossain


Director

Khandker Mohammad Khaled


Director

Khandker Mohammad Khaled, former Chairman and present Director of Prime


Bank Limited is a BUET graduate in Mechanical Engineering. After graduation he
joined the then Water & Power Development Authority (WAPDA), now Bangladesh
Water Development Board (BWDB). After having served BWDB for thirteen years,
he started his own business in 1975 establishing Greenland Engineers & Tractors
Company Limited (GETCO) along with few associates which by now has attained an
enviable position among the contemporary business houses in Bangladesh. He is
currently Chairman & Managing Director of GETCO Telecommunications Limited,
GETCO Agro Vision Limited and GETCO Limited. He is Vice- Chairman and
Member, Board of Governor, Prime Asia University. Besides, he is associated with
numerous Chamber Bodies and Societies in different capacities prominent among
which are Institute of Engineers, Bangladesh, National Heart Foundation of
Bangladesh, Diabetic Association of Bangladesh, AMCHAM, Bangladesh,
Bangladesh Railway Spares and Accessories Suppliers Association, International
WHOs WHO Historical Society and 62-Engineers Club. He is currently the
President of Canada-Bangladesh Chamber of Commerce and Industries
(CANCHAM). A very widely traveled person, Mr. Khaled is an amiable personality
having track record of making contributions in the social and educational
development activities of the country.
He is also a Member of the Audit Committee of the Board of Directors of Prime Bank
Limited.

Annual Report 2012 22

Mrs. Muslima Shirin is the Chairperson of MAWSONS Ltd., engaged in business.


She is also engaged in real estate business. She represents in the Board of Prime
Finance & Investment Limited on behalf of MAWSONS Ltd.
She is also a Member of the Executive Committee of the Board of Directors of Prime
Bank Limited.

Muslima Shirin
Director

Mr. Md. Nader Khan is one of the Sponsor Directors and former Chairman of Prime
Bank Limited. He has already proved himself as a very prominent business
entrepreneur by setting many high-end establishments in different business sectors.
He is playing important roles in different companies such as:
Managing Director:
Pedrollo nk Limited
Pragati Corporation
Polyexprint Ltd.
Polyex Laminate Ltd.,
Halda Valley Tea Co. Ltd.
Polytape Ltd.
PNL Water Management Ltd.

Md. Nader Khan

Director

Chairman:
Artisan Ceramics Ltd.
New Vision Information Technology Ltd.
Director:
Prime Bank Limited
Prime Finance & Investment Ltd.
National Life Insurance Co. Ltd.
Prime Insurance Ltd.
The Consolidated Tea and Lands Company (BD)
Hill Plantation Ltd.
Baraoora (Sylhet) Tea Company Ltd.
He completed his Graduation from Chittagong College under Dhaka University in
1967. One of his business concern, Pedrollo nk Limited, is the market leader in
water pump Business in Bangladesh since 1985. Mr. Md. Nader Khan was honored
with Prime Ministers Award 2010 for his contribution in tree plantation.
As a goodhearted personality, Mr. Nader Khan is actively involved in diverse CSR
activities. He is the Chairman of Lion Mukhlesur Rahman Foundation, Lion Mukhlesur
Rahman Plastic Surgery Hospital, Zero Club Foot Project, Founder of Cider
International School, Ex- Governor (2000-2001) of Lions Club International- District
315 B4 Bangladesh, to mention a few. He is the trustee Member of Independent
University of Bangladesh (IUB) & Chittagong Independent University (CIU).
Mr. Khan believes hard work and business integrity are the keys to success. He
feels a leader with vision is necessary to give proper directions for our economic
development. He is now desirous for contributing in national development through
expanding business to quality education service and tea plantation which sector are
yet to be developed in our country.

Annual Report 2012 23

Board of Directors - Protecting Shareholders Value


Mr. Nafis Sikder is the Managing Director of Palmal Group which was founded by
his father late Nurul Haque Sikder, a prominent business personality then and
among the pioneers in RMG sector. After completion of O and A level, Mr. Sikder
went to Washington University, Saint Louis, Missouri, USA and obtained BS in
Business Administration with distinction. With his ingenuity and expertise in
operations, strategic management & marketing skills, expanded the Groups
business in all the spheres of RMG. The group at present is the most prolific and
trusted suppliers of Apparels to American and European buyers. Mr. Sikder is an
avid philanthropist and actively contributes in the promotion and expansion of
education through establishing Schools and Colleges. He is also associated with
numerous socio welfare and charitable organizations.

Nafis Sikder
Director

Mr. Imran Khan is one of the Directors of Pedrollo nk Limited market leader of
PEDROLLO Brand Water pumps of Italy in Bangladesh. A promising business
personality of the country, he is also Director of PNL Holding Limited, PNL Water
Management Limited, Polyexprint Ltd, Polyexlaminate Ltd, Halda Valley Tea Co.
Ltd, Hill Plantation Limited.
An Ex-Cadet of Fauzdarhat Cadet College, Chittagong, Mr. Khan completed his
graduation in BBA (Marketing) from North South University, Dhaka.
Mr. Khan is actively associated with various social activities. He is a member of the
Governing body of Lion Mukhlesur Rahman Foundation a renowned Charitable
organization, Chittagong.

Imran Khan

He is also a Member of the Executive Committee of the Board of Directors of Prime


Bank Limited.

Director

A successful businessman, Mr. Md. Shahadat Hossain is a Sponsor Director of


Prime Bank Limited. He is a past Vice Chairman of the Board of Directors also. His
business entity consists of VIP Shahadat Poultry & Hatchery, VIP Shahadat Cold
Storage and Rangpur Agro Industries.
An active social worker, Mr. Hossain is associated with different social welfare
organizations dedicated to the services of general mass.

Md. Shahadat Hossain


Director

Annual Report 2012 24

Prof. Dr. Mohammed Aslam Bhuiyan


Director

Prof. Dr. Mohammed Aslam Bhuiyan, Professor of Sociology, University of


Chittagong is a renowned educationist and was appointed an Independent Director
of the Bank in April 2009. He obtained his MS in Sociology on Rural Development at
the Moscow University, erstwhile USSR in 1976. He was also educated in the USA
& Germany. He did his Ph.D from Bombay University under the fellowship of Indian
Council of Social Science Research (ICSSR). Mr. Bhuiyan is former Vice Chancellor
of The Peoples University of Bangladesh and Chairman of the Department of
Sociology, University of Chittagong. He was also Director CUCSU, Provost
Shamsun Nahar Hall, Registrar (In charge) of Chittagong University. Presently Dr.
Bhuiyan is a Senate Member of Chittagong and Dhaka University, Syndicate
Member of the Moulana Bhashani University of Science & Technology and member,
Presidium, Bangladesh India Friendship Society. He is also Member of Governing
Council of Bangladesh Climate Change Resilience Fund (BCCRF), Ministry of
Environment and Forest. Prof. Bhuiyan wrote more than 100 academic papers
published in National & Foreign Journals including many leading Newspapers.
He is also a Member of the Audit Committee of the Board of Directors of Prime Bank
Limited.

Mr. Manzur Murshed, a retired govt. official, appointed Depositor Director of Prime
Bank Limited on 19th March 2009 and reappointed in 2012. He graduated in
Engineering (Electrical) in 1961 from the University of Dhaka and MA (Public Admin)

from American University, Beirut. He started his career in 1961 as Assistant


Engineer in East Pakistan Water and Power Development Authority (EPWAPDA)

and retired from services as member, Planning & Development in December 1995.
He was also Director of Eastern Cables Ltd. He is a Fellow of IEB, Member of Dhaka
Club and Kurmitola Golf Club. He at present runs a consultancy firm offering
expertise services for the development of the Power Sector in the country.

Manzur Murshed
Director

Mr. Md. Ehsan Khasru joined as Managing Director of Prime Bank Limited on 15
September, 2011. Prior to joining Prime Bank Limited, he was Additional Managing
Director of The City Bank Ltd.
In his long 30 years banking career, he has held various responsible management
positions in Credit Risk Management, Risk Management, Credit Administration and
Relationship Management.
Mr. Khasru started his illustrious banking career in 1983 as a Probationary Officer in
National Bank Ltd. In 1985, he joined National Credit and Commerce Bank Ltd. After
serving eight years, in 1992 he moved to American Express Bank in the Marketing
Manager (Relationship) position in the Business & Corporate Banking Division and
served there till 1999. Later on, in 2000, he went abroad and worked for Royal Bank
of Canada and Bank of Montreal as a Senior Manager (Relationship) and Financial
Services Manager respectively till 2007.

Md. Ehsan Khasru


Managing Director

Mr. Khasru returned to Bangladesh in 2007 and joined Eastern Bank Limited as
Head of Credit Risk Management. Subsequently, in 2008, he joined the City Bank
Ltd. as SEVP and Head of Credit Risk Management where he received elevation
twice in three years. During this time he was also promoted to the rank of Additional
Managing Director for his contribution as the Chief Risk Officer of the bank.
An MBA in Marketing from the Institute of Business Administration (IBA), University
of Dhaka in 1982, Mr.Khasru achieved his Bachelor (Hons) in Economics from
Dhaka University in 1979.

Annual Report 2012 25

Corporate Governance

Composition of Board and Committees


Group Chairmans Review
Managing Director & CEOs Roundup
Directors Report on Financial Statements
and Internal Control
Report of the Audit Committee
Report of the Shariah Supervisory Committee
CEO/CFOs Declaration to the Board
Corporate Governance
Sustainability Report
Corporate Management
Corporate Organogram
Group Corporate Structure
Management Discussion and Analysis
Risk Management
Report on Risk Management by
Chief Risk Officer
Market Discipline
Disclosures on Risk Based Capital (Basel-II)

Composition of Board and Committees


Executive Committee

Board of Directors
Mr. Md. Shirajul Islam Mollah

Chairman

Mr. M.A. Khaleque

Vice Chairman

Mr. Mizanur Rahman Bhuiyan

Vice Chairman

Mr. Md. Nader Khan

Director

Khandker Mohammed Khaled

Director

Quazi Sirazul Islam

Director

Mr. Mafiz Ahmed Bhuiyan

Director

Mr. Md. Shahadat Hossain

Director

Mrs. Marina Yasmin Chowdhury

Director

Mrs. Nazma Haque

Director

Mrs. Nasim Anwar Hossain

Director

Mrs. Salma Huq

Director

Mrs. Muslima Shirin

Director

Mr. Nafis Sikder

Director

Mr. Tanjil Chowdhury


Mr. Imran Khan

Director

Prof. Dr. Mohammed Aslam Bhuiyan

Prof. Ainun Nishat

Mr. Manzur Murshed

Mr. Md. Ehsan Khasru

Director

Mr. Mafiz Ahmed Bhuiyan

Chairman

Mr. Tanjil Chowdhury

Vice Chairman

Quazi Sirazul Islam

Member

Mrs. Muslima Shirin

Member

Mrs. Salma Huq

Member

Mrs. Nasim Anwar Hossain

Member

Mr. Imran Khan

Member

Audit Committee
Prof. Ainun Nishat

Chairman

Mr. M.A. Khaleque

Member

Khandker Mohammad Khaled


Mrs. Nazma Haque

Member

Prof. Dr. Mohammed Aslam Bhuiyan

Member
Member

Independent Director

Independent / Depositor Director

Independent / Depositor Director


Managing Director

Advisor

Mr. Ziaul Hasan Siddiqui

Shariah Supervisory Committee


Prof. Maolana Mohammad Salauddin

Prof. Maolana Mohammad Shahidul Islam


Prof. Dr. Shamsher Ali
Mr. M. Azizul Huq

Prof. Dr. Muhammad Abdur Rashid

Maolana Shah Mohammad Wali Ullah


Mr. Md. Shirajul Islam Mollah

Mr. Muhammad Abdul Wahhab


Mr. Md. Ehsan Khasru
Mr. Nasiruddin Ahmed

Chairman

Member

Member
Member
Member
Member
Member
Member
Member

Member Secretary

Annual Report 2012 27

Group Chairmans Message

In the backdrop of the two gigantic


developments where many moderate

sized banks found pushed to the walls


and the stronger ones struggled, Prime
Bank stood apart due to its strong

fundamentals and prudent management


duly supported by timely & appropriate
policy decision.

While I take up the pen to communicate with the valued


patrons and stakeholders about the progress of the bank
during the past year-2012, I cannot restrain myself from
starting with an optimistic note. Yes, Bangladesh economy
has been acclaimed as STAR economy by the UN experts
as it has continued to grow at an average rate of 6-7
percent compared to diminishing trend of many developed
countries. Despite the global financial challenges varying
from crisis, volatility, uncertainties to various risks,
developing country like Bangladesh only requires prudent
economic management to attain the projected growth. I am
also taking inspiration on such positive note and hope
Prime Bank will likewise apply its dexterous management
skills to ward of the challenges and continue Sailing
Through Success in the year - 2013.
Going back to 2012, our shareholders would recall that the
banking industry from the beginning of third quarter
onwards, started stepping into a situation of apprehension
with the promulgation of Provisioning & Asset
Classification policy of the banking business. Though the
contents of the policy apparently suggest a synchronization
effort on the part of the Regulators with the international
standard best practices but as expected, the entire industry
was jolt under the compulsion to shift gears and in the
process veer away from the projections set at the
beginning of the year. Then emerged the tabloid story
running almost every day in the national dailies with regard
to Inland documentary bill financing by a leading
commercial bank (state owned ) which not only sent
shocking waves across the banking industry but also
dented the pride of many.
In the backdrop of the two gigantic developments where
many moderate sized banks found pushed to the walls and
the stronger ones struggled, Prime Bank stood apart due to
its strong fundamentals and prudent management duly
supported by timely & appropriate policy decision.
Under the circumstances, our valued stake-holders should
have reasons to rejuvenate as their bank stood the test of
time and moved as usual towards the projected
performance targets.
In light of the developments noted above, I take the
pleasure to highlight the following aspects under reference
of the year 2012 on the firm belief that they will not only be
satisfying but reassuring as well.
Performance- 2012:
Against the backdrops stated above, the bank succeeded
in maintaining double digit dividend for 2012.
At the end of the year banks Deposit & Advance stood at
Tk 181,962 million and Tk 165,042 million which is about
14 percent and 16 percent respectively higher than the
year end position of 2011.
Return on Equity (ROE) stood at 13.43 percent and the
Earning per Share (EPS) was Tk 2.89 which is considered
commendable as against the industry average at the
moment.
Capital Adequacy of the bank stood at 12.64 percent
against the regulatory requirement of 10.00 percent and it
is worth mentioning here that during the entire 2012 bank

made numerous Stress Testing exercises to reaffirm its


strong footing on the issue assuming acute to most
distressing situations likely to be encountered. The process
also included implementation of the project of Rating of the
Corporate who also cooperated considering the win-win
situation.
The ratio of non-performing loan to total loans stood at 3.74
percent, though appears slightly higher compared to yester
years but its obviously low compared to many
contemporaries and particularly upon compliance with the
prevailing stringent classification policies.
Strategic Priorities & Actions Plan -2012-2014:
To survive the test of time and competition, its always
important to reassess ones position with regard to current
and anticipated changes and accordingly determine
priorities and work out appropriate strategies to be on
course towards the projections. As per advice of the Board,
the Management undertook the gigantic leap in this direction
and presented a three year Actions plan i.e. 2012-2014
which also included the concept of Dream Banking(Bank
within Bank) - a unique but orthodox Unit banking concept
which appears taking shape in the near future.
Our shareholders shall be pleased to learn that the actions
plan of the bank over the next three years shall be focused
on the following priorities to mention few, which will
eventually lead to improvement & consolidation of the
current KPIs.

Maintain strong capital base;

Continuation of diversification of credit portfolio in


corporate exposure, emphasize on retail, SME and
agricultural loan;

Improvement of deposit mix by maintaining efficient


deposit mix, increase share of low cost and no cost
deposit in total deposit, increase non-funded
business;

Maintain adequate level of liquidity through minimizing


asset-liability mismatch and recovery of past due
loans;

Diversification of products and services by introducing


IT based innovative products and alternate delivery
channels;

Increase share of inward remittance;

Increase non-funded (non-interest fee based) income;

Extend banking services to un-banked and under


banked people for inclusive growth;

Innovative approach in dealing with complex and


large transactions / fund requirements with strategic
alliance;

Improve internal governance through strengthening


good corporate cultures, motivation, training and
supervision as per KPIs in all levels of management;

Strengthening internal control and monitoring;

Conduct BPR (Business Process Re-engineering) in

Annual Report 2012 29

Group Chairmans Message

different functional areas to improve efficiency and


bring in required structural change;

Improvement of IT infrastructure in order to develop


new IT based products and services;

Integrated marketing effort


customer-orientated culture;

Development in Human Resources Management


System to motivate and retain the Human Resources
and transform Human Resources to Human Capital
through proper training in every aspects of working
area;

Cost optimization at all levels of operation by ensuring


budgetary control;

Expansion of activities related to Corporate Social


Responsibility and Green Banking.

by

creating

Technology-Enabler & Differentiator:


Among the various steps under strategic priorities, bank
has chalked out technology as one of the pressing and vital
one. There is a strong realization that spending on
widespread technology is an Investment to support growth
and new business development. In todays intense
competition where every bank is trying to capture the
customers mind by offering technology based solutions,
bank cannot lag behind and as such its determined to
prove that technology is not only an enabler but a
differentiator as well.
Pursuing the belief, bank has already introduced biometric
smart card money transfer services under the brand name
Prime Cash which will help a long way in the inclusion of
unbanked people. Banks internet services under Altitude
has made a remarkable headway and barring some
promotional back up, is likely to be most sought after
services for all customers in the nearest future. Besides,
the centralization process under the guidance of renowned
KPMG is progressing fast to engulf entire back office
movements and in the process remove the ever looming
worries for the management.
In addition, bank has finally decided to procure exclusive
Islamic software to support its Islamic banking transactions
complying with the Shariah principles. Efforts are also
there to up-grade the existing European banking software
T-24 and finally integrate it with the procured Islamic
module under an API arrangement.
Corporate Governance:
Our shareholders are well aware that BSEC through a
promulgation on the issue of Corporate Governance
inserted few new conditions for compliance by the listed
companies within 31st December 2012. The Board
observed that the inclusion of new conditions appeared
reinforcing the objectives of Corporate Governance for the
greater interest of all sections of stakeholders of the public
listed companies. Implementation of the conditions was

Annual Report 2012 30

expected to boost the governance culture and make


companies more transparent by allowing bigger
representation of the minorities in the Board of Directors of
the Holding Companies. New conditions also appeared
directed towards taking more responsibilities and
supervision on the affairs of the Subsidiaries by the Holding
Companies.
Prime Bank being a practicing company of good corporate
governance culture and having met most of the conditions
in normal course, therefore, resolved to comply with the
new set of conditions of the newly promulgated notification
by adopting resolutions and formalizing the roles &
responsibilities of the important position in the company as
required under it. The Board while taking the decision took
into account the issue of precedence to be followed while
complying with the directives of the different regulators
based on the nature of its entity.
Therefore, on the subject ,our shareholders can rest
assured that majority of the conditions of the notification
has been met and in particular the Audit Committee, a vital
sub-committee of the Board assigned with the
responsibility of oversight has been functioning strictly in
compliance with the recent directives on the corporate
governance of BSEC.
Community Services (CSR):
In this regard we may recall the famous saying of Abraham
Lincoln about the Democracy; similarly, we can also echo
that Banking is all about the society. Its the society we do
banking about and its the society to which we belong.
Therefore, its our moral responsibility to contribute for the
progress and welfare of the society.
Prime Bank ever since its inception has been alert about its
commitment to the Society and with each passing day,
involvement has been increasing. The bank has been
performing the responsibilities in two pronged manner.
One, the Bank itself has been engaging in day to day
issues like extending financial support to the needy, non
profitable organizations, educational institutions, Hospitals,
temporary medical services, cultural activities, games &
sports besides sponsoring many other events of
significance.
While the Foundation has been more
organized in its approach, taking up long term projects and
also conducting educational support programs on regular
basis. Some of the establishments like Prime Bank Eye
Hospital and Prime Campus - an English medium school at
the moment bear the testimony of the efforts. In addition,
the Foundation has a large project of significance in hand
like setting up a Medical College, Nursing Training College
and an international standard auditorium on huge premises
acquired for the purpose. Bank has been facilitating the
Foundation in this regard by setting aside a portion of its
profit before tax under obligation towards the society.
From 2011 onwards, bank has been fielding its own Cricket
Team in the Premiere League to popularize the game and
in 2012 it extended by participating in a franchised based
Cricket league competition. The main objective about
entering the Cricket arena is about setting up a full fledged

Cricket Academy to nurture existing talents to take up


national assignment in future.
In addition, the bank sponsored BPL-T20 League
competition to provide an impetus to the game. Further, to
enable regaining the past glory of the once number one
game of the country Foot-Ball, the bank decided to sponsor
the Leagues of District Football Associations in the year
2012-13.
On the business front, Bank has been contributing to the
society by extending credit facilities on softer terms to the
Women entrepreneur, SME Sector & environment friendly
projects under Green Banking policy of the bank.
Challenges & Reality -2013 :
While the economy has been growing satisfactorily in the
band of 6-7 percent but political instability and poor
infrastructure coupled with insufficient power supply
remains a big hurdle in the implementation of economic
reforms. Even though 50 percent of the GDP is generated
from the service sector and RMG export has stood the test
of time during the global financial crisis and recession, we
have reasons to draw inspiration in these regards. The
bank has worked to instill the spirit of combating
challenges, accordingly capacity building has been done,
as such its my firm belief that the skilled workforce of the
bank will be equipped enough to ward off any nature of
crisis or obstacle likely to impede its progress.
Yet, some of the challenges the bank foresees in the near
future are:
Sudden Policy decision like increase in CRR and SLR
and reduction in repo.
Investments in large infrastructure projects and the time
gap of return
Inflationary pressure.
Less flow of foreign investment.
High Government borrowings.

Note of appreciation:
I had intended to include more areas of operation in this
report but as they have been attended in different sections
of the Annual Report, I leave it to you to peruse them.
Therefore, before concluding I like to acknowledge and
thank a number of people and organization for contributing
towards our success.
First of all, I like to extend sincerest thanks to our valued
shareholders for their continuous support and inspiration.
My deepest gratitude goes to our Regulators specially the
Bangladesh Bank for their guidance and advice without
which bank might not have achieved consistent level of
growth matching the key milestones of performance.
I also like to thank our external auditors for carrying out the
auditing task professionally and advising us on the
compliance issues relating to International and Bangladesh
Accounting Standards. Continuous appreciation of our
format/presentation of the Financial Statements at home &
aboard bears the testimony of the compliance status.
I also like to thank all my colleagues in the Board of
Directors, the Management along with entire workforce of
the bank particularly the team associated with the hard
work of bringing out this voluminous Annual Report of the
year- 2012.
Finally, I like to do a justice by recalling our dear sponsor
colleague, Md.Abul Quashem who died premature in a
tragic road accident in June 2012. He was young and a
great sole inclined to volunteer for the cause of the bank.
His sudden departure shall be sadly missed, we, as such
acknowledge with deep appreciation and gratitude his
contributions for the bank with the sincerest hope that his
innocent sole shall rest in heavenly peace. Amin!
With the hope that our sailing through success shall
continue in the year 2013 as well.

High prices of the property- as deterrent to industrial


growth
Banks Recovery of NPL particularly the investments of
the Merchant Bank.
High Interest rate and reduction in repayment capacity
of the customers in general.

Md. Shirajul Islam Mollah


Chairman

Annual Report 2012 31

Managing Director and CEOs Round up

We continue to grow in size, deliver

superior service, translate greater profit


for the stakeholders, while our aim is to

build the bank as an institution of


Financial Excellence.

It is my pleasure to present your Banks phenomenal


progress and achievements of 2012 and highlight the
strategic priorities to steer the Banks journey towards
excellence. Prime Bank Limited (PBL), established to
promote progress and development at micro level and
macro level through delivering full-fledged financial
services, has again proved that it is the best-positioned
Bank in the country to harness economic trends and deliver
value to our clients and stakeholders. This has been
possible mostly with our customers unshakable trust and
confidence in the Bank.
Economic Scenario
A stable, healthy development of the economy is
fundamental requirement for a Banks development, and
the sound development of a Bank cannot take place when
it is not serving a healthy, growing real economy. On a
global perspective, the economy showed its varying colors
with the European sovereign debt crisis, weak financial
performance of EU countries, high unemployment rate in
the developing countries, avoidance of fiscal cliff to avert
recession in USA etc. However, Bangladesh economy
showed its resilience amidst global downturn registering
6.32 percent GDP growth against 5.30 percent GDP
growth for developing countries. Also, controlling point to
point inflation to a single digit has been impressive with
control of non-food inflation. Remittance inflow has been
impressive with more than $12.17 billion of expatriates.
However, the economy could not avoid the net effect in
sluggish growth in exports partly due to Euro zone financial
crisis coupled with the European Union's single-step GSP
facility to Bangladesh's competitors. As a result, Export
earnings marked a rise of only 5.93 percent in 2011-12
against the Governments target of 15.6 percent for the
period.
Prime Banks Financial Performance
PBL has proactively responded to changes in
macro-environment and regulatory requirements and
excelled in all banking performance parameters. As a
process of effectively serving the development of the real
economy, we expanded new markets, reduced loan
concentration risk, improved credit operation quality and
efficiency on the basis of sustainable development.
Despite challenges the Bank continued to grow in its
operating line and achieved a growth of 15 percent. The
prudent management of assets and liabilities contributed in
achieving the growth.
Prudent Balance Sheet Management
Your Bank has shown its proficiency in managing fund of
valued customers, shareholders and patrons by
transforming sound financial results with booking a net
profit before Tax of Tk 5.34 billion in 2012 with an
impressive return on equity of 13.53 percent. Profit after
Tax stood at Tk 2.70 billion. The profit has been achieved
by adhering to the challenging loan provisioning
requirement of the Central Bank. The total balance sheet of
the Bank stood at Tk 474 billion, equivalent to USD 5.93
billion while the Bank maintained an impressive capital
adequacy of 12.73 percent (12.64 percent on consolidated

basis), well above the stipulated rate of 10.00 percent. The


ratio of non-performing assets to total assets was at a
commendable 3.83 percent (3.74 percent on consolidated
basis), which is lower than the industry average. Foreign
Trade Business grew by 1 percent during the year while
remittance and guarantee business showed growth of 15
percent and 6 percent respectively.
Asset and Liability
Prime Bank maintained its market leader position in asset
and liability among the conventional private commercial
banks. Deposit of the Bank increased by Tk 22.24 billion
during 2012 with an impressive growth rate of 14 percent.
Loans and advances have grown by 16 percent during the
year. The Bank has efficiently maintained a well diversified
Loans & Advances portfolio. Retail deposit has been
mobilized by providing competitive and superior products
while corporate deposit has been collected through
corporate deposit campaign. Thus, high cost of fund was
been managed with adequate focus on no and low cost
fund. Thus, sector wise the Bank maintained optimum
exposure with due concentration on SME and Retail
assets. The Bank adequately diversified its investment
through project finance, SME and Retail. Funds under
Corporate, SME and Retail stood at Tk 134.70 billion,
12.23 billion and 11.30 billion respectively.
Efficient Deposit Base
The Bank always stressed on maintaining efficient deposit
mix. The deposits of the Bank grew by 14 percent in 2012.
Customer deposits of the bank grew by 15 percent. The
growth was supported by branch network, innovative IT
based products and superior services along with liability
campaigns carried throughout the year. Low and no cost
deposits grew by 12 percent. As a result, the Interest cost
of deposit was restricted to 8.75 percent as against 8.15
percent of the previous year despite increase in rates of
high cost term deposits fueled by the liquidity position in the
market. As a stable funding base, scheme deposits
continued to rise resulting to a growth of 20 percent.
Customer Focus
Customers have been the forefront and driving force
behind the Banks mission of being a bank with a
difference. Exploring the unmet financial need of the
customers, assessing their finance requirement in
expanding and running their business smoothly, translating
their needs into services and satisfying their demands have
been the driving force. As a part of this customer endearing
strategy, the Bank continuously monitored the
performance of the products and services, and came up
with a number of innovative products and services to
satisfy the need of the customers and deliver superior
value. The Bank pursued the policy of service excellence in
ensuring superior customer service. Focusing on core
customer management skills, service delivery speed and
outstanding branch environment have shown greater
customer satisfaction and increased market reputation
according to mystery shopping survey.

Annual Report 2012 33

Managing Director and CEOs Round up

Risk Management

Organizational and Structural Change

Risk management has been embedded as a core element


for mitigating uncertainties and assessing risk.This has
strengthened
consolidated
risk
management,
off-balance-sheet risk management, and improved our
technical capacity for the management of credit, market,
liquidity and operational risks. All these measures have
kept our asset quality stable and risks under control against
a backdrop of a complicated, difficult environment. To
strengthen the fulfillment of Basel-II accord, the Banks
Risk Management Division undertaken Stress tests as per
Bangladesh Banks guidelines to assess the capacity of the
Bank in unanticipated crises and management response to
manage the crises.

In 2012, the Bank has introduced dynamic organizational


development programs to streamline organizational
operational processes and procedures. Business
processes were upgraded or optimized on a customer
experience-oriented basis towards the objective of
increased efficiency, which greatly enhanced our collective
operation capability and back-office support capacity. In
the face of stricter regulatory capital requirements, we have
accelerated the implementation of our strategic
transformation from capital-intensive to capital-efficient
activities. Many divisions/units of head office have been
centralized to streamline the back office support for the
branches. All these initiatives improved organizational
efficiency contributing to prompt decision making, better
monitoring,
superior
customer
service,
higher
accountability and transparency.

Contribution to Remittance
Remittance has been playing a crucial role in economic
development of the country and your Bank has taken a
number of initiatives to take advantage of the global trend
in continuous growth of remittance flow towards the
developing countries. PBL has its foothold through its
correspondent network globally and at home. Prime
Exchange Co. Pte Ltd., Singapore and Prime Exchange
(UK) Ltd. operating have channeled remittance of foreign
expatriates. The Bank has signed agreements with
different overseas banks to facilitate collection of
remittance. Overall remittance increased by Tk 5.55 billion
registering a growth of 15 percent over the previous year.
Brand & Brand Reputation
The Banks phenomenal performance has been reflected
not only in its financial performance but with honors and
awards on local and global fronts. The Bank received the
Bizz 2012- Inspirational Company Award from World
Confederation of Businesses (WORLDCOB) at a program
held in Barcelona, Spain. Among other notable
international awards, Prime Bank Limited received the
Best Bank Award from The Institute of Chartered
Accountants of Bangladesh (ICAB) eight times in a row on
the basis of evaluation of the Presented Accounts and
Annual Reports of 2011 in the Private Banking Category.
The Bank received the award of the Strongest Bank in the
Country at the Strong Rated Bank Award 2012 in
recognition to its efficient asset management. Furthermore,
the Bank proved its business sustainability by winning "The
Daily Star-DHL Bangladesh Business Award-2011" in the
category of Best Financial Institution. Other awards that
the Bank has achieved over the years are International
Star for Leadership in Quality (ISLQ) Award in the Gold
category by the Business Initiative Directions (BID) in
Paris, France, the prestigious SAFA (South Asian
Federation of Accountants) Award on the basis of the
evaluation of annual report, Best Corporate Award for 2
consecutive times. These awards demonstrate the Banks
transparency in its presented accounts, strict adherence to
regulations and disclosure of corporate governance
practices in the Banking Sector of Bangladesh.

Annual Report 2012 34

Card Business and Alternative Delivery Channel (ADC)


Card business and ADC made remarkable progress in
terms of profitability, issuing, and acquiring business. The
number of debit and credit card issued increased
significantly with a remarkable growth of 22 percent and 9
percent respectively. To provide exclusive privileges to our
most valued customers, Platinum Credit Card has been
launched by offering loyalty benefits in shopping and dining
privileges with free priority Pass Membership in 600 VIP
airport lounges around the world. GMON (fraud monitoring
system) is in place to ensure the quality of portfolio and
safeguard against risk of credit card fraud or unauthorized
use. Flow of remittance has been multiplied through the
Banks mobile banking service, SMS banking service.
Besides, to facilitate remittance in the rural areas, your
Bank has introduced pioneering innovation Biometric
Smart Card Prime Cash to bring the untapped people of
urban and rural areas of the country under banking
channel. This effort is another endeavor of the Bank to
bring the unbanked population under financial inclusion.
The customers of the Bank will be able to operate their
accounts through this card by their finger tips. The number
of ATM booths has increased significantly with a total of
134 ATM booths all over Bangladesh and over thousand
POS across different outlets.
Branch Expansion Program (BEP)
To serve the unbanked and potential banking population of
the country, the Bank expanded its footholds in major areas
considering guidelines of the Central Bank. The Bank
strengthened its presence by setting up Conventional as well
as SME/Agri Branch in strategic locations with prospect of
business and economic growth. A total of 11 branches were
added to increase Primes foothold all over the country. The
Central Banks policy directive in branch expansion program
has been adhered by maintaining the ratio of Urban and
Rural branches. According to the approval of Bangladesh
Bank in 2013 your bank is going to open 10 branches
considering the economic and business potential after
comprehensive business feasibility study undertaken by
R&D Division of the Bank.

Islamic Banking

Human Resources (HR)

The Bank provides Islamic Banking products and services


according to guidelines framed by the Islamic Shariah
Board. Hasanah Deposits and investments of Islamic
Banking Branches have shown a continuous upward
growth. Funds under Management (assets and liabilities)
of our five Islamic Branches were Tk 32,591 million.
Besides, the Bank signed memorandum with Hajj Agencies
Association of Bangladesh (HAAB) where agencies under
HAAB across the country will use Prime Banks online
banking facility to collect the subscriptions of the Hajj
Pilgrims for their Hajj and other related expenses in Saudi
Arabia. The Hajj Pilgrims of rural areas will also be able to
deposit their money to the accounts of their respective
agencies at any branch of Prime Bank across the country
through the Banks Islamic Banking branches. The bank for
the first time issued pre-paid Hajj Card for the pilgrims
which became very popular.

The Bank considers investment in Human Resources as


the most important investment in the portfolio and key to
sustainable growth. The Bank has created leaders who
have been exemplary in the banking industry with their
knowledge and leadership qualities. This year was not an
exception where the Bank recruited the most promising
potential human resources, retained the high performers
and placed right people in the right place. The Bank has
attracted the most promising graduates hailing from the
most reputed universities for its management trainee
program. On campus recruitment of the most promising
candidates showed the Banks vision of recruiting the most
talented people in the banking industry. It is our continuous
endeavor to create an organization of mutual trust,
establish an open and enabling environment where our
people can work with self respect, dignity and freedom of
speech. The Bank is one of the pioneers in delivering
professional knowledge to the aspired bankers. The
Human resource Training and Development Center
(HRTDC) has arranged professional training programs and
a good number of people were trained last year. For all
these reasons, the Bank is one of the best places in the
financial sector for developing a banking career.

Basel-II Compliance and Basel-III


The bank maintained satisfactory capital base during the
year. As against the minimum requirement of 10 percent,
the bank maintained capital adequacy ratio at above 12
percent both on solo and consolidated basis. The bank has
strengthened its risk management process to comply with
the supervisory capital requirement under Pillar-2 of
Basel-II. The bank also have the readiness for Basel-lII as
its Tier-I capital is equivalent to 10 percent of risk weighted
assets on consolidated basis and has significant holding of
Government Treasury Bills/Bonds which will support the
maintenance of liquidity coverage ratio.
Information Technology (IT)
Staying committed to the goal of delivering excellent
banking services, requires continuous improvements in
technological platform. It is the combination of technology
and banking knowledge that can redefine the competitive
landscape of the banking industry. The Bank has come a
step further with advancement in IT to provide more quick
and prompt service to its valued customers. The Bank
introduced internet banking Altitude which received
acceptance from all corners of the financial sector. This is
the first ever truly real time fund transfer facility without
even going to the branch. Besides, the Banks core
banking software Temenos T24, a world-class technology
platform, was fine tuned to achieve further efficiency in its
operations. The bank signed agreement to launch for the
first time in Bangladesh, biometric smart card money
transfer service to build the financial services infrastructure
to increase the reach of financial services to the unbanked
people in urban and rural areas. The Remit Fast- a
remittance package developed by the in-house experts is
used in branches of PBL Exchange (UK) Ltd. Phone
Banking, SMS Banking and Centralized Asset
Management System are used in all Branches including
Head Office. The IT team provided regular training in
increasing the efficiency of the officers of the Bank in core
banking and other core operation areas.

Meeting the need of Our Client and the Society


Your Bank is at the forefront of adhering to the principle of
giving back to the society. Throughout the year the Bank
has undertaken significant corporate social activities
towards all sections of society. These activities involved
not only of financial assistance but also highlighting our
role as highly aware corporate entity contributing towards
community as a whole. The Prime Bank foundation has
taken exemplary strides which have proved our mission of
making a difference. The Foundation has been playing
important role in education by providing stipends to the
poor but meritorious students through Education Support
Program since 2007, in health by setting up Prime Bank
Eye Hospital and in sports by establishing Prime Bank
Cricket Club through which it is training up the upcoming &
talented cricketers of the country at the International
Standards. As the Bank believes in giving back to the
customer, it has shown in its delivery of products and
services where it has provided more intrinsic return for
senior citizens, women and school going students.
Economic Outlook
Global economy is still facing a struggle towards recovery,
despite improved conditions in financial markets. A growth
of 2.4 percent for the global economy in 2013, 1.3 percent
for advanced economies weighed down by spending cuts,
high unemployment and weak consumer and business
confidence, 5.5 percent for developing countries economy
has been forecasted. However, for Bangladesh the outlook
in 2013, can be encouraging subject to containing inflation,
maintaining the current account surplus and political
stability resulting to investment friendly environment.
Strategic Priorities
2013 will be a challenging year yet our unshakable firm
commitment towards excellence with outstanding

Annual Report 2012 35

Managing Director and CEOs Round up

operational efficiency will make the Bank stronger, set


examples for others to follow and create positive
differences. We believe that, as long as we adhere to the
right development strategy, take pro-active actions and
forge ahead determinedly, 2013 is bound to be a year full
of hopes and harvests. Our strategic priorities will be:

Expand cross-border activities

Strengthen recovery drives

Implement automated transaction monitoring system to


guard against money laundering

Upgradation of the operating system.

Continue to provide new products and services to


customers with support of superior information
technology platform

Increase more value added services for our corporate


clients and maintain leadership in the corporate
business

Diversification of business in SME, Retail and


agricultural financing

Financial inclusion of customers in the unbanked areas


with integration of IT, remittance platform

Enhance internal control across the Bank

Annual Report 2012 36

I conclude with sincere thanks and gratitude to the Central


Bank for their time-befitting policies, guidance and
supports. I am also thankful the Board of Directors for their
visionary role and guidance. My special applauds to the
Prime Bank Team, the pillar of our success against
challenges.

Md. Ehsan Khasru


Managing Director & CEO

Directors Report on Financial Statements and Internal Control


The Directors are required to present the Annual Report
together with Directors Report and the Financial
Statements in accordance with Bangladesh Accounting
Standards (BAS) and Bangladesh Financial Reporting
Standards (BFRS), the Bank Companies Act 1991, the
rules and regulations issued by Bangladesh Bank, the
Companies Act 1994, Securities and Exchange
Commission (SEC) Rules 1987, the Listing Rules of Dhaka
Stock Exchange Limited and Chittagong Stock Exchange
Limited and other applicable laws and regulations.
The financial statements are required by law and
International Accounting Standards as adopted by ICAB to
present fairly the financial position of the Company and the
performance for the period. In preparing the financial
statements, the followings are to be done:

Select suitable accounting policies and then apply


them consistently;

Make judgments and estimates that are reasonable


and prudent;

Ensure that the financial statements have been


prepared in accordance with International Accounting
Standards adopted by ICAB;

Prepare the financial statements on going concern


basis unless it is appropriate to presume that the
company will not continue in business.

Proper accounting records should be kept that disclose


with reasonable accuracy at any time the financial position
of the Company and enable them to ensure that its
financial statements comply with Companies Act 1994 and
Bank Company Act 1991.
In compliance with the requirements of the SECs
Notification dated 07 August, 2012, the Directors are also
required to declare certain matters in their report which
inter alia includes as under:

The financial statements prepared by the


management of the issuer company present fairly its
state of affairs, the result of its operations, cash flows
and changes in equity;

Proper books of accounts of the issuer company have


been maintained;

Appropriate accounting policies have been


consistently applied in preparation of the financial
statements and the accounting estimates are based
on reasonable and prudent judgment;

International Accounting Standards and International


Financial Reporting Standards as applicable in
Bangladesh, have been followed in preparation of
financial statements with appropriate disclosures;

The system of internal control is sound in design and


has been effectively implemented and monitored;

There are no significant doubts upon the issuer


companys ability to continue as a going concern. If
the issuer company is not considered to be a going
concern, the fact along with reasons there should be
disclosed;

Significant deviations from last year in operating


results of the issuer company should be highlighted
and reasons thereof should be explained;

Key operating and financial data of at least preceding


three years should be summarized;

If the issuer company has not declared dividend


(Cash or Stock) for the year, the reason thereof
should be given.

The Directors confirm that Annual Report together with the


Directors Report and the Financial Statements have been
prepared in compliance with Bangladesh Accounting
Standards (BAS) and Bangladesh Financial Reporting
Standards (BFRS), the Bank Companies Act 1991, the
rules and regulations issued by Bangladesh Bank, the
Companies Act 1994, Securities and Exchange
Commission (SEC) Rules 1987, the Listing Rules of Dhaka
Stock Exchange Limited and Chittagong Stock Exchange
Limited and other applicable laws and regulations.
Meetings
The Board meets regularly to review policies, procedures,
risk management and business plan of the Bank and
appoints CEO and Senior Management etc. During the
year 2012, 19 meetings of the Board were held.
This report should be read in conjunction with Auditors
Report to the Shareholders of Prime Bank Limited.
Other
compliances
of
BSEC
Notification
No.
SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August,
2012 are given in Annexure I, II & III.
On behalf of the Board of Directors

Md. Shirajul Islam Mollah


Chairman

Annual Report 2012 37

Report of the Audit Committee- 2012


In compliance with the guidelines of Bank Companies Act

3.

Fixing quorum of the Audit Committee Meeting with at

4.

Ensuring presence of Chairman of the Committee

5.

To review the financials of the Subsidiaries particularly

& BSEC directives, the Audit Committee of the Board of


Prime

Bank

Limited

has

been

functioning

as

sub-committee of the Board of Directors. It has been


assisting the Board in ensuring that financial statements
reflect true and fair view of the state of affairs of the bank.
It also carries out the oversight responsibilities for
implementation and compliance of different policies

least one Independent Director

during AGM of the company.

their investment issues.

formulated by the Board and the Regulators.

The Board of Directors accordingly, resolved to comply

Considering the importance of the role of the Audit

a result, Audit committee has been functioning as usual

Committee and allowing it cover even wider area of


oversight, Banking Regulation & Policy Department
(BRPD) of Bangladesh Bank in the recent past allowed
induction of more members in the Audit Committee.
Accordingly, the strength of the committee has been raised
to maximum five (05) and at the moment comprises of
following members:

with all the stipulations within the expiry of the deadline, as

strictly in compliance with the directives of the promulgated


notification.

During the year 2012, Audit Committee had eight (08)


meetings against the stipulated four. In this time, the
Committee met the Internal Audit Team, Financial
Administration Division and Internal Control & Compliance

Team of the Bank. The Committee also had meetings with

the External Auditors to discuss their observations in the


1)

Prof. Ainun Nishat

: Chairman
(Depositor/Independent Director)

2)

Mr. K. M. Khaled

: Member

3)

Mr. M. A. Khaleque

: Member

4)

Mrs. Nazma Huq

: Member

5)

Prof. Mohammed Aslam Bhuiyan : Member

progress of the bank and accordingly communicated


appropriate actions to the concerned in light of the
discussion.

The Committee attended following issues during the


year under reporting:

Oversee the financial reporting process

Monitor Inter Control Risk management process

Committee to avoid conflict of interest and as a measure of

Oversee performance of external auditors.

Committee have been excluded from being member of the

Reviewing financial statements of both the Holding

(Independent Director)

Care has been taken in the composition of the Audit


good Corporate Governance. As a result, members of the

Executive Committee of the Board which generally deals

with the business issues. Similarly, as per regulatory

investment made by them before submission to the

guidelines, Company Secretary has been assigned duties


and role of the Secretary to the Committee.

In a recent development, Bangladesh Securities and


Exchange Commission (BSEC) vide their Notification

board for approval.

Reviewing adequacy of internal audit function.

Reviewing Management Letter issued by Bangladesh

dated 7.08.2012 directed taking certain measures to

Bank & other External Auditors and Management


response thereto as part of compliance.

improve upon the standard of corporate governance in the


listed companies which among others included:

company and the Subsidiaries particularly the

Reviewing

Internal

Auditors

findings

on

the

irregularities both minor & of significance at different

1.

Constitution of the Audit Committee with Independent


Director as Chairman.

branches of the bank and referring those to the Board

2.

Set forth Role/TOR of the Audit Committee in writing.

Board.

Annual Report 2012 38

with appropriate recommendation for decision of the

Reviewing the audit reports of the subsidiaries and

The Audit Committee also reviewed the Annual

directing necessary actions as appropriate.

Financial

Statements,

2012

prepared

by

subsidiaries to ensure proper functioning as per laid


down guidelines of the Board and the regulators.

Howlader Yunus & Co. and M/S Hoda Vasi

Besides, the Committee:

consideration of the Board.

Chowdhury

&

Co.

and

recommended

for

In addition, the Committee also undertook the

Agriculture and Policy on Green Banking which has

been declared a thrust sector for the economy of the


country.

Reviewed the functioning of Human Resources


Development Centre (Training

Academy) at

submission at his Secretariat.

Advised Management to take into account the

importance of working in the Audit & Inspection

Teams for versatility and as such ensure that

experience of working in such role is counted as a

positive point in favor of the incumbent during annual


performance appraisal.

periodical interval for its significance in contribution

Before drawing conclusion, I like to extend sincerest thanks

Capital.

and support to carry forward the mission of the Committee.

towards transformation of the resources in to Human

advising Managing Director to review the Audit &


Branches on regular basis immediate upon their

progress of the bank:

Reviewed performance and portfolios of SME,

Endeavored to introduce best practices including


Inspection reports with the concerned Head of

followings considering their significance in the

of all Divisions of the Head Office including Prime


Bank Foundation alongside the branches and

the

Management and audited by External Auditors M/S.

Advised Audit Teams to carry out Audit & Inspections

Reviewed the performance of the Islamic Banking


Branches and recommended introduction of Sharia
Compliant software. Directed

&

ensured

health

to all the members of the Audit Committee for their time

I also like to thank the members of the Board of Directors


for allowing the Committee to discharge its due role as an
independent sub-committee of the Board.

checking of the IT System and taking measures for


upgradation for efficiency & effectiveness.

Suggested software development for monitoring &


following up compliance issues

Prof. Ainun Nishat


Chairman, Audit Committee

Annual Report 2012 39

Report of Prime Bank Shari'ah Supervisory Committee 2012


Bismillahir Rahmanir Rahim.
All praises are for Allah Subhanahu-wa-tayala. He is the
One and Second to none.
Salat and Salam are on Hazrat Muhammad (peace be
upon him) who is the best Prophet and the last messenger
of Allah.
In the year 2012, three meetings of Prime Bank Shari'ah
Supervisory Committee were held where different
operational issues including those referred to by the Board
of Directors and the Management of the Bank were
reviewed by the Committee and necessary guidelines and
counseling were provided thereon. Respected members of
the Committee also addressed Iftar Mahfils arranged by
the Islamic banking branches of the Bank and held formal
and informal discussions on Shari'ah issues that inspired
all concerned for compliance of Shari'ah. Apart from this,
the Muraqibs audited all Islamic banking branches during
the year 2012 and submitted reports thereon. Based on the
report, some branches were advised to improve their
standard of Shariah compliance in certain areas.
The Prime Bank Shari'ah Supervisory Committee after
reviewing Shari'ah audit reports has opined as under:
a)

It has been observed from the reports of the Muraquibs


that desk level violation in investment deals have been
decreased significantly. Most of the Shariah violations
occur due to software problem.

b)

It has also been observed that awareness about the


compliance of Shari'ah has been increased during the
year under report among the officials related to
investment and also among the investment clients as
compared to the previous year.

c)

To ensure compliance of Shari'ah as per expected


standard, the decision of Shariah Supervisory
Committee to install Islamic banking software at the
Islamic banking branches was taken into consideration
by the Management seriously and work order has

Annual Report 2012 40

already been issued to the vendor for implementation of


the same at the Islamic banking branches.
d)

It has been also observed that effectiveness of


Shariah audit conducted by the Muraqibs have been
increased in Shari'ah compliance among the branch
officials.

The following suggestions have been given by the


Prime Bank Shari'ah Supervisory Committee:
1)

Implementation of the Islamic Banking software at the


Islamic Banking Branches at an early date.

2)

Final Profit of Mudaraba depositors to be calculated


and posted before the first quarter of the year.

3)

The training of manpower of the Bank on Shari'ah


principles, at all tiers of Islamic banking should be
strengthened further.

4)

To engage manpower having sufficient knowledge and


training on Islamic Shari'ah at all the Islamic banking
branches to ensure proper buying and selling in the
investment operations.

5)

The officers should be more cautious in


implementation of Shari'ah principles in buying and
selling of goods while making investment. Besides,
manuals prepared for Islamic banking should be
strictly followed.

May Allah give us Taufique to achieve His satisfaction


through implementation of Shari'ah in every sphere of life.
Ameen.

Nasiruddin Ahmed
Member Secretary

Prof. Maolana Mohammad Salahuddin


Chairman

28 February, 2013
Board of Directors
Prime Bank Limited
Adamjee Court Annex Building-2
119-120 Motijheel Commercial Area
Dhaka-1000

SUB: CEO / CFOs Declaration to the Board


The following is provided to the Board of Directors of Prime Bank Limited in our capacity as the persons responsible for
performing the functions of Managing Director & CEO and Chief Financial Officer of the Bank.
In accordance with the notification of Bangladesh Securities and Exchange Commission No.
SEC/ CMRRCD/2006-158/134/Admin/44 dated 07, August, 2012 we declare that for the financial year ended 31
December, 2012:
i) We have reviewed the financial statements for the year and that to the best of our Knowledge and belief:
a)

these statements do not contain any materially untrue statement or omit any material fact or contain
statements that might be misleading;

b)

these statements together present a true and fair view of the companys affairs and are in compliance with
existing accounting standards and applicable laws;

ii) There are, to the best of knowledge and belief, no transactions entered into by the Bank during the year which are
fraudulent, illegal or violation of the Banks code of conduct.

Md. Ehsan Khasru

Managing Director & CEO

Ahmed Kamal Khan Chowdhury

Chief Financial Officer

Annual Report 2012 41

Corporate Governance
Fairness, Transparency, Accountability and Responsibility
are the minimum standard of acceptable corporate
behavior today. At PBL, corporate governance means
increasing the shareholders value by being efficient,
transparent, professional and accountable to the
organization, society and the environment.
Board of Directors
The number of Board member is 19 as per the Bangladesh
Banks guideline. Out of the 19 members one member is an
Independent Director and two members are from the
Depositors. Thus the bank has also complied with the
Bangladesh Securities and Exchange Commissions
corporate governance guidelines. Board members include
persons of high caliber, with academic and professional
qualification in the field of business and professionals. This
gives strength for effective discharge of duties and
responsibilities by the Board. The Board approves the
banks budget and business plan and reviews those on
monthly basis so as to give directions as per changing
economic and market environment. The Board reviews the
policies and manuals of the various segments of businesses
in order to establish effective risk management in credit and
other key areas of operations. The Board and the Executive
Committee review the policies and guidelines issued by the
Bangladesh Bank regarding credit and other operations of
the banking industry. The management operates within the
policies, manuals and limits approved by the Board. Regular
meeting of the Board is held, at least once in a month.
Code of Conduct
The Board of Directors of PBL adopted the following Code of
Conduct for Members of the Board to provide guidance to
directors to carry out their duties in an honest, responsible and
businesslike manner and within the scope of their authority, as
set forth in the laws of the country as well as in the
Memorandum and Articles of Association of the company.
Members are expected to comply with the following standards
to enhance and maintain the reputation of the Company:
The Members shall act honestly, in good faith and in
the best interests of the shareholders and the
company.
The members shall not make improper use of
information acquired as a director.
The members shall not take improper advantage of the
position of a director.
The members will be obligated to be independent in
judgment and actions and take all reasonable steps to

Annual Report 2012 42

be satisfied as to the soundness of decision taken by the


Board of Directors.
Confidential information acquired by the members in
the course of exercise of directorial duties shall remain
the property of the company and it will be improper to
disclose or allow it to be disclosed, unless that
disclosure has been authorized by the company, or the
person from whom the information has been received.
Members shall make every effort to attend all Board
and Committee Meetings during their tenure. They will
not absent themselves without good reasons or
confirming leave of absence.
To maximize effectiveness of the Board/Committee
Meetings, contribution of Individual director shall be
monitored and appraised on an annual basis.

Board members having interest of any nature in the


agenda of the meeting, shall declare beforehand the
nature of their interest and withdraw from the room,
unless they have a dispensation to speak.
Training opportunities/orientation/workshops will be
arranged for the members (especially for the newly
inducted members) to make them acquainted with the
international best practices, their fiduciary obligations,
Code of Conduct etc.
Members shall always maintain Fit and Proper Test
Criteria, clean CIB status and other obligations
declared by the Primary and other Regulators.
Members shall be judicious about their entitlement of
benefit/privileges as per Banking Companies Act
-1991, Circulars issued by Bangladesh Bank and shall
be willing to produce supporting documents, if
required.
Members shall comply with Article 23.1 of the Banks
M&AA while making Sale-Buy of Companys share
and shall refrain from making such transaction without
formal declaration.
Every Director will assure annually signing a confirmation that
they have gone through, have complied with and will continue to
comply with the set of codes approved by the Board of Directors.
Responsibilities of the Chairman of the Board of Directors
As the Chairman of the Board of Directors (or
Chairman of any Committee formed by the Board of
Directors) does not personally possess the jurisdiction

to apply policy making or executive authority, he shall not


participate in or interfere into the administration or
operational and routine affairs of the bank.
The Chairman may conduct on site inspection of any
branch or financing activities under the purview of the
oversight responsibilities of the Board. He may call for
any information relating to banks operation or ask for
investigation into any such affairs; he may submit such
information or investigation report to the meeting of the
Board or the Executive Committee and if deemed
necessary, with the approval of the Board, he shall
effect necessary action thereon in accordance with the
set rules through the CEO. However, any complaint
against the CEO shall have to be apprised the
Bangladesh Bank through the Board along with the
statement of the CEO.
Besides, the Chairman may/shall assume any other
responsibility if the Board assigns within the purview of the
Rules, Regulations, Acts and Articles of the bank.
Executive Committee
As approved by the Bangladesh Bank, the Board has
Executive Committee. The number of members of the
Executive Committee is 7. The Executive Committee reviews
the policies and guidelines issued by the Bangladesh Bank
regarding credit and other operations of the banking industry.
It ensures the implementation of the policies and guidelines
through the management. The Executive Committee of the
Board approves the credit proposals as per the approved
policy of the Board. The management ensures due diligence
of the credit policy and risk management at the time of
submitting the credit proposals.
Audit Committee
In compliance with the guidelines of Bank Companies Act &
BSEC directives, the Audit Committee of the Board of PBL has
been functioning as a sub-committee of the Board of
Directors. It has been assisting the Board in ensuring that
financial statements reflect true and fair view of the state of
affairs of the bank. It also carries out the oversight
responsibilities for implementation and compliance of different
policies formulated by the Board and the Regulators.
Considering the importance of the role of the Audit Committee
and allowing it cover even wider area of oversight, Banking
Regulation & Policy Department (BRPD) of Bangladesh Bank
in the recent past allowed induction of more members in the
Audit Committee. Accordingly, the strength of the committee
has been raised to maximum five (05).

Roles and Responsibilities of the Audit Committee


The audit Committee will:
I. Internal control
Evaluate whether management is setting the
appropriate compliance culture by communicating the
importance of internal control and the management of
risk and ensuring that all employees have
understanding of their roles and responsibilities;
Review the arrangements made by the management
for building a suitable Management Information
System (MIS) including computerization system and
its applications;
Consider whether internal control strategies
recommended by internal and external auditors have
been implemented by the management;
Review the existing risk management procedures for
ensuring an effective internal check and control
system;
Review the corrective measures taken by the
management as regards the reports relating to
fraud-forgery, deficiencies in internal control or other
similar issues detected by internal and external
auditors and inspectors of the regulatory authority and
inform the board on a regular basis.
II. Financial Reporting
Oversee the financial reporting process
Monitor choice of accounting policies and principles
Review the quarterly, half yearly and annual financial
statements and determine whether they are complete
and consistent with the accounting standards set by
the regulatory authority before submission to the
Board for approval
Meet with management and the external auditors to
review the financial statements before their
finalization.
Review statement of significant related
transactions submitted by the management

party

Review management letters/letter of internal control


weakness issued by Statutory Auditors.
III. Internal Audit

Review the adequacy of internal audit function

Review the activities and organizational structure of


the internal audit function and ensure that no
unjustified restrictions or limitations are made;

Annual Report 2012 43

Corporate Governance

Review the efficiency and effectiveness of internal


audit function;

Review that findings and recommendations made by


the internal auditors for removing the irregularities
detected and also running the affairs of the bank are
duly considered by the management.

IV. External Audit

Review the auditing performance of the external


auditors and their audit reports;

Review that findings and recommendations made by


the external auditors for removing the irregularities
detected and also running the affairs of the bank are
duly considered by the management;

Make recommendations to the Board regarding the


appointment of the external auditors.

V. Compliance with existing laws and regulations

Review whether the laws and regulations framed by


the regulatory authorities (central bank and other
bodies) and internal regulations approved by the
Board have been complied with.

VI. Other Responsibilities

Place compliance report before the Board on


quarterly basis regarding regularization of the errors
& omissions, fraud and forgeries and other
irregularities as detected by the internal and external
auditors and inspectors of regulatory authorities;
Perform other oversight functions as requested by
the Board and evaluate the committees own
performance on a regular basis.

Benefit provided to Directors and Managing Director


As per the Bangladesh Bank BRPD Circular no. 09 dated
19th September 1996, banks in Bangladesh can provide
only the following facilities to the Directors:

The Chairman of the Board of Directors may be


provided car, telephone, office chamber and private
secretary;

In addition to the above, Directors are entitled to


fees and other benefits for attending the Board, EC,
Audit Committee and Shariah Supervisory
Committee meetings (notes to accounts 32);

Managing Director is paid salaries and allowances


as per approval of the Board and the Bangladesh
Bank (notes to accounts 31).

The bank has fully complied with the Bangladesh Bank

Annual Report 2012 44

Circular and Instruction.


Retirement and Re-election of Directors
As per Companies Act 1994 and Articles of Association of
the bank, following Directors will retire in the 18th Annual
General Meeting and they are eligible for re-election:
Quazi Sirazul Islam
Mr. Md. Nader Khan
Mr. Mizanur Rahman Bhuiyan
Mrs. Nazma Haque
Mrs. Salma Huq
Mrs. Marina Yasmin Chowdhury &
Mrs. Nasim Anwar Hossain
Delegation of power
The Board has delegated appropriate finance and
business power to the management as per guidelines of
the Bangladesh Bank. In order to have proper functioning
and quick disposal of credit proposal, the Board has

delegated authority to the Executive Committee of the

Board to approve proposals within certain limit. The

delegation has supported the operation in positive manner.


Prime Bank Shariah Supervisory Committee
Operations of Islamic banking branches of PBL are
supervised

by

Prime

Bank

Shariah

Supervisory

Committee, comprising of a pool of Shariah experts and


renowned economists of the country. The basic functions

of Prime Bank Shariah Supervisory Committee are to offer

views on matters related to Islamic banking operations of

the bank from time to time and to assist the Board of


Directors by advising them on matters relating to Shariah.

Their recommendation on Shariah Principles is strictly

respected by the Board to run Islamic banking operations

of the bank. During the year 2012, three meeting of the

Committee were held. Apart from this, the Muraqibs


audited all Islamic banking branches during the year and
submitted reports to the Committee.
Management
The management team of PBL is headed by the Managing
Director, Mr. Md. Ehsan Khasru, who joined the bank on
15th September, 2011. Several management committees
have been formed to handle the banking operation and
identify and manage risk. The committees are MANCOM,
ALCO, MRS Committee. The Managing Director leads the
two most important Committees, MANCOM and ALCO. As
per the Bangladesh Banks instruction, Basel-II
Implementation Committee has been formed which is
responsible for proper implementation of Basel-II capital
adequacy guidelines in the bank.
Responsibilities and Authorities of the CEO
The CEO of the bank, whatever name called, shall discharge
the responsibilities and effect the authorities as follows:
In terms of the financial, business and administrative
authorities vested upon him by the board, the CEO shall
discharge his own responsibilities. He shall remain
accountable for achievement of financial and other
business targets by means of business plan, efficient
implementation thereof and prudent administrative and
financial management.

involved or interfere into such affairs. The authority relating


to transfer of and disciplinary measures against the
staff, except those at one tier below the CEO, shall rest
on him, which he shall apply in accordance with the
approved service rules. Besides, under the purview of
the human resources policy as approved by the board,
he shall nominate officers for training.
Besides, the Managing Director may/shall assume any
other responsibility if the Board assigns within the purview
of the Rules, Regulations, Acts and Articles of the bank.
Achievement of Business targets in 2012
Performance of the bank for the year 2012 was good
considering the prevailing market challenges as well as the
global economic slowdown. The performance of the bank
against targets is as below:
Taka in billion

Budget
Budget Actual
Achievement
2012
2012
(%)
Profit before provision
8.50
8.55
101
Deposit
200.00 182.05
91
Advance
160.00 160.89
101
Import
210.00 168.53
80
Export
158.00 143.61
91
Inward Remittance (Foreign) 43.00 42.45
99
Guarantee
33.00 29.39
89
Particulars

Risk Management
PBL has a comprehensive risk management policy details of which
are given in Risk Management chapter of this Annual Report.

The CEO shall ensure compliance of the Bank


Companies Act, 1991 and/or other relevant laws and
regulations in discharge of routine functions of the bank.

Regulation and Supervision

The CEO shall include information on violation of any


law, rules, regulation including Bank Company Act,
1991 while presenting memos before the Board or the
committee formed by the board.

Bank Company Act 1991 and various circulars issued by

CEO will provide all sorts of information to Bangladesh


Bank about the violation of Banking Companies Act, 1991
and/ or any violation of Laws, rules and regulations.
The recruitment and promotion of all staff of the bank
except those in the two tiers below him shall rest on the
CEO. He shall act in such cases in accordance with the
approved service rules on the basis of the human
resources policy and sanctioned strength of employees
as approved by the board. The Board or the chairman of
any committee of the Board or any director shall not get

The bank is governed by the Bangladesh Banks rules and

regulation on various issues of banking operation. The


the Bangladesh Bank are the basis of supervision. Various
requirements and controls are imposed covering inter-alia

capital adequacy, depositors protection, risk management,


market and liquidity, anti money laundering compliance,
prudential guidelines on lending and reporting standard.

The Bangladesh Bank also undertakes comprehensive


and special audit on the bank. The Bangladesh Bank

regularly meets with senior executives of the bank,

discusses issues regarding adherence to the standards


and guidelines by the bank.

Banks Exchange Houses and PBL Finance (Hong Kong)


Limited are governed by the rules and regulation of the
respective monetary authorities.

Annual Report 2012 45

Awards and Recognition

01

02

03

05

08

01.
02.
03.
04.
05.
06.

06

07

09

SAFA Award for the Best Presented Accounts and


Corporate Disclosures in Banking Sector 2010 1st prize.
ICAB National Award for the best published
Accounts and Reports 2010 - 1st prize
ICMAB Best Corporate Award 2010-1st prize
International Star for Leader in Quality (ISLQ)
Award, France
SAFA Best Presented Accounts Award - 2009
overall winner
SAFA Best Presented Accounts Award - 2008
Joint Winner Banking Financial Sector

Annual Report 2012 46

04

10

07.

SAFA Best Presented Accounts and Corporate


Governance Disclosures Award 2009 - winner
(Banking Sector)

08.

ICMAB Best Corporate Performance Award 2008 1st Position (Jointly)

09.

SAFA Best Presented Accounts Award - 2007


Bronze Award (Banking Sector)

10.

SAFA Best Presented Accounts Award 3rd Position

11

12

13

14

15

16

17

18

19

20

11.
12.

FNS Award - 2005, Best Performing Local Bank


ICAB National Awards - 2004 for Best
Published Accounts and Reports - 1st Prize,
Financial Sector (Banking)
13. ICAB National Awards - 2003 for Best
Published Accounts and Reports - 2nd Prize
Financial Sector (Banking)
14. 9th ICAB National Awards for Best Published
Accounts and Reports 2008 1st prize Financial
Sector (Banking)
15. 10th ICAB National Award for Best Published
Accounts and Reports 2009 1st prize
(Banking Sector)

17.

12th ICAB National; Awards for Best Published


Accounts & Reports 2011 (1st Postion-Private
Sector Bank)

18.

ICMAB Best Corporate Award 2012 1st


Position in the Banking Sector (Private
Commercial Bank-Traditional Operation)
The Bizz 2012- Inspirational Company Award
Bangladesh Business Award-2011, DHL-The
Daily Star
SAFA Best Presented Annual Report Awards
2011-Winner (Private Sector Banks)
SAFA Best Presented Annual Report Awards
2011-Overal Winner (1st Runner up)

19.
20.
21.
22.

16. 11th ICAB National Awards for Best Published


Accounts and Reports 2010 Winner (Private
Sector) Corporate Governance Disclosure Awards

Annual Report 2012 47

Corporate Governance

Audit by the External Auditors

based audit the audit team evaluates the level of inherent

External auditors audited 20 branches and Head Office so

as to cover minimum 80 percent of the risk assets. They


also discussed with the management and Audit Committee
of the Board on various issues including internal control
and compliance. Suggestions of the auditors are given due

consideration and are implemented by the management.

The reports of the auditors are also discussed in the Board.


Internal Control and Compliance

risk of individual borrower as well as the level of a particular


branch on the basis of a risk matrix.
Internal Audit and Inspection
Internal auditing and Inspection (IAI) is an independent,

objective assurance consulting activity which adds value


within the bank through improvement of banks internal
operation. IAI follows systematic and disciplined approach

to evaluate and improve the effectiveness of risk

With the advent of globalization vis--vis technological

changes, banking has become more and more diversified.

As the banking function entails high risk, effective internal


control system, good corporate governance, transparency

and accountability have become more important for


banking sector worldwide. Internal control system identifies

the risk inherent in the process, adopts mitigation


measures and ensures compliance thereof.

As per guidelines issued by the Bangladesh Bank, PBL


established an organizational structure which allows

segregation of duties among key functional units. Internal

management, control and goverance processss. For


sustainable growth, operational risks shall have to be

controlled efficiently which is done by IAI through off-site


and on-site supervisions as per banks and regulators

policy guidelines. IAI also ensures implementation status of


instructions and policy guidelins of the Board of Directors,

Executive Committee of the Board and Audit Committee of


the Board.

General Objectives of audit and inspection are:

Control and Compliance Division of PBL has been

Monitoring unit.

Historically, the internal audit system in banks has been

To detect and prevent fraud and forgeries;

To find out errors and lapses for immediate

concentrating on transaction testing, testing of accuracy

and reliability of accounting records and financial reports,

integrity, timeliness of control reports and adherence to

legal and regulatory requirements. PBL also undertakes


cash verification of the branches from time to time in order

to check any fraud and forgery in respect of cash

transactions. The bank also undertakes surprise inspection


of smaller branches on sample basis having low volume of
business.

However, in the changed scenario, such testing by itself


would not be sufficient. There is a need for widening as well
and

effectiveness

of

risk

To achieve these objectives PBL is gradually moving

necessary improvements when felt necessary. In risk

Annual Report 2012 48

appliances and running processes which may pave the

To look over and report that operations of the bank are

conducted

within

the

framework

of

principles,

operational manuals and/or circulars;

To keep the bank along with its human resources and

valued customers in safe and sound position by

minimizing and controlling operational risks to the

management system and control procedures prevailing in


internal audit in 2006 and continues the same with

To indicate weaknesses of operational methods,

procedures and instructions laid down in different

towards risk based internal audit to evaluate the risk


various areas of its operation. PBL introduced risk based

To point out policy deviations in executing duties and

responsibilities of different functional tires;

Specific objectives of audit and inspection are:

management

procedures and internal control system in the banks.

rectification and future notification and correction;

ways for errors and frauds.

as redirecting the scope of internal audit to evaluate the


adequacy

financial statements are in accordance with the Bank


Company Act 1991, IAS and BAS;

reconstructed into 03 (three) units, i.e., (i) Internal audit and

inspection unit, (ii) Central compliance unit, and (iii)

To examine whether the books of accounts and

highest extent possible;

To play active role in the process of transforming

human resources into human capital;

To impart hands-on guidances to the employees for

their learning and correction in day to day operational


activities;

To recommend for formulation and/or implementation

B) Audit Cell of the Board undertook following Audit and


Inspections of the bank during 2012:
SL

of business and operational policies to manage


banking activities efficiently and prudently by reducing
cost of doing business;

To provide detailed indicative information of current

business affairs to the Board of Directors and the

deviations while executing operational activities in


various levels;

To conduct risk based internal audits as per internal

and regulators policy guidelines and also international


banking norms and practices.

Following types of audit and inspections are undertaken by

the Audit and Inspection Division and Audit Cell of the


Board:

Comprehensive Audit

Risk Based Internal Audit

Special Audit / Inspections

A) Audit and inspection division undertook following audit


and inspections of the bank during 2012:

SL

Nature of Audit and


Inspection

Audit & Inspection


conducted
2012

Comprehensive inspection of

Investigation and / special

40

30

Surprise inspection of

53

52

Comprehensive risk based

64

60

Inspection of overseas

03

01

Divisions at Head Office


inspection of branches
branches

internal audit of branches

Exchange Houses of PBL

2011
8

2011

8 times

8 times

Review of the business


performance of the branches
and cash verification

16

33

management about principle, policy and objective

2012

Audit on compliance of the


decisions of the Board, the
Executive Committee and the
Audit Committee

To report to the Board of Directors and the

Audit & Inspection


conducted

management for their proactive decision making for


ensuring sustainable growth with green banking;

Nature of Audit and


Inspection

Review of Large Loans over


Tk 50 million
Special inspection

16
33
branches branches
1

Compliance Unit
The Bangladesh Bank BRPD Circular no. 17 dated
October 07, 2003 advised the scheduled commercial
banks operating in the country to put in place effective risk
management system which includes money laundering risk

management among others. Since money laundering, a


criminal act recognized all over the world, has very severe
consequence in the economy and security of the society,
PBL has updated Anti Money Laundering Guidelines 2012
which includes senior management commitments to the
anti-money laundering program. The management has
evolved such a culture for the bank so that all the
employees strictly adhere to each and every provision of
Money laundering Prevention Act-2012 and Anti-Terrorism
(Amended) Act-2012. All employees of the bank
irrespective of the position they hold, are accountable to the
top management and regulatory body for their activities
which might directly or indirectly relate to money laundering.
Activities of Central Compliance Unit regarding prevention
of anti-money laundering during the year 2012 include:

Reconstitution of Central Compliance Committee


(CCC) to review the AML activities of the bank;

A message have been sent from the desk of the


Managing Director to all employees of the bank for
ensuring compliance in AML issues;

Submission of report to the Managing Director on


quarterly basis regarding AML activities;

Use of uniform Account Opening Form as prescribed


by the Bangladesh bank;
Declaration of Transaction Profile has been obtained
for all accounts;

Annual Report 2012 49

Corporate Governance

Reporting of CTR on regular basis;


Reporting of STR to Bangladesh Bank was done
accordingly;
Reporting of Unusual Transaction
Task-Force on regular basis;

to

Central

Collection and review of Self Assessment Report from


the branches and take corrective actions when
needed;
Solution of the problems/issues as and when received
from BFIU of the Bangladesh Bank,
Compliance of the Bangladesh Bank requirements
from time to time and attending the meeting of the
Central Task Force arranged by BFIU of the
Bangladesh Bank;
Arranging five training programs on prevention of
money laundering and terrorist financing attended by
137 participants;
Conduct AML inspection on 99 branches by internal
audit and inspection teams to find out the lapses in
anti-money laundering issues;
Surprise visit conducted on 60 branches to detect and
rectify the weaknesses in AML activities and to build
up awareness among the employees;
Follow-up and monitoring of audit report (related to
anti-money laundering) as and when received from
banks Internal Audit and Inspection Division and
External Auditors of the bank;
Conducting warm-up session round the year for
updating the knowledge on the new Money laundering
Prevention Act-2012 and Anti-Terrorism (Amended)
Act-2012.

corruption of data, risk of unauthorized access to and


modification to data in electronic form, risk of logical access
to instruction sets, data files and critical system settings etc.
To comply with the ICT guideline of the Bangladesh Bank and
ensure smooth operation of business, an independent IT
Audit & Security department was formed. The main aim of the
department is to identify the inherent risks and vulnerabilities
associated with the use of IT, its operation and operation of
core banking system Temenos T24, controls implemented to
mitigate the risks and provide recommendations for
improvement in controls to reduce risks.
The objectives of internal IT audit are reviewing the risks
faced by the bank in relation to use of information
technology and assess whether they are being controlled /
mitigated in an effective and efficient manner and providing
an assessment of the banks IT control against Guideline
on ICT for Scheduled Banks and Financial Institutions of
the Bangladesh Bank.
PBL is one of the pioneer banks in Bangladesh to realize
importance of IT security. IT Audit and Security
Department has been actively assessing and reporting
security issues to the management. However, to mitigate
present security risks, the department will work on strategic

level of information security management, which will


include

implementation

of

Information

Security

Management System (ISMS) and security standard


adoption like ISO27001-2 and PCI DSS (Payment Card

Industry Data Security Standard). ISO27001-2 is the


internationally recognized Management Standard for

Information Security and PCI DSS is a widely accepted


standard and regulatory requirement for Debit/Credit Card
security.

Another crucial task of the department is to make aware of

all level of users (executives and officers) of the bank at

IT Audit and Security

branch and Head Office about IT and IT Securities, its risks

Information systems audit is a part of the overall audit

risks. In this perspective, IT Audit department conducted a

process, which is one of the facilitators for good corporate


governance. IT audit is basically the process of collecting
and evaluating evidence to determine whether a computer
system safeguards assets, maintains data integrity,
achieves organizational goals effectively and consumes
resources efficiently.
PBL is fully dependent on information technology for its
smooth operation and customer services. Information and
information system controls in an IT driven environment
suffer from significant inherent risks such as data loss,

Annual Report 2012 50

and vulnerabilities and controls to mitigate / minimize the

number of workshops on IT Security and its risk to share


knowledge and create awareness among all level of users
of the bank.

During the year 2012, the department carried out audit on


99 branches and 15 SME branches.

Following key areas are being covered under IT Audit:


IT management
Implementation of security policy

Physical security and environmental control

Safety is almost like risk free Government short term


obligations. CRISL also foresees no significant change /

Access control

volatility in its operation in near future and placed the bank

Password compromising

with Stable Outlook for the next one year.

Network security

Awards & Recognition

Systems continuity

Since its inception in 1995, PBL is delivering banking

Application system Temenos T24 (thorough checking of

services with a view to be recognized as the best Private

overall operation of the banking system, i.e., general


banking, credit and foreign trade).

Commercial Bank in Bangladesh in terms of efficiency,


capital adequacy, asset quality, sound management and
profitability having strong liquidity. PBL was the recipient of

Ratings

ICAB National Awards for Best Presented Annual Reports

PBL was rated by Credit Rating Information and Services

2011 from ICAB (Institute of Chartered Accountants of

below:

professionalism and reputation for PBL to receive the

Limited (CRISL). The summary of the ratings is given

award consecutively for eight years. For the fourth time in a

CRISL Rating

Surveillance Rating-2010

Long Term Short Term


ST-1
AA+
+
ST-1
AA

Date of Declaration of Rating

May 30, 2012

Surveillance Rating-2011
Outlook

Bangladesh) for Annual Report 2011. It is a great honor of

Stable

CRISL reaffirmed the long term rating of PBL to AA+


(pronounced as double A plus) and short term rating to
ST-1 based on consolidated financials up to December
31, 2011 and other qualitative and quantitative information
up to the date of rating. While assigning the rating CRISL
viewed the ongoing fundamentals of PBL such as strong
capital base, good asset quality, satisfactory financial
performance, increasing market share, average operating
performance, diversified business lines, considerable
increase in non-funded business, sound IT infrastructure,
experienced management team etc. However, the above
factors are moderated, to some extent, by increase in
non-performing loan, high cost of fund, dependence on

row, PBL was the winner of SAFA Best Presented Annual


Report Awards 2011 from SAFA (South Asian Federation
of Accountants) for Annual Report-2011 in Private Sector
Banks category. The bank also became the Winner- 1st
Runner up in Overall category of SAFA Best Presented
Annual Report Awards 2011. PBL received First Position
in ICMAB Best Corporate Award 2012 for Annual
Report-2011. Bangladesh Business Awards-2011 was
received from DHL-The Daily Star for Best Financial
Institution of the year 2011. The bank also achieved Bizz
2012- Inspirational Company Award from WORLDCOB
(World Confederation of Business) in recognition of
consistent growth, corporate social responsibilities (CSR)
and use of technology. All these awards testify compliance
by the bank with Bangladesh Accounting Standards and
International Accounting Standards and that adequate
information are given for the investors and shareholders to
make prudent judgment.
Corporate Sustainability

fixed deposit etc.

There is increasing recognition by the corporate bodies

Banks rated in long term in this category are adjudged to

differential elements and means for achieving greater

be of high quality, offer higher safety and have high credit


quality. This level of rating indicates a corporate entity with
a sound credit profile and without significant problems.
Risks are modest and may vary slightly from time to time
because of economic conditions. The short term rating
indicates highest certainty of timely payment. Short term
liquidity including internal fund generation is very strong
and access to alternative sources of funds is outstanding.

that Corporate Social Responsibility (CSR) can be a key


business value in this competitive world. Corporate
sustainability means delivering sustainable profit growth for
the long-term benefits of our shareholders, building
sustainable customer relationships and demonstrating to
stakeholders that our business contributes to the
environment, social and economic well being of the world
at large. Details of CSR activities of PBL are given in the
Sustainability Report chapter of this Annual Report.

Annual Report 2012 51

Corporate Governance

Compliance Report on BSECs Notification

The Bangladesh Securities and Exchange Commission (BSEC) requires all listed companies to report on the compliance
of the conditions described in BSECs notification dated 7 August 2012 on Comply basis. The Board of Directors of the
Company has taken appropriate steps to comply with the conditions as detailed in Annexure I, II & III below:
Annexure I
a. Number of Board Meetings, attendance of Directors and their Remuneration:
Serial
No.

Name of Incumbent
Directors

01
02

Mr. Md. Shirajul Islam Mollah


Mr. M. A. Khaleque

03

Mr. Mizanur Rahman Bhuiyan

(Appointed on 01.03.2012)

Remuneration
Drawn
(Tk.5000.00/ Meeting

Meeting held

Attended

Chairman
Vice Chairman

19
19

18
11

Tk.90,000.00
Tk.55,000.00

Vice Chairman

16

02

Tk.10,000.00

Position

04

Mrs. Marina Yasmin Chowdhury

Director

16

10

Tk.50,000.00

05

Mrs. Nasim Anwar Hossain

Director

16

08

Tk.40,000.00

Mrs. Nazma Haque

Director

13

11

Tk.55,000.00

08
09

Khandker Mohammed Khaled


Quazi Sirazul Islam
Mrs. Salma Huq

Director
Director

19
19

12
16

Tk.60,000.00
Tk.80,000.00

Director

17

02

Tk.10,000.00

10

Mrs. Muslima Shirin

Director

17

17

Tk.85,000.00

11
12

Mr. Mafiz Ahmed Bhuiyan


Mr. Md. Nader khan

Director

19

17

Tk.85,000.00

16

12

Tk.60,000.00

Mr. Md. Shahadat Hossain

Director

17

16

Tk.80,000.00

Director
Director

19
19

10
18

Tk.50,000.00
Tk.90,000.00

16

Mr. Nafis Sikder


Mr. Tanjil Chowdhury
Mr. Imran Khan

Director

11

07

Tk.35,000.00

17
18
19
20

Prof. Ainun Nishat


Prof. Dr. Mohammed Aslam Bhuiyan
Mr. Manzur Murshed
Mr. Md. Ehsan Khasru

Depositor/Independent Director
Independent Director
Depositor/Independent Director
Managing Director

19
19
19
19

13
18
18
18

Tk.65,000.00
Tk.90,000.00
Tk.90,000.00
Nil

Meeting held

Attended

06
07

13
14
15

Serial
No.
01
02
03
04
05
06
07
08
09
10
11

(Appointed on 01.03.2012)
(Appointed on 01.03.2012)
(Appointed on 10.04.2012)

(Appointed on 01.03.2012)
(Appointed on 01.03.2012)

(Appointed on 01.03.2012)
(Appointed on 01.03.2012)

(Appointed on 21.05.2012)

Name of the
resigned/deceased Directors

Director

Position

Remuneration
Drawn
(Tk.5000.00/ Meeting

Mrs. Razia Rahman

Former Director

03

--

--

Mr. Azam J Chowdhury

Former Director

03

03

Tk.15,000.00

Capt. Imam Anwar Hossain

Former Director

03

02

Tk.10,000.00

Mr. Mohammad Aminul Haque

Former Director

06

03

Tk.15,000.00

Qazi Saleemul Huq

Former Director

02

--

--

Mr. Mohammad Abdul Wahhab

Former Director

02

02

Tk.10,000.00

Mrs. Shahnaz Quashem

Former Director

03

03

Tk.15,000.00

Mr. Md. Abul Quashem

Former Director

07

04

Tk.20,000.00

Mrs. Hasina Khan

Former Director

03

03

Tk.15,000.00

Mrs. Firoja Amin

Former Director

08

08

Tk.40,000.00

Ms. Saheda Pervin Trisha

Former Director

02

02

Tk.10,000.00

(Resigned on 01.03.2012)
(Resigned on 01.03.2012)
(Resigned on 01.03.2012)
(Resigned on 10.04.2012)
(Resigned on 01.03.2012)
(Resigned on 01.03.2012)
(Resigned on 01.03.2012)
(died on 01.03.2012)

(Resigned on 01.03.2012)
(Resigned on 21.05.2012)
(Resigned on 01.03.2012)

Annual Report 2012 52

b. Number of Executive Committee Meetings, attendance of Directors and their Remuneration:

Remuneration
Drawn
(Tk.5000.00/ Meeting

Meeting held

Attended

Quazi Sirazul Islam

Chairman
Vice Chairman
Director

22
22
22

19
19
20

Tk.95,000.00
Tk.95,000.00
Tk.100,000.00

Mrs. Muslima Shirin

Director

19

19

Tk.95,000.00

05

Mrs. Salma Huq

Director

19

07

Tk.35,000.00

06

Mrs. Nasim Anwar Hossain

Director

12

02

Tk.10,000.00

07

Mr. Imran Khan

Director

09

03

Tk.15,000.00

Meeting held

Attended

Serial
No.

Name of Incumbent
Directors

01
02

Mr. Mafiz Ahmed Bhuiyan

03
04

Serial
No.

Mr. Tanjil Chowdhury

(Appointed on 01.03.2012)
(Appointed on 01.03.2012)
(Appointed on 17.06.2012)
(Appointed on 26.07.2012)

Name of the Resigned/


Deceased Directors

Position

Position

Remuneration
Drawn
(Tk.5000.00/ Meeting

Mr. Muhammad Abdul Wahhab

Former Director

03

03

Tk.15,000.00

02

Quazi Saleemul Huq

(Resigned on 01.03.2012)

Former Director

03

--

--

03

Mrs. Marina Yasmin Chowdhury

Former Director

04

01

Tk.5,000.00

04

Mrs. Shahnaz Quashem


(Resigned on 01.03.2012)

Former Director

03

02

Tk.10,000.00

05

Mr. Abul Quashem

Former Director

08

05

Tk.25,000.00

06

Mr. Nafis Sikder

Former Director

06

--

--

01

(Resigned on 01.03.2012)

(Resigned on 17.06.2012)

(Died on 27.06.2012)
(Resigned on 10.04.2012)

c. Number of Audit Committee Meetings, attendance of Directors and their Remuneration:


Serial
No.

Name of the Incumbent


Directors

Remuneration
Drawn
(Tk.5000.00/ Meeting

Meeting held

Attended

Chairman
Director

08
08

08
03

Tk.40,000.00
Tk.15,000.00

Position

01
02

Prof. Ainun Nishat

03

Khandker Mohammed Khaled

Director

08

03

Tk.15,000.00

04

Mrs. Nazma Haque

(Appointed on 10.04.2012)

Director

05

04

Tk.20,000.00

05

Prof. Dr.Mohammed Aslam Bhuiyan

Director

08

07

Tk.35,000.00

Meeting held

Attended

03

01

Serial
No.
01

M. A. Khaleque

Name of the Resigned


Director
Mr. Mohammad Aminul Haque

(Resigned on 10.04.2012)

Position
Former Director

Remuneration
Drawn
(Tk.5000.00/ Meeting
Tk.5,000.00

Annual Report 2012 53

Corporate Governance

The pattern of Shareholding along with name wise details of:


i)

Parent/Subsidiary/Associated Companies and other related parties: Nil

ii)

Shareholding of Directors:

Serial
No.

Name

Mr. Md. Shirajul Islam Mollah

Position

Annexure II

% of shares as at
31.12.2012

Chairman

2.01

Mr. M. A. Khaleque

Vice Chairman

2.12

Mr. Mizanur Rahman Bhuiyan

Vice Chairman

2.00

Mrs. Marina Yasmin Chowdhury

Director

2.03

Mrs. Nasim Anwar Hossain

Director

2.37

Mrs. Nazma Haque

Director

2.01

Khandker Mohammad Khaled

Director

2.78

Quazi Sirazul Islam

Director

2.00

Mrs. Salma Huq

Director

3.13

10

Mrs. Muslima Shirin

Director

2.00

11

Mr. Mafiz Ahmed Bhuiyan

Director

2.00

12

Mr. Md. Nader Khan

Director

3.69

13

Mr. Imran Khan

Director

2.00

14

Mr. Md. Shahadat Hossain

Director

2.70

15

Mr. Nafis Sikder

Director

2.51

Mr. Tanjil Chowdhury

Director

16

(Representative of East Coast


Shipping Lines Ltd.)

2.00

(Share holding of East Cost


Shipping Lines Ltd.)

17

Prof. Ainun Nishat

Depositor/Independent Director

18

Mr. Manzur Murshed

Depositor/Independent Director

0.003

19

Prof. Dr. Mohammed Aslam Bhuiyan

20

Mr. Md. Ehsan Khasru

iii)

Independent Director

Managing Director

Shareholding of CEO, CFO, Company Secretary & Head of Internal Audit

1.

Chief Executive Officer and his spouse and minor children

2.

Chief Financial Officer and his spouse and minor children

3.

Company Secretary and his spouse and minor children

4.

Head of Internal Audit and his spouse and minor children

iv)

Executives (Top five salaried person other than CEO, CFO, CS, HIA)

1.

Mr. Muhammad Yasin Ali, DMD

2.

Mr. Kanti Kumar Saha, DMD

3.

Mr. Md Tabarak Hossain Bhuiyan, DMD

4.

Quazi A.S.M. Anisul Kabir, DMD

5.

Mr. Habibur Rahman, SEVP

Annual Report 2012 54

Annexure III
Status of Compliance with the condition imposed by the Bangladesh Securities and Exchange Commissions
Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August, 2012:
Condition
No.
1.0
1.1
1.2

Title

Compliance status (put in the


appropriate column)
Complied

1.2 (i)

Independent director: At least 1/5th of the total


number of directors

1.2 (ii)

For the purpose of this clause independent


director means a director.

1.2 (ii) b)

1.2 (ii) c)

1.2 (ii) d)
1.2 (ii) e)
1.2 (ii) f)

1.2 (ii) g)
1.2 (ii) h)

1.2 (ii) i)
1.2 (iii)
1.2 (iv)
1.2 (v)
1.2 (vi)

Not
complied

Board of Directors

Boards size shall not be less than 5 and more than 20

1.2 (ii) a)

Remarks
(if any)

Independent Director

Independent director does not hold any share


or holds less than one percent (1%) shares of
total paid up capital.

Independent director does not have any other


relationship, whether pecuniary or otherwise, with the
company or its subsidiary/associated companies.

Independent director is not the shareholder,


director or officers of any member of Stock
Exchange or an Intermediary of the capital market.
Independent director is/was not the partners or
executives during preceding 3 (three) years of
concerned companys statutory audit firm.

*Currently, two depositor


directors along with one
independent director.
One vacant position will
be filled up soon.

Independent Director is not a sponsor of the


company and is not connected with the companys
Sponsor Or Director Or Shareholder who holds 1% or
more shares of the company (certain family members
are also required to comply with this requirement).

Independent directors are not the members,


directors or officers of any stock exchange.

Independent director has not been convicted


for a criminal offence involving moral turpitude.

The post of independent directors cannot


remain vacant for more than 90 days.

Independent directors is not the independent


director in more than 3 (three) listed companies.
Independent director is not convicted by a court
of competent jurisdiction as a defaulter in
payment of any loan to a bank or a non-bank
financial institution (NBFI).

Such appointment is
to be approved in the
ensuing 18th AGM

The independent director shall be appointed by


the Board of Directors and approved by the
Shareholders in the AGM.

The Board shall lay down a Code of Conduct of


all Board Members and Annual Compliance of
the Code to be recorded.

The tenure of office of an Independent


Directors shall be for a period of 3 (three) years
which may be extended for 1 (one) term only.

No such vacancy
Formal code of conduct has
been clearly spelled out
and approved by the board

Annual Report 2012 55

Corporate Governance

Condition
No.
1.3
1.3 (i)
1.3 (ii)

1.3 (iii)
1.4

Compliance status (put in the


appropriate column)

Title

Complied

Independent director shall be knowledgeable


individual with integrity who is able to ensure
required compliance.

In special cases above qualification may be


relaxed by the Commission

N/A

The independent director must have at least 12


(twelve) years of corporate management/
professional experiences along with other requisites.

Separate Chairman and CEO and their clearly


defined roles and responsibilities.
Directors Report to Shareholders

1.5 (i)

Industry outlook and possible


developments in the industry

1.5 (ii)

Segment-wise or product-wise performance.

future

Risks and concerns

1.5 (iv)

Discussion on cost of goods sold, gross profit


margin and net profit margin

1.5 (v)

Discussion on continuity of any Extra-Ordinary


gain or loss

1.5 (vi)
1.5 (vii)
1.5 (viii)
1.5 (ix)
1.5 (x)
1.5 (xi)

1.5 (xii)
1.5 (xiii)

1.5 (xiv)

Not
complied

Qualification of Independent Director (ID)

1.5

1.5 (iii)

Remarks
(if any)

Basis for related party transaction- a statement


of all related party transactions should be
disclosed in the annual report
Utilization of proceeds from public issues, right
issues and/ or through any others instruments.
An explanation if the nancial results
deteriorate after the company goes for IPO,
RPO, Rights Offer, Direct Listing etc.
If signicant variance occurs between Quarterly
Financial performance and Annual Financial
Statements the management shall explain
about the variance on their Annual Report.
Remuneration
to
directors
including
independent directors.
The nancial statements prepared by the
management of the company present fairly its
state of affairs, the results of its operation, cash
ows and changes in equity.
Proper books of account of the company have
been maintained.
Appropriate accounting policies have been
consistently applied in preparation of the nancial
statements and that the accounting estimates are
based on reasonable and prudent judgment.
International
Accounting
Standards
(IAS)/Bangladesh
Accounting
Standards
(BAS)/International
Financial
Reporting
Standards (IFRS) /Bangladesh Financial
Reporting Standards (BFRS), as --applicable in
Bangladesh, have been followed in preparation
of the nancial statements and any departure
there-from has been adequately disclosed.

Annual Report 2012 56

N/A

PBL being a bank, cost of


interest expenses and
GP% alongwith profit
margin were discussed
PBL does not have such
gain or loss

During 2012 there were no


public or right issue of shares

N/A

N/A

Condition
No.
1.5 (xv)
1.5 (xvi)
1.5 (xvii)
1.5 (xviii)
1.5 (xix)

Title
The system of internal control is sound in design and
has been effectively implemented and monitored.

There are no signicant doubts upon the


company's ability to continue as a going concern.
Signicant deviations from the last years operating
results of the company shall be highlighted and
the reasons thereof should be explained.

Key operating and nancial data of at least


preceding 5 (ve) years shall be summarized.

If the company has not declared dividend (cash or


stock) for the year, the reasons thereof shall be given.

Compliance status (put in the


appropriate column)
Complied

Remarks
(if any)

Not
complied

N/A

1.5 (xx)

The number of Board meetings held during the year


and attendance by each director shall be disclosed.

1.5 (xxi)

The pattern of shareholding shall be reported to disclose the aggregate number of shares
(along with name wise details where stated below) held by:

1.5 (xxi) a) Parent/Subsidiary/Associated Companies and


other related parties (name wise details);

1.5 (xxi) b) Directors, Chief Executive Ofcer, Company


Secretary, Chief Financial Ofcer, Head of
Internal Audit and their spouses and minor
children (name wise details);
1.5 (xxi) c) Executives (top five salaried employees of the
company other than stated in 1.5(xxi)b);

1.5 (xxi) d) Shareholders holding ten percent (10%) or more


voting interest in the company (name wise details).
1.5 (xxii)

In case of appointment/re-appointment of a Director the Company shall disclose the following


information to the Shareholders:

1.5 (xxii) a) a brief resume of the Director;


1.5 (xxii) b) Nature of his/her expertise in specific functional areas.

1.5 (xxii) c) Names of companies in which the person also

holds the directorship and the membership of


committees of the board.
2.0
Chief Financial Officer, Head of Internal Audit & Company Secretary
2.1

Appointment of CFO, Head of Internal Audit


and Company Secretary and their clearly
defined roles, responsibilities and duties.

2.2

Attendance of CFO and the Company


Secretary at Board of Directors meeting

Audit Committee:

3 (i)

Audit Committee shall be the sub-committee of


the Board of Directors.

3 (ii)

The Audit Committee shall assist the Board of


Directors in ensuring that the financial
statements reect true and fair view of the state
of affairs of the Company and in ensuring a
good monitoring system within the business.

Annual Report 2012 57

Corporate Governance

Condition
No.

Title

Compliance status (put in the


appropriate column)
Complied

Remarks
(if any)

Not
complied

3 (iii)

The Audit Committee shall be responsible to


the Board of Directors. The duties of the Audit
Committee shall be clearly set forth in writing.

3.1

Constitution of the Audit Committee

3.1 (i)

The Audit Committee shall be composed of at


least 3 members.

3.1 (ii)

Constitution of Audit Committee with Board


Members including one Independent Director.

3.1 (iii)

All members of the Audit Committee should be


nancially literate and at least 1 (one)
member shall have accounting or related
nancial management experience.

3.1 (iv)

Filling of Casual Vacancy in Committee

3.1 (v)

The Company Secretary shall act as the


secretary of the Committee.

3.1 (vi)

The quorum of the Audit Committee meeting


shall not constitute without at least 1
independent director.

3.2

Chairman of the Audit Committee

3.2 (i)

Chairman of the Audit Committee shall be an


Independent Director.

3.2 (ii)

Chairman of the audit committee shall remain


present in the Annual General Meeting (AGM).

3.3

Role of Audit Committee

3.3 (i)

Oversee the nancial reporting process.

3.3 (ii)

Monitor choice of accounting policies and principles.

3.3 (iii)

Monitor Internal Control Risk management process.

3.3 (iv)

Oversee hiring and performance of external auditors.

3.3 (v)

Review along with the management, the


annual nancial statements before submission
to the board for approval.

3.3 (vi)

Review along with the management, the


quarterly and half yearly Financial Statements
before submission to the Board for approval.

3.3 (vii)

Review the adequacy of internal audit function.

3.3 (viii)

Review statement of signicant related party


transactions submitted by the management.

3.3 (ix)

Review Management Letters/ Letter of Internal


Control weakness issued by statutory auditors.

3.3 (x)

When money is raised through Initial Public


Offering (IPO)/ Repeat Public Offering
(RPO)/Rights Issue the company shall disclose
to the Audit Committee about the uses/
applications of funds by major category (capital
expenditure, sales and marketing expenses,

N/A

Annual Report 2012 58

N/A

There were no such vacancy

Chairman of the audit


committee is also a
depositor director
Chairman of the audit
committee will be present
in the ensuing AGM

Condition
No.

Title

Compliance status (put in the


appropriate column)
Complied

Remarks
(if any)

Not
complied

working capital, etc.), on a quarterly basis, as a part


of their quarterly declaration of financial results.
3.4.

Reporting of the Audit Committee

3.4.1

Reporting to the Board of Directors

3.4.1 (i)

The Audit Committee shall report on its


activities to the Board of Directors.

3.4.1 (ii)

The Audit Committee shall immediately report


to the Board of Directors on the following
ndings, if any:

3.4.1 (ii) a) Report on conflicts of Interests.

3.4.1 (ii) b) Suspected or presumed fraud or irregularity or


material defect in the internal control system;

3.4.1 (ii) c) Suspected infringement of laws, including


securities related laws, rules and regulations;

NIL

3.4.1 (ii) d) Any other matter which shall be disclosed to


the Board of Directors immediately.

NIL

Communicated to
regulator duly

3.4.2

Reporting of anything having material financial


impact to the Commission.

NIL

3.5

Reporting to the Shareholders and General Investors.

NIL

External/Statutory Auditors should not


be engaged in:

4 (i)

Appraisal or valuation services or fairness opinions.

4 (ii)

Financial information systems design and


implementation.

4 (iii)

Book-keeping or other services related to the


accounting records or nancial statements.

4 (iv)

Broker-dealer services.

4 (v)

Actuarial services.

4 (vi)

Internal audit services.

4 (vii)

Any other service that the Audit Committee


determines.

4 (viii)

No partner or employees of the external audit


firms shall possess any share of the company
they audit at least during the tenure of their
audit assignment of that Company.

Subsidiary Company

5 (i)

Provisions relating to the composition of the


Board of Directors of the holding company shall
be made applicable to the composition of the
Board of Directors of the subsidiary company.

5 (ii)

At least 1 (one) independent director on the Board of


Directors of the holding company shall be a director
on the Board of Directors of the subsidiary company.

Annual Report 2012 59

Corporate Governance

Condition
No.

Title

Compliance status (put in the


appropriate column)
Complied

Remarks
(if any)

Not
complied

They have reviewed financial Statements for


the year and that to the best of their knowledge
and belief:

6 (i) a)

These financial statements do not contain any


materially untrue statement or omit any
material fact or contain statements that might
be misleading.

6 (i) b)

These financial statements together present a


true and fair view of the companys affairs and
are in compliance with existing accounting
standards and applicable laws.

6 (ii)

There are, to the best of knowledge and belief,


no transactions entered into by the company
during the year which are fraudulent, illegal or
violation of the companys code of conduct.

Reporting and Compliance of Corporate


Governance:

7 (i)

The company shall obtain a Certificate from a


Professional
Accountant/Secretary
(CA/CMA/CS) regarding compliance of
conditions
of
Corporate
Governance
Guidelines of the Commission and shall send
the same to the shareholders along with the
Annual Report on a yearly basis.

7 (ii)

The directors of the company shall state, in


accordance with the Annexure attached, in the
directors' report whether the company has
complied with these conditions.

5 (iii)

The minutes of the Board meeting of the


subsidiary company shall be placed for review
at the following Board meeting of the holding
company.

5 (iv)

The Minutes of the respective Board meeting


of the holding company shall state that they
have reviewed the affairs of the Subsidiary
Company also.

5 (v)

The Audit Committee of the holding company


shall also review the Financial Statements, in
particular the investments made by the
Subsidiary Company.

Duties of Chief Executive Officer (CEO) and


Chief Financial Officer (CFO):

6 (i)

Annual Report 2012 60

Annexure-IV
Status of Compliance of Bangladesh Banks guidelines for Corporate Governance (BRPD circular no 16 dated 24.07.2003)
Sl
No.
1.

Compliance
Status

Particulars
Responsibilities and authorities of the board of directors:

(a) Work-planning and strategic Management:

Complied

(b) Lending and risk management:

Complied

(c) Internal control management:

Complied

(d) Human resources management and development:

Complied

(e) Financial management:

Complied

i) The board shall determine the objectives and goals and to this end shall chalk out strategies and
work-plans on annual basis. It shall specially engage itself in the affairs of making strategies
consistent with the determined objectives and goals and in the issues relating to structural change
and reorganization for enhancement of institutional efficiency and other relevant policy matters. It
shall analyze/monitor at quarterly rests the development of implementation of the work-plans.
ii) The board shall have its analytical review incorporated in the Annual Report as regard the success/
failure in achieving the business and other targets as set out in its annual work-plan and shall
apprise the shareholders of its opinions/recommendations on future plans and strategies. It shall
set the Key Performance Indicators (KPIs) for the CEO and other senior executives
and have it evaluated at times.
(i) The policies, strategies, procedures etc. in respect of appraisal of loan/investment proposal, sanction,
disbursement, recovery, reschedulement and write -off thereof shall be made with the boards approval
under the purview of the existing laws, rules and regulations. The board shall specifically distribute the
power of sanction of loan/investment and such distribution should desirably be made among the CEO
and his subordinate executives as much as possible. No director, however, shall interfere, directly or
indirectly, into the process of loan approval.
(ii) The board shall frame policies for risk management and get them complied with and shall monitor at
quarterly rests the compliance thereof.
The board shall be vigilant on the internal control system of the bank in order to attain and maintain
satisfactory qualitative standard of its loan/investment portfolio. It shall review at quarterly rests the
reports submitted by its audit committee regarding compliance of recommendations made in internal
and external audit reports and the Bangladesh Bank inspection reports.
(i) Policies relating to recruitment, promotion, transfer, disciplinary and punitive measures, human
resources development etc. and service rules shall be framed and approved by the board. The
chairman or the directors shall in no way involve themselves or interfere into or infiuence over any
administrative affairs including recruitment, promotion, transfer and disciplinary measures as executed
under the set service rules. No member of the board of directors shall Compled be included in the
selection committees for recruitment and promotion to different levels. Recruitment and promotion to
the immediate two tiers below the CEO shall, however, rest upon the board. Such recruitment and
promotion shall have to be carried out complying with the service rules i.e., policies for recruitment and
promotion.
(ii) The board shall focus its special attention to the development of skills of banks staff in different fields
of its business activities including prudent appraisal of loan/investment proposals, and to the adoption
of modern electronic and information technologies and the introduction of effective Management
Information System (MIS). The board shall get these program incorporated in its annual work plan.
(i) The annual budget and the statutory nancial statements shall finally be prepared with the approval
of the board. It shall at quarterly rests review/monitor the positions in respect of banks income,
expenditure, liquidity, non-performing asset, capital base and adequacy, maintenance of loan loss
provision and steps taken for recovery of defaulted loans including legal measures.
(ii) The board shall frame the policies and procedures for banks purchase and procurement activities
and shall accordingly approve the distribution of power for making such expenditures. The maximum
possible delegation of such power shall rest on the CEO and his subordinates. The decision on matters
relating to infrastructure development and purchase of land, building, vehicles etc. for the purpose of
banks business shall, however, be adopted with the approval of the board.

Annual Report 2012 61

Corporate Governance

Sl
No.

Particulars

(f) Formation of supporting committees:

For decision on urgent matters an executive committee, whatever name called, may be formed with

Compliance
Status
Complied

the directors. There shall be no committee or sub-committee of the board other than the executive
committee and the audit committee. No alternate director shall be included in these committees.

(g) Appointment of CEO:

The board shall appoint a competent CEO for the bank with the approval of the Bangladesh Bank.
2.

Complied

Responsibilities of the chairman of the board of directors:


(a) As the chairman of the board of directors (or chairman of any committee formed by the board or any

director) does not personally possess the jurisdiction to apply policymaking or executive authority, he
shall not participate in or interfere into the administrative or operational and routine affairs of the bank.

Complied

(b) The chairman may conduct on-site inspection of any bank-branch or nancing activities under the

purview of the oversight responsibilities of the board. He may call for any information relating to banks
operation or ask for investigation into any such affairs; he may submit such information or investigation

report to the meeting of the board or the executive committee and if deemed necessary, with the
approval of the board, he shall effect necessary action thereon in accordance with the set rules through
the CEO. However, any complaint against the CEO shall have to be apprised to Bangladesh Bank
through the board along with the statement of the CEO.
(c) The chairman may be offered an of ce-room, a personal secretary/assistant, a telephone at the
of ce and a vehicle in the business-interest of the bank subject to the approval of the board.

3.

Responsibilities of the adviser:

The adviser, whatever name called, shall advise the board of directors or the CEO on such issues only
for which he is engaged in terms of the conditions of his appointment. He shall neither have access to
the process of decision-making nor shall have the scope of effecting executive authority in any matters

Complied

of the bank including nancial, administrative or operational affairs.


4.

Responsibilities and authorities of the CEO:

The CEO of the bank, whatever name called, shall discharge the responsibilities and effect the
authorities as follows:
(a) In terms of the nancial, business and administrative authorities vested upon him by the board, the
CEO shall discharge his own responsibilities. He shall remain accountable for achievement of nancial
and other business targets by means of business plan, ef cient implementation thereof and prudent
administrative and nancial management.
(b) The CEO shall ensure compliance of the Bank Companies Act, 1991 and/or other relevant laws and
regulations in discharge of routine functions of the bank.
(c) The CEO shall report to Bangladesh Bank of issues violative of the Bank Companies Act, 1991 or
of other laws/regulations and, if required, may apprise the board post facto.
(d) The recruitment and promotion of all staff of the bank except those in the two tiers below him
shall rest on the CEO. He shall act in such cases in accordance with the approved service rules on
the basis of the human resources policy and sanctioned strength of employees as approved by the
board. The board or the chairman of any committee of the board or any director shall not get involved
or interfere into such affairs. The authority relating to transfer of and disciplinary measures against the
staff, except those at one tier below the CEO, shall rest on him, which he shall apply in accordance with
the approved service rules. Besides, under the purview of the human resources policy as approved by
the board, he shall nominate of cers for training etc.

Annual Report 2012 62

Complied

To us, the path to


sustainability is green.
Our endevour to protect
green will prevail.

Annual Report 2012 63

Sustainability
Report
Corporate sustainability is a business approach that
creates long-term consumer and employee value by
not only creating a green strategy aimed towards the
natural environment, but taking into consideration every
dimension of how a business operates in the social,
cultural, and economic environment. It also formulates
strategies to build a company that fosters longevity
through transparency and proper employee development.
In respect of corporate sustainability, PBL has focused on
following specific key areas of:

Nation building

Enhancement of market place

Promotion of the work place

Support to the community

Protection of environment

Nation Building
The best way to support the country is to do something
better in the area of operation. PBL constantly showed
strong performance which has helped the stability of the
banking sector. The local and international recognition of
the published accounts has helped to establish integrity
of the countrys financial system. PBL will continue to
play the pivotal role in this regard. Agriculture and SME
financing have become keys to economic growth of the
country and without opening up of the financial sector to
semi urban and rural areas, the projected growth of the
economy will not be achievable. PBL has given strong
focus in these areas which are evident from the growth rate
achieved during the year. Public service is still inefficient
and as such emphasis is also given in infrastructure
development which includes financing for communication,
telecommunication, bridge, roads and highways etc. This
will have positive impact in national growth.
Contribution to National Exchequer
PBL has contributed significantly to the governments
effort in collection of revenue. As per law, the bank deducts
at sources income taxes, VAT and excise duty from
various payments and services and deposits the same
to government exchequer. Besides, the bank also pays
income tax on its earnings. Total payment to government
exchequer during 2012 is depicted below:
Annual Report 2012 64

Particulars
Payment of income tax on banks
earnings
Income tax, VAT and excise duty
deducted at source from various
payment and services by the
bank
Total payment

Taka in million

2012
1,992.69

2011
2,761.31

2,865.19

1,842.41

4,857.88

4,603.72

Supplier payment policy


PBL always adheres to well set payment policies for all
suppliers and explains them in details about the payment
method and system and reviews process before providing
work order. Bills are paid according to the payment terms
and VAT and other withholding taxes are deducted from
bills as per law. As of date of this report, there is no legal
case filed by the bank or filed against the bank by any
supplier.
Enhancement of Market Place
The best published accounts award of ICAB, ICMAB
and SAFA over the years for the published reports and
accounts is the testimony of good governance, compliance
with IAS, BAS and other regulatory requirements. Market
discipline is gradually being established as more banks
are now encouraged to give adequate information to
the shareholders and their compliance status is also
improving.
Capacity Development in the Banking and Financial
Sector
PBL believes that professional development of the people
working in the banking and financial sector will immensely
help to readdress various risk elements involved in
banking transactions. With that aim in view the bank took
some unique initiatives which were appreciated by the
participants. Some of the initiatives are given below:
During the year 2012 Islamic Banking Division arranged
Ifter Mahfils and discussion meetings and held formal and
informal discussions on various Shariah issues, Islamic
banking activities and importance of the Holy Ramadan.
Members of Shariah Council, eminent thinkers on Islamic
Ideology and customers participated in the discussion
meeting.
The bank as per agreement with the Bangladesh Institute
of Bank Management (BIBM), the apex body of the training
institutes for the bankers in Bangladesh, sponsors the
prize money given to the students securing first, second
and third position in the Masters in Bank Management
(MBM) examination of the institute.

PBL encourages the participation of graduates in the


business processes of the bank through its internship
program. This initiative of the bank allows fresh and
meritorious graduates from Business Schools and
Universities to get on hand experience about the different
processes in banking. These experiences help them to
plan their career path more effectively.

new positions initially. PBL has given full paid internship


opportunity to 385 students from different universities.
The bank strongly encourages and facilitates the females
to take part in workforce and to take leadership.
Percentage of female employees

PBL sponsored a couple of learning events like workshops/


conferences organized by renowned educational
institutions of the country.
Promotion of the work place
Human Resources
PBL is working with a vision of converting human resources
into human capital through appropriate knowledge, skills,
abilities and personal attribution. A healthy environment
has been created where employees enjoy working with
pride. Believing that the human resources are main
elements behind the success and future sustainability
of the bank, the bank is developing and motivating the
workforce with contemporary HR policies and attractive
benefits. The bank is not only offering a job but also a
learning, challenging and rewarding career.
The HR Division had a focus to establish PBL as the best
employer of choice in the banking sector by creating an
attractive, inclusive and safe environment that recognizes
the talents and encourages employees to take ownership
for their professional and personal growth. HR Division
has been coming up with relentless recommendations
and contributions in each stage of employee life cycle
starting from hire to retire. The Division has undertaken
an initiative to align its core HR functions including but
limiting to attracting, developing, retaining talents with
the strategy of the bank. The individual sections in the
Division i.e., recruitment, compensation, separation,
mobilization, discipline and organization development
have proficiently carried out their roles in transforming the
human resources into human capital.

20%
19%
18%
2010

2011

Total Workforce by Age Group


Age Group

2010

Above 55
45-55
35-45
25-35
Below 25
Total

From inception, the bank is successfully developing in


bringing diversity in workforce in context of age, gender,
ethnicity and locality. There is an increasing trend in
workforce along with the business and span of service.
With 130 branches, 3 off-shore banking units and 5
subsidiaries spread across home and abroad, the bank is
a proud employer of a diversified pull of people. The bank
has opened 11 new branches during 2012 creating 100

29
151
566
1,325
68
2,139

2011
35
162
631
1,401
63
2,292

2012
41
182
786
1,498
37
2,544

Recruitment and Selection


The recruitment and selection unit of HR Division has
carried out a massive talent acquisition during 2012. The
bank strongly believes that its human resources are the
driving force behind the financial excellence. Along with
developing an internal pool of competent workforce, HR
Division also ensures that there is steady flow of skilled
and experienced employees from the job market who can
deal with the new challenges of time. HR also contributes
in the management and leadership development in
every area of the bank with sourcing the best potential
candidates and developing a synergy between the
employees and the bank.

Here are some of the highlights and major achievements


of HR Division in 2012:
Diversity in workforce

2012

Recruitment in 2012

28%
72%

Fresh Entrance (Management Trainee and Trainee Assistant)


Lateral Entrance

Annual Report 2012 65

Sustainability Report
Instead of simply filling up the employee gap in certain
positions of the bank, the recruitment and selection team
emphasized on the Best Fit philosophy that can assure
placing right people in right place at the right time. In line
with these, the HR Division has facilitated the recruitment
for a total of 317 including both fresh and lateral candidates
in 2012.
Recruitment trend

318
260

2011

2012

Training, Learning and Development


PBL has created a learning environment through its
robust on the job and classroom training facilities. To
develop the fresh and young officers with banking norms
and knowledge and keep the existing pool updated with
contemporary practices, the bank has a range of Basic and
Advanced level Banking, IT, Soft Skill and Management &
Leadership Development trainings and workshop. These
are arranged and provided from banks HR Training and
Development Center (HR-TDC).
HR-TDC arranged 19 professional training courses and
88 workshops and seminars during the year 2012 where
2,250 employees of different grades participated.

No. of participants in different types of training by HR-TDC

Foundation, 245

IT, 662
Leadership
Development, 41

Core
Banking, 1332

Soft Skill, 463

Specialized, 40

A good number of employees of the bank were also sent to


attend various training, workshops and seminars arranged
by different training academies in home and abroad.
Annual Report 2012 66

Sl.
Title
No.
A. Training Course
01 Foundation Training Course
for MT
02 Foundation Training Course
for TA (General)
03 Foundation Training Course
for TA (Cash)
04 Advanced International Trade
Payment and Finance
Advanced Credit Management
05
(ACM)
06 T-24 System
Total
B. Workshops
01 Reporting System of SBS1, SBS-2 & SBS -3 to
Bangladesh Bank
02 Legal Aspects of Securities
and Documentation
03 Green Banking
04 Bangladesh Electronic Fund
Transfer Network (BEFTN)
05 IT Audit & Security and
Prevention of Fraud in Banks
06 Altitude to create awareness
07 Supply Chain Management
08 Preparation of Rationalized
Input Templates (RIT)
09 Classification of non-performing
loans & advances
10 Office Automation Software
11 Retail Banking and Consumer
Finance
12 Laws, Regulations & Practice
in Banks
13 Risk Based Audit, Internal
Control & Compliance and
Supervision
14 General Banking Operation
15 Credit Risk Grading (CRG)
System in Banks
16 Islamic Banking Operations &
Finance
17 Orientation Program
18 SBS-3 and SME Data
Reporting
19 Centralized Retail Banking
System (RSys)
20 UCPDC 600 and related ICC
Publications
21 Cash Management &
Detection, Disposal of Forged
and Mutilated Notes
22 Priority Banking
21 Rules and Procedures in
Foreign Remittance
22 ADC products and operational
procedure
23 Dual card payment procedure
24 Basel-II: Implication & BaselIII and Stress Testing
25 Ethics, Etiquette & Manner in
Banks
26 Leadership and Negotiation Skills
Total
Grand Total (A+B)

Number

Total
participants

36

69

101

18

60

10
19

143
427

49

67

3
1

145
30

81

12
1
1

238
40
12

38

10
2

200
86

35

37

2
1

75
22

20

2
4

39
122

10

110

20

22

1
1

28
36

113

1
1

36
51

30

1
68
87

41
1,823
2,250

No. of participants sent outside for training


Abroad, 28
Bangladesh instute
of Bank Management 15
other TrainingInstitute, 92

Bangladesh Bank training


Academy, 32

Mobilization of Human Resources


With continuous effort of HR Division, the bank has created
a strength based culture where right people are placed at
right place. To comply with the policy of the Bangladesh
Bank to transfer the employees who are more than 3
years in the same branch, the bank has already prepared
a transfer planning and rolling it out very meticulously.
Employee Code of Ethics and Business Conduct
'Prime Bank Employee Code of Ethics and Business Conduct'
is a framework of ethical behavior for all the employees of
the organization. Following are the key principles of 'Prime
Bank Code of Ethics and Business Conduct':

Trainees with Outstanding Performance


(TOP) Award will be given to the top performers
in foundation training program.
Around the Year Appreciation Award (AAA) is
an informal and non monetary recognition which
will be given to employees for performing any job
well done any time during the year.

Service Benefit
The bank is maintaining a welfare fund taking contribution
from both employees and the bank to support the employees
and their families on the ground of medical, maternity,
retirement, disability and death claim. In 2012, a total of
Tk 15.02 million was sanctioned to support 314 employees
on the above mentioned ground. Contributory Provident
Fund Facility, Gratuity Fund, Retirement Benefits, Leave
Fare Assistance, Risk Allowance for Tellers, Technical
Allowance, two Festival Bonuses, Incentive / Performance
Bonus, Employee House Building Loan Scheme, Employee
Car Scheme for Executives, Employee Consumer Credit
Scheme Loan, Professional Qualification Achievement
Monetary Award, Scholarship or monetary allowance for
meritorious children of employees through benevolent fund
are mentionable service benefits of the bank.

Service to customers with uncompromising


integrity, utmost respect, unwavering responsibility and
dedicated citizenship;
Protect privacy and confidentiality of customer information;
Prevent money laundering and fraud;
Demonstrate workplace respect.

Organization Development

Reward and Recognition Program for Human Resources

After incorporation, the big achievement of OD was


planning a comprehensive HR software called HR
Connect and developing its first phase which will be a
platform to avail HR services online in smarter and easier
way. It will automate various HR jobs to obtain greater
efficiency. It will also help the management with smart
MIS in strategic HR planning.

Provide

PBL feels that meaningful rewards and recognition provide


an effective way of raising morale and encouraging higher
levels of performance in both individual and team level.
To acknowledge and inspire outstanding performers, to
cultivate leaders who will continue to demonstrate greater
business performance and to set an example for others
in achieving similar performance, HR Division revised the
rewards and recognition policy in 2012 creating following
cash and non-cash awards for every calendar year:
The Chairmans Star of the Stars Award (CSS)
will be given to one special employee who has
delivered exceptional and beyond expectation
performance on an ongoing basis in revenue
earning or cost saving, innovation and leadership.
It is the most prestigious award provisioned for
Banker of the Year.
CEOs Banker with Exceptional Service Traits
(BEST) Award will be given to three exceptional
employees who marvel in service excellence and
constantly satisfy the customer of the bank.
Outstanding Recovery Initiative (ORI) Award
will be given to three exceptional employees for
applying best effort in recovering classified loans.
Commendable Branch Performance Award
(CBPA) is intended to inspire the branches based
on the core business performance indicators.

HR Division is continuing with the activities of Organization


Development with special emphasis in 2012. OD is
contributing towards achieving the Mission and Vision of
the bank through a planned intervention in HR policies,
processes and operations.

In the upcoming years, OD will work more in automation


and process development so that human beings and
human resources management system live and work
together for the mutual benefits. It will also concentrate on
employee engagement and motivation to make the bank
as Employer of Choice.
Major Achievement in 2012
The HR Division of the bank has achieved a number of
milestones in 2012 and aims for higher targets in 2013.
With a view to ensure excellence in every aspects of
the employees of the bank, the HR team has been
continuously renovating its policies, procedures and
practices which ensure the best interest of the bank
and the employees. In line with the Mission, Vision and
Guiding Values of the Bank, the HR Division made their
best efforts to create and sustain a dynamic workforce
and also a vibrant working environment.
Following are the mentionable success of HR Division
during 2012:

Annual Report 2012 67

Sustainability Report

Setting up new organogram in Centralized model;


of some of the HR Policies such as
Reward & Recognition Policy, Car Policy, Mobile
Phone Policy, Gratuity Policy etc.;
Developing Management Trainee Development Policy;
Developing the first phase of HR software.

Revision

HR Plan and Priorities for 2013


HR Division has planned 2013 with full of challenges and
initiatives. To build an employee centric HR culture with
most automated processes and best practices, HR will
take initiatives to review the existing policies and introduce
contemporary thoughts.
Following are the priorities of HR for 2013:
To

bring performance measurement and performance


based incentive related activities of HRM under
automation;
Training need analysis process development and
automation;
Training and development roadmap preparation;
Service benefit improvement;
Improvement of HR policies and procedures;
Adoption of thoughts of HR Accounting System;
Employee Engagement and Employer Branding
initiative taking.
Human Resource Accounting in PBL
Human resource Accounting is the process of identifying
and reporting the investments made in the human
resources of an organization that are presently not
accounted for in the conventional accounting practices.
Accounting of human resources is nothing but the
valuation of human asset in monetary terms and the
process of their recording and disclosure.
HR Accounting has some limitations which are:

There is no proper, clear-cut and specific


procedure or guidelines for finding costs and
value of human resources of an organization. The
systems which are being adopted have certain
drawbacks. Moreover, there is no universally
accepted method of the valuation of human
resources.
The period of existence of human resource
is uncertain and hence valuing them under
uncertainty in future seems to be unrealistic.
Empirical evidence is yet to be found to support
the hypothesis that HRA as a tool of management
facilitates better and effective management of
human resources.
As human resources are incapable of being
owned, retained, and utilized, unlike the physical
assets, there is a problem for the management to
treat them as assets in the strict sense.
In spite of all its significance and necessity, the Tax
Laws do not recognize human beings as assets.

Annual Report 2012 68

Considering the above limitations and as like as most


of the institutions PBL has not yet practiced Humane
Resource Accounting in the real sense. However, to
better understanding the impact of recruitment, training,
compensation and other employee benefits, the bank
calculates the ratios mentioned below which are considered
with due importance in the decision making process.
Taka in million
Ratios related to HRA
Salary cost per employee

2012
1.17

2011
0.81

Operating cost per employee

1.94

1.80

Operating income per employee

5.30

5.04

Profit before provision per employee

3.36

3.24

Profit before tax per employee

2.10

2.95

Salary cost as percentage of operating cost 54.33

50.02

Salary cost as percentage of operating income 19.90

17.88

However, PBL has the plan for adoption of thoughts of HR


Accounting System in 2013.
Support to the Community
PBL established Prime Bank Foundation and
contributes equal to 4 percent of net profit before tax
(Tk 213.41 million in 2012) as donation to this foundation
for undertaking projects in health and education sector.
PBL has strengthened the management capacity of its
Foundation, the corporate responsibility wing, having
staffed with right kind of human resources required to
reinforce its commitment to the society. Aligning with its
long term goal, the Prime Bank Foundation has chalked
out a number of long and short terms projects focusing
more on health and education to be rolled out over a
period of next 3-5 years (details of activities are given in
Prime Bank Foundation chapter of this report).
Apart from the CSR activities taken by Prime Bank
Foundation, the bank conducted various CSR activities
during the year 2012. The highlights of some of the
activities taken during the reporting period are as follows:
Support to Martyr Family
The loss of lives in the BDR carnage shocked the entire
nation. PBL took responsibility to support two such
families for Tk 0.48 million per year for ten years starting
from 2009.
Education
Sponsorship of Tk 0.50 million to Science Olympiad
organized by Bangladesh Academy of Science;
Sponsorship of Tk 0.30 million to Prime BankDhaka College Science Expo 2012 organized by
Dhaka College Science Club;
Sponsorship of Tk 0.30 million to Alumni Night
2012 of Brac University Alumni Association;
Sponsorship of Tk 0.04 million to MBM Day and
Job Fair 2012 organized by Bangladesh Institute
of Bank Management;

Donation of Tk 0.30 million to Sirajul Ulum Arabia


Madrasa;

Sponsorship of Tk 0.03 million to Shipyard


School and College, Khulna;

Sponsorship of Tk 0.40 million to Prime BankNDDC (Notre Dame College Debate Club) 24th
National Debate Competition;

Sponsorship of Tk 0.20 million to Inter University /


School Debate Competition organized by London
College of Legal Studies.

Donation of Tk 0.50 million to a cancer patient for

of Ms Sigma Haque;

of

Tk

0.03

million

to

Tennis

Sponsorship of Tk 0.30 million to Jatio Rabindra


Sponsorship of Tk 0.05 million to 17th Anniversary

15th International Rating Chess Tournament


organized by Leonine Chess Club;

Sponsorship of Tk 0.55 million to Junior Golf Team


of Kurmitola Golf Club for Junior Championship
in England.

Sponsorship of Tk 0.51 million for printing and distribution


Sponsorship of Tk 0.05 million to a program of
News Broadcasters Association of Bangladesh;

Sponsorship of Tk 0.02 million to Chaudanga


Zilla Samity;

Sponsorship of Tk 0.10 million to FBBCI for


arranging seminar and dinner party;

Sponsorship of Tk 0.02 million to 1st National


Inter School Freshers Champion Debaters

Sponsorship of Tk 3.78 million to Prime Bank


Cup Golf Tournament at Kurmitola Golf Club;

Donation of Tk 0.05 million to Bengali New Year

of 5,000 pcs books on Bangladesh economy;

Leonine Chess Club


Sponsorship of Tk 0.47 million to Prime Bank

Sponsorship of Tk 0.41 million to International

Bangladesh;

Sponsorship of Tk 0.22 million to Prime Bank 7th


International Womens Tournament organized by

Canadian

Celebration-1419 of News Presenters Society of

Sponsorship of Tk 0.30 million to Banskhali


Shadhinota Gold Cup Football Tournament-2012;

by

Bangla Festival & Book Fair-2012;


Club;

organized

of Chittagong Stock Exchange;

Tournament-2012 organized by Naogaon Tennis

2012

Sangeet Sammilon;

Sponsorship of Tk 0.30 million to Pallima


Donation

Sponsorship of Tk 0.62 million to Canada


Chamber of Commerce;

Donation of Tk 0.20 million to a cardiac patient for

Sangshad Badminton Tournament;

Sponsorship of Tk 1.00 million to a cultural

Showcase

Games & Sports

Sponsorship of Tk 0.05 million to Prime Bank Kite


Festival-2012;

Donation of Tk 0.03 million to a kidney patient for

his treatment.

Sponsorship of Tk 0.03 million to an Art exhibition

program organized by all community club;

her treatment;

Sponsorship of Tk 0.10 million to a seminar on


history and tradition;

his treatment;

Sponsorship of Tk 10.00 million to Bangla


Academy Ekusha Book Fair 2012;

Health

Arts & Culture

League-2012;

Sponsorship of Tk 0.01 million to Sandhani for


Art competition;

Sponsorship of Tk 3.50 million to Hirok Joyonti of


Dhaka University;

Sponsorship of Tk 3.00 million to Positioning


Bangladesh, branding for business;

Sponsorship of Tk 0.64 million to organize


remittance based star night at Doha;

Sponsorship of Tk 0.45 million to Bijoy Parbone Utshab;

Sponsorship of Tk 2.00 million to 31st celebration


of Dhaka Club;

Launching of Prime Bank Cricket Club (PBCC)

Sponsorship of Tk 0.10 million to Bangla Darpan to


pay lifelong honor to language activist Dr. Abdul Matin

Annual Report 2012 69

Sustainability Report
Disaster Management

Distribution of blankets of Tk 5.08 million to the


winter distressed people;

Donation of Tk 0.50 million to the fire affected


workers of Tazreen Garments.

Distribution of blankets to the winter distressed people

Others (for benefits of mass people)


Sponsorship of Tk 0.10 million for the top


3 students of Bangladesh Institute of Bank
Management (BIBM) in the Masters in Bank
Management (MBM) examination;

Sponsorship of Tk 0.30 million to Desh TV to


organize a program on budget discussion;

Donation of Tk 2.50 million to Proyash, an


institute working for betterment of Handicapped
children, patronized by Bangladesh Army;

Sponsorship of Tk 0.10 million to Chittagong Boat Club


to inaugurate the club house and passenger vessel;
Tk 0.34 million for setting public addressing
system at Chittagong Mohila Samity school;
Sponsorship of Tk 0.10 million to marine academy
for best cadet;

Annual Report 2012 70

Tk 0.75 million for distribution of 5 formalin dehydrate machine to FBCCI;


Tk 2.50 million for Jessore press club construction;
Tk 0.10 million for financial assistance to
Bangladesh Bannya Prani Sheba Foundation.

Primary health care service of PBL at Bishwa Ijtema

Promotion of Environment
The state of environment is rapidly declining in Bangladesh
and it is also a country vulnerable to climate change. The

key areas of degradation are air pollution, water pollution


and scarcity, encroachment of rivers, improper disposal of

industrial and medical waste, deforestation, less of open air


and bio diversity. The environment degradation needs to be
tackled in a concerted manner by all and society demands
that businesses also take responsibility in safeguarding the
planet. Green Banking is a component of the global initiative

to save environments. Banking sector in Bangladesh took


steps in this regard particularly in the field of Green financing

but the activities got new momentum after issuance of


Policy Guidelines for Green Banking by Bangladesh Bank
in the regard. PBL attaches great importance to these

initiatives and already made satisfactory progress in this


regard. Details of Green Banking initiatives of PBL are given
in Green Banking chapter in this Annual Report.

Corporate Social Responsibility

Yearly donation to the families of BDR carnage at Pilkhana.

Governor of Bangladesh Bank inaugurating


Prime Bank Eye Hospital.

Prize giving Ceremony of Prime Bank Cup


Golf Tournament 2012 at KGC

Scholarship awarding at BIBM, Dhaka

Prize giving ceremony of Prime Bank-NDDC National Debate


Competition.

Crest distribution of Childrens Art Competition Organised by PBL

Prize distribution at the Conclusion of International Rating


Chess Tournament-2012

Inaugural ceremony of 24th National Debate Competition

Annual Report 2012 71

Sustainability Report
Green Banking
Green banking considers all the social and environmental
factors along with financial priorities with an aim to
protect the environment as well as to foster the economic
development in a more environment friendly way. It
is an opportunity to make a positive contribution to

PBL attaches great importance to these initiatives and


already made satisfactory progress in this regard. Given
below are the actions taken by PBL related to green banking:
Policy formulation and Governance
In line with the global development and response to the
environmental degradation and as per instructions of
Bangladesh Bank, PBL has already established its Green
Banking Policy named as PBL Environmental Blueprint.
A Green Banking Cell (GBC) has been formed with the

environmental and social concerns by enacting policies

task of developing policies, planning and administering

designed so that the business operations do not degrade

the green banking initiatives of the bank.

the environment or turns harmful for the society. It covers


a multitude of areas from a bank being environmentally
friendly to how their money is invested. Global warming is
an issue and has direct impact on bio-diversity, agriculture,

Incorporation of Environmental Risk in CRM


PBL has integrated the Environmental Risk Policy with its
Credit Risk Management Policy as part of the due diligence
review. It includes planning, training, implementation,

fisheries, dry land, water resources and human health.

measurement, reporting and reviewing and it will be

The environmental degradation needs to be tackled in

applicable to new business and existing business that

a concerted manner by all and society demands that


businesses to take responsibility in safeguarding the
planet. The key areas of degradation are air pollution,
water pollution, encroachment of rivers, disposal of
industrial and medical waste, deforestation, less of
open air and bio diversity and so on. Green banking is a

comes up for renewal or extension. The incorporation of


the environmental scanning to assess credit risk of the
borrowers and refrain from financing projects which would
have direct adverse impact on water pollution, health,
encroachment of rivers and deforestation.
Sector Specific Environmental Policies

component of the global initiative to save the planet.

PBL has already formulated strategies to design specific

Bangladesh is in a vulnerable stage in terms of climate

such as ready made garments and textile, ship breaking

change. In line with global development and response


to the environmental degradation, financial sector in
Bangladesh should play important roles as one of the key
stake holders. Banking sector in Bangladesh took steps in
this regard particularly in the field of green financing but
the activities got new momentum after issuance of Policy
Guidelines for Green Banking by the Bangladesh Bank in

policies for different environmental sensitive sectors


industry etc. Further sector specific environmental policies
will be formed in the near future.
Green Strategic Planning
The bank has determined green targets to be attained
through strategic planning and disclosed for green
financing and in-house environment management as well.
For in-house environment management, the target areas

this regard. PBL recognizes that balancing non-financial

cover attaining energy efficiency in the form of the use of

factors such as environmental and social issues with

renewable energy, reduction of electricity, gas, and petrol

financial priorities is essential with a view to demonstrate


the characteristics of good corporate governance.
There are direct impacts on the environment through
the daily consumption of energy and other resources.
In addition, there are indirect effects on the environment
through the provision of financial services to projects in
environmentally sensitive areas.

Annual Report 2012 72

consumption, reduction of Green House Gas (GHG)


emissions, issuance of e-statements, electronic bill pay,
saving papers, environment friendly office buildings etc.
For green financing, the target areas cover reducing
loans for certain environmentally harmful activities,
attaining particular percentage of environmental loans
as percentage of total loans and introducing eco-friendly
financial products etc.

Setting up Green Branches

friendly. The projects which contribute to degradation

A Green Branch is featured by the provision of the

or deterioration of the environmental issues are usually

maximum use of natural light, use of renewable energy,


use of energy saving bulbs and other equipments,
reduced water and electricity use, use of recycled water
etc. Such a branch of a bank is specifically designated
as a Green Branch. PBL has 12 branches and 5 SME
branches powered by solar energy.

avoided. The bank financed Effluent Treatment Plants


(ETP) of RMG and textile sectors and other biogas
projects. In 2012, the bank extended finance of Tk 94.42
million for installation of ETP and Tk 346.28 million for
financing projects having ETP. The bank has further
strengthened its green banking initiatives by financing
environment-friendly Hoffman Klin based automated brick

Waste Management

fields, which contribute towards a greener climate.

Waste minimization through re-use and re-cycling are

Climate Risk Fund

the preferred methods of reducing solid waste. However,


where solid waste cannot be eliminated, the bank is careful
about its management and disposal. PBL promotes and
encourages waste management through reducing and
re-using wastes like optimum usage of office equipments
and furniture.
Improved In-house Environmental Management
Strategy of reuse, recycling of materials and equipments,
and source reduction and waste minimization strategy
is a part of in-house environmental management under
Phase-II. PBL has developed Green Office Guide to
reduce water, paper and electricity consumption like:

The instructions and communications within the


bank are becoming more online. To reduce paper
consumption both side of the paper is used for

interest rate is lower than the regular rate of interest.


Green products
PBL has introduced various products which are reducing
paper use, fuel consumption etc. Internet Banking,
Online Banking, SMS Banking and Phone Banking are
such products which are gaining popularity day by day.
These products are allowing the customers to do banking
transactions without coming to the bank physically.
Expansion of ATM network is greatly reducing the need
for cheque book and reducing consumption of security
papers etc.

PBL allocated Tk 15 million per quarter for green marketing,

Energy saving lights are used instead of


traditional bulbs / lights;
Air coolers are functioning on auto temperature
basis which helps limited running of compressor
unit and subsequently saving electricity;
LCD monitors are used instead of CRT for CCTV
systems for lower power consumption;

is expanding its exposure in agricultural sector where

As per the Bangladesh Bank guidelines, solar

branches and ATM booths;

initiative whenever there is demand for such fund. PBL

Green Marketing

been installed in specific branches, SME

partially. Besides, the bank contributes to Government

drafting and printing;


panels of adequate capacity have successfully

In 2012, climate risk funds have been created and utilized

Conversion of vehicles of banks transportation


pool and those of the employees to run on CNG.

Green Finance
Green finance as a part of green banking makes great
contribution to the transition to resource efficient and low
carbon industries i.e., green industry and green economy.
PBL financed various projects which are environment

training and capacity building. After introduction of SMS


banking, green marketing is gaining momentum. Through
push and pull system, the customers are becoming aware
of banks new products and initiatives. Employment
notices are given on website and online applications are
invited now. Kiosk machines installed at different places
for the awareness to the customers of the banks product
instead of sending paper ads and door to door mail
delivery. In addition, CSR activities had contributed to the
field of health and green finance as well.
Online Banking
All the branches of PBL are online. The bank has expanded
its ATM network and bills payment system is introduced
through ATM. PBL has used the BACH and BEFTN
mechanism for payment of wage earners remittances,
cash management and salary disbursement which greatly
supports the concept of green banking.
Annual Report 2012 73

Sustainability Report-Green Banking


Employee Training

address environmental issues and risks material to the

The employees are receiving training on regular basis to


take responsibility for implementation of these policies.
Training on green banking has become a part of regular
training programs of the bank.
To demonstrate the commitment, PBL is maintaining
and

communicating

effective

policies,

procedures,

standards and guidelines for the business activities to

management, its clients and other stakeholders. PBL


is continuously improving the system for monitoring,
measuring and transparent reporting of the performance
related to predefined targets, priorities and objectives.
With a view to developing green banking practices, PBL
has taken proactive initiatives for employees, customers
and the society as a whole.

ETP financed project

Solar panel setup at a branch

Kuril Flyover

Battery Manufacturing Factory

Potato cultivation under agreculture finance of PBL

A mango garden financed by PBL

Annual Report 2012 74

Corporate Management

Annual Report 2012 75

Senior Management

Left :
Quazi A. S. M. Anisul Kabir
Deputy Managing Director & COO

Middle :
Md. Ehsan Khasru
Managing Director & CEO

Right :
Md. Tabarak Hossain Bhuiyan
Deputy Managing Director & COEM

Muhammad Yasin Ali


Deputy Managing Director (ICC)

Ahmed Kamal Khan Chowdhury


Deputy Managing Director & COFGB

Kanti Kumar Saha


Deputy Managing Director & CBO

Annual Report 2012 76

Managing Director
Md. Ehsan Khasru

Senior Vice President

Deputy Managing Director


Ahmed Kamal Khan Chowdhury
Muhammad Yasin Ali
Kanti Kumar Saha
Md. Tabarak Hossain Bhuiyan
Quazi A. S. M. Anisul Kabir

Vice President

Md. Didarul Alam


Imtiaz Ahmed Siddiqui
Sarqume Mohd. Kabir
A B M Habibur Rahman
Jahan Ara Begum
Mohammed Abul Kalam
Ferdousi Sultana
Md. Moniruzzaman
S. H. Mukhter Ahmed
Md. Milon Miah
Md. Iftekhar Uddin
Md. Abdus Shukur
Kazi Tozammel Huq
Kamruzzaman Khairul Kabir
Md. Fakhrul Islam
Syeda Nazma Parvin
Nuhal Ahmed Choudhury
Md. Hafizur Rahman Mallick
A K M Kamal Uddin
Md. Habibur Rahman
Md. Shahin Alam
Md. Toufiqur Rahman Ayeni
Abu Ashraf Siddique
Sharif Uddin Choudhury
Mohammad Jashim Uddin
Md. Mazharul Haque
Abdur Rashid Miah
Md. Omar Faruque
Mohd. Afzal Hossain
Md. Ramiz Uddin Miah
Md. Mahiuddin Ahmed
Md. Giash Uddin
A K M Jan-e-Alam
Mohammed Zakaria
Syed Sahadat Hossain
Md. Shamsuddin
Imtiaz Ahamed Bhuiyan
Md. Zahirul Islam
Mozammel Hoque
Md. Shah Alam Howlader
Md. Anwarul Islam
Ashraf Uddin Ahmed
Md. Amzad Hossain
Dewan Arfanul Alam
Syed Md. Nazmul Huque
Md. Ibrar
Md. Omar Kabir
Masudur Rahman
Md. Shahidul Alam
M A Mubin
Mir Md. Hassanul Zahed
Gazi Salauddin
Mohd. Jamil Hossain
Shamsher Jamal
Md. Tarique Parvez Jewel
Mohammad Yaqub
Md. Iftekhar Hossain
Mostafa Hasan
Md. Tofazzul Hossain
A N M Baki Billah
Md. Moniruzzaman
Morshed Ahammed
Anwarul Hoque
Md. Rezaul Haque
Md. Muhibbur Rahman
Amirul Alam Chowdhury
Md. Salah Uddin
Md. Reza Hossain
Md. Ibrahim Hossain Gazi
Md. Amir Hossain Majumder Md. Abdul Quddus
Wasequddin Ahmed Chowdhury Md. Amanullah
Joseph Halder
Md. Shaheen Howlader
Md. Abul Kalam Azad
Farhad Ahmad Khan
Muhammad Muzahid Hossain
Salahuddin Ahmed
Kazi Zillur Rahman
Taher Jamil
Syed Shafqat Rabbi
Md. Shaiful Hossain
Md. Abdul Matin
Md. Safiul Amin
Md. Fayezur Rahman Talukder

Senior Executive
Vice President
Habibur Rahman
A. O. M. Rashed
Md. Ezaz Hossain
Md. Nazim Uddin
Md. Iqbal Hossain
Kazi Mahmood Karim

Senior Asst. Vice


President

Md. Abu Taher Khan


Md. Firdous Alam
Md. Ahsan Habib
Md. Mahbub Alam
Ajmal Hoque Chowdhury
A S M Azizul Karim
Harunur Rashid Chowdhury
Kazi Azharul Islam
Md. Showkat Kamal Sarker
Md. Kamrul Islam
Mohammad Nazim Uddin
Bidyut Kumar Das
Abu Taher Md. Zakaria
Md. Kabirul Hasan
Md. Shahidul Islam
Mollah Farid Ahmed
Md. Yusuf Ali
Mohammad Nuruzzaman
Md. Jafar Hasan
A K M Enamul Haque
Md. Abdul Bari Mollah
Sharmina Banu
Dorothy Sultana
Ali Mohammad Nurul Huda
Md. Mozahid Kabir
Md. Tanveer Reza
Md. Mamunur Rashid
Mohd. Asaduzzaman
Zahed Iqbal
Sharmin Akther
Giash Uddin Ahmed
Md. Ziaul Latif
Abdul Mannan Khan
Farid Ahmed
Syed Tazul Islam
S M Khurshed Alam
Kazi Moinul Haque
Md. Aminur Rahman Akanda
Sirajul Hoque
Debashis Chakraborty
Md. Khaled Anwar
Mohammed Abu Shayem
Md. Arman Uddin Bhuiyan
Md. Taj Uddin Ahmed
Md. Syadur Rahman
Md. Iqbal
Hasan-Ul-Huq
Tofail Ahmed
Md. Ruhul Quisth
Farid Ahmed
Md. Tajul Islam
Md. Ashiqur Rahman
Mohammad Nazrul Islam
Mohammad Khurshid Alam
Muhammad Asiful Haque
Shanila Mehjabin

Executive Vice
President

Hasan Mohiuddin Bhuiyan


Sheikh Mortuza Ahmed
Shahidur Rahman Khan
Nasim Sekander
Md. Anwarul Islam
Mohammed Ehsan Habib
A S M Fasiul Islam
Khondoker Fazle Haider
Abdus Salam Khan
Farhad Uddin
Sk. Matiur Rahman
Muhammad Anowarul Islam
Md. Mashiur Rahman
Abu Zafar Md. Sheikhul Islam
Sk. Anisuzzaman
Md. Shahadat Hossain
Md. Shahjahan Majumder
K. M. Bodroudoja

Asst. Vice President

Md. Alamgir
Iqbal Haider
Afzalun Nahar
Mohammad Ashrafuzzaman
S M Parvez Kabir
A B M Shahjahan
Md. Rabiul Ahasan
Md. Nuruzzaman
Mohd. Baqui Billah
Md. Nazrul Islam
Mohammad Asif Chowdhury
Sayed Delwar Hossain
Md. Nasir Uddin
Md. Abdur Raafi
Syed Mahammed Ali Suhel
Mahmood Khan
Md. Ariful Haque
Ekram Ullah Chowdhury
Nazrul Islam
Nehal Hossain
Md. Nazrul Islam
Md. Rabiul Islam
Md. Rezwan Uddin Swhel
Florence Sutopa Majumder
Kamrun Nahar
Md. Mainul Kabir
A K M Abdul Alim Ibne Khabir
Mohammad Jahangir Bhuiyan
Md. Moinul Hasan
Md. Mobasshirul Islam
A T M Ahsan
Kazi Khairul Islam
Amal Chandra Basak
Md. Mizanur Rahman
Mohammad Shawkat Ali
Khandoker Raihan Ali
Md. Emdad Hossain
Mohammad Nazmul Hossain
Mohammad Kamal Uddin
A H M Be-darul Alam Goni
S M Shahidul Islam
Shah Mohd. Zakir Hossain
Md. Touhiduzzaman
Quazi Anwarul Azim
Md. Hashmot Ali Mollah
Shah Mohammad Mohsin
Mohammad Anisur Rahman
A K M Khairul Basher
Masood Mizan
Rupan Kanti Paul

Annual Report 2012 77

Annual Report 2012 78

SME Branches
Network

Islamic Banking
Division

Card Division

M-Commerce

ADC
Department

Retail Banking
Division

SME Credit

SME Banking
Division

Head of Small
Medium Retail

Chief Officer Emerging


Market & DMD

Treasury
Front Office

H.O Corporate
Banking Team

Branch Managers
Corporate Banking

Head of Wholesale
Banking Division

Chief Businiess Officer


(CBO) & DMD

Offshor Banking
Units

Corporate Liability
Marketing

Lease Finance
Unit

Export Finance
Unit

Structured Finance
Department

General Credit
Unit-2

General Credit
Unit-1

Treasury
Mid - Office

Risk Managment
Division

Credit Admin
Division

MDs
Secretariat

Operations
Division

Facility Management
Division
(Previously L&SSD)

Recovery
Division

Legal
Division

Agriculture
Support

International
Division

Proprietary
Investment
Department

IT Audit
Department

Internal Audit
& Inspection
Department
Compliance &
Monitoring
Department

Chief Officer Finance


& Global Business
& DMD

Board
Secretariat

Chief Financial
Officer (CFO)
(Financial Admin Division)

Chief Operating Officer


(COO) & DMD

Managing
Director

Chairman of the
Board of Directors

Trade Finance
Centralization
Department

Retail Banking
CRM Department

Credit Risk
Management (CRM)
Division

Chief Risk Officer


(CRO) & AMD

Board Audit
Cell

Head Office

Corporate Organogram of PBL

Anti Money
Laundering Cell

Capital Market
Division

Internal Control
& Compliance
Division

Marketing
Division

Resourch &
Development

Project Management
Officer

Human Resources
Divition

IT Divition

Brand
Communication
Department

Public Relations
Department

Strategic Planning
& Business
Promotion Dept

Chief Internal Control


&Compliance Officer
(CICCO) & DMD

Group Corporate Structure

Prime Bank Limited

Bangladeshi Companies

Overseas Companies

Prime Bank Investment Ltd. (99.99%)

Prime Exchange Co. Pte. Ltd, Singapore (100%)

Prime Bank Securities Ltd. (95%)

PBL Exhange (UK) Ltd. (100%)


PBL Finance (Hong Kong) Ltd. (100%)

Annual Report 2012 79

Management Discussion
and Analysis

demand conditions, business investment should have

Global Economy

sales, housing markets, and employment.

The world economy continued to struggle four years after


the onset of the global financial crisis as evident from the
table below. The World Bank estimated the global GDP to
grow by 2.3 percent in 2012 (2.5 percent estimated by the
IMF). Economic conditions improved modestly in the third
quarter and improved further in the fourth quarter of 2012.
Developing economies were still the main driver of global
growth where activities picked up broadly as expected
and the growth in United States surprised on the upside.
Bond spreads in the euro area declined, while prices for
many risky assets notably equities rose globally. Capital
flows to emerging markets remained strong. However, a
broad set of indicators for global industrial production and
trade indicate no further strengthening of global growth.
The third-quarter improvement in global growth was partly
due to temporary factors including increased inventory
accumulation (mainly in the United States). It also masked
old and new areas of weakness. Activity in the euro area
was even softer than expected with some signs of stronger
spillovers of the weakness to the euro area core. In Japan,
output contracted further in the third quarter.
Global GDP Growth (%)
2011
Advances
Economies

World Bank
IMF
Euro Area
World Bank
IMF
USA
World Bank
IMF
Developing World Bank
Countries
IMF
China
World Bank
IMF
India
World Bank
IMF
Bangladesh World Bank
IMF
World
World Bank
IMF
Source:

1.6
1.6
1.5
1.4
1.8
1.8
5.9
6.3
9.3
9.3
6.9
7.9
6.7
6.7
2.7
2.9

2012
2013
(Estimated) (Projected)
1.3
1.3
1.3
1.4
-0.4
-0.1
-0.4
0.2
2.2
1.9
2.3
2.0
5.1
5.5
5.1
5.5
7.9
8.4
7.8
8.2
5.1
6.1
4.5
5.9
6.3
5.8
6.3
6.0
2.3
2.4
2.5
2.7

World Bank Global Economic Prospects (January 2013)


IMF World Economic Outlook Update (January 2013)

grown quickly; instead it fell at a 1.8 percent annualized

pace in the third quarter. Data for the fourth quarter

suggest that it too will be weak despite improving retail


GDP growth for East Asia and the Pacific region is
projected to slow to 7.5 percent in 2012 largely on

account of weak external demand and policy actions in


China directed towards moderating domestic demand and
controlling inflation. Going forward, GDP growth in the

region is projected to accelerate to 7.9 percent in 2013

before stabilizing at around 7.5-7.6 percent in 2014-2015


mirroring a modest acceleration in China in 2013 followed
by growth stabilization through 2015.

South Asias growth weakened to 5.4 percent in 2012,

mainly reflecting a sharp slowdown in India. Weak global


demand exacerbated region-specific factors including

subdued investment rates, electricity shortages, policy

uncertainties, and weak monsoon rains. Sri Lankas


growth was also dampened by policy efforts to contain

overheating and a poor harvest, while growth in Bangladesh

slowed in part due to weakening exports. Inflation eased

in most South Asian countries during 2012. However,


structural capacity constraints and entrenched inflationary
expectations suggest limited scope for policy easing to

support growth. South Asias GDP is projected to rise to

5.7 percent in 2013 and 6.4 percent in 2014, helped by


policy reforms in India, stronger investment activity, and
a gradual improvement in global demand for South Asias

exports. Migrant remittances in particular from the oil-rich


Gulf Cooperation Council (GCC) countries are projected
to remain resilient and support domestic demand in Nepal,
Bangladesh and Pakistan.
Bangladesh Economy
The Bangladesh economy achieved an impressive growth
of 6.3 percent during FY12 despite the global economic

downturn. A strong demand and continued expansion

of infrastructural facilities helped to accomplish this

accelerated economic growth amidst the fragile pace of

GDP growth in the Euro area is estimated to be scaled down


in 2013 as the region faced significant headwinds including
weak external demand, deleveraging by European banks,
a poor harvest and inflationary pressures. Growth slowed
most in the countries with strong economic linkages to the
Euro area, while it was relatively robust in most resource-rich
economies that have benefited from high commodity prices.

global economic recovery. The expansion of the economy

In the United States, uncertainty over future policy in the


run up to the November elections and from the so-called
fiscal cliff contributed significantly to the dampening of the
recovery in US growth during the second half of 2012.
Normally, with improving labor market and consumer

of fertilizer, uninterrupted supply of power for irrigation,

Annual Report 2012 80

during FY12 was broad-based, registering positive growth


by all sectors and sub-sectors of the economy.

Agricultural sector contributed 19.3 percent of total GDP


in FY12 and achieved a growth of 2.5 percent aided by

continued policy support from the Government including


subsidy in input prices, adequate and timely distribution
increased credit flows and higher procurement prices of

output. Within the agriculture sector, the highest growth (5.4


percent) was achieved in the fishing sub-sector. Agriculture
and forestry sub-sector recorded 1.7 percent growth.

Industry sector emerged as the highest growing sector (9.5


percent). This was led by strong growth in manufacturing
and construction sub-sectors which recorded an impressive
growth of 9.8 percent and 8.5 percent respectively. The
accelerated growth of the sector was mainly due to huge
investment in large, medium and small scale industry.
Directives from the Bangladesh Bank to promote adequate
credit delivery and other mode of financing facilities to
Small and Medium Enterprises (SMEs) contributed to
achieve satisfactory industrial growth.
Service sector which is the largest sector of the economy
(49.5 percent of the total GDP) registered 6.1 percent
growth in FY12. Monetary intermediation (banks)
achieved growth of 9.4 percent in FY12 compared to 9.0
percent in FY11. Sectoral GDP growth performance was
as mentioned below:
1 Agriculture
2 Industry
3 Services
GDP

FY09
4.1
6.5
6.3
5.7

FY10
5.2
6.5
6.5
6.1

FY11
5.1
8.2
6.2
6.7

FY12
2.5
9.5
6.1
6.3

Source: Bangladesh Bank Annual Report (2011-2012)

6.3

5.7

6.1

6.7

GDP Growth (%)

FY09

FY10

FY11

FY12

The average inflation measured by 12-month average


basis increased from 8.8 percent in FY11 to 10.6 percent
in FY12. The rising inflation was triggered mainly by
the continuous rise in international commodity prices
including food, fuel and fertilizers, the higher than
targeted money supply growth, Taka depreciation and the
successive upward adjustments of administered energy
and petroleum prices in the domestic market. However,
the point to point basis inflation as at end December 2012
came down to 7.7 percent. This decline was mainly due
to the lower food and non-food prices. Weighted average
exchange rate for 1 US Dollar depreciated from Tk 71.17
in FY11 to Tk 79.10 in FY12 and which was Tk 79.75 for
the year 2012. Domestic savings-GDP ratio increased
from 19.3 percent in FY11 to 19.4 percent in FY12 while
investment-GDP ratio increased from 25.2 percent in
FY11 to 25.5 percent in FY12.

Monetary policy stance remained accommodative for


productive economic activities with growth supportive
financial inclusion promotion measures in credit policies
while also firmly discouraging diversion and undue
expansion of bank credit for wasteful unproductive uses
to build-up of inflationary pressures. The Bangladesh
Bank continued to support credit growth for activities
facilitating production of goods and services, providing
refinance against lending in income generating priority
sectors (agriculture, SME, low cost housing etc.) while
discouraging excessive expansion of non-essential credit
and similar other demand side lending. The increased
interest rate flexibility facilitated deposit mobilization and
restoration of balanced advance deposit ratios in banks.
The weighted average interest on bank credit increased
to 13.75 percent in FY12 compared to 12.42 percent in
FY11. On the other hand, the weighted average cost of
deposits increased to 8.15 percent in FY12 from 7.27
percent in FY11. The growth of Broad Money stood at
17.4 percent in FY12, which was significantly lower than
the growth of 21.4 percent in FY11.
Export earnings recorded growth of 6.2 percent and stood
at USD 24.0 billion during FY12 whereas import payment
stood at 32.0 billion in FY12 indicating an increase of 5.4
percent over FY11. Inward remittances from expatriate
Bangladeshi nationals increased by 10.2 percent and
stood at USD 12.8 billion in FY11. The current account
surplus was USD 1.63 billion whereas the balance of
payments registered a surplus of USD 0.5 billion in FY12
due to increased flow of FDI and portfolio investment. The
gross foreign exchange reserve held by the Bangladesh
Bank stood at USD 10.36 billion at the end of FY12 (USD
12.75 billion at the end of December 2012).
Banking Sector of Bangladesh
Banking sector of Bangladesh showed remarkable
resilience in FY12. With a view to fostering a sound, efficient
and stable financial system, the Bangladesh Bank began
implementing a number of important policy measures.
These included forceful emphasis on undertaking timely
and effective risk management practices by banks through
the revised Risk Management Guidelines. Supervisory
oversight over banks has been strengthened through routine
and periodic review of the stability of the individual banks
as well as the whole banking system reinforced through
the introduction of stress testing for bank resilience. Great
efforts have been made to broaden the inclusion of unserved and under served productive economic sectors and
population segments into the financial system with easier
access to banking services. At the same time, banks have
been encouraged to expand CSR initiatives and Green
Banking operations. The Bangladesh Bank issued new
guidelines for loan classification on provisioning for banks
Annual Report 2012 81

Management Discussion and Analysis


which came into effect from the last quarter of 2012. This
guideline increased the amount of non-performing loans and
provision requirements for banks but in the long run it will
elevate the banking practices to the best norms in the world.
Some key indicators of the banking sector of Bangladesh
are mentioned below:
Taka in billion
Particulars

Total assets
Deposits

Loans and advances

Weighted average deposit rate (%)

Weighted average lending rate (%)


Capital adequacy ratio (%)
NPL ratio (%)

FY11

FY12

5,431.5
4,082.7

6,521.2
4,937.2

7.27

8.15

3,476.8

4,115.4

12.42

13.75

7.1

7.2

9.7

11.3

Provision adequacy ratio (%)

96.4

93.9

Return on Equity (ROE) %

15.5

13.5

Return on Assets (ROA) %

1.3

1.2

Source: Bangladesh Bank Annual Report (2011-2012, 2010-2011)

Future outlook
Recent economic growth of Bangladesh averaging 6.2
percent is undoubtedly impressive. Attainment of the
expected GDP growth in FY13 will depend mainly on
effective adoption of prudent macroeconomic policies in a
sound economic environment along with global economic

recovery. Bangladesh will also need to focus on markets


outside the EU, particularly in the ASEAN and the SAARC
countries. Sound economic policies combined with the
policies contributing to rapid gains in social indicators will

contribute to the countrys aspiration to become a middle


income country in the near future.

The Bangladesh Bank has downgraded the GDP growth


forecast for FY13 to 6.2 percent from earlier projection

of 7.2 percent. The World Bank in its report on Global


Economic Prospects (January 2013) has also forecasted

GDP growth of Bangladesh to 5.8 percent in FY13 and 6.2

percent in FY14. The report mentioned that the countrys


export performance weakened in 2012, domestic demand
was supported by steady inflows of remittances and
a relatively stable agricultural performance. However,

external constraints have been exacerbated by supply


side bottlenecks including inadequate infrastructure,
energy constraints and political uncertainty. The report

forecasted that a further diversification of export markets


and gains in market share will benefit Bangladesh as

growth is expected to pick up faster in North America and


Asia compared with near-stagnant growth projected for
the Euro Area in 2013. IMF in its World Economic Outlook
Update (January 2013) has also forecasted GDP growth
of Bangladesh to be 6.0 percent in FY13.
Annual Report 2012 82

The latest monetary policy (January-June 2013) stance


by the Bangladesh Bank is designed to ensure that the
credit envelope is sufficient for productive investments to
support the GDP growth target while keeping it consistent
with the targeted inflation rate. In view of the risks to output
growth due to uncertainties around the global economy,
the Bangladesh Bank has revised its targets for broad
money and private sector credit growth. However, further
space has been created in the monetary program in case
there is greater lending appetite for productive purposes
and sufficient to accommodate even an optimistic scenario
for output growth. At the same time the Bangladesh Bank
is committed to bringing inflation down further and also to
avoiding asset price bubbles, and as such continues to
encourage banks to use the space for private sector credit
growth for productive, and not speculative purposes.
This balanced monetary policy will also aim to minimize
excessive volatility of the exchange rate. The Bangladesh
Bank will continue its intensified focus on bolstering
financial sector soundness and stability by tightening
loan classification and provisioning requirements towards
convergence with global best practice standards,
introducing online supervisory reporting requirements on
financial transactions, strengthening onsite and offsite
vigilance on risk management, internal controls and
internal audit in banks and financial institutions.
Despite the challenges, the financial sector of the country
is also expected to continue showing good results during
2013. The banking sector is still the most promising and
structured sector of the economy. It is also the most
preferred sector for the investors of the bourses as
increased remittance flows, good export performance and
steady industrial growth, accelerated performance in SME
and consumer loan, implementation of risk management
and corporate governance are likely to have positive
impact in the performance of the banking sector. PBL is
well positioned to meet the challenges of 2013 and will
continue to strive to innovate and capture opportunity
for growth and value creation. The bank will continue
to harness the potentials of retail, credit card, SME,
agriculture and remittance market. The bank will focus
on its IT based products and services for inclusion of unbanked and under-banked segment of population along
with generating more business from existing customers.
However, continued pressure on interest margins,
fees, exchange earnings and increased provision
requirement for retail, credit card, SME and Off-balance
sheet exposures will pose a challenge to the financial
sector. By adhering to good corporate governance
and practices, sound risk management policies and
strict credit evaluation procedure, PBL, in its pursuit for
growth, will have the readiness to meet the challenges
of capital adequacy under Basel-III. which is going to be
implemented in Bangladesh in the near future.

Review of Performance of PBL


Prime Bank operation
PBL is one of the leading private commercial banks
of the country in terms of asset quality, profitably,
product diversification, and capital adequacy. The major
challenges faced by the bank during 2012 were:
Liquidity management became a priority as liquidity
position became tightened since the last quarter
of 2011 and continued to do so during 2012 due to
adoption of further contractionary monetary policy by
the Bangladesh Bank to arrest higher asset growth
to non-productive sectors and keep inflation at an
acceptable level. The bank as a primary dealer had to
buy treasury bills / bonds which were devolved by the
Bangladesh Bank which created an extra pressure
that affected earnings as well as caused additional
expenses in the form of borrowing from the market
and higher cost of term deposits;

Ensure expected growth of loan portfolio was a challenge


for the bank in 2012 particularly in the first two quarters
due to liquidity constraints. Moreover, unavailability
of power especially gas for new projects and downfall
in capital machinery import acted adversely to loan
growth. However, the situation improved to some extent
in the last two quarters of 2012;

Diversification of credit portfolio with higher emphasis


on SME and retail lending in absence of adequate
scope for growth in corporate segment as well as a
priority for contribution to the economy. Disbursement
of agriculture loan was also a priority for the bank as
prescribed by the Bangladesh Bank;
The bank enjoyed comparatively lower spread in the
beginning of 2012. But the spread gradually increased
due to recovery drives and increase in lending rates
though deposit rates were also increased by liquidity
crunch;

Improvement of deposit mix and competitive pricing


on liabilities became a regular phenomenon over
the year 2012 to avoid profit erosion. However, low
cost and no cost deposits continued to be converted
to high cost term deposits bearing higher rates of
interest propelled by the liquidity crunch in the market;

Maintaining asset quality was a top priority for the bank.


The bank continued recovery drives which improved
the asset quality. But the new loan classification and
provisioning policy implemented from the last quarter
of 2012 increased the NPL ratio and loan provision
requirement of the bank;

Increase foreign exchange business (import, export,


remittance) despite the overall slow growth of this
avenue of business particularly import which helped
to book commission and exchange earnings up to a
satisfactory level;

Volatile

capital market also affecting the money

market in the form of tight liquidity scenarios.

In the backdrop of the challenging environment, PBL


continued its growth in all of its operating activities.
PBLs operational activities include commercial banking
in conventional and Islamic banking mode and off-shore

banking through off-shore banking units. Merchant banking


activities are being carried out by PBLs subsidiary namely

Prime Bank Investment Limited whereas brokerage

activities are carried out through another subsidiary namely

Prime Bank Securities Limited. Bank's subsidiaries at


Singapore and UK are engaged in providing remittances
faculties to expatriate Bangladeshis. PBL Finance (Hong

Kong) Limited, another fully owned subsidiary of PBL


advises, negotiates, confirms and provides discounting

facilities against LCs originating from PBL and other


banks in Bangladesh. All the business sectors showed
satisfactory performance during 2012.
What we did good
Excellent

Brand Image

Network of 113 branches and 17 SME branches at


strategic financial centers

Deep

market penetration and continuous growth in

corporate, commercial and trade finance sectors

Good market share and sound financial performance


Islamic banking products and services

Off-shore

banking in major EPZs

Exchange

Houses (fully-owned subsidiaries) at

Singapore and UK for remittance business

PBL

Finance (Hong Kong) Ltd., a fully owned

subsidiary for financing and remittance business

Real-time online banking through core banking software

Temenos T24, a world class technology platform

Expansion
Internet

of ATM services and KIOSK

Banking, SMS Banking, Phone Banking and

Mobile Banking

Credit

Card

Consumer finance

Small

& Medium Enterprise (SME) finance

Syndicated

financing

Merchant

banking activities through Prime Bank

Brokerage

activities through Prime Bank Securities

Investment Limited (fully-owned subsidiary)


Limited (fully-owned subsidiary)

Corporate

governance and CSR activities

Management
Wide

team and skilled HR

customer base

Growth

of foreign exchange business despite slow

economic situation

Continuous
Diversified

expansion of branches

product base

Annual Report 2012 83

Management Discussion and Analysis


Achievements
The achievements and concerns of PBL during the year
2012 are given below:

a) 15 percent growth of profit before provision


The bank registered profit before provision of Tk 8,551
million in 2012 against Tk 7,427 million in 2011. The growth

of profit was 15 percent whereas achievement of budget


was 101 percent. However, profit before tax in 2012

showed a negative growth of 21 percent over 2011 mostly


because of implementation of new loan classification and

provisioning policy by the Bangladesh Bank from the last


quarter of 2012.

b) 14 percent growth of deposit volume


Despite the challenging scenario in the market for deposit

mobilization, PBLs growth rate for deposits was 14


percent, which was 91 percent of the budget. The growth

of high cost deposits (15 percent) was higher due the tight
liquidity position in the market and devolvement of treasury

bills / bonds by the Bangladesh Bank as a primary dealer.

However, the bank continued its efforts for mobilization of


low cost and no cost deposits for which low cost and no
cost deposits increased by 12 percent whereas savings
deposit increased by 7 percent over the previous year

despite the conversion of low cost and no cost deposits to


high cost term deposits bearing increasingly higher rate
of interest.

Deposit Mix

Scheme Deposits
22.22%
FDR
45.38%

Current &
Contingent
15.37%
Bills Payable
1.88%
Savings Deposits
10.54%
Special Notice
Deposits
4.62%

To employees as
salaries & allowances

To providers of capital as
dividend & reserve

To Government as income tax


Depreciation

Retained profit
Deferred taxation

c) 16 percent growth of loans and advances volume


Loans and advances volume was 101 percent of the budget
which reflected a growth of 16 percent over previous year.
The loans and advances portfolio was more diversified.

SME loan showed 30 percent growth as encouraged by


the Bangladesh Bank whereas retail loan as discouraged
by the regulatory body showed 3 percent growth;
d) 33 percent growth of net interest income
PBLs interest income increased by 37 percent in 2012.

Yield on loans and advances increased to 15.17 percent


Annual Report 2012 84

in 2012 from 13.09 percent in the previous year due to


increase in rates of interest on lending and drives for
recovery of overdue loans.
On the other hand, PBLs interest expense increased by
38 percent during 2012. Interest cost of deposits was the
main component of interest expenses whereas interest
cost of borrowings also had a significant part in 2012.
Interest cost of deposits increased to 8.75 percent in 2012
from 8.15 percent in the previous year due to increase in
rates of interest on deposits arising from overall liquidity
pressure in the market. Moreover, the liquidity pressure
compelled the bank, a Primary Dealer, to go for mobilization
of additional high cost deposits and additional borrowings
to purchase treasury bills / bonds which were devolved by
the Bangladesh Bank. This caused interest expense on
deposits to increase by 29 percent and interest expense
on borrowings to increase by 131 percent.
As a result, PBLs net interest income increased by 33
percent during 2012. Net interest income was the main
contributor to operating income, accounting for 40 percent
followed by investment income and non-interest income.
e) 11 percent growth of investment income
PBLs investment income consists of interest / discount
earned on treasury bills / bonds, gain on government
security trading, dividend received on shares and
capital gain from sale of securities of listed companies.
Investment income of the bank in 2012 increased by 11
percent over the previous year. As a primary dealer, PBL
had to devolve securities by Bangladesh Bank which
created extra pressure as the bank had to borrow from
the market. As such interest/discount income became the
main contributor to investment income. However, due to
rising rates of interest on treasury bills / bonds the bank
had to book net trading / revaluation loss of Tk 53.55
million in 2012 against net trading / revaluation gain of Tk
730.14 million in the previous year. In addition, dividend
was received on shares of Prime Bank Investment Limited
for Tk 240 million in 2012 against Tk 450 million in 2011;
f) Growth of foreign exchange business
PBL handled foreign exchange business worth Tk 354.59
billion in 2012 against Tk 344.67 billion in 2011. This can be
termed as an achievement considering the slow economic
scenario for trade finance business in Bangladesh
particularly for import business as detailed below:
Import business handled was Tk 168.53 billion which
was 80 percent of the budget and showed 3 percent
negative growth;
Export volume was Tk 143.61 billion which was 91 percent
of the budget but showed growth rate of 8 percent;
Remittance business was Tk 42.45 billion which was 99
percent of the budget and showed growth rate of 15 percent.

g) Growth of non-interest income

was 36.62 percent in 2012 against 35.75 percent in 2011

Despite the challenging economic situation for foreign


exchange business in Bangladesh as stated above, noninterest income of PBL increased by 3 percent during

the year. Fees and exchange based income of the bank

and indicates satisfactory operating efficiency of the bank


as per the industry standard.

j) Strengthening capital base

decreased by 10 percent during the year due to fall in

By maintaining strong growth of profit, PBL has always

rates of foreign currencies. However, other charges and

growth. As a result, capital adequacy of the bank as per

of 56 percent as a result of realization of charges against

percent as against minimum statutory requirement of 10.00

overall growth of non-interest income.

consideration both in terms of mind set-up and decision

import business and lower gap between buying and selling

ensured internal generation of capital to meet the business

recoveries increased during the year registering a growth

Basel-II on consolidated basis remained strong at 12.64

banks superior services provided which contributed to

percent. The bank has gradually been taking Basel-III into


making which is yet to be implemented in Bangladesh.

h) NPL recovery
Tk 460.24 million had been recovered against NPL
accounts and Tk 85.05 million had been recovered against

previously written-off accounts in the year 2012. Due to


continuation of major recovery efforts, the NPL ratio stood
at 3.83 percent in 2012 despite the new loan classification
and provisioning policy by the Bangladesh Bank.
i) Cost control
Operating cost was in line with the budget and increased
by 20 percent during the year mainly due to increase

in personnel and other operating expenses resulting

from increased investment in branch expansion and

development of IT infrastructure. To keep the salary

package competitive in the industry, there was upward


revision of the packages in the last quarter of 2011
which had full effect in personnel expenses in the year

2012. However, the enhancement of the package will


motivate our employees to do even better in future and

targeted increase of business especially in SME and retail


segments will benefit the bank in broad spectrum. PBL also

made donation amounting to Tk 213.41 million to Prime

Bank Foundation to carry on various CSR activities. PBL


also focused on developing brand image and increased

promotional and advertisement expenses. This strategy

added value to the business. The banks cost-income ratio


Total
Cluster Name Number of
branches

Number
of AD
branches

Deposits
Actual

k) Branch Cluster Management


Branch Cluster Management (Branch Mentorship) was
strengthened further during 2012. Through Cluster
Management the Senior Management is becoming directly
involved with Head of Branches (HOBs) in their marketing
drives for assets, liabilities, and other issues. As a result,
the HOBs are exposed to more matured thoughts and
ideas through Mentors resulting in qualitative improvement
of their business and operational activities. The shift to
the mentorship program has proved to be very effective
way of empowering the people to do better, understand
the challenges ahead through interactive dialogue with
senior management. The cluster management follows a
bottom up approach in setting the budget which includes
all key parameters of core risk management. The good
profitability, strong asset quality are the results of proactive
role of the HOBs under the cluster managements. The
system strengthened the compliance, transparency and
accountability of the HOBs and has become the process
of creating future leaders and successors of top level
management.
The branches of PBL are divided into 4 (four) clusters
each headed by a Deputy Managing Director. A brief
review of the structure and performance of the clusters
are mentioned below:
Taka in million

Loans & Advances

% of Total

Actual

% of
Total

Budget

Operating Profit
%
Actual
Achievement

% of Total

Cluster-1

29

11

47,115

26.55

55,091

36.09

3,002

3,066

102

26.92

Cluster-2

31

47,759

26.91

38,157

24.99

3,147

3,433

109

30.14

Cluster-3

28

40,650

22.90

28,120

18.42

2,625

2,699

103

23.69

Cluster-4

25

41,952

23.64

31,297

20.50

2,326

2,193

94

19.25

All Clusters

113

27

177,476

11,100

11,391

103

152,665

Annual Report 2012 85

Management Discussion and Analysis


Branch Clusterwise Frofit
Cluster-4
19.25%

Cluster-1
26.92%

Cluster-3
23.69%

Cluster-2
30.14%
Cluster-1

Cluster-3

Cluster-2

Cluster-4

Activities of Divisions of PBL


Business Review
Credit

Liability Marketing and Cash Management to offer


different kind of liability products and innovative solutions
for cash management to fulfill the needs of ever changing
requirements of the large corporate.
The bank continued playing a major role in supplying
business capital (i.e., loans / investments), arranging
and raising finance while maintaining a high standard of
diligence and ensuring full compliance, to help the economy
prosper and build social and physical infrastructure of
the country. PBL does understand the complexity and
intricacies of corporate financing modalities and devices
and tailors customized and comprehensive banking
solutions for corporate customers in a cost effective and
friendly manner. As at end 2012, total corporate lending of
the bank stood at Tk 134.70 billion registering 15 percent
growth over that of year 2011 and accounting for about 84
percent of banks total loan portfolio. A brief description of
the banks corporate banking activities by the major units
of CBD during 2012 is summarized below:

The credit portfolio of the PBL includes loans and advances


provided under conventional terms and investments

Corporate Loan Mix

provided as per Islamic Shariah on profit sharing basis. The

Others Loans
10.77%

credit portfolio increased by Tk 22.04 billion during 2012

registering a growth of 15.87 percent. Credit covers following

Commercial
Lending
16.10%

core areas: Corporate, SME, Retail and Credit Card.


Loans & Advances Mix

Industrial Loan
60.70%
SME Loan
7.60%

House Building
2.68%

Retail Loan
7.03%
Corporate Loan
83.72%

Credit Card
0.57%
Staff Loan
1.08%

Corporate Loan

SME Loan

Retail Loan

Credit Card

Staff Loan

Corporate Banking
Corporate Banking Division (CBD) of PBL serves the

large corporate in different industry segments of the

country. A large amount of the loans and advances of


PBL is extended through CBD. CBD is preceding through
several strategic business units namely (i) General Credit

Unit, (ii) Export Finance Unit, (iii) Lease Finance Unit


and (iv) Structured Finance Department to cater banking

solutions to corporate customers via both conventional


and Islamic Shariah complaint modes. During 2012,
another new business unit was formed namely Corporate

Annual Report 2012 86

Export Financing
9.74%

Industrial Loan

Others Loans

Commercial Lending

Export Financing

House Building

General Credit Unit


General Credit Unit (GCU) is a part of Corporate Banking
Division, playing major role to finance large corporate
customers. In PBL, CBD is a broader term to handle
large corporate bodies like manufacturing, agro based
industries, essential commodity, ship breaking, steel
manufacturing, construction, etc. GCU is handling the
major portion of banks loan portfolio through its two units
(Unit 1 and Unit 2). GCU provides services to its corporate
customers located in various geographic locations.
PBL has well defined structure to handle credit proposals
and GCU team is engaged with processing the proposals
complying regulatory issues and guidelines. Branches
keep business relationship with the valued customers and
after getting request from their end, send the proposals
to GCU for necessary approval. On proper scrutiny, GCU
places the issue to the competent authority for approval.

Major areas of financing of GCU includes essential


commodity trading and processing, construction, real
estate, work order financing (for construction of roads,

highways, bridges, Jetty, embankment, rehabilitation and


new construction of railway lines etc), ship building, ship

breaking, manufacturing and steel re-rolling, renewable

energy, etc. The service range of GCU includes


documentary credit and post import financing (for trading
items, capital machinery and raw material), working capital

and issuance of various types of Bank Guarantee and


Counter Guarantee. Members of this unit also maintain

extensive relationship with the customers to understand


the business need as well as their financial requirement.
With this view, GCU members arrange frequent visits

to the customers business ventures to maintain and

increase customer relationship for better customer


services, customized and innovative solutions. Clientele
of GCU comprises of many large and reputed business

concerns of the country. GCU also focuses on catering to

the need of innovative business ideas. As a result, many


pioneering business have been successfully financed
by this unit. PBL also provided UPAS and refinancing in

foreign currency to allow the corporate to take the benefit


of LIBOR based financing.

Industrial Loan Mix


Agriculture 2.78%

Banks total exposure on export field comprises with


RMG, backward linkage industries, textile sector which
includes dyeing and weaving industries, textile mills,
spinning, handloom, home textile; jute, leather, ceramics,
pharmaceuticals, fisheries, plastic products, accessories
manufacturers etc.
Lease Finance Unit
Lease Finance Unit of the bank undertakes the following
activities: (i) to diversify the investment portfolio of the
bank, (ii) to provide complete and composite financial
services according to the customer need, and (iii) to
participate in the industrial development of the country.
At the year-end 2012, the lease finance portfolio stood
at Tk. 8.19 billion. PBL offers lease finance facility
against capital machinery for industrial units and BMRE
of the existing industrial units, medical equipments for
clinics, pathological laboratories, hospitals, construction
equipments, transport vehicles, etc. Apart from this,
the bank extended loans to 15 Non-Banking Financial
Institutes (NBFIs) against which total outstanding was
Tk. 2.63 billion at the year end 2012.
Structured Finance Department

Others (including
bills) 30.25%

Textile 31.88%

Food and allied


6.53%

Transport & communication


11.41%
Service 7.29%

Pharmaceuticals
1.93%

Cement & ceramic


6.25%

Leather, chemical,
cosmetics 1.43%

Tobacco 0.25%

Textile

Cement & ceramic

Food and allied

Service

Pharmaceuticals

Transport & communication

Leather, chemical, cosmetics

Others (including bills)

Tobacco

Agriculture

Export Finance Unit


Export is the driving force for the economy of the country

both in terms of foreign currency earnings and employment


generation. The performance of PBL in handling export

business is quite satisfactory, which was around 7 percent

of the countrys total export earnings i.e., about 7 percent


of countrys export business is routed through PBL. The
total volume of export of the bank in 2012 was Tk 143.61
billion against Tk 133.40 billion in 2011. The exporters

were encouraged to enter into new markets and support


was given in the form of both pre-shipment and postshipment export credit.

Export Finance Unit of the bank comprises of experienced


and efficient manpower who are handling more than 350
direct and hundreds of deemed exporters through its
27 Authorized Dealer (AD) branches and 3 Off-shore
Banking Units (OBUs).

Structured Finance Department (SFD) under the umbrella


of CBD is reorganized to provide more customized
structured products to the corporate customers. SFD
is functioning in three areas namely: (i) Infrastructure
Finance, (ii) Industrial Partnership and (iii) Service
Sector. At the end of 2012, the portfolio of SFD was Tk
12.83 billion of which Tk 2.25 billion was in Infrastructure
Finance, Tk 9.80 billion in Industrial Partnership whereas
Tk 0.78 billion was in Service Sector.
In addition to its involvement in conventional projects, the
bank is always keen to support Governments initiative
for electricity generation by financing power plants. As a
part of this initiative, two power projects (50 MW and 25
MW) went into trial production in 2012 where EPC finance
and project finance for both the projects were provided
by PBL.
Inspired by global awareness for an environment friendly
world, PBL looks forward to finance green projects in
priority basis. The bank promoted green projects i.e., a
Hybrid Hoffman Klin based automatic brick project was
first of its kind to get disbursement under the refinance
scheme of the Bangladesh Bank during the last year.
Financing the central effluent treatment plant at Dhaka
EPZ that started its trial production in 2012 is another
example of banks such involvement.

Annual Report 2012 87

Management Discussion and Analysis


To facilitate the initiative of the Bangladesh
Telecommunication Regulatory Commission to restrict
illegal VOIP operation, the bank extended financing
packages to nine International Gateway, Interconnection
Exchange and International Internet Gateway operators
under the licenses issued by BTRC in 2012. Another
significant exposure of the bank in 2012 was taken on a
company which is one of the six licensees to undertake
implementation of International Terrestrial Cable network,
the much awaited alternative to existing submarine cable
network to connect with rest of the world.
In 2012, PBL won a Letter of Mandate from a large
corporate customer to arrange a syndicated finance of
Tk 4.36 billion as Lead Arranger which will be the 22nd
syndicated deal of PBL as Lead Arranger.

and the corresponding liabilities. Short term transaction


solutions include corporate salary account, collection
account of large business houses, correspondent banking
arrangements for other banks, insurance companies,
leasing and finance companies, state owned corporations

/ entities, etc. Investment solutions include different


Current Accounts, SND Accounts, Term Deposit Accounts,
etc. In addition, corporate liability team also provides a

wide range of corporate fund management solutions for

business houses using online banking platform of PBL


through its network of 130 branches across the country.
Trade Finance and Guarantee Business
Considering the economic scenario, PBLs performance in
this area was satisfactory. Total import and export business

handled during 2012 were Tk 168.53 billion and Tk 143.61


billion respectively. The import business reduced by 3

percent over the previous year. The main items of imports

were industrial machineries, raw materials, commodities


and other consumer products. The growth rate of export
business was 8 percent and the items of export were

RMG, Shrimp, Jute & Jute goods, Leather, Tobacco,

Ceramic tiles, Fresh vegetable, Tempered Quoted Glass,


Bone crust, Betel-Nut etc. The growth of export gave the

bank an edge in managing required foreign currency for


meeting LC commitments. PBLs guarantee business in

2012 was Tk 29.39 billion registering 6 percent growth


Raozan 25 MW Dual Fuel Power Plant

over that of 2011.

Import & Export Business

168,532

143,612

133,396

106,943

96,452

76,097

91,424

68,550

147,704

174,384

(Taka in million)

Star Ceramic Limited

Corporate Liability Marketing and Cash Management Unit

Retail Banking

Corporate liability marketing and cash management


team is formed to offer different kinds of liability products
and innovative solutions for cash management. This team
deals with offering various cash management products
and investment solutions to the existing and prospective
corporate clients in line with their cash flow / cash cycle,
investment / savings appetite which will facilitate better cash
management, reduce cost of fund and most importantly
to ensure maturity matching between banks assets

Retail Banking of PBL has passed another successful

Annual Report 2012 88

year both in terms of asset and liability business as the


bank is different from the competitors and customers can
easily differentiate banks products from others. The agility
in terms of expanding the delivery channels, augmenting

value added products, creating new avenues of services,


inventing new alternative delivery channels for expanding
banks customer base in distant urban and rural areas

were the contributing factors for satisfactory performance.

PBL is one of the largest providers of retail loan in


Bangladesh and the growth of retail loan portfolio of the
bank was 3.33 percent during 2012 despite a number
of restrictions imposed by the Bangladesh Bank in
disbursing retail loans. The bank could successfully
redesign products and services to record growth.

Another milestone for the bank was signing memorandum

On the liability side, emphasis was given on mobilization


of Current and Savings accounts (CASA). As a result
number of CASA accounts increased by around 116,000
whereas volume increased by 6 percent in 2012 over the
previous year.

Details of the loyalty programs and activities are given in

Retail Banking is always in the process to modify the


existing retail products according to customers needs. In
2012, new products like My First Account (MFA), Account
150% and Lakshma Puron (LP) were launched whereas
products like Double Benefit Deposit Scheme (DBDS),
Monthly Benefit Deposit Scheme (MBDS) and Prime
Millionaire Scheme (PMS) were redesigned.
During 2012, Retail Banking Division carried out different

promotional campaigns details of which are given in the


Customer Care chapter of this report.

4th largest card issuer. This has given the bank exclusive
rights for issuing and acquiring JCB card in Bangladesh.
As a result, the bank has now agreement with three

world renowned card issuer- VISA, Mastercard and JCB.


the Customer Care Chapter of this report.
SME Banking

SMEs play a very significant role in the economy in


terms of balanced and sustainable growth, employment

generation, development of entrepreneurial skill and


contribution to export earnings. Bangladesh economy

is characterized by low per capita income, high level of

unemployment, mass poverty and social deprivation. In

these circumstances, higher growth of SMEs can reduce


poverty to a satisfactory level by creating jobs for the

skilled and un-skilled manpower in this sector. Most of


the SMEs assist in regional and local development since

they accelerate rural industrialization by linking it with the


more organized urban sector. SMEs use a combination of

innovation, improvisation to develop local products and

Credit Card
As a continuous process, the bank achieved technological
advancement, service improvement and product
development during the year which contributed to double
digit growth in all of the key performance indicators for
credit card as given below:
Key Performance
Indicators

of understanding with Japan Credit Bureau (JCB), worlds

Year
2009

2010 2011

% Growth
2012 in 2012
over 2011

Number of card issued


3,720 8,918 9,365 10,206
Advance (Taka in million)
450
517 750
915
Acquiring business (Taka
in million)
2,336 3,422 4,140 5125
Net profit (Taka in
million)
35.98 55.32 65.37 80.23

9
22

24
23

Various initiatives and loyalty programs were carried


throughout the year 2012 which kept PBL credit card in
forefront. Mentionable are grand launching of Platinum
Card through a gala night, issuing pre-paid hajj card
for the pilgrims, enhancing business network through
signing merchant agreement with Saadmusa and
Mustofa Mart, introduction of Shariah based Islamic
credit card- Hasanah Quard Credit Card, implementing
new design of core products and adopting queue
management system for priority customer service facility.
The bank carried out various promotional campaigns viz.
'Shop n Win' and 'Shop n Earn' loyalty reward programs
with unique features. Procuring new 500 EMV complied
POS machines and shifting the business and collection
centers in different sites were also important strategic
movements of the bank in 2012.

services for local needs using local resources. It has been


tested and found that lack of access to external finance is a
key obstacle SMEs growth. SMEs face several difficulties

in obtaining finance from the formal sector. Most of the

problems are from demand side. On the other hand,


collateral requirements, weak credit skills and practices,

cumbersome loan processing and documentation are the


major supply side problems.

PBL has been working in order to ensure the vibrant

financial economy through the financing in SME sector.


PBL has already taken several initiatives from their end to
cater or facilitate the SMEs for their success.

The bank has been operating SME business successfully

as one of the market leader in Bangladesh since 1995. SME


business has huge opportunities to grow. For successful
SME operation, the division adopted centralized operating
practices by developing need-based, market oriented and
transparent check & balance working models.

PBL has been strengthening its SME banking business


under the following manner:

Separate

SME Financing Policy which is being

regularly reviewed and updated;


centralized SME banking operations;

Dedicated SME desks in all branches for marketing


and expansion of SME business;
Separate dedicated SME
desk for women
entrepreneurs;
Separate monitoring team for SMEs;
Strengthening

Annual Report 2012 89

Management Discussion and Analysis


Separate

team (employees as well as DSEs for push


marketing) for selling loan and collecting deposit
through SME products;
Special Credit Risk Management team for SME banking;
Different trainings for SME officials as well as for
entrepreneurs;
Dedicated collection team for SME loan;
Customized products and services for SME;

Service through 17 SME/Agri branches at different


places in Bangladesh;
Develop clusters under area approach etc.

namely Prodip Loan under JICA fund Refinance &


Pre-finance Scheme of the Bangladesh Bank to boost
up trading, manufacturing and service sectors. Apart
from offering customized financial services, PBL puts its
efforts for the development of this sector by participating
in various road shows, workshops, forums and fairs to
build awareness among the customers.

During 2012, PBLs strategy was focused on marketing


the products to wider range of customers and providing
working capital and term loan to different manufacturers,
traders and service providers including backward and
forward linkage industry that fall into SME universe.
Banks exposure is thus well diversified among 4,560
customers to different sectors viz. cottage, handy crafts,
power loom, auto parts, garments accessories etc.
Outstanding SME loan of SME branches was Tk. 988.86
million. The recovery rate was 95 percent which is also
a corner stone of our success in management of overall
portfolio. Total outstanding SME loan of the bank was
Tk 12,230.78 million.
Size-wise SME Qutstanding

Small
11%
Medium
83%

Micro
6%

Agreement signing ceremony with BB for Re & Pre-finance


scheme of JICA fund

PBL signed an agreement with the Bangladesh Bank for


availing Re-finance/Pre-finance facility under JICA fund for
financing to establish new projects, BMRE of existing projects
in the form of fixed asset financing with initial working capital,
which is associated with the investment loan.
PBL arranged various workshops and training programs
during the year. These workshops and training programs
were aimed at capacity development of bankers.

Small
Micro
Medium

Sector-wise SME Qutstanding

Trade
38%

Manufacturing
53%

Service
9%

Trade
Manufacturing
Service

PBL introduced different customized products tailored to


needs of SMEs which are i) Sahaj Rin (Easy Loan), ii)
Chalti Rin, iii) Moushami Rin, iv) Digun Rin, and v) Anchol
Rin. PBL also introduced a customized SME product
Annual Report 2012 90

Workshop on Existing SME Policy and Responsibility of


Banker organized by PBL

PBL also arranged 3 days long workshop on SME Credit


Risk Management for development of capacity building of 28
Group Leaders at BASA Training Centre at Pekua, Tangail.
To inspire SME entrepreneurs for financial literacy PBL
has distributed tally book in the eve of Pahela Boisakh
1418. With the use of this tally book, business owners
would be able to keep their business record in a more

organized way. Moreover, PBL is a party to various

MFIs in order to eliminate or reduce the possibilities of the

for making available easy finance to SME sector. So far

been ceaselessly trying to contribute to the sector and will

refinance programs executed with Bangladesh Bank


PBL received Tk 301.20 million against 729 clients from
various re-finance scheme of Bangladesh Bank.

Details of other activities including banker-customer

dialogues for development of SMEs are given in


Customer Care chapter of this Annual Report.

Financing women entrepreneurs under SME


Another notable idea in SME financing is the development

of women entrepreneurs. In the new framework of SME,


PBL is giving top priority in developing and harnessing

women entrepreneurs. The bank has designed a separate


product Anchol for women entrepreneurs. PBL disbursed

Tk 58.65 million to 108 women entrepreneurs at lower


interest rates.

Agriculture financing
At the moment, roughly one-fifth of Bangladeshs GDP
originates from agricultural sector, and the sector

absorbs about half of the total labor force of the country.


Agricultural credit is being construed as an integral part
of the modernization of agriculture and commercialization

of rural economy. Agriculture as a sector depends more


on credit than any other sector because of seasonal

variations in farmers returns and a changing trend from


subsistence to commercial farming. In the absence of
necessary working capital for buying water, fertilizer and
pesticides, coupled with it the lack of the knowledge for
their balanced application, farmers often fail to reap a
better harvest from modern technology-led crops.

The Bangladesh Bank has also made agriculture lending

mandatory for all banks including private and foreign


commercial banks. This strategy of Bangladesh Bank has
expanded the scope for inclusion banking. To achieve

the desired goal, the Bangladesh bank also declared that

the banks, having not enough branches in rural areas,

would be allowed to use nongovernmental organizations


(NGOs)/ MFIs linkage for disbursement of farm credit. In
line with Government efforts as well as the Bangladesh

Bank guidelines, PBL also continued its proactive policy


and program support to boost up agriculture financing.

accounts being delinquent. In spite of all odds PBL has


continue doing so in the future for the greater interest of
the country.

Agricultural Loan products of PBL


PBL has been providing agriculture loan in the form

of Abad (for crops loan), Khamar (for farm loan) and

Nabanno (any agri purpose loan) to meet up working

capital and capital expenditure requirements of the farms/


projects/ enterprises/ farmers.
Abad (Crop Loan)
Rural people of Bangladesh are dependent on agriculture.
For helping and encouraging and betterment of rural

people (share cropper, marginal / small / medium scale


farmers) to cultivate crops and vegetables, PBL provides
Abad (Crop Loan) to bear the cost of tilling of land,
fertilizers, pesticides, irrigation, seed etc.

This product has been designed to ensure desired amount


of money for the share croppers, marginal / small / medium

scale farmers at the beginning of cultivation. The farmers

could repay their loan after harvesting time. This product

helps them a lot in terms of benefit as they need no more


to take high interest bearing loan from the local money
launders, businessmen and MFIs/NGOs. Moreover,
this flexible repayment system removes their mental
pressure of weekly /monthly/quarterly installments. By

concentrating on better production farmers are benefiting


in this process and contributing to the national production
over the year.

Crop-Diversification and Multi-cropping / Inter-Cropping


PBL has taken program for changing over the traditional
cultivation system for crop-diversification. To cultivate

multi-crop (potato and banana, potato and maize and


others) in the same field in a season helps to reduce food

insufficiency and food insecurity in the area as well as


reduce the production cost. For cultivating potato and
banana in the same field in a season, PBL disbursed loan

under Abad (Crop Loan) to the farmers at Dinajpur which


was the first of its kind in Bangladesh.

PBL also recognizes Agriculture / Rural Credit as one

Mango Gardening

people into the banking activities and plays a major role

mango production could be increased by utilizing adequate

of the major tools for ensuring inclusion of the rural

Chapai Nawabgonj is a land of mango. PBL observed that

in the overall economic development of the country. In

fertilizers, pesticides, irrigation, seed etc in time. But there

the absence of own branch network the bank has largely


been depending on third party networks (NGOs / MFIs). It
is pertinent to mention that while using third party network

the bank is extremely selective in choosing the NGOs/

was no bank to finance this sector. In order to increase the


mango production and meet the demand thereof, PBL has
started to finance for production of mango under Abad loan
as a pioneer in this sector at Chapai Nawabgonj.

Annual Report 2012 91

Management Discussion and Analysis


Khamar (Farm Loan)

An

PBL has been providing Khamar Loan to meet up working

Agricultural

capital and capital expenditure requirements of the farms


like fisheries, hatchery, poultry, beef fattening, milching
cow/ dairy, bio-gas plant, poultry/livestock/fish feed

effective monitoring system has been put in place;


credit is provided to the real small,

marginal farmers and share-croppers singly or in a


group following easy process;
Credit

facilities are allowed at rebate rate (4 percent)

producer, duck rearing, integrated farm, solar panel for

for cultivation of pulse, oil seeds and spices to reduce

farm and others related to agriculture.

dependency on import and save huge amount of

Nabanno (Any Agri Purpose Loan)


PBL has been providing Nabanno Loan to the farmers
for purchasing of farm machineries / agri equipments
(irrigation and tilling technology/equipments, thresher,
tractor, harvester etc), solar pumps / solar power operated
irrigational equipment, rural transport (van, rickshaw,
mechanized boat, covered van, truck for carrying poultry/
fish etc.) and to meet up the capital requirement of
nursery farming, weavers (handloom industry), tissue
culture farming.
PBL has been strengthening its agriculture and rural credit
business under the following manner:

Developed Agriculture Financing Policy Manual;

Lunched

3 (three) agriculture loan product named

foreign exchange incurred for importing the items


under interest loss compensation scheme of the
Government;
Women

are given priority for disbursing agricultural/

rural credit;
Up

to 31st December, 2012 total cumulative

disbursement was Tk 3,949.07 million among 91,452


entrepreneurs/farmers (out of which Tk 2,517.35
million was disbursed amongst 89,665 farmers
through 11 NGOs).
Agriculture Loan by purpose
Customers of PBL receive loan for various purposes.
Most of them are related to crops, fisheries, livestock
(dairy, beef fattening, poultry etc.) and poverty alleviation.

Abad (crop loan), Khamar (farm loan) and Nabanno


(any agri purpose loan);

A separate full-fledged Division has been established


named as Agriculture Support Division;

(Seven) Agriculturists have been recruited for

branch and head office and posted accordingly. A


number of experienced officers have been hired and
posted at head office;
Conducted

meeting among the farmers at Jessore,

Chapai Nawabgonj, Dinajpur, Rangpur, Mymensingh


and other places;
PBL

has taken necessary initiatives to create

Agriculture Project Visit

awareness and impart training on agricultural/rural


credit policy and program;
According

to the Agricultural/Rural Credit Policy and

Program, the 3 core sectors viz. crop, fisheries, and


livestock are given priority;
High

Product-wise outstanding
Livestock 30%
Farm Machineries 1%
Irrigation
equipments 4%

Fisheries
8%

Value Crops are given priority in extending credit

facility,
Ensure

timely availability of necessary agricultural

credit for the small and marginal farmers including


share-croppers;
Credit

has been disbursed following area approach

method emphasizing on the comparative advantages


of producing regional crops;
Annual Report 2012 92

Crop Storage &


Marketing
13%

Crop 37%
Others
3%

Poverty alleviation
4%

Fisheries

Crop

Crop Storage & Marketing

Irrigaton equipments

Poverty alleviation

Farm Machineries

Others

Livestock

Disbursement from 01-01-12 to 31-12-12


Livestock 23%
Farm Machineries 3%
Irrigation
equipments 2%

Fisheries 6%

Crop Storage &


Marketing 19%

Crop 40%

Others
3%

Sector

Crop
Irrigation
equipments
Farm
Machineries
Livestock
Fisheries
Crop torage
& Marketing
Poverty
alleviation
Others
Total

Poverty alleviation
4%

Fisheries

Crop

Crop Storage & Marketing

Irrigaton equipments

Poverty alleviation

Farm Machineries

Others

Livestock

Taka in Million

2012

2011

Disbursement Outstanding Disbursement Outstanding


as on
as on
31.12.2012
31.12.2011

662.36

525.55

175.43

146.36

24.98

63.04

4.09

3.04

41.15

12.62

5.66

4.72

373.22
104.18

422.86
116.88

167.74
193.77

176.52
108.78

317.09

189.72

4.07

3.45

62.29

53.81

41.43

39.48

49.85

44.34

132.22

46.18

1,635.12

1,428.82

724.41

528.53

Islamic Banking
Islamic banking operations of PBL started in the very year
of its establishment in December 1995 through the opening
of Islamic banking branch at Dilkusha, Dhaka. PBL is the
pioneer in such a kind of blending of conventional and
Islamic banking in the country which is followed by many
other banks. With the passage of time, the bank now
carries on its Islamic banking operations through 5 (five)
Islamic banking branches. Objectives of launching Islamic
banking operations by PBL are the followings:
To

cater to the needs of customers who want to have


services in Islamic Shariah compliant modes supporting
the sentiment of people, majority of whom are Muslims
and are akin to the Islamic financial system;

To

introduce the partnership concept of business


operations for ensuring justice in distribution system;
To introduce wealth maximization concept through
profit / loss sharing system in business and
investment and financially weaker section of people
to develop their financial standing through Islamic
banking operation mechanism;
To provide products and services free from interest
suited to the needs of customers and establish justice
in the society;
To do other acts ancillary to the establishment of
exploitation-free society.
Operations of Islamic banking branches are coordinated by
Islamic Banking Division at Head Office and supervised by
Prime Bank Shariah Supervisory Committee, comprised
of a pool of Shariah experts, renowned economists of
the country. The basic functions of Prime Bank Shariah
Supervisory Committee are to offer views on matters
related to Islamic banking operations of the bank from time
to time and assist the Board of Directors by advising them
on matters relating to Shariah. Their recommendation on
Shariah Principles is strictly respected by the Board to
run Islamic banking operations of the bank.
Launching of Islamic banking operation by PBL by
introducing different innovative products and services
based on Islamic Shariah got tremendous response from
a considerable portion of its clientele who are eager to
accept Shariah compliant modern and innovative banking
products and services. PBL is also offering Islamic banking
products and services through Islamic banking service
desks set up at its conventional banking branches.
The bank identifies all of its Islamic banking activities by
adopting a generic name Hasanah- the brand name for
Islamic products and services of the bank, which has been
used in the Quran and the Hadith to denote good deed,
welfare, virtue, beauty spot etc. The strategy to launch
Hasanah brand has proved to be a good move. The
Islamic banking business is growing at a competitive rate
despite various limitations for its expansion. This growth
is also comparable to the overall growth of the Islamic
banking sector of the country.
The Islamic banking manpower of the bank is more than
one hundred for whom the bank arranges regular training
programs on operation of Islamic banking. PBL is an active
member of Central Shariah Board for Islamic banks in
Bangladesh and Islamic Banks Consultative Forum. Thus
the bank is committed to uphold the sentiment of majority
of the people in the country as a bank with a difference.
The Islamic banking branches demonstrated progress in
the year 2012. The profit before provision stood at Tk 0.86
billion during the year whereas deposit and investment
were Tk 16.25 billion and Tk 13.67 billion respectively at
the end of the year. Total import and export businesses
handled by the Islamic banking branches were Tk 13.79
billion and Tk 8.61 billion respectively.
Annual Report 2012 93

Management Discussion and Analysis


Activities related to Islamic banking- Year 2012

Treasury Function

Islamic Banking Division conducted Hajj Campaign 2012


with a view to provide service to the Hajj Pilgrims and
mobilize deposit in the process. For the purpose, a team
of officials and direct sales executives worked under the
guidance of the Division. During the campaign, 140 agent
accounts were opened and low cost deposit of Tk 3,310
million was mobilized as fees from over 15,000 pilgrims.

Treasury operation concentrated on funding operation


and foreign exchange dealings. Treasury of PBL provides

diversified products and services and has four desks


concentrated on funding operation, liquidity and market
risk management, Primary Dealers operations and
foreign exchange dealings.
Foreign

Exchange

desk:

Foreign

exchange

operations are conducted to meet LC commitment

and funding requirement of the customers. PBL


is one of the leading market makers in different
foreign exchange products mainly USD/BDT spot,
swaps, forward transactions in inter-bank market
and cross-currency dealing (mostly customer driven

transactions) with foreign correspondents abroad.


Treasury has also been funding banks surplus fund
to PBLs overseas finance companies especially
for bill discounting purpose and off-shore banking

units for their smooth business operations including


business under UPAS (Usance Payable At Sight) LC
and refinancing deferred LCs.

Hajj Campaign 2012

Three Iftar Mahfils were held at Dhaka, Chittagong and


Sylhet centrally with all the branches of the cities where
paper was presented on Waqf by renowned Islamic
scholars before a huge gathering. In 2012, three new
deposit products and one investment product were
introduced. Study and analysis for installation of Islamic
banking software was completed and work order was
issued to the selected vendor for the purpose.

Money Market Desk: The money market desk


regularly participates in the inter-bank market of the
country and exercises all types of existing money

market products like call money, term placement,

Repo, Special Repo, ALS, Reverse-Repo etc.


with the Bangladesh Bank and inter-bank mostly
on overnight basis. Besides, USD/BDT Swap is

considered as a very popular money market product


and the money market desk is actively participates in
swap transactions and manages liquidity positions
Asset

Liability Management Desk: Treasury is

the driving force of the Asset Liability Management


Committee (ALCO). It executes the strategies of the

ALCO for effective management and monitoring of


various balance sheet gaps and risk limits set by the

regulator and CRO. It takes various decisions regarding

interest rate structure of deposits, loan pricing,


credit-deposit ratio, contingency funding plan, stress

testing, liquidity coverage ratio (LCR), transfer pricing


mechanism for internal funding and investments in
Iftar Mahfil arranged by PBL

Three meetings of the Shariah Supervisory Committee were

Government securities including corporate bonds by


evaluating the market trend and scenario.
Primary

Dealer (PD) Desk and Fixed Income

arranged in 2012 where different operational issues were

Desk: The Bangladesh Bank devolved Government

conducted Shariah audit and inspection at the Islamic banking

development of the secondary market. But the

arranged Medical Camp at Bishwa Ijtema to provide primary

almost non-vibrant due to unattractive yields. In

reviewed and the Muraqibs of Shariah Supervisory Committee

Treasury Bills / Bonds to the primary dealers for

branches and submitted reports thereon. Besides, the Division

demand for Treasury Bonds in capital market was

health services to the devotees as before.

spite of the difficulties, PBL has continuously been

Annual Report 2012 94

trying to develop the bond market through trading of

Arabia, Singapore, UAE, UK, Malaysia, USA, Italy and

Treasury Bills and Bonds in the secondary market

Oman. During 2012, remittance arrangement with Hana

and also providing financial advisory services to the

Bank, South Korea and CIMB Bank, Malaysia opened

prospective customers of Government Securities for

new windows for inward remittance.

bond market development. The primary dealer desk

Countrywise Inflow of Foreign Remittance


January-December 2012

is also participating in primary auctions as the agent


of the corporate clients. PBL actively participated in
developing the Primary Dealers Association which

Singapore
17%

Oman
1%

Italy
2%

helped to improve the bond market

Malayasia
2%

Regulatory Compliance: Treasury complied with

others
10%

KSA
38%

regulatory requirement to maintain CRR and SLR.

UAE
14%

The Division also maintained exchange position


(Overbought/ Oversold Position) of the bank in line
with the Bangladesh Bank open position limit set
for PBL. The bank being a primary dealer, at times
felt pressure on liquidity due to higher volume
of devolvement of Treasury Bills / Bonds by the
Bangladesh Bank. The rate of interest in money
market shoot up and in order to stabilize the money
market the primary dealers were asked not to go for
borrowing from money market. The Bangladesh Bank
was supposed to provide support for CRR. However,
in case of any shortfall, interest would be realized but
which would not affect the performance measurement
of the banks by the Bangladesh Bank. Total interest
paid was Tk 199.36 million.

UK
11%

USA
5%

Correspondent Relationship
PBL has
around

wide correspondent relationship with banks

the

world

to

facilitate

international

trade

transactions. As on December 31, 2012, the number of


relationship stood at 660 covering 266 banks spread

across 80 countries. PBL maintains 37 Nostro Accounts


in 10 major currencies with reputed international banks

around the world in all the important global financial


centers. PBL also offers Vostro account service to foreign

correspondents. The bank enjoys sufficient credit lines

from its correspondents including credit limit under TFFP


of Asian Development Bank (ADB) for adding confirmation

to letter of credit as and when needed. During 2012, PBL

Foreign remittance

availed bilateral loan in USD from correspondent banks

In 2012, PBL maintained a growing trend of inward


foreign remittance business throughout the year. The
bank handled total inward foreign remittance of Tk 42,443
million indicating 15 percent growth over that for the year
2011. The Non-Resident Bangladeshis (NRBs) routed
remittance through networks of exchange companies and
banks. Major sources of banks remittance were Saudi

for use in trade finance transactions through Offshore


Banking Units.

Prime Exchange Co. Pte. Ltd., Singapore


The company significantly expanded business in 2012.

Total volume of remittance was SGD 82.56 million in 2012


compared to SGD 46.86 million in 2011, showing growth

of 76.18 percent. The company made profit before tax of


SGD 141,836 in 2012 compared to SGD 104,427 in 2011

recording a growth of 36 percent. The company operates


with two branches in Desker Road and Jurong East

Inflow of Foreign Remittance


(Taka in million)

complying with the regulations of both the Bangladesh


Bank and Monetary Authority of Singapore (MAS). Growth
42,443

in business of the company was possible due to marketing

efforts, personalized service, efficient service platform under


28,433
22,669

RemitFast software and enhanced distribution network.

36,890

The company started remittance through Sonali Bank

26,447
2008

2009

Limited in 2012 which is in addition to existing arrangement


2010

2011

2012

with Pubali Bank Limited. The Bangladesh Bank has


approved opening of third branch for which approval

Annual Report 2012 95

Management Discussion and Analysis


of MAS is sought and under process. Arrangement for
remittance of Non-Resident Indians (NRIs) through HDFC
Bank, a reputed bank in India, has been finalized in 2012.
PBL Exchange (UK) Limited

During the year 2012, the company made operating profit


of Tk 432.91 million as against Tk 703.40 million in 2011.
Prime Bank Securities Limited
Prime Bank Securities Ltd. was established to provide

The company has been operating with three Branches in

brokerage services in the stock market. During the year

has marked growth despite stiff competition. The volume of

million as against Tk 14.32 million in 2011.

London, Birmingham and Manchester. The business volume

remittance was GBP 19.79 million in 2012 which was 55

percent higher than GBP 12.77 million in 2011. The company

2012, the company made operating profit of Tk 48.10

Information and Communication Technology

incurred operating loss of GBP 115,788 in 2012 compared

PBL has always upgraded itself with the latest technology

has taken some pragmatic steps for further acceleration of

advantages of the technology which has enriched its IT

to reach a better position in 2013.

tremendously increased its customer service as well as

PBL Finance (Hong Kong) Limited

PBL is the pioneer in providing multi-dimensional banking

to operating loss of GBP 150,090 in 2011. The subsidiary

and time-to-time the bank has adopted different

business growth. If implemented, the Company is expected

infrastructure. Technological development of the bank

trust worthiness of the stakeholders towards the bank. Now

Total assets of the company reached to HKD 119.68

products and services with advanced technologies. The

million on December 31, 2011. The company made net

help of the technological advantages. The IT Division is

to HKD 3.15 million in 2011. The main functions of the

dedicated professional workforce which has been built-

discounting facilities against LCs originating from PBL

application. For developing IT backbone the bank has

remittance business. The company has been run by

considering return on investment.

million as on December 31, 2012 compared to HKD 56.29

bank is dedicated towards its customer satisfaction with

profit after tax of HKD 4.32 million in 2012 compared

well equipped not only with technology, but also with a

subsidiary are to advise, negotiate, confirm and provide

up for support as well as development of new satellite

and other Bangladeshi Banks. The company also handles

invested throughout the year in an efficient manner

executive and officials having diverse experience in foreign

The bank successfully implemented the Core Banking

trade business both in Hong Kong and Bangladesh.


Offshore Banking

PBL has been offering Offshore Banking facilities

through 3 (three) Offshore Banking Units (OBU) located


in Dhaka Export Processing Zone (DEPZ), Chittagong

Export Processing Zone (CEPZ) and Adamjee Export


Processing Zone (AEPZ). The total loans and advances
of three OBUs reached to USD 61.30 million equivalent
to Tk 4,895 million as on December 31, 2012 compared
to USD 42.40 million equivalent to Tk 3,470 million as on

December 30, 2011 recording a growth of 41 percent.


During the year 2012, OBUs made operating profit of USD
1.84 million equivalent to Tk 150.32 million as against

USD 1.57 million equivalent to Tk 119.50 million in 2011


with a growth of 26 percent.

Prime Bank Investment Limited


PBL was registered as Merchant Banker with the
Bangladesh Securities and Exchange Commission,
Bangladesh in 2001 for starting its Investment Banking

and Advisory services. As per directives of the

System, Switching System to deploy ATM and POS and

secured Wide Area Network. For Core Banking System


the bank selected Temenos T24, a world class and
proven technology, implemented and supported in over

90 countries worldwide. At present the bank has 130


branches under the same network. After implementation

of the system the bank turned to an electronic bank by


reducing manual works. Now PBL is offering real time

online banking where a customer can do transaction from

any point or from any branch or from any ATM (banks own
ATMs and shared ATMs) or SWIFT. Major IT initiatives
during 2012 were:

In-house development team


The In-House Development Team formed under IT Division

developed 13 software as per internal requirement of the


bank and the Bangladesh Bank. PBL has a full-fledged

and experienced In-house Software Development Team

that has already boosted up the quality of services and

automated the internal operations to a great extent by


developing good score of software.

Bangladesh Bank, PBL converted its Merchant Banking

RemitF@st

name and style Prime Bank Investment Ltd. in 2010.

collection through overseas PBL exchange houses

and Investment Division (MBID) into a subsidiary in the

Annual Report 2012 96

is

web-based

Online

Remittance

Management System developed for real-time remittance

located at Singapore and UK which has been running


successfully for the last two years.
The team also developed and implemented Rsys (Retail
Banking Automation System with notifications to retail
loan Applicants and extensive MIS on retail banking) in
2012, which has automated all the desk jobs of Sales,
Assessment and CAD under Retail Banking Division.
Apart from developing unalienable day-to-day Systems
like CL, CIB, LC Reporting Package, HRIS & Payroll
Management System, Balance Confirmation System,
Centralized Limit Register, the development team is now
in the process of implementing Centralized Fixed Asset
Management System within the first quarter of 2013.
In year 2012, the team also started the project of
Corporate Loan Proposal Tracking System which will
eventually help the management to control and monitor
each corporate loan proposal and approval work flow and
to take appropriate measures on any undue stagnation
found during the life cycle of corporate loan processing.
This System promises to heighten the level of services
presently provided by CBD, CRM and CAD with the
help of real-time tracking mechanism and will eventually
increase all around customers satisfaction.

In 2012, the team completed the development of the first


version of the Internet Banking Application ALTITUDE
to serve the banks customers with various real-time
banking services without requiring them to come to the
bank. Customers can access the application using any
device (for example, Desktop PC, Laptop, any handheld
devices like Mobile Phone, PDA and Tablet etc) that has a
web browser with connectivity to the internet. ALTITUDE
is highly secured which has been acknowledged and
certified by VerySign, the worlds most renowned
Certificate Authority (CA). Another security is used at
ALTITUDE named Two-Factor Authentication (2FA), a
Fool-Proof security on the transactions.
After successfully passing the last four years with the CBS,
the bank is going to upgrade CBS Temenos T24 from R6 to
R12. After signing of SOW (Scope of Work), upgradation
activities will be started. With this upgradation, the bank
also purchased MIS software of Temenos Insight which
will make banks MIS system more robust, prompt and
user friendly.
For the first time in Bangladesh, the bank completed
Information System (IS) Audit by KPMG, Pakistan which
represents a member firm of one of the Big Four auditing
and accounting forms in the world.

branches, SME branches and ATMs. Using end to end


Fiber Optics link, Radio and VSAT link of Licensed
Frequency, the bank successfully deployed 10 branches,
53 offsite and onsite ATM terminals in the year of 2012.
For upgrading CBS Temenos T24 from R6 to R12, the
bank has completed the procurement of total hardware
for Database Server, Application Server, Storage System
and Backup system with related environmental software.
Microsoft Active Directory Service, Antivirus Solution
and other
The bank has now 130 branches which are under the
domain of PRIMEBANK and managed under a central
group policy (complied with guidelines of the Bangladesh
Bank) for every user and computer which ensures
computer and user level desktop security and increased
flexibility to users. Antivirus System has been updated
with new version of Antivirus solution which is centrally
managed for daily updates to computers and ensuring
desktop security through proper security parameters
like desktop level firewall. For increased online financial
transactions, to ensure network level security and for
a reliable secured network for Internet Zone, the bank
included new generation firewall Palo Alto and Email
Security Solution and world class web-gateway to
manage the network in a more efficient way. To monitor
the performance of mission critical servers of all system
at Data Center, Disaster Recovery Site, and branches,
the bank introduced world class Network Management
System CA-Network Management System Solution which
includes Spectrum, e-health and others.
ATM and Switching Network

The bank successfully completed the integration of


card business of the bank with Japan Credit Bureau
(JCB), the 4th largest card issuer in the world.

Under

the network of banks renowned switching

system IST, the bank deployed 53 ATMs, 500 POS


terminals. Additional 50 ATMs and 500 units of GPRS
POS terminals will be deployed very soon.

The

bank successfully completed the integration with

NPS (National Payment Switch) testing system. Basic


transactions (Withdrawal, Reversal, Balance Inquiry)
testing have already been completed.

Using

banks robust switching system IST, the bank

introduced highly secured electronic payment system


Prime Cash, which will enrich the customer services
of Alternative Delivery Channel.

System and Networking

Bangladesh Automated Cheque Processing System


(BACPS)

The bank deployed redundant and robust WAN


Connectivity for smooth operation of Temenos T24 for

PBL implemented BACH phase by phase as prescribed


by the Bangladesh Bank all over the country where Sonali
Annual Report 2012 97

Management Discussion and Analysis


Bank was the Clearing House. At present 96 Branches are
using Bangladesh Automated Cheque Processing System
(BACPS) and all braches are using the Bangladesh
Electronic Funds Transfer Network (BEFTN).
Under the above facilities, the bank is capable to disburse
cash dividend of different companies, credit card bill within
the bank and other banks and utility bills promptly and
freely. Details on BACPS are given in Customer Care
chapter of this Annual Report.
Alternate Delivery Channels
PBL successfully launched Biometric Smart Card in 2012
to provide financial service for the un-banked and under
banked people in the rural and urban areas by fingerprint
recognition. Moreover, the bank further expanded its ATM
network, Internet Banking, SMS Banking, Phone Banking,
Mobile Banking and KIOSK. A few more services like
Automated Cheque Cash Deposit Machine (CCDM) will
be added soon for the customers of the bank. Details on
alternate delivery channels are given in Customer Care
chapter of this Annual Report.

Inauguration of new branches


The FMD team believes in the time-related positioning of
resources and always tries to achieve the target within the
stipulated time span. In 2012, one of the big challenges
was determining locations based on customer needs and
hiring premises for setting up PBLs ATM booths with a
target of 100. Opening of a new branch involves a series of
actions. The key areas are carrying out detailed feasibility
study of business through R&D Division, obtaining the
Bangladesh Banks permission, site / premises selection
satisfying banks distinctive requirement, testing structural
feasibility of premises, hiring of suitable premises, interior
and exterior design by divisional engineers / architectural
firm, supply of all kinds of electro-mechanical and
electronics equipment and furniture / fixture etc.

Chairman of PBL inaugurating shibpur branch, Narsingdi

In 2012, PBL opened 11 new branches at different places


of the country. One of the branches namely Tejgaon
Branch was opened on bank's own property. Besides, the
bank purchased some properties for opening branches.
Daulatpur Branch at Khulna has already been opened
and one more is in the offing at Patuatuli, Dhaka.

ATM of PBL

Facility Management
Facility management is an integral and fundamental
requirement for any modern organization. To meet the
goals or objectives, a well-planned logistics strategy
is a primary requisite to the successful outcome of any
operation, especially when establishing, conducting and
even expanding business under crucial environments,
anywhere within or beyond borders. In PBL, the function
of FMD (Facility Management Division) team is delegated
with the administration of planning, organizing, controlling,
staffing, designing, selection and decoration for branch
opening, printing, procurement, inventory, warehousing,
distribution, transportation, safety and security, well-knit
supply chain management, hiring, renewal and purchase
of real estate property. In 2012, the facility management
team successfully accomplished few big challenges of
which important ones are highlighted below:
Annual Report 2012 98

Making and Installation of Solar Energy Generation


System (SEGS):
The facility management should always comprise of
steps with the aim of maximizing output, faster and

efficient resolution of issues at the same time reduction of

internal costs. The facility management team undertakes


every support service as an opportunity to demonstrate

its pledge towards the best possible support to the


stakeholders. Such an endeavor is the installation of

Solar Energy Generation System (SEGS) at low cost


using local resources by banks engineers.

Following the pre-condition of the Bangladesh Bank to


have prior installation of Solar Energy Generation System

before getting electricity connection, FMD ensured timely

commissioning of designated branches. At present, a total


of 17 branches have solar panels installed by the banks

engineers. Gradually, the bank will install solar panel in all

its future branches under the slogan of Save Energy for


Green Bangladesh.

Risk Management

enjoy working with pride. Believing that the human

PBL has always being in the forefront of implementing

resources are main elements behind the success and

of any banking institution may be defined as the possibility

motivating the workforce with contemporary HR policies

business is in fact a business of risk taking. So it is vital to

but also a learning, challenging and rewarding career.

out of these risk ventures. In todays challenging financial

Report chapter of this Annual Report.

different risk management tools and techniques. The Risk

future sustainability of the bank, the bank is developing and

of incurring losses, financial or otherwise. Banking

and attractive benefits. The bank is not only offering a job

manage all these risks efficiently to emerge as the winner

Details of HR related activities are given in Sustainability

and economic environment effective risk management


is must for sustainable growth in shareholders value.

Significant accounting policy

In banking arena, key risks include credit, market,

This management discussion analysis is based

strategic risk, concentration risk, compliance risk etc. The

statements of 2012.

understanding of various risks, disciplined risk assessment

Summary of financial performance of PBL

operational, liquidity, reputation risk and other risks like


risk management strategy of PBL is based on a clear
and measurement procedures and continuous monitoring.

Details of Risk Management are given in the "Risk


Management" chapter of this Annual Report.
Capital Management
Capital management of the bank is based on the objective

to maintain an adequate capital base to support the

projected business and regulatory requirement. This is


done by drawing an annual planned business growth vis-

-vis capital requirement. PBL recognizes the impact of

shareholders returns on the level of equity and seeks


to maintain a prudent balance between Tier-I and Tier-II
capital. As per directives of Bangladesh Bank, the banks

are required to maintain capital at 10.00 percent of risk-

weighted assets under Basel-II. Tier-I capital should be


minimum 5 percent of total capital.

The banks capital fund is divided into two parts- Tier-I and
Tier-II capital. Tier-I includes the equity (paid-up capital,

share premium, statutory reserve and retained earnings)


and Tier-II includes general provision on unclassified

loans and advances, revaluation reserves, unsecured

subordinated debt and exchange equalization account.


Total consolidated capital fund of the bank increased by
Tk 1,687 million and stood at Tk 25,916 million during
2012. Tier-I capital grew by Tk 1,920 million and stood

at Tk 20,664 million during the year under review. Total

consolidated capital fund is equivalent to 12.64 percent


of total risk weighted assets. More details regarding

on the significant accounting policies and financial

Particulars
Operating income
Operating expenses*
Profit before tax and provision
Net profit before tax

Net profit attributable to shareholders

Total assets
Loans and advances
Deposits
Shareholders equity
Net return on equity
Cost income ratio*
Non-performing loan ratio
Capital adequacy

Taka in million

2012
13,492
4,941
8,551
5,335
2,072
236,833
160,890
182,053
20,787
13.53%
36.62%
3.83%
12.64%

2011
11,559
4,132
7,427
6,766
2,780
199,950
138,848
159,816
19,095
20.19%
35.75%
1.37%
12.46%

* Total operating expenses of PBL increased by 19.58

percent during the year mainly due to increase in personnel

and other operating expenses. To match with the growth of


SME and retail business and branch expansion a number of

manpower was recruited along with sales force. Moreover,

to keep the salary package competitive in the industry, there

was upward revision of the packages in the last quarter


of 2011 which had full effect in personnel expenses in the

year 2012. However, the enhancement of the package will


motivate our employees to do even better in future and

targeted increase of business especially in SME and retail


segments will benefit the bank in broad spectrum. PBL also

made donation amounting to Tk 213.41 million to Prime

capital management are given in the Market Discipline-

Bank Foundation to carry on various CSR activities. PBL

this Annual Report.

promotional and advertisement expenses. This strategy

Human Resources

ratio was 36.62 percent in 2012 which slightly increased

Disclosures on Risk Based Capital (Basel-II) chapter of

The bank is working with a vision of converting human


resources into human capital through appropriate
knowledge, skills, abilities and personal attribution. A
healthy environment has been created where employees

also focused on developing brand image and increased

added value to the business. The banks cost income


from 35.75 percent in 2011 due to increased investment
in branch expansion and development of IT infrastructure.

Considering the factors stated above, the ratio indicates


the satisfactory operating efficiency of the bank.

Annual Report 2012 99

Management Discussion and Analysis


Profits and Dividends

Loans

Operating

income increased by 16.72 percent to Tk


13.49 billion in 2012 compared to Tk 11.56 billion
in 2011. Operating expenses increased by 19.58
percent and stood at Tk 4.94 billion in 2012 compared
to Tk 4.13 billion in 2011. As a result, profit before
provision increased by 15.13 percent to Tk 8.55 billion
in 2012 compared to Tk 7.43 billion in 2011. Profit
before tax decreased by 21.15 percent to Tk 5.34
billion due to higher loan provision requirement as per
new loan classification and provisioning policy by the
Bangladesh Bank and net profit after tax decreased by
25.73 percent to Tk 2.70 billion. Net profit attributable
to shareholders stood at Tk 2.07 billion;

Net

return on equity for 2012 was 13.53 percent


compared to 20.19 percent in 2011;

Earnings

per share was Tk 2.88 in 2012 compared to


Tk 3.88 in 2011;

Board of Directors recommended stock dividend of 10


percent and cash dividend of 10 percent for the year 2012.

Profit before Tax by segments


Particulars

Conventional banking
Islamic banking

Off-shore banking
Total

Conventional

to profit;

Off-shore
The

Taka in billion

2012

2011

Growth (%)

4.33

5.82

(25.60)

0.12

25.79

0.86

0.15
5.34

0.83

6.77

3.41

(21.15)

and advances increased by Tk 22.04 billion


and stood at Tk 160.89 billion as at December 2012
indicating a growth of 15.87 percent;
Total deposits grew by Tk 22.24 billion and stood at
Tk 182.05 billion as at December 2012 indicating a
growth of 13.91 percent;
Non-performing loan ratio stood at 3.83 percent in
2012 compared to 1.37 percent in 2011 due to the
change in loan classification and provisioning policy
by the Bangladesh Bank;
Capital adequacy ratio as per Basel-II stood at
12.64 percent on consolidated basis at the end of
December 2012 which was 12.46 percent at the end
of December 2011.
Deposits
Core

customer deposits continued to increase.


Customer deposits consist of 98.22 percent of total
deposits as at December 2012;
Savings deposit of the bank showed growth of 6.94
percent and its share to total deposit stood at 10.54
percent;
Low cost and no cost deposits showed growth of
11.72 percent. However, high cost deposits registered
a growth of 15.00 percent as liquidity pressure in the
market compelled the bank, a Primary Dealer, to go
for mobilization of additional high cost deposits to
purchase treasury bills / bonds which were devolved
by the Bangladesh Bank;

banking remained the main contributor

Growth and Mix of Deposite

banking showed strong growth of profit;

profitability of conventional banking and Islamic


banking reduced due to higher provision requirement
resulting from new loan classification and provisioning
policy by the Bangladesh Bank.
Profit before Tax of PBL by Segments
2008

Conventional Banking

2009

High Cost Deposit

2010

2011

Low Cost Deposit

2012

No Cost Deposit

81.03 %

Islamic Banking
16.15%

Balance Sheet Growth, Asset Quality and Capital Position


PBLs

total asset increased by Tk 36.88 billion and


stood at Tk 236.83 billion as at end of December
2012 indicating a growth of 18.45 percent;

Annual Report 2012 100

Strong

brand image, efficient customer services


along with retail liability campaign were keys to the
commendable growth rate.

Loans and advances


Loans and advances were well spread. Retail and
SME sector showed significant growth during 2012;
Phase out of lending interest rate caps was initiated
in March 2011 by the Bangladesh Bank starting with
loans other than industrial term loans and loans for
export, agriculture and essential imports. As a result,
the spread of the bank gradually improved in spite

of increase of interest rates on deposits arising from


tight liquidity position in the market;
Non-performing loan increased during the year by Tk
4.26 billion due mainly to the new loan classification
and provisioning policy by the Bangladesh Bank and
stood at 3.83 percent which is much below the market
average of 10.03 percent. As such the asset quality
may be termed as strong;
PBL made adequate provision against loans and
advances as per the Bangladesh Bank guideline.
Cash flow statement of PBL
During the year under review, PBL had a net cash inflow
of Tk 2,824 million as shown below:
Particulars
Net cash flows from operating activities
Net cash flows from investment activities
Net cash flows from financing activities
Net increase / decrease in cash

Taka in million

2012
4,395
(791)
(780)
2,824

2011
7,466
(2,535)
(288)
4,643

Net Cash flows from operating activities


The major component of net cash flow from operating
activities is operating profit by eliminating the effect of
depreciation and provisions. Net cash flow was positive
as the increase in loans and advances and purchase of
trading securities (treasury bills) were adequately covered
by customer deposits and borrowings from the Bangladesh
Bank under repo facilities provided to primary dealers.
Net Cash flows from investment activities
Net cash flow was negative as the bank realized sale
proceeds from securities less than the amount for
purchase of land and building for its business and make
payment against lease obligations.
Net Cash flows from financing activities
Net cash flow was negative as 10 percent cash dividend
for 2011 was distributed to the shareholders in 2012.
Liquidity statement
From

the liquidity statement it transpires that there is

minimal negative gap till 1-3 months bucket, moderate


positive gap in over 3 months-5 years bucket and there

is a huge positive gap in over 5 years maturity bucket.

So the cumulative gap is positive and pressure from


liquidity is minimal. In reality, above 90 percent of
fixed term deposits are renewed on maturity. As such,
the negative gap actually converts into positive gap.

In

order to meet the withdrawal demand Bank

maintained adequate liquid assets as per regulation.

Following CRR and SLR ratio was maintained as

at December 31, 2012 as against the regulatory


requirement:

Particulars
Cash Reserve Requirement (CRR)
Statutory Liquidity Ratio (SLR)

Required
(%)
6.00

Maintained
(%)
6.06

19.00

35.54

Managing Risk
PBL Group recognizes and takes proactive measures
to manage various risks posed by the ever-changing
business environment. These risks which include credit
risk, market risk, liquidity risk and operational risk are
comprehensively dealt with and systematically managed
by established limits and control. PBL established a
structured frame work for risk management which is
intended to balance risk against returns. Details of risk
management of PBL are given in "Risk Management"
chapter of this report.
Monitoring performance through Key Performance
Indicators
The bank tracks the performance against number of
bench marks known as key performance indicators.
The KPIs fall under two categories- financial and nonfinancial. The KPIs are used to track performance against
the planned targets, comparison of previous years results
and industry bench mark.
Financial key performance indicators
Deposits

and loans are the two important elements


considered in monitoring the performances. This
helps the management to plan business expansion
vis--vis liquidity. Deposit performance is measured
in terms of cost of deposits, mix of deposits. Credit
is monitored in terms of yield on advance and
impairment charges. PBL kept the lead in deposits
and loans and advances among the conventional
private commercial banks;
Asset and liability mix is monitored to ensure
expected profitability, efficiency as well as to achieve
diversification;
Off-balance sheet exposure i.e., letter of credit, export
and guarantee are monitored as these are important
sources of fee based income. Margin and commission
aspects are looked into;
Revenue growth and revenue mix indicate the
business growth and sources of income. This helps
the management how well is our business mix and
what actions should be taken for a balanced growth;
Cost to income ratio is an important tool which the
management uses to determine the efficiency of
consumption of resources for creating income;
NPL

ratio measures the asset quality of the bank and

helps in managing asset portfolio;

Net profit before tax measures the operating efficiency

of the management and is important for determining


the productivity of the employees;

Annual Report 2012 101

Management Discussion and Analysis


Return

on average equity measures the return on the

average capital invested in the business;

The

steady dividend policy of PBL aims to deliver

sustainable and growing returns to shareholders by


remaining a responsible corporate citizen;

The

earnings per share ratio shows the level of

earnings generated per ordinary shares.

Non-financial key performance indicators


The

most important indicator is customer satisfaction.

It is the key to the development of business. Research

and Development Division reviews the customer


satisfaction level. It also undertakes mystery shopping
to find out efficiency of our customer service system;

Through ATM

usage survey, we can track the number

of transaction processed, resilience of our system


in terms of service availability target. The survey
indicates gradual increase of transactions indicating
customer satisfaction;

As

PBL always emphasize for being compliant, above

all the issues compliance status is regarded as a very


important non-financial KPI in PBL.

Product and Services and Information Technology


PBL will depend more on technology and shall convert its
products supported by the core banking software.
Risk factors
It is needless to say that there are certain risk factors

which are external in nature and can affect the business


of the bank. The factors discussed below can significantly
affect the business:
General

business and political condition

PBLs performance greatly depends on the general

economic conditions of the country. The effect of


recession is still unfolding which may result to slow

down in business environment. Political stability is


must for growth in business activities.

Changes

in credit quality of borrowers

Risk of deterioration of credit quality of borrowers is

inherent in banking business. This could result due to


global economic crisis and supply side distortion. The
changes in the import prices affected the commodity

sectors and ship breaking industry. Deterioration in


credit quality requires provisioning.
Changes

in policies and practices of regulatory


bodies to revise practices, pricing and
responsibilities of the financial institutions
PBL is subject to regulations and compliance of
regulation is must. Changes in policies with regard

Annual Report 2012 102

to interest rates, pricing have significant effect on


the performance of the bank. Bangladesh Bank is
expected to continue its persuasion to reduce the
spread and charges further which is likely to affect the
performance. Changes in provisioning requirement
will also affect the performance of the bank.

with Basel-II
Basel-II is fully effective from 2010 and PBL has
complied with respect to credit risk management, its
supervision and establishment of effective internal
control. The establishment of effective control requires
more investment in technology and operating expenses
are likely to increase. The rating of the borrowers is
being done. Basel-III is yet to be implemented in
Bangladesh but the bank has been in the process for
mind set-up to prepare for the new accord.
Volatility in equity market
The Bangladesh Securities and Exchange
Commission and the stock exchanges improved their
supervisory role but the equity market is still volatile.
The recession fear also added to the volatility. If
volatility continues it is likely to affect the performance
of the bank.
Compliance

Changes

in market conditions
Changes in market conditions particularly interest
rates on deposits and volatility in foreign exchange
market is likely to affect the performance of the bank.
Depositors are becoming increasingly price sensitive
and any unilateral upward change by a bank will exert
pressure on interest rate structure of the banking
sector. It is feared that wage earners remittances may
decline due to fall in job opportunity in international
market. Unless offset by export performances, there
may be pressure in the foreign exchange market.
The risk of litigation
In the ordinary course of business, legal actions,
claims by and against the bank may arise. The
outcome of such litigation may affect the financial
performance of the bank.
Success of strategies
PBL is proceeding with its strategic plan and its successful
implementation is very important for its financial
performance. Major deviation due to external and internal
factors will affect the performance of the bank.
Operational risk
Operational risk is inherent to all businesses more so
when the operation is technology based. PBL is now
using its core banking software Temenos T24, but
that requires other hardware and software support.
Although all risk mitigation techniques is taken but it
is not certain that there may not be any major failure in
the operating system arising from error, fraud etc. This
type of failure may impact the performance of the bank.

Management Teams
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Annual Report 2012 103

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Annual Report 2012 105

Risk Review
Maintaining discipline in Risk Management

PBLs balance sheet remains


strong and diversified. We also remain highly
liquid. We have a robust risk governance
structure and a dedicated risk team.
Risk Profile

Diversified
Portfolio

Strong Liquidity
Position

Robust Risk
Governance
Structure &
Dedicated
Teamwork

Risk
Return

Annual Report 2012 106

Risk Management
Risk is the probability that an investments actual return
will be different than expected which includes the
possibility of losing partial or full of the original investment.
Risk is an integral part of the banking business and
PBLs aim is to deliver superior shareholders value
by achieving an appropriate trade off between risk and
returns. In banking arena, key risks include credit, market,
operational, liquidity, reputation risk and other risks like
strategic risk, concentration risk, compliance risk etc. The
risk management strategy of PBL is based on a clear
understanding of various risks, disciplined risk assessment
and measurement procedures and continuous monitoring.
The risk management policy of the bank operates under
5 broad principles:
Oversight by the Board / Executive Committee. Board
approves policies and processes of risk management
which is recommended by the top management and
Executive Committee approves the credit proposals
submitted by the top management;
Audit Committee of the Board reviews the internal audit
reports of the bank and risk management covering
credit risk, operational risk including money laundering
risk, market risk and liquidity risk;
Dedicated independent Risk Management Units
viz. Credit Risk Management Department, Credit

Administration Department, Credit Monitoring and


Recovery Department, Internal Control and Compliance
Division, Internal Audit & Inspection Department, IT
Audit Department and money laundering risk through
Chief Compliance Officer of the bank and Compliance
Officers posted at different branches;
Dedicated committees at management level has been
set up to monitor risk viz. credit risk through Credit
Review Committee / and Risk Management Unit,
operational risk through Management Committee and
Internal Control and Compliance Division, market and
liquidity risk through Asset Liability Committee (ALCO)
and information risk through MRS Committee.
In order to streamline risk control features in a more
effective manner, PBL has put in place its Standard
Operating Procedure (SOP) in line with internationally
accepted best practices. SOPs cover all operating
departments including Corporate Banking, SME Banking,
Retail Banking, Credit, Foreign Exchange, Treasury,
Human Resources and Financial Administration. The
SOPs include all processes related to the initiation,
maintenance, settlement / closure and recording for
the entire range of products offered by the bank. SOPs
help the bank maintain control over its operations, clarify
the links with the IT system, and act as an effective
communication tool that will reduce training time, and
improve risk management and work consistency.

Principal Uncertainties
Risk

Description

Mitigants

D e t e r i o r a t i n g Deteriorating macroeconomic conditions can have an


macroeconomic impact on banks performance via their influence on
conditions
personal expenditure and consumption patterns; demand
for business products and services; the debt service burden
of consumers and businesses; the general availability of
credit for retail and corporate borrowers; and the availability
of capital and liquidity funding for banks business

Balance risk and return taking into account


of changing conditions through the economic
cycle.
Monitor economic trends in markets very
closely and continuously review the suitability
of banks risk policies and controls

The nature and impact of future changes in economic


policies, laws and regulations are not predictable and may
run counter to banks strategic interests. These changes
could also affect the volatility and liquidity of financial
markets, and more generally the way the bank conducts
business and manages capital and liquidity

Keep a close watch on key regulatory


developments in order to anticipate changes
and their potential impact on banks
performance

Financial Market Financial market volatility or a sudden dislocation could


Instability
affect banks performance, through its impact on the markto-market valuations of assets in banks available-for-sale
and trading portfolios or the availability of capital or liquidity
Financial market instability also increases the likelihood
of default by banks corporate customers and financial
institution counterparties
The risk of fraud and other criminal activities is growing
Risk of fraud
as criminals become more sophisticated and as they
take advantage of the increasing use of technology in
the society

Assess carefully the performance of banks


financial institution counterparties, rate them
according to their systemic importance,
adjusting banks exposure accordingly
Maintain
robust
suitability
and
appropriateness processes

Changes in
regulations
and laws

Have a broad range of measures in place to


monitor and mitigate this risk
Controls are embedded in banks policies
and procedures across a wide range of
activities, such as origination, recruitment,
physical and information security

Annual Report 2012 107

Risk Management
Risk Management Process
PBLs risk management process is based on a clear
understanding of various risks, disciplined risk assessment
and measurement procedures and continuous monitoring.
The policies and procedures established for this purpose
are continuously benchmarked with international best
practices. The Board of Directors has oversight on all the
risks assumed by the bank. Specific Committees have
been constituted to facilitate focused oversight of various
risks. Risk management process in PBL consists of:

E. Monitoring: Risk monitoring is used to check whether


the risks actually incurred lie within the prescribed limits,
thus ensuring an institutions capacity to bear those risks.
The above process of risk management has been
undertaken in PBL in a cyclical manner which implies that
if any risk(s) remains un-attended, that will be addressed
though the repetition in the process which started with
identification of those factors and the process continues.

A. Identification;
B. Measurement;
C. Aggregation;
D. Planning and controlling;
E. Monitoring.
A. Identification: A banks risks have to be identified
before they can be measured and managed. Typically
PBL distinguishes the following risk categories:





Credit risk;
Market risk;
Operational risk;
Liquidity risk;
Reputation risk;
Islamic banking risk.

B. Measurement: The consistent assessment of the


above-mentioned types of risks is an essential prerequisite
for successful risk management. Credit risk assessment
and measurement in PBL is calculated on the basis of
possible losses from the credit portfolio. Potential losses
in the credit business can be divided into expected losses
and unexpected losses. Expected losses are derived from
the borrowers expected probability of default and the
predicted exposure at default less the recovery rate, i.e.,
all expected cash flows, especially from the realization of
collateral. The expected losses should be accounted for
in income planning and included as standard risk costs
in the credit conditions. Unexpected losses result from
deviations in losses from the expected loss.
C. Aggregation: When aggregating risks, it is important
to take into account correlation effects which cause a
banks overall risk differing from the sum of the individual
risks. This applies to risks both within a risk category as
well as across different risk categories.
D. Planning & Controlling: Furthermore, risk
management in PBL has the function of planning the
banks overall risk position and actively managing the
risks based on that plan. Managing the risks should be
taken for the selective limitation of risk positions as well
as the mitigation, or possibly increase of these positions
by means of financial instruments or suitable techniques.

Annual Report 2012 108

Credit Risk Management


Principles for the Management of Credit Risk in PBL
While financial institutions have faced difficulties over
the years for a multitude of reasons, the major cause of
serious banking problems continues to be directly related
to lax credit standards for borrowers and counterparties,
poor portfolio risk management, or a lack of attention to
changes in economic or other circumstances that can
lead to a deterioration in the credit standing of a banks
counterparties. Credit risk is most simply defined as the
potential that a banks borrower or counterparty will fail to
meet its obligations in accordance with agreed terms. The
goal of credit risk management is to maximize a banks risk
adjusted rate of return by maintaining credit risk exposure
within acceptable parameters. The effective management
of credit risk is a critical component of a comprehensive
approach to risk management and essential to the longterm success of any banking organization. Thats why,
a risk based asset review framework has also been put
in place wherein the frequency of asset review would be
higher for high exposure cases and/or lower credit rating.
The sound practices set out in this document specifically
address the following areas:
Establishing an appropriate credit risk
environment;
Operating under a sound credit granting process;
Maintaining an appropriate credit administration,
measurement and monitoring process; and
Ensuring adequate controls over credit risk.

As part of this framework, the following sets of principles


are used for the sustainable risk management culture.

Balancing Risk
and Return
Responsibility

Accountability

Anticipation
Competitive
advantage

measuring, monitoring and controlling any type of risk


associated with the strategy. Such policies and procedures
address credit risk in all of the banks activities and at both
the individual credit and portfolio levels.

Risk is taken in support of the


requirements of banks stakeholders,
in line with banks strategy and within
its risk appetite
It is the responsibility of all
employees to ensure that risktaking is disciplined and focused.
PBL takes into account of its social
responsibilities and its commitments
to customers in taking risk to provide
a return
Risk is taken only within agreed
authorities and where there is
appropriate
infrastructure
and
resource. All risk-taking must be
transparent, controlled and reported
PBL seeks to anticipate future risks and
ensure awareness of all known risks
The bank seeks to achieve
competitive
advantage
through
efficient
and
effective
risk
management and control

The banks ensures that the risks inherent in products and


activities new to them are subject to adequate procedures
and controls before being introduced or undertaken, and
approved in advance by the Board of Directors or its
appropriate committee. In order to streamline risk control
features in a more effective manner, PBL has put in
place Standard Operating Procedure (SOP) in line with
internationally accepted best practices.
B. Operating under a sound credit granting process
The bank is operating under sound, well defined credit-granting
criteria. These criteria include a thorough understanding of
the borrower or the counterparty, as well as the purpose and
structure of the credit, and its source of repayment.
Credit facilities are allowed in a manner so that credit
expansion goes on ensuring optimum asset quality i.e.,
banks standard of excellence shall not be compromised;
PBL carefully avoids name lending. Credit facility is
being allowed absolutely on business consideration
after conducting due diligence;
Risks inherent in a credit proposal are being identified
and appropriate mitigating factors are applied;
Collateral offered against a credit facility is properly
valued and verified by the concerned Relationship
Officer and / or Relationship Manager and re-valued
and re-verified annually in the subsequent period(s). In
addition, the same collateral is valued and verified by an
enlisted surveyor of the bank which is now applicable for
all customers irrespective of any amount;

The credit risk management policy of PBL operates under


the following broad principles:
A. Establishing
environment

an

appropriate

Credit

Risk

The Board of Directors has the responsibility for approving


and periodically reviewing the credit risk strategy and
credit risk policies of the bank. The strategy reflects
banks tolerance for risk and the level of profitability the
bank expects to achieve for incurring various credit risks.
Senior management has the responsibility for implementing
the credit risk strategy approved by the Board and for
developing standard policies and procedures for identifying,

CREDIT RISK
Business
Industry Risk

Financial Risk

Management
Risk

Leverage

Size of
Business

Experience

Security
Coverage

Liqudity

Age of
Business

Succession

Collateral
Coverage

Profitability

Business
Outlook

Team Work

Support

Coverage

Industry
Growth

Relationship
Risk

Security Risk
Account
Conduct

Utilization
of Limit
Compliance of
Coverants/
Condition
Personal
Deposits

Market
Competiton
Barriers to
Business

Credit Risk Components and Key Paramenter


s

Annual Report 2012 109

Risk Management
Risk

grading of the accounts have been done as


per the Bangladesh Banks guidelines. Any credit
approval / sanction shall be subject to the banking
regulations in force or to be imposed by the regulatory
body from time to time and to the changes in the
banks policy. Compliance Report on CRG at the end
of each quarter to be given to CRM at Head Office.
Data collection check list and limit utilization format
are prepared for regular assessment. Internal Audit
& Inspection Division independently reviews the risk
grading at the time of auditing the branches.

Credit Risk Components and Key Parameters


The bank has established overall credit limits at the level
of individual borrowers and counterparties, and groups of
connected counterparties that aggregate in comparable
and meaningful manner for different types of exposures,
both in the banking and trading book and on and off the
balance sheet.
PBL always complies with the prevailing banking

regulations regarding Single Borrower Exposure Limit set


by the Bangladesh Bank from time to time. Credit facility
to a single customer (Individual, Enterprise, Company,
Corporate, Organization, and Group) shall be treated as
Large Loan if total limit/disbursement amount exceeds 10
percent of the total capital of the bank. PBLs total Large
Loan Portfolio exposure shall not exceed 56 percent of
the total outstanding loans and advances at any point of
time as per Master Circular on Single Borrower Exposure
Limit of BRPD circular no 5 dated April 09, 2005.

Sales

Acquisition/
Credit-specific
Customer

Collect and
Review Data

Executive Committee of the Board approves the proposals


beyond the authority limit of the Credit Committee. The
Board of Directors reviews the proposals approved by the
Executive Committee.
All extensions of credit made on an arms length
basis. In particular, credits to related companies and
individuals must be monitored with particular care and
other appropriate steps taken to control or mitigate the
risks of connected lending. Credit operation of the bank
should contribute at optimum level within the defined
risk limitation. In other words, credit facilities should be
extended in such a manner that each deal becomes a
profitable one so that the bank can achieve growth target
and superior return on capital.
C. Maintaining an appropriate credit administration,
measurement and monitoring process
A system has been put in place by the bank for ongoing
administration of various credit risk-bearing portfolios.
Dedicated independent risk management units like Credit
Risk Management Unit, Credit Administration Division,
Credit Monitoring and Recovery Department, Internal
Control and Compliance Division, and Internal Audit &
Inspection Department are developed for these purposes.
Dedicated committees at management level has been set
up to monitor risk viz. credit risk through Credit Review
Committee / and Risk Management Unit.
PBL has a system of tracking Early Alert Accounts. An Early
Alert Account is one that has risks or potential weaknesses
of a material nature requiring monitoring, supervision, or
close attention of the management. If such weaknesses

Risk Analysis

Credit Review

Collateral and
Risk assessment

Processing

Documentation

Approval

Implementation
of Credit Decision

Credit approval process in PBL sub-divided into a large number of individual process steps
The bank has a clearly-established process in place for
approving new credits as well as the extension of existing
credits. A thorough credit risk assessment is done before
granting loans. The Credit Risk Assessment includes
borrower risk analysis, industry risk analysis, historical
financial analysis, projected financial performance, the
conduct of the account, and security against the proposed
loan. The assessment originates from relationship
manager / account officer and is approved by Credit
Committee at Head Office. The Credit Committee under
delegated authority approves the credit proposals.

Annual Report 2012 110

are left uncorrected, they may result in deterioration of the


repayment prospects for the asset or in the banks credit
position at some future date with a likelihood of being

downgraded. Early identification, prompt reporting and


proactive management of Early Alert Accounts are prime
responsibilities of all Relationship Managers / Officers

and the whole process is a continuous one. An Early Alert


Report is completed by the RM and sent to the approving

authority in CRM for any account that is showing signs

of deterioration. The Risk Grade is then changed and


referred to CRM for assistance in recovery.

The bank has also put a system in place for monitoring

levels, consistent with prudential standards and internal

the adequacy of provisions and reserves. For NPL

controls and other practices to ensure that exceptions to

the condition of individual credits including determining


Provisioning and Write-off, the guidelines established

by the Bangladesh Bank for CIB reporting, provisioning


and write-off of bad and doubtful debts, and suspension

of interest are followed in all cases. The Recovery Unit

(RU) Account Manager determines the Forced Sale


Value (FSV) of NPL accounts. Forced Sale Value is

the amount that is expected to be realized through the


liquidation of collateral held as security or through the
available operating cash flows of the business net of

any realization costs. Provision is maintained for any

shortfall in the FSV to cover total loan outstanding once


an account is classified.

PBL has information systems and analytical techniques

that enable management to measure the credit risk

inherent in all on- and off-balance sheet activities. The

management information system should provide adequate


information on the composition of the credit portfolio
including identification of any concentrations of risk.

All credit extensions must comply with the requirements

of banks Memorandum and Articles of Association, Bank


Company Act, 1991 as amended from time to time, the

Bangladesh Banks instruction circulars, guidelines and

limits. The bank has established and enforced internal

policies, procedures and limits are reported in a timely


manner to the appropriate level of management.

PBL has a system in place for managing problem credits

and various other workout situations. All NPLs are


assigned to Account Manager(s) within the Recovery
Department, who is responsible for coordinating and

administering the action plan / recovery of the account and


serve as the primary customer contact after the account is
downgraded to substandard.

Liquidity Risk Management


Liquidity risk is the risk to timely meet obligations when
they come due without incurring unacceptable losses.

The liquidity risk of banks arises from funding long term


assets by short term liabilities.

Liquidity risk can arise due to market liquidity or funding

liquidity. Market liquidity risk is defined as an asset


cannot be sold due to lack of liquidity in the market due

to widening of bid / offer spread. Funding liquidity risk is

defined as risk that liabilities cannot be met when they fall


due or can only be met at an uneconomic price.

other applicable laws, rules and regulations, banks Credit

To manage liquidity risk, PBL maintains diversified and

all relevant circulars in force. Any deviation from the internal

and institutional deposits. The principle responsibility of the

The portfolio should always be well diversified with

Division which maintains liquidity based on historical

size, economic purpose etc. Concentration of credit shall

funding requirement, sources of fund, options for reducing

Risk Management Policy, Credit Operational Manual and

stable funding base comprising of core retail, corporate

policy of the bank must be justified and well documented.

liquidity risk management of the bank rests with Treasury

respect to sector, industry, geographical region, maturity,

requirements, current liquidity position, anticipated future

be carefully avoided to minimize risk.

funding needs, present and anticipated asset quality,

PBL takes into consideration potential future changes in

economic conditions when assessing individual credits

and their credit portfolios, and assesses their credit


risk exposures under stressful conditions. An important
element of sound credit risk management involves

discussing what could potentially go wrong with individual

present and future earning capacity, present and planned

capital position. ALCO monitors the liquidity management


of Treasury by i) setting tolerance limit for cumulative cash
flow mismatches, ii) setting limit on loan to deposit ratio,
iii) setting limits on dependence on institutional deposits
which are volatile in nature.

credits and within the various credit portfolios, and

From the liquidity statement (Annexure-I) it can be

of capital and provisions.

million, contractual maturity of liability within 1 year is Tk

factoring this information into the analysis of the adequacy


D. Ensuring adequate controls over credit risk
PBL has established a system of independent, ongoing

credit review and the results of such reviews are


communicated directly to the Board of Directors and
senior management.

PBL ensures that the credit-granting function is being

properly managed and that credit exposures are within

seen that out of total deposit liabilities of Tk 182,052.87


131,218.67 million. In the liquidity statement it transpires
that there is minimal negative gap till 1-3 months bucket,

moderate positive gap in over 3 months-5 years bucket

and there is a huge positive gap in over 5 years maturity


bucket. So the cumulative gap is positive and pressure

from liquidity is minimal. In reality, above 90 percent of

fixed term deposits are renewed on maturity. As such, the


negative gap actually converts into positive gap.

Annual Report 2012 111

Risk Management
Market Risk
Market Risk is the risk of loss in positions arising from
movements in market prices. Market risks include:

Equity Risk: The risk that stock or stock index


price and/or their implied volatility will change

Interest Rate Risk: The risk that interest rates


and/or their implied volatility will change.

Foreign Exchange Risk: The risk that foreign

exchange rates and/or their implied volatility will

more interest income when rates rise and less interest


income when rates fall. If the loan is funded with fixed rate
deposits, the banks interest margin will fluctuate.
Model Risk: The risk is presented by mathematical
models used to price assets and liabilities not directly
quoted on the market. Interest rate pricing models are
based on reasonable assumptions about the behavior of
interest rates that may fail in particular market conditions.

change.

The short term impact of changes in interest rates is on

prices and/or their implied volatility will change.

changes in interest rates impact the cash flows on the

Commodity Risk: The risk that commodity

Treasury Division manages the market risk and ALCO monitors


the activities of Treasury Division in managing the risk.
Interest Rate Risk:

the banks Net Interest Income (NII). In a longer term,


assets, liabilities and off-balance sheet items, giving rise to
a risk to the net worth of the bank arising out of all re-pricing
mismatches and other interest rate sensitive position.
Maturity grouping of rate sensitive assets and liabilities of
the bank (see table on Interest Rate Risk Analysis) shows
moderate negative gap in the first quarter and moderate
positive gap in the rest three quarters. If market rates shift
upward by 1 percent the bank will enjoy a positive earning
to the tune of Tk 27.34 million during 1 year period and vice

Interest rate risk is the risk (variability in value) borne by

versa. The impact is very insignificant compared to total

to variability of interest rates. In general, as rates rise, the

as stipulated by the Bangladesh Bank. The statement also

an interest-bearing asset, such as a loan or a bond, due

revenue of the bank and also within the acceptable limit

price of a fixed rate bond will fall, and vice versa. Interest

shows that there will be 2.05 percent impact on quarterly

rate risk is commonly measured by duration. Banks face


many types of interest rate risk. They are as follows:

operating profit which is also within the stipulated limit of


10 percent.
Foreign Exchange Risk Management
It is the risk that the bank may suffer losses as a result
of adverse exchange rate movements during a period
in which it has an open position in an individual foreign

Basis Risk: The risk is present when yields on assets and


costs on liabilities are based on different bases. In some

circumstances, different bases will move at different rates


or in different directions, which can cause erratic changes
in revenues and expenses.

currency. In addition, the bank is also exposed to interest


rare risk and settlement risk on account of its foreign
exchange business.
Foreign exchange risks are measured and monitored
by Treasury Division. To evaluate the extent of foreign

Yield Curve Risk: The risk is presented by differences

exchange risk, a Liquidity Gap Report is prepared for each

term rates are normally long term rates and banks earn

customer transaction resulting in a long or a short position

term assets. But the relationship between long term and

limit of the bank is USD 36.15 million equivalents to Tk

between short term and long term interest rates. Short

currency. Gap or mismatch of maturities can arise due to a

profit by borrowing short term money and investing in long

for the bank. The overall foreign currency exposure

short term rates can shift quickly which can cause erratic

2,886.57 million or on overnight basis as stipulated by the

changes in revenues and expenses.

Bangladesh Bank. The sum of the net overall positions

Re-pricing Risk: The risk is presented by assets and

in different currencies results in a positive net assets

For instance, a loan with a variable rate will generate

not exceed the stipulated limit.

liabilities that are repriced at different times and rates.

Annual Report 2012 112

position of Tk 661.35 million. The overall exposure does

Equity Risk
Equity risk is defined as losses due to changes in market
price of equity held. To measure and identify the risk, mark
to market valuations of the share investment portfolios
are done. Mark to market valuation is done against a
predetermined limit. At the time of investment, following
factors are taken into consideration:
of investment
of the securities
Liquidity of the securities
Reliability of earnings
Capital appreciation
Risk factors
Implication of taxes

actions taken on losses from fraud and control


lapses;
Review of safety and control measures of
premises.
Risk control and measurement in PBL are as under:

Security

Fundamentals

Operational Risk Management


Operational risk is defined as the risk of loss resulting
from inadequate or failed internal processes, people and
systems, or from external events. Operational risks vary
in their components. Some are very high occurrence with
low value risk and some are low occurrence with high value
risks. Third consultative paper of Basel-II recommended
following event based classification of operational risks:
fraud
External fraud
Employment practices and workplace safety
Client, products and business practices
Damage to physical assets
Business disruption and system failure
Execution, delivery and process management
Internal

Based on the classification, following type of operational


risks can be identified:

Manuals and Standard Operating Procedures


are in place and implementation of those are
regularly monitored;
Regular review of system and network by
Management Committee (MANCOM) and
Management Reporting System Committee
(MRSC);
Internal Control and Compliance Division
undertakes periodical and special audit of
branches and departments at Head Office
for review of the operation and compliance of
statutory requirement. The Audit Committee of
the Board subsequently reviews the reports of
the Internal Control and Compliance Division;
Comprehensive and special audit of branches
and business units by Internal Audit & Inspection
Division, Internal Control and Compliance
Division;
Risk based audit by Internal Audit & Inspection
Division;
Segregation of duties and multi-tier approval
procedure;
Conduct IT Audit on regular basis;
Establishing a Data Center for backup of data
and information;
Regular testing of systems back-up procedure
and contingency plan.

Prevention of Money Laundering

In PBL, operational risks are identified and measured in


the following manner:
Risks are identified with reference to the relevant
policy manuals, processes, procedures and
practices;
Accounts are evaluated as per Departmental
Control function Check List (DCFCL)
Incident reporting and analysis of causes and

Money laundering risk is defined as the loss of reputation


and expenses incurred as penalty for being negligent
in prevention of money laundering. The Bangladesh
Bank Guidelines on Anti-Money Laundering contain the
following major issues which have been incorporated in
banks policy:
Duly filled in KYC (Know Your Customer) Form is
a must for account opening;
TP (Transaction Profile) in which every customer
must specify what will be the frequency and
amount of transactions;
There should be a monitoring function to monitor
unusual / suspicious transaction which needs to
be reported to the Bangladesh Bank;
Cash Transaction Report (CTR) is to be sent to
the Bangladesh Bank on every month for the
customers depositing or withdrawing cash above
Tk 0.70 million in any day in a bank branch;

Annual Report 2012 113

Risk Management





Records should be maintained for 5 (five) years;


Appoint Compliance Officer in every branch and
Chief Compliance Officer at Head Office;
Train officials on anti-money laundering;
Customers should be classified on the basis of risk;
Customer Acceptance Policy should be prepared;
STR to be reported as and when detected.

All the above issues have been fully complied. For


mitigating the risks the bank has a designated Chief
Compliance Officer at Head Office and Compliance
Officers at branches, who independently review the
transactions of the accounts to verify suspicious
transactions. Manuals for prevention of money
laundering have been established and Transaction
Profile has been introduced. Training is continuously
given to all the category of officers and executives for
developing awareness and skill for identifying suspicious
activities. Suspicious transactions are reported to the
Bangladesh Bank.
The chapter on Corporate Governance in this Annual
Report contains details of the control measures at Head
Office and branch level.

All the above issues have been duly addressed. Activities


of Internal Control and Compliance Division during the
year 2012 include:




Internal Control and Compliance


Internal Control and Compliance is a management
process designed to achieve:
Effectiveness and efficiency of operations
Reliable financial reporting
Compliance with laws and regulations

Pillar-I and Pillar-II of BaselII also focused on operational


risk and supervisory review respectively attaching
considerable importance to internal control & compliance
and on supervision & monitoring. As per Para 1.5.2 of
Core Risk Guidelines of Bangladesh Bank on Internal
Control and Compliance, the MANCOM will review on
yearly basis the overall effectiveness of internal control
system and provide a certification on the effectiveness
of Internal Control Policy, Practice and Procedure. The
guideline contains the following major issues:
Audit Committee should be formed by every bank;
MANCOM (Management Committee) should be
formed by every bank and hold regular meeting.
Annual review by the MANCOM should be
carried out regarding effectiveness of internal
control system;
Policies and procedures should be determined
for every function of the bank;
Business strategy should be set by each bank;
Risk recognition, assessment, control activities
and segregation of duties, monitoring activities
and correcting deficiencies;

Annual Report 2012 114

Management Reporting System;


Establishment of Compliance culture.

KYC formality completed for all legacy accounts


of the bank;
Declaration of Transaction Profile has been
obtained of all accounts;
Use of uniform Account Opening Form as
prescribed by Bangladesh Bank;
Reporting of CTR was regular.
Reporting of STR to Bangladesh Bank was made
correctly. To the best of our knowledge, there
was no issue on Money Laundering. However,
the bank paid Tk 0.20 million to the Bangladesh
Bank for the late submission of STR;
Training of 100 percent officers of the bank on
AML have been completed;
Solution of the problems / issues as and when
received from Anti Money Laundering Department
of the Bangladesh Bank.
Update the knowledge of banks officers on
Anti Money Laundering and Anti Terrorist
financing and Laws published, develop them
for keeping account opening records and attain
the Self Assessment Forms of each branch as
recommended by the Bangladesh Bank;
Compliance of the Bangladesh Banks
requirements time to time and attending the
meeting arranged by FATF of Anti Money
Laundering Department of the Bangladesh Bank;
Follow-up and monitoring of Audit Report (related
to Anti Money Laundering) as and when received
from banks Internal Audit Division and External
Auditors of the bank;
Conducting warm-up session round the year for
updating the knowledge of the new & amendment
of existing circulars on AML.

The chapter on Corporate Governance in this Annual


Report contains details of internal control and compliance
measures of the bank.
Islamic Banking Risk
Islamic banking is becoming a popular mode of banking
because of its Shariah complied principles. In many
countries, there are separate Islamic banking banks and
also banks which are operating under both conventional
and Islamic mode of banking. In addition to the credit risk,
market risk, liquidity risk and operational risk there are
other risks in Islamic banking operation.
Shariah Non-Compliance Risk arises from the
failure of the banks to comply with Shariah rules
and regulations. As more and more banks are
operating under both conventional and Islamic

banking, it is becoming increasingly important

scheduled banks. Basel Capital Accord-II in respect of

the sustainability of Islamic banking. Based on

of a bank more closely with the underlying risk a bank


undertakes through providing funded and non-funded
facilities / guarantees / commitments to the clients /
in favor of clients / counterparty. With a view to smooth
implementation of Basel-II Accord, the management of
PBL decided to conduct Credit Rating of our Corporate
Borrowers through External Credit Rating Assessment
Institutions (ECAIs).

to comply with Shariah rules and regulations for


historical reviews, the potential areas of Shariah
non-compliance is assessing potential profits that
cannot be recognized as eligible profits under
Shariah Principle.

Fiduciary risk is the risk that arises from banks


failure to perform in accordance with explicit
and

implicit

standards

applicable

to

their

fiduciary responsibilities. As a result of losses


in investments, banks may become insolvent

and therefore unable to (i) meet the demands of

current account holders for repayment of their


funds; and (ii) safeguard the interests of their

PLS (Profit Loss Sharing) deposit holders. Banks


may fail to act with due care when managing

investments resulting in the risk of possible


forgone profits to PLS deposit holders.

In order to reduce Shariah non-compliance risk, the

Muraqibs regularly conducted Shariah audit. Fiduciary


risk is controlled through banks risk management
process.

Information and Communication Technology Risk


We are living in an era of information and communication

technology and the banks have become more technology


driven these days. Use of computer, internet has

become a common practice in the banking industry.


There are certain risks involved in the use of information

capital measurement and capital standards aligns capital

Since inception, Risk Management Division (RMD) has


taken over the mentorship to rate its corporate exposures
through ECAIs. RMD has continued to ensure the
timely and proper completion of borrower rating through
guidance, series of meetings and written correspondences
with the allied stakeholders.
As a result of vigorous effort and continuous persuasion,
out of total 433 nos. eligible borrowers of PBL having
exposures of Tk 100 million and above, rating of 225
nos. borrowers (51.96 percent of eligible borrowers) has
been completed till December 31, 2012. Another 52 nos.
borrowers have already signed agreement with ECAIs. It
is expected that by the end of 2nd quarter of 2013, total
277 nos. eligible borrowers out of total 433 nos. borrowers
will be rated through ECAIs which will cover 63.97 percent
of the eligible borrowers.
The rating category of the 225 nos. borrowers of PBL is
as follows:

from malfunction of system, failure of network, lack of

Bangladesh
Bank Rating
Grade

hacking etc.

BB Grade 1
BB Grade 2

and communication technology. This risk may arise

knowledge about the use of technology, virus attack,


To manage IT related risk, PBL has adopted Core Banking

Software TEMENOS T24 for its Bank management.


PBL has also taken steps to secure data through Disaster

Recovery (DR) site. It has two DR sites located in Uttara


and Gulshan to make sure that the bank is operating

smoothly under unavoidable circumstances. PBL has


an IT audit team formed as per the Central Banks
guideline. The team is conducting IT Audit in each branch

on a periodic basis and providing suggestions to higher


management. IT Division is also managing IT related

training programs to make sure that employees are


aware of IT risk related issues. The chapter on Corporate

Governance in this Annual Report contains details of IT


audit.

Borrowers Rating
Borrower rating is the offshoot of banks capital adequacy

requirement under Basel-II framework applicable for

Equivalent
Rating of
CRISL

Equivalent
Rating of
CRAB

AAA
AAA
AA+, AA, AA1, AA2,
AAAA3
BB Grade 3 A+, A, A- A1, A2, A3
BBB+,
BBB1,
BB Grade 4
BBB, BBB-,
BBB2,
BB+, BB, BBB3, BB1,
BBBB2, BB3
BB Grade 5 B+, B, B- B1, B2, B3
Total

No. of
% of Total
Rated
rated
Customers
Customers
of PBL
05
2.22%
42
18.67%
77
99

34.22%
44.00%

02
225

0.89%
100%

Stress Testing
Stress Testing is a risk management technique used to
evaluate the potential effects of an institutions financial
condition of a specific event and/or movement in a set of
financial variables. It refers to the process to cover multiple
risk measures across categories and complements
traditional risk models. It is also an integral part of the
Capital Adequacy Framework. The traditional focus of
stress testing relates to exceptional but plausible events.
Stress testing for credit risk assesses the impact of
increase in the level of non-performing loans (NPLs) of

Annual Report 2012 115

Risk Management
the banks. This involves several shocking events. Each
shocking event contains Minor, Moderate and Major
Levels of shock.
Performing loan directly downgraded to B/L- Sectoral
Concentration 1: It is a measure of the concentration risk

where the bank has the highest investment. It assumes


that 3%, 9% and 15% of the performing loan will be

directly downgraded to B/L category in minor, moderate


and major levels of shock respectively. Capital Adequacy
Ratio (CAR) of PBL will be 12.65%, 12.48% and 12.31%

in minor, moderate and major levels of shock respectively


when considering individual shock.

Performing loan directly downgraded to B/L- Sectoral


Concentration 2: It is a measure of the concentration
risk where the bank has the second highest investment. It

assumes that 3%, 9% and 15% of the performing loan will


be directly downgraded to B/L category in minor, moderate

and major levels of shock respectively. Capital Adequacy


Ratio (CAR) of PBL will be 12.64%, 12.46% and 12.28%

in minor, moderate and major levels of shock respectively


when considering individual shock.

Increase in NPLs due to default of top large loan


borrowers: It represents the scenario of the bank when

top large borrowers default. It is assumed that top 3, 7 and


10 borrowers of the bank will default in minor, moderate

and major levels of shock respectively. Capital Adequacy

Ratio (CAR) of PBL will be 6.47%, 7.59% and 5.76% in

minor, moderate and major levels of shock respectively

when considering individual shock. PBL as a part of its


strategy is reducing the exposure of large loan borrower

and focusing on diversification of credit portfolio. However,


the bank is continuously monitoring the performance of
large loan borrowers. Besides, a good amount of security
coverage is also maintained against those large loans.

Negative shift in NPLs categories: It represents the

shift of a loan from one NPL category to the next NPL


category. It is based on the assumption of 5%, 10% and

15% downward shift in the NPLs categories in minor,


moderate and major levels of shock respectively. Capital
Adequacy Ratio (CAR) of PBL will be 12.77%, 12.41%

Annual Report 2012 116

and 12.19% in minor, moderate and major levels of shock


respectively when considering individual shock.

Decrease in the Forced Sale Value (FSV) of the


collateral: It represents the banks condition when FSV of
collateral decreases sharply. It is based on the assumption
that FSV of collateral will fall by 10%, 20% and 40% in
minor, moderate and major levels of shock respectively.
Capital Adequacy Ratio (CAR) of PBL will be 12.63%,
12.53% and 12.32% in minor, moderate and major levels
of shock respectively when considering individual shock.
Interest rate shock: It represents the condition of the
bank when interest rate changes significantly. It is based
on the assumption that interest rate will change by 1%,
2% and 3% in minor, moderate and major levels of shock
respectively. Capital Adequacy Ratio (CAR) of PBL will be
11.70%, 10.67% and 9.64% in minor, moderate and major
levels of shock respectively when considering individual
shock.
Foreign exchange shock: It represents the condition of
the bank when exchange rate changes significantly. It is
based on the assumption that exchange rate will change
by 5%, 10% and 15% in minor, moderate and major levels
of shock respectively. Capital Adequacy Ratio (CAR)
of PBL will be 12.71%, 12.70% and 12.69% in minor,
moderate and major levels of shock respectively when
considering individual shock.
Equity shock: It represents the banks condition when
market value of share falls sharply. It is based on the
assumption that share price will change by 10%, 20%
and 40% in minor, moderate and major levels of shock
respectively. Capital Adequacy Ratio (CAR) of PBL will
be 12.67%, 12.60% and 12.48% in minor, moderate
and major levels of shock respectively when considering
individual shock.
When all the shocks are considered together, Capital
Adequacy Ratio (CAR) of PBL will be 10.60%, 6.74%
and 1.78% in minor, moderate and major levels of shock
respectively. So, the bank can absorb minor level of
shock only when all the shocks are considered together.
However, for absorbing other levels of shock which is very
unlikely in the industry, the bank may require additional
capital and reserve.

Annual Report 2012 117

20,000,088

5,927,202

5,033,160

132,751,323

3,376,263

2,641,429

13,677,828,714

JPY

CHF

CAD

AUD

SGD

SAR

SEK

Total

* Core Capital is Tk

83,157,945

20,510,699,935

13,016,480,060

104,378,880

81,964

19,477,001

231,644,468

241,936,083

EUR

GBP

12,660,897,747

Liabilities In FCY

Assets In FCY

661,348,654

2,641,429

3,376,263

28,372,443

5,033,160

(81,964)

5,927,202

20,000,088

63,680,944

10,291,615

522,107,474

3=1-2

Net Short Term


Position

Short Term Foreign Currency Holdings

13,183,005,221

USD

Currency

as on 31.12.2012

Banks Exposure to Foreign Exchange Risk

Liabilities In
FCY

6=4-5

Long Term Net


Position

661,348,654

2,641,429

3,376,263

28,372,443

5,033,160

(81,964)

5,927,202

20,000,088

63,680,944

10,291,615

522,107,474

7=3+6

Overall Net
Position

3.22%

Overall Net
Position /
Core Capital

1.00%
4,933,932.35
27,343,884.83
2.05%

10,063,866,116.05
8,062,882,439.49
2,000,983,676.56
11,089,464,401.35

Over 9 month to upto 1 year

in Bangladesh Taka

In Bangladesh Taka

1.00%
19,393,248.49
22,409,952.47
1.68%

Over 6 month to up to 9
month
15,565,537,762.57
7,700,498,098.55
7,865,039,664.02
9,088,480,724.79

Long Term Foreign Currency Holdings

1.00%
9,382,171.15
3,016,703.99
0.23%

Over 3 month to up to 6
month
21,149,560,462.16
17,344,568,828.28
3,804,991,633.88
1,223,441,060.77

Assets In FCY

1.00%
(6,365,467.17)
(6,365,467.17)
-0.48%

76,121,173,045.52
78,702,723,618.63
(2,581,550,573.11)
(2,581,550,573.11)

Rate Sensitive Assets


Rate Sensitive Liabilities
Gap
Cummulative Gap

Adjusted Interest Rate Change (IRC)


Quarterly earning impact (Cum. Gap * IRC)
Accumulated earning impact to date
Earning Impact / Avg. Quarterly Net Profit

1- 90 days

Particulars

for 1 percent change in the market rate of interest


as on 31.12.2012

Interest Rate Risk Analysis

Report on Risk Management by


Chief Risk Officer
It has been a successful year for PBL in terms of portfolio
growth, improving the quality of the portfolio, meeting the
Minimum Capital Requirement (MCR) under Basel-II and
in many other ways. PBL is committed to its stakeholders
to attain a sustainable business growth commensurate
with its strategy through implementation of a robust
Enterprise Risk Management (ERM) framework within the
organization. The main objective of ERM is to inculcate
the risk culture at every part of its operation so that risk
elements (whether credit, market, operation or other
pillar-II risk elements) remain within its acceptable level
and the bank is not exposed to any threats for exceeding
its tolerance parameters.
As per the guidelines of the Bangladesh Bank, PBL considers
risks in two broad categories, one is Pillar-I risk and another
is Pillar-II risk. Under Pillar-I, credit, market and operational
risks are being considered, while other risks, which are not
coved in Pillar-I are covered under Pillar-II.

1. Pillar 1 Risk Management


1.1 Credit Risk
Credit risk arises from the potential that an obligor is either
unwilling to perform or its ability to perform such obligation
is impaired resulting in economic loss to the bank. As per
the Bangladesh Bank guideline, PBL already separated
credit marketing, credit risk management, and credit
administration function. The credit risk in PBL is guided by
Credit Risk Management Policy which was duly approved
by the Board of Directors of the bank.
The following systems and procedures are being followed
in PBL to manage the credit risk:
a. Credit Origination: Before allowing a credit facility, the
Bank makes an assessment of risk profile of customer/
transaction.
b. Limit Setting: Establishing exposure limits for single
obligor and group of connected obligors is an important
element for Credit Risk Management. PBL sets credit limit
according to the merit of the transaction.
c. Credit Administration: Ongoing administration of the
credit portfolio is an essential part of the credit process. PBL
has already established a centralized credit administration
department and a process manual. Credit administration
function is basically a back office activity that supports and
controls extension and maintenance of credit.
d. Measuring Credit Risk through External Credit
Rating Institutions (ECAIs): PBL through its Risk
Management Division is putting its best efforts to get its
corporate borrowers rated by ECAIs. PBL rated 51.96

Annual Report 2012 118

percent of the total eligible borrowers through agreement


signed with ECAIs.
e. Credit Risk Monitoring and Control: Credit risk
monitoring refers to continuous monitoring of individual
credits inclusive of off-balance sheet exposures to
obligors as well as overall credit portfolio of the bank. PBL
has a dedicated team to perform the function of credit risk
monitoring and control.
f. Delegation of Authority: The Board of Directors is the
ultimate authority for making any credit decision under the
guidance of regulatory directives as well as internal policy
manuals. PBL has established responsibility for credit
sanctions and delegated authority to approve credits or
changes in credit terms.
g. Managing Problem Credits: PBL has established
and enforced internal controls and other practices to
ensure that exceptions to policies, procedures and limits
are reported in a timely manner to the appropriate level
of management. The bank has a system in place for
managing problem credits and various other workout
situations. All NPLs are assigned to Account Manager(s)
within the Recovery Department, who is responsible for
coordinating and administering the action plan/recovery of
the account, and serves as the primary customer contact
after the account is downgraded to substandard.
1.2 Market Risk:
1.2.1 Definition: Market risk is defined as a current
or prospective threat to the banks earnings due to
movements in market prices, i.e., prices of securities,
commodities, interest rates and foreign exchange rates.
Market risk exposure of PBL is explicit in portfolios of
securities/equities and instruments that are actively
traded. In addition, Treasury Division complies with
regulatory requirement to maintain CRR and SLR. PBL
also maintained exchange position (overbought/ oversold
position) of the bank, in line with the Bangladesh Bank
open position limit set for PBL.
1.2.2 Policies Guiding Market Risk: PBL has a separate
Asset Liability Management (ALM) policy, which acts as the
controlling point for any investment activities of the bank.
1.2.3 Segregation of Responsibilities: The Asset and
Liability Committee (ALCO) holds overall responsibility for
market risk and sets the limit for trading positions (FOREX
and local currency) and stop loss levels on product and the
level of experience of the dealers. Treasury division actively
manages market risk within the limits provided by ALCO.
1.2.3.1 Foreign Exchange Desk: PBL is one of the leading
market makers in different foreign exchange products
mainly USD/BDT spot, forward, swaps, transactions in
inter-bank market and cross currency dealing (mostly
customer driven transactions) with foreign correspondent

abroad. Treasury has also been funding its surplus funds


to PBLs overseas finance companies especially for bill
discounting purpose and off-shore banking units for their
smooth business operations including business under
UPAS LC and re-financing against deferred LCs.
1.2.3.2 Money Market Desk: The money market desk
regularly participate in the inter-bank market of the
country and exercise all types of existing money market
products like call money, term placement, Repo, Special
Repo, ALS and Reverse-Repo with the Bangladesh Bank
and inter-bank etc mostly on overnight basis.
1.2.3.3 Asset Liability Management Desk: Treasury is
the driving force of ALCO. It executes the strategies of
the Asset Liability Management Committee for effective
management and monitoring of various balance sheet
gaps and risk limits set by the regulator and CRO. It takes
various decisions regarding interest rate structure of
deposits, Loan Pricing, credit deposits ratio, contingency
funding plan, stress testing, liquidity coverage ratio (LCR),
transfer pricing mechanism for internal funding and
investments in government securities including corporate
bonds by evaluating the market trend and scenario.
1.2.3.4 Primary Dealer (PD) and Fixed Income Desk:
The Bangladesh Bank devolved Government Treasury
Bills/ Bonds to the primary dealers for development of the
secondary market. But the demand for Treasury Bonds in
capital market was almost non-vibrant due to unattractive
yields. In spite of the difficulties, PBL has continuously
been trying to develop the bond market through trading of
Treasury Bills and Bonds in the secondary market and also
providing financial advisory services to the prospective
customers of Government Securities for bond market
development. Primary dealer desk is also participating in
primary auctions as the agent of the corporate clients. PBL
actively participated in developing the Primary Dealers
Association which helped to improve the Bond Market.
1.3 Operational Risk
1.3.1 Definition: Operational risk refers to the risk of loss
because of inadequate or failed internal processes, staff
and systems or external events. It also includes legal risk.
PBL has emphasized on risk identification and assessment
that ensure that all key risks are effectively highlighted for
Banks transparency and management. This enables the
bank to focus on fewer but more fundamental risks.
1.3.2
Identification
and
Measurement:
The
measurement and control framework comprises of
the following qualitative elements:
Monitoring of key risks. This is an ongoing process
that ensures that an unfavorable development in such
risks is consistently highlighted on a group basis.
Risk mitigation strategies and implementation process
that ensures key risks are controlled and establish
transparency in these strategies and processes.
Follow up on loss data and events.

1.3.3 Control and Mitigation: At present, operational


risk is largely managed through internal control and audit
system. Our bank has put in place the following measures
to control/ mitigate operational risk:





System of delegated authority covering credit


and expenditure.
Book of instructions and issuance of instructions
through circulars from time to time.
Preventive vigilance
Continuous training process
Risk Based Internal Audit
Compliance Policy

2. Pillar 2 & All Other Risks


PBL is conducting stress testing on its financials on
a quarterly basis and reporting the outcomes to the
Bangladesh Bank, as a part of Pillar-2 risk management
tool. In addition, the Bangladesh Bank also released
guideline of Supervisory Review Evaluation Process
(SREP), which states that every bank has to establish
a Supervisory Review Process (SRP) team, a process
document called Internal Capital Adequacy Assessment
Program (ICAAP) for assessing the overall risk profile and
a strategy for maintaining adequate capital. Accordingly,
PBL has already established a SRP team and also
submitted the report on additional capital requirement
under Pillar-2 to the Bangladesh Bank.
PBL assessed its additional capital requirement under
Pillar-2 taking into consideration risks that are not covered
under Pillar-1. According to the model, such risks include
residual risk, credit concentration risk, liquidity risk, interest
rate risk in banking book, settlement risk, reputation risk,
strategic risk and other material risks.
3. Compliance Status of MCR in 2012
In compliance of MCR under Pillar-1 risk elements, PBL
was well ahead of minimum requirement in all four quarters
of 2012. On consolidated basis, CAR was 12.72 percent at
the end of March, 12.06 percent at the end of June, 12.31
percent at the end of September and 12.64 percent at the
end of December.
4. Initiatives of Risk Management in 2013
Risk Management Division (RMD) has started working
to implement the process of embedding Enterprise Risk
Management as a part of long term visionary plan. The
major challenge would be to prepare the ground for moving
towards Internal Rating Based (IRB) approach for credit risk
and the Standardized Approach for operational risk.

Ahmed Kamal Khan Chowdhury


Deputy Managing Director & CRO
Prime Bank Limited
Annual Report 2012 119

Market Discipline
Disclosures on Risk Based Capital (Basel-II)
1. Scope of Application
Qualitative a)
disclosure
b)

The name of the top Prime Bank Limited


corporate entity in the group
to which this guidelines
applies.
An outline of differences in
the basis of consolidation for
accounting and regulatory
purposes, with a brief
description of the entities
within the group (a) that
are fully consolidated; (b)
that are given a deduction
treatment; and (c) that are
neither consolidated nor
deducted (e.g. where the
investment is risk-weighted).

Prime Bank Limited has 5 (Five) subsidiaries viz. (i) Prime Bank
Investment limited, (ii) Prime Bank Securities Limited, (iii) Prime
Exchange Co. Pte. Limited, Singapore, (iv) PBL Exchange (UK)
Limited and (v) PBL Finance (Hong Kong) Limited.
A brief description of the Bank and its subsidiaries are given
below:
Prime Bank Limited

Prime Bank Limited (PBL) was incorporated as a public limited


company in Bangladesh under Companies Act, 1994. It commenced
its banking business with one branch from April 17, 1995 under the
license issued by Bangladesh Bank. Presently the Bank has 113
(one hundred thirteen) branches, 17 (seventeen) SME Branches /
Centre all over Bangladesh, and 2 (two) booths located at Dhaka
Club, Dhaka and at Chittagong Port, Chittagong. The Bank has 3
(three) Off-shore Banking Units (OBU) operating at Dhaka EPZ,
Chittagong EPZ and Adamjee EPZ. The bank went for Initial Public
Offering in 1999 and its shares are listed with Dhaka Stock Exchange
Limited and Chittagong Stock Exchange Limited as a publicly traded
company for its general class of shares.
The principal activities of the Bank are to provide all kinds of
commercial banking services to its customers through its branches.
Subsidiaries of PBL:
i) Prime Exchange Co. Pte. Limited, Singapore:
Prime Exchange Co. Pte. Ltd., Singapore a fully owned subsidiary
company of Prime Bank Limited was incorporated in Singapore
on January 06, 2006 and commenced its remittance business
from July 08, 2006. The principal activities of the company are to
carry on the remittance business and to undertake and participate
in transactions, activities and operations commonly carried on or
undertaken by remittance and exchange house.
ii) Prime Bank Investment Limited:

Prime Bank Investment Limited (PBIL) is a subsidiary company


of Prime Bank Limited incorporated as a public limited company
on April 27, 2010 with the registrar of Joint Stock Companies,
vide certificate of incorporation no.C-84266/2 dated 28 April 2010
which has commenced its business on the same date.
The main objectives of the company are to carry out the business
of full-fledged merchant banking activities like issue management,
portfolio management, underwriting, corporate advisory services etc.
iii) PBL Exchange (UK) Limited:
PBL Exchange (UK) Limited was incorporated as a private limited
company with Companies House of England and Wales on
November 19, 2009 and commenced its operation on 02 August
2010 with three Branches located at Brick Lane of London,
Coventry Road of Birmingham and North Pldham of Manchester.
The company is a fully owned subsidiary of Prime Bank Limited.

Annual Report 2012 120

iv) Prime Bank Securities Limited:


Prime Bank Securities Limited was incorporated on April 29, 2010
as a private limited company under the Companies Act 1994. The
main objective of the company is to carry on business of stock
brokers / dealers in relation to shares and securities dealings and
other services as mentioned in the Memorandum and Articles
of Association of the Company. The company commenced its
operation from May 2011.
v) PBL Finance (Hong Kong) Limited:
PBL Finance (Hong Kong) Limited, a fully owned subsidiary of Prime
Bank Limited. The company was incorporated with Companies
Registries of Hong Kong. Prime Bank Limited obtained approval from
Bangladesh Bank for opening of a fully owned finance company in
Hong Kong. This is the third fully owned overseas company of Prime
Bank Limited. PBL Finance (Hong Kong) Limited obtained Money
Lending Licenses (307/2011) issued by Honorable Court of Hong
Kong on 28th July 2011. It has commenced its operation in August
2011 with one branch located at 608, 6/F, Admiralty Centre, Tower-2,
18 Harcourt Road, Hong Kong.
c)

Quantitative d)
disclosure

Any restrictions, or other


major
impediments,
on
transfer of funds or regulatory
capital within the group.

Not applicable

The aggregate amount of


capital deficiencies in all
subsidiaries not included in
the consolidation that are
deducted and the name(s)
of such subsidiaries.

Not applicable

2. Capital Structure
Qualitative
disclosure

Quantitative
disclosure

a)

b)

Summary information on the


terms and conditions of the
main features of all capital
instruments, especially in the
case of capital instruments
eligible for inclusion in Tier 1
or in Tier 2.

As per the guidelines of Bangladesh Bank, Tier-1 Capital of


PBL consists of (i) Fully Paid-up Capital, (ii) Non-repayable
Share Premium Account, (iii) Statutory Reserve, (iv) Retained
Earnings and (v) Minority Interest in Subsidiaries.
Tier-2 Capital consists of (i) General Provision against
unclassified Loans/Investments, Off-balance sheet exposure
& Off-shore banking Units), 50% of Asset revaluation reserve,
50% of Revaluation gain/loss on investment (HFT), 10% of
Revaluation reserve for equity instruments, PBL unsecured
nonconvertible subordinated bond as approved by Bangladesh
Bank and Exchange equalization fund etc.

The amount of Tier-1 capital with separate disclosure of:


I.
II.

Fully Paid up capital


Non repayable share premium account

Solo
Consolidated
Taka in Million
9,357.71
9,357.71
2,241.23
2,241.23

c)

III.
Statutory reserve
IV.
General reserve
V.
Retained earnings
VI. Minority interest in subsidiaries
VII. Non-cumulative irredeemable preference shares
VIII. Dividend equalization account
Sub-Total (A)
The total amount of Tier 2 and Tier 3 capital (B)

6,839.53
2,072.23
20,510.70
5,240.80

6,839.53
2,225.19
0.00
20,663.66
5,252.00

d)
e)

Other deductions from capital


Total eligible capital (A+B)

25,751.50

25,915.60

Annual Report 2012 121

Market Disipline disclosures on Risk Based Capital (Basel-II)


3. Capital Adequacy:
Qualitative
disclosure

a)

A summary discussion of the


banks approach to assessing
the adequacy of its capital
to support current and future
activities.

The Bank has adopted Standardized Approach (SA) for


computation of capital charge for credit risk and market
risk, and Basic Indicator Approach (BIA) for operational risk.
Assessment of capital adequacy is carried out in conjunction
with the capital adequacy reporting to the Bangladesh Bank.
The Bank has maintained capital adequacy ratio on the basis of
Consolidated and Solo are 12.64% & 12.73% respectively
as against the minimum regulatory requirement of 10%. Tier-I
capital adequacy ratio for Consolidated is 10.08% as well as
Solo is 10.14% against the minimum regulatory requirement
of 5%. The Banks policy is to manage and maintain its capital
with the objective of maintaining strong capital ratio and high
rating. The Bank maintains capital levels that are sufficient
to absorb all material risks. The Bank also ensures that the
capital levels comply with regulatory requirements and satisfy
the external rating agencies and other stakeholders including
depositors. The whole objective of the capital management
process in the Bank is to ensure that the Bank remains
adequately capitalized at all times.

Quantitative
disclosure

Particulars
b)

c)
d)
e)

Capital requirement for credit risk

Capital requirement for market risk


Capital requirement for operational risk
Total and Tier 1 capital ratio:
For the consolidated group; and
For stand alone
Minimum capital requirement

Total Risk Weighted Assets (RWA)


Total and Tier-1 Capital Ratio:
Total CAR

Solo
Consolidated
Taka in Million
18,080.62

18,011.38

79.65%

79.73%
-

335.85
1,817.50

20,234.00

561.91
1,936.98

20,510.30

202,339.80

205,102.70

12.73%

12.64%

Tier-1 CAR

10.14%

10.08%

Tier-2 CAR

2.59%

2.56%

4. Credit Risk:
Qualitative
disclosure

The general qualitative disclosure requirement with respect to credit


risk, including:

a)

i) Definitions of past With a view to strengthening credit discipline and bring classification
due and impaired (for and provisioning regulation in line with international standard, a
accounting purposes);
phasewise program for classification and provisioning was undertaken
by the Bank as per Bangladesh Bank circulars issued from time to
time. In this regard, all the loans and advances are grouped into four
categories for the purpose of classification, namely (i) Continuous
Loan, (ii) Demand Loan, (iii) Fixed Term Loan and (iv) Short-term
Agricultural and Micro Credit. They are classified as follow:
Continuous & Demand Loan are classified as:
Sub-standard- if it is past due/overdue for 03(three) months or
beyond but less than 06 (six) months;
Doubtful- if it is past due/overdue for 06 (six) months or beyond
but less than 09 (nine) months;
Bad/Loss- if it is past due/overdue for 09 (nine) months or beyond.

Annual Report 2012 122

In case of any installment(s) or part of installment(s) of a Fixed Term


Loan amounting upto Tk 1.00 million is not repaid within the due date,
the amount of unpaid installment(s) are treated as past due or overdue
installment. Such types of Fixed Term Loans are classified as under:
Sub-standard- if the amount of past due installment is equal
to or more than the amount of installment(s) due within 06 (six)
months, the entire loans are classified as Sub-standard.
Doubtful- if the amount of past due installment is equal to or
more than the amount of installment(s) due within 09 (nine)
months, the entire loans are classified as Doubtful.
Bad/Loss- if the amount of past due installment is equal to or
more than the amount of installment(s) due within 12(twelve)
months, the entire loans are classified as Bad/Loss.
In case of any installment(s) or part of installment(s) of a Fixed Term
Loan amounting more than Tk 1.00 million is not repaid within the due
date, the amount of unpaid installment(s) are treated as past due or
overdue installment. Such types of Fixed Term Loans are classified
as under:
Sub Sub-standard- if the amount of past due installment is equal
to or more than the amount of installment(s) due within 03 (three)
months, the entire loans are classified as Sub-standard.
Doubtful- if the amount of past due installment is equal to or more
than the amount of installment(s) due within 06 (six) months, the
entire loans are classified as Doubtful.
Bad/Loss- if the amount of past due installment is equal to or
more than the amount of installment(s) due within 09 (nine)
months, the entire loans are classified as Bad/Loss.
Short-term Agricultural and Micro Credit will be considered irregular if
it is not repaid within the due date as stipulated in the loans agreement
are classified as under:
Sub-standard- if the irregular status continues after a period of
12 (twelve) months, the credits are classified as Sub-standard.

Doubtful- if the irregular status continue after a period of 36


(thirty six) months, the credits are classified as Doubtful.

Bad/Loss- if the irregular status continue after a period of 60


(sixty) months, the credits are classified as Bad/Loss.
A Continuous loan, Demand loan or a Term Loan which remained
overdue for a period of 02 (two) months or more, are treated as
Special Mention Account (SMA).
ii)
Description
of
approaches
followed
for specific and general
allowances
and
statistical methods;

The Bank is required to maintain the following general and specific


provision in respect of classified and unclassified loans and advances
/ investments on the basis of Bangladesh Bank guidelines issued
from time to time:
Particulars
Rate
General provision on unclassified Small and Medium
0.25%
Enterprise (SME) financing.
General provision on unclassified loans and advances/ nvestments 1%
other than Consumer Financing, Loans to Brokerage House, Merchant
Banks, Stock Dealers etc., SMA as well as SME Financing).

Annual Report 2012 123

Market Disipline disclosures on Risk Based Capital (Basel-II)


Particulars
General provision on interest receivable on loans /
investments.
General provision on off-balance sheet exposures (Provision
has been made on the total exposure and amount of cash
margin or value of eligible collateral were not deducted while
computing off-balance sheet exposure).

Rate
1%
1%

General provision on unclassified loans and advances/


investments for housing finance, loans for professionals to
set-up business under consumer financing scheme.

2%

General provision on the unclassified loans to Brokerage


House, Merchant Banks, Stock Dealers, etc.

2%

General provision on unclassified amount for Consumer


Financing.

5%

General provision on outstanding amount for Special Mention


Account (SMA).

5%

Specific provision on Sub-Standard loans and advances / 20%


investments.
Specific provision on Doubtful loans and advances / 50%
investments.
Specific provision on bad / loss loans and advances / investments. 100%
Quantitative
disclosure

b)

Total gross credit risk Total gross credit risk exposures broken down by major types of credit
exposures broken down exposure of the Bank:
by major types of credit
Particulars
Taka in Million
exposure.
Secured Overdraft/Quard Against TDR
38,485.35
Cash Credit/Mudaraba
22,797.52
Loan (General)
30,396.29
House Building Loan
3,615.48
Loan Against Trust Receipts (LTR)
17,724.67
Payment Against Documents (PAD)
679.99
Retail Loan
11,303.24
Lease Finance/Izara
8,186.01
Credit Card
915.41
SME Loan
988.95
Hire Purchase
8,118.56
Other Loans & Advances
10,229.25
Bill purchased/discounted-Inland
5,499.98
Bill purchased/discounted-Foreign
1,949.16
Total
160,889.85

c)

Geographical distribution Geographical distribution of exposures, broken down in significant


of exposures, broken areas by major types of credit exposure of the Bank:
down in significant areas
Particulars
Taka in Million
by major types of credit
Urban:
exposure.
Dhaka Zone
Chittagong Zone
Khulna Zone
Rajshahi Zone
Barishal Zone
Sylhet Zone
Rangpur Zone
Sub-Total
Rural:
Dhaka Zone
Chittagong Zone
Khulna Zone
Rajshahi Zone
Sylhet Zone
Sub-Total
Grand Total (Urban + Rural)

Annual Report 2012 124

117,138.25
25,060.28
5,214.20
4,510.33
150.52
1,993.48
1,020.74
155,087.80
3,866.63
1,014.28
121.04
487.63
312.47
5,802.05
160,889.85

d)

Industry or counterparty
type
distribution
of
exposures, broken down
by major types of credit
exposure

Industry or counterparty type distribution of exposures, broken down


by major types of credit exposure of the Bank:
Particulars
Taka in Million
Commercial Lending
21,690.12
Export Financing
13,119.36
House Building Loan
3,615.48
Retail Loan
11,303.24
Small & Medium Enterprises (SME)
12,230.78
Special Program Loan
682.45
Staff Loan
11.20
Other Loans & Advances (SOD)
14,745.21
Loans, Advances & Lease/Investments to Managing
1,724.31
Director / CEO and other senior executives
Industrial Loans/Investments (Details are given below)
81,767.70
Total
160,889.85
Industrial Loans/Investments
Particulars
Taka in Million
Agriculture
2,274.81
Textile Industries
26,070.84
Food and allied industries
5,340.97
Pharmaceutical Industries
1,574.64
Leather , Chemical, Cosmetics, etc.
1,170.21
Tobacco Industries
204.57
Cement and Ceramic Industries
5,113.19
Service Industries
5,958.98
Transport & Communication Industries
9,325.67
Other Industries including bills purchased and discounted
24,733.82
Total

e)

81,767.70

Residual
contractual Residual contractual maturity break down of the whole portfolios,
maturity
breakdown broken down by major types of credit exposure of the Bank:
of the whole portfolio,
Particulars
Taka in Million
broken down by major
Repayable
on
Demand
types of credit exposure.
Up to 1 month
Over 1 month but not more than 3 months
Over 3 months but not more than 1 year
Over 1 year but not more than 5 years
Over 5 years
Total

f)

36,933.56
34,024.06
44,801.02
42,229.23
2,901.98
160,889.85

By major industry or counterparty type:


i) Amount of impaired The amount of classified loans and advances/investments of the
loans and if available, Bank are given below as per Bangladesh Bank guidelines.
past due loans, provided
Particulars
Taka in Million
separately;
Continuous Loans & Advances

Demand Loans & Advances


Term Loans & Advances
Short Term Agro Credit and Micro Credit
Total

499.46

2,137.72
3,528.87
2.45
6,168.50

ii) Specific and general Specific and general provisions were made on the amount of classified
provisions; and
and unclassified loans and advances/investments, off-balance sheet
exposures and off-shore banking units, interest on receivable,
diminution in value of investment and other assets-suspense of the
Bank according to the Bangladesh Bank guidelines.
Particulars
Taka in Million
Provision on classified loans and advances/investments
1,949.08
Provision on unclassified loans and advances/investments
1,964.67
Provision on Off-balance sheet exposures
1,080.00
Provision for Off-shore Banking Units
60.50
Provision for interest receivable on loans & advances/investments
9.52
Provision for other assets
247.11
Provision for diminution in value of investments
43.80
Total
5,354.68

Annual Report 2012 125

Market Disipline disclosures on Risk Based Capital (Basel-II)


iii) Charges for specific During the year the specific and general provisions were made on
allowances and charge- the amount of classified and unclassified loans and advances/
offs during the period.
investments, off-balance sheet exposure, off-shore banking units,
interest on receivable, diminution in value of investment and other
assets-suspense of the Bank as per Bangladesh Bank guidelines.
Particulars
Taka in Million
Provision on classified loans and advances/investments
1,490.00
Provision on unclassified loans and advances/investments
240.00
Provision on Off-balance sheet exposures
140.00
Provision for Off-shore Banking Units
Provision for interest receivable on loans & advances/investments
9.52
Provision for other assets
1,292.42
Provision for diminution in value of investments
43.80
Total
3,215.74
g)

Gross Non Performing Assets (NPAs).


Non Performing Assets (NPAs) to Outstanding loans and advances.
Movement
Performing
(NPAs).

of

Particulars
Non Opening balance
Assets Addition/adjustment during the year
Closing balance

Particulars
Movement of specific Opening balance
provisions for NPAs.
Provisions made during the period
Write-off
Write-back of excess provisions
Closing Balance

Taka in Million
1,908.25
4,260.25
6,168.50
Taka in Million
778.23
1,490.00
(404.20)
85.05
1,949.08

5. Equities: Disclosures for Banking Book Positions


Qualitative
disclosure

a)

The general qualitative disclosure requirement with respect to equity risk, including:
Differentiation between holdings
on which capital gains are expected
and those taken under other
objectives including for relationship
and strategic reasons; and

Investment in equity securities are broadly categorized


into two parts:

Discussion of important policies


covering
the
valuation
and
accounting of equity holdings in
the banking book. This includes the
accounting techniques and valuation
methodologies used, including key
assumptions and practices affecting
valuation as well as significant
changes in these practices.

The primary aim is to investment in these equity securities


for the purpose of capital gain by selling them in future or
held for dividend income. Dividends received from these
equity securities are accounted for as and when received.
Both Quoted and Un-Quoted equity securities are valued
at cost and necessary provisions are maintained if the
prices fall below the cost price.

i) Quoted Securities (Common or Preference Shares &


Mutual Fund) that are traded in the secondary market
(Trading Book Assets).

ii) Unquoted securities are categorized as banking book


equity exposures which are further sub-divided into two
groups: unquoted securities which are invested without
any expectation that these will be quoted in near future i.e.
held to maturity (HTM), and securities those are acquired
under private placement or IPO and are going to be
traded in the secondary market after completing required
formalities. Unquoted securities are valued at cost.

As per to Bangladesh Bank guidelines, the HFT equity


securities are revalued once in each week using marking
to market concept and HTM equity securities are amortized
once a year according to Bangladesh Bank guideline.
The HTM equity securities are also revalued if any, are
reclassified to HFT category with the approval of Board
of Directors.

Annual Report 2012 126

Solo

Qualitative
disclosure

Consolidated
Taka in Million

b)

Value disclosed in the balance sheet of


investments, as well as the fair value of those
investments; for quoted securities, a comparison
to publicly quoted share values where the share
price is materially different from fair value.

c)

The cumulative realized gains (losses) arising


from sales and liquidations in the reporting period.

d)

Total unrealized gains (losses)

e)

At cost

At market
value

294.30

250.50

At cost

At market
value

1,770.90

1,380.80

11.24

25.28

(43.80)

(390.10)

Total latent revaluation gains (losses)

Any amounts of the above included in Tier-2 capital.

Capital requirements broken down by appropriate equity groupings, consistent with the banks
methodology, as well as the aggregate amounts and the type of equity investments subject to
any supervisory provisions regarding regulatory capital requirements (10% on market value).
Specific Market Risk

25.05

138.08

General Market Risk

25.05

138.08

6. Interest Rate Risk in the Banking Book (IRRBB)


Qualitative
disclosure

a)

The general qualitative disclosure


requirement including the nature
of IRRBB and key assumptions,
including assumptions regarding
loan prepayments and behavior
of non-maturity deposits, and
frequency of IRRBB measurement.

Interest rate risk is the risk where changes in market


interest rates might adversely affect a bank's financial
condition. Changes in interest rates affect both the current
earnings (earnings perspective) as well as the net worth
of the bank (economic value perspective). Re-pricing risk
is often the most apparent source of interest rate risk for
a bank and is often gauged by comparing the volume of a
banks assets that mature or re-price within a given time
period with the volume of liabilities that do so.
The short term impact of changes in interest rates is on the
banks Net Interest Income (NII). In a longer term, changes
in interest rates impact the cash flows on the assets, liabilities
and off-balance sheet items, giving rise to a risk to the net
worth of the bank arising out of all re-pricing mismatches and
other interest rate sensitive position.
Maturity grouping of rate sensitive assets and liabilities
of the bank (see table on Interest Rate Risk Analysis)
shows moderate negative gap in the first quarter and
moderate positive gap in the rest three quarters. If
market rates shift upward by 1 percent the bank will
enjoy a positive earning to the tune of Tk 27.34 million
during 1 year period and vice versa. The impact is very
insignificant compared to total revenue of the bank and
also within the acceptable limit as stipulated by the
Bangladesh Bank. The statement also shows that there
will be 2.05 percent impact on quarterly operating profit
which is also within the stipulated limit of 10 percent.

Annual Report 2012 127

Market Disipline disclosures on Risk Based Capital (Basel-II)

Interest Rate Risk Analysis (for 1% change in the market rate of interest)
Quantitative b)
disclosure

The
increase
(decline) in earnings
or
economic
value (or relevant
measure
used
by
management)
for
upward
and
downward
rate
shocks
according
to
managements
method
for
measuring IRRBB,
broken
down
by currency (as
relevant).

Particulars

Rate Sensitive Assets


Rate Sensitive Liabilities
GAP
Cumulative GAP
Adjusted Interest Rate
Changes (IRC)
Quarterly earnings impact
(Cum. GAP * IRC)
Accumulated earning
impact to date
Earning impact/Avg.
quarterly net profit

1-90
days
76,121
78,703
(2,582)
(2,582)
1.00%

Over 3
Over 6
months
months
to upto 6
to upto 9
months
months
Taka in Million
21,150
15,566
17,345
7,701
3,805
7,865
1,223
9,088
1.00%
1.00%

Over 9
months
to upto 1
year
10,064
8,063
2,001
11,089
1.00%

(6,365)

9,382

19,393

4,934

(6,365)

3,017

22,410

27,344

(0.48%)

0.23%

1.68%

2.05%

7. Market Risk
Qualitative
disclosure

a)

i) Views of Board of
Directors (BOD) on
trading/ investment
activities.

Market risk is the possibility of losses of assets in balance sheet and offbalance sheet positions arising out of volatility in market variables i.e.,
interest rate, exchange rate and price. Allocation of capital is required in
respect of the exposure to risks deriving from changes in interest rates
and equity prices in the banks trading book, in respect of exposure to risks
deriving from changes in foreign exchange rates and commodity price in the
overall banking activity. The total capital requirement for banks against their
market risk shall be the sum of capital charges against:
i. Interest rate risk
ii. Equity position risk
iii. Foreign exchange (including gold) position risk throughout the banks
balance sheet and
iv. Commodity risk.

ii) Methods used to Measurement Methodology:


measure Market risk. As banks in Bangladesh are now in a stage of developing risk management
models, Bangladesh Bank suggested the banks for using Standardized
Approach for credit risk capital requirement for banking book and Standardized
(rule based) Approach for market risk capital charge in their trading book.
Maturity Method has been prescribed by Bangladesh Bank in determining
capital against market risk. In the maturity method, long or short positions in
debt securities and other sources of interest rate exposures, including derivative
instruments, are slotted into a maturity ladder comprising 13 time-bands (or
15 time-bands in case of low coupon instruments). Fixed-rate instruments are
allocated according to the residual term to maturity and floating-rate instruments
according to the residual term to the next repricing date.
In Standardized (rule based) Approach the capital requirement for various
market risks (interest rate risk, price, and foreign exchange risk) are
determined separately.
The total capital requirement in respect of market risk is the sum of capital
requirement calculated for each of these market risk sub-categories. e.g.:
a) Capital Charge for Interest Rate Risk = Capital Charge for Specific Risk
+ Capital Charge for General Market Risk;
b) Capital Charge for Equity Position Risk = Capital Charge for Specific Risk
+ Capital Charge for General Market Risk;
c) Capital Charge for Foreign Exchange Risk = Capital Charge for General
Market Risk;
d) Capital Charge for Commodity Position Risk = Capital charge for general
market risk.

Annual Report 2012 128

iii)
Market
Risk Treasury Division manages the market risk and ALCO monitors the activities
Management system. of treasury Division in managing such risk.
iv)
Policies
and
processes
for
mitigating
market
risk.

To mitigate the several market risks the bank formed Asset Liability
Management Committee (ALCO) who monitors the Treasury Divisions
activities to minimize the market risk. ALCO is primarily responsible for
establishing the market risk management and asset liability management
of the Bank, procedures thereof, implementing core risk management
framework issued by the regulator, best risk management practices followed
by globally and ensuring that internal parameters, procedures, practices/
polices and risk management prudential limits are adhere to.
The Treasury Division are taking following measures to minimize the several
market risks:
i) Foreign exchange risk management: it is the risk that the bank may
suffer losses as a result of adverse exchange rate movement during a period
in which it has an open position in an individual foreign currency. This risk
measured and monitored by the Treasury Division. To evaluate the extent of
foreign exchange risk, a liquidity Gap report prepare for each currency.
ii) Equity Risk: Equity risk is defined as losses due to changes in market price
of the equity held. To measure and identify the risk, mark to market valuation
to the share investment portfolios are done. Mark to market valuation is done
against a predetermined limit. At the time of investment, following factors are
taken into consideration:
a)
b)
c)
d)
e)
f)
g)

Quantitative
disclosure

Security of Investment
Fundamentals of securities
Liquidity of securities
Reliability of securities
Capital appreciation
Risk factors and
Implication of taxes etc.

The capital requirements for:


b)

Interest rate risk


Equity position risk
Foreign exchange risk and
Commodity risk
Total Capital Requirement

Solo

Consolidated
Taka in Million
219.60
219.61
50.10
276.20
66.15
66.10
335.85
561.91

8. Operational Risk
Qualitative
disclosure

a) i) Views of BOD on Operational risk is defined as the risk of loss resulting from inadequate or failed
system to reduce internal processes, people and systems or from external events. This definition
Operational Risk includes legal risk but excludes strategic and reputation risk. It is inherent in every
business organization and covers a wide spectrum of issues. The Board of Director
(BOD) of the Bank and its Management firmly believe that this risk through a
control based environment in which processes see documented, authorization as
independent and transactions are reconciled and monitored. This is supported by
an independent program of periodic reviews undertaken by internal audit, and by
monitoring external operational risk events, which ensure that the group stays in line
which industry best practice and takes account or lessons learned from publicized
operational failures within the financial services industry.
The BOD has also modified its operational risk management process by issuing
a high level standard like SOP, supplemented by more detailed formal guidance.
This explains how the bank manages operational risk by identifying, assessing,
monitoring, controlling and mitigating the risk, rectifying operational risk events,
and implementing any additional procedures required for compliance with local
regulatory requirements.
The Bank maintains and tests contingency facilities to support operations in the event
of disasters. Additional reviews and tests are conducted in the event that any branch of
the bank is affected by a business disruption event, to incorporate lessons learned in
the operational recovery from those circumstances. Plans have been prepared for the
continued operation of the banks business, with reduced staffing levels.

Annual Report 2012 129

Market Disipline disclosures on Risk Based Capital (Basel-II)


ii) Performance
gap
of
executives and
staffs.

Human Resources
Organizations need to effectively manage their human resources to get the
maximum contribution from their employees. PBL always focuses on helping its
people to grow, enabling individuals to make a difference and win their goals.
HR Division of PBL always strives to ensure a great place to work by creating an
attractive, inclusive and safe environment that rewards success and encourages
employees to take control of their personal development.
At the core of the HR strategy is managing an organizational culture where
employees enjoy working with pride and are strongly motivated to gain and
maintain professional excellence to convert the human resource into human
capital. Ensuring such things in the bank is a key driver of productivity and
performance, which creates the foundation of banks performance culture. HR
Division persuades and focuses on the behaviors that bring out the very best
from every employee, assessing their performance not just on results but on
how those results were achieved. To further embed these behaviors PBL has a
remuneration program in place, carefully designed to encourage its employees to
live its values every day. The bank has always taken a view that its remuneration
policies should support and drive its business strategy and reinforce its values.
PBL believes these are sound and aligned to external best practice standards
with risk-based and robust governance structures. Banks annual performance
bonuses are discretionary and are delivered in a combination of cash and deferred
shares. They are set with regard to an assessment of risk and other factors such
as achievement of our management agenda, risk management and economic
backdrop, as well as profit. PBL accentuates on shared working, creativity and
innovation among its employees.
PBLs brand pledges, a bank with a difference, sets out its deep and lasting commitment
to people, to the communities in which we live and work, and to building a sustainable
and responsible business in the long run in a unique way. And it is this commitment
that not only sets us apart as a bank but also as an employer.
By developing strengths of the human capital, valuing their unique perspectives
and enabling them to make a difference to our success, PBL will help them to fulfill
their latent talent. Getting the best from this opportunity will rely on them sharing
their commitment to delivering performance for its shareholders, building lasting
relationships while demonstrating a passion for helping it do better- for customers
and society.
With 2,544 people, operating through 130 branches, the bank prides itself on
being a truly peerless organization, combining the expertise and endeavor of
experienced and fresh talents.
HR Focus
PBLs distinctive customs and values contributes an enormous function in its
success, they are at the heart of who we are and what we strive for. PBL
distinguishes itself by being a strengths-based organization. The bank focuses on
understanding and leveraging its employees' strengths to ensure they are in the
true roles for them to truly excel.
PBL believes that the human capital is one of the crucial elements which influence
the rhythm, evolution, directions, quality and activity development in the bank.
The HR Division has been relentlessly working to help the bank in achieving its
goal of being the best commercial Bank in Bangladesh in terms of efficiency,
capital adequacy, asset quality, sound management and profitability having
strong liquidity. The Division endeavors for managing an organizational culture
where employees enjoy working with pride and are strongly motivated to gain and
maintain professional excellence. It also focuses on the respect for the employees,
the enforcement of moral and ethical principles.
HR Success:
Major achievement like:
Revision of car policy, gratuity policy, mobile phone policy and reward &
recognition policy
Manpower Planning
Organogram Restructuring

Annual Report 2012 130

Mobilization of Human Capital:


The main ingredient for making profit in a Bank is human capital. For the evaluation
of banking performance one must take into consideration the human qualities and
professionalism proven by the Bank employees. The customer pays attention not
only to the Bank product or service quality, offered by the Bank, but also to the way
the Bank addresses itself to the client. The client must feel secured and trust the
Bank which he or she chose for his or her business. Also the work environment,
friendship and collaboration among the Bank employees reflect positively in the
bank-customer relationship.
In view of that, the HR Division of the Bank has always been striving to bring in
highly motivated, proactive, result oriented and above all committed workforce to
its winning team. It is to be noted that the tally of the branch number has reached
to 130 in 2012 from 119 of 2011. But for the last few years, both the recruitment
growth rate and turnover (exit) rate of the employees of the Bank has been
declining significantly, which is a robust indicator of the enhanced efficiency and
dedication of its human capital.
Training:
Human capital contributes to obtaining performance and developing Bank activities.
Beyond performance Banks must pay attention in training to Bankers of maximum
diplomacy and professionalism, and credibility for a more and more sophisticated
customers. Beyond performance, Banks must be interested in trainings that are
highly professional and diplomatic, and most of all credible for a more and more
sophisticated customers.
Prime Bank HR Training and Development Center is mere a Learning Center
rather than a Training Center and is output driven rather than input oriented. The
main purpose of the Human Resources Training and Development Center (HRTDC) is providing a progressive, flexible and balanced training service that seeks
to develop the skills and competencies necessary for the effective and efficient
performance of the human capital of the bank.
The HR-TDC of the bank arranged 19 professional training courses and 88
workshops and seminars during the year 2012 where 2,250 employees of different
grades participated.
In addition to HR-TDC nominated 28 employees to participate several training
programs or conferences abroad related to the burning issues of the age.
Moreover, 139 employees also participated several local training academies
like Bangladesh Bank Training Academy (BBTA), Bangladesh Institute of Bank
Management (BIBM) and others prominent training institutions.
Reward and Recognition
PBL has achieved an inimitable position in the Banking industry sailing on the
prolific patronization towards its employees. In this regard the Bank always tries
to sustain the inner drive of the outstanding performers through its well furnished
Reward and Recognition Policy to rejuvenate their consisting effort to result in
better outcomes. Throughout 2012 various campaigns were carried out with regular
business targets to revive the sound competitive mood among the employees to
boost up the business of the bank. Rewards and appreciations were sponsored
around the year to distinguish the committed effort of the employees and their
teams. Highlights of such initiatives are as following:
HR Future Plan
HR Division of the Bank has been going through continuous development with
a view to transforming its workforce into a dynamic and efficient one. Bringing a
timely restoration in its policies and organizational structures, it looks forward to
engage in the following courses of actions in the future:
Complying with the Centralization model blended with the new organogram;
Ensuring CSR (Corporate Social Responsibility) issues within the organization;
Continuous development of work environment and other issues regarding
employee welfare;
Ensuring the ingredients to the Bank keeping competitive edge of the Bank in
the industry.

Annual Report 2012 131

Market Disipline disclosures on Risk Based Capital (Basel-II)


iii)
Potential Risk factors/Potential external events:
external events
It is needless to say that there are certain risk factors which are external in
nature and can affect the business of the Bank. The factors discussed below can
significantly affect the business:
General business and political condition
PBLs performance greatly depends on the general economic conditions of the
country. The effect of recession is still unfolding which may result to slow down in
business environment. Political stability is must for growth in business activities.
Changes in credit quality of borrowers
Risk of deterioration of credit quality of borrowers is inherent in banking business.
This could result due to global economic crisis and supply side distortion. The
changes in the import prices affected the commodity sectors and ship breaking
industry. Deterioration in credit quality requires provisioning.
Changes in policies and practices of regulatory bodies to revise practices, pricing
and responsibilities of the financial institutions
PBL is subject to regulations and compliance of regulation is must. Changes
in policies with regard to interest rates, pricing have significant effect on the
performance of the Bank. Bangladesh Bank is expected to continue its persuasion
to reduce the spread and charges further which is likely to affect the performance.
Changes in provisioning requirement will also affect the performance of the bank.
Implementation of Basel-II
Basel-II is fully effective from 2010 and PBL needs to be complied with respect
to credit risk management, its supervision and establishment of effective internal
control. The grading of the borrowers and its link with capital requirement may
slow down the credit expansion. The establishment of effective control requires
more investment in technology and operating expenses are likely to increase.
Volatility in equity market
The Bangladesh Securities and Exchange Commission and the stock exchanges
improved their supervisory role but the equity market is still volatile. The recession
fear also added to the volatility. If volatility continues it is likely to affect the
performance of the bank.
Changes in market conditions
Changes in market conditions particularly interest rates on deposits and volatility in
foreign exchange market is likely to affect the performance of the bank. Depositors
are becoming increasingly price sensitive and any unilateral upward change by
a bank will exert pressure on interest rate structure of the banking sector. It is
feared that wage earners remittances may decline due to fall in job opportunity in
international market. Unless offset by export performances, there may be pressure
in the foreign exchange market.
The risk of litigation
In the ordinary course of business, legal actions, claims by and against the bank
may arise. The outcome of such litigation may affect the financial performance of
the bank.
Success of strategies
PBL is proceeding with its strategic plan and its successful implementation is very
important for its financial performance. Major deviation due to external and internal
factors will affect the performance of the bank.

Annual Report 2012 132

iv)
Policies
and processes
for mitigating
operational
risk.

Prime Bank limited (PBL) has formed a separate Risk Management Division
under Chief Risk Officer to ensure following things:
Designing of organizational structure by clearly defining roles and responsibilities
of individuals involved in risk taking as well as managing it;
Formulation of overall risk assessment and management policies, methodologies,
guidelines and procedures for risk identification, risk measurement, risk monitoring,
defining an acceptable level of risk, mitigation of all the core risks in line with their
respective guidelines provided by Bangladesh Bank;
Reviewing and updating all risks on systematic basis as necessary at least
annually, preferably twice a year, ensuring that adequate controls exist and that
the related returns reflect these risks and the capital allocated to support them.
The main risk areas will be (i) Balance sheet Risk Management, (ii) Credit Risk,
(iii) Foreign Exchange Risk, (iv) Internal Control and Compliance Risk, (v) Money
Laundering Risk and (vi) IT Risk. The following risks have also to be reviewed:
Operational Risk
Market Risk
Liquidity Risk
Reputation risk
Insurance Risk
Sustainability Risk
Setting the portfolio objectives and tolerance limits/parameters for each of the risks;
Formulation of strategies and different models in consistency with risk management
policy based on IT Policy and in house IT support which can measure, monitor and
maintain acceptable risk levels of the bank;
Development of information systems/MIS inflow and data management
capabilities to support the risk management functions of the bank.
Ensure compliance with the core risks management guidelines at the department
level, and at the desk level;
The unit will work under banks organizational structure and suggest to the CEO
to take appropriate measures to overcome any existing and potential financial
crisis;
Analysis of self resilience capability of the bank;
Initiation to measure different market conditions, vulnerability in investing in
different sectors;
The unit will also work for substantiality of capital to absorb the associated risk
in banking operation.
Activities undertaken by Risk Management Division since inception and recent
approaches
Risk Management Division of PBL is currently arranging monthly meeting on
various issues to determine strategies in consistency with risk management policy,
which can measure, monitor, and maintain acceptable risk level of the bank.
Minutes of each meeting is submitted to the Bangladesh Bank on monthly basis;
Besides, Risk Management Paper has also been prepared on the basis of 03
months monthly minutes addressing different areas of risk and their mitigating
tools & techniques guided by the members of Risk Management Division;
In order to perform the risk management function smoothly, RMD had invited all
the Operational Divisions vide letter to the Head of respective Divisions to form
an internal committee along with defined duties of concerned officials. It is to be
noted here that due to continuous and successful persuasion, all the Operational
Divisions have formulated and established internal risk management committees.
Stress Testing in PBL:
Risk Management Division (RMD) of PBL has prepared a stress testing model
in line with the Bangladesh Banks guideline which initially focused on Simple
Sensitivity and Scenario Analysis on the following five risk factors:
Interest rate;
Forced sale value of collateral;
Non-performing loans (NPLs);
Share prices; and
Foreign exchange rate.
The stress testing based on the financial performance of the bank as on
December 31, 2012 shows that when all the shocks are considered together,
Capital Adequacy Ratio (CAR) of PBL will be 10.60%, 6.74% and 1.78% in minor,
moderate and major levels of shock respectively. So, the bank can absorb minor
level of shock only when all the shocks are considered together. However, for
absorbing other levels of shock which is very unlikely in the industry, the bank may
require additional capital and reserve.

Annual Report 2012 133

Market Disipline disclosures on Risk Based Capital (Basel-II)


v)
Approach
for calculating
capital charge
for operational
risk.

The Banks operating in Bangladesh shall compute the capital requirements for
operational risk under the Basic Indicator Approach (BIA). Under BIA, the capital
charge for operational risk is a fixed percentage, denoted by (alpha) of average
positive annual gross income of the bank over the past three years. Figures for
any year in which annual gross income is negative or zero, should be excluded
from both the numerator and denominator when calculating the average. The
capital charge may be expressed as follows:
K = [(GI 1 + GI2 + GI3) ]/n
WhereK = the capital charge under the Basic Indicator Approach
GI = only positive annual gross income over the previous three years (i.e., negative
or zero gross income if any shall be excluded)
= 15 percent
n = number of the previous three years for which gross income is positive.
Gross income: Gross Income (GI) is defined as Net Interest Income plus Net
non-Interest Income. It is intended that this measure should:
i). be gross of any provisions;
ii). be gross of operating expenses, including
fees paid to outsourcing
service providers;
iii). exclude realized profits/losses from the sale of securities held to maturity in
the banking book;
iv). exclude extraordinary or irregular items;
v.) exclude income derived from insurance.

Quantitative
disclosure

Particulars
b) The capital requirement for operational risk

Annual Report 2012 134

Solo Basis

Consolidated

Taka in Million
1,817.50
1,936.98

Shareholders' Information

Financial Highlights- Group & PBL


Financial Highlights- PBL
Key financial Data & Key Ratios- PBL
Graphical Presentation- PBL
Segment Analysis
Distribution of Shareholdings in 2012
Shares held by the Directors in 2012
Economic Impact Report
- Capital Adequacy
- Value Added Statement
- Economic Value Added Statement
- Payment of Dividends
Market Price Information
Financial Calendar 2012
Governance on Investors Relation
Glimpses of 17th AGM

Annual Report 2012 135

Financial Highlights-Group & PBL


Prime Bank Limited

Interest income
Profit before provision and tax
Provision for loans and assets
Profit after provision before tax
Tax including deferred tax
Profit after tax

2012
Taka in
million
22,822
8,551
3,216
5,335
2,636
2,699

2011
Taka in
million
16,709
7,427
661
6,766
3,132
3,634

At the year end


Total shareholders equity
Deposits
Loans and advances
Investments
Property, plant and equipment
Total assets

20,787
182,053
160,890
49,670
4,363
236,833

Statutory Ratios (%)


Liquidity ratio
Capital adequacy ratio
Share Information
Earnings per share (Taka)
Dividend (%)
Net assets value per share (Taka)

Performance during the year

Ratios (%)
Non performing loans

Return on average shareholders fund

Return on average assets

Group

36.58
15.13
386.50
-21.15
-15.83
-25.73

2012
Taka in
million
23,808
8,840
3,324
5,516
2,815
2,700

2011
Taka in
million
17,547
8,137
1,051
7,086
3,397
3,689

19,095
159,816
138,848
39,172
3,975
199,950

8.86
13.91
15.87
26.80
9.76
18.45

20,962
181,962
165,042
48,003
4,420
238,169

19,263
159,812
141,802
37,516
4,033
200,996

8.82
13.86
16.39
27.95
9.58
18.49

35.54
12.73

32.96
12.45

2.58
0.28

35.54
12.64

32.96
12.46

2.58
0.18

2.88
20.00
22.21

3.88
30.00
24.49

-25.77
-10.00
-9.28

2.89
20.00
22.40

3.94
30.00
24.70

-26.65
-10.00
-9.32

3.83
13.53
1.24

1.37
20.19
2.05

2.46
-6.66
-0.81

3.74
13.43
1.23

1.35
20.09
2.07

2.39
-6.66
-0.84

Change
%

Constituents of Liabilities & Capital of PBL

20.97%
1.84%

8.73%
3.95%

35.68
8.64
216.29
-22.16
-17.12
-26.80

Constituents of Assets of PBL

5.62%
76.87%

Change
%

7.52%

67.93%

1.73%

4.83%

Paid-up Capital

Reserves & Surplus

Borrowings

Other Liabilities

Deposit

Loans & Advances

Investments

Liquid Assets

Other Assets

Fixed Assets

Constituents of Assets of Group

20.15%

1.86%

69.30%

7.52%
1.18%

Annual Report 2012 136

Loans & Advances

Investments

Liquid Assets

Other Assets

Fixed Assets

Financial Highlights-PBL
Profit Before Tax

Gross Revenue

(Taka in million)

2011

2012

Gross revenue
Operating income
Profit after tax
Total capital
Total deposits
Total loans & advances
Total assets
No. of deposits accounts
No. of loans & advances accounts
Return on assets (%)
Return on equity (%)
Statury liquidity ratio (%)
Capital adequacy ratio (%)
No. of employees
No. of branches
No. of SME branches/centers
Rating
Long -term
Short-term

5,335

6,766

30,902

24,207

(Taka in million)

2011

2012

2012
30,902
13,492
2,699
2,575
182,053
160,890
236,833
1,034,120
55,709
1.24
13.53
35.54
12.73

Taka in million
2011
24,207
11,559
3,634
24,069
159,816
138,848
199,950
830,544
58,192
2.05
20.19
32.96
12.45

2,544
113
17

2,292
102
17

AA+
ST-1

AA+
ST-1
Annual Report 2012 137

Shareholders Information

Key Financial Data & Key Ratios-PBL


Particulars
Interest income

Interest expenses

Net interest income

Investment income

2008

2009

Taka in million

2010

9,096

10,856

12,147

1,970

2,430

4,323

7,126

1,744

8,426

3,372

7,824

2,632

2011
16,709

12,648
4,061

4,157

Commission, exchange and brokerage

1,437

1,749

2,262

2,689

Operating income

5,778

8,196

9,795

11,559

3,847

5,289

6,176

7,427

Other operating income

Operating expenses

Profit before provision and tax

Provision for loans and assets

Profit after provision before tax

Tax including deferred tax

Profit after tax

Balance Sheet

Authorized capital

Paid-up capital

Total shareholders equity


Deposits

Long-term liabilities

Loans and advances


Investments

Property, Plant and Equipment

628

1,931

1,384

2,463

1,232

644

2,907
700

4,589

1,805

579

3,618
540

5,636

2,535

652

4,132
661

6,766

3,132

2012
22,822

17,410
5,411

4,633

2,429

1,018

13,492
4,941

8,551

3,216

5,335

2,636

1,232

2,784

3,101

3,634

2,699

10,000

10,000

10,000

10,000

25,000

2,844

6,697

3,555

11,745

5,776

16,908

7,798

19,095

9,358

20,787

88,021

106,956

124,574

159,816

182,053

75,156

89,252

116,057

138,848

160,890

31,044

23,103
1,375

38,209

19,934
1,573

47,918

20,484
1,695

63,379

39,172
3,975

84,827

49,670
4,363

Earning assets

100,261

109,905

137,577

179,537

212,204

Total assets

110,437

124,806

154,342

199,950

236,833

Net current assets

Total liabilities
Current ratio

9,962

103,740
1.14

3,435

113,061
1.05

7,349

137,434
1.09

2,262

180,856
1.02

2,735

216,046
1.02

Gearing ratio

83.84

80.56

76.98

77.88

80.97

Staturory liquidity Ratio

19.86

28.50

26.00

32.96

35.54

168,532

Quick ratio

Equity debt ratio (%)


Other Business
Import

Export

Remittance

Guarantee Business
Capital Measures (Consolidated)
Total risk weighted assets

Core capital (Tier-I)

Supplementary capital (Tier-II)


Total capital

Tier-I capital ratio

Tier-II capital ratio

Total capital ratio


Annual Report 2012 138

0.93

0.80

0.84

0.78

6.45

10.39

12.30

10.56

91,424

96,452

147,704

174,384

68,550

0.77

9.62

76,097

106,943

133,396

143,612

10,010

13,673

29,000

27,844

29,391

72,253

82,710

183,747

194,380

205,103

22,669

6,265

1,594

26,447

9,057
3,112

28,433

15,791
5,692

36,890

18,744
5,485

42,443

20,664
5,252

7,859

12,168

21,483

24,229

25,916

2.21

3.76

3.09

2.82

2.56

8.67

10.88

10.95

14.71

8.60

11.69

9.64

12.46

10.08

12.64

Key Financial Data & Key Ratios-PBL


Particulars

2008

2009

Taka in million

2010

2011

2012

Credit Quality
Non-performing loans (NPLs)
NPLs to total loans and advances (%)
Provision for unclassified loans
Provision for classified loans

1,323

1,149

1,368

1,908

6,168

1.76

1.29

1.18

1.37

3.83

1,040

1,303

1,463

1,725

1,965

734

631

642

778

1,949

Share Information
Market price per share (Taka)
No. of shares outstanding (Million)
No. of shareholders (actual)

53.98

65.30

94.45

44.50

37.00

284.38

355.47

577.64

779.81

935.77

9,180

10,339

19,748

26,030

23,964

Earnings per share (Taka)

4.33

7.83

5.69

4.70

2.88

Dividend:

25%

40%

40%

30%

20%

Cash

0%

10%

5%

10%

10%

Bonus

25%

30%

35%

20%

10%

27.78

44.44

49.52

40.21

21.82

Effective dividend ratio (%)


Dividend cover ratio (times)

1.73

1.96

1.42

1.57

1.44

Dividend yield (%)

4.63

6.13

4.23

6.74

5.41

15,349

23,212

54,572

34,702

34,624

Net asset value per share (Taka)

Market capitalization

23.55

33.04

29.27

24.49

22.21

Price earning ratio (times)

12.46

8.34

16.60

9.47

12.85

Net interest margin on average earning assets

2.28

2.31

3.49

2.56

2.76

Net non-interest margin on average earning assets

2.17

2.72

1.50

2.12

1.60

Operating Performance Ratio (%)

Earning base in assets (average)

91.07

89.34

88.66

89.51

89.69

Gross profit ratio

44.77

49.31

55.59

47.75

43.66

Net interest income as a percentage of working funds

2.07

2.07

3.10

2.29

2.48

Profit per employee

2.48

2.87

2.89

3.24

3.36

Operating profit as a percentage of working funds

4.05

4.50

4.43

4.19

3.92

Cost-income ratio

33.42

35.47

36.94

35.75

36.62

Credit-deposit ratio

85.38

83.45

93.16

86.88

88.38

8.55

8.41

6.39

8.15

8.75

Yield on average advance

13.52

13.16

11.76

13.09

15.17

Return on average assets

1.30

2.37

2.22

2.05

1.24

Return on average equity

20.58

30.19

21.65

20.19

13.53

70

84

94

102

113

Cost of funds on average deposits

Other information
No. of branches
No. of SME branches/centers
Number of ATM
No. of employees
No. of foreign correspondents

14

17

17

29

39

43

81

134

1,551

1,844

2,139

2,292

2,544

518

602

621

644

660

Average earning assets

86,530

105,083

123,741

158,557

195,871

Average total assets

95,013

117,622

139,574

177,146

218,392

Average deposits

79,266

97,488

115,765

142,195

170,934

Average loans & advances

66,420

82,204

102,654

127,452

149,869

5,985

9,221

14,327

18,002

19,941

Average equity

Annual Report 2012 139

Shareholders Information

Graphical Presentation PBL

2008

Annual Report 2012 140

13.53

20.58

21.65

30.19

Return on Equity (%)

2009

2010

2011

2012

Graphical Presentation PBL

Annual Report 2012 141

Shareholders Information

Segment Analysis
Profit before Tax

74.02%

15.62%
2.73%

Group

6.76%
0.87%
Conventional Banking
Islamic Banking
Off-shore Banking
Local Subsidiaries (PBIL, PBSL)
Overseas Subsidiaries (Exchange House, Finance Co.)

Operating Revenue

Assets Employed
86.24%
86.64%

7.21%
1.19%
4.15%
1.21%

6.84%
2.13%
3.83%
0.56%

Conventional Banking
Islamic Banking
Off-shore Banking
Local Subsidiaries (PBIL, PBSL)
Overseas Subsidiaries (Exchange House, Finance Co.)

Conventional Banking
Islamic Banking
Off-shore Banking
Local Subsidiaries (PBIL, PBSL)
Overseas Subsidiaries (Exchange House, Finance Co.)

Profit before Tax

80.14%

16.91%

PBL

2.95%

Conventional Banking
Islamic Banking
Off-shore Banking

Assets Employed

Operating Revenue

7.16%
91.12%

1.26%

Conventional Banking
Islamic Banking
Off-shore Banking

Annual Report 2012 142

2.22%

7.62%

90.62%

Conventional Banking
Islamic Banking
Off-shore Banking

Distribution of Shareholdings in 2012


Particulars
Sponsors
Financial Institutions
Foreign Investors
Non-resident Bangladeshi
General Public

Number of Shares
2012
2011
379,553,447
317,740,777
188,237,104
163,401,686
35,695,212
14,282,281
5,031,043
6,018,026
327,254,663
278,366,788
935,771,469
779,809,558

% of Shares
2012
2011
40.56%
40.75%
20.12%
20.95%
3.81%
1.83%
0.54%
0.77%
34.97%
35.70%
100%
100%

Shares held by Directors in 2012


Particulars
Mr. Md. Shirajul Islam Mollah

Mr. M. A. Khaleque

Mr. Mizanur Rahman Bhuiyan

Mrs. Marina Yasmin Chowdhury


Mr. Nasim Anwar Hossain
Mrs. Nazma Haque

Mr. Khandker Mohammad Khaled

Quazi Sirazul Islam

Status
Chairman

Vice Chairman

Vice Chairman
Director
Director
Director
Director

Director

Mrs. Salma Huq

Director

Mr. Mafiz Ahmed Bhuiyan

Mrs. Muslima Shirin

Mr. Manzur Murshed

Prof. Dr. Mohammed Aslam Bhuiyan

18,983,935

18,720,079

22,150,681

21,644,226

12,409,969

94.69%

20.00%

18,798,231

25,973,071

18,741,962

20.00%

51.02%

10,120,151

18,719,181

84.97%

Director

18,716,670

Director

Prof. Ainun Nishat

18,768,111

19,860,746

Director

Director

Mr. Md. Shahadat Hossain


Mr. Tanjil Chowdhury (Representative of East
Coast Shipping Lines Limited)

Change

29,322,129

Director

Mr. Nafis Sikder

9,640,093

16,550,622

Closing
Position

Mr. Md. Nader Khan


Mr. Imran Khan

Opening
Position

Director

Director

Depositor Director
Depositor Director
Independent
Director

18,716,136

34,563,056

25,283,258

18,736,602

23,478,344

25.31%

9,040,272

18,728,326

107.17%

22,180

26,616

20.00%

98,164,115

349,550,532

256.09%

Annual Report 2012 143

Shareholders Information

Economic impact report


The banks overall mission is to deliver optimum value to its customers, employees, shareholders and the nation
and the business strategy is geared towards achieving this. This section covers the value the bank delivers to its
shareholders and the nation at large.
The banks policy has been to deliver optimum value in a manner that is consistent with the highest levels of fairness
and transparency. For the bank, it has not been a case of building financial value and enhancing the bottom line at
any cost, but rather participating in a process of creating value through fair and ethical means. Building sustainable
value of all stakeholders is an important corporate goal.
Some of the measures taken to create, sustain and deliver optimum value are as follows:
Maintaining capital adequacy
Capital adequacy symbolizes the financial strength and stability of a bank. It limits the extent up to which banks can
expand their business in terms of risk weighted assets. Like all commercial institutions, banks too constantly look
at ways of expanding their operations by acquiring property, plant and equipment, opening branches, in addition to
mobilizing deposits, providing loans and investing in other assets.
Regulatory capital requirements are therefore necessary to prevent banks from expanding beyond their ability to
manage (over trading), to improve the quality of banks assets, to control the ability of the banks to leverage their
growth and to lead to higher earnings on assets, leading to peace of mind of all the stakeholders. The bank keeps a
careful check on its capital adequacy ratios.
The capital adequacy computation on consolidated basis as at December 31, 2012 is given below:
Details of Capital Fund

Taka in million
2012

2011

Tier-I: Core capital


Paid-up capital

9,358

7,798

Share premium

2,241

2,241

Statutory reserve

6,840

5,773

Surplus in consolidated profit and loss account / Retained earnings

2,225

2,932

20,664

18,744

General provision maintained against unclassified loans / investments

1,965

1,725

General provision maintained against off-balance sheet exposure

1,080

940

General provision maintained against Off-shore Banking Units

61

61

Revaluation gain / loss on investment (50% of total)

21

130

126

126

2,000

2,500

5,252

5,485

25,916

24,229

205,103

194,380

10.08

9.64

2.56

2.82

12.64

12.46

Minority interest in subsidiaries

Total Tier-I capital


Tier-II: Supplementary capital

Revaluation reserve for equity instruments (10% of unrealized market gain)


Revaluation reserve for fixed assets (50% of total)
Subordinated bond
Exchange equalization account
Total Tier-II capital
Total capital
Total risk-weighted assets
Core capital ratio (%)
Supplementary capital ratio (%)
Total capital adequacy ratio (%)

Annual Report 2012 144

Value added statements for the year ended December 31, 2012
Taka in million

Particulars

2012

Income from banking services

2011

30,902

24,207

(19,388)

(14,489)

11,514

9,718

(3,216)

(661)

8,298

9,057

To employees as salaries & allowances

2,685

2,067

To providers of capital as dividend & reserve

2,939

3,693

To Government as income tax

2,450

2,907

(240)

(58)

Depreciation

278

224

Deferred taxation

186

225

225

390

8,298

9,057

Less: Cost of services & supplies


Value added by banking service
Non-banking income
Provision for loans & off-balance sheet exposure

Distribution of value addition

To expansion and growth


Retained profit

Total

Distribution of value addition- 2012

Distribution of value addition- 2011


32.10%

29.53%

-2.89%
3.35%
2.24%

32.36%

35.42%

-0.64%
2.47%
2.48%

40.78%

22.82%

To providers of capital as
dividend & reserve
Retained profit
Deferred taxation

To employees as
salaries & allowances
To Government as income tax
Depreciation

To providers of capital as
dividend & reserve
Retained profit
Deferred taxation

2008

2009

2010

2011

12.64

11.69

12.46

14.71

Capital Adequacy Ratio (%)

10.88

To employees as
salaries & allowances
To Government as income tax
Depreciation

2012

Annual Report 2012 145

Shareholders Information

Economic Value Added Statement


Economic value added is a measure of profitability which takes into consideration the cost of total invested equity.
Shareholders / equity providers are always conscious about their return on capital invested. As a commercial banking
company, we are deeply concerned for delivery of value to all of our shareholders / equity providers.
Taka in million
Particulars

2012

Shareholders equity

2011

2010

20,787

19,095

16,908

4,082

3,503

2,975

24,869

22,598

19,883

23,734

21,241

17,011

Profit after taxation

2,699

3,634

3,101

Add: Provision for loans / investments, off-balance sheet


exposure and Off-shore Banking Units

3,216

661

540

Less: written-off during the year

(404)

(200)

(257)

5,511

4,095

3,384

13.46%

13.46%

12.26%

Cost of average equity

3,194

2,859

2,085

Economic value added

2,316

1,237

1,299

87.33%

-4.84%

-24.39%

Add: Cumulative provision for loans / investments, off-balance


sheet exposure and Off-shore Banking Units

Average shareholders equity


Earnings

Average cost of equity (based on weighted average rate of Shanchay


Patra issued by the Government of Bangladesh) plus 2% risk premium.

Growth over last year

Taka in million
Maturity analysis
Interest earning assets

Below
1 year

1-5 years

Above
5 years

Total

124,535

57,328

30,341

212,204

9,418

3,320

11,891

24,629

Total assets

133,953

60,648

42,232

236,833

Interest bearing liabilities

128,321

51,042

23,372

202,735

2,898

6,684

3,729

13,311

131,219

57,726

27,101

216,046

Maturity Gap

2,735

2,921

15,131

20,787

Cumulative Gap

2,735

5,656

20,787

Non-interest earning assets

Non-interest bearing liabilities


Total liabilities

Annual Report 2012 146

Maintaining liquidity

Payment of dividends

The liquidity policy of the bank has always been to carry


a positive mismatch in the interest earning assets and
interest bearing liabilities in the 1 to 30 days category. Our
liquidity remained at optimum levels during the year. The
liquid assets ratio stood at 35.54% ( required 19% of total
demand & time deposits) in December 2012.

The dividend policy of bank has always been to pay a


decent dividend to its shareholders while ploughing back
sufficient profits to fund growth and capital adequacy
requirements. As a result of this prudent dividend policy,
the bank has been able to build up its shareholders fund
base to satisfactory levels.

The assets and liabilities committee (ALCO) of the bank


monitors the situation and maintains a satisfactory tradeoff between liquidity and profitability.

Considering the performance of the bank over the past


year, the Board has recommended stock dividend of 10%
and cash dividend of 10% for the year 2012.

Market Value Added Statement


Market Value Added (MVA) statement is the difference between the total market value and the total book value of shares
of a bank. A high MVA indicates that the bank has created substantial wealth for the shareholders. MVA is equivalent
to the present value of all future expected economic value added. The share market value of banks shares stood at Tk
34,624 million whereas the book value of the shares stood at Tk 20,787 million, resulting a Market Value Addition of Tk
13,837 million as of December 31, 2012. The calculation of Market Value Added is given below:
Particulars

No. of shares

Value in Taka

Taka in million

Market value

935,771,469

37.00

34,624

Book value

935,771,469

22.21

20,787

Market value added

13,837

Economic Value Addition


(Taka in million)
2,316

1,299

2010

1,237

2011

2012

Annual Report 2012 147

Shareholders Information

Market Price Information


Month

DSE
High
Taka

Low
Taka

CSE
Volume

High
Taka

Low
Taka

Volume

Total
Volume on
DSE & CSE

January12

46.50

36.20

11,608,011

46.50

36.50

796,039

12,404,050

February12

45.50

33.80

13,479,475

45.00

33.70

679,171

14,158,646

March12

43.10

31.00

26,675,605

43.00

31.00

568,272

27,243,877

April12

40.20

34.20

21,113,315

40.00

34.00

565,012

21,678,327

May12

37.70

33.80

9,454,793

37.60

33.00

277,563

9,732,356

June12

36.90

29.70

7,401,326

35.90

27.90

285,594

7,686,920

July12

33.00

29.40

7,647,783

29.50

27.00

364,061

8,011,844

August12

36.40

30.50

9,403,775

35.30

28.10

261,677

9,665,452

September12

38.90

30.90

18,300,174

35.30

28.10

397,944

18,698,118

October12

36.00

32.50

5,544,529

36.20

29.80

143,703

5,688,232

November12

35.00

29.00

3,763,805

35.90

27.50

113,949

3,877,754

December12

38.50

29.50

8,083,481

39.00

28.10

331,471

8,414,952

Market Capitalization
(Taka in million)

54,572

15,349

2008

Annual Report 2012 148

34,624
34,702

23,212

2009

2010

2011

2012

Financial Calendar 2012


Quarterly Results

Audited consolidated results for the 4th quarter ended 31 December 2011
Unaudited consolidated results for the 1st quarter ended 31 March 2012
Unaudited consolidated results for the 2nd quarter and half-year ended 30 June 2012
Unaudited consolidated results for the 3rd quarter ended 30 September 2012

Dividends

Distribution of stock dividend of 20% and cash dividend of 10% in respect of


financial year ended 31 December 2011

Announced on
Announced on
Announced on
Announced on

15th February 2012


14th May 2012
31st July 2012
23rd October 2012

Stock Dividend
Cash Dividend

8th April 2012


15th April 2012
15th February 2012
29th March, 2012

Notice of Annual General Meeting


Annual General Meeting

Other Information
Exchange controls and other limitations affecting equity security holders
Non-residents can buy and sell PBLs shares and transfer the dividends after complying with Foreign Exchange
Transaction Guidelines 1996 and SEC Rules.
Taxation on shares and dividends
Following is the current deduction of tax at source on dividend income as per current fiscal act:

In case of resident / non-resident Bangladeshi company at the rate of 20 percent

If the shareholder resident / non-resident Bangladeshi person other than company at the rate of 10 percent

If the shareholder resident (other than Bangladeshi non-resident) person other than company at the rate of 25 percent

Capital gain arising from transfer or sale of Government Securities is tax exempted. Capital gain arising from
transfer or sale of Stocks and Shares of publicly listed companies listed with stock exchanges is taxable at the
rate of at least 10 percent. For non-resident the tax exemption on capital gain shall be allowed if the similar
exemption is allowed in the country of residence of the non-resident

Stock Details
Stock Symbol
Company Code
Listing year
Market category
Electronic share
Market lot
Total number of securities

Particulars

DSE
PRIMEBANK
11116
2000
A
Yes
250
935,771,469

CSE
PBBANK
22013
1999
A
Yes
250
935,771,469

Availability of information about PBL

Annual Report 2012 and other information about PBL may be viewed on PBLs website www.primebank.com.bd PBL provides
copies of Annual Reports to the Bangladesh Securities and Exchange Commission, Bangladesh Bank, Dhaka Stock Exchange
and Chittagong Stock Exchange for their reference. Investors may read them at their public reference room or library.

Governance on Investors Relation

PBL is strongly committed to equitable treatment of every shareholder, whether they are major or minority shareholders, institutional
investors, or foreign shareholders. To ensure equal treatment of all shareholders, the bank created various mechanisms, such as:
Shareholders who are unable to attend the shareholders meeting, the bank provides proxy forms which allow shareholders to specify
their vote on each agenda. The proxy forms, which are in accordance with the standard format, are sent along with the annual report.

The shareholders meetings proceed according to the order of the agenda, without adding new and uninformed agenda, in
order to give the opportunity to shareholders to study the information on the given agenda before making a decision. Moreover,
there are no changes to the important information in the shareholders meeting.

The bank sees the importance of the consideration of transactions which may have conflict of interest or may be connected or
related transactions, and abides by good corporate governance principles, including the rules and regulations of the Bangladesh
Securities and Exchange Commission and the Dhaka Stock Exchange and the Chittagong Stock Exchange transactions, directors,
management and those who are related persons do not participate in the consideration to approve such transactions.

The bank provides a channel for minority shareholders to propose issues deemed important and appropriate to include in the
agenda of the banks annual general meeting of shareholders and to nominate candidates with appropriate knowledge, abilities
and qualifications to be considered for the position of director.
The bank continues to have regular communication with the shareholders through periodic updates of performance and at any
other time when it believes it to be in the best interest of shareholders generally.

Investors Inquiries
Any queries relating to shareholdings for example transfer of shares, changes of name and address, and payment of dividend
should be sent to the following address:

Share Department
Sarker Mansion (8th Floor)
29, Rajuk Avenue, Dhaka-1000
Phone: 9567265/261
Email: info@primebank.com.bd

Annual Report 2012 149

Glimpses of 17th AGM

Annual Report 2012 150

Media Highlights 2012

Annual Report 2012 151

Media Highlights 2012

Annual Report 2012 152

Customer Care

The guiding principles also provide for standards of

PBLs strategy is to strive for Excellence in customer


service. This has been embedded in the banks customer
care culture. Maintaining high standards of customer
service, delivering excellent services to customers and
exceeding customers expectation are the cornerstones
of the banks continuous business growth strategy. The
banks corporate tagline- a bank with a difference further
inculcates the mindset and promotes the actions of all
levels of staff to provide excellent customer service in their
dealings with customers.

service effectively and efficiently.

In 2012, PBL continued to invest significant resources to


enhance and sustain the superior customer service geared
towards improving greater customer experience and
satisfaction. It is this continuous unwavering commitment
that has enabled the bank to build its franchise and the
PBL Brand, which has become well-recognized for its
superior customer service. This, together with the longlasting customer relationship built over the years, have
enabled the bank to differentiate itself among its peers in
the highly competitive market as well as contributed to the
banks business growth and success.
Guiding Principles for Customer Service
Customer service in PBL is guided by banks established
principles which spell out in written and oral form banks
commitment to deliver a high standard of customer
service. These principles outline the types of services
the bank aims to provide and the manner in which the
customers can contact the bank to provide feedback on
how the bank can serve its customer better. The guiding
principles are summarized below:
Accountability: The bank will clearly explain to its
customers the financial benefits and the risks involved
of the banks products and services that customers are
interested in.
Fairness: The bank will act fairly and reasonably towards
its customers in a consistent and ethical manner. Any
dispute will be resolved fairly and quickly in accordance
with a clear set of procedures.
Privacy: The bank will treat all customer information
as private and confidential and ensure the security of the
usage of customer information.
Reliability: The bank will co-operate with industry
players so that customers can enjoy secure and reliable
banking and payment systems.
Transparency: The bank will provide its customers with
clear, relevant and timely information about its products and
services in order to help customers make informed decisions.

service which guide the PBL staffs in providing customer


Personalized Face-to-Face Customer Service

PBL places great importance on interacting with


its

customers,

especially

personalized

face-to-face

interaction. It is through such interactions that the staffs

of the bank serve the customers and deliver superior


customer service to meet their needs.

The customer service officers at the front desks of the


bank in 130 branches across the country provide face-

to-face service to banks customers who walk into the

branches, assist customers on all inquiries on banking

matters, attend to customers feedback and complaints


and provide prompt resolutions to customer issues. These

officers are trained to serve the customers to achieve a

high level of customer satisfaction and to gather customer


feedback for business and service improvement.

Besides the customer service officer, PBL has a pool of

well-trained sales executives across the country to meet


and serve customers who have varying needs for financial
services from the bank.

Head of branches are also tasked to know, serve and build


relationship with the key customers of their branches. They

are responsible for the overall customer service standards


and customer satisfaction of their respective branch.

Superior service delivery through technology based


products and services

Another dimension of customer service is providing

customers with easy access to services at their


conveniences. Increasingly sophisticated customers are
demanding for services to be made available whenever

and wherever they need them. Therefore, apart from the

face-to-face customer service provided during the normal


branch business hours, PBL has been investing in self

service technologies that enable the delivery of customer


service at the convenience of customers.

With the use of telecommunication facilities, customer

service is also provided through PBLs customer service

helplines where customers can call banks customer


service personnel for any inquiries, complaints and
to obtain solutions to their banking issues. There are

dedicated helplines covering all spectrums of services that


PBL provides. Some of these helplines operate extended
hours to serve customers at their convenience.

Over the years, PBL has expanded its self service

alternate delivery channels such as the Automated Teller


Machine (ATM) network, Internet Banking, SMS Banking,

Phone Banking, Mobile Banking, Biometric Smart Card


Annual Report 2012 153

Customer Care
and KIOSK to serve its large customer base. New

services like automated Cheque Cash Deposit Machine

Phone Banking

In 2012, the bank installed 53 new ATMs country wide.

The bank successfully implemented Phone Banking


services in 2011 and by year-end 2012 the bank has
provided this service to over 2,000 number of account
holders. With Phone Banking, customers get the services
like available balance enquiry, debit card activation, lost
debit card block, change of TIN number, available credit
card balance and last date of bill payment for credit card.

located in the busy and preferred locations across the

Mobile Banking

(CCDM) will be added in 2013. Details of the alternate


delivery channels as given below will give an idea about
the banks superior services provided to the customers:
ATM Network
Now the bank has 134 ATMs in operation and these are

country. As per banks approved expansion plan, PBL

by fingerprint recognition. By end of 2012, total number

Th e bank successfully launched Mobile Banking services


in 2012 to facilitate financial services using mobile phones
for the account holders. With Mobile Banking, customers
get the services like deposit and withdrawal of money
from remote agents, SMS Banking such as balance
inquiry, Mini Statement etc., bill / utility payment service,
intra-bank fund transfer, fund transfer to any registered
mobile, shopping through registered merchant, Visa
Money Transfer (VMT) to enable customers to send /
receive money from a VISA Card to another irrespective
of the issuing bank and facility to link banks existing Debit
Card or Credit Card through mobile.

the country were enjoying this service. With Biometric

Information KIOSK / Bills Pay

shall install another 50 ATMs in 2013. Moreover, the bank


has around 1,200 shared ATMs across the country. By the

end of 2012, the number of ATM Cards (proprietary) of


the bank reached 190,946 whereas the number of Master
Debit Card reached to 75,641.
Biometric Smart Card
The bank successfully launched Biometric Smart Card

in 2012 to provide financial service for the un-banked

and under banked people in the rural and urban areas


of agents was 437 and 18,000 account holders across

Smart Card, customers get the services like opening and


maintaining a smart card virtual account, cash deposit and

withdrawal from PBL DG Smart Card Account, transfer


from PBL DG Smart Card Account to CBS Account, salary
disbursement to PBL DG Smart Card Account and foreign
remittance collection. Other facilities like cash withdrawal
from PBL ATM by using DG Smart Card Account, Mobile

Top-up and DPS installment collection are in the process.


Internet Banking (Altitude)
Launching of Altitude, Internet Banking Software
developed by banks in-house IT professionals was one of
the successes of PBL which was further extended in 2012.

PBL was one of the pioneer banks to start this Inter-Intra


financial banking service for the customers. With Altitude,
customers get the services like real time balance enquiry,

intra-inter bank fund transfer, intra-inter bank credit card


bill payment and cheque requisition. Additional features

The bank has 4 Information KIOSK. PBL ATM Card


and Master Debit Card holders can enjoy facilities like
account balance enquiry, account statement through the
Information KIOSK. In addition, Utility Bill payment of
a number of companies is also possible by Information
KIOSK and ATMs
Centralized Clearing Cell (CCC) and Internet Banking
Operations
To ensure a modern payment and settlement system
infrastructure for the country, Bangladesh Automated
Clearing House (BACH), the first ever electronic clearing
house, with its two components- Bangladesh Automated
Cheque Processing System (BACPS) and Bangladesh
Electronic Fund Transfer Network (BEFTN) a state-of-theart technology went on live on October 2010 and February
2011 respectively.

PBL introduced SMS Banking services in 2010 and

PBL is providing services through these two projects


to its valuable customers. Total number and amount
of instruments in the automated clearing (BACPS and
BEFTN) is increasing day by day as customers are being
highly benefited.

number of accounts for SMS Banking. With SMS Banking,

Benefits of BACPS

like utility bill payment is in the process.


SMS Banking

by end of 2012 the bank has reached more than 7,530


customers get the services like welcome alert (for account

opening), any transaction related alert in Core Banking

System (CBS), Fixed Deposit maturity alarm, high value

transaction alert, account status change alert, payment


(loan) failure alert and Cheque clearing failure alert
Annual Report 2012 154

BACPS minimizes fraud and forgery, reduces cheque


carrying and clearing cost, reduces payment processing
time dramatically, ensures faster and secured payment
and settles payment of all cheques of the whole country
under a single head of the Bangladesh Bank.

Total amount of cheques (Outward & Inward) in 2011 and 2012

No. of cheques(Outward & Inward) in 2011 and 2012

30000

1000000
900000

25000

800000
700000
600000

15000

2011

500000

2012

400000

2011
2012

10000

300000

5000

200000
100000

0
No. of Cheques (Outward)

Outward_Amount (Core)

No. of Cheques (Inward)

Inward_Amount (Crore)

Benefits of BEFTN
BEFTN eliminates cheque printing and clearing cost,
eliminates lost and stolen instruments, reduces risk and
fraud, ensures secured and faster payment and saves
time.
No. of EFT requests presented (Outward) and received (Inward) in 2012

Total Amount presented (Outward) and received (Inward) in 2012


450
400
350
300

OUTWARD
(Amount, Crore)

250
200

80000

150

70000

100

INWARD
(Amount, Crore)

50

60000
OUTWARD
(Requests)

50000
40000

0
JAN-MAR

APR-JUN

JUL-SEPO

CT-DEC

INWARD
(Requests)

30000
20000

Facilities provided by CFRC and Card Division through


Centralized Clearing Cell

10000
0
JAN-MAR

APR-JUN

JUL-SEPO

CT-DEC

Especially BEFTN has made the disbursement of foreign


remittance very faster and reliable. So total amount of

Annual Report 2012 155

Customer Care
foreign remittance is increasing with time dramatically.
Besides, merchant (POS) customers of CARD division
are also getting the payment in their own account (any
bank) without any difficulties.
No. of Outward Request of CFRC & CARD Division in 2011 and 2012
180000
160000
140000
120000

2011

100000

2012

80000
60000
40000
20000
0
No. of Outward Request
(CFRC)

No. of Outward Request


(Card)

R&D for Innovation and Competitive Edge

Total Amount Sent by CFRC & CARD Division in 2011


and 2012 through BEFTN
160000
140000
100000

2011
2012

60000
20000
0
Total Amount (Crore),
CFRC

Total Amount (Crore),


CARD

Internet banking Altitude is also linked with BEFTN which


has got a very special attraction to the customers from the
beginning.
To ensure greater access of the unbanked population in the
far-flung areas, PBL launched Biometric Smart technology
based Prime Cash card through which common people/
beneficiaries can withdraw the hard earned remittances
of the expatriates from more than 500 Prime Cash agent
locations across the country. Besides, during the year PBL
activated its remittance distribution network of UDDIPAN,
a leading Micro Finance Institution of Bangladesh for
smooth delivery of inbound remittances received through
the exchange houses and banks including Western Union
Money Transfer from more than 200 outlets of UDDIPAN
throughout the country.
The customers were served efficiently by Centralized
Foreign Remittance Cell (CFRC) utilizing the RemitFast,
a software developed by in-house IT Team and
BEFTN. Mobile message system was introduced for
the beneficiaries guiding them to the nearest branches
for collection of remittance. PBL continued its effort to
encourage and motivate both remitters and beneficiaries
Annual Report 2012 156

to use formal banking channel for money transfer from


abroad. The bank maintained close contact with remitters
in different countries. PBL provided two of its officials
to UAE on deputation for providing better and effective
services to the Bangladeshi expatriates living and working
in different parts of UAE. A number of officials of PBL
visited KSA and UAE to promote products of the bank
to the expatriates. PBL was the sponsor of Bangladesh
Night held in Qatar attended by a large number of
Bangladeshis working there. The bank also participated in
various fairs / campaigns in home and abroad (Qatar, KSA,
UAE, UK, Singapore and Malaysia) to create awareness
about remittance and promotion of selling wage earners
development bond and USD investment bonds arranged
by the Bangladesh Bank.

Banking industry constantly experiences ever changing


customer needs, intense pressure from competition,
adaptation and introduction of technological advancements
that facilitate customers in availing banking services. On top
of all priorities, identification and satisfaction of customer
needs are integral in sustaining profitable banking business
in this competitive and dynamic financial sector. To identify
customer needs and to implement strategies aimed at
satisfying those needs, a bank requires information about
customers preference, perception, and potential untapped
investment opportunities. Besides, as competition has
become more intense (48 scheduled banks having more
than 8,000 branches in the country, 9 more upcoming banks
and proliferation of NBFIs providing a number of financial
services similar to commercial banks), decision makers need
competitive intelligence and information on the effectiveness
of their strategies. The task of Research and Development
(R&D) Division of PBL is to provide the management of
the bank with relevant, authentic, reliable and actionable
information and analytical objective findings so that they
can make effective and time-befitting decisions. Besides, a
bank has to come up with new and innovative avenues of
products and services, explore potential markets in order to
strengthen its market position and make an upswing in its
growth cycle. This is where R&D Division plays a significant
role for gaining competitive advantage for the bank.

Hence, activities of R&D Division are of paramount


importance for the bank since it can come up with
concrete insights for supporting the higher management
to initiate customer-oriented strategic decision for growth
and expansion of business. In that pursuit, PBLs R&D
activities are focused on the three core areas- Market
Research, Operations Research and Economic and
Business Policy Research. 2012 was an eventful year for
R&D as it continuously monitored the market to predict
changes and came up with studies, products and services
to contribute to the banks growth.

Operations Research
Feasibility Studies for Branch Expansion Program
(BEP) and ATM: To explore potential markets where
the bank can provide its services to contribute to the
economic development of the area, feasibility studies have
been conducted on more than 150 locations all over the
country for new branch expansion and business growth.
To strengthen the alternative delivery of banking services,
feasibility studies for ATM expansion program have been
undertaken all over Bangladesh.

151

130

140

163

Branch Expansion Program (BEP) Vision

Some major activities performed by the R&D Division in


2012 are highlighted below:
Market Research
Product Development and Reengineering: R&D
Division introduced some innovative products such
as My First Account (Savings Account for school &
college students), Lakshma Puron Savings Scheme
(conventional and Islamic banking), Account 150%
(conventional and Islamic banking), Carnival Loan
and Prodip SME Loan Product. More asset and liability
products are in the pipeline;
Product Re-engineering: The division also modified
features of existing products and services as per
market demand to attain and retain market share, for
example, revision of Double Benefit Deposit Scheme,
Monthly Benefit Deposit Scheme and Prime Millionaire
Deposit Scheme for conventional and Islamic banking;
Mystery Shopping- a Service Quality Assessment
Survey: To ensure service excellence at branch
level, Mystery Shopping Survey is an ongoing project
throughout the year. After the Benchmarking Study
and subsequent service quality survey, it was revealed
that PBLs level of quality customer service is above
the industry standard.

Business Policy Research


R&Ds monthly publication In-Focus achieved a
notable milestone as the Newsletter successfully
launched its first printed version with new concept,
layout and design along with its online version in
interactive manner. In-Focus has been moving
forward with specific focus on Bangladeshs economy
and finance, through providing its readers cutting edge
knowledge and information to remain updated on
national and international issues. Besides, a weekly
financial newsletter is being disseminated to provide
financial insights to valued readers on a weekly basis;

81.98

86.18

76.85

R&D provided information for availing different

2010
PBL BenchmarkC

2010
ompetitors Benchmark

2011
PBL Latest MS

corporate awards and seminars such as- DHL/Daily


Start Best Financial Institution Award, Positioning
Bangladesh, etc.;
Annual Report 2012 157

Customer Care
Commodity Market Watch from national and global
perspective on eight commodities;

R&D played the role of knowledge partner on behalf


of PBL in the event of Positioning Bangladesh- an
international seminar for branding Bangladeshi business;
Budget Review for FY 2012-13 highlighting 20 sectors
such as RMG, Leather, Pharmaceuticals, EPZ, SME,
Tax, Duties etc;
Sectoral reports on Ready-Made Garments (RMG), BiCycle market, etc.
In coming years R&D is looking forward to working as a

Mato Eid Utshobe

Initiatives and loyalty programs carried throughout the


year 2012 which to keep credit card in forefront are grand

complete Knowledge Hub for the bank aligning its core

launching of Platinum Card through a gala night, issuing

difference.

network through signing merchant agreement with

Prompt Complaint Resolution System

based Islamic credit card- Hasanah Quard Credit Card,

processes with the banks strategic vision of making a

PBL continues to put in place an efficient customer


complaint resolution system to address customer
complaints as part of its customer care commitment. The
bank has set a maximum number of days for all customer

pre-paid hajj card for the pilgrims, enhancing business


Saadmusa and Mustofa Mart, introduction of Shariah
Shop n Win and Shop n Earn loyalty reward program,
signing memorandum of understanding with Japan Credit
Bureau (JCB), worlds 4th largest card issuer.

complaints to be acknowledged and resolved.


Listening to the Customer
PBL always remains active to ensure superior delivery
standards. PBL continues to enhance its customer
service delivery standards by gaining customer feedback
through customer survey and mystery customers.
Besides, a number of customer-get-together campaigns
were launched in 2012 to get customer feedback.

Gala Launching of Platinum Card

Creating Customer Awareness


The bank creates awareness among customers about
its different products and services through different
campaigns throughout the year.

License Agreement Signing with JCB

Customer Mela

During 2012, Retail Banking Division carried out different


promotional campaigns like Customer Mela, Retail
Fixed Deposit Mobilization Campaign, Festival Deposit
Mobilization Campaign, Lets Start Banking, AltitudeBeat the Q and Mato Eid Utshobe.
Annual Report 2012 158

Shop n Win- An Exclusive Loyalty Program for Platinum


Cardholders

SME Loan for Tk 3.50 million was also disbursed to two


SME customers during the program.
Different awareness building programs for agriculture
loan were taken by PBL as below:

Issuing Prime Hajj Pre-paid Card

Banker-customer dialogues for development of SMEs were


held at rural areas as a part of regulatory compliance and
cluster development policy directives of the Bangladesh
Bank. The dialogues gave the bank opportunity to find out
new SME customers including women entrepreneurs and
finally expanding the SME activities.
Meeting with the field level farmers at Chapai Nawabgonj

A Customer Caring Bank


PBL, as a caring corporate citizen, and in line with the
policies of the Government and the Bangladesh Bank of
advocating care for the underprivileged people, senior
citizens and mass people, continues to provide special
products and services as follow:
Bank-Customer Gathering for development of SMEs organized
by Sherpur SME/Agri branch of PBL

PBL has Senior Citizen Schemes designed for the senior


citizens of the country. As per the scheme 0.25 percent
higher rate of interest is provided to the eligible depositors
of the bank.
The bank identifies all of its Islamic banking activities by
adopting a generic name Hasanah- the brand name for
Islamic products and services of the bank which cater to the
needs of customers who want to have services in Islamic
Shariah compliant modes supporting the sentiment of
people, majority of whom are Muslims and are akin to the
Islamic financial system. The Islamic banking activities of
the bank along with its IT based products and services
and increased agricultural lending activities are bringing

Sanctioning loan to a entrepreneur in a Bank-Customer


Gathering organized by Sherpur SME/Agri. branch of PBL

in more and more un-banked and under-banked people


under the banking umbrella of PBL.

Annual Report 2012 159

Customer Care

Md. Abul Kashem, the story of a successful farmer


I, Md. Abul Kashem is a small holder farmer in Dorbarpur, Ramdubi Sadar,Dinajpur. For many years
I grew potato, maize, banana, paddy, etc by availing loan from money lenders with higher interest for
maintaining the operational costs i.e. seed, fertilizer, pesticides, irrigation, labour cost, land rent etc.
I did not have enough money and land as well to cultivate potato, maize, banana, paddy, green chili
etc. commercially. But I knew how to cultivate quality crop commercially. To cultivate quality crops,
quality seed, fertilizer, pesticides, labour and adequate irrigation facility is needed in time. As I did
not have enough money, I had to go to the doors of shop keepers, money lenders to borrow money,
as well as purchase seed, fertilizer, pesticides etc. on credit but could not manage from any where in
time. Rather was hurt, humiliated and criticized.
Meanwhile, I came to know about the Agriculture Credit program of Prime Bank Limited. I became
inspired and decided to start farming of potato, maize, banana, paddy, etc. commercially. Next week, I
went to Prime Bank Limited for availing Agriculture Loan to cultivate potato. Afterwards, the Agriculture
Credit Officer of Prime Bank came to my house and visited my crops field and discussed with me, my
spouse and other group members.
I took 1st Crop Loan by forming a group of Tk 100,000 for potato cultivation in the year 2009 and
repaid the loan in time after harvesting and subsequently availed another loan of Tk 50,000 for maize
cultivation in March 2010. I again availed Crops loan of Tk 120,000 for potato cultivation in September,
2010 and Tk 140,000 for banana cultivation in November, 2010. Similarly, in 2011 I had availed crops
loan of Tk 120,000 for potato cultivation and Tk 75,000 for maize cultivation. In 2012, I availed crops
loan of Tk.120,000 for potato cultivation and Tk 50,000 for maize cultivation. I repaid all the loans in
time. So, comparing last few years I succeeded to make profit. Before availing loan, we had to repay
the Money lenders /Mohajans selling the product in lower price. But this year we had an opportunity
to sell the products storing for few months and thereby got optimum price of products.
I was not well off when I availed a loan for the first time from Prime Bank Limited. I was in vicious
cycle of poverty, could not maintain the educational cost of the children, and could not maintain the
household cost. My house was made of bamboo fence, tin etc. Now, my living standard has improved
significantly and I am living in a brick built house. Besides, my children are going to top class standard
school. Clothing is better than before and at a glance money crisis is far away. Today, solvency and
happiness have taken place in my family. Potato, banana, green chili of my garden is representing
me in Dhaka and Bogra. I am selling my products at fair price. All these became possible with the
help of Prime Bank Limited. I expect the Agri-finance activities of Prime Bank Limited will continue to
support farmers like us.
I wish every success of Prime Bank Limited.

Annual Report 2012 160

A Self Explanatory Statement of a Physically Disable Business Person


I, Md. Shamsul Alam, Proprietor of Borni Handicraft of Hazi Boshir Uddin Market, Mouchak,

Siddirgonj, Narayangonj. I started a handicraft business in very small scale in 1995 and till
now running the business very successfully.

I contacted different banks for taking loan for expansion of my business but could not
manage anywhere as I am a physically disable business entrepreneur. In this situation,

SME Banking Division of Prime Bank Limited offered me a loan for expansion of my

business. In 2010, I had enjoyed a SME loan of Tk 400,000 from Prime Bank Limited and
successfully paid the entire loan amount with interest in time. Again I have been enjoying
another SME loan of Tk 400,000 from Prime Bank Limited since 2012.

Hogla trees those are grown in the bank of rivers are used as main raw materials of my

business. From those raw materials I make different types of Basket, Paper Box, Flower
Basket, Flower Vase and different types of home decorators. These finished products are
sold in locally as well as in abroad through NGOs.

I am feeling so proud to have such kinds of business by generating employment of 25

persons both male and female. This year, profit was more than that of previous year and

became able to improve the life standard of my family. I give special thanks to Prime Bank

Limited who is beside me as a helping friend since 2010 to make easy my way to the
progression of my business.

Annual Report 2012 161

Customer Services at
Prime Bank

Annual Report 2012 162

Products
and Services

Annual Report 2012 163

Products
and Services

Annual Report 2012 164

Annual Report 2012 165

Annual Report 2012 166

Annual Report 2012 167

pathway to achievements ...

Prime Bank Foundation


CEOs Go over
Prime Bank Foundation, over the last few years has grown
to become one of Bangladeshs leading banking sectors
foundations, not only in terms of benefaction, but also in
terms of the goodwill that its target people have bestowed
on us. The Foundation reflects the essence of what we
have always believed in, which is the well-being of its
priority target groups and beneficiaries.
Prime Bank Foundation is a foundation with a wealth of
ability and powerful assets e.g. wonderful innovation
capabilities, a country wide footprint and leading position
in demand and supply side financing in education and
healthcare. We have tremendous potential in terms of
sustained growth and as such have been trying to step up
every year to deliver fully on that potential. This is our 6th
CSR report, which builds on our experience publishing
annual CSR reports from 2007. The year gone by has
seen the expansion of CSR activities across the country
which will cater to the needs of our target communities
and beneficiaries. The year gone by has seen a range of
impact created by our CSR activities. It is our belief that
our CSR Report 2012 is well-heeled in brainwaves,
triumphs and hopes.
The journey has been eventful. Each day has taken us a
step forward towards perfection. However, the fulcrum of
any successful service organisation is its people. Today, I
can proudly proclaim, that the goodwill the Foundation has
earned, is largely due to the professionals who man our
Foundation and its projects. Our strong internal growth
has been further augmented by their passion to deliver
quality service, their unquestioning loyalty, their
dedication, proficiency and wonderful proactive approach.
As the voices captured in this annual report suggest,
inherent in the work to create pathways to success for
target group of beneficiaries are exhilarating
opportunities: to generate new insights; to strengthen
existing programmes/projects and develop new ones; to
inspire creative new approaches; to benefit from
knowledge shared. We will work to leverage all of these
opportunities as we move into 2013.
The theme of this annual CSR report, Achievements
Pathway also reflects the organisational evolution that is
producing these changes. It presents a high-altitude view of
what we have learned and are learning about creating
pathways to success, including what we have learned and
are learning about ourselves, our communities, our shared
beliefs and our relationships. And it presents that view
through the eyes of the members of the community that we
work for. In doing so, it mirrors our conviction that the most
effective pathway is that created in and by the community.
Of course, an annual report is necessarily a snapshot, not
a complete portrait. While this report includes sample lists
of the case studies made during the year, it cannot begin
to detail the full range of internal and external efforts on
which we have worked.
Being a leading economic establishment, Prime Banks
interest and focus are not limited to only making profit, but
they also extend to enhancing the contribution towards the

national development process through development of the


society. Further, this social responsibility is not limited to
today's society, but its services also extend to take into
account future generations on the long term.
We have always believed that our programmes designed to
tailor to the needs of our priority target beneficiaries create
opportunities for them to translate their dreams into reality.
This belief continues to propel us towards new initiatives
and new targets so we can impact the lives of many across
the country.
I am sincerely grateful to the Foundation Management
Committee, its Executive Committee and Prime Bank Board
of Directors, staff and partners for having the fortitude to
stay dedicated to our mission. I also appreciate the support
we have received from the entire priority target beneficiary
and community for the period of our work. As we go forward
in 2013 and beyond, we will make a more rigorous effort to
be a stronger voice of hope, a beacon of light and an
institution that is dedicated to uplifting the areas of our work.
The staff works particularly hard to achieve programmatic
goals. They exhibit humility that spurs upward mobility for
indigent families, while administering outstanding services
to our clientele with professionalism, technical knowledge
and care.
Before I conclude, I extend my heartfelt thanks to you for
taking time to go over our activities this year and for sharing
with us a sense of optimism for what we make possible. As
this report demonstrates, we continue to make important
and exciting changes and look forward to updating you on
further progress in the years to come.
Sincerely yours,

Dr. Iqbal Anwar


Chief Executive Officer
Prime Bank Foundation

annual report 2012 169

Some endeavours are too valuable to be measured financially. Though being able to
improve the opportunities and livelihoods of those in need is priceless, we believe in
empowerment more than aid. Our groundbreaking social programmes enhance the health,
educational opportunities and cultural participation for the marginalised, but more than that,
they lay the foundation for continuous development that extends beyond our beneficiaries.
By contributing to development in Bangladesh in the areas of education, health and more,
Prime Bank Foundation is investing in brighter future.

Prime Bank Foundation has always been playing an imperative role in the social life of Bangladesh throughout its course
of compassionate operation, during which the Foundation has placed its resources and capabilities engaging in a range of
activities that are benefiting its priority target people of the country over the past six years.

Education Support Programme (ESP)


An initiative designed to support higher studies and improve employment prospects, the ESP project is a long term
renewable scholarship programme for underprivileged but meritorious students from across the country intended to
remove barriers to accessing higher education.

Prime Campus (PC)


Prime Campus is an English medium school started and run by PBF. Prime Campus is designed not only to make high
quality English based primary education more accessible for the financially constrained, but is intended to serve as a model
to introduce holistic education and innovative teaching methods, with a view of eventually further spreading this new
approach to schooling.

Prime Bank Nursing Institute (PBNI)


Prime Bank Nursing Institute provides high quality nursing education at affordable prices, both to increase employment
opportunities for its beneficiaries, and also to contribute to the development of the health sector in Bangladesh. Partnered
with a leading nursing institute from the Philippines, PBNI utilises modern equipment and state-of-the-art teaching methods
to produce highly skilled, capable, and compassionate graduates.

Prime Bank Eye Hospital (PBEH)


Designed to address the pressing needs for eye care and ophthalmic health in Bangladesh, Prime Bank Eye Hospital
provides a wide range of treatment for those that cannot afford this care from elsewhere. Beyond operating a hospital in
the capital, PBEH also has a mission to promote health seeking behaviour and early detection and prevention, by running
screening camps across the country.

Prime Bank Cricket Club (PBCC)


Prime Bank has long been a patron of culture in Bangladesh, having sponsored sporting events over many years. Prime
Bank Cricket Club takes this a step further, by recognising the contribution athletics make in the character and social
development. PBCC provides beneficiaries the opportunity to experience the life of a professional athlete, with plans
underway for the development of a cutting edge training centre and coaching programme.

Other Activities
In addition to the ongoing core projects mentioned above, Prime Bank Foundation is also involved in numerous other
activities to support pressing social and emergency needs in the country.

annual report 2012 170

ESP Press Ad of Last

Years

Brief Information on ESP


S/L

Category of Information

Information of Awardess by Year


2007

2008

2009

2010

2011

2012

Applications Received

2,985

1,753

4,774

3,651

4,371

9,987

Applications found Valid

2,542

1,478

4,387

3,515

3,979

9,570

Finally Selected Awardees

170

122

198

196

205

386

Selected Male Awardees

108

78

135

135

148

294

Selected Female Awardees

62

44

63

61

57

92

Awardees completed graduation

86

60

35

15

Awardees completed study

81

24

annual report 2012 171

Education
Education Support Programme (ESP)
Education is possibly the single most important human development factor needed to develop not only an individual but
vital for the progress of the entire nation. The prospect to pursue higher education is an empowering and life changing
opportunity, and an invaluable tool for effecting social change. The youth of Bangladesh is extremely driven and
hardworking, and can achieve great things if given the chance. Prime Bank Foundations activities in the area of education
emphasise the view that empowerment is much more powerful than aid, and that view is reinforced year after year as the
programme continues to produce inspiring stories of individuals overcoming hardship and achieving success.
Prime Bank Foundations Education
Support Programme (ESP) is a long
term renewable scholarship programme
for underprivileged but meritorious
students from across the country
intended to remove barriers to accessing higher education. Under this
initiative, eligible students receive
monthly stipends that allow them to
pursue under-graduate, Graduate and
post-graduate level studies, giving them
the opportunity to break out of the cycle
of poverty, increase their sense of
self-worth, and fulfill their potential.
Rather than providing one time awards
for good performance, the programme
supports students in completing their
scholarly aspirations in order to allow
them to make real, meaningful and
lasting changes in their lives.Typical
applicants come from very humble
backgrounds, with household incomes
barely enough to meet their basic
needs. Beneficiaries of the Education
Support Programme develop skills that
make them eligible for better employment, benefiting not just themselves, but
allowing them to support families as

400

well. Perhaps the most compelling


outcome of the programme is in its
repeated demonstration that, if given the
opportunity, anyone can be successful
and improve their circumstances, even
those that are left behind by the conventional system.
The Education Support Programme was
launched in September 2007, with the
governor of Bangladesh Bank presenting the first installment of stipends to the
selected students. New sessions are
typically announced in national newspapers, as well as with the cooperation of
members of the education sector. A
three member Advisory Committee is
commissioned to develop neutral select
criteria and identify the most deserving
candidates. The amount paid out
monthly in stipends was set initially at
BDT 1500, but has since been raised to
BDT 2200. Students have used these
grants to pursue their higher education
in reputable local medical, engineering
and agricultural colleges, and national
universities, in a wide range of subjects
covering sciences, humanities, and
commerce.

Distribution of Awardees
by Batch (2007-2012)

The scope of the Education Support


Programme extends to supporting
gender equality, ensuring that a
sufficient number of both male and
female applicants receive assistance. In
addition, special consideration is made
for those from especially disadvantaged
backgrounds, such as the visually
impaired, those from extremely remote
areas, and others with special needs.
Prime Bank Foundation is committed to
ensuring the effectiveness of its activities, and PBF staff regularly visit institutions attended by the ESP beneficiaries.
The positive feedback from the
programme has come not only from the
students and their families, but is
echoed by the teachers, principals, and
others that see first-hand the impact
that it is having. Beyond just supporting
the right to education, Prime Bank
Foundation strives to foster a culture
that supports personal and community
development free from discrimination
based on socio-economic status, race,
or gender.

Awardees Information (2007-2012)


386

350

(112) 9%
300

(196) 15%
250

200

(15) 1%

198

170

196

205

(954) 75%

150

122
100

50

Completed Graduation 15% (196)


Stipend Receiving 75% (954)
2007

2008

2009

2010

2011

2012

Each batch begins in October each year

annual report 2012 172

Completed Study 9% (112)


Drop-out 1% (15)

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annual report 2012 178

Some Outstanding Performance


of ESP Awardees

Richerd Kisku
PBF-ID: 08-1-2
-088
6th position
Fine Art, DU

Syed Akram Ali


PBF-ID: 08-1-3-101
17th position
International Business, DU
Shamima Nasrin M
ukta
PBF-ID: 09-2-3-185
7th position
Accounting, CU

annual report 2012 179

Some of our Awardees


Now in Job

Md. Selim Uddin


PBF-ID: 08-1-1-028
Quality Control Officer
AHZ Agro Industries

Nazma Zabin
PBF ID: 08-2-2-093
BCS Customs

Halim
Shakila -3-119
: 07-2
PBF-ID
ce
r, Finan
Lecture iversity
Un
Dhaka

annual report 2012 180

n uddin
Md. Borha
7-1-1-019
PBF-ID: 0
iser
Merchand
rics
b
a
F
in Iris

ssain
Shaikh Farhad Ho
62
-0
-2
PBF-ID: 08-1
er
ffic
Asst. O
NCC Bank

in
MD. Azhar Udd
42
-1
-2
-1
07
PBF-ID:
te
ia
oc
ss
A
h
Researc
D
&
R
C
A
BR

Ms.Farhana Lokm
an
PBF-ID: 07-2-2-1
68
Assistant Judge

Shilpy Begum
PBF-ID: 07-2-2-169
Officer
BDS-71 News Agency

Distribution of ESP Awardees


by District & Division
Panchagarh

11

22

Thakurgaon

Lalmonirhat

Nilfamari

Number of ESP Awardees

14

19

38

Kurigram
Rangpur

Dinajpur

No ESP Awardees

55
Gaibandha

10

35

Jaipurhat

17

Sherpur

22

Naogaon

Rajshahi

Mymensingh

41

28
Nator

Sirajganj

14

Gazipur

Pabna

Chuadanga

24

Manikganj

20
Jhinaidaha

14

11

Narail

Madaripur

41
Shariatpur

Gopalganj

26

36

Pirojpur

Bagerhat

Khulna

16

2
Khagrachari

Lakshmipur

27

Comilla

Chandpur

5
Barisal

28

12

59

Munshiganj

13

Shatkhira

4
Faridpur

40

Maulvibazar

Brahmanbaria

Narayanganj

Dhaka

12

Magura

Jessore

26
Narsingdi

Rajbari

5
Habiganj

25

Kushtia

2
Meherpur

16
Kishoreganj

Tangail

34

32

13

Sylhet

38

63

19

17

Sunamganj

Netrokona

Jamalpur

Bogra

Chapai
Nawabganj

11

22

14
Noakhali

Feni

23
Rangamati

Jhalokati

77

Bhola
Patuakhali

14

13

11

Chittagong

Borguna

1
Bandarban
Cox's Bazar

Total number of awardees is 1277

Sl.
l #
l.
1
2
3
4
5
6
7

Divi
vis
vi
isio
i n
Barisal
Chittagong
Dhaka
Khulna
Rajshahi
Rangpur
Sylhet
Total

Awa
w rd
wa
rde
dees
98
266
259
185
230
202
37
1277

15

annual report 2012 181

Snapshot on PBF & Its Projects

annual report 2012 182

Frontal view of Prime Campus - Uttara building

Frontal view of Prime Campus - Mirpur building

Prime Campus: Palm And Banyan


some banyans, but the trees girth may extend as far as Rajshahi,
Sylhet, and even the Banderbans one day. The idea from the start
was to let the Prime Campus-Uttara model spread in Bangladesh.

Prime Campus-Uttara is a 2008 CSR initiative of Prime Bank Foundation designed to provide quality English medium schooling at
affordable rates. It is a uniquely organic project with immense growth
potential, small in its inception, but enormous when fully developed.
We might compare it to the palm
and banyan tree. The first four
and a half years have already
shown both
trees characteristic growth patterns-upward like
the palm and outward like the
banyan.

There are good reasons for PBFs


using the organic paradigm, instead of
beginning with the grown tree. A major
one is that we can benefit from and
build upon the experience and
knowledge gained in the previous
stages, both in vertical and horizontal
expansion. Each new class section,
level, and school has a foundation and
From two classes, Nursery and
model. For example, teachers of the
Kindergarten, in the first year, the
next highest level or at the newly
tree has grown to a height of
opened school have a group of
Standard 4, one new class level
colleagues experienced in teaching at
having been added each year.
Prime Campus who can answer
Since the school is using the
questions and give advice.
This
Cambridge O and A-Level
support
is
especially
important
Kindergarten Classroom at Prime Campus Uttara
curriculum, the potential upwards
because we use an interactive,
is another eight classes, to
child-centered pedagogy that is different from the traditional method
Standard 12, or twice its present height. Excelsior! From a total of 25
practiced in Bangladesh. Another example is that in starting a new
students in the first year, the tree has expanded to 235. There are
school more accurate enrollment projections for the opening year
now three sections each of Nursery and Kindergarten, with multiple
allows better planning. Nine teachers were recruited and trained for
sections in Class 1 (4) and Class 2 (2). In the current 2012-2013
the initial two classes at Prime Campus-Uttara in 2008, four for those
session the first branch, or, we should say, offshoot, has appeared:
at Mirpur in 2012.
Prime Campus-Mirpur. Like the parent trunk, it promises to grow up
To return to our comparison in closing, Prime Campus is still young
and out from its Nursery and Kindergarten class and small enrollment.
and developing, but it is a young palm and banyan.
The number of these offshoots may not reach the thousands, as with

Class
Class

Il

2011

2010

as

Cl

VI

ss

la

lV

as

IIl

Cl

Class

2013 2014

2012

ss

Cla

VII

2016

s
Cla

2017

2009
KG
Nursery

2018

2008

2019

Uttara

III

sV

2015

Class IX

ve

Le
O-

Class

el

ev

L
A-

2013

KG

Mirpu

r
2012

ry

rse

Nu

Prime Campus
annual report 2012 183

Prime Bank Nursing Institute (PBNI)


long-term ventures of Prime Bank Foundation as a part of
its corporate social responsibility. It started from the
scratch i.e. from project conceptualisation through formal
launching of the project. The project activities are being
undertaken sequentially. In order to proceed with project,
necessary technical and management assistance are
solicited through long term partnership based on need and
a Memorandum of Understanding (MOU)
has already been signed with Cebu Normal
University, one of the centres of excellence
for nursing education in the Philippines to
have them as a technical assistance partner
for Prime Bank Nursing Institute, a new
creation of Prime Bank Foundation which
has been set in the reporting year aiming at
developing highly skilled nurses at an
affordable price needed to meet the increasingly high demand of competent nurses by
different healthcare service providers in the
country and beyond. Where cost is an
CEO, PBF with President 'Cebu
issue, nursing education is not out of reach.

In Bangladesh there are 51 governments and 19 NGO, and


private (for profit) registered nursing training institutes
(Source: Statistical Handbook of Bangladesh, BBS-2009).
Majority of them offer diploma nursing course and a few of
them offer four year long BSc nursing course. The country
presently has only about 66,717 hospital beds available in
the 2,519 hospitals of which 37,611 are in the government
hospitals and the rest 29,056 are in the
NGO and private (for profit) hospitals. The
entire country has a total of 22,803 registered nurses and they are working in all
those hospitals of country. Facilities at all
levels have inadequate number of appropriately trained nurses giving rise to a serious
threat to the quality of care being provided
to the patients of those huge number of
hospitals.

At present the total number of nurses who


are being awarded graduation/diploma from
all these nursing training institutes per year
Normal University'-Philippines
is 4600 which is meeting about 70% of the
The Institute is going to start its first academic
actual needs of the country. Rather the gap between the
session
2012-13
from the beginning of 2013 offering three
actual needs and the production per year is widening
year
Diploma-in-Nursing
Science & Midwifery course. The
day-by-day. Moreover the requirement for trained regiscourse
is
approved
by
Bangladesh
Nursing Council i.e. BNC.
tered nurse of the country will be more than double in 2020
as against 22803 in 2009/10. The numbers of nursing
Before giving approval, a four member Inspection Team
training institutes that are currently offering nursing training
from BNC visited the PBNI on November 04, 2012 to
(both Diploma and B. Sc. in Nursing) along with their
inspect how far the PBNI met up the BNC guidelines to
annual production capacity.
establish PBNI.
Prime Bank Nursing College/Institute is one of the new and

The Team Leader of BNC Inspection


Team sharing his suggestions

annual report 2012 184

Partial view of PBNI Simulation Lab

A view of PBNI Computer Lab

Later, Graduation and Post-graduation courses will be incorporated in the near future step by step. In addition to that
special certificate courses will be provided for different professional/service-holders or non-professional by PBNI to popularise the nursing profession in the different strata of the community as a part of social movement.

Special Features of PBNI

State-of-the art Nursing Institute


Partnership with Cebu Normal University-Philippines for Technical and Management Assistance
Equipped with modern teaching aids, materials & equipment
Highly experienced, well-trained & dedicated Faculties
Interactive methodology for hands on learning
Lay a solid foundation in English Language
Special effort to make efficient in Computer & Internet uses
Highly visible & easily accessible location
Affordable fee structure with accessibility to all
Safe and Well furnished Female Hostel Facilities

Eventually, PBNI is established to build a bright future of new generation as an efficient manpower regarding nursing
profession in the country and aboard.

Health
Prime Bank Eye Hospital (PBEH)

PBEH

Prime Bank Eye Hospital (PBEH) was established to make high quality eye care
accessible to all, regardless of their financial condition. With eye-disease
pervasive across Bangladesh, countless poor and needy people throughout the
country suffer and lose their livelihoods to conditions that are readily treatable
and often preventable. Though the hallmark of PBEH is to provide treatment at
prices that everyone can afford, with many receiving free support, a core
principle of hospital is its financial self-sufficiency, based on successful social
business models. This is achieved through high quality, high volume care based
on a well-organised system. Aiming to meet the goals defined by the Vision
2020 initiative of the World Health Organisation, PBEH not only provides
treatment and surgery, but is also actively involved in raising awareness of and
generating demand for eye health in order to promote the prevention and control
of avoidable blindness across the country.

Prime Bank Eye Hospital

House # 82, Road # 8A, Satmasjid Road


Dhanmondi, Dhaka-1209

PBEH is unique because of a combination of several factors, including:


Pricing and Accessibility of Services:

Highly Skilled and Professional Team:

Pricing is designed to ensure accessible to all, with a


safety-net provision for those who cannot afford regular costs
Tailored to needs setup for different socio-economic strata
Pricing at a sliding scale for sustainability and
cross-subsidisation if needed
One-stop shoppingapproach to provide a wide range of
eye care services

An exceptional team of highly trained, dedicated and


caring staff, including physicians, management, and
others
A well-structured and functional organogram with
clearly defined responsibilities, ensuring accountability and results

Setup, Launch and Operation:


The launching of Prime Bank Eye Hospital in January 2012 was the outcome of several years of careful planning and meticulous work. Every stage of the process was guided by the hospitals founding vision: providing eye care that is not only affordable for all, but of the highest standard. Technical and management assistance has been secured from AECS (Aravind Eye
Care System, India) since 2010, after Prime Bank Foundation entered into an agreement with them for their guidance in the
establishment of a state-of-art eye hospital in Bangladesh. Following the signing of the MoU, Prime Bank Eye Hospital began
setting up its hospital at a site on Satmasjid Road Dhanmondi, Dhaka, where operations will continue until they are eventually
shifted to a purpose-built facility in Ashulia. Modern international grade equipment was procured,

annual report 2012 185

checked and installed under supervision of renowned ophthalmologists. All other work, including hospital renovation and
human resource recruitment, was completed by the end of 2011, realising the goal of establishing PBEH as a cutting-edge
eye care centre. Finally, a distinguished team from AECS (comprised of Mr. R. D Thulasiraj, Mr. Nagarajan, Dr. AsimSil,
and Ms. Sashi Priya) visited the site on December 15, 2011, to oversee the progress and ensure every standard was
fulfilled.
2012 was a landmark year for Prime Bank Eye Hospital, not just because of its launch, but also the incredible response it
saw. PBEH was inaugurated on January 2012, at a ceremony attended by
numerous distinguished guests, including the Governor of Bangladesh
Bank, Board of Directors of Prime Bank Limited (PBL), and many others.
The hospital began actual operations on the 22nd of January 2012. In the
days since, several thousand beneficiaries have passed through PBEH,
where they have received life-changing treatment and care.
Promoting the newly established hospital was a key priority, and PBEH has
been proactively addressing this challenge with publicity campaigns in print
media (newspapers and magazines), PBL ATM booth branding, brochure
distribution, and other activities. The response has been remarkable, with
the number of treatment seekers increasing day by day.

Inauguration of PBEH by Dr. Atiur Rahman


Governor, Bangladesh Bank

In addition to operating its fixed facility in Dhaka, the PBEH project also has
a mission to promote early detection and prevention, and outreach to those
outside the capital, in order to address the pressing needs for eye care
across the country. In 2012, PBEH began implementing outreach camps
where cataract patients are identified, and later provided with surgery at
minimal cost.
One of PBEHs fundamental values is continuous progress and development. Accordingly, the Vision Building & Strategic PlanningWorkshop was
planned during an AECS team visit, for the purpose of defining longer term
goals and action plans. The workshop was held in May 2012 at LAICO,
AECS India. Various goals and strategies were discussed, covering
self-sustainability, conducting of outreach camps, recruitment of skilled HR,
promotion, and much more.

Vision Building & Strategic Planning


Workshop Participants From PBEH

Impact and Service Statistics:


Since inception, PBEH has provided 5,676 patients with eye care services at minimal cost. Of these, 147 patients underwent surgery and received aftercare treatment. The surgeries were performed by PBEHs proficient ophthalmologists,
whose diligent work meets the standards and requirements set by the World Health Organization (WHO).

After Surgery

Some complex
operations
performed
at Prime Bank
Eye Hospital

Before Surgery

In 2012, PBEH conducted 11 outreach camps, providing ophthalmic examinations to 2,750 patients. Among them, 93
patients were brought to the base hospital (PBEH) for surgery. About 700 patients received refraction services with
spectacles being dispensed to around 500 beneficiaries.

annual report 2012 186

Outreach Camp to
Prime Bank Eye Hospital

Vision test at Camp

Patient Examination at Camp

Patient Examination at Camp

Camp patients are in queue for follow-up surgery

Camp patients are having dinner at PBEH cafeteria

Camp patients are at PBEH ward

Camp patients are at PBEH ward

Camp patients are at PBEH ward

annual report 2012 187

Sports & Culture


Prime Bank Cricket Club (PBCC)
Social and cultural development is frequently overlooked in typical corporate social responsibility programmes, but Prime
Bank Foundation recognises the importance this plays in overall national development. Prime Bank Foundation
understands that sports are not just about recreation, but can play a major role for character development, and that the
cultural value of athletics can enrich society as a whole.
Prime bank has a long been a patron of culture in Bangladesh, having sponsored sporting events over many year. In 2011,
PBF went on to from the Prime Bank Cricket Club (PBCC), initially to offer club level players the opportunity to experience
the life of a professional cricket. This journey began with the acquisition of a Premier Division cricket team eligible to play
in Premier Division Cricket League of Bangladesh. Subsequent plans involve the development of an integrated cricket
development programme that will create a pathway for continued athletic progress for promising talents. In addition, PBF
also intends to be involve in general promotion and popularisation of cricket all over the country through various other
activities.
The modern sporting environment, especially in the world of cricket, has been growing increasingly competitive. PBFS
future plans include the establishment of a cutting edge Cricket Academy and coaching programme, to make available the highest
standard of coaching, fitness training, and overall development for budding cricketers. By taking on board some of the most exciting
names in Bangladesh cricket, and addressing shortcomings in issues of sports psychology and infrastructure, PBCC seeks to help
hopeful cricketers reach their full potentials.

Practice session of PBCC


Last match of Super league
with Victoria Sporting Club

Besides developing physical fitness, dedication towards athletic helps foster mental toughness and other important values,
including a competitive spirit, sportsmanship. leadership, determination, discipline, and overall personal development.
PBCC hopes not only to promote Bangladesh cricket on the world stage, but also to contribute in the development of more
rounded citizens.
Prime Bank has been sponsoring sports for more than a decade. This commitment for a range of sports and clubs make a
significant contribution to the sports and cultural life and enhance the attractiveness of our corporate roles.
The unique proposition of PBCC is that in 2011 we have formed a Cricket club in the name of Prime Bank Cricket Club
(PBCC) which played 1st time in the most prestigious Premier Cricket League organised by Bangladesh Cricket Board and
in the very first year we become third (3rd) in the point table, PBCC played the last super league match with Victoria
Sporting Club. They lost the last match in the super league and in the end of the League we are tie up with 24 points with
two other teams and become third (3rd) due to Head to Head law as per League by-laws.

Launching Ceremony of Prime Bank Cricket Club

annual report 2012 188

PBCC played 11 matches in total the League stage and won 10 matches and in Super League stage we played 05 matches
and won 2 matches, out of 16 matches we won 12 matches.
PBCC organised a very gorgeous launching ceremony on 14th May, 2012 at the Pan Pacific Sonargaon Hotel being
graced by the presence of Mr. AHM Mustafa Kamal FCA, MP and President, Bangladesh Cricket Board as the Chief Guest.
The eye-catching launching being unique in the cricket arena in Bangladesh was attended by the Directors of Board of
Directors of Prime Bank Limited, its high officials and former National captains and players, BCB Directors, Club officials
from (Premier, 1st Division, 2nd Division and 3rd Division), former and current National coaches, umpires and a very handsome number of sports journalists from both electronic and print media.

Prime Bank South Zone


Team.
Signing of MOU with BCB

Bangladesh Cricket League


Prime Bank Foundation having interest in the game of cricket and sharing the vision of Bangladesh Cricket Boards (BCB),
a governing body to regulate and promote cricket in Bangladesh of developing and popularising the longer version of
cricket known as Franchise Based National Cricket League has acquired a Franchisee license for ten years from BCB to
own and operate Prime Bank South Zone, one of the teams of Franchisee Based National Cricket League to participate in
the longer version cricket on franchise basis under the control of the Franchisee and started operating the team for its first
year from 2012.

CSR contribution directly from Prime Bank Limited


for the period of January-December 2012
Education

Prime Bank sponsored top 3 students of BIBM for their excellent result
Sponsorship of Science Olympiad organized by Bangladesh Academy of Science
Sponsorship of Prime Bank-Dhaka College Science Expo 2012 organized by Dhaka College Science Club
Sponsorship of Alumni Night 2012 of BRAC University Alumni Association
Sponsorship of MBM Day and job Fair 2012 organized by Bangladesh Institute of Bank Management
Donation to Sirajul Ulum Arabia Madrasa
Donation of computer to Shipyard School and College, BN, Khulna
Sponsorship of Prime Bank-NDDC 24th National Debate Competition
Sponsorship of Inter University/school debate competition organized by London college of legal studies

Health
Donation to a good numbers of individuals for their Cardiac, Kidney, Cancer and other treatments

Sports

Sponsorship of Pallima Badminton Tournament


Sponsorship of Tennis Tournament-2012 organized by Naogaon Tennis Club
Sponsorship of Banskhali Shadhinota Gold Cup Football Tournament-2012
Sponsorship of Prime Bank 7th International Womens Tournament organized by Leonine Chess Club
Sponsorship of District and Divisional Football League organized by Bangladesh Football Federation
Sponsorship of Prime Bank 15th International Rating Chess Tournament organized by Leonine Chess Club
Sponsorship of Prime Bank Cup Golf Tournament at Kurmitola Golf Club
Sponsorship of Junior Golf Team of Kurmitola Golf Club for Junior Championship at England

annual report 2012 189

Arts & Culture


Sponsorship of Bangla Academy Ekusha Book Fair 2012
Sponsorship of Seminar on history and tradition
Sponsorship of an Art exhibition of Sigma Haque
Prime Bank Kite Festival-2012
Sponsorship a cultural program organized by all community club
Sponsorship of Canada Showcase 2012 organized by Canadian Chamber of Commerce
Sponsorship of Jatio Rabindra Sangeet Sammilon
Sponsor 17th Anniversary of Chittagong Stock Exchange
Sponsorship International Bangla Festival & Book Fair 2012
Donation to Bangali New Year Celebration 1419 to News Presenters Society of Bangladesh
Printing and distribution of 5,000 pcs books written by Governor, Bangladesh Bank
Sponsorship a program of News Broadcasters Association of Bangladesh
Sponsorship to FBCCI for arranging seminar
Sponsorship of 1st National Inter School Freshers Champion debaters league, 2012
Sponsorship to Sandhani for Art competition
Sponsorship of Hirok Joyonti of Dhaka University
Sponsorship of Positioning Bangladesh, branding for business
Sponsorship of Bijoy Parbone Utshab
Sponsorship of 31st celebration of Dhaka Club
Sponsoring Bangla Darpan to pay lifelong honor to language activist Dr. Abdul Matin

Disaster Management
Prime Bank donated cheques to the families of two martyred army officers killed in BDR carnage at Pilkhana
Distribution of blankets to the winter distressed people
Donation for fire affected workers of Tazreen Garments

Others
Supported Desh TV to organize a programme on budget discussion
Donation to Proyash, an institute worked for betterment of Handicapped children, patronised by Bangladesh
Army

Sponsorship to Chittagong Boat Club to inaugurate the club house and passenger vessel
Setting public addressing system at Chittagong Mohila Samity school
Sponsoring marine academy for best cadet
Distributed 5 formalin de-hydrate machine to FBCCI
Jessore press club construction
Financial assistance to Bangladesh Bannya Prani Sheba Foundation

annual report 2012 190

Three Strategic Goals


G oa l 1

G oa l 2

G oa l 3

Make
education
more
accessible to the target
population we work for

Make health more accessible


to the target population we
work for

Build a strong and dynamic


capable
of
organisation,
facilitating effective education,
eye and other components of
health programme, and having
positive impact on public
opinion, policies and practices.

Both access and quality in


education have been given
attention,
as
education
programmes continued to be
implemented.

Completed the set up of Prime


Bank Eye Hospital in Dhaka, a
well equipped eye hospital
staffed with skilled workforce
with the technical assistance
from Aravind Eye Care System
of India to provide a wide range
of eye care services to all.

Our
capacity
development
endeavour, is envisioned to
institutionalise
learning
processes and systematically
organise sharing of information,
experiences, best practices and
lessons learned with our project
level people and the organisation
to we work partner with. We aim
institutionalise the core values of
responsible corporate citizenship
into the way of doing business, to
mould future business and to
professionalise the practice of
CSR. Monitored, measured and
report on the impact of the work
that we do

Sizeable
increase
of
our
programme reach in all 64
districts of the country including
the very hard-to- reach areas
through ESP, a programme to
respond to the needs of the
grad/undergrad/ post-grad level
underprivileged but meritorious
students of the country.
Availability of low cost quality
education to a much bigger
number of children through
Prime Campus, Uttara and its
new branch at Mirpur.
Signing of an MOU with Cebu
Normal University, one of
the centres of excellence for
nursing education in
the
Philippines to have them as
a technical assistance partner
for Prime Bank Nursing Institute,
a new initiative of Prime Bank
Foundation which has been set
in the reporting year aiming at
developing highly skilled nurses
at an affordable price needed
to meet the increasingly high
demand of nurses by different
healthcare
service providers
in the country and beyond.
The Institute will start its first
academic session from the
beginning of 2013 offering
three year diploma course in
nursing.

Where cost is an issue, eye care


is not out of reach. Prime Bank
Eye Hospital, an initiative of
Prime Bank Foundation, from the
beginning of 2012, has started
providing high quality eye care
services as part of its Corporate
Social Responsibility

Implemented information sharing


and communication sharing and
communication systems to link
our people and programmes
Increased efficiency in managing
organisational resources
Continued building capacity of
project staff and systems to
support our target people

annual report 2012 191

Financial Reports 2012

Directors Report
Auditors Report to the Shareholders
Financial Statements - Group & PBL
Financial Statements - OBU
Financial Statements - PBIL
Financial Statements - PBSL
Financial Statements - PECL, Singapore
Financial Statements - PBL Exchange (UK) Ltd.
Financial Statements - PBL Finance (Hong Kong) Ltd.
Calendar of Significant Events
Notice of the 17th Annual General Meeting
Branch Network
Glossary

Annual Report 2012 192

Directors Report-2012
(Under Section 184 of Companies Act 1994)
The Board of Directors of Prime Bank Limited has the
pleasure of presenting the 18th Annual Report and Audited
Financial Statements for the year 2012 together with the
Report of the Auditors to the shareholders. A brief overview
of the world market trend with the performance of Bangladesh Economy has also been provided in this Report. A
review of this report would reveal continuous growth of the
bank in a stiff competitive environment.
Global Economy
The World Bank estimated the global GDP to grow by 2.3
percent in 2012 (2.5 percent estimated by the IMF). The
world economy continued to struggle four years after the
onset of the global financial crisis. Developing economies
were still the main driver of global growth. GDP growth in
Euro area is estimated to be scaled down in 2013. Data for
the fourth quarter on US economy suggest that it too will be
weak despite improving retail sales, housing markets, and
employment. GDP growth for East Asia and the Pacific
region is projected to slow to 7.5 percent in 2012 largely on
account of weak external demand and policy actions in
China directed towards moderating domestic demand and
controlling inflation. Going forward, GDP growth in the
region is projected to accelerate to 7.9 percent in 2013.
South Asia's growth weakened to 5.4 percent in 2012,
mainly reflecting a sharp slowdown in India. The regions
GDP is projected to rise to 5.7 percent in 2013 and 6.4
percent in 2014, helped by policy reforms in India, stronger
investment activity, and a gradual improvement in global
demand for South Asias exports. Migrant remittances in
particular from the oil-rich Gulf Cooperation Council (GCC)
countries are projected to remain resilient and support
domestic demand in Nepal, Bangladesh and Pakistan.
Details on global economy are given in Management
Discussion and Analysis chapter of this Annual Report.
Bangladesh Economy
Despite the global economic downturn, the Bangladesh
economy achieved an impressive growth of 6.3 percent
during FY12. A strong demand and continued expansion of
infrastructural facilities helped to accomplish this accelerated economic growth amidst the fragile pace of global
economic recovery. The expansion of the economy during
FY12 was broad-based, registering positive growth by all
sectors and sub-sectors of the economy.
The monetary policy remained accommodative for productive economic activities with growth supportive financial
inclusion promotion measures in credit policies while also
firmly discouraging diversion and undue expansion of bank
credit for wasteful unproductive uses to stem build-up of
inflationary pressures.

Banking sector of Bangladesh showed remarkable


resilience in FY12. With a view to fostering a sound,
efficient and stable financial system, the Bangladesh Bank
began implementing a number of important policy measures. These included forceful emphasis on undertaking
timely and effective risk management practices by banks
through the revised Risk Management Guidelines. The
Bangladesh Bank issued new guidelines for loan classification on provisioning for banks which came into effect from
the last quarter of 2012. This guideline increased the
amount of non-performing loans and provision requirements for banks but in the long run it will elevate the banking practices to the best norms in the world.
The Bangladesh Bank has downgraded the GDP growth
forecast for FY13 to 6.2 percent from earlier projection of
7.2 percent. The World Bank in its report on Global
Economic Prospects (January 2013) has also forecasted
GDP growth of Bangladesh to 5.8 percent in FY13 and 6.2
percent in FY14. IMF in its World Economic Outlook
Update (January 2013) has also forecasted GDP growth of
Bangladesh to be 6.0 percent in FY13. Details on Bangladesh economy are given in Management Discussion and
Analysis chapter of this Annual Report.
Performance of PBL
Despite the challenges, PBL was able to record progress in
all most all the areas of operation in 2012. The bank maintained satisfactory growth of asset and liabilities. Trade
finance and other ancillary businesses recorded considerable growth as per the prevailing economic scenario. The
bank further expanded its branch network and alternate
delivery channels. New IT based products and services
were introduced. Regulatory changes like new loan classification and provisioning policy had an impact on net profit
after provision and non-performing loan ratio. However,
these changes will help the bank to cope up with the
worlds best practices. A detailed financial analysis on
performance of PBL is given in the last part of this chapter.
Business Review
Vision, Mission, Corporate Philosophy, Strategic Priorities
and Corporate Conduct
PBLs vision, mission, corporate philosophy, strategic
priorities and corporate conduct are given in the beginning
of the report. In achieving banks vision, mission and strategic priorities, the highest level of ethical standards are
maintained.
Brief History of PBL
PBL started its journey in the year 1995 with the firm
commitment of excellence customer service with a
difference. Its vision remained to be the best private
commercial bank in Bangladesh in terms of efficiency,

Annual Report 2012 193

Directors Report-2012

capital adequacy, asset quality, sound management and


profitability having strong liquidity. Having recorded progress
in all areas PBL has now established itself as the leading and
strongest of private commercial banks in Bangladesh.
PBL formally launched its business in April 1995 with one
branch at Motijheel Commercial Area, Dhaka. It started its
Islamic banking operations in December of the same year.
It was listed with both the bourses of Bangladesh viz.
Chittagong Stock Exchange and Dhaka Stock Exchange in
1999 and 2000 through initial public offering.
PBL became primary dealer for buying and selling securities
under the license issued by Bangladesh Bank in 2003.
With the aim to offer innovative banking service to the Non
Resident customers, PBL opened its first Offshore Banking
unit in 2007 at DEPZ, Savar, a new dimension in its
customer friendly business activities. The bank opened two
more Offshore Banking Units at CEPZ, Chittagong and
Adamjee EPZ, Narayangonj.
It was registered as Merchant Banker with the Bangladesh
Securities and Exchange Commission, Bangladesh in 2001
for starting its Investment Banking and Advisory services.
As per directives of the Bangladesh Bank, PBL converted
its Merchant Banking and Investment Division (MBID) into a
subsidiary in the name and style "Prime Bank Investment
Ltd." in 2010. With the view of business diversification in
mind, the bank also established another subsidiary
company in the name and style "Prime Bank Securities
Ltd." to provide brokerage services in the stock market.
PBL has also expanded its services cross border with a
view to providing banking services globally. It opened its
first fully owned subsidiary- Prime Exchange Co. Pte Ltd. in
Singapore, which started its operation in 2006 to offer
remittance service to Bangladeshi Nationals living in
Singapore. This is the first ever fully owned Exchange
Company of a Private Sector Bank of Bangladesh
established in Singapore with the approval of the
Bangladesh Bank and the Monetary Authority of
Singapore.
With permission from the Bangladesh Bank and registration
of Financial Services Authority, UK, another fully owned
subsidiary of PBL, Prime Exchange (UK) Limited, started its
operation from August 2010 in the UK along with its three
branches in London, Birmingham and Manchester. The
company is engaged in remittance business.
PBL Finance (Hong Kong) Limited, a fully owned
subsidiary of PBL started its operation in 2011. The main
functions of the subsidiary are to advise, negotiate, confirm
and provide discounting facilities against LCs originating
from PBL and other banks in Bangladesh. The company
also handles remittance business.

Annual Report 2012 194

At present, the bank has been working with 130 branches


including 17 SME branches. The introduction and
expansion of ATM network, Internet Banking, SMS
Banking, Phone Banking, Mobile Banking, Biometric Smart
Card and KIOSK ushered a new era and PBL is now well
poised towards sustainable development.
Principal Activities
The principal activities of the bank are banking and related
businesses. The banking businesses include deposits
taking, cash withdrawal, extending credit to corporate
organizations, organizing syndication deals, retail and
SME financing, trade financing, project financing, lease
and hire purchase financing, credit cards, remittance
services etc. The mode of banking includes conventional
and Islamic banking. The services are provided through
both traditional and modern IT based products. The bank
performs investment banking and advisory services
through Prime Bank Investment Limited and brokerage
services through Prime Bank Securities Limited. Banks
subsidiaries at Singapore and UK are engaged in providing
remittances faculties to expatriate Bangladeshis. PBL
Finance (Hong Kong) Limited advises, negotiates,
confirms and provides discounting facilities against LCs
originating from PBL and other banks in Bangladesh. The
company also handles remittance business. 3 (three)
Off-shore Banking Units offers banking services involving
foreign currency denominated assets and liabilities.
Strategy
The strategic priorities and actions plans as stated in the
banks Strategic Plan (2012-2014) are mentioned below:
Maintain strong capital base by expediting borrowers
rating, concentrating on lending portfolio having lower
capital charge, strengthening Internal Capital
Adequacy Assessment Process (ICAAP).
Continuation of diversification of credit portfolio in
corporate exposure, emphasize on retail, SME and
agricultural loan, address gender issue by providing
loans to women entrepreneurs in SME segment and
emphasize on geographical diversification.
Improvement of deposit mix by maintaining efficient
deposit mix, increase share of low cost and no cost
deposit in total deposit, increase non-funded business.
Maintain adequate level of liquidity through minimizing
asset-liability mismatch and recovery of past due loans.
Diversification of products and services by introducing
IT based innovative products and alternate delivery
channels.
Increase share of inward remittance by expansion of

existing exchange houses, opening of new exchange


houses, increase in domestic network for the
beneficiaries through strategic alliance, development of
new products for the NRBs.
Increase non-funded (non-interest fee based) income.
Extend banking services to un-banked and under
banked people for inclusive growth.
Innovative approach in dealing with complex and large
transactions / fund requirements with strategic alliance.
Improve internal governance through strengthening
good corporate cultures, motivation, training and
supervision as per KPIs in all levels of management.
Strengthening internal control and monitoring.
Conduct BPR (Business Process Re-engineering) in
different functional areas to improve efficiency and
bring in required structural change.
Improvement of IT infrastructure in order to develop new
IT based products and services.

Integrated marketing effort by creating a


customer-orientated culture, Brand archaeology study
(in-depth research for brand strategy development),
Brand Repositioning and extensive marketing for
branding Hasanah.

Development in Human Resources Management


System to motivate and retain the Human Resources
and transform Human Resources to Human Capital
through proper training in every aspects of working
area.
Cost optimization at all levels of operation by ensuring
budgetary control.
Expansion of activities related to Corporate Social
Responsibility and Green Banking.
The bank has been working as per the above stated Strategic
Plan and a lot of developments have taken place which are
emphasized in different chapters of this Annual Report.
Review of Operations, Products and Services of PBL
Review of operations along with products and services of
the bank has been given in Management Discussion and
Analysis, Customer Care and other chapters of this
report.
Offshore Banking
PBL has been offering Offshore Banking facilities through
3 (three) Offshore Banking Units (OBU) located in Dhaka
Export Processing Zone (DEPZ), Chittagong Export
Processing Zone (CEPZ) and Adamjee Export Processing

Zone (AEPZ). The total loans and advances of three OBUs


reached to USD 61.30 million equivalent to Tk 4,895 million
as on December 31, 2012 compared to USD 42.40 million
equivalent to Tk 3,470 million as on December 30, 2011
recording a growth of 41 percent. During the year 2012,
OBUs made operating profit of USD 1.84 million equivalent
to Tk 150.32 million as against USD 1.57 million equivalent
to Tk 119.50 million in 2011 with a growth of 26 percent.
Prime Bank Investment Limited
PBL was registered as Merchant Banker with the
Bangladesh Securities and Exchange Commission,
Bangladesh in 2001 for starting its Investment Banking and
Advisory services. As per directives of the Bangladesh
Bank, PBL converted its Merchant Banking and Investment
Division (MBID) into a subsidiary in the name and style
"Prime Bank Investment Ltd." in 2010. During the year
2012, the company made operating profit of Tk 432.91
million as against Tk 703.40 million in 2011.
Prime Bank Securities Limited
"Prime Bank Securities Ltd." was established to provide
brokerage services in the stock market. During the year
2012, the company made operating profit of Tk 48.10
million as against Tk 14.32 million in 2011.
Prime Exchange Co. Pte. Ltd., Singapore
The company operates with two branches in Desker Road
and Jurong East complying with the regulations of both
Bangladesh Bank and Monetary Authority of Singapore
(MAS). Growth in business of the company was possible
due to marketing efforts, personalized service, efficient
service platform under RemitFast software and enhanced
distribution network. The company significantly expanded
business in 2012. Total volume of remittance was SGD
82.56 million in 2012 compared to SGD 46.86 million in
2011, showing growth of 76.18 percent. The company
made profit before tax of SGD 141,836 in 2012 compared
to SGD 104,427 in 2011 recording a growth of 36 percent.
The company started remittance business through Sonali
Bank Limited in 2012 which is in addition to existing
arrangement with Pubali Bank Limited. This has expanded
the remittance network at domestic market. The
Bangladesh Bank has approved opening of third branch for
which approval of MAS is sought and under process.
Arrangement for remittance of Non-Resident Indians
(NRIs) through HDFC Bank, a reputed bank in India, has
been finalized in 2012.
PBL Exchange (UK) Limited
The company has been operating with three branches in
London, Birmingham and Manchester. The business
volume has marked growth despite stiff competition.

Annual Report 2012 195

Directors Report-2012

Pictures of Some PBL financed SME Projects

A light engineering firm

Manufacturer of kacher churi

A rice mill

A women entrepreneur in handicraft business

A weaving factory

A rubber factory

Annual Report 2012 196

Pictures of Some PBL financed Projects on Agriculture

Khamar (Farm Loan): Financing for Fish Culture at


Mymensingh

Abad (Crop Loan): Financing for Potato Cultivation at


Dinajpur

Abad (Crop Loan): Financing for Banana Cultivation at


Dinajpur

Nabanna RIN: Financing in the Mango Garden availed great


success at Chapai Nawabgonj

Khamar Loan: Financing in the Dairy Farm.

Khamar Loan: Financing in the Poultry Layer

Annual Report 2012 197

Directors Report-2012

Pictures of some PBL Financed Projects

Saidpur to Chillahati Railway project

Teesta Bridge, Rangpur

Repairing of the existing bituminous overlay


at Hazrat Shahjalal International Airport, Dhaka

Under construction of School cum Cyclone


Center at Shoronkhola, Bagerhat

Annual Report 2012 198

The volume of remittance was GBP 19.79 million in 2012


which was 55 percent higher than GBP 12.77 million in
2011. The company incurred operating loss of GBP 115,788
in 2012 compared to operating loss of GBP 150,090 in 2011.
The subsidiary has taken some pragmatic steps for further
acceleration of business growth. If implemented, the
Company is expected to reach a better position in 2013.
PBL Finance (Hong Kong) Limited
Total assets of the company reached to HKD 119.68
million as on December 31, 2012 compared to HKD 56.29
million on December 31, 2011. The company made a net
profit after tax of HKD 4.32 million in 2012 compared to
HKD 3.15 million in 2011. The main functions of the
subsidiary are to advise, negotiate, confirm and provide
discounting facilities against LCs originating from PBL and
other Bangladeshi Banks. The company also handles
remittance business. The company has been run by
executive and officials having diverse experience in foreign
trade business both in Hong Kong and Bangladesh.
Risk Management
PBL has always being in the forefront of implementing
different risk management tools and techniques. The Risk
of any banking institution may be defined as the possibility
of incurring losses, financial or otherwise. Banking business
is in fact a business of risk taking. So it is vital to manage all
these risks efficiently. In todays challenging financial and
economic environment effective risk management is must
for sustainable growth in shareholders value. In banking
arena, key risks include credit, market, operational, liquidity,
reputation risk and other risks like strategic risk,
concentration risk, compliance risk etc. The risk
management strategy of PBL is based on a clear
understanding of various risks, disciplined risk assessment
and measurement procedures and continuous monitoring.
Details of risk management are given in the Risk
Management Chapter of this Annual Report.

capital fund of the bank increased by Tk 1,687 million and


stood at Tk 25,916 million during 2012. Tier-I capital grew by
Tk 1,920 million and stood at Tk 20,664 million during the
year under review. Total consolidated capital fund is
equivalent to 12.64 percent of total risk weighted assets.
More details regarding capital management are given in the
Market Discipline- Disclosures on Risk Based Capital
(Basel-II) chapter of this Annual Report.
Human Resources
PBL is working with a vision of converting human
resources into human capital through appropriate
knowledge, skills, abilities and personal attribution. A
healthy environment has been created where employees
enjoy working with pride. Believing that the human
resources are main elements behind the success and
future sustainability of the bank, the bank is developing and
motivating the workforce with contemporary HR policies
and attractive benefits. The bank is not only offering a job
but also a learning, challenging and rewarding career.
Details of HR related activities are given in Sustainability
Report chapter of this Annual Report.
Corporate Sustainability
In respect of corporate sustainability, PBL has focused on
following specific key areas namely, nation building,
enhancement of market place, promotion of the work
place, support to the community and protection of
environment. PBL established Prime Bank Foundation
and contributes equal to 4 percent of net profit before tax
(Tk 213.41 million in 2012) as donation to this foundation
for undertaking projects in health and education sector.
Details of activities of the foundation are given in Prime
Bank Foundation chapter in this report). Apart from the
CSR activities taken by Prime Bank Foundation, the bank
conducted various CSR activities during the year 2012,
details of which are given in Sustainability Report and
Green Banking chapters of this Annual Report.

Capital Management

Corporate Governance

Capital management of the bank is based on the objective


to maintain an adequate capital base to support the
projected business and regulatory requirement. This is
done by drawing an annual planned business growth
vis--vis capital requirement. PBL recognizes the impact of
shareholders returns on the level of equity and seeks to
maintain a prudent balance between Tier-I and Tier-II
capital. As per directives of the Bangladesh Bank, the
banks are required to maintain capital at 10.00 percent of
risk-weighted assets under Basel-II. Tier-I capital should
be minimum 5 percent of total capital.

The bank adheres strictly to the regulatory guidelines on


corporate governance. Disclosures on corporate
governance are provided in the Corporate Governance
chapter of this Annual Report.

The banks capital fund is divided into two parts- Tier-I and
Tier-II capital. Tier-I includes the equity (paid-up capital,
share premium, statutory reserve and retained earnings) and
Tier-II includes general provision on unclassified loans and
advances, revaluation reserves, unsecured subordinated
debt and exchange equalization account. Total consolidated

Financial Analysis
Total Assets
Consolidated assets of the bank stood at Tk 238,169 million in
2012 as against Tk 200,996 million in 2011. Total assets of PBL
stood at Tk 236,833 million in 2012 from Tk 199,950 million in
2011 registering a growth of 18.45 percent. The increase in
assets of PBL was mainly driven by growth of customer
deposits. The growth of deposits was used for funding growth in
credit and holding of securities for SLR purpose and as a
primary dealer. The economy witnessed a satisfactory growth
scenario in credit and deposits mobilization.
Annual Report 2012 199

Directors Report-2012

Growth of Balance Sheet Items


Outstanding
Taka in Million

2012

Growth of
PBL

Industry
Average
Grouth

2011

236,833

199,950

18.45

17.99

Deposits

182,053

159,816

13.91

20.31

Loans &
Advances

160,890

138,848

15.87

16.24

Assets

Cash and Balance with Bangladesh Bank & its Agent


Consolidated position of the bank is Tk 16,187 million in
2012 as against Tk 13,508 million in 2011. PBLs position
increased from Tk 13,497 million in 2011 to Tk 16,177
million in 2012 depicting a growth of 19.86 percent. The
growth in deposits increased the Cash Reserve
Requirement of the bank which is maintained with the
Bangladesh Bank and its agent.

performing loan of PBL was 3.83 percent which was much


below the industry average of 10.03 percent.
Liabilities
Consolidated total liabilities (excluding equity) of the bank
stood at Tk 217,207 million in 2012 as against Tk 181,733
million in 2011. The total liabilities (excluding equity) of PBL
stood at Tk 216,045 million in 2012 from Tk 180,856 million
in 2011 registering a growth of 19.46 percent. The increase
in liability was mainly due to growth in deposits and
borrowings.
Borrowings from other banks, financial institutions and agents
The borrowing of PBL stood at Tk 20,682 million which
represents PBLs borrowing against PBL Bond, call
borrowing, repo of treasury bills and refinance against SME
loan from Bangladesh Bank. The borrowed amount was
mainly used for purchasing Treasury Bills/Bonds which
were devolved on the bank in excess of SLR requirement.

Balance with other banks and financial institutions

Deposits

Consolidated position of the bank is Tk 1,718 million in 2012


as against Tk 1,580 million in 2011. PBLs position
increased from Tk 1,516 million in 2011 to Tk 1,644 million
in 2012 depicting a growth of 8.44 percent. The positive
growth in PBLs position was due to increase in both number
and balance of nostro accounts maintained with overseas
banks. Adequate funds were maintained with correspondent
banks for payment against LC commitments.

The deposits of PBL grew by 13.91 percent in 2012.


Customer deposits of the bank grew by 14.98 percent. The
growth was supported by branch network and high
standard service provided to customers along with liability
campaign carried out by retail liability team for mobilization
of no cost and low cost deposits. Fixed deposits remained
the main component of deposits contributing 45.37 percent
of the total deposits. Interest cost of deposit increased to
8.75 percent as against 8.15 percent of the previous year
as a result of increase in rates of high cost term deposits
fueled by the liquidity position in the market. Scheme
deposits increased by 19.54 percent over the previous
year. The clientele group of the Bank was individuals,
corporation, NGO, NBFI, government bodies etc.

Investment
PBLs investment increased during the year by Tk 10,498
million and stood at Tk 49,670 million as at 31 December
2012. The bank purchased government treasury bills to
cover the increased SLR requirement. In addition, as a
primary dealer PBL had to buy government treasury
bills/bonds which were devolved by Bangladesh Bank.
Loans and Advances / Investments
Consolidated loans and advances/investments (credit under
Islamic Shar'iah) of the bank grew strongly by 16.39 percent
and stood at Tk 165,042 million in 2012. Loans and advances
of PBL increased by Tk 22,041 million showing a growth of
15.87 percent during 2012. Investment of Islamic banking
branches was Tk 13,670 million and the growth rate was 3.02
percent during 2012. Outstanding loans and advances of
off-shore banking units was Tk 4,895 million showing a
growth of 41.05 percent. Yield on loans and advances of PBL
increased to 15.17 percent from the level of 13.07 percent of
previous year due to increase of lending rates. Concentration
of loans and advances was well managed and details of
credit are given at notes to accounts no 7(a).5. Ratio of non
Annual Report 2012 200

Deposits Mix of PBL

Types of
Deposits

Outstanding
Taka in million
2012

Current &
Contingent
Bills Payable
Savings
Special Notice
Deposits
FDR
Scheme
Deposits
Total Deposits

2011

Growth
%

Mix (%)
2012

2011

27,975 23,934

16.88

15.37 14.98

3,421 2,993
19,189 17,944
8,412 7,938

14.30
6.94
5.97

1.88 1.87
10.54 11.23
4.62 4.97

82,608 73,171
40,448 33,836

12.90
19.54

45.37 45.78
22.22 21.17

182,053 159,816 13.91

Shareholders Equity

Net Interest Income

Consolidated shareholders equity increased by 8.82


percent during the year. PBLs shareholders equity
increased by 8.86 percent during 2012. Paid-up capital of
PBL increased by Tk 1,560 million (bonus share of 2011)
and stood at Tk 9,358 million during 2012. The statutory
reserve increased by Tk 1,067 million during the year and
stood at Tk 6,840 million. Distributable profit stood at Tk
2,072 million during the year. The strong growth in
shareholders equity will help the bank to expand its business.

PBLs net interest income increased by 33.26 percent


during 2012. Net interest income was the main contributor
to operating income, accounting for 40.11 percent followed
by investment income and non-interest income.

Analysis of Income Statement of PBL


Sl
No

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Particulars

Interest income
Interest expense
Net interest income
Investment income
Non-interest income
Total operating income
Total operating expenses
Profit before tax and provision
General provision on loans
Provision for classified loans
General provision on offbalance sheet items
Provision for diminution in
value of investments
Other provisions
Net profit before tax
Provision for tax including
deferred tax
Net profit after tax

2012

Taka in million
%
Change

2011

22,822 16,709 36.58


(17,410) (12,648) 37.65
5,411
4,061 33.26
4,633
4,157 11.45
3,447
3,341
3.18
13,492 11,559 16.72
(4,941) (4,132) 19.58
8,551
7,427 15.13
(240)
(305) (21.31)
(1,490)
(226) 559.29
(140)
(130)
7.69
(44)

(1,302)
5,335
2,636

6,766 (21.15)
3,132 (15.83)

2,699

3,634 (25.73)

Interest Income
PBLs interest income increased by 36.58 percent during
2012. Interest earned from loan and profit earned on
investment remained the principal component of interest
income. Yield on loans and advances increased to 15.38
percent in 2012 from 13.06 percent in the previous year
due to increase in rates of interest on lending and drives for
recovery of non-performing loans.
Interest Expense
On the other hand, PBLs interest expense increased by 37.65
percent during 2012. Interest cost of deposits was the main
component of interest expenses whereas interest cost of
borrowings also had a significant impact in 2012. Interest cost
of deposits increased to 8.75 percent in 2012 from 8.15 percent
in the previous year due to increase in rates of interest on
deposits arising from overall liquidity pressure in the market.
Moreover, the liquidity pressure compelled the bank, a Primary
Dealer, to go for mobilization of additional high cost deposits
and additional borrowings to purchase treasury bills / bonds
which were devolved by the Bangladesh Bank. This caused
interest expense on deposits to increase by 30.83 percent and
interest expense on borrowings to increase by 112.41 percent.

Investment Income
PBLs investment income consists of interest / discount
earned on treasury bills / bonds, gain on government security
trading, dividend received on shares and capital gain from
sale of securities of listed companies. Investment income
increased by Tk 476 million during the year registering a
growth of 11.45 percent over the previous year, accounted for
34.34 percent of the operating income. Since PBL is a primary
dealer, securities were devolved by the Bangladesh Bank in
excess of SLR requirement. As such interest/discount income
became the main contributor to investment income.
Non-Interest Income
Non-interest income of PBL increased by 3.18 percent
during the year. Commission and exchange based income of
the bank decreased by 9.65 percent during the year due to
fall in import business and lower spread between buying and
selling rates of foreign currencies. However, other charges
and recoveries increased during the year registering a
growth of 56.11 percent as a result of realization of charges
against banks superior services provided which contributed
to overall growth of non-interest income.
Total Operating Income
Due to the reasons explained above, total operating income
of the bank grew by 16.72 percent during the year and
stood at Tk 13,492 million.
Total Operating Expense
Total operating expenses of PBL increased by 19.58
percent during the year mainly due to increase in
personnel and other operating expenses. To match with
the growth of SME and retail business and branch
expansion a number of manpower was recruited along
with sales force. Moreover, to keep the salary package
competitive in the industry, there was upward revision of
the packages in the last quarter of 2011 which had full
effect in personnel expenses in the year 2012. However,
the enhancement of the package will motivate our
employees to do even better in future and targeted
increase of business especially in SME and retail
segments will benefit the bank in broad spectrum. PBL
also made donation amounting to Tk 213.41 million to
Prime Bank Foundation to carry on various CSR activities.
PBL also focused on developing brand image and
increased promotional and advertisement expenses. This
strategy added value to the business. The banks cost
income ratio was 36.62 percent in 2012 which slightly
increased from 35.75 percent in 2011 due to increased
investment in branch expansion and development of IT
infrastructure. Considering the factors stated above, the
ratio indicates the satisfactory operating efficiency of the
bank as per the industry standard.
The productivity of the employee continued to grow which
is evident from the following ratio:

Annual Report 2012 201

Directors Report-2012

Taka in million

Particulars
Income per employee

2012
5.30

5.04

Profit before provision per employee

3.36

3.24

Assets per employee

93.09

87.24

Expense per employee

Profit before tax per employee

1.94

2.10

2011

1.80

2.95

Provision for Classified Loans


The provision against classified loans increased during the
year due to change in loan classification and provisioning
policy by the Bangladesh Bank. Total provision against
classified loan was Tk 1,490 million during 2012 as against Tk
226 million of previous year. Provision adequacy ratio was
100.15 percent against industry average of 93.89 percent.
NPL ratio

Industry average of NPL ratio


Provision adequacy

2012

3.83%

10.03%

100.15%

2011

1.37%

6.10%

106.43%

Industry average for provision


93.89%
103.04%
Recovery
adequacyagainst classified and written-off Loans

PBL was able to recover Tk 460.24 million against classified loans


and Tk 85.05 million against written-off loans during the year 2012.
General Provision
Provision against unclassified loans was made to the tune
of Tk 240 million durng 2012 as against Tk 305 million of
previous year. General provision requirement on
off-balance sheet outstanding had to be provided Tk 140
million as against Tk 130 million of previous year. The bank
was not required to make any provision for off-Shore
banking units during the year. This is to be noted that
general provision is regarded as Tier-II capital of the bank
and provides safeguard against future default as well as
supports business growth by strengthening the capital
base.
Adequate provision was made to the tune of Tk 44 million
for diminution in value of investment in shares arising from
the volatile capital market.
Other Provisions
Upon detection of irregularities assessing the recovery
prospects, the bank made full provision against protested bills
and claims originated during the course of banking operations
amounting to Tk 1,302 million.
Net Profit before Tax
After making above provisions, net profit before tax of PBL
stood at Tk 5,335 million registering a negative growth of 21.15
percent due to higher provision requirement due mainly
change in loan provisioning policy by the Bangladesh Bank

Net Profit after Tax


Net profit after tax stood at Tk 2,699 million registering a
negative growth of 25.73 percent during 2012. Earnings per
share decreased to Tk 2.88 as at December 31, 2012 from
Tk 3.88 in the previous year. Average ROA and ROE stood
at 1.24 percent and 13.53 percent respectively.
Statutory Reserve

As per Bank Company Act 1991, 20 percent of profit before


tax is required to be transferred to statutory reserve. As
such an amount of Tk 1,067 million has been transferred to
statutory reserve.
Dividends

Thus fund available for distribution is Tk 2,072 million (Tk


1,632 million from current year profit plus Tk 440 million
from retained earnings of previous year). In order to
maintain a satisfactory capital adequacy ratio of the bank,
the Board decided to recommend 10 percent stock dividend
and 10 percent cash dividend for the year 2012.
Satisfactory capital fund will enable the bank to increase
business activities.
Shareholders Value

PBL remains fully committed to delivery of higher


shareholders value. The high profitability track record
underpins the value the shareholders derived from
investing in the shares of PBL. The earnings per share
decreased and stood at Tk 2.88 and return on average
equity stood at Tk 13.53 during 2012. Market capitalization
stood at Tk 34,624 million as at December 2012 holding the
9th position among the listed companies and 2nd position
among the listed banks in the Dhaka Stock Exchange. PBL
has been rated as 3rd among the listed companies as per
Performance of DSE-20 Index. Share of PBL in market
capitalization was 1.89 percent.
Meeting of the Board

During the year 2012, 19 Board Meetings were held. Details


are at Annexure-1.
Re-appointment of Auditors

Hoda Vasi Chowdhury & Co and Howladar Yunus & Co were


appointed as external auditors of the bank for the year 2012
in the 17th Annual General Meeting held on 29th March
2012. They have expressed their willingness to continue as
external auditors for the year 2013. As per the Bangladesh
Bank guidelines they are eligible for re-appointment.
Annual General Meeting

Annual General Meeting will be held on 31st March 2013 at


Bashundhara Convention Center at 10.00 a.m. The
Directors Report and financial statements were approved
at 393rd Board Meeting held on 28th February 2013 for
presentation to the shareholders.
On behalf of the Board of Directors

Provision for Income Tax


Provision against current year income tax of PBL was Tk
2,450 million compared to Tk 2,907 million of preceding
year. Deferred tax provision decreased to Tk 186 million
from Tk 225 million of previous year.

Annual Report 2012 202

Md. Shirajul Islam Mollah


Chairman

Some PBL Activities during 2012

PBL family members rendering chorus Aso Hey Boishakh in


the early hour of Pohela Boishakh - 1419

Chairman Mr. Md. Shirajul Islam Mollah inaugurating 17th


anniversary celebration of the Bank.

Exchange of Mou with Hajj Agencies Association of Bangladesh


(HAAB)

Launching of "My First Account", School Banking for the


students.

Agreement signing ceremony with CIMB Islamic Bank of


Malaysia

Seminar on Role of Waqf in Socio Economic Development


followed by Iftar Mahfil in progress.

Annual Report 2012 203

Some PBL Activities during 2012

A PBL sponsored International Seminar Positioning Bangladesh: Branding for Business.

Signing ceremony of license agreement with Japan Credit


Bureau (JCB) International Co. Ltd.

Launching of Mobile Banking Service Easy Cash.

Press conference on the eve of launching Prime Cash

Corporate Agreement signing ceremony with Metlife Alico,


Bangladesh

Closing ceremony of training course organized by PBL HR


Training & Development Center.

Annual Report 2012 204

Certificate on compliances of conditions of The Corporate


Governance guidelines to the shareholders of Prime Bank Limited

We have examined the compliances of conditions of The Corporate Governance guidelines of the
Bangladesh Securities and Exchange Commission (BSEC) by Prime Bank Limited (the Bank)
as stipulated in clause 7(i) of the BSEC notification no SEC/CMRRCD/2006-158/134/Admin/44
dated 7 August 2012.
The compliances of conditions of The Corporate Governance guidelines as stated in the aforesaid
notification and reporting of the status of compliance is the responsibility of the Banks
Management. Our examination for the purpose of issuing this certification was limited to the
checking of procedures and implementations thereof, adopted by the Bank for ensuring the
compliance of conditions of corporate governance and correct reporting of compliance status on
the attached statement on the basis of evidence gathered and representation received.
To the best of our information and according to the explanations given to us, we certify that,
except as reported on the attached status of compliance statement, the Bank has complied with
the conditions of corporate governance stipulated in the above mentioned BSEC notification
dated 7 August 2012.

Manzoor Alam, FCA


Senior Partner
ICAB Enrolment Number 132
For, Hoda Vasi Chowdhury & Co.
Chartered Accountants

Jahidur Rahman, FCA


Partner
ICAB Enrolment Number 860
For, HowladarYunus & Co
Chartered Accountants

Dhaka, February 28, 2013

Annual Report 2012 205

Auditors Report
to the shareholders of Prime Bank Limited
We have audited the accompanying consolidated financial statements of Prime Bank Limited and its subsidiaries (together
referred to as the Group) as well as standalone financial statements of Prime Bank Limited (the Bank) for the year ended
31 December 2012 which comprise the balance sheet, profit and loss account, statement of changes in equity and cash
flow statement for the year then ended, and a summary of significant accounting policies, other explanatory notes and
information.
Managements responsibilities for the Consolidated Financial Statements
Management is responsible for the preparation of consolidated financial statements that give a true and fair presentation of
these in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS)
as explained in note 2, the Bank Companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the
Companies Act 1994 and other applicable laws and regulations, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with relevant ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys
internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements of the Group and the financial statements of the Bank.
The financial statements of the Banks five subsidiaries, namely Prime Exchange Co. Pte. Ltd. (Singapore), Prime Exchange
(UK) Ltd., PBL Finance (Hong Kong) Ltd., Prime Bank Investment Ltd. and Prime Bank Securities Ltd. reflects total assets
of Tk. 10,458,486,721 as at 31 December 2012 and total revenue of Tk.1,327,577,073 for the year ended 31 December
2012. These financial statements have been audited by other component auditors who have expressed unqualified audit
opinion and accepted by us for the audit of the Groups consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the financial statements have been prepared in accordance with Bangladesh Accounting Standards (BAS)
and Bangladesh Financial Reporting Standards (BFRS) as explained in note 2, give a true and fair view of the financial
position of the Group and the Bank as at 31 December 2012 and of the results of their financial performance and their
cash flows for the year then ended and comply with the applicable sections of the Bank Companies Act 1991, the rules and
regulations issued by the Bangladesh Bank, the Companies Act 1994, the Securities and Exchange Rules 1987 and other
applicable laws and regulations.
Annual Report 2012 206

We also report that:


a)

we have obtained all the information and explanations which to the best of our knowledge and belief were necessary
for the purposes of our audit and made due verification thereof;

b)

in our opinion, proper books of account as required by law have been kept by the Bank so far as it appeared from
our examination of those books and proper returns adequate for the purpose of our audit have been received from
branches not visited by us;

c)

the Banks balance sheet and profit and loss account together with the annexed notes 1 to 50 dealt with by the report
are in agreement with the books of account and returns;

d)

the expenditure incurred was for the purpose of the Banks operations;

e)

the financial position of the Bank as at 31 December 2012 and the profit for the year then ended have been properly
reflected in the financial statements, the financial statements have been prepared in accordance with the generally
accepted accounting principles;

f)

the financial statements have been drawn up in conformity with the Bank Companies Act 1991 and in accordance
with the accounting rules and regulations issued by the Bangladesh Bank;

g)

adequate provisions have been made for advances and other assets which are in our opinion, doubtful of recovery;

h)

the financial statements conform to the prescribed standards set in the accounting regulations issued by the
Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh;

i)

the records and statements submitted by the branches have been properly maintained and consolidated in the
financial statements;

j)

the information and explanations required by us have been received and found satisfactory;

k)

over 80% of the risk weighted assets have been reviewed by us spending over 5,000 person hours;

l)

Capital adequacy Ratio (CAR) as required by the Bangladesh Bank has been maintained adequately during the year.

Hoda Vasi Chowdhury & Co


Chartered Accountants

Howladar Yunus & Co


Chartered Accountants

Dhaka, 28 February 2013

Annual Report 2012 207

Consolidated Balance Sheet


as at 31 December 2012
Particulars

Notes

2012

Amount in Taka

2011

PROPERTY AND ASSETS


Cash

In hand (including foreign currencies)


Balance with Bangladesh Bank and its agent bank (s)
(including foreign currencies)
Balance with other banks and financial institutions
In Bangladesh
Outside Bangladesh

Money at call and short notice

Investments
Government
Others

Loans, advances and lease /investments

2,069,226,315

1,474,979,105

14,117,939,937
16,187,166,252

12,032,573,269
13,507,552,374

251,534,389
1,466,724,570
1,718,258,959

382,122,372
1,197,482,195
1,579,604,567

44,936,697,967
3,065,827,910
48,002,525,877

34,395,651,805
3,120,176,474
37,515,828,279

Loans, cash credits, overdrafts etc./ investments

156,374,907,982

134,406,227,505

Bills purchased and discounted

8,667,419,387
165,042,327,369
4,419,804,836
2,798,965,983
238,169,049,276

7,395,421,459
141,801,648,964
4,033,403,880
2,557,642,372
200,995,680,436

21,149,348,118

10,969,847,805

27,294,077,412
3,421,438,111
19,188,831,632
132,058,072,695
181,962,419,850

23,625,794,636
2,992,596,076
17,943,888,911
115,250,080,280
159,812,359,903

14,095,474,132
217,207,242,100

10,950,827,275
181,733,034,983

14.2

9,357,714,690

7,798,095,580

14.9
15
16
17
18

67
6,839,527,566
42,034,865
251,603,567
4,510,188
2,225,185,837
20,961,807,176
238,169,049,276

63
5,772,509,105
259,338,544
251,603,567
8,058,632
2,931,809,566
19,262,645,453
200,995,680,436

Fixed assets including premises, furniture and fixtures


Other assets
Non - banking assets
Total assets

9
10

LIABILITIES AND CAPITAL


Liabilities
Borrowings from other banks, financial institutions and agents
Deposits and other accounts
Current / Al-wadeeah current deposits
Bills payable
Savings bank / Mudaraba savings deposits
Term deposits / Mudaraba term deposits
Bearer certificate of deposit
Other deposits
Other liabilities
Total liabilities
Capital / Shareholders equity
Paid -up capital
Share premium

Minority Interest
Statutory reserve
Revaluation gain / loss on investments
Revaluation reserve
Foreign currency translation gain
Other reserve
Surplus in profit and loss account / Retained earnings
Total Shareholders equity
Total liabilities and Shareholders equity

Annual Report 2012 208

11
12

13

14.8

19

2,241,230,396

2,241,230,396

Consolidated Balance Sheet


as at 31 December 2012
Particulars

Notes

2012

Amount in Taka

2011

OFF - BALANCE SHEET EXPOSURES


Contingent liabilities
Acceptances and endorsements
Letters of guarantee
Irrevocable letters of credit
Bills for collection
Other contingent liabilities

20
20.1
20.2
20.3
20.4

Other commitments
Documentary credits and short term trade -related transactions
Forward assets purchased and forward deposits placed
Undrawn note issuance and revolving underwriting facilities
Undrawn formal standby facilities , credit lines and other commitments
Liabilities against forward purchase and sale

Total Off-Balance Sheet exposures including contingent liabilities

26,979,335,910
42,846,572,774
28,353,752,325
10,007,661,530
108,187,322,539

28,963,416,330
34,955,284,339
29,706,663,305
7,429,741,406
101,055,105,380

108,187,322,539

101,055,105,380

These financial statements should be read in conjunction with the annexed notes 1 to 50.

Chairman

Director

Director

Managing Director

See annexed auditors report to the Shareholders of the date.

Hoda Vasi Chowdhury & Co


Chartered Accountants

Howladar Yunus & Co


Chartered Accountants

Dhaka, 28 February 2013

Annual Report 2012 209

Consolidated Profit and Loss Account


for the year ended 31 December 2012
Particulars

Notes

2012

Amount in Taka

2011

Interest income / profit on investments

22

23,807,748,522

17,546,811,157

Interest / profit paid on deposits, borrowings, etc.

23

(17,987,629,591)

(13,046,539,824)

5,820,118,931

4,500,271,333

Net interest / net profit on investments


Investment income

24

4,451,946,974

4,224,206,552

Commission, exchange and brokerage

25

2,628,137,057

2,917,119,847

Other operating income

26

1,101,978,717

798,991,288

14,002,181,679

12,440,589,020

Total operating income (A)


Salaries and allowances

27

2,780,540,201

2,131,614,239

Rent, taxes, insurance, electricity, etc.

28

474,283,014

403,458,311

Legal expenses

29

32,391,528

18,559,956

Postage, stamp, telecommunication, etc.

30

134,466,650

138,050,963

Stationery, printing, advertisements, etc.

31

308,479,135

303,104,472

Managing Directors salary and fees

32

11,448,000

9,192,067

Directors fees

33

5,217,746

3,699,624

Auditors fees

34

1,522,518

1,312,505

Charges on loan losses

35

Depreciation and repair of Banks assets

36

345,856,437

284,073,883

Other expenses

37

1,068,015,016

1,010,684,627

Total operating expenses (B)

5,162,220,245

4,303,750,647

Profit / (loss) before provision (C=A-B)

8,839,961,434

8,136,838,373

Specific provision

1,490,000,000

226,000,000

General provision

240,000,000

305,000,000

140,000,000

130,000,000

1,870,000,000

661,000,000

Provision for diminution in value of investments

(27,053,710)

389,941,266

Provision for impairment of client margin loan

179,183,361

Other provisions

1,301,942,300

Total provision (D)

3,324,071,951

1,050,941,266

Total profit / (loss) before taxes (C-D)

5,515,889,483

7,085,897,107

2,629,200,771

3,171,778,786

186,283,025

225,165,885

2,815,483,796

3,396,944,671

2,700,405,687

3,688,952,436

591,798,618

596,047,115

3,292,204,305

4,284,999,551

Provision for loans / investments

38

Provision for Off-Shore Banking Units


Provision for off-balance sheet exposures

Provision for taxation:


Current tax

39

Deferred tax
Net profit after taxation
Retained earnings brought forward from previous year

Annual Report 2012 210

19.1

Consolidated Profit and Loss Account


for the year ended 31 December 2012
Particulars

Notes

2012

Amount in Taka

2011

Appropriations
Statutory reserve

1,067,018,461

1,353,189,982

Minority interest

General reserve

Retained surplus

19

Earnings per share (EPS)

44

1,067,018,468

1,353,189,985

2.89

3.94

2,225,185,837

2,931,809,566

These financial statements should be read in conjunction with the annexed notes 1 to 50.

Chairman

Director

Director

Managing Director

See annexed auditors report to the Shareholders of the date

Hoda Vasi Chowdhury & Co

Howladar Yunus & Co

Chartered Accountants

Chartered Accountants

Dhaka, 28 February 2013

Annual Report 2012 211

Consolidated Cash Flow Statement


for the year ended 31 December 2012
Particulars
A)

Notes

2012

Amount in Taka

2011

Cash flows from operating activities


Interest receipts in cash

26,869,276,024

19,000,177,647

Interest payments

(17,771,734,765)

(11,980,804,137)

Dividend receipts

14,477,350

467,592,508

2,628,137,056

2,916,034,666

85,048,984

110,069,208

(2,654,658,200)

(2,124,206,268)

(688,608,205)

(579,510,579)

(1,992,688,589)

(2,761,312,666)

Fees and commission receipts in cash


Recoveries of loans previously written off
Cash payments to employees
Cash payments to suppliers
Income taxes paid
Receipts from other operating activities

40

1,918,600,187

1,913,154,655

Payments for other operating activities

41

(1,453,178,417)

(1,474,437,464)

6,954,671,425

5,486,757,570

1,157,486,973

(4,885,593,657)

(23,651,758,398)

(23,078,063,101)

(12,968,997,333)

(10,746,999,469)

9,125,817,450

8,282,513,358

22,559,005,948

31,179,063,572

428,842,035

554,840,857

685,431,691

1,557,180,763

(2,664,171,634)

2,862,942,323

4,290,499,791

8,349,699,893

5,000,000

5,000,000

(2,591,181)

(416,281,955)

(676,877,625)

(2,514,084,521)

(5,720,867)

(5,089,558)

3,893,813

240,300

(676,295,860)

(2,930,215,734)

Cash generated from operating activities before


changes in operating assets and liabilities
Increase / (decrease) in operating assets and liabilities
Statutory deposits
Purchase of trading securities (Treasury bills)
Loans and advances to other banks
Loans and advances to customers
Other assets

42

Deposits from other banks / borrowings


Deposits from customers
Other liabilities account of customers
Trading liabilities
Other liabilities

Net cash from operating activities


B)

43

Cash flows from investing activities


Debentures
Payments for purchases of securities
Purchase of property, plant and equipment
Payment against lease obligation
Proceeds from sale of property, plant and equipment
Net cash used in investing activities

Annual Report 2012 212

Consolidated Cash Flow Statement


for the year ended 31 December 2012
Particulars

C)

Notes

2012

Amount in Taka

2011

Cash flows from financing activities


Receipts from issue of sub-ordinated bond

Receipts from issue of ordinary share including premium net off Tax

Dividend paid

(779,809,558)

(744,474,022)

Net cash used in financing activities

(779,809,558)

(744,474,022)

D)

Net increase / (decrease) in cash and cash equivalents (A+ B + C)

2,834,394,373

4,675,010,137

E)

Effects of exchange rate changes on cash and cash


equivalents

(13,654,203)

(251,323,912)

F)

Cash and cash equivalents at beginning of the year

15,089,790,941

10,666,104,716

G)

Cash and cash equivalents at end of the year (D+E+F)

17,910,531,111

15,089,790,941

2,069,226,315

1,474,979,105

14,117,939,937

12,032,573,269

1,718,258,959

1,579,604,567

Money at call and short notice

Reverse repo

5,105,900

2,634,000

17,910,531,111

15,089,790,941

Cash and cash equivalents at end of the year


Cash in hand (including foreign currencies)
Balance with Bangladesh Bank and its agent bank (s)
(including foreign currencies)
Balance with other banks and financial institutions

Prize bonds (note-6a)

These financial statements should be read in conjunction with the annexed notes 1 to 50.

Chairman

Director

Director

Managing Director

Dhaka, 28 February 2013

Annual Report 2012 213

Annual Report 2012 214


-

Surplus / (deficit) on account of revaluation of investments

Currency translation differences

Net gains and losses not recognized in the income statement

Net profit for the year

9,357,714,690
7,798,095,580

Issue of share capital-right share

Appropriation made during the year

Balance as at 31 December 2012

Balance as at 31 December 2011

Dhaka, 28 February 2013

Chairman

Minority interest

5,772,509,105

6,839,527,566

1,067,018,461

5,772,509,105

5,772,509,105

2,241,230,396

2,241,230,396

2,241,230,396

2,241,230,396

Taka

Share
premium

63

67

63

63

Taka

Minority
interest

251,603,567

251,603,567

251,603,567

251,603,567

Taka

Revaluation
reserve

259,338,544

42,034,865

Director

Director

42,034,865

151,271,024

(368,574,703)

259,338,544

259,338,544

Taka

Revaluation
gain / loss on
investments

These financial statements should be read in conjunction with the annexed notes 1 to 50.

Cash dividend

1,559,619,110

Adjustment of last year revaluation gain on investments

Dividends (Bonus shares)

7,798,095,580

7,798,095,580

Taka

Taka

Surplus / (deficit) on account of revaluation of properties

Restated balance

Changes in accounting policy / Last years profit

Balance as at 1 January 2012

Particulars

Statutory
reserve

Paid up
capital

Consolidated Statement of Changes in Equity


for the year ended 31 December 2012

8,058,632

4,510,188

4,510,188

(3,548,444)

8,058,632

8,058,632

Taka

F.C.
translation
gain

Taka

Total

(4,130,727)

151,271,024

(368,574,703)

(779,809,558)

2,700,405,687

Managing Director

2,931,809,566 19,262,645,453

2,225,185,837 20,961,807,176

(1,067,018,461)

(4)

(779,809,558)

(1,559,619,110)

2,700,405,687

2,931,227,283 19,041,211,047

(582,283)

2,931,809,566 19,262,645,453

2,931,809,566 19,262,645,453

Taka

Retained
earnings

Balance Sheet
as at 31 December 2012
Particulars

Notes

2012

Amount in Taka
2011 (Restated)

PROPERTY AND ASSETS


Cash

In hand (including foreign currencies)

3a

Balance with Bangladesh Bank and its agent bank (s)


(including foreign currencies)

Balance with other banks and financial institutions


In Bangladesh

4a

Outside Bangladesh
5

Investments

6a

Others

Loans, advances and lease / investments

Loans, cash credits, overdrafts, etc./ investments


Bills purchased and discounted

Fixed assets including premises, furniture and fixtures

Other assets

Non - banking assets

1,464,103,675

14,117,939,937

12,032,573,269

16,177,443,513
251,389,642

8a
9a

10a

Total assets

377,477,308

1,138,637,962

44,936,697,967

34,395,651,805

49,670,435,192

39,172,298,623

153,440,706,958

132,028,898,117

160,889,848,563

138,848,430,008

4,087,797,994

2,941,514,147

236,833,005,579

199,950,493,482

20,681,977,457

10,969,847,805

27,373,823,258

23,628,852,206

19,188,831,632

17,943,888,911

4,733,737,225

7a

13,496,676,944

1,392,741,405
1,644,131,047

Money at call and short notice

Government

2,059,503,576

7,449,141,605
4,363,349,270
-

1,516,115,270

4,776,646,818

6,819,531,891
3,975,458,490

LIABILITIES AND CAPITAL


Liabilities

Borrowings from other banks, financial institutions and agents


Deposits and other accounts

Current / Al-wadeeah current deposits

11a

12a.1.c

Bills payable

3,421,438,111

Savings bank / Mudaraba savings deposits

Term deposits / Mudaraba term deposits


Bearer certificate of deposit

Other liabilities
Total liabilities

Capital / Shareholders equity


Paid up capital

Share premium

Statutory reserve

13a

13,311,117,157

159,815,720,972

10,069,949,491

14 .2

9,357,714,690

7,798,095,580

15

6,839,527,566

5,772,509,105

17

251,603,567

251,603,567

14.8

18a

Surplus in profit and loss account / Retained earnings

19a

Total liabilities and Shareholders equity

180,855,518,268

Foreign currency translation gain

Total Shareholders equity

216,045,966,674

16a

Other reserve

115,250,383,779

182,052,872,060

Revaluation gain / (loss) on investments


Revaluation reserve

132,068,779,059

Other deposits

2,992,596,076

2,241,230,396
19,719,692

5,015,711
-

2,072,227,283

20,787,038,905

236,833,005,579

2,241,230,396
243,159,736

8,694,724
-

2,779,682,107

19,094,975,214

199,950,493,482

Annual Report 2012 215

Balance Sheet
as at 31 December 2012
Particulars

Notes

2012

Amount in Taka
2011 (Restated)

OFF - BALANCE SHEET EXPOSURES


Contingent liabilities

20a

Acceptances and endorsements

20a.1

26,979,335,910

28,963,416,330

Letters of guarantee

20a.2

42,846,572,774

34,955,284,339

Irrevocable letters of credit

20a.3

28,353,752,325

29,706,663,305

Bills for collection

20a.4

10,007,661,530

7,429,741,406

108,187,322,539

101,055,105,380

Documentary credits and short term trade -related transactions

Forward assets purchased and forward deposits placed

Undrawn note issuance and revolving underwriting facilities

Undrawn formal standby facilities , credit lines and other commitments

Liabilities against forward purchase and sale

108,187,322,539

101,055,105,380

Other contingent liabilities

Other commitments

Total Off-Balance Sheet exposures including contingent liabilities

These financial statements should be read in conjunction with the annexed notes 1 to 50.

Chairman

Director

Director

Managing Director

See annexed auditors report to the Shareholders of the date.

Hoda Vasi Chowdhury & Co.

Howladar Yunus & Co.

Chartered Accountants

Chartered Accountants

Dhaka, 28 February 2013

Annual Report 2012 216

Profit and Loss Account


for the year ended 31 December 2012
Particulars

Notes

2012

Amount in Taka
2011 (Restated)

Interest income / profit on investments

22a

22,821,500,674

16,708,767,903

Interest / profit paid on deposits, borrowings, etc.

23a

(17,410,286,124)

(12,647,982,518)

5,411,214,550

4,060,785,385

Net interest / net profit on investments


Investment income

24a

4,633,326,302

4,157,293,110

Commission, exchange and brokerage

25a

2,429,444,757

2,688,928,970

Other operating income

26a

1,017,962,459

652,092,975

13,491,948,068

11,559,100,440

Total operating income (A)


Salaries and allowances

27a

2,673,292,974

2,057,720,184

Rent, taxes, insurance, electricity, etc.

28a

430,873,148

367,568,017

Legal expenses

29a

28,570,418

16,312,942

Postage, stamp, telecommunication, etc.

30a

127,601,535

132,056,013

Stationery, printing, advertisements, etc.

31a

304,366,321

298,731,953

Managing Directors salary and fees

32

11,448,000

9,192,067

Directors fees

33a

5,152,571

3,569,924

Auditors fees

34a

575,000

522,500

Charges on loan losses

35

Depreciation and repair of Banks assets

36a

331,708,120

271,478,216

Other expenses

37a

1,027,527,828

974,998,715

Total operating expenses (B)

4,941,115,915

4,132,150,531

Profit / (loss) before provision (C=A-B)

8,550,832,153

7,426,949,909

Specific provision

1,490,000,000

226,000,000

General provision

240,000,000

305,000,000

140,000,000

130,000,000

1,870,000,000

661,000,000

43,797,548

Other provisions

1,301,942,300

Total provision (D)

3,215,739,848

661,000,000

Total profit / (loss) before taxes (C-D)

5,335,092,305

6,765,949,909

2,449,800,000

2,907,320,000

186,300,000

224,500,000

2,636,100,000

3,131,820,000

2,698,992,305

3,634,129,909

440,253,439

498,742,179

3,139,245,744

4,132,872,089

Provision for loans / investments

38a

Provision for Off-Shore Banking Units


Provision for off-balance sheet exposures

Provision for diminution in value of investments

Provision for taxation


Current tax

39a

Deferred tax

Net profit after taxation


Retained earnings brought forward from previous years

19.1a

Annual Report 2012 217

Profit and Loss Account


for the year ended 31 December 2012
Particulars

Notes

2012

Amount in Taka
2011 (Restated)

Appropriations
Statutory reserve

1,067,018,461

1,353,189,982

1,067,018,461

1,353,189,982

General reserve

Retained surplus

19a

2,072,227,283

2,779,682,107

Earnings per share (EPS)

44a

2.88

3.88

These financial statements should be read in conjunction with the annexed notes 1 to 50.

Chairman

Director

Director

Managing Director

See annexed auditors report to the Shareholders of date

Hoda Vasi Chowdhury & Co

Howladar Yunus & Co

Chartered Accountants

Chartered Accountants

Dhaka, 28 February 2013

Annual Report 2012 218

Cash Flow Statement


for the year ended 31 December 2012z
Particulars
A)

Notes

2012

Amount in Taka

2011

Cash flows from operating activities


Interest receipts in cash

25,883,028,176

18,162,184,424

Interest payments

(17,194,391,298)

(11,585,290,180)

Dividend receipts

14,477,350

467,592,508

2,429,444,756

2,688,968,185

85,048,984

110,069,208

(2,554,040,973)

(2,066,912,251)

(683,868,903)

(576,159,881)

(1,992,688,589)

(2,761,312,666)

Fees and commission receipts in cash


Recoveries of loans previously written off
Cash payments to employees
Cash payments to suppliers
Income taxes paid
Receipts from other operating activities

40a

1,775,963,262

1,698,153,270

Payments for other operating activities

41a

(1,355,446,797)

(1,369,935,123)

6,407,525,968

4,767,357,494

1,157,486,973

(4,885,593,657)

(22,041,418,555)

(22,791,905,847)

(13,647,964,993)

(10,643,375,389)

8,658,446,788

8,282,513,358

22,646,097,089

31,097,395,141

428,842,035

554,840,857

786,096,248

1,085,124,521

(2,012,414,415)

2,698,998,984

4,395,111,553

7,466,356,478

5,000,000

5,000,000

Payments for purchases of securities

(127,663,428)

(29,996,467)

Purchase of property, plant and equipment

(666,354,778)

(2,505,029,178)

(5,720,867)

(5,089,558)

3,893,813

240,300

(790,845,260)

(2,534,874,903)

Cash generated from operating activities before changes in


operating assets and liabilities
Increase / (decrease) in operating assets and liabilities
Statutory deposits
Purchase of trading securities (Treasury bills)
Loans and advances to other banks
Loans and advances to customers
Other assets

42a

Deposits from other banks / borrowings


Deposits from customers
Other liabilities account of customers
Trading liabilities
Other liabilities

Net cash from operating activities


B)

43a

Cash flows from investing activities


Debentures
Proceeds from sale of securities

Payment against lease obligation


Proceeds from sale of property, plant and equipment
Net cash used in investing activities

Annual Report 2012 219

Cash Flow Statement


for the year ended 31 December 2012z
Particulars
C)

Notes

2012

Amount in Taka

2011

Cash flows from financing activities


Receipts from issue of sub-ordinated bond

Receipts from issue of ordinary share including premium net off Tax

Dividend paid

(779,809,558)

(288,818,355)

Net cash used in financing activities

(779,809,558)

(288,818,355)

D)

Net increase / (decrease) in cash and cash equivalents (A+B+C)

2,824,456,735

4,642,663,220

E)

Effects of exchange rate changes on cash and cash equivalents

(13,202,489)

(243,265,280)

F)

Cash and cash equivalents at beginning of the year

15,015,426,214

10,616,028,274

G)

Cash and cash equivalents at end of the year (D+E+F)

17,826,680,460

15,015,426,214

2,059,503,576

1,464,103,675

14,117,939,937

12,032,573,269

1,644,131,047

1,516,115,270

Money at call and short notice

Reverse repo

5,105,900

2,634,000

17,826,680,460

15,015,426,214

Cash and cash equivalents at end of the year


Cash in hand (including foreign currencies)
Balance with Bangladesh Bank and its agent bank (s)
(including foreign currencies)
Balance with other banks and financial institutions

Prize bonds (note-6a)

These financial statements should be read in conjunction with the annexed notes 1 to 50.

Chairman

Dhaka, 28 February 2013

Annual Report 2012 220

Director

Director

Managing Director

Annual Report 2012 221

9,357,714,690
7,798,095,580

Issue of share capital (Right share)

Appropriation made during the year

Balance as at 31 December 2012

Balance as at 31 December 2011

Dhaka, 28 February 2013

Chairman

5,772,509,105

6,839,527,566

1,067,018,461

5,772,509,105

5,772,509,105

Taka

Statutory
reserve

251,603,567

251,603,567

251,603,567

251,603,567

Taka

Revaluation
reserve

243,159,736

19,719,692

Director

Director

19,719,692

145,134,659

(368,574,703)

243,159,736

243,159,736

Taka

Revaluation
gain / loss on
investments

These financial statements should be read in conjunction with the annexed notes 1 to 50.

2,241,230,396

2,241,230,396

Net profit for the year

Cash dividend

Net gains and losses not recognized in the income


statement

Share premium

Currency translation differences

Surplus / deficit on account of revaluation of investments

2,241,230,396

2,241,230,396

1,559,619,110

Dividends (Bonus shares)

Adjustment of last year revaluation gain on investments

7,798,095,580

7,798,095,580

Taka

Taka

Surplus / deficit on account of revaluation of properties

Restated balance

Changes in accounting policy / Last years profit

Balance as at 1 January 2012

Particulars

Share
premium

Paid-up
Capital

Statement of Changes in Equity


for the year ended 31 December 2012

8,694,724

5,015,711

5,015,711

(3,679,013)

8,694,724

8,694,724

Taka

F.C.
Translation
gain

19,094,975,214

20,787,038,905

(779,809,558)

2,698,992,305

18,867,856,157

(3,679,013)

145,134,659

(368,574,703)

19,094,975,214

19,094,975,214

Taka

Total

Managing Director

2,779,682,107

2,072,227,283

(1,067,018,461)

(779,809,558)

(1,559,619,110)

2,698,992,305

2,779,682,107

2,779,682,107

2,779,682,107

Taka

Retained
earnings

Notes to the Financial Statements


for the year ended 31 December 2012
1.1

Prime Bank Limited


The Prime Bank Limited (the Bank) was incorporated as a public limited company in Bangladesh under
Companies Act, 1994 with the registered office of the company at 119-120 Motijheel C/A, Dhaka-1000. It
commenced its banking business with one branch from April 17, 1995 under the license issued by Bangladesh
Bank. Presently the Bank has 130 (One Hundred Thirty) branches, 17 (Seventeen) SME Centre/ Branches all
over Bangladesh and 2 (two) booths located at Dhaka Club, Dhaka and at Chittagong Port, Chittagong. Out of
the above 130 branches, 05 (five) branches are designated as Islamic Banking branch complying with the rules
of Islamic Shariah. Also the Bank has 3 (Three) Off-shore Banking Units (OBU). The Bank went for Initial Public
Offering in 1999 and its share is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange
Limited as a publicly traded company for its general classes of share.

1.1.1

Principal activities
The principal activities of the Bank are to provide all kinds of commercial banking services to customers through
its branches and SME centre/ Branches in Bangladesh. The Bank also provides Offshore banking services
through 3(three) OBUs.

1.1.2

Off-shore Banking Unit


The Bank obtained Off-shore Banking Unit permission vide letter no. BRPD(P)744(84)/2001-868 dated 19 March
2001. The Bank commenced operation of its one unit from March 15, 2007. Presently the Bank has 3 (Three)
Off-shore banking Units (OBU) located at Dhaka EPZ, Chittagong EPZ and Adamjee EPZ. The Off-shore banking
units are governed under the rules and guidelines of Bangladesh Bank. Separate financial statements of Off
-shore banking unit are shown in Annexure-K.

1.2

The Bank has 5 (Five) Subsidiaries details of which are given at note no. 1.2.1-1.2.5.

1.2.1

Prime Exchange Co. Pte. Limited, Singapore


Prime Exchange Co. Pte. Ltd., a fully owned subsidiary company of Prime Bank Limited was incorporated in
Singapore on January 06, 2006 and commenced its remittance business from July 08, 2006 under the remittance
license issued by the Monetary Authority of Singapore (MAS) under section 7A(3) of the Money Changing and
Remittance Business Act (Chapter 187), Singapore. The principal activities of the company are to carry on
the remittance business and to undertake and participate in transactions, activities and operations commonly
carried on or undertaken by remittance and exchange house. Financial Statements of the company are shown in
Annexure-N.

1.2.2

Prime Bank Investment Limited


Prime Bank Investment Limited is a subsidiary company of Prime Bank Limited incorporated as a public limited
company on April 27, 2010 with the registrar of Joint Stock Companies, Dhaka vide certificate of incorporation
no.C-84266/10 dated 28 April 2010 which has commenced its business on the same date. There of 29,999,994
shares (out of 30,000,000 shares) of Prime Bank Investment Limited are held by Prime Bank Limited and only
6 shares are held by 6 senior executives of Prime Bank Limited and Prime Bank Investment Limited. The main
objectives of the company for which was established are to carry out the business of full-fledged merchant
banking activities like issue management, portfolio management, underwriting, corporate advisory services etc.
Securities and Exchange Commission (SEC) thereafter issued a full fledged merchant banking license in favor of
Prime Bank Investment Ltd, vide letter no. SEC/Reg/MB/SUB/2010/03/208 dated 02 June 2010 with effect from
01 June 2010. Financial Statements of the company are shown in Annexure-L.

1.2.3

PBL Exchange (UK) Limited


PBL Exchange (UK) Limited was incorporated as a private limited company with Companies House of England
and Wales under registration no. 7081093 dated 19 November 2009. The company is a wholly owned subsidiary
of Prime Bank Limited. The company commenced its operation on 02 August 2010 with three Branches located
at Brick Lane of London, Coventry Road of Birmingham and North Oldham of Manchester. The registered office
is located at 16 Brick Lane, London E1 6RF. Financial Statements of the company are shown in Annexure-O

Annual Report 2012 222

Notes to the Financial Statements


for the year ended 31 December 2012
1.2.4

Prime Bank Securities Limited


Prime Bank Securities Limited was incorporated on April 29, 2010 as a private limited company under the
Companies Act 1994 vide certificate of incorporation no.C-84302 /10. Prime Bank Securities Limited become
member of Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited for brokerage transaction
vide Security Exchange Commission certificate no. 3.1/DSE-219/2010/429 dated 16.09.2010 and 3.2/CSE141/2010/239 dated 31.08.2010 respectively. Prime Bank Securities Limited commenced its operation from May
2011. The main objectives of the company are to carry on business of stock brokers / dealers in relation to shares
and securities dealings and other services as mentioned in the Memorandum and Articles of Association of the
Company. Prime Bank Limited and Prime Bank Investment Limited hold 95% and 5% of Prime Bank Securities
Limited respectively. Financial Statements of the company are shown in Annexure-M.

1.2.5

PBL Finance (Hong Kong) Limited


PBL Finance (Hong Kong) Limited, a fully owned subsidiary of Prime Bank Limited. PBL Finance (Hong Kong)
Limited was incorporated with Companies Registries of Hong Kong (Certificate of incorporation no. 1584971 and
Business Registration no. 58197431 both dated April 7, 2011) . PBL Finance (Hong Kong) Limited obtained
Money Lending Licenses (307/2011) issued by Honorable Court of Hong Kong on 28th July 2011. It has
commenced its operation from August 2011 with one branch located at 608, 6/F, Admiralty Centre, Tower-2, 18
Harcourt Road, Hong Kong. Financial Statements of the company are shown in Annexure-P.

2.00

Significant accounting policies and basis of preparation of financial statements

2.1

Basis of accounting

2.1.1

Statement of compliance
The financial statements of the Bank and its subsidiaries (the Group) are made up to 31 December 2012 and
are prepared under the historical cost basis, except for certain investments which are stated at fair/market value
and freehold land which are measured at revalued amount, in accordance with the First Schedule (Sec-38) of the
Bank Companies Act 1991, BRPD Circular # 14 dated 25 June, 2003 and DFIM Circular # 11, dated 23 December
2009, other Bangladesh Bank Circulars, Bangladesh Accounting Standards (BAS) and Bangladesh Financial
Reporting Standards (BFRS) adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), the
Companies Act 1994, the Securities and Exchange Rules 1987, Dhaka & Chittagong Stock Exchanges listing
regulations and other laws and rules applicable in Bangladesh. In case the requirement of Bangladesh Bank
differs with those of BAS/BFRS, the requirement of Bangladesh Bank have been applied.
In addition to foregoing directives and standards, the operation of Islamic Banking Branches are accounted for in
accordance with Financial Accounting Standards issued by the Accounting and Auditing Organisation for Islamic
Financial Institutions, Bahrain, and Bangladesh Bank circular no-15, dated November 09, 2009. A separate
balance sheet, profit and loss account and a statement of profit paid on deposits are shown in Annexure-G and
G(1) and the figures appearing in the annexure have been incorporated in the related heads of these financial
statements as recommended by the Central Shariah Board for Islamic Banks in Bangladesh.

2.1.2

Basis of consolidation
The consolidated financial statements include the financial statements of Prime Bank Limited, and its subsidiaries
Prime Bank Investment Limited, Prime Bank Securities Limited, Prime Exchange Co. Pte. Ltd., Singapore, PBL
Exchange (UK) Limited and PBL Finance (Hong Kong) Limited made up to the end of the financial year.
The consolidated financial statements have been prepared in accordance with Bangladesh Accounting Standard
27: Consolidated and Separate Financial Statements. The consolidated financial statements are prepared to a
common financial year ending 31 December 2012.
Subsidiary
Subsidiary is that enterprise which is controlled by the Bank. Control exists when the Bank has the power, directly
or indirectly, to govern the financial and operating policies of an enterprise from the date that control commences
until the date that control ceases. The financial statements of subsidiary are included in the consolidated
financial statements from the date that control effectively commences until the date that the control effectively
Annual Report 2012 223

Notes to the Financial Statements


for the year ended 31 December 2012
ceases. Subsidiary companies are consolidated using the purchase method of accounting. The subsidiary Prime
Exchange Co. Pte. Ltd., Singapore, Prime Exchange (UK) Ltd and PBL Finance (Hong Kong) Limited has a
common financial year ending 31 December 2012. The conversion policy of subsidiary companies is given
below.
Particulars

Price

Prime Exchange Co.


Pte. Ltd., Singapore

PBL Exchange
(UK) Ltd.

PBL Finance
(Hong Kong) Ltd.

For assets & liabilities

Closing price

65.23680

129.10130

10.30321

For income & expenses

Average price

64.13665

127.78200

10.41756

All intra-group transactions, balances, income and expenses are eliminated on consolidation. Profit and loss
resulting from transactions between Group are also eliminated on consolidation.
2.1.3

Use of estimates and judgments


In the preparation of the financial statements management required to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amount of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
The most critical estimates and judgments are applied to calculate provision for loans, advances and
investments.

2.1.4

Foreign currency transaction


a) Foreign currency
Items included in the financial statements of each entity in the group are measured using the currency of the
primary economic environment in which the entity operates, i e. the functional currency. The financial statements
of the group and the Bank are presented in Taka which is the Banks functional and presentation currency.
b) Foreign currencies translation
Foreign currency transactions are converted into equivalent Taka using the ruling exchange rates on the dates of
respective transactions as per BAS-21 The Effects of Changes in Foreign Exchange Rates. Foreign currency
balances held in US Dollar are converted into Taka at weighted average rate of inter-bank market as determined
by Bangladesh Bank on the closing date of every month. Balances held in foreign currencies other than US Dollar
are converted into equivalent US Dollar at buying rates of New York closing of the previous day and converted
into Taka equivalent.
Assets and liabilities & income and expenses of Off-shore Banking Units have been converted into Taka currency
@ US$1 = Taka 79.8499 (closing rate as at 31st December 2012) and Tk.81.8532 (average rate which represents
the year end).
c) Commitments
Commitments for outstanding forward foreign exchange contracts disclosed in these financial statements are
translated at contracted rates. Contingent liabilities / commitments for letters of credit and letters of guarantee
denominated in foreign currencies are expressed in Taka terms at the rates of exchange ruling on the balance
sheet date.
d) Translation gains and losses
The resulting exchange transaction gains and losses are included in the profit and loss account, except those
arising on the translation of net investment in foreign subsidiary.

Annual Report 2012 224

Notes to the Financial Statements


for the year ended 31 December 2012
e) Foreign operations
The results and financial position of the Groups operations whose functional currency is not Bangladeshi Taka
are translated into Bangladeshi Taka as follows:
i)

Assets and liabilities are translated at the exchange rate ruling at the balance sheet date;

ii)

Income and expenses in the income statement are translated at an average rate approximating the
exchange rates at the year end;

iii)

Resulting exchange differences are recognized as a separate component of equity.

iv)

As per BAS 21 Foreign Currency Transactions, foreign currency denominated non-monetary items of
the OBUs are translated at historical rate, as the OBUs are considered as an integral part of the Banks
operation not a foreign operation due to specific regulations governing the OBU and its unique nature.

f) Consolidation of Financial Statements of foreign operations


Consolidation, foreign exchange differences arising from the translation of net investments in foreign entities, as
well as any borrowings are taken into capital reserve. When a foreign operation is disposed of, such currency
translation differences are recognized in the income statement as part of the gain or loss on disposal.
2.1.5

Statement of cash flows


Statement of cash flows have been prepared in accordance with the Bangladesh Accounting Standard-7
Statement of Cash Flows under direct method as recommended in the BRPD Circular No. 14, dated June 25,
2003 issued by the Banking Regulation & Policy Department of Bangladesh Bank.

2.1.6

Liquidity statement
The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity
term as per the following basis [Annexure-I and I(1)].
i)

Balance with other Banks and financial institutions, money at call and short notice, etc. are on the basis
of their maturity term;

ii)

Investments are on the basis of their respective maturity;

iii)

Loans and advances / investments are on the basis of their repayment schedule;

iv)
v)

Fixed assets are on the basis of their useful lives;


Other assets are on the basis of their realization / amortization;

vi)

Borrowing from other Banks, financial institutions and agents, etc. are as per their maturity / repayment
terms;

vii)

Deposits and other accounts are on the basis of their maturity term and past trend of withdrawal by the
depositors;
Provisions and other liabilities are on the basis of their payment / adjustments schedule.

viii)
2.1.7

Reporting period
These financial statements cover one calendar year from 1 January to 31 December 2012.

2.1.8

Offsetting
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there
is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or
realize the asset and settle the liability simultaneously (note-9a, 13a.1, 24a, 25a.1).
Annual Report 2012 225

Notes to the Financial Statements


for the year ended 31 December 2012
2.1.9

Restatement
In order to comply with the Bangladesh Accounting Standards (BAS-8), Accounting Policies, Changes in
Accounting Estimates and Errors. As per the standard it requires to restate the interest income/profit for Taka
28,053,160 of 2011 (note 22a) and the retained earnings as on 01.01.2011 by Taka 15,696,557 to show the
retrospective effect that has occurred for the relevant year of transaction. Consequently, the above amount was
adjusted with interest/profit suspense account.

2.2

Assets and basis of their valuation

2.2.1

Cash and cash equivalents


Cash and cash equivalents include notes and coins on hand, unrestricted balances held with Bangladesh Bank
and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used
by the Bank management for its short-term commitments.

2.2.2

Loans, advances and lease / investments


a)

Loans and advances are stated in the balance sheet on gross basis.

b)

Interest / profit is calculated on a daily product basis but charged and accounted for on accrual basis.
Interest / profit on classified loans and advances / investments is kept in suspense account as per
Bangladesh Bank instructions and such interest / profit is not accounted for as income until realised
from borrowers [note - 7a.10 (x)]. Interest / profit is not charged on bad and loss loans / investments
as per guidelines of Bangladesh Bank. Records of such interest amounts are kept in separate
memorandum accounts.

c)

Commission and discounts on bills purchased and discounted are recognized at the time of
realization.

d)

Provision for loans and advances / investments is made on the basis of year-end review by the
management following instructions contained in Bangladesh Bank BCD Circular no. 34 dated
16 November 1989, BCD Circular no. 20 dated 27 December 1994, BCD Circular no. 12 dated 4
September 1995, BRPD Circular no. 16 dated 6 December 1998, BRPD Circular no. 9 dated 14 May
2001, BRPD Circular no.02 of February 2005, BRPD Circular no. 09 of August 2005 ,BRPD Circular
no. 17 dated 06 December 2005,BRPD circular no.32 dated 27 October 2010, BRPD Circular no.14
dated 23.09.2012 and BRPD Circular no.19 dated 27.12.2012. The provision rates are given below:
Particulars
General provision on unclassified general loans and advances / investments
General provision on unclassified small enterprise financing

Rate
1%
0.25%

General provision on interest receivable on loans / investments

1%

General provision on unclassified loans / investments for housing finance,


loans for professionals to set-up business and loans to share business

2%

General provision on unclassified consumer financing other than housing


finance, loan for professionals and loans to share business

5%

General provision on special mention account

5%

Specific provision on substandard loans and advances / investments

20%

Specific provision on doubtful loans and advances / investments

50%

Specific provision on bad / loss loans and advances / investments

100%

Annual Report 2012 226

Notes to the Financial Statements


for the year ended 31 December 2012

2.2.3

e)

Loans and advances / investments are written off to the extent that (i) there is no realistic prospect of
recovery, (ii) and against which legal cases are pending for more than five years as per guidelines of
Bangladesh Bank. These write off however will not undermine / affect the claim amount against the
borrower. Detailed memorandum records for all such write off accounts are meticulously maintained
and followed up.

f)

Amounts receivable on credit cards are included in advances to customers at the amounts expected
to be recovered.

Investments
All investment securities are initially recognised at cost, being fair value of the consideration given, including
acquisition charges associated with the investment. Premiums are amortized and discounts accredited, using the
effective yield method and are taken to discount income. The valuation method of investments used are:
Held to maturity (HTM)
Investments which have fixed or determinable payments, and are intended to be held to maturity, other than
those that meet the definition of held at amortized cost-others are classified as held to maturity. Investment
(HTM)-BHBFC is shown in the financial statements at cost price.
Held for trading (HFT)
Investments classified in this category are acquired principally for the purpose of selling or repurchasing -in shorttrading or if designated as such by the management. After initial recognition, investments are measured at fair
value and any change in the fair value is recognised in the statement of income for the period in which it arises.
These investments are subsequently revalued at current market value on weekly basis as per Bangladesh Bank
Guideline. Revaluation gain has been shown in revaluation reserve account & revaluation loss has been shown
in Profit & Loss account.
Value of investments has been enumerated as follows :
Items

Applicable accounting value

Government treasury bills-HTM

Amortized value

Government treasury bills-HFT

Market value

Government treasury bonds-HTM

Amortized value

Government treasury bonds-HFT

Market value

Prize bond

At cost

BHBFCs-debenture

At cost

Investment in listed securities


These securities are bought and held primarily for the purpose of selling them in future or hold for dividend
income. These are reported at cost. Unrealized gains are not recognized in the profit and loss account. But
provision for diminution in value of investment is provided in the financial statements which market price is below
the cost price of investment as per Bangladesh Bank guideline (note-13a).
Investment in unquoted securities
Investment in unlisted securities is reported at cost under cost method. Adjustment is given for any shortage of
book value over cost for determining the carrying amount of investment in unlisted securities.
Investments in subsidiary
Investment in subsidiaries is accounted for under the cost method of accounting in the Banks financial statements
in accordance with the Bangladesh Accounting Standard no-28. Accordingly, investments in subsidiaries are
stated in the Banks balance sheet at cost, less impairment losses if any.

Annual Report 2012 227

Notes to the Financial Statements


for the year ended 31 December 2012
2.2.4

Property, plant and equipment


Property, plant & equipment are recognized if it is probable that future economic benefits associated with the
assets will flow to the Bank and the cost of the assets can be reliably measured.
a)

All fixed assets are stated at cost less accumulated depreciation as per BAS-16 Property, Plant
and Equipment. The cost of acquisition of an asset comprises its purchase price and any directly
attributable cost of bringing the asset to its working condition for its intended use inclusive of inward
freight, duties and non-refundable taxes.

b)

The Bank recognises in the carrying amount of an item of property, plant and equipment the cost of
replacing part of such an item when that cost is incurred if it is probable that the future economic benefits
embodied with the item will flow to the company and the cost of the item can be measured reliably.
Expenditure incurred after the assets have been put into operation, such as repairs and maintenance,
is normally charged off as revenue expenditure in the period in which it is incurred.

c)

Depreciation is charged for the year at the following rates on reducing balance method on all fixed
assets other than vehicles, software and all fixed assets of ATM related on which straight line
depreciation method is followed and no depreciation is charged on land:
Category of fixed assets
Land
Building

2.2.5

Rate
Nil
2.50%

Furniture and fixtures

10%

Office equipment

20%

Library books

20%

Vehicles (straight line)

20%

Category of fixed assets (ATM Assets)

Rate

Furniture and fixtures (straight line)

10%

Office equipment (straight line)

20%

d)

For additions during the year, depreciation is charged for the remaining days of the year and for
disposal depreciation is charged up to the date of disposal.

e)

On disposal of fixed assets, the cost and accumulated depreciation are eliminated from the fixed assets
schedule and gain or loss on such disposal is reflected in the income statement, which is determined
with reference to the net book value of the assets and net sale proceeds.

f)

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset have been capitalized as part of the cost of the asset as per BAS-23.

g)

Leasehold properties are recorded at present value of minimum lease payments or fair market value,
whichever is lower as per the provisions of BAS-17. The carrying value of leasehold properties is
amortized over the remaining lease term or useful of leasehold property, whichever is lower.

Intangible assets
a)

An intangible asset is recognized if it is probable that the future economic benefits that are attributable
to the asset will flow to the entity and the cost of the assets can be measured reliably.

b)

Software represents the value of computer application software licensed for use of the Bank, other
than software applied to the operation software system of computers. Intangible assets are carried at
its cost, less accumulated amortization and any impairment losses.

Annual Report 2012 228

Notes to the Financial Statements


for the year ended 31 December 2012
Initial cost comprises license fees paid at the time of purchase and other directly attributable
expenditure that are incurred in customizing the software for its intended use.

2.2.6

c)

Expenditure incurred on software is capitalized only when it enhances and extends the economic
benefits of computer software beyond their original specifications and lives and such cost is recognized
as capital improvement and added to the original cost of software.

d)

Software is amortized using the straight line method over the estimated useful life of 10 (ten) years
commencing from the date of the application software is available for use over the best estimate of its
useful economic life.

Impairment of Assets:
The policy for all assets or cash-generating units for the purpose of assessing such assets for impairment is as
follows:
The Bank assesses at the end of each reporting period or more frequently if events or changes in circumstances
indicate that the carrying value of an asset may be impaired, whether there is any indication that an asset may
be impaired. If any such indication exits, or when an annual impairment testing for an asset is required, the
bank makes an estimate of the assets recoverable amount. When the carrying amount of an asset or cashgenerating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is
written down to its recoverable amount by debiting to profit & loss account.
Fixed assets are reviewed for impairment whenever events or charges in circumstances indicate that the carrying
amount of an asset may be impaired.

2.2.7

Investment properties
a)

b)

c)
2.2.8

Investment property is held to earn rentals or for capital appreciation or both and the future economic
benefits that are associated with the investment property but not sale in the ordinary course of
business.
Investment property is accounted for under cost model in the financial statements. Accordingly,
after recognition as an asset, the property is carried at its cost, less accumulated depreciation and
impairment loss.
Depreciation is provided on a reducing basis over the estimated life of the class of asset from the date
of purchase up to the date of disposal.

Other assets
Other assets include all balance sheet accounts not covered specifically in other areas of the supervisory activity
and such accounts may be quite insignificant in the overall financial condition of the Bank.

2.2.9

Securities purchased under re-sale agreement


Securities purchased under re-sale agreements are treated as collateralized lending and recorded at the
consideration paid and interest accrued thereon. The amount lent is shown as an asset either as loans and
advances to customers or loans to other banks.
The difference between purchase price and re-sale price is treated as interest received and accrued evenly over
the life of Repo agreement.

2.2.10

Receivables
Receivables are recognised when there is a contractual right to receive cash or another financial asset from
another entity.

2.2.11

Inventories
Inventories measured at the lower of cost and net realizable value.

Annual Report 2012 229

Notes to the Financial Statements


for the year ended 31 December 2012
2.2.12

Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee as per BAS-17 Leases. All other leases are classified as operating leases
as per BAS-17 Leases.
The Bank as lessor
Amount due from lessees under finance leases are recorded as receivables at the amount of the Banks net
investment in the leases (note-7a.3). Finance lease income is allocated to accounting periods so as to reflect a
constant periodic rate of return on the banks net investment outstanding in respect of the leases.
The Bank as lessee
Assets held under finance leases are recognised as assets of the Bank at their fair value at the date of acquisition
or, if lower, at the present value of the minimum lease payments (note-9a). The corresponding liability to the lessor
is included in the balance sheet as a finance lease obligation (note-13a.9). Lease payments are apportioned
between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged directly against income.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned
assets.

2.2.13

Non-banking assets:
There are no assets acquired in exchange for loan during the period of financial statements.

2.2.14

Reconciliation of inter-bank and inter-branch account


Accounts with regard to inter-bank (in Bangladesh and outside Bangladesh) are reconciled regularly and there
are no material differences which may affect the financial statements significantly.
Un-reconciled entries / balances in the case of inter-branch transactions as on the reporting date are not material.

2.3

Share capital
Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial
assets.

2.4

Statutory reserve
Bank Companies Act, 1991 requires the Bank to transfer 20% of its current years profit before tax to reserve until
such reserve equals to its paid up capital.

2.5

Revaluation reserve
When an assets carrying amount is increased as a result of a revaluation , the increase amount should be
credited directly to equity under the heading of revaluation surplus / reserve as per BAS-16: Property, Plant and
Equipment. The Bank revalued the assets of land and buildings during the year 2008 which are absolutely owned
by the Bank and the increase amount transferred to revaluation reserve. The tax effects on revaluation gain are
measured and recognised in the financial statements as per BAS-12: Income Taxes.

2.5.1

Minority interest in subsidiaries


Minority interest in business is an accounting concept that refers to the portion of a subsidiary corporations stock
that is not owned by the parent corporation. The magnitude of the minority interest in the subsidiary company is
always less than 50% of outstanding shares, else the corporation would cease to be a subsidiary of the parent.
Minority interest belongs to other investors and is reported on the consolidated balance sheet of the owning
company to reflect the claim on assets belonging to other, non-controlling shareholders. Also, minority interest is
reported on the consolidated income statement as a share of profit belonging to minority shareholders.

Annual Report 2012 230

Notes to the Financial Statements


for the year ended 31 December 2012
2.5.2

Prime bank sub-ordinated bond


Prime Bank issued unsecured non-convertible sub-ordinated bond on 07 February 2010 after obtained approval
from Bangladesh Bank and Securities and Exchange Commission vide their letter # BRPD (BIC) 661 / 14B (P)
/2009-319, dated 31 December 2009 and SEC / CI / CPLC-205 / 09 / 282, dated December 23, 2009 respectively.
The Subordinated Bond is counted towards Tier- II capital of the Bank. The bond shall bear interest @ Tk.11.50%
per annum, payable semi annually in arrear on 07 August and 07 February of each year.

2.5.3

Share premium
Share premium is the capital that the Bank raises upon issuing shares that is in excess of the nominal value
of the shares. The share premium may be applied by the Bank in paying up unissued shares to be allotted to
members as fully paid bonus shares or writing-off the preliminary expenses of the Bank or the expenses of or
the commission paid or discount allowed on, any issue of shares or debentures of the Bank or in providing for
the premium payable on the redemption of any redeemable preference shares or of any debentures of the Bank.
Share premium was shown in accounts after deduction of income tax @3% on share premium as per finance
Act-2010.

2.7

Deposits and other accounts


Deposits by customers and banks are recognised when the Bank enters into contractual provisions of the
arrangements with the counterparties, which is generally on trade date, and initially measured at the consideration
received.

2.8

Borrowings from other banks, financial institutions and agents


Borrowed funds include call money deposits, borrowings, re-finance borrowings and other term borrowings from
banks. These are stated in the balance sheet at amounts payable. Interest paid / payable on these borrowings is
charged to the profit & loss account.
Disclosures of borrowings against Repo are shown in notes- 6a.11 to 6a.12 and 46

2.9

Basis for valuation of liabilities and provisions

2.9.1

Provision for current taxation


Provision for current income tax has been made as per prescribed rate in the Finance Ordinance, 2012 on the
accounting profit made by the Bank after considering some of the add backs to income and disallowances of
expenditure as per income tax laws in compliance with BAS-12 Income Taxes.

2.9.2

Deferred taxation
Deferred tax is accounted for in accordance with BAS 12: Income Taxes. Deferred tax normally results in a
liability being recognized within the Statement of Financial Position. BAS 12 defines a deferred tax liability as
being the amount of income tax payable in future periods. Deferred tax is recognized on differences between
the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax
liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to
the extent that it is probable that taxable profits will be available against which deductible temporary differences,
unused tax losses or unused tax credits can be utilized. Such assets and liabilities are not recognized if the
temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company
intends to settle its current tax assets and liabilities on a net basis.

Annual Report 2012 231

Notes to the Financial Statements


for the year ended 31 December 2012
2.9.3

Benefits to the employees


The retirement benefits accrued for the employees of the Bank as on reporting date have been accounted
for in accordance with the provisions of Bangladesh Accounting Standard-19, Employee Benefit. Bases of
enumerating the retirement benefit schemes operated by the Bank are outlined below:
a) Provident fund
Provident fund benefits are given to the permanent employees of the Bank in accordance with Banks service
rules. Accordingly a trust deed and provident fund rules were prepared. The Commissioner of Income Tax, Taxes
Zone - 5, Dhaka has approved the Provident Fund as a recognized provident fund within the meaning of section
2(52), read with the provisions of part - B of the First Schedule of Income Tax Ordinance 1984. The recognition
took effect from 07 July 1997. The Fund is operated by a Board of Trustees consisting six members (03 members
from management and other 03 members from the Board of Directors) of the Bank. All confirmed employees of
the Bank are contributing 10% of their basic salary as subscription to the Fund. The Bank also contributes equal
amount of the employees contribution. Interest earned from the investments is credited to the members account
on yearly basis.
b) Gratuity fund
The Bank operates an unfunded gratuity scheme on Closed Plan Basis, in respect of which provision is made
annually covering all its permanent eligible employees. Actuarial valuation of gratuity scheme has been made to
assess the adequacy of the liabilities provided for the scheme as per BAS-19 Employee Benefits.
c) Welfare fund
Prime Banks employees welfare fund is subscribed by monthly contribution of the employees. The Bank also
contributes to the Fund from time to time. The Fund has been established to provide medical support and
coverage in the event of accidental death or permanent disabilities of the employees. Disbursement of loan from
the fund is done as per rules for employees welfare fund. Retirement benefit are also provided from this fund.
d) Incentive bonus
10% of net profit after tax is given to the employees in every year as incentive bonus. This bonus amount is being
distributed among the employees based on their performance. The bonus amount is paid annually, normally first
quarter of every following year and the costs are accounted for in the period to which it relates.

2.9.4

Provision for liabilities


A provision is recognised in the balance sheet when the Bank has legal or constructive obligation as a result
of a past event and it is probable that an outflow of economic benefit will be required to settle the obligations, in
accordance with the BAS 37 Provisions, Contingent Liabilities and Contingent Assets.

2.9.5

Provision for Off-balance sheet exposures


Off-balance sheet items have been disclosed under contingent liabilities and other commitments as per
Bangladesh Bank guidelines. As per BRPD Circular # 14, dated September 23, 2012, banks are advised to
maintain provision @1% against off-balance sheet exposures (L/C and Guarantee) in addition to the existing
provisioning arrangement.

2.9.6

Provision for nostro accounts


As per instructions contained in the circular letter no. FEPD (FEMO) / 01 / 2005-677 dated 13 September 2005
issued by Foreign Exchange Policy Department of Bangladesh Bank, provision is to be maintained the unreconciled debit balance of nostro account more than 3 months as on the reporting date in these financials. Since
there is no unreconciled entries which are outstanding more than 3 months provision has not been made.

Annual Report 2012 232

Notes to the Financial Statements


for the year ended 31 December 2012
2.10

Revenue recognition

2.10.1

Interest income
In terms of the provisions of the BAS-18 Revenue, the interest income is recognised on accrual basis. Interest on
loans and advances ceases to be taken into income when such advances are classified. It is then kept in interest
suspense. After the loans / investments is classified as bad, interest / profit ceases to apply and recorded in a
memorandum account. Interest/Profit on classified advances/investment is accounted for on a cash receipt basis.

2.10.2

Profit on investment (Islamic Banking Branches)


Mark-up on investment is taken into income account proportionately from profit receivable account. Overdue
charge / compensation on classified investments is transferred to profit suspense account instead of income
account.

2.10.3

Investment income
Interest income on investments is recognised on accrual basis. Capital gain on investments in shares is also
included in investment income. Capital gain is recognised when it is realised.

2.10.4

Fees and commission income


Fees and commission income arising on services provided by the Bank are recognised on a cash basis.
Commission charged to customers on letters of credit and letters of guarantee is credited to income at the time
of effecting the transactions.

2.10.5

Dividend income on shares


Dividend income on shares is recognised during the period in which it is declared and ascertained.

2.10.6

Interest paid and other expenses (Conventional Banking Branches)


In terms of the provisions of BAS-1 Presentation of Financial Statements interest and other expenses are
recognised on accrual basis.

2.10.7

Profit paid on deposits (Islamic Banking Branches)


Profit paid to mudaraba depositors is recognised on accrual basis as per provisional rate. However, the final profit
is determined and to be paid to the depositors as per Annexure-F.

2.10.8

Dividend payments
Interim dividend is recognised when they are paid to shareholders. Final dividend is recognized when it is
approved by the shareholders.
The proposed dividend for the year 2012 has not been recognized as a liability in the balance sheet in accordance
with the BAS-10 : Events After the Reporting Period.
Dividend payable to the Banks shareholders is recognized as a liability and deducted from the shareholders
equity in the period in which the shareholders right to receive payment is established.

2.11

Risk management
The risk of Prime Bank Limited is defined as the possibility of losses, financial or otherwise. The risk management
of the Bank covers core risk areas of banking viz. credit risk, liquidity risk, market risk that includes foreign
exchange risk, interest rate risk, equity risk, operational risk and reputation risk arising from money laundering
incidences. The prime objective of the risk management is that the Bank evaluates and takes well calculative
business risks and thereby safeguards the Banks capital, its financial resources and profitability from various
business risks through its own measures and through implementing Bangladesh Banks guidelines and following
some of the best practices as under:

Annual Report 2012 233

Notes to the Financial Statements


for the year ended 31 December 2012
2.11.1

Credit risk
It arises mainly from lending, trade finance, leasing and treasury businesses. This can be described as potential
loss arising from the failure of a counter party to perform as per contractual agreement with the Bank. The failure
may result from unwillingness of the counter party or decline in his / her financial condition. Therefore, the Banks
credit risk management activities have been designed to address all these issues.
The Bank has segregated duties of the officers / executives involved in credit related activities. A separate
Corporate Division has been formed at Head Office which is entrusted with the duties of maintaining effective
relationship with the customers, marketing of credit products, exploring new business opportunities, etc. Moreover,
credit approval, administration, monitoring and recovery functions have been segregated. For this purpose, three
separate units have been formed within the credit division. These are (a) Credit Risk Management Unit (b) Credit
Administration Unit and (c) Credit Monitoring and Recovery Unit. Credit Risk Management Unit is entrusted with
the duties of maintaining asset quality, assessing risk in lending to a particular customer, sanctioning credit,
formulating policy / strategy for lending operation, etc. Adequate provision has been made on classified loans /
investments is shown in note-13a.3.
A thorough assessment is done before sanction of any credit facility at Credit Risk Management Unit. The risk
assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the
customer, security of the proposed credit facility, etc. The assessment process at Head Office starts at Corporate
Division by the Relationship Manager / Officer and ends at Credit Risk Management Unit when it is approved /
declined by the competent authority. Credit approval authority has been delegated to the individual executives.
Proposals beyond their delegation are approved / declined by the Executive Committee and / or the Management
of the Bank. Concentration of credit risk is shown in note -7a. 5.
In determining Single borrower / Large loan limit, the instructions of Bangladesh Bank are strictly followed.
Internal audit is conducted at periodical intervals to ensure compliance of Banks and Regulatory polices. Loans
are classified as per Bangladesh Banks guidelines. Concentration of single borrower / large loan limit is shown
in note-7a.9.

2.11.2

Liquidity risk
The object of liquidity risk management is to ensure that all foreseeable funding commitments and deposit
withdrawals can be met when due. To this end, the Bank is maintaining a diversified and stable funding base
comprising of core retail and corporate deposits and institutional balance (note - 12a). Management of liquidity
and funding is carried out by Treasury Department under approved policy guidelines. Treasury front office is
supported by a very structured Mid office and Back office. The Liquidity management is monitored by Asset
Liability Committee (ALCO) on a regular basis. A written contingency plan is in place to manage extreme
situation.

2.11.3

Market risk
The exposure of market risk of the Bank is restricted to foreign exchange risk, interest rate risk and equity risk.
Foreign exchange risk
Foreign exchange risk is defined as the potential change in earnings due to change in market prices. The foreign
exchange risk of the Bank is minimal as all the transactions are carried out on behalf of the customers against
underlying L/C commitments and other remittance requirements. No foreign exchange dealing on Banks account
was conducted during the year.
Treasury Department independently conducts the transactions and the back office of treasury is responsible for
verification of the deals and passing of their entries in the books of account. All foreign exchange transactions
are revalued at Mark-to-Market rate as determined by Bangladesh Bank at the month-end. All Nostro accounts
are reconciled on a monthly basis and outstanding entry beyond 30 days is reviewed by the management for its
settlement. The position maintained by the bank at the end of day was within the stipulated limit prescribed by
the Bangladesh Bank.

Annual Report 2012 234

Notes to the Financial Statements


for the year ended 31 December 2012
Interest rate risk
Interest rate risk may arise either from trading portfolio or non-trading portfolio. The trading portfolio of the Bank
consists of Government treasury bills of 28 days maturity. The short-term movement in interest rate is negligible
or nil. Interest rate risk of non-trading business arises from mismatches between the future yield of an asset and
its funding cost. Asset Liability Committee (ALCO) monitors the interest rate movement on a regular basis.
Equity risk
Equity risk arises from movement in market value of equities held. The risks are monitored by Investment
Committee under a well designed policy framework. The market value of equities held was however higher than
the cost price at the balance sheet date (Annexure-B).
2.11.4

Reputation risk arising from money laundering incidences


Money laundering risk is defined as the loss of reputation and expenses incurred as penalty for being negligent
in prevention of money laundering. For mitigating the risks, the Bank has a designated Chief Compliance
Officer at Head Office and Compliance Officers at branches, who independently review the transactions of the
accounts to verify suspicious transactions. Manuals for prevention of money laundering have been established
and transaction profile has been introduced. Training is continuously given to all the category of Officers and
Executives for developing awareness and skill for identifying suspicious activities / transactions.

2.11.5

Operational risk
Operational risk may arise from error and fraud due to lack of internal control and compliance. Management
through Internal Control and Compliance Division controls operational procedure of the Bank. Internal Control
and Compliance Division undertakes periodical and special audit of the branches and departments at the Head
Office for review of the operation and compliance of statutory requirements. The Audit Committee of the Board
subsequently reviews the reports of the Internal Control and Compliance Division.

2.12

Earnings per share


Basic earnings per share
Basic earnings per share has been calculated in accordance with BAS 33 Earnings per Share which has been
shown on the face of the profit and loss account. This has been calculated by dividing the basic earnings by the
weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share
No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during
the year under review.

2.13

Events after the reporting period


Where necessary, all the material events after the reporting period have been considered and appropriate
adjustment / disclosures have been made in the financial statements.

2.14

Directors responsibility on statement


The Board of Directors takes the responsibility for the preparation and presentation of these financial
statements.

2.15

Memorandum items
Memorandum items are maintained to have control over all items of importance and for such transactions where
the Bank has only a business responsibility and no legal commitment. Bills for collection, Stock of travelers
cheques, savings certificates, wage earners bonds and other fall under the memorandum items. However, Bills
for Collection is shown under contingent liabilities as per Bangladesh Banks format of reporting.

Annual Report 2012 235

Notes to the Financial Statements


for the year ended 31 December 2012
2.16

Related party transaction


Related party transaction is a transfer of resources, services or obligation between related parties, regardless of
whether a price is charged. Detail of related parties transaction are given in note-48.

2.17

Information about business and geographical segments


Segmental information is presented in respect of the Groups business and of Prime Bank Limited.
Business segments
Business segments report consists of products and services whose risks and returns are different from those of
other business segments. These segments comprise Conventional Banking including Off-shore Banking Units,
Islamic Banking, Prime Bank Investment Limited and Prime Bank Securities Limited. Business segments report
are shown in Annexure-H.
Geographical segments
Geographical segments report consists of products and services within a particular economic environment
where risks and returns are different from those of other economic environments. These segments comprise
of Prime Bank Limited, Off-shore Banking Units, Prime Bank Investment limited, Prime Bank Securities Limited,
Prime Exchange Co. Pte. Ltd, Singapore, PBL Exchange (UK) Ltd. and PBL Finance (Hong Kong) Limited.
Geographical segments report are shown in Annexure-H.
Inter-segment transactions are generally based on inter-branch fund transfer measures as determined by the
management. Income, expenses, assets and liabilities are specifically identified with individual segments. Based
on such allocation, segmental balance sheet as on 31 December 2012 and segmental profit and loss account for
the year ended 31 December 2012 have been prepared.

2.18

Compliance report on Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting
Standards (BFRS)
The Institute of Chartered Accountants of Bangladesh (ICAB) is the sole authority for adoption of Bangladesh
Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS). While preparing the
financial statements, Prime Bank applied all the applicable of BAS and BFRS as adopted by ICAB. Details are
given below:
Name of the BAS
Presentation of Financial Statements

BAS no.

Status

Applied *

Inventories

Applied

Statement of Cash Flows

Applied

Accounting Policies, Changes in Accounting Estimates and Errors

Applied

Events after the reporting period

10

Applied

Construction Contracts

11

N/A

Income Taxes

12

Applied

Property, Plant and Equipment

16

Applied

Leases

17

Applied

Revenue

18

Applied

Employee Benefits

19

Applied

Accounting for Government Grants and Disclosure of Government Assistance

20

N/A

The Effects of Changes in Foreign Exchange Rates

21

Applied

Borrowing Costs

23

Applied

Related Party Disclosures

24

Applied

Accounting and Reporting by Retirement Benefit Plans

26

N/A **

Annual Report 2012 236

Notes to the Financial Statements


for the year ended 31 December 2012
Name of the BAS

BAS no.

Status

Consolidated and Separate Financial Statements

27

Applied

Investments in Associates

28

Applied

Interests in Joint Ventures

31

N/A

Financial Instruments: Presentation

32

Applied *

Earnings per share

33

Applied

Interim Financial Reporting

34

Applied ***

Impairment of Assets

36

Applied

Provisions, Contingent Liabilities and Contingent Assets

37

Applied

Intangible Assets

38

Applied

Financial Instruments: Recognition and Measurement

39

Applied *

Investment Property

40

Applied

Agriculture

41

N/A

Name of the BFRS

BFRS no.

Status

First time adoption

N/A

Share Based Payment

N/A

Business Combinations

N/A

Insurance Contract

N/A

Non-current Assets Held for Sale and Discontinued Operations

N/A

Exploration for and Evaluation of Mineral Resources

N/A

Financial Instruments: Disclosure

Applied

Operating Segments

Applied

N/A

Not Applicable

* In order to comply with certain specific rules and regulations of the local Central Bank (Bangladesh Bank)
which are different to BAS/BFRS, some of the requirements specified in these BAS/BFRSs are not applied.
Refer below for such recognition and measurement differences that are most relevant and material to the
Bank and the Group.
** This Standard regards a retirement benefit plan as a reporting entity separate from the employers of the
participants in the plan. Therefore, it is not applicable for the Banks annual report as it is the employer and
not the retirement benefit plan itself.
*** The objective of BAS 34 is to prescribe the minimum content of an interim financial report and to prescribe
the principles for recognition and measurement in complete or condensed financial statements for an interim
period and hence it is not applicable for annual financial statements. However, the Bank being a listed entity in
Dhaka and Chittagong Stock Exchanges regularly publishes Interim Financial Report complying with BAS 34.
New and amended standards adopted by the Bank and the Group
There are no new standards, amendments to standards and interpretations that are effective for the first time for
the financial year ended 31 December 2012 that have a significant impact on the Group and the Bank.
New and amended standards and interpretations not yet adopted by the Bank and the Group
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning from 1 January 2013 or later, and have not been applied in preparing these consolidated financial
statements. None of these is expected to have a significant effect on the consolidated financial statements of
the Group and the Bank. Although International Accounting Standards Board (IASB) has issued a new standard
(IFRS 9) along with related amendments to existing standards (IAS/BAS 32, 39) but none of these have been
adopted and/or endorsed locally as BAS/BFRS and as such any possible impact could not be determined.
Annual Report 2012 237

Notes to the Financial Statements


for the year ended 31 December 2012
Difference between BAS/BFRS and Bangladesh Bank Regulation:
Provision for loans and advances
BAS/BFRS: As per BAS 39 an entity should start the impairment assessment of loans and advances by
considering whether objective evidence of impairment exists for those loans that are individually significant. For
loans and advances which are not individually significant, the assessment can be performed on an individual or
collective (portfolio) basis. Such provision shall be netted off against loans and advances.
As per BRPD Circular no. 14 & 15 dated 23 September 2012 and BRPD Circular no. 19 dated 27 December 2012,
a general provision at 0.25% to 5% under different categories of unclassified loans (standard/ SMA loans) should
be maintained regardless of objective evidence of impairment. And, specific provision for sub-standard loans,
doubtful loans and bad losses should be provided at 20%, 50% and 100% respectively for loans and advances
depending on the duration of overdue. Also, a general provision at 1% should be provided for all off-balance
sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39. Also for
disclosure such provision shall be shown as liability as opposed to netting off against loans and advances.
Repo and reverse repo transaction of Government securities (i.e. treasury bills and bonds)
BAS/BFRS: When an entity sells a financial asset and simultaneously enters into an agreement to repurchase
the asset (or a similar asset) at a fixed price on a future date (REPO), the arrangement is accounted for as
a deposit as opposed to a sale, and the underlying asset continues to be recognised in the entitys financial
statements. Such transaction do not satisfy derecognition criteria specified in BAS 39. Same rule applies to the
opposite side of the transaction (Reverse REPO).
As per Bangladesh Bank circulars/guidelines, when a bank sells a financial asset and simultaneously enters
into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (REPO), the
arrangement is accounted for as a normal sales transactions and the financial assets should be derecognised in
the sellers book and recognised in the buyers book.
Cash and cash equivalent
BAS/BFRS: As per BAS 7 cash and cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Therefore,
some items like Balance with Bangladesh Bank on account of CRR/SLR are not part of cash and cash equivalent
as those are not readily available.
As per Bangladesh Bank circulars/guidelines, balance with Bangladesh Bank is part of cash and cash equivalent
regardless of any restriction.
2.19

Approval of financial statements


The financial statements were approved by the Board of directors on February 28,2013

2.20

General
a)

These financial statements are presented in Taka, which is the Banks functional currency. Figures appearing
in these financial statements have been rounded off to the nearest Taka.

b)

The expenses, irrespective of capital or revenue nature, accrued / due but not paid have been provided for
in the books of the Bank.

c)

Figures of previous year have been rearranged whenever necessary to conform to current years
presentation.

Annual Report 2012 238

Notes to the Financial Statements


for the year ended 31 December 2012
2012
3

ii

Consolidated cash
Cash in hand
Prime Bank Limited (note-3a.1)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

1,464,103,675
41,057
10,817
10,823,556
1,474,979,105

14,117,939,937
14,117,939,937
16,187,166,252

12,032,573,269
12,032,573,269
13,507,552,374

1,971,441,919
88,061,657
2,059,503,576

1,414,850,909
49,252,766
1,464,103,675

10,816,492,170
2,881,505,675
13,697,997,845
Sonali Bank as agent of Bangladesh Bank (Local currency)
419,942,092
14,117,939,937
16,177,443,513
Reconciliation statements regarding Bangladesh Bank balance are given Annexure-A-1

9,433,960,795
1,854,968,231
11,288,929,026
743,644,243
12,032,573,269
13,496,676,944

Balance with Bangladesh Bank and its agent bank(s)


Prime Bank Limited (note-3a.2)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Cash of the Bank

3a.1

Cash in hand
In local currency
In foreign currency

3a.3

2011

2,059,503,576
7,346
4,895
9,710,498
2,069,226,315

3a

3a.2

Amount in Taka

Balance with Bangladesh Bank and its agent bank(s)


In local currency
In foreign currency

Cash Reserve Requirement (CRR) and Statutory Liquidity Ratio (SLR)


Cash Reserve Requirement and Statutory Liquidity Ratio have been calculated and maintained in accordance with
section 33 of Bank Companies Act, 1991 and MPD circular nos.05, dated December 01, 2010.
The Cash Reserve Requirement on the Banks time and demand liabilities at the rate of 6% has been calculated and
maintained with Bangladesh Bank in current account and 19% Statutory Liquidity Ratio for conventional banking and
11.50% Statutory Liquidity Ratio for Islamic banking , including CRR, on the same liabilities has also been maintained
in the form of treasury bills, bonds and debentures including FC balance with Bangladesh Bank. Both the reserves
maintained by the Bank are in excess of the statutory requirements, as shown below:
a) Cash Reserve Requirement

Required reserve
Actual reserve maintained (note-3a.2)
Surplus / (deficit)

b) Statutory Liquidity Ratio

Required reserve (including CRR)


Actual reserve maintained (including CRR) - note-3a.5
Surplus / (dificit)
Total required reserve
Actual reserve held
Total surplus
3a.4

Maturity grouping of cash


Payable on demand
Up to 1 month
Over 1 month but not more than 3 months
Over 3 months but not more than 6 months
Over 6 months but not more than 1 year
Over 1 year but not more than 5 years
Over 5 years

10,711,548,230
10,816,492,170
104,943,940

9,102,226,820
9,433,960,795
331,733,975

32,672,594,350
61,114,141,480
28,441,547,130
32,672,594,350
61,114,141,480
28,441,547,130

27,606,171,980
47,892,328,749
20,286,156,769
27,606,171,980
47,892,328,749
20,286,156,769

5,399,669,573
10,777,773,940
16,177,443,513

4,279,100,959
9,217,575,985
13,496,676,944

Annual Report 2012 239

Notes to the Financial Statements


for the year ended 31 December 2012
2012
3a.5

Held for Statutory Liquidity Ratio


Cash in hand (note -3a.1)
Balance with Bangladesh Bank and its agent bank(s) (note-3a.2)
Government securities (note-6a.ii)
Government bonds (note-6a.ii)
Bangladesh Bank Bills (note-6a.ii)

Consolidated balance with other banks and financial institutions


In Bangladesh
Prime Bank Limited (note-4a.1)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Less: Inter-company transaction
Outside Bangladesh
Prime Bank Limited (note-4a.2)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

4a

Balance with other banks and financial institutions of the Bank


In Bangladesh (note-4a.1)
Outside Bangladesh (note-4a.2)

4a.1

In Bangladesh
Current account
Agrani Bank Ltd., Principal Branch, Dhaka
Agrani Bank Ltd., Purana Paltan Branch, Dhaka
Agrani Bank Ltd., Bhairab Bazar, Kishoregonj
Agrani Bank Ltd., Mirzapur Branch, Mirzapur
AB Bank Ltd. Principal Branch, Dhaka
The City Bank Ltd, Dhaka
Dutch-Bangla Bank Ltd., Head office, Dhaka
Exim Bank Ltd., Motijheel Branch, Dhaka
Islami Bank BD Ltd., Local Office, Dhaka
Islami Bank BD Ltd., Jhikorgacha
Janata Bank Ltd., Local Office, Dhaka
Janata Bank Ltd., Ishwardi Branch
Janata Bank Ltd., Companygonj Branch
Janata Bank Ltd., Corporate Branch, Bogra
National Bank Ltd., Rangpur Branch
Pubali Bank Ltd., Dhaka Stadium Branch, Dhaka
Rupali Bank Ltd. ,Motijheel Branch, Dhaka
Sonali Bank Ltd., Rangpur Branch
Sonali Bank Ltd., Pabna Branch
Sonali Bank Ltd., Sunamganj Branch
Sonali Bank Ltd., Dinajpur Branch
Sonali Bank Ltd., Local Office, Dhaka
Sonali Bank Ltd., Narayangonj
Sonali Bank Ltd., Companygonj Branch
Sonali Bank Ltd., Thakurgaon Branch
Sonali Bank Ltd., Fakirapool Branch, Dhaka
Sonali Bank Ltd., Faridpur Branch, Faridpur
Sonali Bank Ltd., Narsingdi Branch
Sonali Bank Ltd., Satkhira
Standard Chartered Bank, Bangladesh
United Commercial Bank Ltd., Principal Branch, Dhaka
Off-shore Banking Units
Uttara Bank Ltd., Local Office, Dhaka
Less: Off-shore Banking Units

Annual Report 2012 240

Amount in Taka

2011

2,059,503,576
14,117,939,937
2,749,635,259
40,969,705,594
1,217,357,114
61,114,141,480

1,464,103,675
12,032,573,269
5,124,479,346
29,271,172,459
47,892,328,749

251,389,642
90,411,112
185,845
341,986,599
90,452,210
251,534,389

377,477,308
3,213,517
4,792,616
385,483,441
3,361,069
382,122,372

1,392,741,405
37,476,454
24,335,982
12,170,729
1,466,724,570
1,718,258,959

1,138,637,962
32,812,263
10,765,643
15,266,326
1,197,482,195
1,579,604,567

251,389,642
1,392,741,405
1,644,131,047

377,477,308
1,138,637,962
1,516,115,270

477,554
94,739
3,500,000
5,778,964
2,997,108
274,719
62,733,959
1,696,291
7,347,825
1,000
13,565,017
3,288,797
1,292
13,123,089
1,167,259
9,562,393
3,045,665
23,417,396
17,178,093
6,932,833
599,503
63,022
10,542,555
16,509,210
3,621,134
7,448,342
166,621,451
176,341
381,765,551
166,621,451
215,144,100

10,488,705
4,007,817
2,500,450
1,160,770
2,998,108
275,515
58,223,470
1,727,900
6,797,821
1,000
73,566,147
5,187,818
328
1,292
16,458
16,199,476
18,624,590
22,173,332
8,568,058
9,385,030
8,220,571
24,871,469
12,182,617
1,001,000
6,064,601
11,562,209
31,028,027
6,716,871
4,417,636
1,867,771
237,669,828
177,841
587,684,526
237,669,828
350,014,698

Notes to the Financial Statements


for the year ended 31 December 2012
2012

Amount in Taka

2011

Special notice deposit accounts


Agrani Bank Ltd., Principal Branch, Dhaka
Agrani Bank Ltd., Takerhat Branch
ICB Islamic Bank Ltd., Principal Office, Motijheel, Dhaka
ICB Islamic Bank Ltd., Sylhet
Janata Bank Ltd., Local Office, Dhaka
National Bank Ltd., Narayanganj Branch, Dhaka
Sonali Bank Ltd., Bhairab Bazar, Kishoregonj
Social Islami Bank Ltd., Principal Branch, Dhaka
Savings accounts
Al Arafah Islami Bank Ltd., Dhaka
Bank Al Falah Ltd., Dhaka
Social Islami Bank Ltd., Principal Branch, Dhaka
Fixed deposits

4a.2

295,926
2,112
15,599
18,971
5,028,074
30,705,174
950
12,433
36,079,239

286,140
1,003,195
15,599
18,970
4,827,406
21,136,783
950
12,210
27,301,253

63,492
36,109
66,702
166,303

61,297
35,416
64,644
161,357

251,389,642

377,477,308

327,947
708,632
12,070,342
8,633,221
10,439,935
621,790
14,492,798
56,046,201
429,879
54,469,945
251,018
5,033,160
5,927,202
7,927,789
18,116,329
32,118,229
151,564,812
84,844
50,043,048
3,755,849
10,295,770
375,130
37,666,149
527,580,408
9,429,091
19,477,472
3,376,263
6,730,567
57,071,561
2,641,429
9,146,985
5,800,084
55,539,532
132,751,323
8,715,241
34,428,476
38,652,955

6,644,484
1,002,246
4,191,187
3,292,821
4,884,087
7,318,508
9,394,222
17,997,373
440,662
29,960,877
618,873
1,972,977
3,791,449
12,742,153
33,567,690
27,949,005
91,803,153
2,541
17,085,340
32,738,763
538,287
10,361,238
445,616,228
12,947,048
7,754,862
1,276,803
7,287,220
10,710,884
1,915,572
16,321,338
23,666,718
43,555,382
206,634,472
2,891,913
16,786
4,073,036
3,226,925
32,444,839

1,392,741,405

1,138,637,962

Outside Bangladesh (NOSTRO Accounts)


Current account
AB Bank Ltd., Mumbai, India
Banca Nazionale, del Lavoro, Rome, Italy
Bank of Bhutan Phuentsholing, Bhutan
The Bank of Tokyo Mitsubishi Ltd., Japan
SMBC, Tokyo, Japan
Citibank N.A., Mumbai, India
Citibank N.A., London , UK
Citibank N.A., New York, USA
Citibank N.A., New York, USA (Off-shore Banking)
Commerz Bank AG, Frankfurt , Germany (EURO)
Commerz Bank AG, Frankfurt , Germany (US$)
Commonwealth Bank of Australia, Australia
Credit Suisse (First Boston), Switzerland
Habib American Bank, New York, USA
Habib Metropolitan Bank Ltd, Karachi
HDFC Bank Limited, Kolkata, India
HSBC Bank USA, New York, USA
HSBC Bank Middle East Ltd., Karachi, Pakistan
HSBC PLC, London, UK
HANA Bank, Seoul
ICICI Bank Ltd, Mumbai, India
Intesa Sanpaolo SPA, Milano, Italy
J. P. Morgan Chase Bank, New York
Mashreq Bank PSC, New York, USA
Mashreq Bank PSC, Mumbai, India
National Westminister Bank, London, UK
The National Commercial Bank, Jeddah
Nepal Bangladesh Bank Ltd., Kathmandu, Nepal
Peoples Bank, Colombo, Sri Lanka
Skandinaviska Enskilda Banken, Sweden
Sonali Bank, Kolkata, India
Standard Chartered Bank, Kolkata, India
Standard Chartered Bank, New York, USA
Standard Chartered Bank, Singapore
Standard Chartered Bank, Frankfurt, Germany
State Bank of India, Kolkata
The Bank of Nova Scotia, Toronto, Canada
Unicredito Italiano SPA, Milano, Italy
Wells Fargo Bank N. A. Newyork
(Annexure -A)

Annual Report 2012 241

Notes to the Financial Statements


for the year ended 31 December 2012
2012
4a.3

Maturity grouping of balance with other banks and financial institutions


Payable on demand
Up to 1 month
Over 1 month but not more than 3 months
Over 3 months but not more than 6 months
Over 6 months but not more than 1 year
Over 1 year but not more than 5 years
Over 5 years

Money at call and short notice

Consolidated investments
Government
Prime Bank Limited (note-6a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Others
Prime Bank Limited (note-6a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Less: Inter-company transaction

6a

Amount in Taka

2011

1,607,885,505
16,630
36,079,239
149,673
1,644,131,047

1,488,652,660
16,136
27,301,253
145,221
1,516,115,270

44,936,697,967
44,936,697,967

34,395,651,805
34,395,651,805

4,733,737,225
1,399,569,819
741,051,850
6,874,358,894
3,808,530,984
3,065,827,910
48,002,525,877

4,776,646,818
1,441,557,511
696,472,977
6,914,677,306
3,794,500,832
3,120,176,474
37,515,828,279

9,939,151,576
35,007,440,491
4,723,843,125
49,670,435,192

17,022,719,665
17,390,298,140
4,759,280,818
39,172,298,623

1,075,511,325
381,038,068
1,293,085,866
2,749,635,259
1,217,357,114

483,460,154
393,210,802
4,247,808,390
5,124,479,346
-

5,105,900
40,964,599,694
40,969,705,594
44,936,697,967

2,634,000
29,268,538,459
29,271,172,459
34,395,651,805

Investments of the Bank


i) Investment classified as per Bangladesh Bank Circular:
Held for trading (HFT)
Held to maturity (HTM)
Other securities
ii) Investment classified as per nature:
a) Government securities:
28 days treasury bills
91 days treasury bills
182 days treasury bills
364 days treasury bills
5 years treasury bills
30 days Bangladesh Bank bills
Government bonds:
Prize bonds
Government bonds - (note-6a.2)

Treasury Bill & Bond amounting to Tk. 2,625,785,597.52 was placed as lien against ALS from Bangladesh Bank on 30.12.2012

Annual Report 2012 242

Notes to the Financial Statements


for the year ended 31 December 2012
2012
b) Other investments:
Debentures of HBFC-bearing interest rate @ 5.5% (note-6a.3)
Dhaka Bank Subordinated Bond interest rate @ 11.65% (note-6a.4)
National Bank Subordinated Bond interest rate @ 11.50% (note-6a.5)
DBH Zero coupon bond interest rate @ 8.25% (note-6a.6)
IDLC Zero coupon bond interest rate @ 8.25% (note-6a.7)
Orascom bond interest rate @ 13.50% (note-6a.8)
Investment in subsidiaries (note-6a.9)
Shares (note-6a.10)

6a.1

Maturity grouping of investments


On demand
Up to 1 month
Over 1 month but not more than 3 months
Over 3 months but not more than 6 months
Over 6 months but not more than 1 year
Over 1 year but not more than 5 years
Over 5 years

6a.2

Amount in Taka

2011

15,000,000
171,430,361
201,661,111
54,663,022
18,152,329
150,112,500
3,808,530,984
314,186,918
4,733,737,225
49,670,435,192

20,000,000
171,595,403
201,661,111
151,813,187
50,402,795
200,150,000
3,794,500,832
186,523,490
4,776,646,818
39,172,298,623

4,539,349,166
615,376,253
955,636,877
1,022,318,981
15,098,785,391
27,438,968,524
49,670,435,192

721,734,628
418,719,985
1,752,799,503
2,920,653,204
9,334,444,098
24,023,947,205
39,172,298,623

850,000,000
6,652,563,435
18,007,844,578
5,779,949,329
3,702,083,149
34,992,440,491

850,000,000
925,083,228
8,305,142,769
4,264,474,884
3,025,597,258
17,370,298,139

2,168,556,000
2,656,291,708
677,658,330
469,653,165
5,972,159,203
40,964,599,694

5,288,669,108
6,300,427,787
163,754,791
145,388,634
11,898,240,320
29,268,538,459

100,000,000
(85,000,000)
15,000,000

100,000,000
(80,000,000)
20,000,000

171,595,403
19,805,000
(19,970,042)
171,430,361

171,595,403
19,805,000
(19,805,000)
171,595,403

Government bonds
Name of the bonds
HTM
3 years T & T bonds
2 years Bangladesh Government Islami Investment Bonds
5 years Bangladesh Government treasury bonds (7.80%-9.00%)
10 years Bangladesh Government treasury bonds(8.50%-11.74%)
15 years Bangladesh Government treasury bonds(8.69%-14.00%)
20 years Bangladesh Government treasury bonds(9.10%-13.29%)
HFT
3 years T & T bonds
2 years Bangladesh Government Islami Investment Bonds
5 years Bangladesh Government treasury bonds (10.60%-11.55%)
10 years Bangladesh Government treasury bonds(11.50%-11.80%)
15 years Bangladesh Government treasury bonds(11.80%-12.10%)
20 years Bangladesh Government treasury bonds(12.10%-12.28%)

6a.3

Debentures of Bangladesh House Building Finance Corporation


- at redeemable value
Principal
Add: Accrued Interest
Less: Redeemed up to 31 December 2012
Redeemable value

6a.4

Dhaka Bank Ltd. Subordinated Bond


Opening balance
Add: Interest accrued during the year
Less: Principal redemption during the year
Less: Interest received during the year
Redeemable value

Annual Report 2012 243

Notes to the Financial Statements


for the year ended 31 December 2012
2012

Amount in Taka

2011

6a.5

National Bank Ltd. Subordinated Bond


Opening balance
Add: Interest accrued during the year
Less: Principal redemption during the year
Less: Interest received during the year
Redeemable value

201,661,111
23,000,000
(23,000,000)
201,661,111

201,661,111
23,000,000
(23,000,000)
201,661,111

6a.6

DBH Zero Coupon Bond


Opening balance
Add: Interest accrued during the year
Less: Principal redemption during the year
Less: Interest received during the year
Redeemable value

151,813,187
7,916,928
(75,000,000)
(30,067,093)
54,663,022

233,648,062
14,993,338
(75,000,000)
(21,828,213)
151,813,187

6a.7

IDLC Zero Coupon Bond


Opening balance
Add: Interest accrued during the year
Less: Principal redemption during the year
Less: Interest received during the year
Redeemable value

50,402,795
2,771,904
(25,000,000)
(10,022,370)
18,152,329

77,553,649
5,125,216
(25,000,000)
(7,276,070)
50,402,795

6a.8

Orascom Bond
Principal
Add: Interest accrued during the year
Less: Principal redemption during the year
Less: Interest received during the year
Redeemable value

200,150,000
23,981,250
(50,000,000)
(24,018,750)
150,112,500

250,187,500
30,750,000
(50,000,000)
(30,787,500)
200,150,000

6a.9

Investment in subsidiaries
2,999,999,940
712,500,000
10,993,235
56,352,624
28,685,185
3,808,530,984

2,999,999,940
712,500,000
10,993,235
49,633,289
21,374,368
3,794,500,832

32,918,300
17,987,037
21,243,239
18,648,926
27,121,550
20,855,770
29,608,038
20,380
14,338,010
23,395,426
21,314,190
9,980,000
19,867,211
37,009,980
294,308,058

6,892,375
3,872,420
5,311,538
4,727,166
5,802,255
20,380
3,482,316
3,608,921
4,622,080
4,429,698
4,135,407
11,298,243
58,202,799

15,694,430
4,184,430
19,878,860
314,186,918

15,694,430
2,413,761
10,000,000
100,212,500
128,320,691
186,523,490

Prime Bank Investment Limited


Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange(UK) Ltd.
PBL Finance (Hong Kong) Limited
6a.10

Investment in shares
Quoted
AB Bank Ltd.
Bank Asia Ltd.
BRAC Bank Ltd.
The City Bank Ltd.
DESCO
Dhaka Bank Ltd.
Eastern Bank Ltd.
Federal Insurance Company Bangladesh Ltd.
Jamuna Bank Ltd.
Lanka Bangla Finance Ltd.
M. I. Cement Factory Ltd.
MJL Bangladesh Ltd
National Bank Ltd.
NLI First MF
One Bank Ltd.
Titas Gas
Uttara Bank Ltd.
Unquoted as on 31 December 2012
Central Depository Bangladesh Limited (CDBL)
Investment in SWIFT
NLI First MF
9% Preference share of BRAC Bank
(Annexure -B)

Annual Report 2012 244

Notes to the Financial Statements


for the year ended 31 December 2012
2012
6a.11 (i)

Amount in Taka

Disclosure regarding outstanding Repo


Counterparty name
Bangladesh Bank-(Assured liquidity support)
Bangladesh Bank-(Special Repo)
Standard Chartered Bank
Pubali Bank Ltd.

Agreement date

Reversal date

Amount

30.12.2012
30.12.2012
30.12.2012
30.12.2012

01.01.2013
01.01.2013
01.01.2013
01.01.2013

2,424,510,000
1,500,000,000
2,374,310,059
1,105,530,248

Total
6a.11 (ii)

7,404,350,307

Disclosure regarding outstanding Reverse Repo


Counterparty name

Agreement date

Reversal date

Amount

Total
6a.12

2011

Disclosure regarding Overall transaction of Repo and Reverse Repo


Counterparty name

Minimum
Outstanding during
the year

Maximum
outstanding during
the year

Daily average
outstanding during
the year

1,987,615,000
276,952,437

14,924,630,000
4,713,754,422

9,526,479,483
1,403,485,189

Securities sold under Repo


With Bangladesh Bank
With other Banks & FIS

Securities purchased under Reverse Repo


From Bangladesh Bank
From other Banks & FIS

Consolidated loans, advances and lease / Investments


Prime Bank Limited (note-7a)

153,440,706,958

132,028,898,117

6,348,091,622

5,897,653,045

404,029,700

193,021,110

Prime Exchange Co. Pte. Ltd., Singapore

PBL Exchange (UK) Ltd.

PBL Finance (Hong Kong) Limited

160,192,828,280

138,119,572,272

3,817,920,298

3,713,344,767

156,374,907,982

134,406,227,505

8,667,419,387

7,395,421,459

165,042,327,369

141,801,648,964

Prime Bank Investment Limited


Prime Bank Securities Limited

Less: Inter-company transactions

Consolidated bills purchased and discounted (note-8)

Annual Report 2012 245

Notes to the Financial Statements


for the year ended 31 December 2012
2012
7a

Amount in Taka

2011

Loans, advances and lease / investments of the Bank


i) Loans, cash credits, overdrafts, etc.
Inside Bangladesh
Secured overdraft / Quard against TDR
Cash credit / Murabaha
Loans (General)
House building loans
Loans against trust receipt
Payment against document
Retail loan
Lease finance / Izara (note - 7a.3)
Credit card
SME loan
Hire purchase
Other loans and advances
Outside Bangladesh

38,485,351,177
22,797,516,730
30,396,292,698
3,615,477,187
17,724,668,458
679,994,650
11,303,238,002
8,186,003,760
915,407,506
988,948,830
8,118,559,532
10,229,248,428
153,440,706,958
153,440,706,958

36,375,509,274
17,533,655,691
22,300,158,827
3,634,699,533
20,912,413,500
701,741,974
10,938,785,871
7,556,800,614
750,396,269
1,278,065,027
7,156,823,052
2,889,848,485
132,028,898,117
132,028,898,117

5,499,981,492

4,617,715,263

1,949,160,113
7,449,141,605
160,889,848,563

2,201,816,628
6,819,531,891
138,848,430,008

160,889,848,563

138,848,430,008

6,168,499,440
620,359,575
3,974,248,435
10,763,107,450
150,126,741,113

1,908,248,000
538,695,707
2,563,399,971
5,010,343,678
133,838,086,330

36,933,559,434
34,024,057,815
44,801,021,311
42,229,227,840
2,901,982,163
160,889,848,563

25,469,685,668
36,007,310,917
42,281,182,417
33,027,948,535
2,062,302,471
138,848,430,008

3,283,525,539
11,226,832,700
585,251,400
15,095,609,639
6,909,605,879
8,186,003,760

1,572,495,257
5,576,138,596
2,246,981,454
9,395,615,307
1,838,814,693
7,556,800,614

ii) Bills purchased and discounted (note-8a)


Payable Inside Bangladesh
Inland bills purchased
Payable Outside Bangladesh
Foreign bills purchased and discounted

7a.1

Net loans, advances and lease / investments


Gross performing loans, advances and lease / investments (note-7a)
Less:
Non-performing loans, advances and lease / investments (note-7a.11)
Interest suspense (note-13a.6)
Provision for loans, advances and lease / investments (note-13a.3, 13a.5)

7a.2

Residual maturity grouping of loans, advances and lease / investments


including bills purchased and discounted
Repayable on demand
Up to 1 month
Over 1 month but not more than 3 months
Over 3 months but not more than 1 year
Over 1 year but not more than 5 years
Over 5 years

7a.3

Lease finance / Izara


Lease rental receivable within 1 year
Lease rental receivable within 5 years
Lease rental receivable after 5 years
Total lease / Izara rental receivable
Less: Unearned interest receivable
Net lease / Izara finance

Annual Report 2012 246

Notes to the Financial Statements


for the year ended 31 December 2012
2012
7a.4

Bills purchased and discounted (note-8a)

92,157,839,051
22,797,516,730
38,485,351,177
153,440,706,958
7,449,141,605
160,889,848,563

78,119,733,152
17,533,655,691
36,375,509,274
132,028,898,117
6,819,531,891
138,848,430,008

1,724,309,911

1,394,937,859

21,690,116,112
13,119,356,738
3,615,477,187
11,303,238,002
12,230,784,130
682,454,196
11,201,263
81,767,701,149
14,745,209,875
159,165,538,652
160,889,848,563

20,675,645,192
8,691,928,762
3,634,699,533
10,938,785,871
9,429,394,225
1,060,828,000
4,462,142
65,426,459,723
17,591,288,701
137,453,492,149
138,848,430,008

2,274,808,715
26,070,842,203
5,340,966,112
1,574,636,341
1,170,213,626
204,570,425
5,113,194,980
5,958,981,208
9,325,671,441
24,733,816,098
81,767,701,149

2,283,317,008
13,330,206,646
3,959,449,000
1,581,394,927
1,617,250,000
35,619,485
2,949,673,646
3,966,959,793
5,157,154,311
30,545,434,907
65,426,459,723

117,138,250,054
25,060,277,567
5,214,202,263
4,510,325,528
150,519,568
1,993,477,795
1,020,742,969
155,087,795,744

101,503,759,729
21,356,686,758
4,376,951,766
3,669,923,389
175,568,285
1,649,254,200
930,136,252
133,662,280,379

3,866,632,368
1,014,279,804
121,042,186
487,631,644
312,466,817
5,802,052,819
160,889,848,563

3,441,718,745
791,768,625
25,696,491
255,683,128
671,282,640
5,186,149,629
138,848,430,008

Loans, advances and lease / investments on the basis of significant


concentration including bills purchased and discounted.
a) Loans, advances and lease / investments to Directors of the Bank
b) Loans, advances and lease / investments to Chief Executive and
other senior executives
c) Loans, advances and lease / investments to customer groups
i) Commercial lending
ii) Export financing
iii) House building loan
iv) Retail loan
v) Small and medium enterprises
vi) Special program loan
vii) Staff loan
viii) Industrial loans / investments detail (note-7a.5 d)
ix) Other loans and advances (SOD)

d) Details of Industrial loans / investments


i) Agricultural industries
ii) Textile industries
iii) Food and allied industries
iv) Pharmaceutical industries
v) Leather, chemical, cosmetics, etc.
vi) Tobacco industries
vii) Cement and ceramic industries
viii) Service Industries
ix) Transport and communication industries
x) Other industries including bills purchase and discounted
7a.6

2011

Loans, advances and lease / investments under the following broad categories
Loans
Cash credits
Overdrafts

7a.5

Amount in Taka

Loans, advances and leases / investments -geographical location-wise


Inside Bangladesh
Urban
Dhaka Division
Chittagong Division
Khulna Division
Rajshahi Division
Barisal Division
Sylhet Division
Rangpur Division
Rural
Dhaka Division
Chittagong Division
Khulna Division
Rajshahi Division
Sylhet Division
Outside Bangladesh

Annual Report 2012 247

Notes to the Financial Statements


for the year ended 31 December 2012
2012
7a.7

7a.8

Sector-wise loans, advances and lease / investments including bills


purchased and discounted
Public sector
Co-operative sector
Private sector

2011

107,324,320
160,782,524,243
160,889,848,563

330,736,692
48,203,108
138,469,490,208
138,848,430,008

115,788,853,865
3,010,813,582
242,063,041
5,131,043
6,466,293,749
7,566,583,262
1,408,779,115
1,853,220
10,412,344,557
15,987,133,129
160,889,848,563

89,543,240,119
3,924,012,894
1,696,097
5,323,242,682
10,550,622,940
549,884,386
992,852
10,767,830,041
18,186,907,997
138,848,430,008

Details of pledged collaterals with the Bank


Collateral of movable / immovable assets
Local banks and financial institutions guarantee
Government guarantee
Foreign banks guarantee
Export documents
Fixed deposit receipts
FDR of other banks
Government bonds
Personal guarantee
Other securities

7a.9

Amount in Taka

Details of large loans, advances and lease / investments


Number of clients with outstanding amount and classified loans / investments exceeding 10% of total capital of the
Bank. Total capital of the Bank was Taka 25,751.53 million as at 31 December 2012 (Tk 24,068.59 million in 2011).
Number of clients
Amount of outstanding advances / investments
Amount of classified advances / investments
Measures taken for recovery
Name of clients
Ananta Group
Bangladesh Rural Advancement Committee (BRAC)
Bismillah Group
Bulk Trade International Ltd.
Concord Pragatee Consortium Ltd.

14

10

45,574,440,000

31,478,100,000

* 632,544,000

Nil

Negotiation under process

Not applicable

Outstanding (Tk. in million)

Total

Total

Funded

Non-funded

(Tk. in million) (Tk. in million)

1,244.75

1,926.43

3,171.19

1,820.02

2,496.42

620.68

3,117.10

3,119.78

3,119.78

2,257.35

2,868.83

ENA Properties

1,358.82

1,419.79

2,778.61

Energy Pac Confidence Group

1,773.42

895.51

2,668.93

1,968.12

Janata Flour & Dal Mills Ltd.

2,510.44

3,959.03

6,469.47

6,650.62

M/s. Kabir Steel & BSA Group

2,065.97

2,320.25

4,386.21

3,927.25

Noman Group

2,214.00

591.73

2,805.73

Prime Bank Investment Ltd

3,816.30

3,816.30

3,555.68

Project Builders Ltd.

2,942.00

1,772.17

4,714.17

Rural Power Company Ltd.


Tamishna Group
T.K Group

2,043.73

2,101.97

739.15

2,841.12

3,115.86

634.78

5,051.07

5,685.86

3,270.65

23,158.86

22,415.58

45,574.44

31,478.10

* The amount relates to Bismillah Group. However, there are challanges which are under scrutiny of our Audit & Inspection and
Bangladesh Bank.

Annual Report 2012 248

Notes to the Financial Statements


for the year ended 31 December 2012
2012
7a.10

2011

Particulars of loans, advances and lease / investments


i)

Loans / investments considered good in respect of which the Bank is


fully secured

131,232,363,211

105,407,519,801

26,399,477,686

10,767,830,041

3,258,007,666

22,673,080,166

160,889,848,563

138,848,430,008

1,735,511,174

1,399,400,001

vi) Loans / investments due from companies or firms in which the directors
of the Bank have interest as directors, partners or managing agents or
in case of private companies, as members

vii) Maximum total amount of advances / investments, including temporary


advances made at any time during the year to directors or managers
or officers of the banking company or any of them either separately or
jointly with any other person.

1,735,511,174

1,399,400,001

viii) Maximum total amount of advances / investments, including temporary


advances / investments granted during the year to the companies
or firms in which the directors of the banking company have interest
as directors, partners or managing agents or in the case of private
companies, as members

ix) Due from banking companies

6,168,499,440

1,908,248,000

1,949,076,445
1,354,840,849
620,359,575

778,227,982
528,916,000
538,695,707

2,574,963,826
404,200,520
2,979,164,346
85,048,984

2,374,986,436
199,977,390
2,574,963,826
110,069,208

3,487,369,161

2,662,458,142

150,891,349,342
3,829,999,781
154,721,349,123

135,761,469,008
1,178,713,000
136,940,182,008

2,286,522,275
709,305,223
3,172,671,942
6,168,499,440
160,889,848,563

560,878,000
309,826,000
1,037,544,000
1,908,248,000
138,848,430,008

ii) Loans / investments considered good against which the Bank holds no
security other than the debtors personal guarantee
iii) Loans / investments considered good secured by the personal
undertaking of one or more parties in addition to the personal guarantee
of the debtors
iv) Loans / investments adversely classified; provision not maintained
there against
v) Loans / investments due by directors or officers of the banking
company or any of them either separately or jointly with any other
persons (note-7a.5b+7a.5c.vii)

x) Classified loans and advances / investments


a) Classified loans and advances / investments on which interest has
not been charged (note-7a.11)
b) Provision on classified loans and advances / investments
(for details see note-13a.3)
c) Provision kept against loans / investments classified as bad debts
d) Interest credited to Interest Suspense Account (note-13a.6)
xi) Cumulative amount of written off loans / investments
Opening Balance
Amount written off during the year
Amount realised against loans / investments previously written off
The amount of written off / classified loans / investments for which law
suits have been filed (note-7a.14)
7a.11

Amount in Taka

Classification of loans, advances and lease / investments


Unclassified
Standard including staff loan
Special mention account (SMA)
Classified
Sub-standard
Doubtful
Bad / Loss

Annual Report 2012 249

Notes to the Financial Statements


for the year ended 31 December 2012
2012
7a.12

Amount in Taka

2011

Particulars of required provision for loans, advances and lease /


investments

Status

Base

Rate

for provision

General Provision
Loans/investments (Excluding
SMA)

150,891,349,342

Interest receivable on loans/


investments
Special mention account (SMA)

*Various

1,789,525,189

1,660,355,150

951,727,418

9,517,274

6,995,138

3,829,999,781

191,499,989

54,294,850

1,990,542,452

1,721,645,138

*General provision is kept @ 1% on general loans and advances / investments and 0.25% on small enterprise financing,
2% on certain other types of lending and 5% on consumer financing.

Status

Base

Rate

for provision

2,014,100,959

20

Specific provision
Sub-standard
Doubtful
Bad / Loss

402,820,192

83,732,000

377,075,126

50

188,537,563

118,590,000

1,354,840,849

100

1,354,840,849

528,916,000

1,946,198,604

731,238,000

Required provision for loans, advances and lease / investments

3,936,741,056

2,452,883,138

Total provision maintained (note - 13, 13a3 & 13a.5)

3,983,765,735

2,563,399,971

47,024,679

110,516,833

Excess / (short) provision at 31 December 2012

Bangladesh Bank letter dated 28/02/2013 advised to classify few customer accounts in the current years financials,
accordingly we have considered those accounts under classification list. However, the Bangladesh Bank has extended
the time for provisioning on such accounts upto 30.06.2013, if fail to recover/reschedule.
7a.13

Particulars of required provision on Off-balance Sheet Exposures


Base
for Provision

Rate
1%

Acceptances and endorsements

33,064,522,464

330,645,225

289,634,163

Letter of guarantee

44,031,123,130

440,311,231

349,552,843

Letter of credit

30,602,172,770

306,021,728

297,066,633

Required provision on Off-balance Sheet Exposures

1,076,978,184

936,253,639

Total provision maintained (note - 13a.4)

1,080,000,000

940,000,000

3,021,816

3,746,361

Excess / (short) provision at 31 December 2012

Annual Report 2012 250

Notes to the Financial Statements


for the year ended 31 December 2012
2012
7a.14

Suits filed by the Bank (Branch wise details)


Agrabad Branch
Adamjee EPZ Branch
Asad Gate Branch
Ashulia Branch
Banani Branch
Bangshal Branch
Barisal Branch
Bashundhara Branch
Bogra Branch
Head Office, FMD & Card
Court Road Branch
Coxs Bazar Branch
Dinazpur Branch
Elephant Road Branch
Foreign Exchange Branch
Ganakbari Branch
Gulshan Branch
Halishahar Branch
Hathazari Branch
IBB, Amberkhana Branch
IBB, Dilkusha Branch
IBB, Mirpur Branch
IBB, O.R. Nizam Road Branch
IBB, Pahattali Branch
Jessore Branch
Joypara
Jubilee Road Branch
Kawran Bazar Branch
Khatunganj Branch
Khulna Branch
Laldighi East Branch
Madhabdi Branch
Mirpur-1 Branch
Motijheel Branch
Mohakhali Branch
Mouchak Branch
Moulvibazar Branch, Dhaka
Mymensingha Branch
Naogaon Branch
Narayanganj Branch
New Eskatan Branch
Oxygen More Branch
Pallabi Branch
Panthpath Branch
Rajshahi Branch
Rangpur Branch
Ring Road Branch
Sat Masjid Road Branch
SBC Tower Branch
Simrail Branch
SME Banking, Dhaka
Sremangal Branch
Sylhet Branch
Subidbazar Branch, Sylhet
Tongi Branch
Uposhahar Branch, Sylhet
Uttara Branch

Amount in Taka

182,223,605
619,020
20,978,451
12,667,127
7,339,256
22,095,540
779,085
7,412,477
733,109,329
25,440,651
507,721
2,122,930
440,993
3,715,619
413,947,087
683,550
93,893,494
385,000
6,167,879
3,132,100
26,740,776
270,000
33,187,610
212,146
6,592,865
1,978,190
480,606,863
132,755,491
16,137,047
120,302,380
6,357,500
3,348,640
9,802,051
763,638,244
2,012,365
4,117,086
100,648,973
8,150,000
40,825,730
1,410,176
727,696
1,290,144
3,763,525
49,272,272
857,888
42,195,523
1,604,025
5,329,753
5,465,265
19,891,879
21,903,286
20,615,350
2,414,000
2,432,493
1,447,800
11,403,213
3,487,369,161

2011

158,485,605
21,209,134
8,088,417
1,271,718
21,496,140
779,085
6,432,545
733,109,329
24,106,651
69,519
1,756,759
5,793,408
975,050
95,007,494
1,957,174
29,606,523
100,000
30,059,610
212,146
6,632,612
956,190
19,111,290
56,292,005
145,804,110
200,019,715
5,202,500
3,964,324
10,812,220
659,995,269
2,012,365
3,362,086
100,648,973
100,981,115
41,086,654
861,249
1,654,686
49,272,272
314,135
33,627,402
1,604,025
5,329,753
7,280,251
6,892,287
21,654,662
20,570,912
964,000
2,432,493
1,395,200
11,207,078
2,662,458,142

Annual Report 2012 251

Notes to the Financial Statements


for the year ended 31 December 2012
2012
8

Consolidated Bills purchased and discounted


Prime Bank Limited (note-8a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

8a

Bills purchased and discounted


Payable in Bangladesh
Payable outside Bangladesh

8a.1

Maturity grouping of bills purchased and discounted


Payable within one month
Over one month but less than three months
Over three months but less than six months
Six months or more

Consolidated fixed assets including premises, furniture and fixtures


Prime Bank Limited (note-9a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

9a

Fixed assets including premises, furniture and fixtures of the Bank


Property, Plant & Equipment
Land
Building
Furniture and fixtures
Office equipment and machinery
Vehicles
Library books
Leased property:
Leased vehicles

Less: Accumulated depreciation


Intangibles assets
Software-core banking
Software-ATM
Cost of intangibles assets
Less: Accumulated amortization
Net book value at the end of the year (See annexure-C for detail)

6,819,531,891
575,889,568
7,395,421,459

5,499,981,492
1,949,160,113
7,449,141,605

4,617,715,263
2,201,816,628
6,819,531,891

2,975,545,974
1,938,801,812
2,534,793,819
7,449,141,605

3,344,016,715
1,912,325,394
1,563,189,782
6,819,531,891

4,363,349,270
22,809,876
8,710,077
5,095,255
18,875,772
964,587
4,419,804,836

3,975,458,490
27,599,950
10,142,395
2,623,453
17,065,888
513,704
4,033,403,880

2,200,907,410
761,773,433
694,293,990
1,157,551,128
325,821,316
1,558,890
5,141,906,167

2,195,907,410
543,182,545
617,233,126
1,032,982,037
216,602,023
1,535,005
4,607,442,146

31,690,384

31,690,384

211,498,500
34,070,094
245,568,594

132,396,714
17,092,221
149,488,935

2,946,983
1,637,587
1,410,371
5,994,941
5,425,160,086
1,214,728,832
4,210,431,254

2,946,983
1,607,562
1,410,371
5,964,916
4,794,586,381
970,149,429
3,824,436,952

226,740,063
28,235,444
254,975,507
102,057,491
152,918,016
4,363,349,270

197,956,054
28,235,444
226,191,498
75,169,960
151,021,538
3,975,458,490

The fixed assets recognised and measurements policy are described in note 2.2.4

Annual Report 2012 252

2011

7,449,141,605
1,218,277,782
8,667,419,387

ATM
Hardware & equipment
Furniture & fixtures
Off-shore Banking Units
Furniture and fixtures
Office equipment and machinery
Vehicles

Amount in Taka

Notes to the Financial Statements


for the year ended 31 December 2012
2012
10

2011

Consolidated other assets


Prime Bank Limited (note-10a)
Less: PBIL investment in Prime Bank Securities Ltd.(below)
Less: Dividend of Prime Bank Investment Limited (note-10a)
Less: Due from Investment in PBL Finance (Hong Kong) Limited (note-10a)
Prime Bank Investment Limited (investment in PBSL)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

10a

Amount in Taka

Other assets of the Bank


Stationery and stamps
Exchange adjustment account
Loan to Off-shore Banking Units
Due from Off-shore Banking Units
Loan to PBL Finance (Hong Kong) Limited
Prepaid expenses
Interest / profit receivable on loan (note-10a.1)
Interest receivable on Govt. securities
Advance deposits and advance rent
Prepaid expenses against house furnishing
Branch adjustments account
Migration account
Suspense account (note -10a.2)
Encashment of PSP / BSP
ATM
Credit card
Sundry assets ( note -10a.3)
Less: Off-shore Banking Units

4,087,797,994
(37,500,000)
(239,999,995)
(1,128,039,537)
2,682,258,462

2,941,514,147
(37,500,000)
(560,463,177)
2,343,550,971

37,500,000
41,455,905
28,155,379
5,920,175
1,936,520
1,739,542
116,707,521
2,798,965,983

37,500,000
129,062,408
37,383,172
2,474,309
6,521,429
1,150,083
214,091,401
2,557,642,372

22,512,393
4,124,190,642
146,642,463
1,128,039,537
30,971,838
951,727,418
1,008,186,693
185,487,221
7,430,885
61,205,540
(2,440)
166,334,111
259,196,282
2,050,889
90,683,814
173,973,813
8,358,631,099
4,270,833,105
4,087,797,994

15,110,147
584,074
2,966,262,332
289,605,535
560,463,177
8,773,938
699,513,772
701,079,687
153,215,480
7,416,864
123,571,698
(121,465)
431,245,616
153,725,551
78,050,003
8,885,605
6,197,382,014
3,255,867,867
2,941,514,147

10a.1

Interest / profit receivable: Amount represents interest / profit receivable on loans, advances and lease / investments,
interest on term placement, Government securities & foreign currency balance, etc.

10a.2

Suspense account includes TT / DD in transit, advance against Land/ Building, advance against new branch, advance
against TA/ DA, printing and stationery, postage, suspense- others, clearing adjustment account etc.

10a.3

Sundry assets
Protested Bills
Less: Writeoff during the year
Receivable from/ (Payable to) branches
Others

1,141,024,661
(1,126,313,064)
(123,449)
159,385,664
173,973,813

7,454,399
1,431,206
8,885,605

At year-end management has performed detailed review of all protested bills and claims originated during the course of
banking operation, and upon assessing their recovery prospect, amounts which are considered to be not recoverable
have been written off after observing required formalities (note-13a.8).
10a.4

Particulars of required provision for other assets


Purchase of credit card bills
71,000,000
Protested bills
14,711,597
Advance deposits and advance rent
1,212,244
Others
159,385,664
Required provision for other assets
Total provision maintained (note - 13a.8)
Excess / (short) provision at 31 December 2012

Rate
100%
100%
100%
100%

71,000,000
14,711,597
1,212,244
159,385,664
246,309,505
247,111,936
802,431

71,000,000
7,454,399
1,212,244
79,666,643
81,000,000
1,333,357

Annual Report 2012 253

Notes to the Financial Statements


for the year ended 31 December 2012
2012
11

Prime Bank Limited (note-11a)

20,681,977,457

10,969,847,805

Prime Bank Investment Limited

3,933,012,530

3,578,091,569

352,278,429

135,253,198

Prime Exchange Co. Pte. Ltd., Singapore

PBL Exchange (UK) Ltd.

PBL Finance (Hong Kong) Limited


Less: Inter-company transactions

Outside Bangladesh (note-11a.2)

PBL bond

3,713,344,767

21,149,348,118

10,969,847,805

20,043,096,293

10,969,847,805

638,881,164

20,681,977,457

10,969,847,805

14,900,000,000

7,880,000,000

2,500,000,000

2,500,000,000

4,943,855

Bangladesh Bank (Off-shore Banking Units)

245,558,700

2,424,510,000

Refinance against SME loan from Bangladesh Bank

218,586,293

339,345,250

20,043,096,293

10,969,847,805

81,964

Doha Bank, Qatar

399,249,500

United Bank Ltd., UAE

239,549,700

638,881,164

Outside Bangladesh
The Bank of Nova Scotia, Canada

Security against borrowings from other banks, financial institutions and agents
Secured (Treasury bills)
Unsecured

11a.4

3,817,920,298

Standard Chartered Bank, Bangladesh


Repo of Treasury Bills

11a.3

14,683,192,572

In Bangladesh
Call deposits

11a.2

24,967,268,416

Borrowings from other banks, financial institutions and agents of the Bank
In Bangladesh (note-11a.1)

11a.1

2011

Consolidated borrowings from other banks, financial institutions and agents

Prime Bank Securities Limited

11a

Amount in Taka

2,424,510,000

18,257,467,457

10,969,847,805

20,681,977,457

10,969,847,805

14,900,000,000

7,880,000,000

3,063,391,164

120,000,000

Maturity grouping of borrowings from other banks, financial institutions and agents
Payable on demand
Up to 1 month
Over 1 month but within 3 months

Over 3 months but within 1 year

469,847,805

2,718,586,293

2,500,000,000

20,681,977,457

10,969,847,805

Over 1 year but within 5 years


Over 5 years

Annual Report 2012 254

Notes to the Financial Statements


for the year ended 31 December 2012
2012
12

Less: Inter-company transactions


Bills payable
Prime Bank Limited (note-12a.1.c)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Savings bank / Mudaraba savings deposits
Prime Bank Limited (note-12a.1.c)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Term / Fixed deposits
Prime Bank Limited (note-12a.1.c)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Less: Inter-company transactions

27,373,823,258
27,373,823,258
79,745,846
27,294,077,412

23,628,852,206
23,628,852,206
3,057,570
23,625,794,636

3,421,438,111
3,421,438,111

2,992,596,076
2,992,596,076

19,188,831,632
19,188,831,632

17,943,888,911
17,943,888,911

132,068,779,059
132,068,779,059
10,706,364
132,058,072,695
181,962,419,850

115,250,383,779
115,250,383,779
303,499
115,250,080,280
159,812,359,903

3,232,242,135
178,820,629,925
182,052,872,060

4,285,925,000
155,529,795,972
159,815,720,972

37,755,074
477,642,721
466,844,340
2,250,000,000
3,232,242,135

28,874,000
855,359,000
801,722,000
2,599,970,000
4,285,925,000

9,223,716,222
3,794,404,102
15,276,866
14,469,292,445
27,502,689,635
166,621,451
27,336,068,184

8,787,796,884
3,917,832,972
84,940,823
11,047,077,355
23,837,648,034
237,669,828
23,599,978,206

Deposits and other accounts of the Bank


Deposits from banks (note -12a.1.a)
Deposits from customers (note-12a.1.b)

12a.1

2011

Consolidated deposits and other accounts


Current deposits and other accounts
Prime Bank Limited (note-12a.1.c)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

12a

Amount in Taka

a) Deposits from Banks


Current deposits and other accounts
Savings bank / Mudaraba savings deposits
Special notice deposits
Fixed deposits
b) Customer Deposits
i) Current deposits and other accounts
Current / Al-wadeeah current deposits
Foreign currency deposits
Security deposits
Sundry deposits (note - 12a.2)
Less: Off-shore Banking Units

Annual Report 2012 255

Notes to the Financial Statements


for the year ended 31 December 2012
2012
ii) Bills payable
Pay orders issued
Pay slips issued
Demand draft payable
Foreign demand draft
T. T. payable
Bill Pay ATM
iii) Savings bank / Mudaraba savings deposits
iv) Term / Fixed deposits
Fixed deposits / Mudaraba fixed deposits
Special notice deposits
Non resident Taka deposits
Scheme deposits

c) Deposits and other accounts


Current deposits and other accounts
Deposits from banks (note -12a.1.a)
Deposits from customers (note-12a.1.b.i)
Bills payable

Deposits from banks (note -12a.1.a)

Deposits from customers (note-12a.1.b.ii)


Savings bank / mudaraba savings deposits
Deposits from banks (note -12a.1.a)

Deposits from customers (note-12a.1.b.iii)


Term / Fixed deposits

Deposits from banks (note -12a.1.a)

Deposits from customers (note-12a.1.b.iv)

12a.2

Amount in Taka

2011

3,305,503,224
4,425,077
111,195,865
313,592
318
35
3,421,438,111

2,847,424,899
5,179,467
139,677,288
313,592
830
2,992,596,076

18,711,188,911

17,088,529,911

80,358,078,398
7,944,713,645
601,207,853
40,447,934,823
129,351,934,719
178,820,629,925
182,052,872,060

70,570,841,509
7,136,150,650
305,972,722
33,835,726,898
111,848,691,779
155,529,795,972
159,815,720,972

37,755,074
27,336,068,184
27,373,823,258

28,874,000
23,599,978,206
23,628,852,206

3,421,438,111

3,421,438,111
477,642,721

18,711,188,911

2,992,596,076

2,992,596,076
855,359,000

17,088,529,911

19,188,831,632

17,943,888,911

2,716,844,340

3,401,692,000

129,351,934,719
132,068,779,059

111,848,691,779

115,250,383,779

182,052,872,060

159,815,720,972

6,085,186,554

3,982,771,999

20,572,395

84,798,208

Sundry deposits
F.C. held against back to back L/C
Sundry creditors

Risk fund and service charges (CCS and lease finance)


Sale proceeds of PSP / BSP

Margin on letters of guarantee


Margin on letters of credit

Margin on FDBP / IDBP, export bills, etc


Lease deposits

162,584,000
45,110,000

1,184,550,356
2,248,420,445
87,103,659

120,955,692

169,851,369
6,550,001

967,024,934

1,772,883,324
124,670,097
106,652,132

Interest / profit payable on deposits

2,538,613,828

2,322,719,001

Others

1,528,828,909

1,100,448,440

Withholding VAT/Tax /Excise duty payable to Government Authority

Annual Report 2012 256

447,366,607

14,469,292,445

408,707,850

11,047,077,355

Notes to the Financial Statements


for the year ended 31 December 2012
2012
12a.3

Payable on demand and time deposits


a) Demand deposits
Current deposits
Savings deposits (10%)
Foreign currency deposits (Non interest bearing)
Security deposits
Sundry deposits
Bills payable
b) Time deposits
Savings deposits (90%)
Fixed deposits
Special notice deposits
Deposits under schemes
Non resident Taka deposits

12a.4

Sector-wise break-up of deposits and other accounts


Government
Deposit money banks
Other public
Foreign currency
Private

12a.5

Unclaimed deposits and valuables


Current deposits
Savings deposits
Demand Draft
SDR
Pay order

12a.6

Maturity analysis of deposits


a) Maturity analysis of deposits from Banks
Payable on demand
Up to 1 month
Over 1 month but within 3 months
Over 3 months but within 1 year
Over 1 year but within 5 years
Over 5 years but within 10 years
Over 10 years
b) Maturity analysis of customer deposits excluding bills payable
Payable on demand
Up to 1 month
Over 1 month but within 3 months
Over 3 months but within 1 year
Over 1 year but within 5 years
Over 5 years but within 10 years
Over 10 years
c) Maturity analysis of bills payable
Payable on demand
Up to 1 month
Over 1 month but within 3 months
Over 3 months but within 1 year
Over 1 year but within 5 years
Over 5 years but within 10 years
Over 10 years

Amount in Taka

2011

9,261,471,296
1,918,883,163
3,627,782,651
15,276,866
14,469,292,445
3,421,438,111
32,714,144,532

8,816,670,884
1,794,388,892
3,680,163,144
84,940,823
11,047,077,355
2,992,596,076
28,415,837,174

17,269,948,469
82,608,078,398
8,411,557,985
40,447,934,823
601,207,853
149,338,727,528
182,052,872,060

16,149,500,019
73,170,811,509
7,937,872,650
33,835,726,898
305,972,722
131,399,883,798
159,815,720,972

3,331,169,000
3,232,242,135
6,281,049,000
3,627,782,651
165,580,629,274
182,052,872,060

3,182,610,000
4,285,925,000
6,641,406,000
3,680,163,144
142,025,616,828
159,815,720,972

66,084
173,417
275,745
974,487
4,388,608
5,878,340

285,444
122,972
150,122
789,500
2,005,578
3,353,616

37,755,074
524,327,155
2,250,000,000
420,159,906
3,232,242,135

28,874,000
935,531,000
2,599,970,000
721,550,000
4,285,925,000

28,653,601,490
39,295,756,247
36,174,586,587
47,903,487,671
23,365,881,479
5,878,340
175,399,191,814

22,650,135,954
34,968,176,650
42,721,335,350
42,616,651,942
9,577,546,384
3,353,616
152,537,199,896

3,421,438,111
3,421,438,111
182,052,872,060

2,992,596,076
2,992,596,076
159,815,720,972

Annual Report 2012 257

Notes to the Financial Statements


for the year ended 31 December 2012
2012
13

Consolidated other liabilities


Prime Bank Limited (note-13a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

13a

Other liabilities of the Bank


Foreign currency held against EDF loan
Exchange equalization account (note - 13a.7)
Exchange adjustment account
Expenditure and other payables
Provision for bonus
Obligation under finance lease (note-13a.9)
Provision for income tax (note - 13a.1)
Deferred tax liability (note-13a.2)
Unearned commission on bank guarantee
Credit card
Provision for gratuity
Provision for off-balance sheet exposures (note-13a.4)
Provision for Off-shore Banking Units (note-13a.5)
Fund for employee welfare fund (EWF)
Fund for Prime Bank Foundation (PBF)
Provision for loans and advances / investments (note - 13a.3)
Provision for Interest receivable on loans and advances / investments (note- 38a)
Provision for diminution in value of investments (note-38a)
Interest suspense account (note - 13a.6)
ATM
Other liabilities
Other provision (note - 13a.8)

13a.1

Provision for income tax


Advance tax
Balance of advance income tax on 1 January
Paid during the year
Settlement of previous years tax liability
Provision
Balance of provision on 1 January
Provision of previous year (note-39a)
Provision made during the year (note-39a)
Net balance at 31 December

Amount in Taka

2011

13,311,117,157
680,344,842
46,762,599
11,246,368
26,138,237
19,864,929
14,095,474,132

10,069,949,491
806,406,171
52,074,061
11,457,388
7,411,726
3,528,439
10,950,827,275

2,198,309,830
1,298,288
78,241,569
279,347,201
9,750,730
2,730,498,965
1,097,321,222
126,153,370
700
591,083,488
1,080,000,000
60,500,000
10,672,000
213,405,000
3,913,748,435
9,517,300
43,797,548
620,359,575
247,111,936
13,311,117,157

1,545,582,036
4,523,326
84,951,171
368,115,248
15,471,597
2,273,387,554
911,021,222
45,760,373
209,448
403,599,750
940,000,000
60,500,000
13,600,000
271,900,000
2,502,899,971
538,695,707
331,965
8,400,123
81,000,000
10,069,949,491

9,203,364,417
1,992,688,589
11,196,053,006

6,442,051,751
2,761,312,666
9,203,364,417

11,476,751,971
2,449,800,000
13,926,551,971
2,730,498,965

8,569,431,971
40,817,745
2,866,502,255
11,476,751,971
2,273,387,554

866,620,593
44,400,629
186,300,000
1,097,321,222

642,120,593
44,400,629
224,500,000
911,021,222

* Corporate tax position of the bank is shown in annexure-D


13a.2

Deferred tax liability


Deferred tax liability
Balance as on 1 January
Add: Provision for revaluation of land and building (note-17)
Add: Addition / Adjustment during the year (note-39a)
Balance as on 31 December

An amount of Tk. 186,300,000/- has been made against provision for deferred tax liability for the current year on account
of depreciation & accrued interest on Government Securities.

Annual Report 2012 258

Notes to the Financial Statements


for the year ended 31 December 2012
2012
13a.3

Provision for loans, advances and lease / investments


Movement in specific provision on classified loans / investments: Provision
held as on 1 January
Less: Fully provided debts written off during the year
Add: Recoveries of amounts previously written off
Add: Specific provision made during the year for other accounts
Less: Provision no longer required
Add: Net charge to profit and loss account (note-38a)
Provision held as on 31 December
Movement in general provision on unclassified loans / investments
Provision held as on 1 January
Add: Amount transferred to classified provision
Add: General provision made during the year (note-38a)
Provision held as on 31 December

13a.4

Provision for off-balance sheet exposures


Provision held as on 1 January
Add: Amount transferred from classified provision
Add: Provision made during the year (note-38a)
Provision held as on 31 December

13a.5

Provision for Off-shore Banking Units


Provision held as on 1 January
Add: Provision made during the year (note-38a)
Provision held as on 31 December

13a.6

Interest suspense account


Balance as on 1 January
Add: Prior year adjustment (note-2.1.9)
Add: Amount transferred to interest suspense account during the year
Less: Amount recovered from interest suspense account during the year
Less: Amount written-off during the year
Balance as on 31 December

13a.7

Exchange equalization account


Balance as on 1 January
Less: Transfer during the year
Balance as on 31 December

13a.8

Other provision for classified assets


Balance as on 1 January
Add: Addition during the year (note-38a)
Less: Adjustment during the year
Balance as on 31 December

Amount in Taka

2011

778,227,982

642,136,164

(404,200,520)
85,048,984
1,490,000,000
1,949,076,445

(199,977,390)
110,069,208
42,886,010
(42,886,010)
226,000,000
778,227,982

1,724,671,990
240,000,000
1,964,671,990
3,913,748,435

1,462,558,000
(42,886,010)
305,000,000
1,724,671,990
2,502,899,971

940,000,000
140,000,000
1,080,000,000

810,000,000
130,000,000
940,000,000

60,500,000
60,500,000

60,500,000
60,500,000

538,695,707
358,662,232
(116,255,174)
(160,743,191)
620,359,575

360,883,878
28,053,160
1,302,263,675
(1,101,726,798)
(50,778,208)
538,695,707

4,523,326
4,523,326
-

4,523,326
4,523,326

81,000,000
1,292,425,000
(1,126,313,064)
247,111,936

81,000,000
81,000,000

At year-end management has performed detailed review of all protested bills and claims originated during the course of
banking operation, and upon assessing their recovery prospect, amounts which are considered to be not recoverable
have been written off after observing required formalities (note-10a.3).
13a.9

Obligation under finance lease


Minimum lease rental payable
Within 1 year
Above 1 year but within 5 years
Leas: Finance charge payable

7,454,973
3,064,950
10,519,923
769,193
9,750,730

8,286,528
8,708,312
16,994,840
1,523,243
15,471,597

Annual Report 2012 259

Notes to the Financial Statements


for the year ended 31 December 2012
2012
14

Share capital

14.1

Authorized capital

2,500,000,000 ordinary shares of Taka 10 each

14.2

2011

25,000,000,000

10,000,000,000

300,000,000

300,000,000

790,244,129 ordinary shares of Taka 10 each issued as bonus shares

7,902,441,290

6,342,822,180

115,527,340 ordinary shares of Taka 10 each issued as right shares

1,155,273,400

1,155,273,400

9,357,714,690

7,798,095,580

Issued, subscribed and fully paid up capital


30,000,000 ordinary shares of Taka 10 each issued for cash

14.3

Amount in Taka

History of paid-up capital

Given below the history of raising of share capital of Prime Bank Limited:

Accounting
year

Declaration

No of share

Value in capital

Cumulative

10,000,000

100,000,000

100,000,000

1995

Opening capital

1996

60% Bonus share

6,000,000

60,000,000

160,000,000

1997

25% Bonus share

4,000,000

40,000,000

200,000,000

1999

Initial Public Offer (IPO)

20,000,000

200,000,000

400,000,000

2000

25% Bonus share

10,000,000

100,000,000

500,000,000

2001

20% Bonus share

10,000,000

100,000,000

600,000,000

2002

16.67% Bonus share

10,000,000

100,000,000

700,000,000

2003

42.86% Bonus share

30,000,000

300,000,000

1,000,000,000

2004

40% Bonus share

40,000,000

400,000,000

1,400,000,000

2005

25% Bonus share

35,000,000

350,000,000

1,750,000,000

2006

30% Bonus share

52,500,000

525,000,000

2,275,000,000

2007

25% Bonus share

56,875,000

568,750,000

2,843,750,000

2008

25% Bonus share

71,093,750

710,937,500

3,554,687,500

2009

30% Bonus share

106,640,620

1,066,406,200

4,621,093,700

25% right share

115,527,340

1,155,273,400

5,776,367,100

2010

35% Bonus share

202,172,848

2,021,728,480

7,798,095,580

2011

20% Bonus share

155,961,911

1,559,619,110

9,357,714,690

935,771,469

9,357,714,690

Annual Report 2012 260

Notes to the Financial Statements


for the year ended 31 December 2012
2012
14.4

Amount in Taka

2011

Group capital adequacy ratio (Consolidated)


In terms of section 13 (2) of the Bank Companies Act, 1991 and Bangladesh Bank BRPD circulars no. 35 dated
December 29, 2010, required capital of the Bank (Consolidated) at the close of business on 31 December 2012 was
Taka 20,510,265,643 as against available core capital of Taka 20,663,658,556 and supplementary capital of Taka
5,251,991,206 making a total capital of Taka 25,915,649,762 thereby showing a surplus capital / equity of Taka
5,405,384,119 at that date. Details are shown below:
Core capital (Tier-I)
Paid-up capital (note-14.2)
Share premium (note-14.8)
Minority interest (note-14.9)
Statutory reserve (note-15)
Surplus in consolidated profit and loss account / Retained earnings (note-19)

9,357,714,690
2,241,230,396
67
6,839,527,566
2,225,185,837
20,663,658,556

7,798,095,580
2,241,230,396
63
5,772,509,105
2,931,809,566
18,743,644,710

1,964,671,990
1,080,000,000
60,500,000
21,017,432
125,801,783
2,000,000,000
5,251,991,206
25,915,649,762

1,724,671,990
940,000,000
60,500,000
129,669,272
125,801,783
2,500,000,000
4,523,326
5,485,166,371
24,228,811,081

346,356,371,815
205,102,656,431
20,510,265,643
5,405,384,119
12.64%

302,050,785,816
194,379,600,000
19,437,960,000
4,790,851,081
12.46%

Supplementary capital (Tier-II)


General provision maintained against unclassified loan / investments (note-13a.3)
General provision on off-balance sheet exposures (note-13a.4)
General provision on off-shore Banking Units (note-13a.5)
Revaluation gain / loss on investments-50% of total (note-16)
Revaluation reserve for equity instruments-10% of market gain
Revaluation reserve-50% of total (note-17)
Prime Bank Sub-ordinated Bond
Exchange equalization account (note-13a.7)
A) Total capital
Total assets including off-balance sheet exposures
B) Total risk weighted assets
C) Required capital based on risk weighted assets (10% on B)
D) Surplus (A-C)
Capital adequacy ratio
Capital requirement
Tier - I
Tier -II
Total

Required
5%
5%
10.00%

Held
10.08%
2.56%
12.64%

Required
5%
5%
10.00%

Held
9.64%
2.82%
12.46%

Capital adequacy ratio (Solo Basis)


Core capital (Tier-I)
Paid-up capital (note-14.2)
Share premium (note-14.8)
Statutory reserve (note-15)
Surplus in consolidated profit and loss account / Retained earnings (note-19a)
Supplementary capital (Tier-II)
General provision maintained against unclassified loan / investments (note-13a.3)
General provision on off-balance sheet exposures (note-13a.4)
General provision on off-shore Banking Units (note-13a.5)
Revaluation gain / loss on investments-50% of total (note-16a)
Revaluation reserve-50% of total (note-17)
Prime Bank Sub-ordinated Bond
Exchange equalization account (note-13a.7)
A) Total Capital
Total assets including off-balance sheet exposures
B) Total risk weighted assets
C) Required capital based on risk weighted assets (10% on B)
D) Surplus (A-C)
Capital adequacy ratio
Capital requirement
Tier - I
Tier -II
Total

Required
5%
5%
10.00%

9,357,714,690
2,241,230,396
6,839,527,566
2,072,227,283
20,510,699,935

7,798,095,580
2,241,230,396
5,772,509,105
2,779,682,107
18,591,517,188

1,964,671,990
1,080,000,000
60,500,000
9,859,846
125,801,783
2,000,000,000
5,240,833,619
25,751,533,554

1,724,671,990
940,000,000
60,500,000
121,579,868
125,801,783
2,500,000,000
4,523,326
5,477,076,967
24,068,594,155

345,020,328,117
202,339,782,174
20,233,978,217
5,517,555,337
12.73%

301,005,598,862
193,257,100,000
19,325,710,000
4,742,884,155
12.45%

Held
10.14%
2.59%
12.73%

Required
5%
5%
10.00%

Held
9.62%
2.83%
12.45%

Annual Report 2012 261

Notes to the Financial Statements


for the year ended 31 December 2012
2012
14.5

Sponsors
Financial Institutions
Foreign Investors
Non- resident Bangladeshi
General Public

2012
Taka
3,795,534,470
1,882,371,040
356,952,120
50,310,430
3,272,546,630
9,357,714,690

2011
Taka
3,177,407,770
1,634,016,860
142,822,810
60,180,260
2,783,667,880
7,798,095,580

2012
%
40.56%
20.12%
3.81%
0.54%
34.97%
100.00%

2011
%
40.75%
20.95%
1.83%
0.77%
35.70%
100.00%

Shareholding range on the basis of shareholdings as at 31 December 2012


Number of
share holders

Shareholding range
Less than 500
500- 5,000
5,001 - 10,000
10,001 - 20,000
20,001 - 30,000
30,001 - 40,000
40,001 - 50,000
50,001 - 100,000
100,001 - 1,000,000
Over 1,000,000

14.7

2011

Percentage of shareholdings at the closing date


Particulars

14.6

Amount in Taka

10,481
10,626
1,260
643
218
109
71
192
230
134
23,964

Taka
Share
1,825,733
17,788,086
8,910,148
9,013,459
5,374,212
3,742,274
3,172,749
13,387,464
69,481,241
803,076,103
935,771,469

Percentage
0.20%
1.90%
0.95%
0.96%
0.57%
0.40%
0.34%
1.43%
7.43%
85.82%
100.00%

Name of the Directors and their shareholdings as at 31 December 2012


Sl

Name of the Directors

Status

1
2
3

Mr. Md. Shirajul Islam Mollah


Mr. M. A. Khaleque
Mr. Mizanur Rahman Bhuiyan
Mrs. Marina Yasmin
Chowdhury
Mrs. Nasim Anwar Hossain
Mrs. Nazma Haque
Mr. Khandker Mohammad Khaled
Quazi Sirazul Islam
Mrs. Salma Huq
Mrs. Muslima Shirin
Mr. Mafiz Ahmed Bhuiyan
Mr. Md. Nader Khan
Mr. Imran Khan
Mr. Md. Shahadat Hossain
Mr. Nafis Sikder
Mr. Tanjil Chowdhury
(Representative of East Coast
ShippingLines Ltd.)
Prof. Ainun Nishat
Mr. Manzur Murshed
Prof. Dr. Mohammed Aslam Bhuiyan
Mr. Md. Ehsan Khasru

Chairman
Vice Chairman
Vice Chairman

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Annual Report 2012 262

Opening
Closing position
position
9,640,093
18,768,111
16,550,622
19,860,746
18,720,079

% of shares as at
31.12.2012
2.01
2.12
2.00

Director

18,983,935

2.03

Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director

21,644,226
12,409,969
10,120,151
18,736,602

22,150,681
18,798,231
25,973,071
18,741,962
29,322,129
18,716,136
18,719,181
34,563,056
18,716,670
25,283,258
23,478,344

Director

9,040,272

18,728,326

Depositor Director
Depositor Director
Independent Director
Managing Director

22,180
98,164,115

26,616
349,550,532

2.37
2.01
2.78
2.00
3.13
2.00
2.00
3.69
2.00
2.70
2.51
2.00 (Share holding
of East Cost Shipping
Lines Ltd.)
0.003
-

Notes to the Financial Statements


for the year ended 31 December 2012
2012
14.8

2,310,546,800

2,310,546,800

2,241,230,396

2,241,230,396

60

60

67

63

Balance on 1 January

5,772,509,105

4,419,319,123

Balance at 31 December

6,839,527,566

5,772,509,105

Less: Income tax deduction at source @ 3% on total premium

Minority interest

Share capital

Retained earnings
15

Statutory reserve

Addition during the year ( 20% of pre-tax profit)


16

2011

Share premium
11,552,734 ordinary shares of Taka 200 each per share

14.9

Amount in Taka

Consolidated revaluation gain / loss on investments

Prime Bank Limited (note-16a)

Gain on revaluation of Investment at Prime Exchange Co. Pte. Ltd.,


Singapore
Gain on revaluation of Investment at Prime Exchange (UK) Ltd.

Gain on revaluation of Investment at PBL Finance (Hong Kong) Limited

16(a)

Revaluation gain / loss on investments of the Bank


Opening balance on 1 January
Add: Amortized/Revaluation Gain
Less: Adjustment of amortization/revaluation gain against sale/maturity
Add: Adjustment of revaluation gain/(loss) of OBU fixed assets
Less: Adjustment of Revaluation loss

17

Revaluation reserve
Balance on 1 January
Addition during the year
Balance at 31 December
Less: Provision for deferred tax

69,316,404

1,067,018,461

69,316,404

1,353,189,982

19,719,692

243,159,736

5,315,965

4,765,890

8,198,026

7,274,926

42,034,865

259,338,544

243,159,736
145,134,659
(368,669,109)
94,406
19,719,692

1,416,526,260
161,342,461
(1,334,266,010)
(442,975)
243,159,736

296,004,196
296,004,196
(44,400,629)
251,603,567

296,004,196
296,004,196
(44,400,629)
251,603,567

5,015,711

8,694,724

8,801,182

4,137,992

The Bank revalued the assets of Land and Buildings details described in note 2.5
18

Consolidated foreign currency translation gain/ (loss)


Prime Bank Limited (note-18a)

Prime Bank Investment Limited


Prime Bank Securities Limited

Prime Exchange Co. Pte. Ltd., Singapore


PBL Exchange (UK) Ltd.

PBL Finance (Hong Kong) Limited


18a

Foreign currency translation gain/ (loss)


Balance on 1 January

Addition during the year

Balance at 31 December

141,298

453,880

(152,759)

(1,260,809)

4,510,188

8,058,632

(494,062)

8,694,724

(3,679,013)

5,015,711

170,837

8,694,724
8,694,724

Annual Report 2012 263

Notes to the Financial Statements


for the year ended 31 December 2012
2012
19

Consolidated retained earnings / movement of profit and loss account


Prime Bank Limited (note-19a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Less: Minority Interest
Less: Dividend of Prime Bank Investment Limited
Less: Profit Remitted by Prime Exchange Co. Pte. Ltd., Singapore
Less: Foreign currency translation gains

19a

Retained earnings / movement of profit and loss account of the Bank


Balance on 1 January
Prior year adjustment (note-2.1.9)
Addition during the year
Transfer to statutory reserve
Cash dividend
Issue of bonus shares
Balance at 31 December
Add: Foreign currency translation gain/ (loss) (note-18a)

19.1

Consolidated retained earnings brought forward from previous year


Prime Bank Limited (note-19.1 a)
Prime Bank Investment Ltd.
Prime Bank Securities Ltd.
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Foreign currency translation gain on 1 January

19.1.a

Retained earnings brought forward from previous year of the Bank


Balance on 1 January
Prior year adjustment (note-2.1.9)
Bonus shares issued
Cash dividend paid
Balance at 31 December
Foreign currency translation gain on 1 January

20

Consolidated contingent liabilities

20.1

Acceptances and endorsements


Prime Bank Limited (note-20a.1)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

Annual Report 2012 264

Amount in Taka

2011

2,068,548,270
326,488,306
33,096,718
30,646,814
(45,540,613)
47,761,808
2,461,001,303
(7)
(239,999,995)
4,184,536
2,225,185,837

2,788,376,831
602,129,749
4,495,828
27,172,736
(29,966,981)
3,315,705
3,395,523,868
(3)
(450,000,000)
(5,655,667)
(8,058,632)
2,931,809,566

2,779,682,107
2,698,992,305
(1,067,018,461)
(779,809,558)
(1,559,619,110)
2,072,227,283
(3,679,013)
2,068,548,270

2,824,985,571
(15,696,557)
3,634,129,909
(1,353,189,982)
(288,818,355)
(2,021,728,480)
2,779,682,107
8,694,724
2,788,376,831

440,253,439
152,129,749
4,495,828
21,517,069
(29,966,981)
3,315,705
591,744,809
53,809
591,798,618

498,742,180
93,624,615
12,723,070
(9,526,667)
595,563,198
483,917
596,047,115

2,779,682,107
(1,559,619,110)
(779,809,558)
440,253,439
440,253,439

2,824,985,571
(15,696,557)
(2,021,728,480)
(288,818,355)
498,742,179
498,742,179

26,979,335,910
26,979,335,910

28,963,416,330
28,963,416,330

Notes to the Financial Statements


for the year ended 31 December 2012
2012
20.2

Letters of guarantee
Prime Bank Limited (note-20a.2)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

20.3

Irrevocable Letters of Credit


Prime Bank Limited (note-20a.3)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

20.4

Bills for collection


Prime Bank Limited (note-20a.4)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

20a

Contingent liabilities of the Bank

20a.1

Acceptances and endorsements


Back to back bills (Foreign)
Back to back bills (Local)
Back to back bills (EPZ)
Less: Margin

20a.2

Letters of guarantee
Letters of guarantee (Local)
Letters of guarantee (Foreign)
Foreign counter guarantees
Less: Margin

Amount in Taka

2011

42,846,572,774
42,846,572,774

34,955,284,339
34,955,284,339

28,353,752,325
28,353,752,325

29,706,663,305
29,706,663,305

10,007,661,530
10,007,661,530
108,187,322,539

7,429,741,406
7,429,741,406
101,055,105,380

23,467,179,116
8,735,295,070
862,048,278
33,064,522,464
(6,085,186,554)
26,979,335,910

21,403,958,328
10,668,342,246
873,887,757
32,946,188,330
(3,982,771,999)
28,963,416,330

21,604,943,515
22,426,179,615
44,031,123,130
(1,184,550,356)
42,846,572,774

19,084,657,270
16,837,652,003
35,922,309,273
(967,024,934)
34,955,284,339

625,653,522
3,924,452,092
39,481,017,516
44,031,123,130
(1,184,550,356)
42,846,572,774

1,573,426,449
1,242,185,336
33,106,697,488
35,922,309,273
(967,024,934)
34,955,284,339

10,353,128,681
7,598,796,833
12,650,247,256
30,602,172,770
(2,248,420,445)
28,353,752,325

15,027,842,031
5,560,834,089
10,890,870,508
31,479,546,628
(1,772,883,324)
29,706,663,305

10,094,765,189
10,094,765,189
(87,103,659)
10,007,661,530

7,554,411,504
7,554,411,504
(124,670,097)
7,429,741,406

Money for which the Bank is contingently liable in respect of guarantees


given favoring:
Directors or officers
Government
Banks and other financial institutions
Others
Less: Margin
20a.3

Irrevocable Letters of Credit


Letters of credit (Sight)
Letters of credit (Deferred)
Back to back L/C
Less: Margin

20a.4

Bills for collection


Outward bills for collection
Less: Margin

Bills for collection is a Memorandum Item. However bills for collection is shown under contingent liability as per
Bangladesh Banks format for preparing financial statements.

Annual Report 2012 265

Notes to the Financial Statements


for the year ended 31 December 2012
2012
21

Dividend income (note-24a)

Fees, commission and brokerage (note-21.2)

Gains less losses arising from dealing in securities

Gains less losses arising from investment securities

20,398,468,504

1,305,873,890

1,327,082,199

254,477,345

467,592,509

1,123,570,867

1,361,846,771

Other operating income (note-26a)

1,017,962,459

652,092,975

Profit less losses on interest rate changes


Expenses:
Interest / profit paid on deposits, borrowings, etc. (note-23a)
Losses on loans, advances and lease/ investments
Administrative expenses (note-21.3)
Other operating expenses (note-37a)
Depreciation on banking assets (note-36a)

30,902,234,192

24,207,082,957

17,410,286,124
3,635,158,345
1,027,527,828
278,429,742
22,351,402,039
8,550,832,153

12,647,982,518
2,933,379,256
974,998,715
223,772,560
16,780,133,049
7,426,949,909

22,821,500,674
3,806,588,945
497,413,554
11,241,156
92,555,220
117,149,862
27,346,449,411
146,099,780
27,200,349,631

16,708,767,903
2,625,327,712
257,036,124
756,849
788,267,323
76,442,500
20,456,598,411
58,129,907
20,398,468,504

1,305,873,890
1,305,873,890

1,326,938,557
143,642
1,327,082,199

2,673,292,974

2,057,720,184

28,570,418

16,312,942

Interest, discount and similar income


Interest income / Profit on investments (note-22a)
Interest income on treasury bills / reverse repo / bonds (note-24a)
Gain on Discounted bond / bills (note-24a)
Gain on sale of shares (note-24a)
Gain on Govt. security trading (note-24a)
Interest on debentures (note-24a)
Less: Loss on sale of security trading (note-24a)

Fees, commission and brokerage


Commission (note-25a)
Settlement fee-PBIL (note-25a)

21.3

27,200,349,631

Gains less losses arising from dealing in foreign currencies (note-25a.1)

Income from non-banking assets

21.2

2011

Income statement
Income:
Interest, discount and similar income (note-21.1)

21.1

Amount in Taka

Administrative expenses
Salary and allowances (note-27a)

Rent, taxes, insurance, electricity, etc. (note-28a)

Legal expenses (note-29a)

Postage, stamp, telecommunication, etc. (note-30a)


Stationery, printing, advertisement, etc. (note-31a)
Managing Directors salary and fees (note-32)
Directors fees (note-33a)
Auditors fees (note-34a)

Repair of Banks assets (note-36a)

Annual Report 2012 266

430,873,148

367,568,017

127,601,535

132,056,013

11,448,000

9,192,067

304,366,321
5,152,571

575,000

53,278,378
3,635,158,345

298,731,953
3,569,924
522,500

47,705,656
2,933,379,256

Notes to the Financial Statements


for the year ended 31 December 2012
2012
22

Consolidated interest income / profit on investment

22a

Interest income / profit on investment of the Bank

23

Consolidated interest / profit paid on deposits, borrowings, etc.

23a

Prime Bank Limited (note-22a)


Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

Amount in Taka

22,821,500,674
861,132,742
58,355,301
7,696
66,752,109
23,807,748,522

2011

16,708,767,903
815,326,644
8,507,103
50,031
14,159,476
17,546,811,157

Loans (General) / Musharaka


Loans against imported merchandise / Murabaha
Loans against trust receipts
Packing credit
House building loan
Lease finance / Izara
Hire purchase
Payment against documents
Cash credit / Bai-Muajjal
Secured overdraft
Consumer credit scheme
Portfolio loan
Staff loan
Small and Medium Enterprise (SME)
Agricultural Loan
Forced loan
Documentary bills purchased
Interest income from credit card
Other loans and advances / Investments
Total interest / profit on loans and advances / investments
Interest / profit on balance with other banks and financial institutions
Interest on call loans
Interest / profit received from foreign banks

3,884,501,655
2,551,440,959
11,259,564
15,668,727
3,293,804,014
2,697,573,875
89,028,712
87,132,916
629,952,993
536,026,859
1,298,020,103
949,819,185
1,082,367,798
767,445,920
150,427,754
152,789,156
2,806,526,070
2,360,815,069
5,192,261,814
3,478,941,537
1,808,255,965
1,523,925,257
109,932,550
89,705,776
700,008,462
355,645,152
5,940,634
216,807,034
43,461,973
926,720,192
900,572,000
192,245,609
146,824,613
341,663,152
848,365
22,739,724,075
16,658,637,340
296,162
264,038
1,846,528
17,383,333
79,633,909
32,483,192
22,821,500,674
16,708,767,903
An amount of Tk. 28,053,160 has been restated under the head loans against trust receipts, lease finance/izara,
hire purchase and secured overdraft.

Prime Bank Limited (note-23a)


Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange(UK) Ltd.
PBL Finance (Hong Kong) Limited

17,410,286,124
513,953,702
41,618,117
21,771,648
17,987,629,591

12,647,982,518
392,108,259
3,044,198
3,404,849
13,046,539,824

751,474,472
526,880,164
9,752,597,209
3,905,613,809
11,026,627
16,108,114
14,963,700,395

634,221,636
323,417,623
7,428,847,528
3,192,276,062
2,490,466
8,773,346
11,590,026,661

1,017,498,487
1,037,169,869
43,789,000
54,737,521
94,767
4,283,154
289,012,931
2,446,585,729
17,410,286,124

179,134,736
528,697,715
24,099,356
23,992,420
100,241
14,431,389
287,500,000
1,057,955,857
12,647,982,518

Interest / profit paid on deposits, borrowings, etc. of the Bank

i) Interest / profit paid on deposits:

Savings bank / Mudaraba savings deposits


Special notice deposits
Term deposits / Mudaraba term deposits
Deposits under scheme
Foreign currency deposits (note-23a.1)
Others

ii) Interest / Profit paid for borrowings:


Call deposits
Repurchase agreement (repo)
Bangladesh Bank-refinance
Local bank accounts
Foreign bank accounts
Islamic Bond Fund
PBL bond

Annual Report 2012 267

Notes to the Financial Statements


for the year ended 31 December 2012
2012
23a.1

5,026,115
5,754,638
245,874
11,026,627

458,941
1,680,854
350,671
2,490,466

4,633,326,302
48,825,592
9,795,075
4,691,946,969
239,999,995
4,451,946,974

4,157,293,110
64,887,747
2,025,695
4,224,206,552
4,224,206,552

3,806,588,945
117,149,862
497,413,554
11,241,156
92,555,220
254,477,345
4,779,426,082
146,099,780
4,633,326,302

2,625,327,712
76,442,500
257,036,124
756,849
788,267,323
467,592,509
4,215,423,017
58,129,907
4,157,293,110

Consolidated investment income


Prime Bank Limited (note-24a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited
Less: Inter-company transactions

24a

2011

Foreign currency deposits


Interest / profit paid on F.C
Interest / profit paid on N.F.C.D
Interest / profit paid on R. F.C.D

24

Amount in Taka

Investment income of the bank


Interest on treasury bills / Reverse repo / bonds
Interest on debentures / bonds
Gain on discounted bond / bills
Gain on sale of shares
Gain on Govt. security trading
Dividend on shares (note-24a.1)
Less: Loss on sale of security trading

24a.1

Dividend on Shares included dividend income of Tk. 239,999,995.20 from its subsidiary, Prime Bank Investment
Limited.

25

Consolidated commission, exchange and brokerage


Prime Bank Limited (note-25a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

25a

2,688,928,970
150,521,169
20,187,773
38,311,889
19,185,250
(15,204)
2,917,119,847

300,728,857
583,764,007
315,647,991
68,781,312
5,376
4,795,635
17,972,030
14,178,682
1,305,873,890
1,123,570,867
2,429,444,757

342,140,821
571,342,706
315,888,659
64,334,299
244,259
7,447,912
17,174,070
8,365,831
1,326,938,557
1,361,846,771
143,642
2,688,928,970

1,129,771,972
(6,201,105)
1,123,570,867

1,360,253,211
1,632,775
(39,215)
1,361,846,771

Commission, exchange and brokerage of the Bank


Commission on L/Cs
Commission on L/Cs-back to back
Commission on L/Gs
Commission on remittance
Commission for services rendered to issue of shares
Merchant Commission
Underwriting Commission regarding Treasury bill/ Bond
Commission from sale of BSP /PSP
Exchange gain (note - 25a.1) - including gain from FC dealings
Settlement fees / Brokerage

25a.1

2,429,444,757
59,713,167
52,419,765
52,597,120
33,937,621
24,627
2,628,137,057

Exchange gain
Exchange gain
Exchange gain-credit card
Less: Exchange loss

Annual Report 2012 268

Notes to the Financial Statements


for the year ended 31 December 2012
2012
26

2011

Consolidated other operating income


Prime Bank Limited (note-26a)

Prime Bank Investment Limited


Prime Bank Securities Limited

Prime Exchange Co. Pte. Ltd., Singapore


PBL Exchange (UK) Ltd.

PBL Finance (Hong Kong) Limited


26a

Amount in Taka

1,017,962,459

652,092,975

45,785,187

142,828,652

320,683

294,300

859,572
-

37,050,816

328,617

3,446,744

1,101,978,717

798,991,288

6,304,685
201,195,485
220,364,527
88,912,804
39,803,095
135,174,145
35,206
149,696,068
3,862,312
172,614,132
1,017,962,459

5,457,287
60,034,388
197,319,531
55,246,951
34,549,851
100,527,229
111,233
106,866,438
50,520
91,929,547
652,092,975

Other operating income of the Bank


Rent recovered
Service and other charges
Retail Income
Income from ATM service
Credit card income (note-26a.2)
Postage / telex / SWIFT/ fax recoveries
Incidental charges
Rebate from foreign Bank outside Bangladesh
Profit on sale of fixed assets
Miscellaneous earnings (note-26a.1)

26a.1

Miscellaneous earnings include syndication fee, commission from foreign remittance house / bank, notice fee
and sale proceeds of various items, etc.

26a.2

Credit card income


Annual fees

Inter-change fees
Others
27

16,812,014
882,734

18,873,535
13,472,340
2,203,976

39,803,095

34,549,851

2,673,292,974

2,057,720,184

Consolidated salaries and allowances


Prime Bank Limited (note-27a)

Prime Bank Investment Limited


Prime Bank Securities Limited

Prime Exchange Co. Pte. Ltd., Singapore


PBL Exchange (UK) Ltd.

PBL Finance (Hong Kong) Limited


27a

22,108,347

34,528,694
13,586,783
19,563,859
20,152,371
19,415,520

31,718,629

4,737,211

15,287,014
16,600,039
5,551,162

2,780,540,201

2,131,614,239

1,091,326,503
809,496,228
444,844,951
98,711,190
1,914,102
227,000,000
2,673,292,974

773,582,044
580,941,549
482,885,431
68,284,661
2,026,499
150,000,000
2,057,720,184

Salaries and allowances of the Bank


Basic pay
Allowances
Bonus
Banks contribution to provident fund
Retirement benefits
Gratuity

Annual Report 2012 269

Notes to the Financial Statements


for the year ended 31 December 2012
2012
28

28,570,418
339,295
110,800
2,020,048
1,309,766
41,201
32,391,528

16,312,942
415,014
38,200
828,514
627,619
337,667
18,559,956

18,810,119
9,760,299
28,570,418

9,963,755
6,349,187
16,312,942

127,601,535
1,520,411
1,162,653
1,502,209
1,079,758
1,600,084
134,466,650

132,056,013
1,886,219
633,364
2,447,401
862,564
165,402
138,050,963

13,378,380
39,380,812
54,895,205
18,930,111
1,017,027
127,601,535

17,456,614
48,587,510
46,216,884
18,457,953
1,337,052
132,056,013

304,366,321
1,472,157
202,144
1,458,981
798,382
181,151
308,479,135

298,731,953
2,383,560
462,178
504,960
807,192
214,629
303,104,472

Postage, stamp, telecommunication, etc. of the Bank


Postage
Telegram, telex, fax and e-mail
Data communication
Telephone - office
Telephone - residence

31

186,694,137
7,998,996
107,582,930
65,291,954
367,568,017

Consolidated postage, stamp, telecommunication, etc.


Prime Bank Limited (note-30a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

30a

222,399,771
8,160,897
112,543,348
87,769,132
430,873,148

Legal expenses of the Bank


Legal expenses
Other professional charges

30

367,568,017
10,451,172
1,987,182
7,813,495
12,175,298
3,463,147
403,458,311

Consolidated legal expenses


Prime Bank Limited (note-29a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

29a

430,873,148
11,274,109
3,449,462
10,667,015
12,652,718
5,366,562
474,283,014

Rent, taxes, insurance, electricity, etc. of the Bank


Rent, rates and taxes
Lease rent
Insurance
Power and electricity

29

2011

Consolidated rent, taxes, insurance, electricity, etc.


Prime Bank Limited (note-28a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

28a

Amount in Taka

Consolidated stationery, printing and advertisements, etc.


Prime Bank Limited (note-31a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

Annual Report 2012 270

Notes to the Financial Statements


for the year ended 31 December 2012
Amount in Taka
2012
2011
31a

Stationery, printing and advertisements, etc. of the Bank

Office and security stationery

Computer consumable stationery

Publicity and advertisement


32

Managing Directors salary and fees

Basic salary

Bonus

House rent allowance

Utility allowance

House maintenance allowance

Others
33

Consolidated Directors fees

Prime Bank Limited (note-33a)

Prime Bank Investment Limited


Prime Bank Securities Limited

Prime Exchange Co. Pte. Ltd., Singapore


PBL Exchange (UK) Ltd.

PBL Finance (Hong Kong) Limited

33a

Directors fees of the Bank

Meeting fees

Other benefits

5,940,000

5,029,000

1,320,000

1,348,667

960,000

1,032,667

11,448,000

9,192,067

5,152,571

3,569,924

18,975

26,700

304,366,321

1,848,000
624,000

756,000

46,200
-

5,217,746

1,715,000

298,731,953

905,000

687,733

189,000

103,000
-

3,699,624

1,890,000

575,000

522,500

Prime Bank Securities Limited

69,000

76,300

5,152,571

115,000

Prime Exchange Co. Pte. Ltd., Singapore

256,547

PBL Finance (Hong Kong) Limited

187,516

Auditors fees of the Bank


External Audit fee

Charges on loan losses

Loan -written off


Interest waived

36

128,375,478

Prime Bank Limited (note-34a)

Consolidated Auditors fees

PBL Exchange (UK) Ltd.

35

144,107,123

1,679,924

Prime Bank Investment Limited

34a

93,472,472

76,884,003

3,437,571

Each Director is paid Tk.5,000/- per meeting per attendance.


34

97,835,991

62,423,207

Consolidated depreciation and repair of Banks assets

Prime Bank Limited (note-36a)

Prime Bank Investment Limited

Prime Bank Securities Limited

Prime Exchange Co. Pte. Ltd., Singapore

PBL Exchange (UK) Ltd.

PBL Finance (Hong Kong) Limited

319,455

3,569,924

62,700

206,010
295,156

149,839

1,522,518

1,312,505

575,000

522,500

575,000

522,500

331,708,120

271,478,216

2,510,397

1,121,309

6,351,755

2,233,559

6,603,129

2,169,052

2,760,602

2,647,076

345,856,437

284,073,883

292,004

55,101

Annual Report 2012 271

Notes to the Financial Statements


for the year ended 31 December 2012
Amount in Taka
2012
2011
36a

Depreciation and repair of Banks assets


Amortization -(see annexure-C for detail)
Software-core banking
Software-ATM
Repairs
Building
Furniture and fixtures
Office equipment
Banks vehicles
Maintenance

37

Consolidated other expenses


Prime Bank Limited (note-37a)
Prime Bank Investment Limited
Prime Bank Securities Limited
Prime Exchange Co. Pte. Ltd., Singapore
PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

37a

Other expenses of the Bank


Security and cleaning
Entertainment
Car expenses
ATM expenses
Retail expenses
Books, magazines and newspapers, etc.
Liveries and uniforms
Medical expenses
Bank charges and commission paid
Loss on sale of fixed assets
Finance charge for lease assets
House furnishing expenses
Subscription to institutions
Donations
Traveling expenses
Expenses for merchant banking
Local conveyance, labor, etc.
Business development
Training and internship
Remittance charges
Cash reward to branches
Laundry, cleaning and photographs, etc.
Credit card expenses
Consolidated salary (staff)
Annual General Meeting
Exgratia
Welfare fund
Prime Bank Foundation
Miscellaneous expenses

Annual Report 2012 272

251,542,211

197,628,609

24,056,251
2,831,280
26,887,531

23,320,407
2,823,544
26,143,951

3,964,557
3,041,227
26,522,967
9,020,713
10,728,914
53,278,378
331,708,120

4,137,754
5,628,106
24,256,541
7,420,205
6,263,050
47,705,656
271,478,216

1,027,527,828
12,942,088
10,602,090
6,126,397
9,660,191
1,156,422
1,068,015,016

974,998,715
24,435,919
4,601,896
3,253,195
2,890,284
504,617
1,010,684,627

130,803,436
61,824,950
125,497,534
110,491,112
81,319,178
2,079,747
289,508
63,981
9,737,272
2,755
2,663,894
3,292,671
10,683,133
17,209,194
32,980,211
11,816,537
34,037,537
29,615,867
16,220,803
9,196,817
6,481,666
5,729,029
39,682,609
27,351,178
470,203
12,154,041
10,672,000
213,405,000
21,755,965
1,027,527,828

109,739,315
63,403,977
90,273,502
75,129,985
96,229,925
1,737,214
486,314
287,968
10,373,817
216,836
3,932,865
3,173,226
8,901,562
12,905,540
23,966,389
12,750,590
26,612,003
17,448,135
13,736,209
8,139,212
5,160,000
5,176,223
39,180,836
26,575,532
1,262,856
9,961,042
13,600,000
271,900,000
22,737,643
974,998,715

Notes to the Financial Statements


for the year ended 31 December 2012
Amount in Taka
2012
2011
38

Consolidated provision for loans, investments,off balance sheet


exposure & other assets

Provision for bad and doubtful loans and advances / investments-PBL (note-38a)
Provision for unclassified loans and advances / investments-PBL (note-38a)
Provision for off-balance sheet exposure-PBL (note-38a)

Provision for diminution in value of investments-PBL (note-38a)

1,490,000,000

226,000,000

240,000,000

305,000,000

140,000,000

130,000,000

43,797,548

Provision for diminution in value of investments-PBIL

(74,084,236)

388,952,446

Provision for impairment of client margin loan-PBIL

178,586,273

3,232,978

988,820

597,088

Provision for diminution in value of investments-PBSL


Provision for impairment of client margin loan-PBSL
Provision for other assets (note-38a)

1,301,942,300
3,324,071,951

1,050,941,266

As per the Press release # SEC/Mukhopatro/2011/662 and SEC/Mukhopatro/2011/696, dated 29 January 2013 and 19 February
2013 respectively of Bangladesh Securities and Exchange Commission, 20% provision has been made by Prime Bank
Securities Limited while Prime Bank Investment Limited made 100% provision on diminution in value of investments and 20%
provision made on impairment of client margin loan.
38a

Provision for loans, investments, off balance sheetexposure &


other assets of the Bank
Provision for bad and doubtful loans and advances / investments
Provision for unclassified loans and advances / investments
Provision for off-shore banking units
Provision for off-balance sheet exposure
Provision for diminution in value of investments
Provision for other assets

39

226,000,000

240,000,000

305,000,000

140,000,000

130,000,000

43,797,548

1,301,942,300

3,215,739,848

661,000,000

Prime Bank Limited (note-39a)

2,449,800,000

2,907,320,000

Prime Bank Investment Limited

154,052,683

255,939,030

Prime Bank Securities Limited

15,685,310

8,170,117

859,495

(250,096)

Consolidated tax expenses

Current tax

Prime Exchange Co. Pte. Ltd., Singapore


PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

8,803,282

599,735

2,629,200,771

3,171,778,786

Prime Bank Limited (note-39a)

186,300,000

224,500,000

Prime Bank Investment Limited

(16,975)

665,885

Deferred tax

Prime Bank Securities Limited


Prime Exchange Co. Pte. Ltd., Singapore

39a

1,490,000,000

PBL Exchange (UK) Ltd.

PBL Finance (Hong Kong) Limited

Tax expenses of the Bank


Current tax
Deferred tax

186,283,025

225,165,885

2,815,483,796

3,396,944,671

2,449,800,000

2,907,320,000

186,300,000

224,500,000

2,636,100,000

3,131,820,000

Annual Report 2012 273

Notes to the Financial Statements


for the year ended 31 December 2012

Amount in Taka

2012
40

Consolidated Receipts from other operating activities


Prime Bank Limited (note-40a)

1,775,963,262

1,698,153,270

Prime Bank Investment Limited

94,610,779

208,855,998

Prime Bank Securities Limited

10,654,647

2,354,312

320,683

344,331

Prime Exchange Co. Pte. Ltd., Singapore


PBL Exchange (UK) Ltd.

37,050,816

3,446,744

1,918,600,187

1,913,154,655

6,304,685

5,457,287

296,467,137

60,034,388

39,803,096

34,549,851

Retail Income

220,364,527

197,319,531

Income from ATM services

296,531,804

55,246,951

Postage / Telex / Fax / SWIFT charge recoveries

135,174,145

100,527,229

35,206

111,233

PBL Finance (Hong Kong) Limited


40a

Receipts from other operating activities of the Bank


Rent recovered
Service and other charges
Credit card income

Incidental charges

41

Rebate from foreign Bank outside Bangladesh

149,696,068

106,866,438

Gain from sale of treasury bond / shares

455,110,150

1,046,060,296

Miscellaneous earnings

176,476,444

91,980,066

1,775,963,262

1,698,153,270

Prime Bank Limited (note-41a)

1,355,446,797

1,369,935,123

Prime Bank Investment Limited

27,323,852

37,354,024

Prime Bank Securities Limited

15,419,971

10,407,840

Prime Exchange Co. Pte. Ltd., Singapore

20,865,705

14,985,593

PBL Exchange (UK) Ltd.

25,770,307

36,905,228

Consolidated payments for other operating activities

PBL Finance (Hong Kong) Limited


41a

8,351,785

4,849,656

1,453,178,417

1,474,437,464

430,873,148

367,568,017

Payments for other operating activities of the Bank


Rent, rates and taxes
Legal expenses
Postage and communication charges, etc.
Directors fees
Other expenses

42

2011

28,570,418

15,067,449

127,601,536

132,056,013

5,152,571

3,569,924

763,249,124

851,673,720

1,355,446,797

1,369,935,123

(13,647,964,993)

(10,643,375,389)

(Increase) / decrease of consolidated other assets


Prime Bank Limited (note-42a)
Inter-company capital

14,030,152

39,402,808

Prime Bank Investment Limited

87,583,771

(104,667,976)

Prime Bank Securities Limited

9,227,793

(35,523,557)

Prime Exchange Co. Pte. Ltd., Singapore


PBL Exchange (UK) Ltd.
PBL Finance (Hong Kong) Limited

Annual Report 2012 274

(3,445,866)

511,307

4,584,909

(2,196,579)

566,986,901

(1,150,083)

(12,968,997,333)

(10,746,999,469)

Notes to the Financial Statements


for the year ended 31 December 2012
42a

(Increase) / decrease of consolidated other assets of the Bank


T & T bonds

41,560,619,018

30,044,160,955

Advance deposits and advance rent

185,487,221

153,215,481

Suspense account

166,334,111

431,245,616

Stationery and stamps

Branch adjustment account


Encashment of PSP / BSP
Credit card

Sundry assets

43

Increase / (decrease) of consolidated other liabilities


Prime Bank Limited (note-43a)

Prime Bank Investment Limited


Prime Bank Securities Limited

Prime Exchange Co. Pte. Ltd., Singapore

PBL Exchange (UK) Ltd.

61,205,540

259,196,282

90,683,814

6,681,509,089

49,027,547,468

15,110,147

123,571,698

153,725,551

78,050,003

4,380,503,024

35,379,582,475

(13,647,964,993)

(10,643,375,389)

786,096,248

1,085,124,521

(6,205,212)

52,074,061

(129,311,326)
(211,020)

415,961,924

5,629,702

(5,137,884)

685,431,691

1,557,180,763

2,198,309,830

1,545,582,036

78,241,570

84,951,171

Unearned commission on bank guarantee

126,153,370

45,760,373

Interest suspense account

620,359,575

Increase / (decrease) of other liabilities of the Bank


F.C. held against EDF L/C

Exchange equalization fund

Expenditure and other payables


Provision for bonus
Other provision

44

22,512,393

18,726,511

PBL Finance (Hong Kong) Limited


43a

Amount in Taka
2012
2011

Consolidated earnings per share (CEPS)


Net profit after tax (Numerator)

Number of Ordinary shares outstanding (Denominator)


Consolidated earnings per share (CEPS)

16,336,490

9,647,201

3,528,439

4,523,326
2,115,248

388,462,283

457,199,437

3,421,173,829

2,635,077,581

2,700,405,687

3,688,952,436

2.89

3.94

786,096,248

935,771,469

494,945,990

1,085,124,521

935,771,469

Earnings per share has been calculated in accordance with BAS - 33: Earnings Per Share (EPS). Previous years figures
have been adjusted for the issue of bonus shares during the year.
44a

Earnings per share (EPS) of the Bank

Net profit after tax (Numerator)

Number of Ordinary shares outstanding (Denominator)


Earnings per share (EPS)

2,698,992,305

3,634,129,909

2.88

3.88

935,771,469

935,771,469

Earnings per share has been calculated in accordance with BAS - 33: "Earnings Per Share (EPS)". Previous year's figures
have been adjusted for the issue of bonus shares during the year.
45

46

Number of employees of the Bank

The number of employees engaged for the whole year or part thereof who received a total remuneration of Tk. 36,000 p.a.
or above were 2,544.
Assets pledged as security for liabilities of the Bank

Treasury bills & bonds to Bangladesh Bank for Repo

7,404,350,307

7,443,355,097

Annual Report 2012 275

Notes to the Financial Statements


for the year ended 31 December 2012
47

Disclosure on Audit Committee of the Bank


a)

Particulars of Audit Committee


The audit committee of the Board was duly constituted by the Board of Directors of the Bank in accordance with the
BRPD Circular no. 12 dated December 23, 2002 of Bangladesh Bank.
Pursuant to the BRPD Circular no. 08 dated 19.06.2011 and SEC notification no. SEC/CMRRCD/2006-158/129/
Admin/44 dated August 7, 2012 on Corporate Governance, the current Committee is Constituted with the following
5 (Five) members of the Board:

Name

Status with bank

Status with
committee

Educational Qualification

Prof. Ainun Nishat

Director

Chairman

M.Sc. Engineer (Civil), Bangladesh University


of Engineering and Technology (BUET),
Ph.D. in Civil Engineering from University of
Strathclyde, Glasgow, U.K.

Mr. M. A. Khaleque

Director

Member

M. Com. CA (CC) ICAB

Mr. Khandker Mohammad


Khaled

Director

Member

B.Sc. Engineer (Mechanical), Bangladesh


University of Engineering and Technology
(BUET).

Mrs. Nazma Haque

Director

Member

B.A. University of Rajshahi.

Independent
Director

Member

B.A. (Hons.), M.A. University of Dhaka,


MS in Sociology on Rural Development,
Moscow University, Ph.D. from Bombay
University.

Prof. Dr. Mohammed Aslam


Bhuiyan

b) Meetings held by the Audit Committee during the year by date:

Annual Report 2012 276

Meeting No

Held on

76th

09.02.2012

77th

14.02.2012

78th

11.04.2012

79th

13.05.2012

80th

25.07.2012

81st

17.09.2012

82nd

21.10.2012

83rd

17.12.2012

Notes to the Financial Statements


for the year ended 31 December 2012
c)

Review by the Audit Committee and Recommended thereof:


i)

Review of the Internal Audit Plan for the year 2012 and suggested area of further concentration.

ii)

Review of the Internal Control function and recommend before the Board for enhancement of the activities
streamlining operational risk.

iii)

Review of all branch and Head office inspection reports as submitted by the Internal Control and Compliance
Division and advice management for timely implementation and follow up.

iv)

Review of the draft consolidated financial statements along with the external auditors and the management and
recommending it to the Board of Directors for consideration.

v)

Review the scope and general extent of the annual audit, including an explanation of risk factors considered, any
limitations on scope of work.

vi)

Review with the top management of the organizations policies and procedures to prevent illegal or unethical
activities, the quality of its personnel and the adequacy of staffing, key accounting policies and procedures,
internal controls, significant areas of risk, legal or regulatory matters that may have an impact on the financial
statements, and any other matters that may affect financial reporting.

vii)

Review of the Management Letter issued by Bangladesh Bank & External Auditors and Management response
thereto as part of compliance.

viii)

Review the results of the audit with external auditors, including material findings, changes to accounting
principles, changes to audit plan, disputes with management, unresolved issues and access to information.

ix)

Submission of compliance report on the minutes to the Board along with its decisions for information and
concurrence of the Board on quarterly basis.

x)

d)

Recommend the appointment of external auditors of the bank considering suitability and all other compliances.

Steps taken for implementation of an effective internal control procedure of the Bank :
i)

Review performance and portfolios of SME, Agriculture and Policy on Green Banking which has been declared
a thrust sector for the economy of the country.

ii)

Review the functioning of Human Resources Development Centre (Training Academy) at periodical interval for
its significance and contribution towards transformation of the resources in to Human Capital.

iii)

Review the performance of the Islamic Banking Branches and recommended introduction of Sharia Compliant
software.

iv)

Directed & ensured health checking of the IT System and taking measures for up gradation for efficiency &
effectiveness.

v)

Suggested software development for monitoring & following up compliance issues.

vi)

Advise Audit Teams to carry out Audit & Inspections of all Divisions of the Head Office including Prime Bank
Foundation alongside the branches and subsidiaries to ensure proper functioning as per laid down guidelines of
the Board and the regulators.

Annual Report 2012 277

Notes to the Financial Statements


for the year ended 31 December 2012
48

Related Party Disclosures of the Bank

i)

Names of the Directors together with a list of entities in which they have Interest

ii)

Significant contracts where Bank is a party and wherein Directors have interest during the year 2012

Annexure-E

(Figure in Taka)
Name of party

Relationship

Nature of transaction

Nil

iii)

Shares issued to Directors and Executives without consideration or exercisable at a discount

iv)

Related party transactions


Nature of party/ contract

v)

vi)

Amount

Relationship

Nil

Amount

Bangla Trac Ltd.

Common Director

6,355,000

Executive Motors Ltd.

Common Director

10,120,000

Lease agreement

Common Director

1,362,428

Lease agreement

Common Director

280,800

Lease agreement

Common Director

7,500,000

Lending policies in respect of related party


a) Amount of transaction regarding loans and advances, deposits, guarantees and commitment
as on 31.12.2012

Nil

b) Amount of transactions regarding principal items of deposits, expenses and commission

Nil

c) Amount of provision against loans and advances given to related party

Nil

d) Amount of guarantees and commitments arising from other off-balance sheet exposures

Nil

Disclosure of transaction regarding Directors and their related concerns


Name of Party

Relation

Type of
Loan

Status of
the loan

Balance as on
31.12.2012 (Tk. In Lac)
Limit

Outstanding

Nil

Nil

Market Value Of
Collateral Security (Tk.
in Lac)

Nil

vii)

Business other than banking business with any relation concern to the Directors as per Section 18(2) of the Bank
Companies Act, 1991.

a)

Lease agreement made with the Sponsor Director & Depositor Director
Nature of contract

Branch Name

Name of Director and


related by

Remarks

Lease agreement

Jubilee Road
Branch

Mr. Md. Nader Khan


Director & owner of the
premises

Lease period:
01.08.2012 to
31.07.2015

Lease agreement

ATM Booth
Jubilee Road Branch

Mr. Md. Nader Khan


Director & owner of the
premises

Lease period:
12.10.2011 to
11.10.2021

Annual Report 2012 278

Notes to the Financial Statements


for the year ended 31 December 2012
Nature of contract
Lease agreement

b)

Branch Name

Name of Director and


related by

Remarks

Gulshan Branch

Prof. Ainun Nishat


(Depositor Director)

Prof. Ainun Nishat was


not a Director of the
Bank when the lease
agreement was executed
in 2002. However, Mr.
Ainun Nishat became a
Depositor Director on 19
March 2009. He is one of
the co-sharer of the lease
premises.Lease period:
01.09.2011 to 31.08.2014

Service receiving companies where the Directors interest subsisted during the year
Name of party

Relationship

Nature of transaction

Bangla Trac

Common Director

Procurement of Generators

6,355,000

Executive Motors Ltd.

Common Director

Procurement of Vehicles

10,120,000

viii

Investment in the Securities of Directors and their related concern

49

Workers Participation Fund and Welfare Fund

Amount

Nil

SRO-336-AIN/2010 dated 5-10-2010 issued by Ministry of Labor and Employment and published in Bangladesh gazette
on 7-10-2010 declaring the status of business of certain institutions and companies (like mobile operating companies,
mobile network service providing company, all Govt. and Non-govt. money lending companies, all insurance companies
etc. ) as Industrial Undertakings for the purposes of Chapter-XV of the Bangladesh Labour Act, 2006 which deals with
the workers participation in companys profit by way of Workers Participation Fund and Welfare Fund (WPFWF). The
Bangladesh Labour Act, 2006 requires the Industrial Undertakings to maintain provision for workers profit participation
fund @ 5% on net profit. However, we have obtained legal opinion from Legal advisor in this regard where it has been
stated that Prime Bank Limited does not fall under this category. Therefore, no provision in this regard has been made in
the financial statements during the year under audit.
50

Events after the Reporting Period


The Board of Directors in its 393rd meeting decided to recommend payment of 10% (ten) cash and 10% (ten) stock
dividend for the year 2012. The total amount of dividend is Tk.1,871,542,938 ( One hundred eighty seven crore fifteen lac
forty two thousand nine hundred thirty eight) only.

Chairman

Director

Director

Managing Director

Annual Report 2012 279

Annual Report 2012 280


CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD

Banca Nazio, del Lavoro, Rome, Italy

Bank of Bhutan, Bhutan

Bank of Tokyo Mitsubishi, Japan

SMBC, Tokyo, Japan

Citibank N.A., Mumbai, India

Citibank N.A., London , UK

Citibank N.A., New York, USA

Citibank N.A., New York, USA (Off-shore Banking)

Commerz Bank AG, Frankfurt , Germany

Commerz Bank AG, Frankfurt , Germany

Commonwealth Bank of Australia, Australia

Credit Suisse (First Boston), Switzerland

Habib American Bank, New York, USA

Habib Metropolitan Bank, Karachi

HDFC Bank Limited, Kolkata, India

HSBC Bank USA, New York, USA

HSBC Bank Middle East Ltd., Karachi, Pakistan

HSBC PLC, London, UK

HANA Bank, Seoul

ICICI Bank Ltd, Mumbai, India

Intesa Sanpaolo SPA, Milano, Italy

J. P. Morgan Chase Bank, New York

Mashreq Bank PSC, New York, USA

Mashreq Bank PSC, Mumbai, India

Account
type

AB Bank Ltd., Mumbai, India

Name of the Bank

US$

US$

US$

EURO

US$

US$

GBP

US$

US$

US$

US$

US$

CHF

AUD

US$

EURO

US$

US$

EURO

US$

JP

JP

US$

EURO

US$

Currency
type

118,085.19

6,607,151.77

471,711.91

3,553.39

128,939.05

47,036.37

387,626.21

1,062.54

1,898,121.50

402,232.55

226,879.79

99,283.64

67,793.61

60,801.35

3,143.62

515,962.41

5,383.59

701,894.44

137,281.93

7,786.98

11,252,355.00

9,305,045.00

151,162.89

6,712.46

4,107.04

FC
amount

79.8499

79.8499

79.8499

105.5696

79.8499

79.8499

129.1013

79.8499

79.8499

79.8499

79.8499

79.8499

87.4301

82.7804

79.8499

105.5696

79.8499

79.8499

105.5696

79.8499

0.9278

0.9278

79.8499

105.5696

79.8499

Exchange
rate

2012

9,429,091

527,580,408

37,666,149

375,130

10,295,770

3,755,849

50,043,048

84,844

151,564,812

32,118,229

18,116,329

7,927,789

5,927,202

5,033,160

251,018

54,469,945

429,879

56,046,201

14,492,798

621,790

10,439,935

8,633,221

12,070,342

708,632

327,947

Equivalent
Taka

158,174.58

5,444,110.45

126,583.64

5,082.52

399,970.72

135,101.81

31.04

1,121,562.62

341,454.06

410,097.75

155,671.37

43,675.41

23,888.93

7,560.79

282,891.31

5,383.59

219,874.59

88,700.47

89,410.49

4,650,183.00

3,135,124.00

51,203.89

9,463.23

81,175.91

FC
amount

Balance with other banks-Outside Bangladesh (Nostro Account) of Prime Bank Limited
as at 31 December 2012

81.8529

81.8529

81.8529

105.9095

81.8529

81.8529

126.4627

81.8529

81.8529

81.8529

81.8529

81.8529

86.8097

82.5896

81.8529

105.9095

81.8529

81.8529

105.9095

81.8529

1.0503

1.0503

81.8529

105.9095

81.8529

Exchange
rate

2011

12,947,048

445,616,228

10,361,238

538,287

32,738,763

17,085,340

2,541

91,803,153

27,949,005

33,567,690

12,742,153

3,791,449

1,972,977

618,873

29,960,877

440,662

17,997,373

9,394,222

7,318,508

4,884,087

3,292,821

4,191,187

1,002,246

6,644,484

Equivalent
Taka

Annexure-A

Annual Report 2012 281

CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD

The National Commercial Bank, Jeddah

Nepal Bangladesh Bank Ltd., Kathmandu, Nepal

Peoples Bank, Colombo, Sri Lanka

Skandinaviska Enskilda, Banken, Sweden

Sonali Bank, Kolkata, India

Standard Chartered Bank, Kolkata, India

Standard Chartered Bank, New York, USA

Standard Chartered Bank, Singapore

Standard Chartered Bank, Frankfurt, Germany

State Bank of India, Kolkata

The Bank of Nova Scotia, Canada

Unicredito Italiano SPA, Milano, Italy

Wells Fargo Bank N. A., New York

Total

CD

National Westminister Bank, London, UK

Name of the Bank

Account
type

US$

EURO

CAD

US$

EURO

SG$

US$

US$

US$

SEK

US$

US$

SAR

GBP

Currency
type

484,070.18

326,121.12

82,554.46

2,034,914.70

695,549.18

72,637.33

114,552.24

215,658.58

714,735.53

84,290.24

158,577.00

150,869.68

FC
amount

79.8499

105.5696

80.1062

81.8529

105.5696

65.2368

79.8499

79.8499

79.8499

12.2482

79.8499

79.8499

21.2910

129.1013

Exchange
rate

2012

1,392,741,405

38,652,955

34,428,476

8,715,241

132,751,323

55,539,532

5,800,084

9,146,985

2,641,429

57,071,561

6,730,567

3,376,263

19,477,472

Equivalent
Taka

396,379.83

30,468.70

50,979.54

205.08

27,305.51

3,278,013.08

532,117.76

289,137.20

199,398.41

161,782.68

130,855.28

89,028.24

58,500.00

61,321.34

FC
amount

Balance with other banks-Outside Bangladesh (Nostro Account) of Prime Bank Limited
as at 31 December 2012

81.8529

105.9095

79.8955

81.8529

105.9095

63.0365

81.8529

81.8529

81.8529

11.8404

81.8529

81.8529

21.8257

126.4627

Exchange
rate

2011

1,138,637,962

32,444,839

3,226,925

4,073,036

16,786

2,891,913

206,634,472

43,555,382

23,666,718

16,321,338

1,915,572

10,710,884

7,287,220

1,276,803

7,754,862

Equivalent
Taka

Annexure-A (contd)

Reconciliation Statement of Balance with Bangladesh Bank


as at 31 December 2012
Annexure-A-1
1)

Balance with Bangladesh Bank-Taka account of the Bank


Detail

Total

Balance as per Bank ledger

10,816,492,170

Unresponded debit entries in


Bangladesh Bank statement
Prime Banks ledger

2,049,697
71,556,167

73,605,864
10,742,886,306

Unresponded credit entries in


Bangladesh Bank statement
Prime Banks ledger

49,220,742
27,966,237

Balance as per Bangladesh Bank statement

2)

77,186,979
10,820,073,285

Balance with Bangladesh Bank-Foreign currency of the Bank


Balance as per Bank ledger

2,881,505,675

Unresponded debit entries in


Bangladesh Bank statement
Prime Banks ledger

1,735,633

1,735,633
2,879,770,042

Unresponded credit entries in


Bangladesh Bank statement
Prime Banks ledger
Balance as per Bangladesh Bank statement

Annual Report 2012 282

104,118,057
499,303,475

603,421,532
3,483,191,573

Investment in shares of the Bank


as at 31 December 2012
Annexure-B
SL.
No.

Name of the Company

Face
Value

No of
shares

Cost / present
value of
holdings

Average
cost

Quoted rate
per share as
on 31.12.12

Total market
value as at
31.12.12

Quoted:
1

AB Bank Ltd.

10

800,000

32,918,300

41.15

33.70

26,960,000

Bank Asia Ltd.

10

700,000

17,987,037

25.70

21.50

15,050,000

BRAC Bank Ltd.

10

600,000

21,243,239

35.41

34.80

20,880,000

The City Bank Ltd.

10

600,000

18,648,926

31.08

26.80

16,080,000

DESCO

10

349,550

27,121,550

77.59

72.10

25,202,555

Dhaka Bank Ltd.

10

700,000

20,855,770

29.79

24.80

17,360,000

Eastern Bank Ltd.

10

762,000

29,608,038

38.86

31.70

24,155,400

Federal Insurance Compnay


Bangladesh Ltd.

10

2,241

20,380

9.09

27.20

60,955

Jamuna Bank Ltd.

10

600,000

14,338,010

23.90

21.70

13,020,000

10

Lanka Bangla Finance Ltd.

10

350,000

23,395,426

66.84

59.00

20,650,000

11

National Bank Ltd.

10

700,000

21,314,190

30.45

22.10

15,470,000

12

NLI First MF

10

998,000

9,980,000

10.00

9.20

9,181,600

13

One Bank Ltd.

10

700,000

19,867,211

28.38

22.80

15,960,000

14

Uttara Bank Ltd.

10

800,000

37,009,980

46.26

38.10

30,480,000

Sub Total

294,308,058

250,510,510

Unquoted:
1

Central Depository Bangladesh Ltd.

Investment in SWIFT

Sub Total
Total

10

4,569,443

15,694,430

3.43

15,694,430

4,184,430

4,184,430

19,878,860

19,878,860

314,186,918

270,389,370

Annual Report 2012 283

Annual Report 2012 284

2,946,983
1,607,562
1,410,371
5,964,916
4,794,586,381

197,956,054
28,235,444
226,191,498
5,020,777,879

2,517,405,010

Software-Amortization
Software-Core Banking
Software-ATM
Sub-total
As at 31 December 2012

As at 31 December 2011

31,690,384
31,690,384

Off-shore
Furniture and fixtures
Office equipment and machinery
Vehicles
As at 31 December 2012
Sub-total

Leased Vehicles
As at 31 December 2012

132,396,714
17,092,221
149,488,935

ATM
Office equipment and machinery
Furniture and fixtures
As at 31 December 2012

2,505,029,178

28,784,009
28,784,009
666,354,778

30,025
30,025
637,570,769

79,101,786
16,977,873
96,079,659

5,000,000
218,590,888
77,060,865
125,001,090
115,784,357
23,885
541,461,085

Taka

Taka

2,195,907,410
543,182,545
617,233,126
1,032,982,037
216,602,023
1,535,005
4,607,442,146

Land
Building
Furniture and fixtures
Office equipment and machinery
Vehicles
Library books
As at 31 December 2012

Particulars

Additions
during the year

Opening balance
as on 01.01.12

COST

1,656,308

6,997,064

6,997,064

432,000
6,565,064
6,997,064

Taka

Disposals/
adjustments
during the
year

Schedule of Fixed Assets of the Bank


as at 31 December 2012

5,020,777,879

226,740,063
28,235,444
254,975,507
5,680,135,593

2,946,983
1,637,587
1,410,371
5,994,941
5,425,160,086

31,690,384
31,690,384

211,498,500
34,070,094
245,568,594

Taka

2,200,907,410
761,773,433
694,293,990
1,157,551,128
325,821,316
1,558,890
5,141,906,167

Total balance as
at 31.12.12

822,710,309

65,718,751
9,451,209
75,169,960
1,045,319,389

905,337
813,576
175,295
1,894,208
970,149,429

16,528,972
16,528,972

73,114,196
2,885,805
76,000,001

10,573,740
235,669,447
540,326,749
88,135,476
1,020,835
875,726,248

Taka

Opening
balance as on
01.01.12

23,772,560

24,056,251
2,831,280
26,887,531
78,429,742

256,615
185,560
282,076
724,250
251,542,211

6,014,754
6,014,754

33,284,158
2,645,313
35,929,471

14,312,215
41,886,296
113,761,985
38,802,110
111,130
208,873,736

Taka

Charge for
the year

1,163,479

6,962,808

6,962,808

397,745
6,565,063
6,962,808

Taka

Disposals/
adjustments
during the
year

DEPRECIATION

1,045,319,389

89,775,002
12,282,489
102,057,491
1,316,786,323

1,161,952
999,136
457,371
2,618,459
1,214,728,832

22,543,726
22,543,726

106,398,353
5,531,119
111,929,472

24,885,956
277,555,743
653,690,989
120,372,523
1,131,965
1,077,637,176

Taka

Total balance
as at 31.12.12

3,975,458,490

136,965,061
15,952,955
152,918,016
4,363,349,270

1,785,031
638,451
953,000
3,376,482
4,210,431,254

9,146,658
9,146,658

105,100,147
28,538,975
133,639,122

Taka

2,200,907,410
736,887,477
416,738,247
503,860,139
205,448,793
426,925
4,064,268,991

Net book value


as at 31.12.12

Annexure-C

Annual Report 2012 285

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Total

2002-2003

2001

2013-2014

1995
to
2000

2012

Assessment
year

Accounting
year

13,926,551,971

2,449,800,000

2,866,502,255

2,285,000,000

1,735,000,000

1,012,449,724

1,015,000,000

592,362,815

557,500,000

482,287,856

348,903,919

312,590,120

268,743,630

3,317,922,403

1,076,933,945

481,412,744

346,638,537

482,287,856

348,903,919

312,590,120

268,743,630

411,652

Taka

Taka

411,652

Tax as per
assessment
order

Tax provision
as per accounts

Statement of tax position of the Bank


as at 31 December 2012

11,192,801,601

1,000,000,000

2,193,417,798

2,033,288,558

1,432,194,785

915,627,471

1,019,804,475

737,606,389

470,158,263

438,405,004

342,757,186

337,138,495

247,455,962

24,947,215

Taka

Tax paid

(259,877,589)

(61,933,945)

110,950,071

210,861,463

Taka

Excess/
(shortage)
of provision

198,449,090

(102,313,148)

(57,129,470)

256,193,645

123,519,726

(43,882,852)

(6,146,733)

24,548,375

(21,287,668)

24,947,215

Taka

Excess/
(shortage)
of tax paid

Submission of tax return is yet not due


Excess
provision of Tk. 259,877,589 in earlier years has been
adjusted against the provision of 2012.

Return filed but the assessment is yet to complete


Excess payment of Tk. 102,313,148 in earlier years will be
adjusted against the tax provision of 2011

Appealed against some disallowances made by the DCT


before the Appellate Tribunal

Return filed but the assessment is yet to complete

Appealed against some disallowances made by the DCT


before the Appellate Tribunal

Completed

Completed

Completed

Completed

Completed

Completed

Completed

Assessment year 1999-2000 is final but the Tax Authority


referred it to High Court Division.

Present status

Annexure-D

Name of Directors and their


interest in different entities of the Bank
Sl
no.

Name of Directors

Status with
PBL

Mr. Md. Shirajul Islam Mollah

Mr. M. A. Khaleque

Vice Chairman

Mr. Mizanur Rahman Bhuiyan

Vice Chairman

Mrs. Marina Yasmin Chowdhury

Director

Mrs. Nasim Anwar Hossain

Director

Annual Report 2012 286

Chairman

Entities where they have interest


China - Bangla Ceramic Industries Ltd.
Bengal Tiger Cement Industries Ltd.
Bajnabo Textiles Mills Ltd.
Trustee Securities Ltd.
United Shipping Lines Ltd.
Rajanigondha Tanker Ltd.
Azbal International Ltd.
Rajanigondha Cargo Ltd.
Peoples Leasing and Financial Services Ltd.
Total Merchandizing & Trims Ltd.
Fareast Finance & Investment Limited
Fareast Stocks & Bonds Limited
Maksons Bangladesh Limited
Maksons Associates Limited
Prime Property Holdings Limited
PFI Properties Limited
Prime Prudential Fund Limited
Prime Financial Securities Limited
GETCO Limited
GETCO Agro Vision Limited
GETCO Fibers Limited
GETCO Power Limited
GETCO Elevator Company Limited
GETCO Agri Technologies
GETCO Online Limited
HRC Technologies Limited
Meghna Light Industrial Products Limited
Meghna Components Ltd.
Meghna Wheels Ltd.
Meghna Cycle Industries Limited
Meghna Bangladesh Ltd.
Uniglory Cycle Components Ltd.
Uniglory Wheels Ltd.
Executive Motors Ltd.
Meghna Rubber Ind. Ltd.
Uniglory Steel Products Ltd.
Trans-world Bi-cycle Co. Ltd.
Meghna Associates Limited
Mahin Cycle Industries Limited
Abrar Steel Industries Limited
Cycle Life Limited
Meghna Holdings Limited
Hola Limited
Uniglory Cycle Industries Limited
Meghna Mainetti Limited
M/S Meghna Bangladesh
Meghna Poly Propylene Limited
Meghna Tyres Limited
Meghna Innova Rubber Co. Ltd.
East Coast Trading (Pvt.) Ltd.
East Coast Shipping Lines Ltd.
EC Securities Limited
EC Distribution Limited
EC Bulk Carriers Ltd.
Parkensine Products Ltd.
Ben Lloyds Lines Ltd.
Bengal Tiger Cement Industries Ltd.
Prime Cement Ltd.
Lubricants Asia Ltd.

Annexure-E
%
of Interest
43.44
12.00
50.00
22.00
40.00
40.00
50.00
40.00
2.27
39.00
1.77
7.24
50.00
50.00
20.00
10.00
10.00
20.00
37.50
27.50
37.50
27.00
30.00
40.00
40.00
40.00
80.00
66.67
66.67
33.33
75.00
27.00
80.00
33.33
93.34
65.00
64.00
40.00
40.00
40.00
75.00
10.00
10.00
50.00
80.00
100.00
25.00
25.00
70.00
20.00
20.00
3.60
40.00
20.00
40.00
12.00
2.36
2.86
14.00

Sl
no.
6

Name of Directors

Mrs. Nazma Haque

Status with
PBL
Director

Mr. Khandker Mohammad Khaled

Director

Quazi Sirazul Islam

Director

Mrs. Salma Huq

Director

10

Mrs. Muslima Shirin

Director

11

Mr. Mafiz Ahmed Bhuiyan

Director

Entities where they have interest


Asian Gate Limited

Annexure-E Continued
%
of Interest
30.00

Acorn Limited

THANE Technology Limited

25.00
25.00

Anirban Enterprise Ltd.


Greenland Engineers & Tractors Company Limited
Machinery & Equipment Trading Company Limited
GETCO Trading Limited
GETCO Limited
GETCO Agro Vision Limited
GETCO Telecommunications Limited
GETCO Power Limited
GETCO Jute Mills Ltd.
GETCO Fibers Limited
GETCO Fertilizers Limited
GETCO One Line Limited
GETCO Business Solutions Limited
GETCO Elevator Company Limited
GETCO Agri-Technologies Limited
GETCO Textile Mills Limited
GETCO Techno labs Limited
GETCO Venture International Limited
Greenland Technologies Ltd.
Green Power Generation Company Ltd.
Khaled Textile Mills Limited
Acorn Trading Company Limited
Eurasia Gate Limited
K.S. Engineering & Technology Limited
K.S. Consultant Limited
Shatata Enterprise Limited
Nirala Agro Fishing Limited
Easy Fly Express Limited
Fareast Finance & Investment Limited
Fareast Islami Life Insurance Co. Ltd.
Fareast Stocks & Bonds Limited
Amin Jewelers Limited
Ducati Apparels Limited
City Hospital Limited
Bangla Gold Limited
Asian Watch Limited
Amin Real Estate Ltd.
GQ Ball Pen Industries Limited
GQ Industries Limited
Maladesh International (Pvt.) Limited
GQ Foods Limited
GQ Enterprise Limited
Mawsons Limited
Eastern University
South East University
Mirzapur Resorts Ltd.
International Holdings Limited
Shepherd World Trade Limited
Australian International School

50.00
29.25
29.25
51.00
37.50
20.00
60.00
28.00
34.00
41.50
35.00
48.00
34.00
30.00
50.00
20.00
60.00
10.00
25.00
44.00
50.00
75.00
50.00
25.00
16.00
25.00
25.00
4.00
4.90
1.01
10.00
75.00
33.33
28.00
12.50
95.00
50.00
9.92
42.00
0.13
26.66
68.81
19.23
3.33
3.33
4.55
3.33
62.00
3.33

Citizen Securities & Investment Ltd.

16.00

Annual Report 2012 287

Name of Directors and their


interest in different entities of the Bank
Annexure-E Continued
Sl
no.

12

Name of Directors

Mr. Md. Nader Khan

Status with
PBL

Director

Entities where they have interest


Pedrollo NK Limited

40.00

Halda Valley Tea Company Limited

15.00

PNL Water Management Limited

35.00

PNL Holdings Limited

20.00

Polyexprint Limited

30.00

Polytape Limited

1.00

Pragati Corporation

13

Mr. Imran Khan

Director

100.00

Polyex Laminate Limited

2.00

Pedrollo Dairy & Horticulture Limited

2.00

Hill Plantation Ltd.

0.67

Cider Education Services Ltd.

20.00

Pedrollo NK Limited

10.00

Halda Valley Tea Company Limited

15.00

PNL Water Management Limited

15.00

PNL Holdings Limited

20.00

Polyexprint Limited

15.00

Polytape Limited

1.00

Prima Enterprise

100.00

Polyex Laminate Limited

2.00

Pedrollo Dairy & Horticulture Limited

2.00

Hill Plantation Ltd.


14

15

16

Mr. Md. Shahadat Hossain

Mr. Nafis Sikder

Mr. Tanjil Chowdhury


(Representative of East Coast
Shipping Lines Limited)

Director

Director

Director

% of Interest

6.60

VIP Shahadat Cold Storage

50.00

VIP Shahadat Poultry & Hatchery

50.00

Palmal Packaging Ltd.

10.00

Marina Apparels Ltd.

99.00

Nafa Apparels Ltd.

99.00

M/S Ayesha Clothing Co. Ltd.

99.00

M/S Ayesha Fashion Limited

99.00

M/S Ayesha Washing Limited

99.00

M/S Safaa Sewing Limited

99.00

M/S Palmal Logistics

51.00

M/S Aswad Composite Mills Limited

95.00

M/S Cortz Apparels Limited

99.00

Palmal Garments Ltd.

43.75

Palmal Garments Hosiery Ltd.

43.75

Parkesine Products Limited

20.00

East Coast Trading (Pvt.) Ltd.

20.00

EC Securities Ltd.

3.60

Bangladesh Trade Syndicate Ltd.


EC Bulk Carriers Ltd.

7.50
20.00

MJL Bangladesh Limited

0.22

17

Prof. Ainun Nishat

Depositor
Director

18

Mr. Manzur Murshed

Depositor
Director

N/A

N/A

19

Prof. Dr. Mohammed Aslam


Bhuiyan

Independent
Director

N/A

N/A

Annual Report 2012 288

N/A

N/A

Distribution of Profit under Islamic


Banking Operation
Annexure-F
Distribution of profit under Islamic Banking operation
Prime Bank is operating 05 (five) Islamic Banking branches based on Islamic Shariah, which absolutely prohibits receipts and
payments of interest in any form. The operation of these 05 (five) branches are totally different from other conventional banking
branches as they operate on the basis of profit sharing arrangement.

Fixation of final profit rate for the year 2012


Provisional profit are applied to the different types of depositors at the rates to be decided by the Bank from time to time taking
into consideration of the industry trend and that of the rates of other Islamic Banks in Bangladesh. Final rates of profit are
declared annually as at 31 December in every year on the basis of income earned from different investments and other business
by individual branches and distributed as per weightage of the different deposit products.
For the year ended 31 December 2012, 70% of total investment income shall be distributed to the different types of Mudaraba
depositors (except no cost fund) according to the weightage. The remaining 30% of the investment income will be retained by
the Bank as Management fee (25%) and Investment loss Off-setting Reserve (5%).

Final Profit rate for the year 2012 is given below:


Weightage

Final rate of profit


for the year
2012 (%)

Mudaraba Saving Deposits

0.75

8.46

Mudaraba Short Notice Deposits

0.52

5.87

Deposit types

Mudaraba Term Deposits


36

Months

1.00

11.28

24

Months

0.98

11.06

12

Months

0.96

10.83

06

Months

0.92

10.38

03

Months

0.88

9.93

01

Month

0.88

9.93

Mudaraba Education Savings Scheme

1.20

13.54

Mudaraba Monthly Contributory Savings Scheme

1.05

11.85

Mudaraba Monthly Benefit Deposit Scheme

1.02

11.51

Mudaraba Double Benefit Scheme

1.02

11.51

Mudaraba Hajj Savings Scheme

1.20

13.54

Mudaraba Lakhpoti Deposit Scheme

1.05

11.85

Mudaraba Millionaire Deposit Scheme

1.05

11.85

Mudaraba House Building Deposit Scheme

1.05

11.85

Annual Report 2012 289

Prime Bank Limited-Islamic Branches


Balance Sheet as at 31 December 2012
Particulars

Notes

2012

Amount in Taka

Annexure-G
2011

PROPERTY AND ASSETS


Cash in hand

Cash in hand (including foreign currencies)

62,420,709

48,302,086

Balance with Bangladesh Bank and its agent bank (s)


(including foreign currencies)
Balance with other banks and financial institutions

62,420,709

48,302,086

213,306

208,136

In Bangladesh
Outside Bangladesh

213,306

208,136

Government

Others

Placement with banks & other financial institutions

Investments in share & securities

Investments
General investments etc

12,907,804,605

12,546,603,759

Bills purchased and discounted

761,805,137

722,057,259

13,669,609,742

13,268,661,018

Fixed assets including premises

39,803,189

40,705,631

Other assets

2,523,594,919

3,219,095,091

16,295,641,865

16,576,971,962

200,000,000

1,883,521,658

2,266,710,947

11,735,023,423

12,105,269,265

Non - banking assets


Total assets
LIABILITIES AND CAPITAL
Liabilities
Placements from other banks, financial institutions and agents

Deposits and other accounts

10

Mudaraba savings deposits


Mudaraba term deposits
Other mudaraba deposits
Al-wadeeah current deposits and other deposits accounts
Bills payable

2,498,804,441

1,781,332,574

128,706,901

145,661,582

16,246,056,423

16,298,974,368

49,585,442

77,997,594

16,295,641,865

16,576,971,962

Paid up capital

Statutory reserve

Other liabilities
Total liabilities

11

Capital / Shareholders equity

Revaluation gain / (loss) on investments

Revaluation reserve

Other reserve

Surplus in profit and loss account / Retained earnings

Total Shareholders equity

16,295,641,865

16,576,971,962

Total liabilities and Shareholders equity

Annual Report 2012 290

Prime Bank Limited-Islamic Branches


Balance Sheet as at 31 December 2012
Particulars

Contingent liabilities

Notes

2012

Amount in Taka

2011

12

Acceptances and endorsements

12.1

2,853,617,078

2,966,899,728

Letters of guarantee

12.2

967,587,167

1,197,088,153

Irrevocable letters of credit

12.3

1,056,519,014

2,149,395,458

Bills for collection

12.4

167,679,643

162,690,924

Other contingent liabilities

5,045,402,902

6,476,074,263

Documentary credits and short term trade -related transactions

Forward assets purchased and forward deposits placed

Undrawn note issuance and revolving underwriting facilities

Undrawn formal standby facilities, credit lines and other commitments

Other commitments

5,045,402,902

6,476,074,263

Other commitments

Total Off-Balance Sheet exposure including contingent liabilities

Annual Report 2012 291

Prime Bank Limited-Islamic Branches


Profit and Loss Account for the year ended 31 December 2012
Particulars

Notes

Annexure-G (i)
Amount in Taka
2012
2011

Investment income

13

2,521,281,958

2,240,087,775

Profit paid on deposits

14

(1,663,610,420)

(1,449,728,938)

857,671,538

790,358,837

Net investment income


Income from investment in shares / securities
Commission, exchange and brokerage

15

100,413,925

114,103,631

Other operating income

16

51,165,583

49,233,842

1,009,251,046

953,696,309

Total operating income (A)

Salaries and allowances

17

95,254,697

71,380,374

Rent, taxes, insurance, electricity, etc.

18

12,118,962

10,637,645

Legal expenses

19

211,615

175,870

Postage, stamp, telecommunication, etc.

20

9,397,036

8,476,519

Stationery, printing, advertisements, etc.

21

5,346,313

6,019,816

Chief Executives salary and fees

Directors fees & expenses

Shariah supervisory committees fees and expenses

Auditors fees

Charges on investment losses

22

Depreciation and repair of Banks assets

23

9,365,464

8,368,617

15,858,328

15,314,304

Total operating expenses (B)

147,552,415

120,373,145

Profit / (loss) before provision (C=A-B)

861,698,631

833,323,164

Specific provision

General provision

Provision for off-balance sheet exposures

Provision for diminution in value of investments

Other provisions

Total provision (D)

861,698,631

833,323,164

Zakat expenses
Other expenses

Provision for investments

Total profit / (loss) before taxes (C-D)

Annual Report 2012 292

24

25

Prime Bank Limited-Islamic Branches


Cash Flow Statement for the year ended 31 December 2012
Particulars
A)

Cash flows from operating activities


Investment income receipts in cash
Profit paid on deposits
Dividend receipts
Fees and commission receipts in cash
Recoveries of investments previously written off
Cash payments to employees
Cash payments to suppliers
Income taxes paid
Receipts from other operating activities
Payments for other operating activities
Cash generated from operating activities before changes
in operating assets and liabilities
Increase / (decrease) in operating assets and liabilities
Statutory deposits
Purchase of trading securities (Treasury bills)
Investment to other banks
Investment to customers
Other assets
Deposits from other banks
Deposits from customers
Other liabilities account of customers
Trading liabilities
Other liabilities
Net cash from operating activities

2012

Amount in Taka

2011

2,179,669,119
(1,661,136,450)
100,413,925
(95,254,697)
(5,346,313)
51,165,583
(40,199,922)

1,713,726,320
(1,230,889,597)
114,103,631
(71,380,374)
(6,019,816)
49,233,842
(42,972,956)

529,311,245

525,801,052

(400,948,724)
(27,059,588)
(1,813,162,649)
1,760,244,704
(28,412,152)
(509,338,409)
19,972,836

(1,917,534,519)
(2,723,942,943)
2,047,262,309
2,057,532,945
21,705,330
(514,976,877)
10,824,175

B)

Cash flows from investing activities


Debentures
Proceeds from sale of securities
Payments for purchases of securities
Purchase of property, plant and equipment
Payment against lease obligation
Proceeds from sale of property, plant and equipment
Net cash used in investing activities

(5,849,042)
(5,849,042)

(9,098,727)
(9,098,727)

C)

Cash flows from financing activities


Dividend paid
Net Cash from financing activities
Net increase / (decrease) in cash and cash equivalents (A+ B + C)
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year (D+E+F)

14,123,793
48,510,222
62,634,015

1,725,448
46,784,774
48,510,222

62,420,709

48,302,086

213,306
62,634,015

208,136
48,510,222

D)
E)
F)
G)

Cash and cash equivalents at end of the year


Cash in hand (including foreign currencies)
Balance with Bangladesh Bank and its agent bank (s)
(including foreign currencies)
Balance with other banks and financial institutions
Placement with banks & other financial institutions
Prize bonds

Annual Report 2012 293

Annual Report 2012 294


-

Changes in accounting policy

Restated balance

Surplus / deficit on account of revaluation of properties

Adjustment of last year revaluation gain on investments

Surplus / deficit on account of revaluation of investments

Currency translation differences

Net gains and losses not recognized in the income statement

Net profit for the year

Dividends (Bonus shares)

Cash dividend

Issue of share capital

Appropriation made during the year

Balance as at 31 December 2012

Balance as at 31 December 2011

Taka

Taka

Balance as at 1 January 2012

Particulars

Statutory
reserve

Paid-up
Capital

Taka

Revaluation
reserve

Prime Bank Limited-Islamic Branches


Statement of Changes in Equity for the year ended 31 December 2012

Taka

Revaluation gain /
loss on investments

Taka

Retained
earnings

Taka

Total

Prime Bank Limited-Islamic Branches

Notes to the Financial Statements for the year ended 31 December 2012 (Please see PBL notes 1-2)

2012
1

Cash in hand

60,635,745

46,823,168

Sub-total (a)

62,420,709

48,302,086

Cash with Bangladesh Bank and its agents


Balance with Bangladesh Bank

Balance with Sonali Bank (as agent of Bangladesh Bank)

Sub-total (b)

Grand total (a+b)

Required CRR and SLR of Islamic Branches are maintained at Head Office
Balance with other banks and financial institutions
In Bangladesh (note-2.1)

Outside Bangladesh (note-2.2)


2.1

In Bangladesh

Short-term deposit accounts

ICB Islamic Bank Ltd., Motijheel, Dhaka

ICB Islamic Bank Ltd, Sylhet

Social Islami Investment Bank Ltd. Dhaka


Savings accounts

Al Arafah Islami Bank Ltd. Dhaka

Bank Al Falah Ltd. Dhaka

Social Islami Investment Bank Ltd. Dhaka


2.2

Outside Bangladesh (NOSTRO Accounts)

Placement with banks & other financial institutions

2011

i) In local currency

ii) In foreign currency

Amount in Taka

Investment in share & securities

Investments

a) In Bangladesh

Quard against TDR

Bai-Murabaha (cc pledge)

Bai-Muajjal (cc hypo)

Retail investment
Izara (note-5.2)

Bai-Salam (packing credit)


Staff investment
Hire purchase

b) Outside Bangladesh
Payable Inside Bangladesh
Inland bills purchased

Payable Outside Bangladesh

Foreign bills purchased and discounted

1,784,964

1,478,918

62,420,709

48,302,086

213,306

208,136

213,306

208,136

15,599

15,599

12,433

12,210

18,971

47,003
63,492

36,109

66,702

18,971

46,780
61,296

35,416

64,644

166,303

161,356

213,306

208,136

997,689,634

692,899,102

4,450,284,608

3,929,345,733

3,058,092,259

3,189,486,454

673,512,624

640,978,677

775,652,281

74,271,401

125,249,403

2