Bank Asia Limited

A scheduled commercial bank in the private sector established under the Banking Company Act 1991 and incorporated in Bangladesh as a public limited company under the Companies Act 1994 to carry out banking business in Bangladesh.

Bank Asia Limited acquired the business of Bank of Nova Scotia, Dhaka in the year 2001 and at the beginning of the year 2002 the Bank also acquired the Bangladesh Operation of Muslim Commercial Bank Limited (MCBL), a bank incorporated in Pakistan, having two branches at Dhaka and Chittagong with one booth at Dhaka.

The Bank at present carrying its banking activities through twenty two branches including ATM, Locker & Foreign Exchange services in the country. The paid up capital of the Bank is 930 million. It has five rural branches as well. They are going to introduce their 23^rd branch in Sylhet on November 06, 2006.

Vision Statement:

Bank Asia’s vision is to have a poverty free Bangladesh in course of a generation in the new millennium, reflecting the national dream. Its vision is to build a society where human dignity and human rights receive the highest consideration along with reduction of poverty.

Mission Statement:

To assist in bringing high quality services to its customers and to participate in the growth and expansion of our national economy.

To set high standards of integrity and bring total satisfaction to its clients, shareholders and employees.

To become the most sought after bank in the country, rendering technology driven innovative services by its dedicated team of professionals.

Financial Performance at a Glance:

Capital Adequacy:

The authorized and paid up capital of the Bank are Tk. 1,200 million and Tk. 930 million respectively. The Bank ended the year 2005 with a total Shareholders’ Equity of Tk. 1,567 million and achieved a capital adequacy of 9.53% compared to the regulatory requirement of 9.0%.

Operating Profit Vs Net Profit Before Tax:

In 2001 operating profit was 126 million taka and net profit before tax was 107 million taka. Operating profit and net profit before tax in next years were 230 and 206 in 2002, 419 and 381 in 2003, 659 and 461 in 2004 respectively. In 2005, operating profit reaches at 801 million taka and net profit before tax reaches at 604 million taka. Here we can see that, the growing rate of operating profit is more than the growing rate of net profit before tax.

Advances Vs Deposits:

In 2001, advances were 3013 when deposits were 3849. In 2002, they were 5449 and 7008, in 2003, 8190 and 10431, in 2004, 11861 and 13471. In 2005 advances were 17870 and deposits were 18500. Here, the growing rate of advances and deposits were almost the same.

EPS Vs Dividend:

EPS was 29.33 taka in 2001, 48.51 taka in 2002, 35.97 taka in 2003, 39.48 taka in 2004 and 41.24 in 2005 respectively. EPS reaches at highest in 2002 and then it falls. But in last 3 years, it increases gradually. Dividend was 18% in 2001, 28% in 2002, 24% in 2003, and 25% in 2004. In 2005, dividend reaches its highest amount at 30%.

Return on Equity:  

Return on equity was 22.61% in 2001, 30.44% in 2002, 24.26% in 2003, 24.82% in 2004 and 26.01% in 2005 respectively. The highest return on equity was in 2002 and then it falls. But last three years, it was rising gradually.

Deposit – Type Wise:

Bank Asia allows five types of deposits. The highest portion is fixed deposit which covers 81% of all deposits. The deposit which stays more than one year less than five years is about 39%, current deposit & other accounts are about 11%, saving bank deposit is about 6% and bills payable is about 2%.

Deposit- Maturity Wise:

Deposits which will mature within one month are about 1%, more than one month, less than six months are about 28%, more than six months, less than one year are about 18%, more than one year, less than five years are about 39% of the whole amount of deposits. Deposits payable on demand are about 14%.

Financial Statements:

Balance Sheet at 31 December 2005                                 

Fixed assets including assets taken on lease
Other assets
Non-banking assets
Total assets
 
LIABILITIES AND CAPITALS   
Liabilities
Borrowing from other banks, financial institutions and agents
Deposits and other accounts
Current deposit and other accounts
Bills payable
Savings bank deposit
Fixed deposits
Other liabilities
Total liabilities
 
Capital/Shareholders’ Equity
Paid-up capital
Statutory reserve
Proposed issue of bonus share
Proposed cash dividend
Share premium
Retained earnings
Total shareholders’ equity
Total liability and shareholder’s equity

759561720

366819473

1104617231

2256278942

17869844542

442167364

580675356

–

23379964628

1350000000

18500070655

1962911904

21812982559

1566982069

23379964628

642612517

119921431

990467991

3240516524

11861196096

116288933

839530037

–

17810533529

1490000000

13470981849

1666080989

16627062838

1183470691

17810533529

Profit and Loss Account

For The Year Ended 31 December 2005

Postage, stamps, telecommunications, etc
Stationary, printing, advertisement, etc
Chief executive’s salary and allowances
Directors’ fees
Auditors’ fees
Depreciations and repair of bank’s asset
other expenses
Total operating expenses
Profit before provision
Provision against loans and advances
Other provisions
Total provisions
Profit before taxation
Provision for taxation
Profit after taxation
Balance of profit, brought forward
Profit available for appropriation
Appropriations
Statutory reserve
Proposed bonus share @ 1 share for 5 shares held
Proposed cash dividend @ 10%
 
 
Retained surplus
Earning per share (ESP)

444765318

1165291732

800718736

603600954

383511378

405875630

372482864

949153485

658699623

460555700

293747972

300475392

Notes to Financial Statements:

(1) The external auditors of the Bank, S. F. Ahmed & Co, Charted accounts worked more than 800 man hour at the Bank’s Corporate Office and different branches. During their audit, they audited above 80% of the Bank’s risk weighted assets on the reporting date.

(2) Wherever considered necessary, previous year’s figures have been rearranged for the purpose of comparison with current year’s presentation without any impact on the profit and value of assets and liabilities as reported in the financial statements.

(3) No material events have bad occurred after the balance sheet date to the date of issue of these financial statements, which could affect the values stated in the financial statements.

(4) Earnings per share (EPS) have been computed by dividing the basic earnings by the number of ordinary shares outstanding as on 31 December 2005 as per Bangladesh Accounting Standard 33: “Earnings Per share”.

(5) Figures in these notes and in the annexed financial statements have been rounded off to the nearest Taka.

(6) A separate set of records for consolidating the statement of affairs and income and expenditure statements of the branches are maintained at the corporate office of the bank in Dhaka, based on which these financial statements have been prepared.

Special Items for Banking Company

Bank Asia Limited

Financial Report 2005

Balance Sheet

Property & Asset:

2  Balance with other bank and financial institutions

2  Money at call and short notice

2  Loans and advances

2  Non-banking assets

Liabilities and Capital:

2  Borrowing from other bank and financial institutions and agents

2  Deposits and other accounts

2  Statutory reserve

Off balance Sheet items:

2  Contingent liabilities

1. Acceptance and endorsements
2. Bills for collection
3. Letters of guarantee
4. Irrevocable letters of credit

2  Commitments

Profit and Loss Account

Main Sources of Operating Income:

2  Interest income

2  Investment income

2  Commission, exchange and brokerage

Basis of Preparation of the Financial Statements:

The financial statements, namely, balance sheet, profit and loss statement, cash flow statements, statement of change in equity, statement of liquidity analysis and relevant notes and disclosures thereto, of Bank Asia Ltd are prepared on a going concern basis under historical cost convention and in accordance with:

1. First schedule of banking companies act 1991
2. Bangladesh bank circulars
3. International accounting standards[IAS]
4. Institute of chartered accountants of Bangladesh [ICAB] standards
5. Bangladesh accounting standards[BAS]
6. Companies act 1994
7. Securities and exchange ordinance1969
8. Securities and exchange rules 1987

Bank Asia does not follow Bangladesh accounting standard 12 “income Taxes” where provision for deferred is required to be provided in the accounts which is not done as per the said standard.

Accounting Practices:

Cash:

Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)

Cash Reserve Ratio and Statutory Reserve Ratio have been calculated and maintained in accordance with section 33 of Banking Companies Act 1991 and subsequent Bangladesh Bank BCD circular no. 13 dated 24 May 1992, BRPD circular no. 12 dated 20 September 1999 and BRPD circular no. 22 dated 06 November 2003 and circular nos. 11 and 12 dated 25 August 2005.

The statutory reserve ratio required on the bank’s time and demand liabilities at the rate of 5% has been calculated and maintained with Bangladesh Bank in current account and 18% statutory liquidity ratio, including CRR, on the same liabilities is also maintained in the form of treasury bills, bonds and debentures including balance with Bangladesh Bank. Both the reserves and maintained by the bank in excess of the statutory requirements, as shown below:

Foreign Currency Transactions

(a) Foreign currency transactions are converted into equivalent Taka currency at the ruling exchange rates on the respective dates of such transactions.

(b) assets and liabilities in foreign currencies as at 31 December 2005 have been converted into Taka currency at the average of the prevailing buying and selling rates of the concerned foreign currencies at the date except “balances with other banks and financial institutions” which have been converted as per directives of Bangladesh Bank vide its circular no BRPD (R) 717/2004-959 dated 21 November 2004.

(C) Differences arising through buying and selling transactions of foreign currencies on different dates of the year have been adjusted by debiting/crediting exchange gain or loss account.

Foreign Currency Rate:

Investments

Value of investments has been stated as follows:

Valuation of Investment

Bond
Industrial and Infrastructure Development Finance Company Ltd.

At 31 Dec 2005/ Taka

Provision for Bad & Doubtful Loans:

Wherever required, the requirements of the said BCD/BRDP circulars of Bangladesh Bank. The rates of provision on various classes of loans &advances are given below

Particulars of Provision Required Against Loans and Advances

Fixed Assets and Depreciations

Fixed assets including assets taken on lease are stated at cost less accumulated depreciation. Depreciation is charged on straight line method based on estimated useful life of each category of assets at the following rates:

Depreciation

Fixed Assets Including Assets Taken on Lease

INTEREST

Interest charged on loans and advances classified by Bangladesh Bank inspection Team and by the Bank management as special mention account, sub-standard, doubtful and bad are kept in interest suspense account as per Bangladesh Bank BCD circular nos. 34 dated 16 November 1989, 20 of 27 December 1994 and 12 of 04 September 1995 as amended by BRPD circular nos. 16 of 06 December 1998, 09 of 14 May 2001 and 09 dated 20 August 2005 and such interest is not accounted for as income until released from borrower. Interest is calculated on daily product basis but charged and accounted for quarterly on accrual basis.

General interest & rates are as Bank Asia declared with the honorable customers are shown bellow. We preserve different rates and interest on different product. Bellow you will see some tables that include most significant information. We have added here also some related links regarding interest and rates.

Interest Rate on Lending

Interest Rate on Deposit

Provision for Taxation

Provision for income tax is made on accounting income considering taxable allowances and disallowances at 45%.

Provision for Corporate Income Tax

Provision for Gratuity

Gratuity payable to all eligible employees at the end of each year is determined on the basis of existing rules and regulations of the bank and paid to the trust of the Fund. As such actuarial valuation is not considered essential.

Provision for Gratuity

Capital Adequacy Ratio (CAR)

In terms of section 13(2) of Banking Companies Act 1991 and Bangladesh Bank BRPD circular nos. 01, 14 and 10 dated 08 January 1996, 16 November 1996 and 25 November 2002 respectively, required capital of the Bank at the close of business on 31 December 2005 is Taka 1565027480 as against available core capital of Taka 1473982069 and supplementary capital of Taka 183112813, that is a total of Taka 1657094882 thereby showing surplus capital/equity of Taka 92067402 at that date. Details are given below:

Total capital maintained (a)
 
Total assets (excluding off-balance sheet items)
Total risk-weighted assets
Required capital (9% of risk-weighted assets) (b)
Surplus (a-b)
Capital adequacy ratio

930000000

–

186000000

330

351286300

1473982069

179773260

3339553

23379964628

17389194224

9.35

744000000

186000000

–

330

231106109

1183470691

114282000

3339553

17810533529

11635898652

11.18

Capital Requirement

Statutory Reserve

OTHER PROVISION

This provision has been made on prepaid legal expenses and protested bills as per Bangladesh Bank BRPD Circular # 14 of 2001.

Earnings Per Share (EPS)

Earnings per share (EPS) has been computed by dividing the basic earnings by the number of ordinary shares outstanding as on 31 December 2005 as per Bangladesh Accounting Standard 33.

Revenue Recognition

Revenue during the year is recognized as follows which satisfies all conditions of revenue recognition prescribed by BAS 18 titled “Revenue”.

(1) Interest is calculated on daily product basis on unclassified loans and advances but charged on a quarterly basis.

(2) Interest is charged on classified loans and advances as per Bangladesh Bank’s BCD and BRPD circular and such interest is not taken into income.

(3) Dividend income is recognized at the time when realized.

(4) Commission and discount on bills purchased and discounted are recognized at the time of realization.

Provident Fund

The employees’ Provident fund of the bank is administered by a board of trustee and is funded by contribution of both the bank and employee at 10% of their basic pay. These contributions are invested separately.

Reporting Period

These financial statements cover one calendar year from 01 January to 31 2005.

Cash Flow Statement

Cash flow statement is prepared in accordance with BAS-7 titled “Cash flow statement” and the cash flows from operative activities have been presented under direct method as prescribed by the Securities and Exchange Commission Rules 1987.

Leased Assets

As per BAS 17 “Lease”, all assets taken on lease have been accounted for as finance lease from the previous year. Details of leased assets have been shown in note 9 to these financial statements.

Off-Balance Sheet Items

Off-balance sheet items have been disclosed under contingent liabilities and other commitments as per Bangladesh Bank’s guidelines.

At a Glance:

Earnings Per Share (EPS) has been computed as per Bangladesh Accounting Standard 33: “Earnings Per share”.

Off-Balance Sheet Items have been disclosed under contingent liabilities and other commitments as per Bangladesh Bank’s guidelines.

As per BAS 17 “Lease”, all assets taken on lease have been accounted for as finance lease from the previous year.

Revenue during the year is recognized as follows which satisfies all conditions of revenue recognition prescribed by BAS 18 titled “Revenue”.

Other provisions have been made on prepaid legal expenses and protested bills as per Bangladesh Bank BRPD Circular # 14 of 2001.

20% of pre-tax profit is transferred to statutory reserve as General Reserve is less than Paid up Capital.

Capital Adequacy Ratio (CAR) is calculated in terms of section 13(2) of Banking Companies Act 1991 and Bangladesh Bank BRPD circular no 01, 14 and 10 dated 08 January 1996, 16 November 1996 and 25 November 2002 respectively,

Provision for income tax is made on accounting income considering taxable allowances and disallowances at 45%.

Interest charged on loans and advances classified by Bangladesh Bank inspection Team and by the Bank management as special mention account, sub-standard, doubtful and bad are kept in interest suspense account as per Bangladesh Bank BCD circular no 34 dated 16 November 1989, 20 of 27 December 1994 and 12 of 04 September 1995 as amended by BRPD circular no 16 of 06 December 1998, 09 of 14 May 2001 and 09 dated 20 August 2005 and such interest is not accounted for as income until released from borrower.

Interest is calculated on daily product basis but charged and accounted for quarterly on accrual basis.

Depreciation is charged on straight line method

Provision for bad & doubtful debt is according to the requirements of the said BCD/BRDP circulars of Bangladesh Bank.

“Balances with other banks and financial institutions” which have been converted as per directives of Bangladesh Bank vide its circular no BRPD (R) 717/2004-959 dated 21 November 2004.

Cash Reserve Ratio and Statutory Reserve Ratio have been calculated and maintained in accordance with section 33 of Banking Companies Act 1991 and subsequent Bangladesh Bank BCD circular no. 13 dated 24 May 1992, BRPD circular no. 12 dated 20 September 1999 and BRPD circular no. 22 dated 06 November 2003 and circular nos. 11 and 12 dated 25 August 2005.

Conclusion

Bank Asia has been launched by a group of successful entrepreneurs with recognized standing in the society. The management of the Bank consists of a team led by senior bankers with decades of experience in national and international markets. The senior management team is ably supported by a group of professionals many of whom have exposure in the international market. In the year 2003 the Bank again came to the limelight with oversubscription of the Initial Public Offering of the shares of the Bank, which was a record (55 times) in our capital market’s history and its shares commands respectable premium. The asset and liability growth has been remarkable. By Dec 2005 the total asset of the Bank grew to Tk 23,380 million, increase of almost 31% comparing to 2004.