Nbl Annual Report

NATIONAL BANK LIMITED AUDITORS’ REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010 73 I annual report 2010 NATIONAL BANK LIMITED AUDITORS’ REPORT TO THE SHAREHOLDERS OF NATIONAL BANK LIMITED We have audited the accompanying financial statements of National Bank Limited, which comprise the balance sheet as at 31 December 2010 and the related profit and loss account, statement of changes in equity and cash flow statement for the period then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), Bangladesh accounting Standards (BAS), Companies Act 1994, Bank Companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the Securities and Exchanges Rules 1987 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.

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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 (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial tatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of the material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation 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 entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the Financial Statements present fairly, in all material respects, the financial position of the bank as at 31 December 2010 and its financial performance and its cash flows for the period then ended in accordance with Bangladesh Financial Reporting Standards (BFRS)

We also report that i. 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; ii. 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 purposes of our audit have been received from the branches not visited by us ; 74 I annual report 2010 NATIONAL BANK LIMITED ii. the Bank’s balance sheet and profit and loss account and it’s cash flows dealt with by the report are in agreement with the Books of Account and returns; iv. the expenditure incurred was for the purposes of Bank’s business; v. the financial position of the Bank at 31 December 2010 and the profit for the period then ended have been properly reflected in the financial statements; the financial statements have been prepared in accordance with the generally accepted accounting principles; vi. he 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; vii. adequate provisions have been made for loans and advances, investments and other assets which are in our opinion, doubtful of recovery and adequate provisions have also been made against Off Balance Sheet items; viii. he financial statements conform to the prescribed standards set in the accounting regulations issued by Bangladesh Bank after consultation with professional accounting bodies of Bangladesh; ix. the records and statements submitted by the branches have been properly maintained and consolidated in the Financial Statements; x. the information and explanations required by us have been received and found satisfactory; xi. guidelines of Core Risk Management issued by the Bangladesh Bank vide BRPD Circular # 17 dated 07 October 2003 is being complied with; xii. he accounts of overseas subsidiary, associate and branches were not audited by us; xiii. it appeared from our test checks that the internal control system was adequate and satisfactory; xiv. during the course of our audit we did not come across any matter which was to be brought to the notice of the shareholders of the Bank; and xv. 80% of the risk-weighted assets have been reviewed spending over, 3,200 man-hours. Dhaka, 15 February 2011 Aziz Halim Khair Choudhury Chartered Accountants 75 I nnual report 2010 NATIONAL BANK LIMITED Consolidated Balance Sheet As at 31 December 2010 2010 Main operation Taka PROPERTY AND ASSETS Cash 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 Intragroup balance Money at call on short notice Investments Government Others Intragroup balance Loans and advances Loans, cash credits, overdrafts etc.

Bills purchased & discounted Offshore Banking Unit Taka NBL Money Transfer Pte Ltd. Taka NBL Money TRN Sdn Bhd Malaysia Taka Total Taka Taka 2009 1,474,308,630 7,221,005,129 8,695,313,759 2,146,014,749 1,488,098,600 3,634,113,349 99,500,000 15,016,883,609 9,976,444,138 24,993,327,747 84,618,774,249 4,897,823,828 89,516,598,077 6,972,137 6,972,137 1,402,093,187 1,084,872,838 2,486,966,025 308,445 21,080,886 2,515,327,493 ,840,147 6,840,147 40,083,555 239,921 40,323,476 3,586,709 547,515 51,297,847 38,095,810 38,095,810 10,512,855 1,765,610 50,374,275 1,481,148,777 7,221,005,129 8,702,153,906 2,231,166,251 1,488,338,521 (327,365,804) 3,392,138,968 99,500,000 15,016,883,609 9,976,444,138 (39,355,420) 24,953,972,327 86,020,867,436 5,982,696,666 92,003,564,102 2,238,847,261 2,973,141,798 384,718,241 134,748,036,603 ,294,914,868 5,553,512,827 6,848,427,695 1,953,168,305 597,406,528 (168,027,447) 2,382,547,386 1,359,800,000 8,589,545,870 3,725,658,407 (26,881,080) 12,288,323,197 61,597,795,428 3,531,490,425 65,129,285,853 1,829,113,020 1,743,483,936 384,788,241 91,965,769,328 Fixed assets including land, buildings, furniture and fixtures 2,224,439,252 Other assets 2,949,747,787 Non-banking assets 384,718,241 TOTAL ASSETS 132,497,758,212 LIABILITIES AND CAPITAL Liabilities Borrowings from other Banks, Financial Institutions and Agents Intragroup balance Deposits and ther accounts Current deposits and other accounts Bills payable Savings bank deposits Fixed deposits Term deposits Bearer certificates of deposits Intragroup balance Subordinated Bond Other liabilities Intragroup balance TOTAL LIABILITIES Shareholders’ equity Paid up capital Intragroup balance Statutory reserve General reserve Other reserve Retained earnings TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY Continued…. ,979,304,198 1,979,304,198 14,020,864,433 2,133,029,898 19,289,901,104 43,801,426,228 23,101,555,044 15,825,000 102,362,601,707 2,500,000,000 6,550,252,984 6,550,252,984 113,392,158,889 4,412,131,300 4,412,131,300 4,180,253,183 497,723,327 4,915,334,354 5,100,157,159 14,693,468,023 19,105,599,323 132,497,758,212 2,396,292,339 2,396,292,339 109,970,350 6,233,049 116,203,399 2,831,755 2,831,755 2,515,327,493 2,515,327,493 18,813,074 18,813,074 18,813,074 16,425,420 16,425,420 16,059,353 16,059,353 32,484,773 51,297,847 0,804,598 30,804,598 30,804,598 22,930,000 22,930,000 (3,360,323) (3,360,323) 19,569,677 50,374,275 4,375,596,537 (273,801,339) 4,101,795,198 14,130,834,783 2,133,029,898 19,289,901,104 43,801,426,228 23,107,788,093 15,825,000 (6,972,137) 102,471,832,969 2,500,000,000 6,602,702,411 (46,592,328) 6,556,110,083 115,629,738,250 4,451,486,720 (39,355,420) 4,412,131,300 4,180,253,183 497,723,327 4,915,334,354 5,112,856,189 14,706,167,053 19,118,298,353 134,748,036,603 ,539,566,185 (148,646,338) 1,390,919,847 10,398,061,333 1,285,541,183 16,509,865,813 31,605,724,061 17,023,623,597 15,825,000 (4,513,835) 76,834,127,152 4,822,475,978 4,822,475,978 83,047,522,977 2,873,417,380 (26,881,080) 2,846,536,300 2,418,373,220 497,723,327 1,586,842,142 1,568,771,362 6,071,710,051 8,918,246,351 91,965,769,328 76 I annual report 2010 NATIONAL BANK LIMITED Consolidated Balance Sheet As at 31 December 2010 010 Main operation Taka OFF BALANCE SHEET ITEMS Contingent Liabilities Acceptances and endorsements Letters of guarantee Irrevocable letters of credit Bills for collection Other liabilities (Bad & Loss) Other Contingent Liabilities Value of Bangladesh sanchaya patra on hand Value of travelers’ cheques on hand Total Contingent Liabilities Other commitments Lease rental commitments Documentary credits and short term trade -related transactions Forward assets purchased and forward deposits placed Undrawn note issuance and revolving facilities Undrawn formal standby facilities, credit lines and other commitments Spot and forward foreign exchange rate contracts Other exchange contracts Claims against the Bank not acknowledged as debt Total off B/S items (Including contingent liabilities) 42,801,387,292 2,243,713,536 45,045,100,828 30,083,029,956 991,250,000 991,250,000 42,801,387,292 2,243,713,536 -991,250,000 991,250,000 45,045,100,828 803,342,000 803,342,000 30,083,029,956 6,027,402,000 5,332,834,216 25,502,804,364 4,947,096,712 41,810,137,292 9,621,959 1,651,474,872 582,616,705 2,243,713,536 6,027,402,000 5,342,456,175 27,154,279,236 5,529,713,417 44,053,850,828 4,890,016,000 5,590,072,772 15,484,573,056 3,315,026,128 29,279,687,956 Offshore Banking Unit Taka NBL Money Transfer Pte Ltd. Taka NBL Money TRN Sdn Bhd Malaysia Taka Total Taka Taka 2009 These Financial Statements should be read in conjunction with the annexed notes Managing Director Director Director Chairman Auditors’ Report to the shareholders signed in terms of our separate report of even date Dhaka, 15 February 2011

Aziz Halim Khair Choudhury Chartered Accountants 77 I annual report 2010 NATIONAL BANK LIMITED Consolidated Profit and Loss Account For the year ended 31 December 2010 2010 Main operation Taka Offshore Banking Unit Taka NBL Money Transfer Pte Ltd. Taka NBL Money TRN Sdn Bhd Malaysia Taka Total Taka Taka 2009 Interest income Less: Interest paid on deposits and borrowings Net interest income Investment income Commission, exchange and brokerage Other operating income Total operating income Salary and allowances Rent, taxes, insurance, electricity etc. Legal expenses Postage, stamp, telecommunication etc. Stationery, printing, advertisement, etc.

Managing director’s salary and allowances Directors’ fees and other benefits Audit fees Charges on loan losses Repairs, maintenance and depreciation Other expenses Total operating expenses Effect of changes in exchange rates Profit transferred from Off Shore Banking Unit Profit before provision Provision for loans and advances Specific provision General provision (Including Off B/S items) Provision for other classified assets Total provision Profit before taxes Provision for taxation Deferred tax (income)/expenses Net Profit after taxation Retained earnings brought forward from previous year Appropriations Statutory reserve Transferred from general reserve (for appropriation) Dividend (Bonus share) Retained earnings carried forward ,506,867,029 5,537,628,704 3,969,238,325 6,216,355,890 1,518,935,393 1,225,254,752 12,929,784,360 1,996,107,963 244,923,173 42,097,475 45,984,752 121,452,940 8,902,876 7,543,275 325,000 1,050,000,000 218,644,467 353,413,658 4,089,395,579 8,840,388,781 100,211,033 8,940,599,814 120,000,000 120,000,000 11,200,000 131,200,000 8,809,399,814 1,920,000,000 29,056,237 1,949,056,237 6,860,343,577 1,567,288,545 8,427,632,122 (1,761,879,963) (1,565,595,000) (3,327,474,963) 5,100,157,159 109,269,308 39,458,310 69,810,998 26,597,906 8,825,372 105,234,276 2,626,661 1,111,149 314,104 253,412 5,098 4,310,424 100,923,852 (712,819) (100,211,033) – 35,488,379 684,119 36,172,498 11,699,005 2,119,755 10,532,855 24,351,615 11,820,883 198,588 12,019,471 12,019,471 1,041,043 174,657 1,215,700 10,803,771 5,255,582 16,059,353 16,059,353 0,988,081 313,913 21,301,994 8,329,598 5,919,357 459,059 362,340 87,134 1,338,722 4,363,533 20,859,743 442,251 442,251 442,251 29,809 29,809 412,442 (3,772,765) (3,360,323) (3,360,323) 9,616,136,337 5,577,087,014 4,039,049,323 6,216,355,890 1,602,009,759 1,235,078,156 13,092,493,128 2,018,763,227 251,953,679 42,097,475 46,757,915 121,815,280 8,902,876 7,543,275 412,134 1,050,000,000 222,356,356 368,315,144 4,138,917,361 8,953,575,767 (514,231) 8,953,061,536 120,000,000 120,000,000 11,200,000 131,200,000 8,821,861,536 1,921,070,852 29,230,894 1,950,301,746 6,871,559,790 1,568,771,362 8,440,331,152 (1,761,879,963) (1,565,595,000) (3,327,474,963) 5,112,856,189 ,006,634,491 4,490,344,927 2,516,289,564 1,779,316,931 1,497,505,815 757,001,976 6,550,114,286 1,534,823,696 189,695,256 9,525,056 38,796,421 110,676,207 7,120,000 4,012,405 344,415 855,400,305 151,891,116 237,198,388 3,139,483,265 3,410,631,021 (200,004) 3,410,431,017 25,000,000 175,000,000 200,000,000 200,000,000 3,210,431,017 1,151,450,413 (23,248,003) 1,128,202,410 2,082,228,607 964,856,945 3,047,085,552 (639,499,183) 135,000,000 (973,815,007) (1,478,314,190) 1,568,771,362 These Financial Statements should be read in conjunction with the annexed notes Managing Director Director Director Chairman Auditors’ Report to the shareholders signed in terms of our separate report of even date Dhaka, 15 February 2011 Aziz Halim Khair Choudhury Chartered Accountants 78 I annual report 2010

Consolidated Statement of changes in Equity (Figure in BDT) Paid up Capital 2,846,536,300 1,565,595,000 4,412,131,300 4,180,253,183 497,723,327 4,915,334,354 3,328,492,212 1,761,879,963 (1,761,879,963) (1,565,595,000) 3,328,492,212 6,871,559,790 6,871,559,790 2,418,373,220 497,723,327 1,586,842,142 1,568,771,362 8,918,246,351 Reserve Reserve Reserve Earnings Statutory General Other Retained Total For the year ended 31 December 2010 Particulars Balance on 01 January 2010 Net profit for the year Bonus shares for 2009 issued during the year Addition during the year Revaluation of Govt. Treasury Bill, Bond and Other Investment Transfer from general reserve for appropriation

Balance at 31 December 2010 5,112,856,189 19,118,298,353 Balance at 31 December 2009 2,846,536,300 2,418,373,220 497,723,327 1,586,842,142 1,568,771,362 8,918,246,351 NATIONAL BANK LIMITED 79 I Director Managing Director Director Chairman annual report 2010 NATIONAL BANK LIMITED Balance Sheet As at 31 December 2010 Notes PROPERTY AND ASSETS Cash 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 on short notice Investments Government Others Loans and advances Loans, cash credits, overdrafts etc.

Bills purchased & discounted Fixed assets including land, buildings, furniture and fixtures Other assets Non-banking assets TOTAL ASSETS LIABILITIES AND CAPITAL Liabilities Borrowings from other Banks, Financial Institutions and Agents Deposits and other accounts Current deposits and other accounts Bills payable Savings bank deposits Fixed deposits Term deposits Bearer certificates of deposits 2010 Taka 2009 Taka 3 4 1,474,308,630 7,221,005,129 8,695,313,759 1,290,177,054 5,553,512,827 6,843,689,881 5 2,146,014,749 1,488,098,600 3,634,113,349 99,500,000 15,016,883,609 9,976,444,138 24,993,327,747 8 84,618,774,249 4,897,823,828 89,516,598,077 2,224,439,252 2,949,747,787 384,718,241 132,497,758,212 61,504,920,890 3,457,391,264 64,962,312,154 1,815,564,664 1,740,385,536 384,788,241 91,912,116,447 1,893,180,877 597,190,817 2,490,371,694 1,359,800,000 8,589,545,870 3,725,658,407 12,315,204,277 6 7 9 10 2. 6. 5 11 12 12. 2 12. 3 1,979,304,198 1,390,919,847 12. 4 4,020,864,433 2,133,029,898 19,289,901,104 43,801,426,228 23,101,555,044 15,825,000 102,362,601,707 2,500,000,000 6,550,252,984 113,392,158,889 4,412,131,300 4,180,253,183 497,723,327 4,915,334,354 5,100,157,159 19,105,599,323 132,497,758,212 10,375,948,754 1,285,541,183 16,509,865,813 31,605,724,061 17,021,746,469 15,825,000 76,814,651,280 4,789,781,786 82,995,352,913 2,846,536,300 2,418,373,220 497,723,327 1,586,842,142 1,567,288,545 8,916,763,534 91,912,116,447 Subordinated Bond Other liabilities TOTAL LIABILITIES Shareholders’ equity Paid up capital Statutory reserve General reserve Other reserve Retained earnings TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY Continued…. 2. 18 13 14. 2 15 16 17 18 80 I annual report 2010 NATIONAL BANK LIMITED Balance Sheet As at 31 December 2010

Notes OFF BALANCE SHEET ITEMS Contingent liabilities Acceptances and endorsements Letters of guarantee Irrevocable letters of credit Bills for collection Other liabilities (Bad & Loss) Other contingent liabilities Value of Bangladesh sanchaya patra on hand Value of travelers’ cheques on hand Total contingent liabilities Other commitments Lease rental commitments Documentary credits and short term trade -related transactions Forward assets purchased and forward deposits placed Undrawn note issuance and revolving facilities Undrawn formal standby facilities, credit lines and other commitments Spot and forward foreign exchange rate contracts Other exchange contracts Claims against the Bank not acknowledged as debt Total off Balance Sheet items (Including contingent liabilities) 2010 Taka 2009 Taka 19 6,027,402,000 5,332,834,216 25,502,804,364 4,947,096,712 41,810,137,292 991,250,000 991,250,000 42,801,387,292 4,890,016,000 5,579,945,980 14,801,207,258 3,125,304,637 28,396,473,875 803,342,000 803,342,000 29,199,815,875 42,801,387,292 29,199,815,875 These Financial Statements should be read in conjunction with the annexed notes Managing Director Director Director Chairman Auditors’ Report to the shareholders signed in terms of our separate report of even date Dhaka, 15 February 2011 Aziz Halim Khair Choudhury Chartered Accountants 81 I annual report 2010 NATIONAL BANK LIMITED Profit and Loss Account For the year ended 31 December 2010

Interest income Less: Interest paid on deposits and borrowings Net interest income Investment income Commission, exchange and brokerage Other operating income Total operating income Salary and allowances Rent, taxes, insurance, electricity etc. Legal expenses Postage, stamp, telecommunication etc. Stationery, printing, advertisement, etc. Managing director’s salary and allowances Directors’ fees and other benefits Audit fees Charges on loan losses Repairs, maintenance and depreciation Other expenses Total operating expenses Profit transferred from offshore banking unit Profit before provision Provision for loans and advances Specific provision General provision (Including Off B/S items) Provision for other classified assets Total provision Profit before taxes Provision for taxation Deferred taxes Income)/expenses Net Profit after taxation Retained earnings brought forward from previous year Appropriations Statutory reserve Transfer from general reserve (for appropriation) Dividend (Bonus Share) Retained earnings carried forward Earnings per share 13. 2 (a) 13. 2 (b & c) 13. 4 Notes 20 21 22 23 24 25 27 28 30 31 32 26 29 33 34 2010 Taka 9,506,867,029 5,537,628,704 3,969,238,325 6,216,355,890 1,518,935,393 1,225,254,752 12,929,784,360 1,996,107,963 244,923,173 42,097,475 45,984,752 121,452,940 8,902,876 7,543,275 325,000 1,050,000,000 218,644,467 353,413,658 4,089,395,579 8,840,388,781 100,211,033 8,940,599,814 120,000,000 120,000,000 11,200,000 131,200,000 8,809,399,814 1,920,000,000 29,056,237 1,949,056,237 6,860,343,577 1,567,288,545 8,427,632,122 (1,761,879,963) (1,565,595,000) (3,327,474,963) 5,100,157,159 15. 55 009 Taka 7,003,704,938 4,489,636,114 2,514,068,824 1,779,316,931 1,448,972,295 750,127,030 6,492,485,080 1,524,454,051 186,191,020 9,525,056 38,345,265 110,629,935 7,120,000 4,012,405 300,000 855,400,305 149,744,214 228,396,741 3,114,118,992 3,378,366,088 19,129,827 3,397,495,915 25,000,000 175,000,000 200,000,000 200,000,000 3,197,495,915 1,150,000,000 (22,974,549) 1,127,025,451 2,070,470,464 975,132,271 3,045,602,735 (639,499,183) 135,000,000 (973,815,007) (1,478,314,190) 1,567,288,545 4. 69 13. 1 37 These Financial Statements should be read in conjunction with the annexed notes Managing Director Director Director Chairman Auditors’ Report to the shareholders signed in terms of our separate report of even date Dhaka, 15 February 2011 Aziz Halim Khair Choudhury Chartered Accountants 82 I annual report 2010 NATIONAL BANK LIMITED Cash Flow Statement For the year ended 31 December 2010

Notes A) Cash flows from operating activities Interest received Interest paid Income from Investment Fees, commission, exchange & brokerage Cash paid to employees Cash paid to suppliers Income taxes paid Received from other operating activities Paid for other operating activities Operating profit before changes in operating assets and liabilities Increase/(decrease) in operating assets & liabilities Sale of trading securities Purchase of trading securities Loans and advances to other banks Loans and advances to customers Other assets Deposits from other Banks Deposits from customers Other liabilities Net cash received from operating activities B) Cash flows from investing activities Proceeds from sale of non- trading securities Investment made during the year (Non-trading securities) Purchase of property, plant and equipment Sale proceeds of fixed assets Net cash used in investing activities C) Cash flows from financing activities Borrowings from Other Banks, Financial Institutions and agents Issue of subordinated bond Net cash received from financing activities D) E) F) G) 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 f the year Cash and cash-equivalents at end of the year (D+E+F) Cash and cash-equivalents at end of the year Cash in hand (including foreign currencies) Balances with Bangladesh Bank and its agent bank (s) Balances with other Banks and Financial Institutions Money at call and short notice Reverse repo Prize bonds 2010 Taka 9,506,867,029 (5,233,922,931) 1,556,283,523 1,518,935,393 (2,012,554,114) (499,795,500) (1,375,039,771) 1,204,312,075 (351,996,375) 4,313,089,329 2009 Taka 6,818,466,566 (4,476,709,304) 909,565,342 1,448,972,295 (1,535,586,456) (385,023,146) (1,366,204,813) 932,344,919 (228,317,075) 2,117,508,328 13. 1 35 36 5,129,578,214 (2,414,256,082) (26,213,422,183) (1,209,362,251) (2,203,835,160) 27,751,785,587 481,157,340 1,321,645,465 5,634,734,794 ,734,594,467 (1,371,728,233) (15,790,235,307) (1,023,955,338) 3,059,995,915 13,567,220,315 132,154,288 308,046,107 2,425,554,435 1,508,728,874 (7,964,223,185) (622,154,636) 59,173,135 (7,018,475,812) 824,349,730 (2,044,519,094) (343,863,070) 4,914,689 (1,559,117,745) 588,384,351 2,500,000,000 3,088,384,351 1,704,643,333 30,482,300 10,700,005,175 12,435,130,808 134,363,947 134,363,947 1,000,800,637 3,105,244 9,696,099,294 10,700,005,175 1,474,308,630 7,221,005,129 3,634,113,349 99,500,000 6,203,700 12,435,130,808 1,290,177,054 5,553,512,827 2,490,371,694 1,359,800,000 6,143,600 10,700,005,175 Managing Director Director Director Chairman 83 I annual report 2010 84 I NATIONAL BANK LIMITED Figure in BDT) Paid up Capital 2,846,536,300 1,565,595,000 4,412,131,300 4,180,253,183 497,723,327 1,761,879,963 3,328,492,212 4,915,334,354 2,418,373,220 497,723,327 1,586,842,142 1,567,288,545 6,860,343,577 (1,565,595,000) (1,761,879,963) Reserve Reserve Reserve Earnings 8,916,763,534 6,860,343,577 3,328,492,212 5,100,157,159 19,105,599,323 Statutory General Other Retained Total 2,846,536,300 2,418,373,220 497,723,327 1,586,842,142 1,567,288,545 8,916,763,534 Director Director Chairman Statement of changes in Equity annual report 2010 For the year ended 31 December 2010 Particulars Balance on 01 January 2010 Net profit for the year Bonus shares for 2009 issued during the year Addition during the year Revaluation of Govt. Treasury Bill, Bond and other Investment Issued during the year Transfer from general reserve Balance at 31 December 2010 Balance at 31 December 2009 Managing Director Liquidity Statement (Asset and liability maturity analysis) As at 31 December 2010 (Figure in BDT) Not more than 1 month term term term term term 1-3 months 3-12 months 1-5 years Above 5-years Total Particulars

Assets 1,474,308,630 7,221,005,129 2,869,082,187 99,500,000 2,650,520,011 3,831,950,072 10,880,217 787,359,291 18,944,605,537 14,116,036,001 36,644,055,116 1,572,423,138 589,965,359 384,718,241 21,760,434 97,921,955 432,862,656 9,296,059,752 30,316,017,237 37,235,046,510 2,735,246,515 5,440,150,566 5,423,666,159 8,743,744,496 8,837,524,506 1,661,013,990 490,546,162 200,000,000 74,485,000 1,474,308,630 7,221,005,129 3,634,113,349 99,500,000 24,993,327,747 89,516,598,077 2,224,439,252 2,949,747,787 384,718,241 Cash in hand Balance with Bangladesh Bank and its agent Bank Balances with other banks and financial institutions Money at call on short notice Investments Loans & Advances Fixed assets including land, building, furniture & fixtures Other assets Non-banking assets Total Assets 43,550,778,566 19,242,282,992 132,497,758,212

Liabilities 329,884,033 17,001,609,125 719,392,085 18,050,885,243 893,720,294 1,183,093,349 8,644,728,841 659,768,066 989,652,099 30,256,550,942 1,897,256,533 36,430,817,489 500,000,000 2,750,511,017 10,028,895,310 2,000,000,000 1,979,304,198 102,362,601,707 2,500,000,000 6,550,252,984 39,681,328,506 12,028,895,310 113,392,158,889 3,500,595,542 3,869,450,060 7,213,387,682 19,105,599,323 Borrowings from other Banks, Financial Institutions & Agents Deposits and other accounts Subordinated Debt Other liabilities Total Liabilities 10,487,590,256 33,143,459,574 3,628,445,745 Net Liquidity Gap NATIONAL BANK LIMITED 85 I Director Director Chairman annual report 2010 Managing Director NATIONAL BANK LIMITED

Notes to the Financial Statements For the year ended 31 December 2010 1 1. 1 General information Status of the bank National Bank Limited was incorporated in Bangladesh as a public limited company with limited liability as on 15 March 1983 under Companies Act 1913 (Companies Act. 1994) to carry out banking business. It obtained license from Bangladesh Bank for carrying out banking business on 22 March 1983. The Bank has been carrying out its banking activities through its one hundred forty five (145) branches including fifteen (15) SME/Agri- branches over the country. The Bank is listed with both Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. 1. 2 1. 2. Principal activities The principal activities of National Bank Limited are to provide a comprehensive range of financial services; personal and commercial banking, trade service, cash management, treasury, security and custody services. Offshore Bank is a Bank located outside the country of residence of depositors, typically in the low tax jurisdiction (or tax haven) that provides financial and legal advantage. Offshore Banking Unit (the Unit) a separate business unit of National Bank Limited, governed under the Rules and guideline of Bangladesh Bank. The Bank obtained the Offshore Banking permission vide letter No. BRPD/(P3)744(97)/2008-2005 dated 01 June 2008 from Bangladesh Bank. The unit commenced its operation from September, 2008 and its office is located at 9, Mohakhali, Dhaka.

Basis of preparation of Financial Statements and significant accounting policies Statement of Compliance The Financial Statements have been prepared in compliance with the Bangladesh Financial Reporting Standards (BFRS), Bangladesh Accounting Standards (BASs), Bangladesh Bank circulars, Bank companies Act 1991, the Companies Act 1994, Securities and Exchange Rules and other rules and regulations as applicable in Bangladesh. 2. 2 Basis of preparation of Financial Statements The Financial Statements of the Bank as at 31 December, 2010 have been prepared on going concern basis under the historical cost convention and in accordance with the “First Schedule” of the Bank Companies Act, 1991 as amended by BRPD Circular No. 14 dated 25 June 2003, other Bangladesh Bank Circulars, Bangladesh Financial Reporting Standards (BFRS), Bangladesh Accounting Standards (BASs), the Companies Act 1994, the Securities and Exchange Rules 1987, the listing Regulations of the Stock Exchanges and other laws and rules applicable in Bangladesh. 2. Basis of consolidation A separate set of record for consolidation of Balance Sheet and Profit & Loss Account of the branches and Head Office of the Bank are maintained based on which these Financial Statements have been prepared. 2. 4 Use of estimates and judgment Preparation of the Financial Statements in conformity with BFRS/BAS requires management to make judgments, estimates and assumptions. These judgments, estimates and assumptions affect the application of accounting policies and the reported amount of assets and liabilities as well as income and expenses in the Financial Statements presented. Actual result may differ from the estimates and assumption made. Estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future period affected. 2. 5 Functional and presentation currency The Financial Statements have been prepared and presented using BDT the functional currency of NBL. 1. 2. 2 2 2. 1 86 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 2. 6 2. 6. 1 Assets and basis of their valuation Loans and advances a) Loans and advances are stated in the Balance Sheet at gross basis. General provisions on unclassified & contingent assets, Specific provisions for classified loans and interest suspense account thereon are shown under other liabilities. ) Loans and advances are written off to the extent that (i) there is no realistic prospect of recovery and (ii) against which legal cases are pending as per guidelines of Bangladesh Bank. However, the write off will not reduce the claim against the borrower. Detailed memorandum records for all of such write off accounts are maintained. 2. 6. 2 Lease finance To comply with Bangladesh Accounting Standard (BAS) No. 17 “Leases”, the books of account for leasing operation has been prepared under finance method of accounting since assets leased to customers under agreements transfer substantially all the risks and rewards associated with ownership, other than legal title, to the customers and all leases are full payout leases.

In accordance with the said standard, the aggregate lease receivables are recorded as gross lease receivables while the excess of gross lease receivables over the total acquisition cost including interest during the period of acquiring the lease equipment constitutes the unearned lease income. At the execution of each lease, a portion of the unearned lease is recognized as revenue income in the period in which it is matured. The balance of the unearned lease income is amortized to revenue on a monthly basis over the primary lease term yielding a constant rate of return over the period. 2. 6. 3 Investments Investments are classified broadly in three categories and accounted for as under. (a) Held to maturity

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the NBL’s management has the intention and ability to hold to maturity. If the Bank were to sell other than an insignificant amount of held -tomaturity assets, the entire category would be reclassified as available for sale. (b) Held for trading Investments classified in this category are acquired principally for the purpose of selling or repurchasing in short trading or if designed as such by the management. After initial recognition, investments are measured at fair value and changes are recognized in the Ptofit & Loss account as income for the period as per provision of BAS-39 “Financial Instruments: Recognition and measurement”. c) Sale and repurchase agreement Securities sold subject to repurchase agreement (REPO) are reclassified in the Financial Statements as pledged assets when the transferee has the right by contract or custom to sell or re-pledge the collateral; the counter-party liability is included in amounts due to other banks, deposits from banks, other deposits or deposits due to customers, as appropriate. Securities purchased under agreements to resell (REVERSE REPO) are recorded as loans and advances to other banks or customers, as appropriate. The difference between sale and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest method. Value of investment has been determined as follows : Items Government treasury bills (HTM) Government treasury bills (HFT) T & T bonds Bangladesh Govt. reasury bonds Prize bond BHBFC-debenture Investments in shares Foreign Investment in Share and FDR Applicable accounting value At Present Value At Market Value At cost At Present Value At cost Face value Marked to market At rolling exchange rate on Balance Sheet date 87 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 2. 6. 4 Fixed assets and depreciation a) All fixed assets are stated at cost less accumulated depreciation. b) Depreciation is charged for the year using straight line method on all fixed assets other than land at the following rates : Category of fixed assets Land Building Furniture, Fixture & Fittings General Equipment Computer Equipment Vehicles Books 2010 Nil 2. 50% 10% 20% 33. 33% 20% 20% Rate of depreciation 2009 Nil 2. 50% 10% 20% 33. 33% 20% 20% ) On additions to fixed assets depreciation is charged from the date of acquisition and no depreciation is charged in the year of disposal of the same. 2. 6. 5 Non- Banking Assets The Bank has shown Non-Banking assets acquired by virtue of decree from Artha-Rin-Adalat at its market value as required by BRPD circular No. 14 dated 25 June 2003. Liabilities and provisions Employees benefits a. Short-term benefits Short-term benefits are employees benefits which fall due wholly within twelve month after the end of the period in which the employees render the related service. The Bank provide various short-term benefits to its employees like incentive bonus, medical services, leave fare assistance etc. b.

Post-employment benefits: i. Defined contribution plans Defined contribution plans are post employment benefit plans under which an entity pays a fixed contributions into a separate entity (Fund) and will have no legal or constructive obligations to pay further. Obligation for contribution to defined contribution pension plans are recognized as an expense in the Profit & Loss account when they are due. Provident fund The benefits of provident fund are given to the employees of the Bank in accordance with the recognized Provident Fund Rules as per section 2(52) of Income Tax Ordinance, 1984. The Provident Fund was recognized with effect from 31 March, 1987.

The Fund is operated by a Board of Trustees consisting of 6 (six) members of the Bank. All confirmed employees of the Bank contribute 10% of their basic salary as subscription to the Fund. The Bank also contributes equal amount to the Fund. Interest earned from the investments of fund is credited to the members account on yearly basis. ii. Defined benefit plans Defined benefit plans are post employment benefit plans other than defined contribution plans. The defined benefit plans of the Bank to its employees includes: Gratuity The Bank operates a funded gratuity scheme with effect from 01 July, 2005, which is administered by a Board of Trustees consisting of 4 (four) members.

Provision has been made for liabilities under gratuity scheme in compliance with BAS-19 and Bangladesh Bank instruction provided in letter No. DBI 1 (private)/82/2008-257 dated February 20, 2008. Superannuation fund The Bank operates a Superannuation Fund Trust by a Board of Trustees consisting of 5 (five) members. The death-cum-survival benefits are given to the employees as per the eligibility narrated in the Trust Rules. The fund got recognition from the National Board of Revenue with effect from July 01, 2005, as per Part-A of First Schedule of Income Tax Ordinance, 1984. The Bank contributes to the fund annually as per superannuation fund rules. c. Other benefits Other benefits includes leave encashment, house building, computer and car loan at a consessional rate. 2. 7. Provision for liabilities A provision is recognized in the Balance Sheet when the Bank has a 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 BAS-37, “Provisions, Contingent Liabilities and Contingent Assets”. 2. 7 2. 7. 1 88 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 2. 7. 3 Provision for Loans and Advances Provision against classified loans and advances is made on the basis of periodical review by the management and instruction contained in BCD Circular No. 2 dated 4 September 1995, BRPD circular No. 16 dated 6 December 1998, BRPD circular No. 9 dated 14 May 2001, BRPD circular No. 02 dated 15 February 2005, BRPD circular No. 05 dated 27 April 2005 and BRPD circular No. 32, dated October 27, 2010. The provisioning rate as per Bangladesh Bank circulars are as follows: Business Unit UC Consumer SMA 5. 00% 5. 00% 5. 00% 5. 00% 5. 00% Rates of Provisions SS 20. 00% 20. 00% 20. 00% 20. 00% 20. 00% DF 50. 00% 50. 00% 50. 00% 50. 00% 50. 00% BL 100. 00% 100. 00% 100. 00% 100. 00% 100. 00% House Building & Professional Other than House Building & Professional Small & Medium Enterprise BHs/MBs/ SDs against shares All Others 2. 00% 5. 00% 1. 0% 2. 00% 1. 00% 2. 7. 4 Provision against Off Balance Sheet items Provision against Off Balance Sheet items have been kept @ 1. 00% as per BRPD Circular No. 08 of August 7, 2007 and BRPD circular No. 10 of September 18, 2007. Provision for Taxation a. Current Tax Current tax is expected tax payable on taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment payable in respect of previous years. Provision for current income tax has been made @ 42. 50% as prescribed in the Finance Act, 2010 of the profit made by the Bank after considering major taxable allowances and disallowances. b.

Deferred Tax Deferred Tax is calculated on the taxable / deductible temporary differences between tax base amount and carrying amount of assets and liabilities as required by Bangladesh Accounting Standards (BAS)-12 “Income Taxes”. Taxable temporary differences are temporary differences that will result in taxable amounts in determining taxable profit/(loss) for future periods when the carrying amount of the asset or liability is recovered or settled. Deductible temporary differences are differences that will result in amounts that are deductible in determining taxable profit (loss) of future periods when the carrying amount of asset or liability is recovered or settled. 2. 7. 5 2. 8 2. 9 Off Balance sheet items Off Balance sheet items have been disclosed under contingent liabilities and other commitments as per Bangladesh Bank guidelines.

Revenue recognition The revenues during the year are recognized complying all conditions of revenue recognition as prescribed in Bangladesh Accounting Standards (BAS)-18, “Revenue Recognition” Interest income The interest receivable is recognized 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 account and in memorandum account. Interest on classified advances is accounted for on a cash receipt basis. Investment income Income on investment is recognized on realisation & accrual basis where applicable Fees and commission income Fees and commission income arises on services provided by the Bank are recognized on a cash receipt basis. Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of effecting the transactions.

Dividend income on shares Dividend income from shares is recognized during the period in which they are actually received. Stock Dividend is recognized as income in the year in which it is sold. Interest paid on Borrowings and Deposits Interest paid on Borrowings and Deposits are calculated on a day basis and recognized on accrual basis. Management and other expenses Expenses incurred by the Bank are recognized on actual or accrual basis whenever necessary. Foreign currencies translation and balance with other banks Amount in foreign currency are translated in accordance with the principles setforth in Bangladesh Accounting Standard-21 “The Effects of Changes in Foreign Exchange Rates” .

As per this standard monetary items not denominated in BDT and cash transactions not completed at the reporting date are translated into BDT using current market rates. Non-monetary items carried at fair value are translated into BDT using current market price at the reporting date and non-monetary items carried at cost are translated using the rate applicable at the time of acquisition. Transaction rates used to translate the items related to income and expenses. 2. 9. 1 2. 9. 2 2. 9. 3 2. 9. 4 2. 9. 5 2. 9. 6 2. 10 89 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 2. 11 Risk management 2. 11. 1 Asset liability management The Asset Liability Committee (ALCO) of the Bank monitors market risk and liquidity risk of the Bank.

The market risk is defined as potential change in earnings due to change in rate of interest, foreign exchange rates which are not of trading nature. Asset Liability Committee (ALCO) reviews liquidity requirement of the Bank, the maturity of assets and liabilities, deposit and lending, pricing strategy and the liquidity contingency plan. The primary objective of the ALCO is to monitor and avert significant volatility in Net Interest Income (NII), return on assets, investment value and exchange earnings. The ALCO also monitors the Capital Adequacy Ratio on monthly basis. 2. 11. 2 Money laundering risk management 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 Officer 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 has been continuously given to all categories of officers and executives for developing awareness and skill for identifying suspicious activities. 2. 11. 3 Credit risk management Credit Risk is defined as potential loss arising from the failure of a counter party to meet financial obligations as per contractual agreement with the bank. For maintaining steady growth of the Bank and for economic development of the country, National Bank Limited manages credit risk meticulously.

National Bank extends credit facilities to different clients in different sectors after doing due diligence and mitigating risk factors properly as per guidelines set by Bangladesh Bank, Executive Committee of the Board of Directors and Management Credit Committee of the Bank. The bank has segregated duties of the executives/officers involved in credit related activities. A separate marketing division has been formed at Head Office which is entrusted with the duties of maintaining effective relationship with the customer, marketing of credit products, exploring new business opportunities etc. Moreover, credit approval, administration, monitoring and recovery functions have been segregated. For this purpose, three seperate units have been formed namely Credit Risk Management Division, Credit Administration Division, Law & Recovery Division.

Credit Risk Management Division is entrusted with the duties of maintaining asset quality, assessing risk involved in lending, sanctioning credit, formulating policy/strategy for lending operation. Credit Risk Grading (CRG) is also made for individual borrowers. A separate desk has been created in Law and Recovery Division to handle top 10 defaulters. 2. 11. 4 Foreign exchange risk management Foreign exchange risk is defined as the potential change in earnings arising 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 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 at the month-end. All Nostro accounts are reconciled on monthly basis and outstanding entries are reviewed by the management for its settlement on regular basis. 2. 11. 5 Internal control and compliance management Operational loss 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 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. 2. 12 Earnings per share (EPS) Earnings per share (EPS) have been calculated in accordance with BAS-33, “Earnings per Share”, which is shown on the face of the Profit & Loss Account. This has been calculated by dividing the net profit after tax by the weighted average number of ordinary shares outstanding as on 31 December, 2010. Earnings per share is adjusted for issue of bonus shares for the year 2009.

Cash flow statement Cash flow statement has been prepared in accordance with BAS-7, “Cash Flow Statements” and under the guidelines of Bangladesh Bank BRPD Circular No. 14 dated 25 June, 2003. The cash flow statement shows the structure of changes in cash and cash equivalent during the financial year. It is broken down into operating activities, investing activities and financial activities. Statement of changes in equity Statement of changes in equity has been prepared in accordance with BAS-1, “Presentation of Financial Statements” and under the guidelines of Bangladesh Bank BRPD Circular No. 14 dated 25 June, 2003. Statement of liquidity The liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on the reporting date.

Reconciliation of inter-bank/books of accounts Books of accounts in regard to inter bank (in Bangladesh and outside Bangladesh) as well as inter-branches are reconciled at a regular interval. Off-setting financial assets and financial liabilities Financial assets and financial liabilities are set off and the net amount reported in the Balance Sheet when, and only when the Bank has a legal right to offset the recognized amount and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards or for gains or losses arising from a group of similar transaction. 2. 13 2. 14 2. 5 2. 16 2. 17 90 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 2. 18 Subordinated Bond Considering the regulatory, legal, present market condition and future capital requirement the Management of NBL has issued subordinated Bond valuing Tk. 250. 00 crore. This will be eligible for Tier -II capital as per revised Basel II Guidelines of Bangladesh. Details of Terms & conditions are as follows: Issue size Issue objectives Issue Arranger Nature of Instrument Mode of placement Listing Security Rating status of the issue Redemption Redemption value Tenure Coupon rate 2. 19 Tk. 250. 0 crore Raising of Tier -II capital to meet the requirement under Basel-II Standard Chardered Bank Un-secured, Non-Convertible, Subordinated Bond Private placement Unlisted Unsecured A2 Paid annually on prorata basis to Bond holders in installment of 20% per year commencing at the third anniversary of the Bond from the date of issue. At par 7 years 11. 50% Segment reporting Business segement is a distinguishable component of the Bank that is engaged either in providing products or services (business segment) which is subject to risk and rewards that are different from those of other segments. The Banks primary format for segment reporting is based on business segments. Total operation of the Bank is divided in five segement named Corporate, Retail & SME, Treasury Operation, Merchant Banking and others.

Segmentwise revenue are shown below: BDT in crore Heads of revenue Interest income Interest expenses Net interest income Income from investments Commission, exchange, brokerage Other operating income Total income Operating Expenses Operating Income Charges on loan loss Net operating income Off-Shore Banking Unit Net operating income Corporate 824. 61 480. 33 344. 28 71. 53 9. 31 425. 12 99. 93 325. 19 105. 00 220. 19 220. 19 Retail & SME 36. 96 21. 53 15. 43 17. 49 48. 64 81. 56 19. 17 62. 39 62. 39 62. 39 Treasury Operation 32. 60 18. 99 13. 61 208. 28 60. 90 282. 79 66. 48 216. 31 216. 31 216. 31 Others 56. 51 32. 92 23. 59 413. 36 1. 97 64. 57 503. 49 118. 36 385. 13 385. 13 385. 13 Total 950. 68 553. 76 396. 92 621. 64 151. 89 122. 52 1,292. 97 303. 94 989. 03 105. 00 884. 03 10. 02 894. 05 *Operating expenses has been allocated on the basis of income. 91 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 Cash in hand (Including foreign currencies) Local currency Foreign currency 4 Balance with Bangladesh Bank and its agent banks (Including foreign currencies) Bangladesh Bank Local currency Foreign currency Sonali Bank Limited (as an agent of Bangladesh Bank)-LCY 1,437,578,107 36,730,523 1,474,308,630 1,248,852,557 41,324,497 1,290,177,054 2010 Taka 2009 Taka 5,941,822,430 426,803,536 6,368,625,966 852,379,163 7,221,005,129 3,832,657,037 1,138,153,767 4,970,810,804 582,702,023 5,553,512,827 *An amount of Tk. 7,000,000. 00 has been marked as lien with Bangladesh Bank upto 30 June 2011 against TT discounting facilities by various branches of NBL. 4. 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 as per BRPD Circular no. 11 and 12, dated August 25, 2005 and DOS circular no. 6 dated October 05, 2005, MPD circular No. 116/2010-1712 & 04 dated December 2010. The Cash Reserve Requirement on the Bank’s 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, including CRR, on the same liabilities has also been maintained in the form of cash held, Bangladesh Bank balance, Sonali Bank balance (agent bank), TT in transit and unencumbered approved securities.

Both the reserves maintained by the Bank are in excess of the statutory requirements, as shown below: a) Cash Reserve Requirement Average time and demand liabilities (excluding inter bank deposits) Required reserve (6% of average time & demand liabilities)* Actual average maintained Surplus / (Shortage) b) Statutory Liquidity Ratio Average time and demand liabilities (excluding inter bank deposits) Required reserve (19% of average time & demand liabilities)* Actual reserve maintained (including CRR) Surplus / (Shortage) 97,321,893,000 5,839,313,580 6,224,425,000 385,111,420 71,195,537,000 3,559,776,850 3,590,548,000 30,771,150 97,321,893,000 18,491,159,670 23,531,905,904 5,040,746,234 71,195,537,000 12,815,196,660 14,415,892,023 1,600,695,363 * The required rate of CRR & SLR has increased by Bangladesh Bank vide their circular No. 02 , dated 04. 05. 2010 and circular No. 11/2010/1712 & 04 dated December 01, 2010. ) Composition of CRR and SLR maintained* Cash held Balance with Bangladesh Bank Balance with Sonali Bank TT in transit Unencumbered approved securities (HTM) * As per statement submitted to Bangladesh Bank. 5 Balance with other banks and financial institutions Inside Bangladesh – In local currency Outside Bangladesh (Annexure-B) Notes 5. 1 5. 2 2,146,014,749 1,488,098,600 3,634,113,349 1,893,180,877 597,190,817 2,490,371,694 1,497,105,000 5,986,556,000 855,942,000 80,000,000 15,112,302,904 23,531,905,904 1,284,280,000 3,854,677,000 582,702,023 8,694,233,000 14,415,892,023 92 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 5. Inside Bangladesh – In local currency In current accounts with Agrani Bank Limited Janata Bank Limited Rupali Bank Limited Sonali Bank Limited In short term deposit accounts with Eastern Bank Limited Janata Bank Limited National Credit and Commerce Bank Limited First Security Islami Bank Limited ICB Islamic Bank Limited Dhaka Bank Limited Sonali Bank Limited Standard Chartered Bank Trust Bank Limited 132,674 776,711 81,904 66,101 31,978 152,740 2,464,314 69,349,776 2,061,056 75,117,254 124,721 61,585,602 81,544 60,780 32,218 144,942 2,157,644 26,995,724 8,360,588 99,543,763 10,366,603 40,200,376 16,124,919 59,720,597 126,412,495 428,622 17,685,726 35,079,019 65,643,747 118,837,114 2010 Taka 2009 Taka

In fixed deposit accounts (in local currency) with ICB Islamic Bank Limited United Commercial Bank Limited BRAC Bank Limited Jamuna Bank Limited AB Bank Limited Mercantile Bank Limited Pubali Bank Limited One Bank Limited Other Financial Institutions 74,485,000 250,000,000 1,320,000,000 100,000,000 1,744,485,000 200,000,000 2,146,014,749 74,800,000 200,000,000 200,000,000 500,000,000 300,000,000 1,274,800,000 400,000,000 1,893,180,877 * Under the Bangladesh Bank’s reconstruction scheme, a part of the deposit liability of Oriental Bank Limited will be transferred to share capital and the remaining part will be paid off over the next five years in phases.

Meanwhile, based on papers prepared under the reconstruction scheme of Bangladesh Bank a Switzerland based investment company named ICB Finance Group Holdings AG, Switzerland has acquired the Oriental Bank Limited. In 2008 NBL has received 25,000 shares and the first installment of Tk 100,000. 00. We are receiving the installment amount in time as per payment schedule. The remaining amount will be received as per the prescribed payment schedule. 5. 2 Outside Bangladesh In fixed deposit accounts (interest bearing) with JP Morgan Chase Bank, Singapore Standard Chartered Bank, Singapore Fund placement to OBU 43,157,317 273,801,339 316,958,656 42,252,687 4,922,660 148,646,338 195,821,685 93 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010

In demand deposit accounts (non interest bearing) with Standard Chartered Bank, Mumbai Standard Chartered Bank, Frankfurt Mashreq Bank, New York JP Morgan Chase Bank, New York Bank of America Int’l, New York Standard Chartered Bank, New York HSBC, New York Sonali Bank Limited, Kolkata Mashreq Bank, Mumbai State Bank of India, Kolkata United Bank, Karachi NABIL Bank, Nepal Standard Chartered Bank, Colombo Myanmar Foreign Trade, Myanmar ABBL, Mumbai Bank of Bhutan, Thimpu HSBC, Karachi ICICI Bank Ltd. Mumbai Commerz Bank, Frankfurt Uni Credito Italino SPA, Italy Alpha Bank AE, Athens Lloyds Bank Plc, Birmingham, UK HSBC, London BOT, Tokyo UBAF, Tokyo Union Bank of Switzerland, Switzerland Habib Bank, Zurich Bank of Nova Scotia, Canada National Australia Bank, Melbourne Standard Chartered Bank, Singapore Wachovia Bank, New York Citibank N. A, New York (For details, Annexure – B may kindly be seen) 5. 3 Balance with other banks and financial institutions (According to remaining maturity grouping) Payable 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 7,567,309 4,593,650 43,871,529 144,857,454 495,805 500,791,933 50,987,031 9,701,042 47,413,796 433,135 2,208,482 25,118,625 1,036,618 46,896 9,473,732 18,327,874 9,327,867 48,754,798 1,777,431 4,009,174 586,696 824 1,057,020 1,777,405 25,379 1,571,066 92,523 2,266,278 1,268,061 6,954,939 164,607,009 60,138,563 1,171,139,944 1,488,098,600 25,646,292 1,836,298 8,676,157 30,234,453 4,493,521 70,455,762 5,595,900 6,495,779 424,056 2,162,190 14,638,113 1,408,358 45,913 16,736,015 20,331,651 17,244,115 110,076,294 71,099 1,562,229 298,392 4,555,739 100,688 21,975 1,338,850 1,204,314 311,414 25,293 15,897,992 39,480,280 401,369,132 597,190,817 2010 Taka 2009 Taka 1,297,552,439 1,571,529,748 490,546,162 200,000,000 74,485,000 3,634,113,349 99,543,763 1,820,206,246 295,821,685 200,000,000 74,800,000 2,490,371,694 94 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 2010 Taka 6 Money at call on short notice a) Deposit Money Banks ICB Islamic Bank Limited Bank Asia Limited Dutch Bangla Bank Limited Premier Bank Limited Mutual Trust Bank Limited IFIC Bank Limited b) Non- Banking Financial Institutions Phoenix Finance & Investment Ltd. Premier Leasing and Finance Ltd. Prime Finance & Investment Ltd.

Investment Corporation of Bangladesh Delta Brac Housing Finance Corporation Limited 99,500,000 30,000,000 30,000,000 50,000,000 200,000,000 100,000,000 410,000,000 1,359,800,000 99,500,000 99,500,000 99,800,000 150,000,000 200,000,000 50,000,000 350,000,000 100,000,000 949,800,000 2009 Taka Under the Bangladesh Bank’s reconstruction scheme, a part of the deposit liability of Oriental Bank Limited transferred to share capital and NBL received the proportionate shares and receiving the remaining amount on installment basis. In view of the above circumstances, NBL will get back the amount of call loan from ICB Islamic Bank Limited (Previous Oriental Bank Limited). 7

Investments Notes In Government securities Treasury Bills Treasury Bonds Prize Bonds Other Investments Debentures Shares( Quoted and Unquoted) Orascom Bond Fixed Capital Investment in Myanmar 7. 1 7. 2 2,342,466,872 12,668,213,037 6,203,700 15,016,883,609 95,000,000 9,177,906,653 700,000,000 3,537,485 9,976,444,138 24,993,327,747 8,583,402,270 6,143,600 8,589,545,870 105,000,000 3,617,195,072 3,463,335 3,725,658,407 12,315,204,277 7. 3 7. 4 7. 5 7. 1 Treasury bills 91 days Treasury bill 182 days Treasury bill 364 days Treasury bill 717,163,195 728,395,734 896,907,943 2,342,466,872 – 95 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 7. 2 Treasury Bonds Date of maturity Interest Rate (%p. a. ) 2010 Taka 2009 Taka Bangladesh Govt.

Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt.

Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt.

Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond 13-Feb-11 10-Apr-11 07-Aug-11 20-Dec-11 06-Dec-14 12-Dec-15 05-May-20 12-May-25 10-Feb-15 10-Mar-25 15-Apr-25 24-Feb-30 24-Mar-30 28-Apr-30 13-Feb-16 10-Apr-16 12-Jun-16 07-Aug-16 06-Sep-16 04-Oct-16 06-Dec-16 07-Feb-17 07-Mar-17 06-Jun-17 04-Aug-17 08-Aug-17 06-Feb-18 02-Apr-18 06-Aug-18 03-Sep-18 08-Oct-18 05-Nov-18 04-Apr-19 04-Mar-19 07-Jan-19 13-Jan-25 20-Jan-15 20-Jan-15 17-Feb-15 03-Mar-20 18-Mar-15 07-Apr-20 21-Apr-15 26-May-30 09-Jun-25 7. 50 7. 50 7. 50 7. 50 8. 50 8. 50 8. 77 8. 80 8. 74 8. 75 8. 77 9. 11 9. 15 9. 17 8. 50 8. 50 8. 50 8. 50 8. 50 8. 50 8. 50 8. 50 8. 0 8. 50 12. 19 12. 15 11. 72 11. 72 11. 72 11. 72 11. 72 11. 72 11. 72 11. 72 9. 00 8. 74 7. 81 7. 81 7. 82 8. 77 7. 85 8. 77 7. 86 9. 20 8. 80 99,345,544 99,489,387 99,772,355 250,011,958 306,355,177 203,402,983 100,000,000 60,000,000 63,100,000 74,300,000 20,200,000 37,000,000 80,000,000 20,500,000 304,314,816 303,854,557 202,247,902 403,802,515 100,765,101 506,897,352 506,454,589 322,606,033 499,658,643 501,223,719 176,736,473 578,746,882 239,593,143 347,123,426 347,047,557 231,311,496 231,276,484 577,731,061 693,086,964 346,775,144 77,175,893 79,881,144 79,881,144 159,684,653 70,351,140 159,718,440 61,321,221 6,185,445 49,055,093 58,278,298 6,661,687 96,164,948 94,997,390 234,919,651 291,282,190 170,623,155 306,899,942 306,584,698 204,180,394 333,040,580 287,313,262 101,844,907 408,715,563 407,082,550 326,624,370 506,428,951 516,370,835 182,099,294 596,342,879 247,010,678 358,346,546 358,379,072 238,957,065 238,995,701 597,665,991 717,251,830 358,618,141 – 96 I annual report 2010 NATIONAL BANK LIMITED Notes to the Financial Statements For the year ended 31 December 2010 Treasury Bonds Date of maturity Interest Rate (%p. a. ) 2010 Taka 2009 Taka Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt.

Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond Bangladesh Govt. Treasury Bond 16-Jun-15 07-Jul-20 14-Jul-25 01-Jul-15 29-Jul-30 04-Aug-20 18-Aug-15 25-Aug-30 08-Sep-20 15-Sep-25 22-Sep-15 29-Sep-30 06-Oct-20 13-Oct-25 20-Oct-15 27-Oct-30 7. 87 8. 79 8. 85 7. 88 9. 20 8. 77 7. 87 9. 23 8. 85 8. 92 7. 93 9. 23 8. 85 8. 95 7. 96 9. 25 94,469,684 269,889,727 105,967,866 278,820,279 98,002,853 269,966,991 269,305,319 55,000,803 269,953,103 109,994,752 257,271,559 68,832,058 287,825,234 118,191,068 295,891,227 82,566,782 12,668,213,037 8,583,402,270 7. Debentures House Building Finance Corporation House Building Finance Corporation House Building Finance Corporation House Building Finance Corporation House Building Finance Corporation House Building Finance Corporation House Building Finance Corporation 28 June 13 08-Feb-15 08-Feb-14 08-Feb-13 08-Feb-12 08-Feb-11 08-Feb-10 4. 50 5. 50 5. 50 5. 50 5. 50 5. 50 5. 50 45,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 95,000,000 45,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 105,000,000

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