Prime Bank

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Prime Bank

Prime Bank

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Prime BankPrime Bank

Prime Bank

Prime Bank

Prime Bank

Prime Bank

Prime Bank

ANNUAL REPORT2 0 1 8

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LETTER OF TRANSMITTAL

ToThe Shareholders,Bangladesh Bank,Bangladesh Securities and Exchange Commission, Registrar of Joint Stock Companies & Firms,Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited

Dear Sir(s),

Subject: Annual Report - 2018

We forward herewith Annual Report-2018 of Prime Bank Limited and its Subsidiaries namely Prime Exchange Co. Pte. Limited, Singapore, PBL Exchange (UK) Limited, PBL Finance (Hong Kong) Limited, Prime Bank Investment Limited, Prime Bank Securities Limited and the dedicated CSR Wing of the Bank, Prime Bank Foundation. The Report includes Audited Financial Statements, Balance Sheet, Profit and Loss Account, Changes in Equity, Cash Flow Statement along with notes thereto on the position of the bank at the closing of businesses on 31st December 2018 for your kind perusal and record please.

Yours sincerely,

Mohammed Ehsan Habib

Company Secretary

C O N T E N T S

Financial Statements of PBL Exchange(UK) Ltd. Independent Auditors' Report to the Members of PBL Exchange (UK) Ltd. 414 Profit and Loss Account 416Balance Sheet 418Statement of Changes in Equity 419Statement of Cash Flow 420Notes to the Financial Statements 421

Financial Statements of PBL Finance(Hong Kong) Ltd. Independent Auditors' Report to the Membersof PBL Finance (Hong Kong) Ltd. 427Statement of Income and Retained Earnings 429Statement of Financial Position 430Notes to Statement of Cash Flows 431Notes to the Financial Statements 432

Financial Statements of Prime Bank Foundation

Independent Auditors' Report to theMembers of the Foundation 439Statement of Financial Position (Balance Sheet) 441Statement of Profit or Loss and other ComprehensiveIncome (Income and Expenditure Statement) 442Receipts and Payments Statement 443

Supplementary Information

Human Resource Accounting 446Glimpses of 23rd Annual General Meeting 448Branch Network 449Notable Activities During 2018 456Redressal of Investors Complaints 458Minutes of 23rd Annual General Meeting 459 Notice of the 24th Annual General Meeting 463Acronyms 464Proxy Form 465

Risk Management

Risk Management Framework &Mitigation Methodology 129Market Discipline Disclosure onRisk Based Capital (Basel-III) 141

Sustainability Analysis

Sustainability Report 170Social Responsibility Initiatives 172Report on Prime Bank Foundation 173Green Banking Report 193Corporate Culture 196Capital Plan 197Environmental & Social Initiatives 198

Integrated Reporting

Integrated Reporting 201Statement of Value Added and its Distribution 215Economic Value Added Statement 215Market Value Added Statement 216

Shareholders' Information

Horizontal Analysis 218Vertical Analysis 219Graphical Presentation 220Distribution of Shareholdings 222Shares held by Directors 222Market Price Information 223Financial Calendar 2018 223

Financial Statements

Independent Auditors’ Report to the Shareholders 225Consolidated Balance Sheet 230Consolidated Profit and Loss Account 232Consolidated Cash Flow Statement 234Consolidated Statement of Changes in Equity 235Balance Sheet 236Profit and Loss Account 238Cash Flow Statement 239Statement of Changes in Equity 240Notes to the Financial Statements 241

General Information

Vision, Mission & Core Values 5 Forward Looking Statement 6 Corporate Profile 8 Five Years’ Financial Summary 10 PBL Milestones 12 Awards and Recognitions 14 Strategic Priorities 16 Group Structure 17 PBL Organogram 18 Corporate Philosophy 19

Board of Directors & Management Profile

Composition of Board and its Committees 21 Directors‘ Profile 22 Senior Management & Committees 31 List of Executives 36

Message from the Chairman andManaging Director & CEO

From the o¡ice of the Chairman 40 Managing Director & CEO's Review 43

Corporate Governance

Directors' Report 48 Corporate Governance Report 61 Certificate on Corporate Governance 69 BSEC Checklist on Corporate Governance 70 Statement of the Board of Directors 81 Statement of the Audit Committee 83 CEO & CFO’s Declaration to the Board 85 Report on Activities of the Audit Committee 86 Report on Activities of the Risk Management Committee 88 CRO’s Report on Risk Management 89 Ethics & Compliance 91

Business Review and Analysis

Management Review 95 Segmental Analysis 116 Report on Human Resource Management 118 Report on Non-performing Asset (NPA) 123 Products and Services 126

Financial Statements of IslamicBanking Branches

Balance Sheet 313Profit and Loss Account 315Cash Flow Statement 316Statement of Changes in Equity 317 Notes to the Financial Statements 318

Financial Statements of O�-shore Banking Units

Balance Sheet 332Profit and Loss Account 334Cash Flow Statement 335Notes to the Financial Statements 336

Financial Statements of Prime BankInvestment Limited Auditors' Report to the Shareholders 345Statement of Financial Position 347Statement of Profit or Loss and Other Comprehensive Income 348Statement of Changes in Equity 349Statement of Cash Flows 350Notes to the Financial Statements 351

Financial Statements of Prime Bank Securities Limited Auditors' Report to the Shareholders 369Statement of Financial Position 371Statement of Profit or Loss and Other Comprehensive Income 372 Statement of Changes in Equity 373Statement of Cash Flows 374Notes to the Financial Statements 375

Financial Statements of Prime Exchange Co.PTE. LTD., Singapore Independent Auditor's Report to the Member of Prime Exchange Co. Pte. Ltd. 392Statement of Profit or Loss & Other Comprehensive Income 394Statement of Financial Position 395Statement of Changes in Equity 396Statement of Cash Flows 397Notes to the Financial Statements 398

ANNUAL REPORT 2018

C O N T E N T S

Financial Statements of PBL Exchange(UK) Ltd. Independent Auditors' Report to the Members of PBL Exchange (UK) Ltd. 414 Profit and Loss Account 416Balance Sheet 418Statement of Changes in Equity 419Statement of Cash Flow 420Notes to the Financial Statements 421

Financial Statements of PBL Finance(Hong Kong) Ltd. Independent Auditors' Report to the Membersof PBL Finance (Hong Kong) Ltd. 427Statement of Income and Retained Earnings 429Statement of Financial Position 430Notes to Statement of Cash Flows 431Notes to the Financial Statements 432

Financial Statements of Prime Bank Foundation

Independent Auditors' Report to theMembers of the Foundation 439Statement of Financial Position (Balance Sheet) 441Statement of Profit or Loss and other ComprehensiveIncome (Income and Expenditure Statement) 442Receipts and Payments Statement 443

Supplementary Information

Human Resource Accounting 446Glimpses of 23rd Annual General Meeting 448Branch Network 449Notable Activities During 2018 456Redressal of Investors Complaints 458Minutes of 23rd Annual General Meeting 459 Notice of the 24th Annual General Meeting 463Acronyms 464Proxy Form 465

Risk Management

Risk Management Framework &Mitigation Methodology 129Market Discipline Disclosure onRisk Based Capital (Basel-III) 141

Sustainability Analysis

Sustainability Report 170Social Responsibility Initiatives 172Report on Prime Bank Foundation 173Green Banking Report 193Corporate Culture 196Capital Plan 197Environmental & Social Initiatives 198

Integrated Reporting

Integrated Reporting 201Statement of Value Added and its Distribution 215Economic Value Added Statement 215Market Value Added Statement 216

Shareholders' Information

Horizontal Analysis 218Vertical Analysis 219Graphical Presentation 220Distribution of Shareholdings 222Shares held by Directors 222Market Price Information 223Financial Calendar 2018 223

Financial Statements

Independent Auditors’ Report to the Shareholders 225Consolidated Balance Sheet 230Consolidated Profit and Loss Account 232Consolidated Cash Flow Statement 234Consolidated Statement of Changes in Equity 235Balance Sheet 236Profit and Loss Account 238Cash Flow Statement 239Statement of Changes in Equity 240Notes to the Financial Statements 241

General Information

Vision, Mission & Core Values 5 Forward Looking Statement 6 Corporate Profile 8 Five Years’ Financial Summary 10 PBL Milestones 12 Awards and Recognitions 14 Strategic Priorities 16 Group Structure 17 PBL Organogram 18 Corporate Philosophy 19

Board of Directors & Management Profile

Composition of Board and its Committees 21 Directors‘ Profile 22 Senior Management & Committees 31 List of Executives 36

Message from the Chairman andManaging Director & CEO

From the o¡ice of the Chairman 40 Managing Director & CEO's Review 43

Corporate Governance

Directors' Report 48 Corporate Governance Report 61 Certificate on Corporate Governance 69 BSEC Checklist on Corporate Governance 70 Statement of the Board of Directors 81 Statement of the Audit Committee 83 CEO & CFO’s Declaration to the Board 85 Report on Activities of the Audit Committee 86 Report on Activities of the Risk Management Committee 88 CRO’s Report on Risk Management 89 Ethics & Compliance 91

Business Review and Analysis

Management Review 95 Segmental Analysis 116 Report on Human Resource Management 118 Report on Non-performing Asset (NPA) 123 Products and Services 126

Financial Statements of IslamicBanking Branches

Balance Sheet 313Profit and Loss Account 315Cash Flow Statement 316Statement of Changes in Equity 317 Notes to the Financial Statements 318

Financial Statements of O�-shore Banking Units

Balance Sheet 332Profit and Loss Account 334Cash Flow Statement 335Notes to the Financial Statements 336

Financial Statements of Prime BankInvestment Limited Auditors' Report to the Shareholders 345Statement of Financial Position 347Statement of Profit or Loss and Other Comprehensive Income 348Statement of Changes in Equity 349Statement of Cash Flows 350Notes to the Financial Statements 351

Financial Statements of Prime Bank Securities Limited Auditors' Report to the Shareholders 369Statement of Financial Position 371Statement of Profit or Loss and Other Comprehensive Income 372 Statement of Changes in Equity 373Statement of Cash Flows 374Notes to the Financial Statements 375

Financial Statements of Prime Exchange Co.PTE. LTD., Singapore Independent Auditor's Report to the Member of Prime Exchange Co. Pte. Ltd. 392Statement of Profit or Loss & Other Comprehensive Income 394Statement of Financial Position 395Statement of Changes in Equity 396Statement of Cash Flows 397Notes to the Financial Statements 398

4 PRIME BANK

ANNUAL REPORT 2018

Vision, Mission & Core Values

Forward Looking Statement

Corporate Profile

Five Years’ Financial Summary

PBL Milestones

Awards and Recognitions

Strategic Priorities

Group Structure

PBL Organogram

Corporate Philosophy

GENERAL INFORMATION

4 PRIME BANK

ANNUAL REPORT 2018

5PRIME BANK

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

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.

VISION

DELIVER

High standard to our customers, clients and shareholders. We share a passion for serving the financial needs of people, companies and institutional investors.

COMMITMENT

Fully committed to achieving success for our customers, our teams and ourselves through compliance with regulatory guidelines.

TRUST

Have trust in our team. We work together to deliver towards full capabilities to all our constituents. We strive to be consistent and straightforward in our interactions.

SUCCEED

Know we succeed only when our customers, communities and environment succeed. We do business in an open, direct and sustainable way.

MISSION

CORE VALUES

5PRIME BANK

6 PRIME BANK

ANNUAL REPORT 2018

“ We bring newer banking solution to our customers to ease the process of traditional banking.”

FORWARD LOOKING STATEMENT

• Prime Bank is creating a responsible business that will always meet customers’ needs and a culture where our colleagues put customers first. This is the key to our long-term success and to fulfilling our aim to retain our position as the best private commercial Bank for customers, colleagues and shareholders;

• The transformation in the form of centralization recently undertaken will ensure we maintain the core values of the past while equipping us to succeed in the future;

• To keep pace with the rapid change in technology to bring new opportunities to improve our service to customers with faster, more convenient and more extensive propositions tailored to meet their needs;

• We aim to treat all our customers fairly and inclusively, making it easy for them to find, understand and access products that are right for them, whatever their circumstances.

• We are working to build a “strong balance sheet” by maintaining capital adequacy, asset quality, strengthening liquidity position, and adopting risk mitigation measures against market risk;

• Develop the bottom line through improved recovery processes. Recovery of NPL will be the Bank’s priority area and there is significant room for improvement;

• Cost management has been a strategic priority and we like to remain focused on maintaining our competitive advantage in cost leadership aligned with our centralized business model.

7PRIME BANK

• We are strong supporters of comprehensive regulatory reform. We support many of the steps that have been taken to protect consumers in the financial services sector. If properly implemented, reform should contribute to future stability of the financial system;

• Our approach to reward aims to provide a clear link between remuneration and delivery of the Bank’s key strategic objectives, namely, becoming the best bank for customers whilst delivering long-term, superior and sustainable returns to shareholders.

• We believe in offering fair reward where colleagues are rewarded for performance aligned to the long-term sustainable success of the business, our commitment to rebuilding trust and changing the culture of the Bank.

• The increasing role of digital has heightened customer expectations for personalization while transforming the manner in which customers interact with Banks. We believe security and resilience are important factors, with the ability to respond to heightened cyber and fraud risks key to retaining customer trust in a digital environment.

• Maintaining corporate sustainability will always remain to be an issue of critical importance to us. We recognize our responsibility to take actions supporting environmental issues and to use our business resources to enable our clients, customers and employees to reduce their own environmental impacts.

8 PRIME BANK

ANNUAL REPORT 2018

CORPORATE PROFILE

Prime Bank was established in April, 1995 by a group of committed and visionary entrepreneurs who conceived an idea of floating a commercial bank with different outlook. Prime Bank is prominent for its superior service quality, brand image, strong corporate governance and corporate culture. We always remain committed to delivering the best service for our customers. We aim to treat all of them fairly and inclusively, making it easy for them to find, understand and access products that are right for them, whatever their circumstances. We have continued to transform the Bank to become a safer, more agile and customer focused organization whilst increasing profitability. Committed for excellence, Prime Bank is a top-tier bank in Bangladesh and reputed among regulators as distinctly ‘compliant’.

Total Assets (BDT)

293,901 million

Loans and Advance (BDT)

205,810 million

Deposits (BDT)

197,518 million

Net Profit (BDT)

2,188 million

17.04%CRAR

0.76%Return on Assets

8.60%Return on Equity

Hong Kong

Singapore

Bangladesh

UK

9PRIME BANK

Listing In-formation

Prime Bank Limited 27 March 2000 15 November 1999

DSE CSE

Rating Informa-tion

Long-Term

Short-Time ST-2 ST-2

AA AA2018

2018

2017

2017

AuthorizedCapital

Paid-up CapitalShare Capital

10,293

25,0002017

11,323

25,000 BDTin Million

BDTin Million

2018

Auditors & Tax Adviser

Auditors

Tax Adviser

Branches

ATM

05

Number of Sub-sidiaries

Number of Branches & ATM

Prime Bank Investment LimitedPrime Bank Securities LimitedPrime Exchange Co. PTE Ltd (Singapore)PBL Exchange (UK) LimitedPBL Finance (Hong Kong) Limited

Hoda Vasi Chowdhury & Co.,Chartered Accountants

146 146

170 168

K.M. Hasan & Co.,Chartered Accountants

Aziz Halim Khair ChoudhuryChartered Accountants

Address

Share DivisionSarker Mansion (8th floor)29, Rajuk AvenueMotijheel C/A, Dhaka-1000Corporate

office

} }

Prime Bank Limited119/120 Adamjee Court Annex Building-2Motijheel C/A, Dhaka-1000Web: www.primebank.com.bd

10 PRIME BANK

ANNUAL REPORT 2018

FIVE YEARS’ FINANCIAL SUMMARY(BDT in million except ratios)

Result of Operation 2018 2017 2016 2015 2014

Interest income 18,390 14,769 13,989 15,551 18,446

Interest expenses 10,741 9,875 10,676 14,257 15,574

Net interest income 7,650 4,894 3,313 1,294 2,872

Investment income 2,154 4,246 6,203 7,989 6,194

Commission, exchange and brokerage 2,209 2,245 1,693 1,956 2,033

Other operating income 887 764 814 834 806

Operating revenue 12,899 12,148 12,023 12,073 11,906

Operating expenses 7,180 6,775 6,266 6,166 5,750

Operating profit 5,719 5,373 5,757 5,906 6,157

Provision for loans and assets 1,782 3,564 3,412 3,154 2,877

Net profit before tax 3,938 1,809 2,345 2,752 3,280

Tax including deferred tax 1,750 750 150 613 887

Net profit after tax 2,188 1,059 2,195 2,139 2,393

Balance Sheet

Authorized capital 25,000 25,000 25,000 25,000 25,000

Paid-up capital 11,323 10,293 10,293 10,293 10,293

Shareholders’ equity 26,181 24,708 25,285 26,415 24,461

Deposits 197,518 199,014 197,934 194,825 204,838

Loans and advances 205,810 198,323 170,212 151,865 147,367

Investments 26,046 23,807 48,249 62,733 72,642

Fixed assets 6,943 6,434 6,590 6,516 6,613

Total assets 293,901 281,275 272,224 267,322 269,218

Total liabilities 267,720 256,567 246,939 240,907 244,758

Other Business

Import 182,263 186,050 134,914 114,747 126,571

Export 134,616 107,002 89,720 88,827 110,096

Remittance 45,755 38,120 32,119 39,146 39,484

Guarantee Business 23,250 31,597 32,350 35,000 30,155

No. of foreign correspondents 672 687 684 658 638

Liquidity Measures

Long-term liabilities 107,586 93,427 90,593 95,170 104,040

Current liabilities 160,134 163,140 140,721 130,576 126,276

Earning assets 241,264 230,038 219,508 215,025 220,115

Current assets 163,248 163,826 157,004 140,218 147,341

Net current assets 3,114 686 16,283 9,641 21,064

Credit-deposit ratio (Conventional) 82.65 84.43 74.95 69.86 66.70

Credit-deposit ratio (Islamic) 82.71 83.25 82.83 79.36 74.56

Current Ratio (percent) 1.02 1.00 1.12 1.07 1.17

Gearing Ratio (percent) 80.43 79.08 78.18 78.27 80.96

CRR Held (percent) 5.72 6.76 6.65 7.04 6.71

SLR Held (percent) 15.28 14.96 28.04 33.18 29.83

Debt Equity Ratio (percent) 9.78 9.63 10.24 10.96 9.99

11PRIME BANK

(BDT in million except ratios)

Capital Measures 2018 2017 2016 2015 2014

Total risk weighted assets 224,585 230,211 254,001 229,843 214,892

Tier-1 Capital 24,335 23,048 23,634 22,977 22,511

Tier-2 Capital 13,924 9,203 7,998 6,306 4,802

Total capital 38,259 32,251 31,632 29,283 27,313

Tier-1 Ratio (percent) 10.84 10.01 9.30 10.00 10.48

Tier-2 Ratio (percent) 6.20 4.00 3.15 2.74 2.23

Capital to Risk Weighted Asset Ratio (percent) 17.04 14.01 12.45 12.74 12.71

Leverage Ratio (percent) under Basel-III 6.52 6.61 7.36 7.57 N/A

Liquidity Coverage Ratio (LCR) 101.41 109.58 139.90 178.71 145.86

Net Stable Funding Ratio (NSFR) 127.94 120.08 120.56 109.12 107.25

Operating Performance Ratio (%)

Net interest margin (NIM) 3.62 2.56 2.02 0.86 1.91

Gross profit ratio 54.72 55.28 52.97 45.85 43.33

Cost-income ratio 55.93 55.98 52.11 51.08 48.29

Cost of Deposit 4.72 4.46 4.94 6.64 7.36

Cost of Fund 7.95 7.91 8.13 9.72 10.19

Yield on average advance 8.51 7.42 8.45 10.20 12.09

Spread 3.79 2.96 3.51 3.56 4.73

Earning asset to total assets (average) 81.30 81.00 81.36 81.73 82.28

Return on average assets (ROA) 0.76 0.38 0.81 0.80 0.91

Return on average equity (ROE) 8.60 4.24 8.49 8.41 10.08

Return on capital employed 4.28 4.55 4.97 4.86 4.79

Asset Quality

Non-performing loans (NPLs) 12,686 10,799 10,139 11,883 11,215

NPLs to total loans and advances (percent) 6.16 5.45 5.96 7.82 7.61

Provision for unclassified loans and advance 3,726 4,647 3,503 2,031 1,741

Provision for classified loans and advance 4,567 4,269 3,787 5,749 4,586

NPL Coverage 65% 83% 72% 65% 56%

Share Information

Market price per share (BDT) 17.80 27.40 17.70 18.10 19.60

No. of shares outstanding (in million) 1,132 1,029 1,029 1,029 1,029

No. of shareholders 14,895 15,102 15,876 18,652 23,102

Earnings per share (BDT) (Restated) 1.93 0.94 1.94 1.89 2.11

Dividend (percent) 12.5 C 10 B, 7 C 16 C 15 C 15 C

Dividend yield (percent) 7.02 6.20 9.04 8.29 7.65

Market capitalization (BDT in million) 20,155 28,204 18,219 18,631 20,175

Net asset value per share (BDT) 23.12 24.00 24.56 25.66 23.76

Price earning ratio (times) 9.21 29.30 8.31 8.71 8.43

Other information

No. of branches 146 146 145 145 140

Number of ATM 170 168 168 168 160

No. of employees 3,212 3,499 2,961 2,934 2,867

Profit per employee (BDT in million) 1.78 1.54 1.94 2.01 2.15

12 PRIME BANK

ANNUAL REPORT 2018

PBL MILESTONES

1995-99• Incorporation of

the Company • Certificate of

Commencement of Business

• License issued by Bangladesh Bank

• License issued for opening the first Branch, Motijheel

• Commencement of business from the Motijheel Branch

• Commencement of Islamic banking business from IBB, Dilkusha

• Listed with Chittagong Stock Exchange Limited

2000• Listed with Dhaka

Stock Exchange Limited

2004• Registered as

Depository Participant of CDBL

2006• Incorporation of

Prime Exchange Co. Pte. Ltd., Singapore

2008• Launching of 1st

ATM

2003• License issued

from the Bangladesh Bank as Primary Dealer

2005• Agreement with

Temenos for Core Banking Software Temenos T24

2007• Opening of

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

13PRIME BANK

2009• Launching of

Internet Banking• Opening of first

SME Centre • Recipient of SAFA

Best Bank Award • Incorporation of

PBL Exchange (UK) Ltd.

2010• Incorporation of

PBIL • Incorporation of

PBSL • Obtained

permission for issuance of Rights Share

• Launching of SMS Bankingg

• Ground breaking of Prime Tower

2012• Launching of

Mobile Banking • Launching of

Biometric Smart Card-Prime Cash

2014• Launching of

JCB Cards in Bangladesh

• Launching of Premium Banking Service ‘Monarch’

2018• TFP Award

from Asian Development Bank-Best SME Deal.

• Asia Sustainability Reporting Rating-’GOLD Rank’.

• Best SME Deal Award from Asian Development Bank.

2011• Change of Face

Value and Market Lot of Shares of PBL

• Launching of Phone Banking

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

2013• Launching of

Prime Bank Nursing Institute

• Launching of Islamic Credit Card 2015

• Launching of First Business World MasterCard Credit Card in Bangladesh

• Prime Bank Receives Remittance Award

14 PRIME BANK

ANNUAL REPORT 2018

AWARDS AND RECOGNITIONS

FIRST POSITION- ICAB National Award for Best Presented Annual Reports(Category: Private Sector-Banks/ Financial Sector)Year: 2002, 2005, 2006, 2007, 2008, 2009, 2011, 2013 and 2015

FIRST POSITION- ICAB National Award for Best Presented Annual Reports(Category: Corporate Governance Disclosures)Year: 2009 and 2015

FIRST POSITION- ICMAB National Best Corporate AwardYear: 2009, 2010, 2012 and 2013

FIRST POSITION- ICSB National Award for Corporate Governance Excellence(Category: Banking Companies)Year: 2015 and 2016

NATIONAL AWARDS ANDRECOGNITIONS

Other National Awards and RecognitionsBangladesh Business Awards 2011 – DHL – The Daily StarThe Industry 2012 – Best Rated Bank Award

15PRIME BANK

Other International Awards and Recognitions:

Financial News Services (FNS) Award 2005 – Best Performing Local Bank

Financial Institution Award - 10 years of Service (2005)

International Star for Leader in Quality (ISLQ) Award, France (2011)

Industry Best Rated Bank Award 2012 – Awarded as Strongest Bank

The Bizz 2012 – Inspirational Company Award

International Platinum Star for Quality Award 2012

Best Bank of Bangladesh by Global Survey (Best Emerging Market Bank in Asia) – 2013

Serdar Patel Awards (2015)

National Center for Sustainability Reporting- Sustainability Reporting Awards 2016

Best SME Deal Award from Asian Development Bank - 2018

INTERNATIONAL AWARDS AND RECOGNITIONS

FIRST POSITION- SAFA Best Presented Accounts and Corporate Governance Disclosures AwardsYear: 2009 and 2013

FIRST POSITION- SAFA Best Presented Annual Report Awards and SAARC Anniversary Awards for Corporate Governance Disclosures(Private Sector Banks)Year: 2011 and 2015

16 PRIME BANK

ANNUAL REPORT 2018

Customer best choice bank

Assisting our clients to operate successfully and being their bank of choice for their business and personal financial needs;

Service excellence Providing delightful customer experience & service quality;

Diversification Continuous diversification with special focus on retail deposit and MSME & Consumer business;

Quality growth Maintaining quality asset & business growth;

Technology driven Achieving technological excellence and to deliver technology driven products and services;

Data security Keeping protection of Customer Data & flawless customer service;

Brand image Create strong brand image that carry a commitment of quality and integrity;

Sustainable return Sustainable returns to stakeholders, exceeding market and shareholder expectations;

Seamless business operation

To conduct transparent and high quality business operation based on market mechanism within the legal and social framework ;

Doing business without compromising the society

Committed to community as a corporate citizen and contributing towards the progress of the nation in a socially responsible manner;

Best employerTo be the employer of best choice with special focus on continuous development of Human Capital and accomplishing a motivational environment to retain critical resources;

STRATEGIC PRIORITIES

With the view to attaining the VISION of the bank and to meet the challenges of current environment PBL has a set of strategic priorities. Those priorities are regularly reviewed and refreshed in order to meet the challenges of changing environment. The Board and Management is committed to manage those priorities in a balanced way with an appropriate mix of growth, return, risk and productivity. PBL believes it can achieve its goal to be ‘A Bank with a Difference’ by focusing on the following strategic priority:

16 PRIME BANK

ANNUAL REPORT 2018

17PRIME BANK

GROUP STRUCTURE

Prime BankSecurities Ltd.

(95% owned)

Prime BankInvestment Ltd.

(99.99% owned)

Prime Bank Limited

OverseasSubsidiaries

LocalSubsidiaries

Prime Exchange (UK) Ltd.

(fully owned)

Prime ExchangeCo. Pte. Ltd.Singapore(fully owned)

PBL Finance(Hong Kong) Ltd.

(fully owned)

17PRIME BANK

18 PRIME BANK

ANNUAL REPORT 2018

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18 PRIME BANK

ANNUAL REPORT 2018

19PRIME BANK

CORPORATE PHILOSOPHY

For Our CustomersTo 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 ShareholdersBy forging ahead and consolidating

its position as a stable and progressive financial institution

By generating profits and fair return on their investment

For Our EmployeesBy promoting their well-being

through attractive remuneration and fringe benefits

By promoting good staff moral through proper staff training

and development, and provision of opportunities for career

development

For Our CommunityBy 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

By upholding ethical values and best practices constantly seeking to improve performance

by aligning our goals with stakeholders’ expectations, because we value them.

19PRIME BANK

BOARD OF DIRECTORS& MANAGEMENT PROFILE

Composition of Board and Its Committees

Directors’ Profile

Senior Management & Committees

List of Executives

21PRIME BANK

COMPOSITION OF BOARD AND ITS COMMITTEES

Board of Directors

Mr. Azam J Chowdhury Chairman

Mr. Mafiz Ahmed Bhuiyan Vice Chairman

Mr. Imran Khan Vice Chairman

Mr. Md. Nader Khan Director

Mr. Quazi Sirazul Islam Director

Mrs. Marina Yasmin Chowdhury Director

Mr. Md. Shahadat Hossain Director

Mr. Md. Shirajul Islam Mollah Director

Mrs. Nasim Anwar Hossain Director

Mrs. Salma Huq Director

Mr. Nafis Sikder Director

Mr. Waheed Murad Jamil Director

Mr. Tarique Ekramul Haque Director

Mr. Mohammad Mushtaque Ahmed Tanvir Director

Mr. Shamsuddin Ahmad, Ph.D Independent Director

Dr. G. M. Khurshid Alam Independent Director

Mr. M Farhad Hussain FCA Independent Director

Prof. Dr. M. Shamim Z. Bosunia Independent Director

Executive Committee

Mr. Md. Shirajul Islam Mollah Chairman

Mr. Quazi Sirazul Islam Member

Mrs. Nasim Anwar Hossain Member

Mr. Mafiz Ahmed Bhuiyan Member

Mr. Imran Khan Member

Mr. Tarique Ekramul Haque Member

Mr. Waheed Murad Jamil Member

Audit Committee

Mr. Shamsuddin Ahmad, Ph.D, Chairman

Mr. Md. Nader Khan Member

Dr. G. M. Khurshid Alam Member

Mr. M Farhad Hussain FCA Member

Risk Management Committee

Dr. G. M. Khurshid Alam Chairman

Mr. Mohammad Mushtaque Ahmed Tanvir Member

Mr. Shamsuddin Ahmad Ph.D Member

Mr. M Farhad Hussain FCA Member

Nomination and Remuneration Committee

Dr. G M Khurshid Alam Chairman

Mr. Md. Nader Khan Member

Mr. Md. Shirajul Islam Mollah Member

22 PRIME BANK

ANNUAL REPORT 2018

Azam J Chowdhury, Chairman Board of Directors is an elite industrialist and entrepreneur in Bangladesh. He is the Chairman and owner of East Coast Group, a conglomerate focused on fuel & energy sector for more than three decades. Currently Mr. Azam J Chowdhury is associated in the position of President, Chairman, Managing Director and Director with the following prestigious businesses:

President:

Bangladesh Association of Publicly Listed Companies (BAPLC)

Bangladesh Energy Companies Association (BECA)

Bangladesh Ocean Going Ship Owner’s Association (BOGSOA)

LPG Operators Association of Bangladesh (LOAB)

Chairman:

The Consolidated Tea & Lands Company Bangladesh Limited (formerly, James Finlay Limited).

Managing Director:

MJL Bangladesh Limited- Affiliate partner of Exxon Mobil, one of the world’s largest fuel & Lubricant businesses.

Director:

Central Depository Bangladesh Limited (CDBL).

Omera Petroleum Ltd. one of the largest LPG operators of the country

Omera Cylinders Ltd. & Omera Fuels Ltd.

In the past Mr. Chowdhury also served as Chairman of Green Delta Insurance Company Limited (2001-2005), one of the most successful general insurance companies in Bangladesh.

In recognition to his performance and repute, the Hungarian Government nominated him as the Honorary Consul of Hungary in Bangladesh.

Mr. Chowdhury is a renowned Golfer and achieved laurels several times in this sporting arena.

DIRECTORS’ PROFILE

Azam J Chowdhury

Chairman

23PRIME BANK

Mr. Imran Khan is a promising business personality. Currently he is Vice Chairman of the Board of Directors and had also served as Vice Chairman of the Executive Committee in the past.

He is Director of the reputed company Pedrollo nk Limited, a market leader in terms of import of PEDROLLO (Italian Brand) Water pumps including sales & distribution in Bangladesh. The company also acts as sole agent of renowned brands Itap, HCP and Rain Bird in Bangladesh.

Mr. Khan is also a director of PNL Holdings Ltd., PNL Water Management Ltd., Halda Valley Tea Company Ltd., Halda Fisheries Ltd. and Hill Plantation Ltd. In addition, he is owner of Prima Enterprise, engaged in import and trading business.

Mr. Khan is an Ex-Cadet of Fauzdarhat Cadet College, Chittagong and completed his post-graduation from North South University, Dhaka.

Mr. Khan actively associates himself with CSR activities and is a member of the Chittagong Club Ltd., Chittagong Boat Club, Shaheen Golf & Country Club and Governing body of Lion Mukhlesur Rahman Foundation- a renowned NGO and Charitable Organization operating from Chittagong for the underprivileged and poor masses across the country.

Imran Khan

Vice Chairman

Mr. Mafiz Ahmed Bhuiyan is a Sponsor Director and currently Vice Chairman and Chairman of the Board of Prime Bank Ltd and Prime Bank Foundation respectively.

Mr. Bhuiyan is Managing Director of IPE Technology Limited, Shepherd World Trade Limited, Shepherd Consultant & Management Ltd, Native Holdings Ltd. and Chairman of Citizen Securities & Investment Limited (A full-fledged Merchant Bank).

He is former Trustee/Life Member of Eastern University & South East University and Director of Australian International School (International Holdings Ltd.).

As a Businessman, Mr. Bhuiyan can be termed as one of the pioneers in the field of RMG in terms of setting up backward linkage industries in collaboration with reputed overseas companies belonging to developed countries.

Mr. Bhuiyan takes keen interest in Games and Sports and is a Member of Kurmitola and Army Golf Club, Dhaka.Mafiz Ahmed Bhuiyan

Vice Chairman

24 PRIME BANK

ANNUAL REPORT 2018

Mr. Md. Shirajul Islam Mollah, a Sponsor Director, is also a past Chairman of the Board of Directors. Presently he also holds the position of Chairman of the Executive Committee of the Board. A very successful business personality, Mr. 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

United Progressive Dredging Ltd.

He is the Chairman of The People’s University of Bangladesh and President of Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA).

Widely travelled, Mr. Shirajul Islam Mollah is involved with various 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. A philanthropist, Mr. Md. Shirajul Islam Mollah is also the Chairman of Shirajul Islam Mollah Samaj Seba Foundation.

Mr. Mollah is a member of Dhaka Stock Exchange (DSE) and Ex. Member of Parliament as well.

Mr. Shamsuddin Ahmad, Ph.D. has been an Independent Director of the Bank with effect from April 2015.

Dr. Ahmad is a distinguished development practitioner with 26 years of experience in the World Bank tackling development challenges in the financial sectors of several countries. As a Senior Financial Sector Specialist in the South Asia region of the World Bank, Dr. Ahmad has worked extensively with the Bangladesh Bank, the State Bank of Pakistan and the Nepal Rastra Bank in assisting these Central Banks to transform themselves into professional, efficient and modern institutions.

Dr. Ahmad retired from the World Bank Headquarters in Washington DC in February 2015, and is keen to utilize his expertise and experience to further develop the financial sector in Bangladesh.

Dr. Ahmad completed his MBA with distinction from IBA in 1977, and started his career as a banker with American Express Bank in Bangladesh. He obtained his Masters and Ph.D. degrees in Development Economics from the University of Hawaii, and returned home to join the World Bank Office in Dhaka in October 1989. He was later posted in Islamabad, Kathmandu and Washington DC offices of the World Bank.

He has won several awards in his educational and professional pursuits, including the prestigious Makana Award for Leadership at the East West Center. He also completed the Financial Institutions Program for Economic Development at the Kennedy School of Government in Harvard University in 2004.

Besides travelling, Dr. Ahmad loves playing golf, tennis and bridge, and is also an enthusiastic ballroom-dancer.

He has been Chairman of the Audit Committee since his induction in 2015.

He is also Chairman of Prime Bank Securities Limited and Director of PBL Finance (Hong Kong) Limited, wholly owned subsidiaries of Prime Bank.

He is also a member of the Risk Management Committee (RMC) of the Board of Directors.

Shamsuddin Ahmad, Ph.D.

Chairman, Audit Committee

Md. Shirajul Islam Mollah

Chairman, Executive Committee

25PRIME BANK

Quazi Sirazul Islam is a Sponsor Director & former Chairman of the Board of Directors.

An elected Member of Parliament in 1996 and 2001, Mr. Islam is the Managing Director of renowned jewelry house, Amin Jewelers Limited.

He is the Chief Advisor of Sonar Bangla Insurance Limited, Member of Gulshan Club Limited and Chairman of the City Hospital (Burn Hospital), the only Private Sector Hospital of such kind in 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 his contribution in the education and social welfare sectors. He was also awarded MJF (Melvin Jones Fellow) Medal by the Lions International Foundation for his contribution to the Society.

Mr. Islam is immediate past Chairman of Bangladesh Jewelry Association and is a life member of Red Crescent Society, Bangladesh, and Member Trustee, People’s University of Bangladesh.

He is also member of Gulshan Society, Gulshan Club and Gulshan North Club Limited.

Mr. Islam is currently member of the Executive Committee of the Board.

Quazi Sirazul Islam

Director

Mr. G.M. Khurshid Alam has been an Independent Director of the Bank with effect from April 2015.

Mr. Alam is currently serving as a Director with Policy Research Institute (PRI), a leading policy and economic research think-tank of Bangladesh. Prior to that he served for 17 years with the World Bank as Senior Private Sector Development Specialist in its South Asia Private Sector and Finance (SASFP) Department from where he retired in August 2012.

Mr. Alam started his professional career entering Government services in 1981 as a member of the Bangladesh Civil Service (Admin) cadre. He served in different positions both in the field administration, Ministry of Finance and Bangladesh Biman before joining the World Bank in 1995.

Mr. Khurshid Alam is a PhD in Economics from Boston University, USA. He is married and has three children.

He is currently Chairman of Risk Management Committee, member of the Audit Committee of the Board, Director of Prime Bank Investment Limited (PBIL), and PBL Exchange (UK) Limited - subsidiary of Prime Bank.

Dr. G.M. Khurshid Alam

Chairman, Risk Management Committee

26 PRIME BANK

ANNUAL REPORT 2018

Mr. Md. Nader Khan is a Sponsor Director and former Chairman of the Board of Prime Bank Limited. He is an entrepreneur and has the credentials of setting up many prestigious commercial establishments in different sectors. Currently, he is associated with the following business concerns in the capacity of:

Chairman:

Artisan Ceramics Ltd.

CIDER Education Services Ltd.

Managing Director:

Pedrollo nk Limited

Halda Valley Tea Co. Ltd.

Halda Fisheries Ltd.

PNL Holdings Ltd.

Director:

National Life Insurance Co. Ltd.

Hill Plantation Ltd.

The Consolidated Tea and Lands Company (BD) Ltd.

Baraoora (Sylhet) Tea Company Ltd

Consolidated Tea and Plantation Ltd.

One of his business concerns, Pedrollo nk Limited is the market leader in the sales and distribution of famous ‘PEDROLLO’ brand water pumps from Italy since 1985.

In 2010, Mr. Khan received Prime Ministers award for Tree Plantation while in 2018 he received another award from the PM for highest Tea production (3,500 Kg) per hectare at the Halda Valley Tea Company Ltd. as against average production of 1,500 Kg/hectare.

Mr. Khan is a philanthropist and involved in various CSR activities. He is the Chairman of Lion Mukhlesur Rahman Foundation, 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 a Trustee Member of ESTCDT (Education, Science, Technology and Cultural Development Trust) of IUB (Independent University, Bangladesh) & CIU (Chittagong Independent University) and Chairman, Finance Committee of CIU.

Md. Nader Khan

Director

Mrs. Marina Yasmin Chowdhury is a Sponsor Director and former Vice Chairperson of Prime Bank Limited. She is currently the Vice Chairperson of East Coast Group (ECG), a conglomerate focused on Fuel & Energy Sector for more than three decades.

She is also the Chairperson of Clean Fuel Filling Station Limited and Parkesine Products Limited, subsidiaries of East Coast Group.

Mrs. Chowdhury is former director of Green Delta Insurance Company Limited, one of the leading general insurance companies of Bangladesh.

Outside the business, Mrs. Marina Y. Chowdhury is actively engaged in philanthropic activities conducted through East Coast Group Foundation. She also takes keen personal interest in philanthropic and charitable causes like Health and Education for the underprivileged.

In her leisure time she enjoys preparing culinary dishes for her family members.Marina Yasmin Chowdhury

Director

27PRIME BANK

Mrs. Nasim Anwar Hossain, a sponsor Director, is former Vice Chairperson of the Board of Directors. She is currently a Member of the Executive Committee of the Board as well.

Mrs. Hossain is a Masters in Political Science from Dhaka University.

She is a successful business personality and Director of the following Companies

Prime Cement Ltd.

Lubricants Asia Ltd.

Bengal Tiger Cement Industries Limited.

She is member of the Board of PBL Finance (Hong Kong) Limited - subsidiary of Prime Bank.

Mrs. Hossain is an active social worker and takes keen interest in different benevolent and philanthropic activities.

Mrs. Salma Huq is a Sponsor Directors and former Chairperson of the Executive Committee of Prime Bank Ltd. She is a Director of GQ Group since 1986 engaged in manufacturing pen, 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 & Investment Ltd.

PFI Securities Ltd. and

Prime Capital Management Ltd.

Mrs. Salma Huq is actively engaged in philanthropic activities like providing scholarship to needy students and arranging medical treatment for the poor.

She is one of the founders of Qazi Saleema Huq Women’s College and Qazi Saleema Huq Girls’ High School.Salma Huq

Director

Nasim Anwar Hossain

Director

A successful businessman, Mr. Md. Shahadat Hossain is a Sponsor Director of Prime Bank Limited. He is also past Vice Chairman of the Board of Directors.

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 masses.

Md. Shahadat Hossain

Director

28 PRIME BANK

ANNUAL REPORT 2018

Mr. Nafis Sikder, Director is the Managing Director of renowned Palmal Group founded by his late father, Engr. Nurul Haque Sikder, a prominent business personality of the early eighties.

Mr. Nafis after completion of ‘O’ and ‘A’ level 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 Group’s business many folds in all spheres of RMG business. The group at present is the most prolific and trusted suppliers of Apparels to some of the reputed North American, Australian and European buyers.

Mr. Nafis Sikder is an avid philanthropist and actively contributes in the promotion and expansion of educational institutes through establishing new Schools and Colleges.

He is also associated with numerous socio welfare and charitable organizations actively supporting the causes of Health Care and poverty alleviation.

Effective December 10, 2015 Mr. Tarique Ekramul Haque has been appointed Director of Prime Bank.

Mr. Tarique Ekramul Haque, Chairman and Director of Bangla Trac Limited, completed his graduation degree (BA Honors in Economics) from University of Manchester, United Kingdom in 2001. Afterwards, he obtained Post graduate degree (MSc in Accounting & Finance) from London School of Economics, U.K. in the year 2003.

Mr. Tarique E Haque started his career in 2001 in Goldman Sachs International, London, UK as a Financial Analyst. In 2004, upon completion of his master’s in accounting and Finance from the London School of Economics, he returned to Bangladesh to join his family in establishing Bangla Trac Limited (Bangla CAT) - the Dealer for Caterpillar Inc. (USA) products in Bangladesh. Today, Bangla CAT is the market leader for electric power solutions and construction machineries in Bangladesh. In 2008, he led the establishment of Bangla Trac Communications Limited - an International Gateway Operator. In 2010, he led the establishment of Acorn Infrastructure Services Limited – a power plant based in Chittagong, Bangla Trac Power Unit-1, power plant in Daudkandi, & Bangla Trac Power Unit-2, power plant in Jashore established in 2018. In 2016 he also led the establishment of Tiffin Box Limited’ the exclusive franchisee for Burger King quick service restaurants in Bangladesh.

Mr. Tarique E Haque is currently a member of the Executive Committee of the Board.

Nafis Sikder

Director

Tarique Ekramul Haque

Director

Mr. Waheed Murad Jamil has been appointed Director of the Prime Bank Ltd. with effect from 28.09.2015 to represent M/s. MAWSONS Ltd, a business concern owned by his family members. An emerging business personality, Mr. Jamil is a business graduate and current Director of Primeasia University, Prime Islami Life Insurance Ltd. Fareast Islami Securities Ltd. and Managing Director of Everest Homes Ltd. and Nowhata Green Bricks Limited.

Mr. Jamil is a member of the Executive Committee of the Board of Prime Bank Limited.

Waheed Murad Jamil

Director

29PRIME BANK

Mr. M. Farhad Hussain FCA has been an Independent Director of the Bank with effect from April 2015.

Managing Partner of M/s Hussain Farhad & Co., Chartered Accountancy Firm, Mr. Hussain is a fellow member of the Institute of Chartered Accountants of Bangladesh with thirty eight years of experience and holding in key positions of Finance and Accounts with multidisciplinary business organizations at home and abroad.

Mr. M. Farhad Hussain FCA is a council member and former President of The Institute of Chartered Accountants of Bangladesh (2007). He is also Technical Advisor of South Asian Federation of Accountants (SAFA). In addition, Mr. Hussain is/was associated with the following organizations in different capacities:

Director

• Bay Asset Management Ltd.• Independent Director of Matin Spinning Mills Ltd and Al-Haj Textile Mills Ltd.Former Director• Shadharan Bima Corporation• Dhaka Stock Exchange (DSE)• Agrani Bank Limited.• Dhaka WASAPast Member of the Boards of:• South Asian Federation of Accountants (SAFA)• Confederation of Asia Pacific Accountants (CAPA)• Former Advisor of Bangladesh Securities and Exchange Commission• Financial Consultant of Oriental Bank Ltd.

Mr. Hussain is currently member of the Audit Committee and Risk Management Committee of the Prime Bank , member of the Board of PBL Exchange Singapore and Chairman, Prime Bank Investment Limited (PBIL), subsidiaries of the Bank.

M. Farhad Hussain FCA

Independent Director

Mr. Mohammad Mushtaque Ahmed Tanvir (Titash), representing Uniglory Cycle Industries Limited, was appointed Member of the Board of Prime Bank in the 433rd Board Meeting held on 13.05.2015.

Mr. Tanvir is an Architect from BUET. After graduating in 1994, he started business career in his own discipline wherein he practiced for 6 years. Subsequently, he joined Uniglory Cycle Components Limited - a sister concern of the Meghna Group as the Managing Director.

Mr. Tanvir became the Chief Executive officer (CEO) of the Transworld Bicycle Co. Ltd another Unit of the same Group wherein he was largely responsible for planning, programming, designing and managing the 100% export oriented industry. Within a short span of time, Mr. Tanvir became the Managing Director of Uniglory Paper & Packaging Ltd and director of some of the industries under the Group.

Finally he became the Executive Director of Uniglory Cycle Industries Limited, the biggest unit of the Group. During his tenure in various capacities, he made himself a symbol of innovation, persistence and entrepreneurship for the Group.

Mr. Tanvir is a sportsman having deep attachment for playing and managing Basket Ball & Golf. He is also associated with a number of organizations like Cadet College Club Ltd, Gulshan Youth Club, Bogra Golf Club, Mirzapur Ex. Cadet Association. He was also General Secretary of Athletic Club of EUCSU in BUET.

Mr. Tanvir is a widely traveled person and led a number of sports teams locally and regionally.

Mohammad Mushtaque Ahmed Tanvir (Titash)

Director

30 PRIME BANK

ANNUAL REPORT 2018

Prof. Dr. M. Shamim Z. Bosunia has been appointed an Independent Director of Prime Bank Limited in the 482nd Board Meeting of the Bank on 30th August 2018.

Prof. Bosunia is a renowned personality and a leading Civil Engineer of the country by profession and whose expertise and advisory services have been pressed for implementation into various mega projects of the country.

He is an ex. professor of BUET and past President of The Institution of Engineers Bangladesh (IEB).

Currently, Prof. Bosunia is associated with the following organizations:

• Emeritus Professor, Dept. of Civil Engineering: University of Asia Pacific (UAP) Dhaka;

• Member, Panel of Experts: PADMA Multi-Purpose Bridge Project and Karnaphuli River Tunnel Project;

• Chairman, Board of Rajshahi WASA;

• President, Bangladesh Association of Consulting Engineers. (BACE)

• Managing Director & Chairman, Abode of Consultants (Pvt.) Limited

Prof. Bosunia is a widely travelled person and led a number of Team/Group responsible for implementation of various mega projects/schemes sponsored by UNDP/World Bank/GOB.

Prof. Dr. M. Shamim Z. Bosunia

Independent Director

Mr. Rahel Ahmed was appointed Managing Director & CEO of Prime Bank Limited on December 14, 2017. Prior to this, he was the DMD and Chief Business Officer of the bank overseeing all businesses of large corporate and institutional clients since 2015.

Mr. Ahmed is an international banker having more than two decades of extensive experience in Wholesale Banking. He has held senior leadership position with the two largest multinational Banks in Bangladesh, ANZ Grindlays Bank and Standard Chartered Bank prior to his relocation to Dubai, UAE where he worked for 7 years for two of the largest regional Banks; Emirates NBD Banking Group and First Gulf Bank in senior roles including in Islamic Banking arena. He played a leading role in ‘Business Model Restructuring and Centralization process’ of Prime Bank during last 3 years.

Mr. Ahmed holds an MBA in International Business from Maastricht School of Business, Netherlands. He is also a certified “Credit Professional” from the world reputed Omega, UK and holds Certificate of Recognition in International Trade Skill Assessment Program jointly conducted by Standard Chartered Group London and ICC. He was also accorded ‘Outstanding Employee and CEO’s award’ in Standard Chartered Bank and First Gulf Bank for his outstanding performance in different times.

Rahel Ahmed

Managing Director & CEO

31PRIME BANK

SENIOR MANAGEMENT

Syed Faridul IslamDeputy Managing Director

Md. Touhidul Alam KhanDeputy Managing Director

M Habibur Rahman ChowdhuryDeputy Managing Director & CFO

Md. Golam RabbaniDeputy Managing Director

Rahel AhmedManaging Director& CEO

From the Left

32 PRIME BANK

ANNUAL REPORT 2018

From the Left

Md. Golam RabbaniDeputy Managing Director

Rahel AhmedManaging Director & CEO

Sk. Matiur RahmanSenior Executive Vice President

M Habibur Rahman ChowdhuryDeputy Managing Director & CFO

Abdul HalimSenior Executive Vice President

Md. Touhidul Alam KhanDeputy Managing Director

Syed Faridul IslamDeputy Managing Director

Md. Ziaur RahmanSenior Executive Vice President

SENIOR MANAGEMENTTEAM (SMT)

33PRIME BANK

Standing (from left)

Sitting (from left)

Md. Abul KashemExecutive Vice President

Md. Shahadat HossainSenior Executive Vice President

ANM MahfuzSenior Executive Vice President

Mir Md. Hassanul ZahedExecutive Vice President

Md. Feroz Al AzadExecutive Vice President

Sk. Matiur RahmanSenior Executive Vice President

M Habibur Rahman ChowdhuryDeputy Managing Director & CFO

Abdul HalimSenior Executive Vice President

Mohd. Rafat Ullah KhanSenior Executive Vice President

Syed Faridul IslamDeputy Managing Director

Md. Iqbal HossainSenior Executive Vice President

EXECUTIVE RISK MANAGEMENT COMMITTEE

Mohammad Jashim UddinSenior Executive Vice President

34 PRIME BANK

ANNUAL REPORT 2018

ASSET LIABILITYCOMMITTEE

Standing (from left)

Sitting (from left)

M Habibur Rahman ChowdhuryDeputy Managing Director & CFO

Shams Abdullah MuhaiminSenior Executive Vice President

Md. Touhidul Alam KhanDeputy Managing Director

Syed Faridul IslamDeputy Managing Director

ANM MahfuzSenior Executive Vice President

Rahel AhmedManaging Director & CEO

Sk. Matiur RahmanSenior Executive Vice President

Abu Zafar Md. Sheikhul IslamExecutive Vice President

Md. Feroz Al AzadExecutive Vice President

35PRIME BANK

SUSTAINABLE FINANCECOMMITTEE

Standing (from left)

Sitting (from left)

M Habibur Rahman ChowdhuryDeputy Managing Director & CFO

Mohammad Jashim UddinSenior Executive Vice President

Md. MoniruzzamanVice President

Mohd. Rafat Ullah KhanSenior Executive Vice President

ANM MahfuzSenior Executive Vice President

Md. Touhidul Alam KhanDeputy Managing Director

Syed Faridul IslamDeputy Managing Director

Md. Abul KashemExecutive Vice President

Md. Iqbal HossainSenior Executive Vice President

Md Asif Bin IdrishSenior Vice President

Mir Md. Hassanul ZahedExecutive Vice President

Mohammad Nazmul Karim ChowdhuryExecutive Vice President

Md. Amir Hossain MajumderExecutive Vice President

Md. Feroz Al AzadExecutive Vice President

36 PRIME BANK

ANNUAL REPORT 2018

LIST OF EXECUTIVES

Additional Managing Director

Md. Tabarak Hossain Bhuiyan

Managing Director &CEO

Rahel Ahmed

Deputy Managing Director

Md. Golam RabbaniMd. Touhidul Alam KhanSyed Faridul IslamM Habibur Rahman Chowdhury

Mohammad Jashim UddinMd. Shahadat HossainZiaur RahmanMohd. Rafat Ullah KhanShams Abdullah Muhaimin

Senior Executive Vice President

Mohammed Ehsan HabibMd. Ezaz HossainAbu Ashraf SiddiqueeSk. Matiur RahmanMd. Iqbal Hossain

Abdul HalimMd. Anwarul IslamFaruk AhammadAbu Nayeem Mohmmad MahfuzSyed Tofail Ali

Syed Md. Nazmul HuqueMuhammad Anowarul IslamMir Md. Hassanul ZahedMohammad Nazmul Karim Chowdhury

Executive Vice President

Syed Sahadat HossainImtiaz Ahamed BhuiyanMd. Amzad HossainMd. Amir Hossain Majumder

Abu Zafar Md. Sheikhul IslamMd. Tarique Parvez JewelMd. Feroz Al AzadMohammad Zubayer ErshadMd. Abul Kashem

Md. Abdul QuddusTofail AhmedMohammad Masud ShahjahanSaif-Ul-Alam Md. Al-AminTanvir Ahmed MahboobNurul Momen KhanMamur AhmedMd. Asif Bin Idrish

Senior Vice President

Md. MoniruzzamanMd. MoniruzzamanMd. Hafizur Rahman MallickMohd. Afzal HossainMd. Ramiz Uddin MiahAbu Taher Md. ZakariaMd. Salah UddinMuhammad Muzahid Hossain

Shaila AbedinMohammad Firoz AlamShahbaj TalatMahbuba AshrafMuhammad Anuarul KabirMohammad Nur Nobi

Debashis ChakrabortyMd. Nazrul IslamMd. Mozahid KabirMd. Khaled AnwarMohammad AshrafuzzamanMd. Arman Uddin BhuiyanHasan-Ul-HuqFarid AhmedSharmin AktherMohammad Khurshid AlamMd. Saidur Rahman Dipu

Vice President

Mollah Farid AhmedMd. Yusuf AliKazi Azaharul IslamMd. Jafar HasanMd. Showkat Kamal SarkerA K M Enamul HaqueHarunur Rashid ChowdhuryS M Khurshed AlamKazi Moinul HaqueDorothy SultanaA K M Abdul Alim Ibne Khabir

Muhammad Rashed IqbalMd. MoniruzzamanAhmed Masudul GoniShahana PervinAsif Ibne SattarRahat MasoodMuhammad Ebnul Alam PalashMd. NadeemMohammad Farhan AdelSyed Hasnain MamunNazrul Islam

37PRIME BANK

Mohammad Aminur RahmanMohammed SamiullahNighat MumtazMohammad Zubaer Hossain

Vice President

Mohammad Aminul IslamMorshed AhammedMohammad Anisur RahmanMd. Rashaduzzaman

Tanvir Ahmed SiddiquiMohammad Reaz AhmadBishanat Sharder

Md. Mahabub UjjamanMohammad Afzalur Rahman KhanMohammad Noor-E-Alam SiddiqueAshis BhattacharjeeS M Parvez KabirMd. Abdur RaafiA T M AhsanMohammad Abu AliMd. Taj Uddin AhmedGiash Uddin AhmedMd. Ruhul QuisthS M Shahidul IslamMohammad Mamunur RashidMd. Emdad HossainMasud Uddin AhmedMohammad Kamal UddinFarjana YeasminMd. Fazle RabbyMohammed Saiful HossainMd. Abu SayeedK. M. Sakhawat HossainMohammad Mamunur RahmanMuhammad Anisur Rahman Bhuyan

Senior AssistantVice President

Md. AlamgirMd. Ariful HoqueMd. Rabiul IslamMd. Rezwan Uddin SwhelMd. Nazrul IslamMohammad Shawkat AliNazneen AkhterShamima PervinFlorence Sutopa MajumderSyed Delwar HossainMd. Kamrul IslamKamrun NaharMd. Mainul KabirMohammad Raihan ShaheedMohammad Jahangir BhuiyanMd. Hashmot Ali MollahMd. Moinul HasanShah Mohammad MohsinA K M Khairul BasherMd. Mobinul HaqueMohammad Sazzad HossainMd. Aminur Rahman AkandaMd. Rabiul Ahasan

Sirajul HoqueMd. Hasan JamalMohammad Badrul AnamNahida SultanaShubir Kumar BaruaIftikhar Ahmed ChowdhuryTakiyan ChowdhuryA. S. M. Hafizur RahmanMd. Mir Murad AliMuntasir Quium KhanM. Riyadh FarhanKh. Md. Sufian RajiAbul Kalam AzadMohammad Mamunur RashidMuhammed Mustafizur RahmanAbdullah Al MehdiSaleh Md. Mahfuzul HassanA. H. M. Kamrul MonemMd. Istiaq KhaledMd. Azad HossainKazi Shafiul AzamMohammed Masud Rayhan

Md. Abul HasanatMd. Rezaul KarimMesbahuddin AhmedMd. Adil UddinBangajit BasakMohammad Rafiqul IslamMd. Mahfuzur RahmanMd. Shazzad HossainMohsinul Hoq SumonMd. Azharul IslamMd. Rafiqul IslamMollah AsaduzzamanMd. Saiful HasanMd. Asaduzzaman

Assistant VicePresident

Md. Saidur RahmanMohammad Abdus SattarShamina SultanaMd. Emdadul HaqueMd. Obaidul HoqueMd. Shamsul HoqueTareq Bin MamunSayeda Rehana FerdousiMd. Rejaul KarimMd. Zakir HossainNoor Mohammad HowladerKazi Foorkan UddinMd. Nizam UddinMd. Azmal Huda

A K M Humyun KabirA K M Ziaul LatifSharmin RahmanMd. Nasim Goni ChowdhuryMd. Monirul Haque BhuiyanMd. OhiduzzamanShariful AhsanRumman Alam ChowdhuryMohammad HanifMd. Masud AlamRajib DeyMohammad Nazimuddin SheikhFaria Azad ShemePijuce Kumar Roy

38 PRIME BANK

ANNUAL REPORT 2018

Md. Shahtab RizviSharifuzzaman ChowdhurySuraiya RahmanMuhammad Ariful IslamMd. Rehan UddinTawhida ChotonAsadul KabirAfsana KishwarIbrahim AliSabina EasminMd. Solaiman-Al-RajiMd. Rafiqul IslamSarker Muhammad Ahmed MuneerMohammad AnisuzzamanNazia Jihan TaniaKazi Muhammad Rezaul KarimMohammad Shihab Hayat RizviRojina ParvinMd. Ziaul HasanSajib SarkarMohammad Shahadat HossainS. M. Sohel JamilSattya Ranjan Chakraborty

Shakil Ahmed KhanHamida KhanamShahnaz AkhterTaksima SultanaMd. Abdul HalimShahjahan KabirMohammad Roichal HoqueMohammad Sazzad HossainMd. Afif Bin Haque ShaikatFarzana MahzabeenShahid Uddin AhmedRupam ChowdhuryNawadir Ali KhanMd. Ashadul LatifMohammad Shakhawat HossainAl Meraz AhmedRony Chanddro PodderMd. RakibuzzamanAhmedur RahmanB M TouhiduzzamanMd. Burhanul HassanMohammad Mahfuzur RahmanMohammad Tanveer Haider Imon

Md. Sariful IslamMuhammad Mahbub Alam MollaSaifuddin AhmedTahmina AkterMohammad Ansarul Karim ShahedSharmin Jahan KhanMd. Abdul AzizMd. Mamun SikderA. S. M. Zahidul IslamAzizul HoqMd. Ferdous Hossain PolashSherajus SalekinMuhammad MoniruzzamanS. Md. Zaved ChowdhuryMd. Joynal AbedinMuhammad Abu ZaforMd. Ershad AliSalahuddin AhmedSarwat Jahan KabirAbu Mohammad Tariqul IsmailMd. YounusM. M. Mahbub Hasan

Assistant VicePresident

MESSAGE FROM THE CHAIRMAN AND MANAGING DIRECTOR & CEO

From the office of the Chairman

Managing Director & CEO’s Review

40 PRIME BANK

ANNUAL REPORT 2018

Dear Stakeholders,

The year 2018, as we have experienced, was a challenging year for global and domestic market, offering both opportunity to thrive and fear to confront instability. The prospect of protectionist trade policies, particularly in the United States with President Trump’s new trade strategy, US-China trade war, fast-evolving new technologies reshaping the trade landscape, and uncertainty about the UK’s future trade relationships with the EU and beyond suggest a global trade system that is facing more uncertainty than ever before. However, Bangladesh has been able to continue its sustained growth amid all sorts of uncertainties with its resilient mindset and everlasting aspiration.

Global Economy

Global economic growth remained steady at 3.1 per cent in 2018, as a fiscally induced acceleration in the United States of America offset slower growth in some other large economies. Developed economies expanded at a steady pace of 2.2 per cent, and growth rates in many countries have risen close to their potential, while unemployment rates in several developed economies have dropped to historical lows. Among the developing economies, the regions of East and South Asia remain on a relatively strong growth trajectory, expanding by 5.8 per cent and 5.6 per cent, respectively in 2018. Many commodity exporting countries, notably fuel exporters, are continuing a gradual

recovery, although they remain exposed to volatile prices.

Economic activity at the global level is expected to expand at a solid pace of 3 per cent in 2019, but there are increasing signs that growth may have peaked. The growth in global industrial production and merchandise trade volumes has been tapering since the beginning of 2018, especially in trade-intensive capital and intermediate goods sectors. Leading indicators point to some softening in economic momentum in many countries in 2019, amid escalating trade disputes, risks of financial stress and volatility, and an undercurrent of geopolitical tensions. At the same time, several developed economies are facing capacity constraints, which may weigh on growth in the short term.

FROM THE OFFICE OFTHE CHAIRMAN

41PRIME BANK

Bangladesh’s progressing economy

The Bangladesh economy has been able to maintain sustained economic growth in the year 2018 due to many reasons. The country’s aim tomake substantial progress in growing its economy, lifting people out of poverty, and improving the lives of its people was well on target last year. Employment has increased specially in IT sector, more people have access to health and education, and basic infrastructure has also improved.GDP growth for FY2017-18 reached 7.86 percent which is significantly higher than the growth of 7.28 percent in the preceding fiscal year. Among the broad sectors of GDP, the contribution of agriculture and service sector to GDP slid down by 0.51 percentage point to 14.23 percent and by 0.74 percentage point to 52.11 percent which was offset by an increased share of industry by 1.24 percentage point to 33.66 percent in relation to the preceding year. Investment in FY2017-18 increased to 31.23 percent of GDP, up by 0.72 percentage point from the preceding fiscal year. As per Bangladesh Bank data, rate of inflation on the basis of consumer price index was 5.55 in December, 2018, lower than 5.70 in the same period of previous year. With a national strategy focused on manufacturing, dominated by the garment industry, the country has seen exports soar by an average annual rate of 15-17% in recent years; reaching a record USD36.7 billion as of June, 2018.This sector is on the track to meet the government’s goal of USD39 billion in 2019.Rapid growth enabled Bangladesh to reach the lower middle-income country status in 2015. In 2018, Bangladesh fulfilled all three eligibility criteria for graduation from the UN’s Least Developed Countries (LDC) list for the first time and is on pathway for graduation in 2024.

Domestic Banking Scenario:

The overall scenario of banking industry in our country remained volatile and experienced a moderate level of resilience round the year 2018. Although the industry has lost little of its momentum due to some concerns like increasing volume of non performing loan (NPL), it has brought several positive changes in terms of modernization, quality of assets, application of international standards,

technology adaptation, capacity build-up, corporate governance, and improved regulatory and supervisory environment. The Foreign Exchange reserve remained sound and hit around USD 32 billion in December 2018.Total deposits and advances, both observed a rise of 9.05 percent and 12.68 percent respectively. However, classified loan increased to 10.29 percent of total outstanding amount in December 2018 from 9.31 percent in the same period of previous year. The private sector credit recorded 13.33 percent growth in December 2018 which was significantly lower than 18.00 percent of the same month of the previous year. Among the positives, there is signal of growth of industrial sector in the country. Bangladesh Bank data shows that disbursement of industrial term loans increased by 21.22 percent and stood at Taka 19111.22 crore and recovery also increased by 5.57 percent during the first quarter of FY19 as compared to the corresponding period of the previous fiscal year. However, total liquid assets of the scheduled banks decreased by 3.44 percent and stood at Taka 255169.52 crore as of end December, 2018 which was Taka 264267.37 crore at the end of June of the same year. Due to political stability and using more of legitimate channel by the remitters, inflow of remittance witnessed an upward trend last year.

Safe but Progressive Journey of Prime Bank

2018 was pivotal for Prime Bank, which is now engaged in one of the largest restructuring processes in its history. Under the new Management the bank went on a challenging first year, since the bank experienced some structural reforms like adopting centralized banking model. The management set out a new strategic agenda for the bank, with the customer at its heart, placing it at the forefront of the industry, and re-engaging the clients in the best possible way.

The senior management was strengthened with key internal and external appointments, and plans put in place to achieve successful structural reform as well as major initiatives to embrace digital technology, to upgrade our systems architecture in the latest core banking system, to become

CRAR

14.01%17.04%20172018

ROE

4.24%8.60%20172018

1,0592,188BDT in million

20172018NPAT

3.03%

4.36%

1,129

42 PRIME BANK

ANNUAL REPORT 2018

fully cyber ready and improve our control effectiveness. Prime Bank’s latest and highly sophisticated Core Banking System (CBS) software now allow customized service offerings to our valued clients and triggers more innovation in product development features.

The Core business was redefined and reorganized in preparation for structural reform, together with plans to bring its returns among the market leaders. While much is yet to be done, including full-fledged agent banking, more digitization in the banking model, business restructuring will largely be completed in 2019.This should allow the Bank to return into a better shape and accomplish more stable financial performance in coming years. The year itself saw external surprises, including the increase of NPL, different social movements, new entrants in the industry, Government election and so on. We also faced regulatory pressure to increase capital levels amid shrinking interest rates, and the need to improve further our control effectiveness and corporate culture. Notwithstanding such pressures, I’m pleased with the progress that we have made, because it signals of shiny days ahead. Compared to previous year, the quality of our portfolio and loan loss coverage ratio has improved considerably. We also received a vibrant response from our subsidiaries in this year.

Strategic Actions

Strategic endeavors are ongoing processes to deal with ever-changing market trends and business demands. We always remain proactive to that call; otherwise, are well responsive according to need of our business requirement. Putting our purpose at the heart of our business is critical if we are to be a truly responsible bank. Our actions need to match our words. That’s why, we believe in continuous market vigilance and improvement for the sake of our stakeholders. in addition to contingency plans, the management persistently aim to perform some routine tasks which include but not limited to:

• Maintaining quality asset & generating greater value from our portfolio

• Ensuring improvement of service quality

• Development of human resource through training program at home and abroad

• Identification of growth driver and cost optimization.

• Providing IT security to our Online customers to safeguard their transaction from cyber threat

• Ensuring highest level of compliance to the regulatory body and transparency to our stakeholders

• Introducing tech-savvy products to cope with local and international trend

• Providing more dynamic and efficient trade and credit related services exploiting the benefit of centralization

CSR Activities

Prime Bank has always been exemplary in its endeavors in respect of performing Corporate Social Responsibility (CSR) every year. With no difference the bank has extended its benevolent hand in numerous occasions throughout last year. For instance, it opened a medical support center and eye camp to provide instant free medical services & essential medicine to the devotees attending at the Ijtema premises. The bank has organized health awareness programs for its Monarch customers in different fields, for instance, preventive care for cardiac problems on the occasion of World Heart Day-2018 and cancer awareness program on a separate occasion. To help the poor & cold-hit people the bank distributed blankets in many parts of the country. The Bank also arranged the tree plantation program on ‘Earth Day’ in bank premises located in different places to encourage and promote the concept of green world.

With the aim to develop highly competent cricketers for the future, Prime bank, as part of CSR, sponsored Prime Bank Young Tigers National School Cricket Tournament, the largest cricket competition of the country. More than 11000 students from 554 schools participated in the tournament, which is being sponsored by Prime Bank for last 3 years. The bank also believes, in order to remain physically and mentally fit, everybody should participate in sports and recreational activities. Therefore, it arranged Prime Bank cricket tournament

for its officials as well. Apart from cricket, the bank also sponsored Golf competition. A three day long “Prime Bank Cup Golf Tournament-2018”at Kurmitola Golf Club was arranged by the bank last year.

Accolades & Recognition

In terms of accolades and recognitions, once again, the year 2018 has been a remarkable year for the Prime Bank. The bank has received Best SME Deal Award from Asian Development Bank (ADB), which was awarded at fourth Annual ADB Trade Finance Program (TFP) Award-2018 held in Singapore. Apart from this prestigious award, the Bank achieved “GOLD RANK” in Asia Sustainability Reporting Rating 2018 by National Centre for Sustainability Reporting (NCSR) and Institute of Certified Sustainability Practitioners (ICSP), Indonesia. In addition, the Bank has also been awarded by Citibank NA, USA with their “2017 Performance Excellence Award”.

Note of Appreciation:

In conclusion, I would like to express my gratitude to all the relevant stakeholders of the bank, including customers, shareholders, and patrons for putting their trust upon us. I am also grateful to all the members of board for their ceaseless support and guidance to make effective decisions to address any challenges we faced during the year. My heartiest thanks to the management and employees of the bank for their vigorous effort, commitment and devotion to the bank to make it a success. I believe, 2018 has brought countless opportunities to us and our dedication; love for this bank will help us grow even bigger in coming years. Our continuous journey of excellence will not stop if our collaborative effort remains continued.

Azam J ChowdhuryChairman

43PRIME BANK

Prime bank has a solid foundation, a trusted customer base and a robust balance sheet. We are well positioned for continued sustainable growth and ready to take advantage of promising opportunities that arise in a changing economy

”“

Honorable Shareholders, Respected Members of the Board of Directors and my beloved Prime Bank family members,

I am indeed privileged to present another exceptionally successful year of Prime Bank at the face of many challenges the industry underwent during that period. Although the bank achieved incredible growth in terms of net operating performance in the year

2018, it continued to be another year of growth as well as consolidation. We continually focused on few essential components of strategic plans and priorities by delivering diversified products & services to our customers in an effort to treat all fairly and inclusively making it easy for them to find, products that are right for them under any circumstances. We have continued to transform the Bank to become a safer,

more agile and customer focused organization whilst maintaining steady profits. Such performance excellence was the result of strategic initiatives including effective balance sheet management, focus on ‘Current Account Savings Account’ (CASA) being low cost liabilities base, quality asset growth and continuous identification of customer needs and gradual improvement of customer service.

MANAGING DIRECTOR AND CEO’S REVIEW

44 PRIME BANK

ANNUAL REPORT 2018

PBL ended year 2018 with a keen sense of focus as the entire organization geared up for what came out to be a more challenging year. Working as an integrated team by believing in ‘One Bank, One Team’ mantra, we found innovative and differentiating ways to delight our customers, attracting new businesses while strengthening existing relationships. All business segments and key branch personnel were most effective in providing new levels of high quality, personalized service.

World Economy

World economy is estimated to have grown by 3.70 percent in 2018, projected by IMF, which was 3.80 percent in previous year. Global growth is expected to be slightly decreased in 2019. Although near-term growth could have surprise on the upside, the global outlook is still subject to substantial downside risks, including the possibility of financial stress, increased protectionism, rising geopolitical tensions and ongoing trade war between China and USA.

Bangladesh Economy

Bangladesh has continued its journey towards graduating to Middle Income country at a rate faster than anticipated with a greater than 6 percent GDP growth during last consecutive eight years. Keeping pace with recent growth trends in the economy, fiscal year of 2017-18 ended in happy notes with a GDP growth rate of 7.86 percent against a 7.28 percent growth in last fiscal year. The outlook also remains steady for the ongoing fiscal of 2019. Average inflation looked yet better at 5.54 percent in December 2018, slightly lower compared to 5.70 percent in December 2017. Country’s current account balance is under slight pressure caused by growth in total imports resulting from increased imports of investment goods and flood related foods. Total import in FY2017-18 was USD 54.46 billion as against total export of USD 36.67 billion in the same period. Country’s foreign exchange reserve also reflects robust look with USD 32.02 billion at the end of 2018.

Banking industry scenario

During 2018, industry held sufficient liquidity position and as such inter-bank call money rate was stable. The call money rate was slightly in upward

Performance overview 2018

Prime Bank has been consistently maintaining its financial performance over the last five years in terms of business volume and profitability. At the end of 2014 total assets of the Bank was BDT 269,218 million whereas at the end of 2018 it stood at BDT 293,901 million recording a growth of more than 9 percent. Below table shows the comparative financial information of the bank of last five years.

trend from 3.92 percent in December 2017 to 4.09 percent in December 2018. However, from the beginning of the 2019, the Industry facing a liquidity challenge and as a result in February 2019 average call money rate raised to 4.36 percent.

Moreover, Bangladesh Bank’s instruction to reduce the AD ratio in coming days will force the banks to collect more deposits which lead to higher cost of deposit for overall industry.

In line with the changes in business dynamics and also having the Bank’s transformation ongoing during the period, profitability varied in last five years. Net profit of the bank went up to BDT 2,188 million at the end of 2018 as opposed to BDT 1,059 million of previous year. The key reason of that significant rise in Net Profit has been the increase of net interest income and decrease of requirement of provisions for loans and advances.

(BDT in million)

Balance sheet 2018 2017 2016 2015 2014

Paid-up capital 11,323 10,293 10,293 10,293 10,293

Shareholders’ equity 26,181 24,708 25,285 26,415 24,461

Deposits 197,518 199,014 197,934 194,825 204,838

Loans and advances 205,810 198,323 170,212 151,865 147,367

Total assets 293,901 281,275 272,224 267,322 269,218

(BDT in million)

Operating performance 2018 2017 2016 2015 2014

Net interest income 7,650 4,894 3,313 1,294 2,872

Operating revenue 12,899 12,148 12,023 12,073 11,906

Operating expenses 7,180 6,775 6,266 6,166 5,750

Operating profit 5,719 5,373 5,757 5,906 6,157

Provision for loans and assets 1,782 3,564 3,412 3,154 2,877

Profit before tax 3,938 1,809 2,345 2,752 3,280

Tax expense 1,750 750 150 613 887

Profit after tax 2,188 1,059 2,195 2,139 2,393

Key ratios (%) 2018 2017 2016 2015 2014

Cost of deposit 4.72 4.46 4.94 6.64 7.36

Yield on advance 8.51 7.42 8.45 10.20 12.09

Return on assets (ROA) 0.76 0.38 0.81 0.80 0.91

Return on equity (ROE) 8.60 4.24 8.49 8.41 10.08

Earnings per share (Taka) 1.93 0.94 1.94 1.89 2.11

Dividend (C=cash; B=bonus) 12.50 C 7 C & 10 B 16 C 15 C 15 C

Non-performing loans ratio 6.16 5.45 5.96 7.82 7.61

Capital to risk weighted asset ratio (CRAR)

17.04 14.01 12.45 12.74 12.71

45PRIME BANK

Accounting policies and estimation and changes thereon

Bank’s financial statements for the year under review has been prepared as per International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as applicable in Bangladesh and circulars/guidelines of Bangladesh Bank and other regulatory authority as applicable for banks. Accounting policies and estimation are consistently followed except otherwise disclosed in the financial statements. Adequate disclosures is being made for any changes in accounting policies and estimation including the effect of such changes. However, no such material changes of accounting policies and estimation occurred during the year of reporting.

Peer industry financial analysis

Bank regularly reviews the activities, financial performance, financial position and cash flows of peer industry competitor based on available information in public. It helps to formulate strategic planning and renewed focus for coming days. In line with reviewing peer group data PBL also regularly analyzes its SWOT to maximize the outcome in a very stiff and competitive business environment.

Risk and concerns for the banking industry

Although the year 2019 expected to be shinning for banking industry under regime of new government, but some uncertainty still remaining as follows;

– From the beginning of the 2019, the Industry facing a liquidity challenge. Moreover, Bangladesh Bank’s decision for reduction of AD ratio will impact its lending decision and increase of cost of deposit;

– Implementation of various mega projects are in the process. Thus, to meet up the expenditure, government may borrow fund from banking sector which may affect some degree of the liquidity scenario;

– Inflow of wage earners remittance is not up to the mark and there is also risk of further declining in remittance growth;

– Under Basel III regime banks need to maintain additional buffer capital of 2.50 percent from 2019. This may increase pressure to banking industry to maintain additional capital requirement in coming years which may also limit the ability of banking industry to further lending.

Future planning & forecast

Although Prime Bank Limited is maintaining its performance consistently during last many years, we still believe we have to go a long way in terms of achieving service excellence and best corporate practices. Our presence in the market is growing progressively and we have improved our presence in all areas of operations. We have professionals with profound managerial talents and perhaps most importantly, we have a hard earned reputation as one of the top service providers in the industry.

PBL is committed to achieve performance excellence through intense focus on all segments of business, strong budgetary control process and an effective system of internal control. Management is confident that, PBL will be able to deliver satisfactory result to its stakeholders in the coming year. Forthcoming years of PBL would be all about reengineering further the business and operational processes to make it more digitally driven and be convenient for the clients of the Bank. Consumer Banking would be focusing more on their service quality improvement by introducing automated processes and channels to target the ‘Generation Z’ more specifically. It’s a journey and that would have to continue

over the years to come. MSME Banking would strengthening further their foothold and continue expanding the horizon to capture more of market pie. Within Wholesale Banking arms, Corporate and Institutional Banking would continue to consolidate it’s strong position by undertaking profitable only selective transactions and cementing further the partnership with the longstanding proven clients. They would focus more on underwriting large transactions and thereafter distributing them to diversify risk by leveraging on our Syndication and Structured Finance arms. Trade and more specifically Export based clients would remain key growth area for both them and Commercial Banking divisions. Commercial Banking would have key focus to churn more of the relationships given the mid market spectrum they deal in. Transaction Banking team would continue to foster their product and sales support towards the Wholesale Bank relationship teams towards building the scale and ensure utilization. Moreover, they would be focusing more on product solutions to continue fetching institutional deposits namely CASA.

“PBL corporate positioning, ‘for a better future’ is brought to life through personalized service delivered with disciplined efficacy and customer- oriented efficiency, because our valued customers are the bank’s greatest asset.”

Shareholders’ Equity

BDT in Million

26,181 24,708 6%

Net profit after tax

2,188 1,059 107%

EPS1.93 0.94

2018 2017 Growth (%)

2018 2017 Growth (%)

2018 2017 Growth (%)

107%

BDT in Million

46 PRIME BANK

ANNUAL REPORT 2018

Outlook 2019

We set our strategy giving highest priority on sustainable business growth and in accordance with that, we believe 2019 shall be a year of moderate growth and consolidation again for the Bank. Keeping bank’s strategy in mind along with the economic scenario we sorted our priority and initiatives for the coming year, which I’d like to put down here as under:

– We presume that money market will be in a challenging state in the coming year and interest rates may climb up as function of that. To meet this challenge, we need to manage liquidity effectively and rationalize pricing of the Loan Portfolio to maintain the NIM;

– Recovery and managing NPL is one of the critical success factor. For which we set increasing focus on strengthening recovery and managing NPLs effectively.

– Focus on fee income must continue;

– We believe that innovation and diversification of products and services is another key factor to ensure continuous growth and sustainability and our concentrated strives will continue in this regard;

– Increased focus on retail & SME and OBU business;

– Focus on Green Banking and Eco-friendly Financing as a part of the commitment to keep the

environment green and to safeguard the planet from warming and towards achievement of the broader objectives of Sustainable Development Goals (SDGs) of the Country;

Acknowledgements

In closing, I would like to reiterate that, together, we will continue to take the bank forward and deliver more value to those we serve and to our shareholders. We are aware that, we face both opportunities and challenges in the year ahead, we have the confidence of knowing that the bank we so proudly serve, not only embraces the future, but is defining what that future will be.

“As the custodian of the enterprise, we are committed to safeguard and add further interest of the bank’s owners- our shareholders….”

Finally, I take this opportunity to thank all of our customers for their cooperation and support and the employees for their enthusiasm & tireless effort. I am indebted to the board of directors of the bank for their forward looking views and guidance. I express my appreciation and thanks to all the regulators for their continuous help and assistance, especially, Bangladesh Bank has always been forthcoming in their valuable guidelines and co-operation from time to time. I look forward to another success story in 2019.

Thank you all for your continued trust in Prime Bank.

Rahel AhmedManaging Director & CEO

ROE

CRAR

YOA

8.60% 4.24% 4.36%

8.51% 7.42% 1.09%

17.04% 14.01% 3.03%2018 2017 Change

2018 2017 Change

2018 2017 Change

CORPORATE GOVERNANCE

Directors Report

Corporate Governance Report

Certificate on Corporate Governance

BSEC Checklist on Corporate Governance

Statement of the Board of Directors

Statement of the Audit Committee

CEO & CFO’s Declaration to the Board

Report on Activities of the Audit Committee

Report on Activities of the Risk Management Committee

CRO’s Report on Risk Management

Ethics & Compliance

48 PRIME BANK

ANNUAL REPORT 2018

The Board of Directors of Prime Bank Limited has the pleasure of presenting Director’s Report, Audited Financial Statements for the year ended on December 31, 2018 together with Auditors’ Report to the Shareholders on the occasion of 24th AGM of the Bank. A review of the report would reveal satisfactory performance of the bank in a competitive environment. In addition, an overview of the global and Bangladesh economy during 2018 and outlook for 2019 has been provided as part of humble presentation to our valued shareholders.

The Directors’ Report has been prepared in compliance with section 184 of the Companies Act 1994, BSEC Notification, the Listing Regulations of Dhaka and Chittagong Stock Exchanges, guidelines of Bangladesh Bank and other applicable regulations. Moreover, the Directors are pleased to explain and disclose some issues, which they consider relevant to ensure transparency and practice of corporate governance in the operational activities of the bank. The Directors believe the Report will give real insights of the bank’s performance during the year under review.

Global Economy

Economic growth accelerated in more than half the world’s economies in 2018. Advanced economies expanded at a steady pace of 2.3 percent in 2018, and growth rates in many have risen close to their potential, while unemployment rates in several developed economies have dropped to historical lows. Among the developing economies, the regions of South Asia remained on a relatively strong growth trajectory, expanding by 5.6 percent in 2018. Many commodity exporting countries, notably fuel exporters, are continuing a gradual recovery, although they remain exposed to volatile prices. Global economic growth remained at steady 3.7 percent in 2018. Economic activity at the global level is expected to expand at a solid pace of more than 3 percent in 2019. The growth in global industrial production and merchandise trade volumes has been tapering since the beginning of 2018, especially in trade-intensive capital and intermediate goods sectors.

Particulars 2017 Estimates

2018 Estimates

2019 Projections

2020 Projections

World Output 3.8 3.7 3.5 3.6Advanced Economies 2.4 2.3 2.0 1.7 Emerging market and Developing Economies

4.7 4.6 4.5 4.9

World Economic Outlook, IMFJanuary 2019

IMF forecasted that weakness in the second half of 2018 will carry over to coming quarters, with global growth projected to decline to 3.5 percent in 2019 before picking up slightly to 3.6 percent in 2020. This growth pattern reflects a persistent decline in the growth rate of advanced economies. From the trend levels reflected above it appears that downtrend occurring more rapidly than previously anticipated-together with a temporary decline in the growth rate for emerging market and developing economies in 2019, suggesting contractions in few countries like Argentina and Turkey, as well as the impact of trade actions on China and other Asian economies. Specifically,

growth in advanced economies is projected to slow from an estimated 2.3 percent in 2018 to 2.0 percent in 2019 and 1.7 percent in 2020.

Bangladesh Economy

Bangladesh reached lower-middle-income status on the strength of an annual economic growth rate of 6 percent and above during last five years and more. The consistent growth was achieved mainly by a rise in readymade garment exports, overseas workers’ remittances, and domestic consumption.

Economic growth in 2018 was mainly driven by strong domestic demand with support from robust credit growth, export and remittance inflows, Government expenditure supported by domestic consumption and investments. Buyers’ confidence in the RMG industry underpinned by improving workplace safety conditions and external demand including strong US growth momentum and diversification of RMG orders away from China aided exports can be attributed for the trend. Improved energy supply and political calmness also supported economic activities. In terms of sectorial performance, monthly industrial production indices suggest strong growth in first half of 2019. The service and agricultural sector activities to remain buoyant in 2019 supported with relatively political stability. Based on the recent economic trends and econometric estimates, Bangladesh Bank projected GDP growth in the range of 7.5-8.2 for FY2019 assuming continued political stability and no external shocks.

FY (Jul-Jun) GDP Growth (%)

2011-12 6.52

2012-13 6.01

2013-14 6.06

2014-15 6.55

2015-16 7.11

2016-17 7.28

2017-18 7.86

DIRECTORS’ REPORT

Foreign Exchange Reserve(USD in million)

35,000

30,000

25,000

20,000

15,000

Dec

,20

13

Dec

,20

14

Dec

,20

15

Dec

,20

16

Dec

,20

17

Dec

,20

1832

,016

33,2

27

32,0

92

27,4

93

22,3

10

18,0

95

49PRIME BANK

Foreign exchange reserves have grown fast to a level generally deemed as adequate, but not yet to a level that could be viewed as excessive seen against those of other developing economy competitors. Foreign exchange reserves held by the Bangladesh Bank stood at US$ 32,016 million at the end of December 2018 while it was US$ 33,227 million in December 2017. Foreign exchange reserves decreased due to weak/less remittance flow in 2018 and high import payments.

Overall outlook

Bangladesh is now at a crossroads of development. The growth momentum that the country has achieved over the last decade must be continued and should be further boosted to help the economy to the middle income group. Exports will grow with continued economic recovery in the US and the Euro area, strong expansion in remittances will boost consumption demand, private and public investment will pick up as the business environment improves under a stabilizing political situation, and spending will increase under the annual development program. From another point of view, the overall outlook for the Bangladesh economy is favorable over the medium term in light of a growing working age population and likely continued global demand for Bangladeshi products. Faster growth beyond 7 percent and sustained investments in infrastructure especially in the energy sector will assist turning the country to a mid-income one.

Banking Industry Outlook

Banking industry has achieved steady growth in deposit mobilization. Total deposits in banking industry increased to BDT 10,099 billion in December 2018 as against BDT 9,261 billion in December 2017 representing a growth of 9.05 percent. On the other hand, total bank’s advance increased to BDT 9,604 billion in 2018 from BDT 8,444 billion in 2017 registering a 13.74 percent growth.

Banking sector indicators appeared concerning in 2018 as gross non-performing loan (NPL) ratio increased to 10.30 percent at the end of December 2018 from 9.31 percent in December 2017. NPL ratio of Prime Bank, however, stood at 6.16% from 5.45 percent in 2017- still much lower than the industry average.

There is pressure on banking industry for entering into an era of lower interest rates regime. In December 2018, the weighted average interest rate on lending of scheduled banks was 9.49 percent. On the other hand weighted average interest rate on deposit was 5.26 percent an increase from 5.01 percent in January 2018.

Risk and concerns for the banking industry

Although the year 2019 is expected to be better for banking industry in Bangladesh but following uncertainties appear, will persist:

• From the onset of 2019, the Industry has been passing through a liquidity contraction. On top of that Bangladesh Bank’s directives for reduction of AD ratio in coming days will force the banks to collect deposits at higher rates limiting fresh lending at affordable pricing.

• Growth of investment and business activities may not occur as per projections due to various directives likely to impact credit flow and lack of governance letting loose ever rising NPLs.

• In order to execute the ongoing mega projects, government may borrow huge sums from the banking sector eventually causing severe impact on the liquidity scenario.

• Flow of wage earners remittance may shrink further.

• As per roadmap for implementation of Basel III, banks will require maintaining additional buffer capital of 2.50 percent from 2019 onwards and this may cause pressure on Capital Management resulting in curtailing fresh lending.

Capital Market Outlook

Banking and capital markets are interlinked for the progress of the economy. Until recent time the market appeared heading for stability after the 2010 bubble but uncertainty might set in anytime despite Bangladesh Bank’s proactive efforts in stabilizing the capital market and at the same time taking steps for reining in the banking sector’s capital market exposures within global best practice norms linked to their capital bases.

Month End DSEX IndexDec, 18Dec, 17Dec, 16Dec, 15Dec, 14

9,60

4,62

0

10,0

99,8

10

8,44

4,35

6

9,26

1,79

3

7,13

1,13

0

8,40

2,68

2

6,17

4,73

5 7,

450

,231

5,45

1,49

5

6,58

8,51

6

Industy Deposit Industy Advance BDT in Million

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

6,24

55,

386

5,28

1

5,28

4

5,36

95,60

1

5,30

3

5,40

5

5,34

4

5,47

6

5,59

7

5,61

3

6,30

7

6,0

20

6,0

93

6,0

06

5,86

1

5,65

6

5,40

35,73

9

5,72

0

5,80

56,0

40

6,500

6,000

5,500

6,000

4,500

2018 2017

DSEX Performance

14

8

10

12

6

4

2

Dec, 2018

Dec, 2017

Dec, 2016

Dec, 2015

Dec, 2014

10.30

9.31

9.23

8.799.6

97.6

1

7.82

5.96

5.45 6.1

6

Industry Classified Loan Prime Bank Classified LoanIndustry Classified Loan Prime Bank Classified Loan

50 PRIME BANK

ANNUAL REPORT 2018

Country’s growing trade and financial integration and increased participation of global investors, capital market will be in a mature shape in coming days. Market capitalization of DSE remained around 20 percent of GDP at the end of December 2018. High national saving tendency can support capital market development with the companies shifting their long-term financing away from the banking system towards the capital market, accompanied by continued improvement in governance, technology and reliable information disclosure.

Brief History of Prime Bank Limited

Prime Bank Limited (“the Bank”) was incorporated as a public limited company under Companies Act, 1994 with the registered office 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. At present the Bank has 146 (One Hundred Forty Six) branches including 18 (Eighteen) SME Centre/Branches across Bangladesh and 2 (Two) booths located at Dhaka Club, Dhaka and at Chittagong Port, Chittagong. Out of the above 146 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), 5 (Five) subsidiary Companies (3 Foreign subsidiaries & 2 Local subsidiaries). The Bank went for Initial Public Offering (IPO) in 1999 and its shares were listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly traded company for its general classes of share.

Principal activities

The principal activities of the bank are to provide all kinds of commercial banking services to the customers which includes extending credit/lending to customers, deposit taking, retail and SME financing, trade financing, project financing, lease and hire purchase financing, credit cards, remittance services etc. The mode of banking includes both 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. Bank’s subsidiaries at Singapore and UK are engaged in providing remittance facilities 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 related to foreign currency denominated assets and liabilities.

At present, the bank has been rendering services through 146 branches including 18 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 for sustainable development.

Preparation of Financial Statements

The financial statements prepared by the management present fairly its state of affairs, the result of its operations, cash flows and changes in equity. These statements have been prepared in accordance with the “first Schedule (Section-38) of the Bank

Company Act 1991,BRPD circular no. 14 dated 25 June 2003, the rules and regulations issued by Bangladesh Bank, International Financial Reporting Standards (IFRS) as adopted by the ICAB in the name of Bangladesh Financial Reporting Standards (BFRS), the Securities and Exchange Rules 1987, Dhaka and Chittagong Stock Exchange’s listing regulations and relevant rules & regulations applicable in Bangladesh.

The financial statements of 2018 have been reviewed by the Audit Committee of the Board of Directors of the Bank and then referred to the Board of Directors for its consideration. The external auditors, Aziz Halim Khair Choudhury, Chartered Accountants and Hoda Vasi Chowdhury & Co., Chartered Accountants appointed by the shareholders, have certified the fairness of the financial statements for the year ended 31 December 2018.

Maintaining proper books of account

Prime Bank maintained proper books of account for its financial transactions occurred during 2018. The transactions are recorded as per guidelines stipulated by the Bangladesh Accounting Standard (BAS) and Bangladesh Financial Reporting Standards (BFRS) as applicable for the bank. The books of account have also been reviewed by the external auditors, Aziz Halim Khair Choudhury, Chartered Accountants and Hoda Vasi Chowdhury & Co., Chartered Accountants with an opinion that proper books of accounts as required by the law have been properly maintained.

Appropriate Accounting policies

Appropriate accounting policies have been consistently applied, except for the changes disclosed in the financial statements in preparation of financial statements and that the accounting estimates are based on reasonable and prudent judgment. Bank records financial transaction on accrual basis with required disclosures and also prepared the financial statements accordingly.

Follow up of IAS & IFRS in preparation of financial statements

International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as applicable in Bangladesh have been followed in preparation of financial statements. However, in case requirement for provisioning and Circulars issued by Bangladesh Bank differs with those of other regulatory authorities and accounting standards, Circulars issued by Bangladesh Bank has prevailed. As such the Group and the Bank has departed from certain requirements of BFRS in order to comply with the rules and regulations of Bangladesh Bank which are disclosed in notes to the financial statements.

Internal control & compliance

The Audit Committee, an assistive committee of the Board reviews the effectiveness of the system of internal controls and management, establish effective audit process and manage various risks. The internal audit function reporting to the Audit Committee operates independently of other aspects of the company’s management structure. It continuously reviews the company’s system of internal controls. These controls include financial controls that assist the Board in meeting its

51PRIME BANK

responsibilities for the integrity and accuracy of the company’s accounting records. The Company’s financial statements, prepared from those records, comply with the required laws and standards. The system of internal control is sound in design and has been effectively implemented and monitored.

A separate report on internal control and compliance is enclosed with the annual report.

Statement of Directors’ Responsibility to establish appropriate system of internal control

The Directors acknowledge their overall responsibility for the Bank’s systems of internal control for establishing efficiency, effectiveness, reliability, timeliness, completeness and compliance with the applicable laws and regulations. This process ensures that a system of internal control in accordance with best financial reporting practice was in place throughout the year and up to the date of the signing of these financial statements. It also involved an assessment of the ongoing process for the identification, evaluation and management of individual risks and of the role of the various committees and bank’s risk management functions.

Statement of Directors’ on adequacy of the system of internal control

The Directors confirm that the Board through its committees has reviewed the effectiveness of the bank’s systems of internal control for the year ended 31 December 2018. The Board through the audit committee has supervised the policies and various parts of businesses to ensure an effective internal control system. The Board business strategy, significant policies for internal control system and risk management have been taken properly and internal audit and control has been accomplished as per requirement of the Bank Company (amended) Act 2013, Bangladesh Bank guidelines, Corporate Governance guidelines of Bangladesh Securities and Exchange Commission etc.

Going concern

Going concern is one of the fundamental assumptions in accounting on the basis of which financial statements are prepared. Financial statements are prepared assuming that a business entity will continue to operate in the foreseeable future without the need or intention on the part of management to liquidate the entity or to significantly curtail its operational activities. Therefore, it is assumed that the entity will realize its assets and settle its obligations in the normal course of the business. It is the responsibility of the management of a bank to determine whether the going concern assumption is appropriate in the preparation of financial statements. The management of Prime Bank has calculated all the ratios related to the maintenance of regulatory capital, LCR, NSFR, Leverage ratio, adequacy of bank’s liquidity as per structured liquidity profile, regulatory reserves and has performed stress testing to determine bank’s shock absorbent capacity in different scenario. All the ratios and results thus calculated reveal that Prime Bank is running well above the level of different parameters set by the respective guideline of Bangladesh Bank.

Top management

The Bank is led by Mr. Rahel Ahmed, Managing Director & CEO. He is a prominent and professional banker with 24 years of rewarding multi-dimensional experience in banking and other fields of management. Mr. Ahmed has proven track record in leading various teams in different banks contributing in business policy formulation and strategy management. There are some other veteran and prominent bankers serving the Bank and contributing their expertise to the continuous growth of the Bank.

Managing Director  & CEO With Prime Bank (since dated)

Rahel Ahmed 01 February 2015

Additional Managing Director

Md. Tabarak Hossain Bhuiyan 16 June 2007

Deputy Managing Director

Md. Golam Rabbani 06 January 2015

Md. Touhidul Alam Khan FCMA 10 March 2015

Syed Faridul Islam  05 April 2015Mohammad Habibur Rahman Chowdhury FCA 11 December 2017

Analysis of key operating and financial data for last 5 (five) years

Prime Bank is maintaining its performance consistently in last five years in term of business volume and profitability. In last five years bank’s total assets recorded 9.17 percent growth and stood at BDT 293,901 million at the end of 2018, which was BDT 269,218 million at the end of 2014. During last five year loans and advances grew by 39.66 percent whereas deposits decreased by 3.57 percent. Below table shows the comparative business highlights of the bank in last five years.

26,18

1

24,7

08

25,2

85

26,4

15

24,4

61

Shareholders' Equity

20182017201620152014

(BDT in Million)

20182017201620152014

Total Assets (BDT in Million)

269,

218

267,

322

272,

224

281,2

75

293,

901

52 PRIME BANK

ANNUAL REPORT 2018

(BDT in million)

Balance SheetChange

(2018 vs 2017) 2018 2017 2016 2015 2014

% Amount

Authorized capital - - 25,000 25,000 25,000 25,000 25,000

Paid-up capital 10.00 1,029 11,323 10,293 10,293 10,293 10,293

Shareholders’ equity 5.96 1,473 26,181 24,708 25,285 26,415 24,461

Deposits (0.75) (1,496) 197,518 199,014 197,934 194,825 204,838

Loans and advances 3.78 7,487 205,810 198,323 170,212 151,865 147,367

Investments 9.41 2,239 26,046 23,807 48,249 62,733 72,642

Fixed Assets 7.92 509 6,943 6,434 6,590 6,516 6,613

Earning assets 4.88 11,226 241,264 230,038 219,508 215,052 220,115

Total assets 4.49 12,626 293,901 281,275 272,224 267,322 269,218

Total liabilities 4.35 11,153 267,720 256,567 246,939 240,907 244,758

Import (2.04) (3,787) 182,263 186,050 134,914 114,747 126,571

Export 25.81 27,614 134,616 107,002 89,720 88,827 110,096

Remittance 20.03 7,636 45,755 38,120 32,119 39,146 39,484

Guarantee Business (26.42) (8,348) 23,250 31,597 32,350 35,000 30,155

In line with the changes in business dynamics, profitability of the bank has varied in last five years. Net profit of the bank recorded an astonishing growth of more than hundred percent. Net profit increased to BDT 2,188 million at the end of 2018 from BDT 1,059 million of previous year. Moreover, below table shows the comparative operating performance in last five years.

(BDT in million)

Operating Performance Change

(2018 Vs 2017) 2018 2017 2016 2015 2014% Amount

Interest income 24.52 3,621 18,390 14,769 13,989 15,551 18,446

Interest expenses 8.76 866 10,741 9,875 10,676 14,257 15,574

Net interest income 56.31 2,756 7,650 4,894 3,313 1,294 2,872

Investment income (49.26) (2,092) 2,154 4,246 6,203 7,989 6,194

Commission, exchange and brokerage (1.62) (36) 2,209 2,245 1,693 1,956 2,033

Other Operating Income 16.10 123 887 764 814 834 806

Operating Income 6.18 751 12,899 12,148 12,023 12,073 11,906

Operating expenses 5.99 406 7,180 6,774 6,266 6,166 5,750

Profit before provision and tax 6.44 346 5,719 5,373 5,757 5,906 6,157

Provision for loans and assets (50.02) (1,783) 1,782 3,564 3,412 3,154 2,877

Profit after provision before tax 117.68 2,129 3,938 1,809 2,345 2,752 3,280

Tax including deferred tax 133.33 1,000 1,750 750 150 613 887

Profit after tax 106.60 1,129 2,188 1,059 2,195 2,139 2,393

However, details of operating and financial data of Prime Bank in last five years are shown separately in financial summary of annual report with charts and graphical presentation. Some key performance ratios are also shown in the below table.

Key Performance Ratio (%) 2018 2017 2016 2015 2014

Net Interest Margin (NIM) 3.62 2.56 2.02 0.86 1.91

Cost-Income Ratio 55.93 55.98 52.11 51.08 48.29

Credit-Deposit Ratio (Conventional) 82.65 84.43 74.95 69.86 66.70

Credit-Deposit Ratio (Islamic) 82.71 83.25 82.83 79.36 74.56

Cost of Deposit 4.72 4.46 4.94 6.64 7.36

53PRIME BANK

Significant deviations from operating results of last year

Bank’s net financial performance has improved significantly in 2018 due to increase of net interest income, decrease in requirement of provision for loans and advances etc. In 2018, yield on advances was 8.51 percent compared to 7.42 percent in 2017 which resulted in an increase of bank interest margin by more than 1 percent. Significant deviations in key operating lines are described as follows:

Net interest income: Net interest income increased by 56 percent stood to BDT 7,650 million in 2018 against BDT 4,894 million in 2017. The main reasons for this growth is the growth of interest income. In 2018, spread increased by more than 1 percent and yield increased to 8.51 percent.

Investment income: Investment income decreased by 49 percent in 2018 compared to previous year. Last year there was a one-off event of realization of revaluation gain of BDT 1,559 million.

Profit after tax: Profit after tax increased significantly by more than 106 percent in 2018 compared to previous year. Net profit increased mainly due to requirement of less provision and increase of net interest margin in 2018. The bank maintained provision for loans and assets of BDT 1,782 million from profit of 2018 against BDT 3,564 million in 2017.

Extraordinary gains or loss

Extraordinary gains or losses refer to infrequent and unusual gains or loss and which is not part of the bank’s ordinary, day-to-day operations. There is no such a gain or losses during the year under reporting.

Risk Based Capital Framework

Risk Based Capital Adequacy Framework (Revised Regulatory Capital Framework for banks in line with Basel III) has been implemented in Bangladesh from beginning of 2015 through BRPD Circular No- 18 dated December 21, 2014. Bank was in Basel II regime in 2014 maintaining its capital level above the minimum requirement, estimating the additional capital requirement to find out level of Adequate Capital against all types of risks under Pillar II and providing adequate disclosure as per pillar III (market discipline) of Basel II guideline.

From very beginning of implementation of Basel III in Bangladesh, Prime Bank has been continuing to calculate minimum capital requirement (MCR) considering credit risk, market risk and operational risk considering the Capital Conservation Buffer @ 0.625 percent. The summary of pillar I (Minimum Capital Requirement) on solo basis of Prime Bank is as under:

Key Performance Ratio (%) 2018 2017 2016 2015 2014

Cost of Fund 7.95 7.91 8.13 9.72 10.19

Yield on Average Advance 8.51 7.42 8.45 10.20 12.09

Return on Average Assets 0.76 0.38 0.81 0.80 0.91

Return on Average Equity 8.60 4.24 8.49 8.41 10.08

Return on Capital Employed 4.28 4.55 4.97 4.86 4.79

Earnings per Share (Taka) 1.93 0.94 1.94 1.89 2.11

Dividend* 12.50 C 7.00 C 10.00 B 16.00 C 15.00 C 15.00 C

Dividend Cover Ratio (Times) 1.55 0.55 1.33 1.39 1.55

Dividend Yield 7.02 6.20 9.04 8.29 7.65

Net Asset Value per Share (Taka) 23.12 24.00 24.56 25.66 23.76

Price Earnings Ratio (Times) 9.21 29.30 8.31 8.71 8.43

Non-Performing Loans Ratio 6.16 5.45 5.96 7.82 7.61

Capital to Risk Weighted Asset Ratio (CRAR) 17.04 14.01 12.45 12.74 12.71

Leverage Ratio (Basel-III) 6.52 6.61 7.36 7.57 -

Liquidity Coverage Ratio (LCL) 101.41 109.58 139.90 178.71 145.86

Net Stable Funding Ratio (NSFR) 127.94 120.08 120.56 109.12 107.25

* C = Cash, B = Bonus

(BDT in Million)

Particulars 2018 2017

Tier I Capital 24,335 23,048

Tier II Capital 13,924 9,203

Total Regulatory Capital 38,259 32,251

Risk Weighted Assets 224,516 230,211

Capital to Risk Weighted Asset Ratio (CRAR) (%) 17.04 14.01

54 PRIME BANK

ANNUAL REPORT 2018

Focusing on the Future Requirement

Bangladesh Bank has issued the “Guidelines on Risk Based Capital Adequacy”, a Revised Regulatory Capital Framework for banks in line with Basel III, on December 2014. Aiming to maintain capital above the required level as per this new guideline, Prime Bank has issued third subordinated bond of BDT 7,000 million in August 12, 2018. Though raising fund from external sources is a short term and costlier solution, the bank is emphasizing more on risk assets management and capital generation from internal sources like increasing reserve by generating profit. For risk assets management, the bank is emphasizing on completion of credit rating of all unrated corporate and medium customers by external credit rating agencies and also emphasizing on restructuring of asset portfolio to low risk based assets. Moreover, the Bank has also built up a platform to transfer from the standardized approach of risk measurement to more advanced version of Internal Risk Based Approach in evaluation of risk exposure of the Bank.

Risk Management

The identification, evaluation and management of risk, together with the way we respond to changes in the external operating environment are key to sustainable growth and underpin the robustness of our business plans and strategic objectives, protecting our license to operate and our reputation and helping create a long-term source of competitive advantage. Risk management is embedded in Prime Bank’s organizational structure, operations and management systems. Business risks across the Group are addressed in a structured and systematic way through a predefined risk management structure. This ensures that the Board’s assessment of risk is informed by risk factors and mitigating controls originating from and identified by the Group’s assets, functional departments and operations, including the Company’s subsidiaries. Moreover, Prime Bank possesses a detailed risk management system with procedures in place to support risk evaluation across the Group. The risks associated with the delivery of the business plan and annual work programs and the associated mitigation measures are maintained in asset or project risk matrices and registers. Prime Bank possesses different committees for risk management. The Credit Committee and Asset and Liability Committee (ALCO) is constituted by the Company’s senior management team which regularly reviews issues related to the markets, credit and liquidity and, accordingly, recommend and implement appropriate measures to proactively identify and mitigate risks. Prime Bank possesses an approved Asset Liability Management (ALM) policy under the responsibility of the ALCO. The Company’s Credit Risk Management (CRM) department independently scrutinizes projects from a risk-weighted perspective and assists relevant departments in setting business development priorities. These are aligned with the Company’s risk appetite while optimizing the risk-return trade-off derived from relevant risk exposures. The CRM team also clearly defines exceptionally high-risk sectors and prohibits lending to those projects which the Company does not ascribe to, including those which represent negative environmental, social or ethical standards. Details of risk management are given in the “Risk Management” Chapter of this Annual Report.

Credit Rating

Bangladesh Bank vide BRPD Circular No.06 dated July 05, 2006 has made it mandatory for the Bank’s to have themselves credit rated. Accordingly Credit Rating of Prime Bank Limited was done by two rating agencies, namely Credit Rating Information and Services Ltd (CRISL) & Credit Rating Agency of Bangladesh Ltd (CRAB) based on audited Financial Statements as on December 31, 2017. The rating report is summarized as under;

Particulars CRISL CRAB

Long Term Rating AA AA2

Short Term Rating ST-2 ST-2

Date of Rating 28 June 2018 27 June 2018

Validity Date 30 June 2019 30 June 2019

Based on Financial Statement

December 31, 2017

Events occurring after the reporting date

As at the date of this report, the Directors are not aware of any matter or circumstance that has arisen since the end of the year 2018 up to the date of approval of financial statements by the Board of Directors of the Bank that has significantly affected or may significantly affect the operations of the Bank, the results of its operations or its state of affairs. However, the only event is, “on 03 April, 2019 , the Board of Directors of the Bank recommended 12.50 percent cash dividend” which is subject to approval of the shareholders in the next Annual General Meeting to be held on 16 May 2019.

Corporate social responsibility

We acknowledge our responsibilities towards the society as a whole in which we live, care for all stakeholders, ethical functioning, respect for employee’s rights and welfare, respect for human beings, respect for environment and disseminate information on CSR policy. We realize that sustainable development is an ongoing journey. We are confident that we are well positioned and prepared to deliver against our responsibilities in the short, medium and long term. A separate report on Corporate Social Responsibility has been attached with the annual report.

Corporate governance

Prim Bank focuses on ethics, governance and transparency. We are committed to maintain full compliance with the laws, rules and regulations that govern our business. The main objective of Prime Bank’s corporate governance is to develop a strong, sustainable and competitive company in the best interest of its shareholders, employees, business associates and society at large. Successful value added business is profoundly dependent upon transparency, internal and external confidence and trust.

Compliance of the conditions of SEC’s notification

In exercise of the power conferred by section 2CC of the Securities and Exchange Ordinance, 1969 (XVII of 1969), Bangladesh Securities and Exchange Commission (BSEC) issued notification no. SEC/CMRRCD/2006-158/207/Admin/80 dated June 03, 2018 to comply with certain conditions

55PRIME BANK

for corporate governance. The notification was issued for establishing a framework for ensuring good governance practices in the listed companies for the interest of the investors and the capital market. A statement on the compliance with the SEC’s conditions has been attached with the Annual Report with compliance certificate. Moreover, as per requirement of Bangladesh Securities & Exchange Commission, a certificate from a professional Chartered Accountants has been obtained and attached with the annual report.

Protecting interest of minority shareholders

Prime bank is committed to protect the interest of minority shareholders of all of its five subsidiary companies. All the subsidiary company is eventually fully owned considering direct and cross holding of shares except only six number of shares of Prime Bank Investment Limited is allocated to the name of senior management of the bank. As a result, no decision of the bank adversely affect the interest of any outsider.

Business ethics and Compliance

How we work is as important as what we do. Prime Bank has a reputation for delivering innovation, performance and solutions. The key element to our long-term success is something less tangible and less easily illustrated with figures. These are integrity and honesty in our business dealings, a factor that contributes to our long-term relationships with clients.

Meeting of the Board of Directors and attendance

During the year 2018 total 14 no. of Board of Director’s meeting, 13 no. of Executive Committee meeting, 10 no. of Audit Committee meeting and 04 no. of Risk Management Committee meeting were held. The status of the attendance is mentioned below:

Attendance of Board of Directors in Board Meeting 2018

SL. Composition of the Board StatusTotal

Meeting Held

Attended Remarks

1 Mr. Azam J Chowdhury Chairman 14 13  

2 Mr. Mafiz Ahmed Bhuiyan Vice-Chairman 14 9 10 nos. of meetings held since his joining

3 Mr. Imran Khan Vice-Chairman 14 7  

4 Mr. Md. Nader Khan Director 14 12  

5 Mr. Quazi Sirazul Islam Director 14 4  

6 Mrs. Marina Yasmin Chowdhury Director 14 7  

7 Mr. Md. Shahadat Hossain Director 14 10 10 nos. of meetings held since his joining

8 Mr. Md. Shirajul Islam Mollah Director 14 6 10 nos. of meetings held since his joining

9 Mrs. Nasim Anwar Hossain Director 14 11  

10 Mrs. Salma Huq Director 14 4  

11 Mr. Nafis Sikder Director 14 -  

12 Mr. Waheed Murad Jamil Director 14 12  

13 Mr. Tarique Ekramul Haque Director 14 5  

14 Mr. Mohammad Mushtaque Ahmed Tanvir Director 14 9  

15 Mr. Shamsuddin Ahmed Ph.D Independent Director 14 14  

16 Dr. G.M. Khurshid Alam Independent Director 14 11  

17 Mr. M. Farhad Hussain FCA Independent Director 14 11  

18 Prof. Dr. M. Shamim Z. Bosunia Independent Director 14 1 1 no. of meeting held since his joining

* Directors who could not attend the meeting were granted leave of absence

56 PRIME BANK

ANNUAL REPORT 2018

Attendance in Executive Committee (E.C) Meeting during the year 2018

Sl Name of the Directors StatusTotal

Meeting Held

Attended Remarks

1 Mr. Md. Shirajul Islam Mollah Chairman 13 910 nos. of meetings held since his joining

2 Quazi Sirajul Islam Member 13 7

3 Mrs. Nasim Anwar Hossain Member 13 10

4 Mr. Mafiz Ahmed Bhuiyan Member 13 1010 nos. of meetings held since his joining

5 Mr. Imran Khan Member 13 6

6 Mr. Tarique Ekramul Haque Member 13 -

7 Mr. Waheed Murad Jamil Member 13 13

Attendance in Audit Committee Meeting during the year 2018

Sl Name of the Directors StatusTotal

Meeting Held

Attended Remarks

1 Mr. Shamsuddin Ahmad, Ph.D. Chairman 10 10

2 Mr. Md. Nader Khan Member 10 03

3 Dr. G M Khurshid Alam Member 10 08

4 Mr. M Farhad Hussain FCA Member 10 09

Attendance in Risk Management Committee Meeting during the year 2018

Sl. Name of the Directors StatusTotal

Meeting Held

Attended Remarks

1 Dr. G M Khurshid Alam Chairman 04 03

2 Mohammad Mushtaque Ahmed Tanvir Member 04 -2 nos. of meetings held since his joining

3 Mr. Shamsuddin Ahmad, Ph.D Member 04 04

4 Mr. M Farhad Hussain FCA Member 04 03

Pattern of Shareholding

Fully paid up shares issued to No of Shares Amount in Taka % of Shares

Sponsors 4,152,053,35 4,152,053,350 36.67%

Financial Institutions 3,076,157,17 3,076,157,170 27.17%

Foreign Investors 348,688,82 348,688,820 3.08%

Non- resident Bangladeshi 26,774,64 26,774,640 0.24%

General Public 3,719,160,79 3,719,160,790 32.84%

Total 11,322,834,77 11,322,834,770 100%

57PRIME BANK

Shareholding of Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer and Head of Internal Audit and their spouses and minor children:

Sl. Name of The directorsShares held as on 31 Dec 2018

i) Directors:  

 1Mr. Azam J Chowdhury, Chairman (Representative of East Coast Shipping Lines Ltd.)

22,661,273

 2 Mr. Mafiz Ahmed Bhuiyan, Vice Chairman 22,650,208

 3 Mr. Imran Khan, Vice Chairman 22,647,170

 4 Mr. Md. Nader Khan, Director 41,821,296

 5 Quazi Sirazul Islam, Director 22,677,773

 6 Mrs. Marina Yasmin Chowdhury, Director 27,288,000

 7 Mr. Md. Shahadat Hossain, Director 22,672,741

 8 Mr. Shirajul Islam Mollah, Director 22,709,414

 9 Mrs. Nasim Anwar Hossain, Director 25,702,323

 10 Mrs. Salma Huq, Director 35,479,775

 11 Mr. Nafis Sikder, Director 28,408,795

 12Mr. Waheed Murad Jamil, Director (Representative of Mawsons Limited.)

22,646,523

 13 Mr. Tarique Ekramul Haque, Director 22,660,429

 14Mr. Mohammad Mushtaque Ahmed Tanvir, Director (Representative of Uniglory Cycle Industries Ltd.)

22,836,275

 15 Mr. Shamsuddin Ahmad, Ph.D, Independent Director -

 16 Dr. G. M. Khurshid Alam, Independent Director -

 17 Mr. M. Farhad Hussain, FCA, Independent Director -

 18 Dr.M.Shamim Z. Bosunia, Independent Director -

ii) Mr. Rahel Ahmed, (Managing Director & CEO) and Spouse -

iii) Mr. Mohammed Ehsan Habib ( Company Secretary) and Spouse -

iv)Mohammad Habibur Rahman Chowdhury FCA (Deputy Managing Director and Chief Financial Officer) and Spouse

-

v) Md. Faruk Ahammad (Senior Executive Vice President and Head of Internal Audit) and Spouse -

Executives (Top five salaried employees of the company, other than the Directors, Chief Executive Office, Company Secretary, Chief Financial Officer and Head of internal audit)

Sl. Name of ExecutivesShares held as on 31 Dec 2018

1 Mr. Habibur Rahman, Additional Managing Director -

2 Mr. Md. Touhidul Alam Khan, Deputy Managing Director -

3 Syed Faridul Islam, Deputy Managing Director -

4 Mr. Md. Golam Rabbani, Deputy Managing Director -

5 Mr. Ziaur Rahman, Senior Executive Vice President -

Shareholders holding 10% or more voting interest in the company:-

Shareholders holding 10% or more voting interest in the company  Nil

58 PRIME BANK

ANNUAL REPORT 2018

Related party transaction

Significant contracts where Bank is a party and wherein Directors have interest during the year 2018

(Amount in BDT)

Name of DirectorsRelationship with the

BankNature of transaction Approved limit

Outstanding amount

Azam J Chowdhury Chairman Credit Card 1,000,000 10,949

Mr. Imran Khan Vice Chairman Credit Card 1,000,000 221,419

Mr.Md.Nader Khan Director Credit Card 500,000 75,692

Mrs. Marina Yasmin Chowdhury Director Credit Card 1,000,000 43,520

Mrs. Nasim Anwar Hossain Director Credit Card 500,000 122,208

Mrs. Salma Huq Director Credit Card 500,000 59,382

Mr.Nafis Sikder Director Credit Card 500,000 29,783

Mr. Tarique Ekramul Haque Director Credit Card 500,000 216,996

Quazi Sirazul Islam Director Credit Card 500,000 865

Mr. Waheed Murad Jamil Director Credit Card 500,000 164,506

Dr. G. M. Khurshid Alam Independent Director Credit Card 500,000 309,356

*Coverd by cash security

Shares issued to Directors and Executives without consideration or exercisable at a discount Nil

Related party transactions

Nature of party/ contract Relationship Amount

Lease agreement Common Director 2,475,168

Lease agreement Common Director 322,920

Lease agreement Common Director 2,054,688

Lease agreement Common Director 60,000

Lease agreement Common Director 738,300

Lease agreement Common Director 4,788,540

Lease agreement Common Director 2,760,000

Lending policies in respect of related party

a) Amount of transaction regarding loans and advances, deposits, guarantees and commitment as on 31.12.2018 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 Nil

Business other than banking business with any relation concern of the Directors as per Section 18(2) of the Bank Companies Act, 1991.Lease agreement made with the Sponsor Director & Independent 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: 01.08.2015 to

31.07.2021

Lease agreementATM Booth

Jubilee Road Branch

Mr. Md. Nader Khan Director & owner of the premises

Lease period: 12.10.2011 to 11.10.2021

Lease agreementStore Room (Regional)

Mr. Md. Nader Khan Director & owner of the premises

Lease period: 13.12.2014 to 12.12.2020

59PRIME BANK

Service receiving companies where the Directors interest subsisted during the year

Name of party Relationship Nature of transaction Amount

- - - -

Investment in the Securities of Directors and their related concern Nil

Business with subsidiary

Name of party Relationship Nature of transaction Outstanding Amount

Prime Bank Investment Limited Subsidiary Company OD Facilities 3,026,635,480

Prime Bank Securities Limited Subsidiary Company OD Facilities 393,452,756

Prime Bank Securities Limited Subsidiary Company Share Trading 184,242,731

PBL Finance (Hong Kong) Ltd Subsidiary Company Term Placement 2,214,960,000

Nature of contract Branch Name Name of Director and related by Remarks

Lease agreement ATM BoothMr. Md. Nader Khan Director &

owner of the premises Lease period: 28.11.2017 to

27.11.2027

Lease agreement 

Kulaura Branch Mrs. Marina Yasmin Chowdhury

Director & owner of the premises

Lease period: 01.09.2013 to 31.08.2019

Lease agreement 

Head OfficeQuazi Sirajul Islam

Director & owner of the premises

Lease period: 10.07.2016 to 09.07.2022

Lease agreement 

Halishahar Branch

Mr. Azam J Chowdhury & Mrs. Marina Yasmin Chowdhury

Director & owner of the premises

Lease period: 01.01.2017 to 31.12.2025

Remuneration of Directors

The Bank does not pay any remuneration to its Directors other than purpose stated in the relevant Bank Companies Act and prevailing BRPD circulars. As per the BRPD circular no.03 dated 18/01/2010 and BRPD Circular letter no. 11 dated 04/10/2015, Chairman may be provided with a car, telephone, Office chamber and private secretary. Directors are entitled to fees and other benefits for attending Board, EC, Audit Committee, RMC and Shariah supervisory committee meeting. Managing Director is paid salaries and allowances as per approval of the Board and Bangladesh Bank.

Appropriation of profit

Taking into account the profit available for distribution after complying with regulatory requirement, the Board in its 489 meeting held on 03 April 2019 recommended 12.50 percent cash dividend for the year ended on December 31, 2018 which is subject to approval of shareholders in the next Annual General Meeting.

As per corporate governance guidelines the Board declare that, no bonus share or stock dividend has been declared as interim dividend during the year 2018.

Proposed appropriations are as follows:

(BDT in million)

Particulars 2018 2017

Net profit after tax for the year 2,188 1,059

Retained earnings at the beginning 359 382

Profit available for appropriation 2,547 1,441

Proposed appropriations:

Transferred to statutory reserve 788 362

Proposed stock dividend - -

Proposed cash dividend 1,415 721

Retained earnings 344 359

60 PRIME BANK

ANNUAL REPORT 2018

Auditors Report

The Board of Directors reviewed the Auditors Report issued by the Bank’s auditors Aziz Halim Khair Choudhury, Chartered Accountants and Hoda Vasi Chowdhury & Co., Chartered Accountants based on the audited financial statements of the bank for the year ended on 31 December 2018. The auditors didn’t raise any material misstatement or significant disagreement during review of the Bank’s financial statements. The Board also reviewed auditors’ opinion/suggestions made under a separate management letter likely to give strategic directions/ guidelines to the management for further improvement.

Appointment of Auditors

Aziz Halim Khair Choudhury, Chartered Accountants and Hoda Vasi Chowdhury & Co., Chartered Accountants were the auditors of the Bank for the years 2017 and 2018. As 2018 was the second year, both the firms are eligible for reappointment in the year 2019.

Section 210 of the Companies Act, 1994 gives authority to the shareholders to fix the appointment of the auditors and their remuneration. Hence, the Board recommends reappointment of Aziz Halim Khair Choudhury, Chartered Accountants and Hoda Vasi Chowdhury & Co., Chartered Accountants as the auditors of the Bank for the year 2019. However, such appointment will be subject to approval of the shareholders in the next Annual General Meeting.

Rotation of Directors

At the Ordinary General Meeting in every subsequent year one third (1/3rd ) of the Directors who have been holding longest in office shall retire from the office according to the clause 108 & 109 of Article of Association (AOA) of the Bank. The Bank will follow the conditions and rotate the Directors as per laws.

Annual General Meeting

24th Annual General Meeting of the Bank will be held on 16 May 2019 at KIB Complex, Krishi Khamar Sarak at 11.00 a.m. and in this connection Directors’ Report and financial statements were approved in the Board Meeting held on 03 April 2019 for presentation to the shareholders.

Future outlook

Prime Bank Limited is making progress on embedding sustainability into business. We still believe that, we have scope to do better. However, Market conditions are challenging and sometime volatile as witnessed in recent times. We have a strong capital base and have acquired good size of quality portfolio and diversity to help us boost our revenue earnings.

Our presence in the market is growing steadily and we have improved our presence in all areas of operations. We have professionals with profound managerial talents and perhaps most importantly, we have a hard earned reputation as one of the top service providers in the industry. We are convinced of our ability to continue to thrive in all areas of our business backed by around two decades plus experience and driven by the ambition to continue reaching new heights in performance. Building on our strength, we are confident that the company will be able to present better results to the shareholders in the years ahead.

Acknowledgement

I would like to thank my colleagues for their valuable time and contributions in guiding the Company to the right direction. I also like to thank Bangladesh Bank, Bangladesh Securities and Exchange Commission, Dhaka and Chittagong Stock Exchanges, Central Depository Bangladesh Limited, borrowers, depositors and all stakeholders for their continuous support and trust on us.

Looking forward for a better performance in the current year 2019.

On behalf of the Board of Directors.

Azam J ChowdhuryChairman

61PRIME BANK

Corporate Governance at Prime Bank comprises carefully considered rules and practices by which Board of Directors and Management of the Bank ensures accountability, fairness, transparency and independence of the operational activities of the Bank. The objective is to earn and maintain trust and confidence of the stakeholders and help the business attain sustainability. Prime Bank as a bank of many stands inclusive rather than exclusive, with its core business offering wide spectrum of financial products and services to individual and businesses. Prime Bank is firmly convinced that a traditional banking model focused on closer customer relationships and advisory services best serves its purpose, as such, its goals are based on customers’ needs & solutions and not merely a product.

Board of Directors:

Policy on appointment of Directors:

Prime Bank always complies with the prescription of the regulatory authorities regarding appointment of directors. Bangladesh Bank circulars, BSEC notifications, Bank Companies Act and Companies Act are strictly followed in this regard. Currently all the members of the Board, other than the Independent Directors maintain minimum two percent shares of the company’s paid up capital and the Board collectively hold more than 30% shares required as per prevailing directives.

As per newly amended Banking Companies Act 1991 (amended up to 2018), a Director may be in the office for a period up to nine years at a stretch (except Independent Directors) and may be reappointed after a lapse of three years subject to eligibility and approval of the regulatory authorities. Again, as in the Companies Act, 1994, Directors are subject to retirement, as such, one-third of the Directors retire by rotation in every AGM except the Independent Directors as per new CG codes of BSEC. The term of office of an Independent Director is three years and may be prolonged by another three years with the prior approval of the concerned regulators. With regards to nomination, removal and casual vacancies etc. of the directors, Bank strictly follows the relevant rules and regulations applicable in such circumstances.

The Managing Director is appointed for a minimum period of three years subject to approval of Bangladesh Bank and his office is not subject to retirement by rotation.

All the directors of the Board are from non-executive category and more than one-fifth is Independent. Currently, there are four independent directors in the composition of the Board with the approval of the BSEC, Bangladesh Bank and consent of the shareholders at the AGM.

Independent Director:

As per the Bank Companies Act, 1991 at least 3 directors should be from Independent category if the maximum number of the Board members is 20. Again, as per BSEC guidelines on Corporate Governance at least one fifth of the total Directors should be from Independent category. Therefore, in compliance with BSEC’s Corporate Governance Code, Board

of PBL nominated four independent directors (1/5th of total number of Directors) so that Board comprises of core skills considered important for diversification in the composition of the company’s directors.

The Board in its 482nd Meeting held on 30.08.2018 appointed Prof. Dr. M. Shamim Z. Bosunia a renowned civil engineer as Independent Director of the Bank with the permission from BSEC and Bangladesh Bank. His nomination will be placed for approval at the upcoming AGM of the bank. Other three independent directors of the bank are Dr. G.M. Khurshid Alam, Mr. Shamsuddin Ahmad Ph.D and Mr. M. Farhad Hussain, FCA. The Board of Prime Bank affirms that the Independent Directors appointed by the Board are in compliance with the relevant directives/guidelines on corporate governance released by the BSEC with regard to appointment of Independent Directors.

Retirement and Re-election of Directors:

As per Companies Act, each year one-third of the Directors retire from office at the AGM and if eligible, may offer them for re-election at the AGM. In line with the BCA 1991 (amendment # 2018), no Director should serve exceeding 9 (nine) years and give a break for a period of three years in order to be eligible to be reappointed. Pursuant to the prevailing directives, following Directors will retire at the 24th AGM (2019) and are eligible for re-election:

1. Mr. Md. Nader Khan

2. Mr. Quazi Sirazul Islam

3. Mrs. Marina Yasmin Chowdhury

4. Mrs. Salma Huq

5. Mrs. Nasim Anwar Hossain

6. Mr. Tarique Ekramul Haque

7. Mr. Mohammad Mushtaque Ahmed Tanvir (representing Uniglory Cycle Industries Ltd.)

Among the above retiring directors, all of them are eligible for reappointment and may continue in compliance with the section 15KaKa of BCA 1991 (Amended up to 2018).

Role of the Board:

As per Bank Companies Act, Section 15B, Board of Directors shall be responsible for framing and implementing policies with regard to risk management, internal control, internal audit and compliance thereof. The section further states that:

• Every bank Company shall constitute an Audit Committee consisting of such members who are not member of the executive committee of the Board of Directors

• Again, every banking company shall constitute a risk management committee consisting of members of the Board of Directors

In compliance with the above stated guidelines, the Board of Prime Bank has been discharging its roles and responsibilities which among others include the followings:

• Work planning and strategic management• Credit & Risk Management

CORPORATE GOVERNANCE REPORT

62 PRIME BANK

ANNUAL REPORT 2018

• Internal Control Management• Human resources management & developments.• Financial management• Appointment of Chief Executive of the Bank (CEO)• Holding Board and various Committee meetings.

Code of Conduct for the Board of Directors:

The Board of Directors in discharging their roles & responsibilities has adopted a Code of Conduct 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. The Code of Conduct states that:

1. The Members shall act honestly, in good faith and in the best interests of the shareholders and the company.

2. The members shall not make improper use of information acquired as a director.

3. The members shall not take improper advantage of the position as a director.

4. The members will be obligated to be independent in judgment and actions and take all reasonable steps to be satisfied as to the soundness of decision taken by the board of directors.

5. 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.

6. 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.

7. To maximize effectiveness of the Board/Committee Meetings, contribution of individual director shall be monitored and appraised on an annual basis.

8. 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.

9. 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.

10. Members shall always maintain ‘Fit and Proper Test Criteria’, clean CIB status and other obligations declared by the Primary and other Regulators.

11. Members shall be judicious about their entitlement of benefit/privileges as per Banking Companies Act -1991 and all circulars issued by Bangladesh Bank and shall be willing to produce supporting documents, if required.

12. Members shall comply with Article 23.1 of the Bank’s Memorandum and Articles of Association of the Company while making Sale-Buy of Company’s share and shall refrain from making such transaction without formal declaration.

Each Director also assures that they shall continue to comply with the set of codes approved by the Board of Directors.

Chairman of the Board:

The Chairman of the Bank is elected by the Board of Directors as per article 112.1 of the Articles of Association of the Bank, and the Board considers the Chairman independent.

Roles and Responsibilities of the Chairman:

The roles and responsibilities of the Chairman are as follows:

• 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 bank’s 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 take necessary action thereon in accordance with the set rules through the CEO. However, any complaint against the CEO shall have to be apprised to the Bangladesh Bank through the Board along with the statement of the CEO.

Besides this, 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, BSEC’s notification on Corporate Governance Guidelines etc.

Independence of Chairman and CEO:

The Chairman is independent of the CEO, and this has been in practice since inception of the Bank. This also complies with Section 1.4 of the BSEC’s notification on Corporate Governance.

Policy on training of Board of Directors:

Prime Bank is fully committed to maintain highest standards of Corporate Governance & professionalism in driving the Bank’s progress on the principles of transparency and openness. For this purpose, training at home and abroad especially on the Corporate Governance is encouraged by the Board. As such, whenever opportunities arise, bank utilizes it to train and orient its members. As per records, Chairman & Directors of the bank have attended workshop and training courses at home and abroad in the past.

Appraisal of the Board’s performance:

Prime Bank Limited doesn’t have a scheme for annual appraisal of the board’s performance till date, but the bank is abiding by the Code of Conduct prescribed by the regulators and formulated by the Board. The Board members have always taken decisions that have in the interest of the bank as a whole and have performed their duties accordingly. Another way of appraising the Board’s performance is conducted by analyzing the execution of the projects In addition; evaluation of the Board also takes place at the AGM by the Shareholders.

63PRIME BANK

Evaluation of the CEO by the Board:

There is a five year (2015-2019) Strategic Priorities & Action Plan (KPI) for the evaluation of the CEO/Management and is revised/reviewed by the Board depending on prevailing scenario and trend of the market challenges.

The CEO is also evaluated on an annual basis as against the KPI’s set forth at the beginning of the year. The Board has the discretion to evaluate CEO whenever it wishes to and particularly during reappointment.

At the start of each year, the Board participates in extensive discussions with the Management and decides on financial and non-financial objectives. The annual financial budget are considered and decided by the Board at the beginning of the financial year. The business and financial goals are assessed each quarter with actual accomplishments by the Board. The non-financial successes are also evaluated by the Board in each quarter. Furthermore, yearly appraisal and assessment of the accomplishments of goals are made at the end of the year.

A few mentionable KPIs for the CEO are: meet annual budgetary targets approved by the Board, maximize shareholders value through desired ROA, ROI, ROE and EPS, maintain sustainable growth on investment and revenue for the Bank, reduction of NPL ratio and improvement in the score for CAMELS & CRMR of BB.

Board Meetings:

The Board meets as required to discuss business strategy, financial performance, matters pertaining to compliance and governance as well as reports on matters deliberated by the respective committees. The Board reviews, amongst others, the financial performance of the Bank and subsidiaries, risk management and compliance reports and approve the quarterly results of the Bank at its meeting. In addition, Special Board meetings are held when necessary, to deliberate on major transactions and ad-hoc matters that require the Board’s urgent attention and decision. A Board meeting is held at the beginning of the year to discuss the Bank’s Business plan and budget.

Meeting papers on the proposals and reports are delivered to the Directors prior to the meetings, giving them sufficient time to evaluate the proposals. Paperless meeting has been introduced using in-house developed software. This enables the Board to function and discharge their responsibilities effectively. The minimum information required for the Board to make an informed and effective decision includes background, objective, key issues, rationale, financial and non-financial impact of the proposal. Directors who are unable to attend a meeting due to unavoidable circumstances are encouraged to provide feedback to the Chairman on matters to be deliberated for their views and which are given due consideration at the meetings.

Directors’ Remuneration:

Directors are not eligible for any remuneration other than attendance fee for the Board and its Committee Meeting. Currently, as per BRPD Circular letter No. 11, dated October 04, 2015, directors are eligible for remuneration of BDT 8,000 for attending each meeting but numbers of such Meetings are also prescribed in the said circular determining the numbers with or without remuneration.

Role of the Company Secretary:

Company Secretary is responsible for advising the Board on issues relating to compliance with the relevant laws, rules, procedures and regulations affecting the Board and the Bank, as well as best practices of governance. He is also responsible for advising the Directors of their obligations and duties to disclose their interest in securities, disclosure of any conflict of interest in a transaction involving the Bank, prohibited to deal in securities and restricted to disclose any price-sensitive information.

The responsibilities of the Company Secretary comprises of:

i. Ensuring the compliance of the Bank in relation to financial and legal practices, as well as issues of corporate governance. He acts as a point of communication between the management, board of directors, company shareholders, reporting in a timely and accurate manner on company procedures and developments

ii. Ensure the Bank complies with its governing document, policies, company law and any other relevant legislation i.e. regulations with Bangladesh Bank, Bangladesh Securities and Exchange Commission (BSEC) and Registrar of Joint Stock Companies etc.

iii. Support the Chairman in the smooth functioning of the Board. Receive agenda items from other Directors/staff and ensure appropriate agenda items are tabled at Board meetings. This is done in consultation with the Chief Executive and the Chair.

iv. In line with Bangladesh Bank guidelines the Company Secretary has to act as the Secretary to all the committees i.e. Executive Committee, Audit Committee and Risk Management Committee of the Board of Directors.

v. Ensure the appointment of Bank’s board members as per procedure laid down in the governing document and policies are followed.

vi. Confirms that Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) are run effectively and in accordance with the provisions of Bank’s governing document.

vii. File the annual list of members and summary of share capital together with the authenticated Balance Sheet and the Profit and Loss account. Issue Dividend Warrants, bonus share certificates and make arrangement for disposal of fractional shares, if any.

viii. viii. Maintain and liaise with various corporate bodies viz. BAB, ABB, Chambers/other bodies, regulators.

Business objectives and areas of business focus:

• PBL’s Board always sets business objectives and areas for focus in consistency with the market. The latest business objectives and areas of business focus can be found in the “Statement Regarding Forward Looking Approach” has been included with the annual report.

Audit Committee:

As per BSEC notification BSEC/CMRRCD/2006-158/207/Admin/80 dated 3rd June 2018 on Corporate Governance Code and Bangladesh Bank Guidelines; the current Audit Committee

64 PRIME BANK

ANNUAL REPORT 2018

has been formed with 4 members including 3 Independent Directors. All the members belong to none-xecutive category and are financially literate as they have years of experience in banking, businesses and financial sectors reforms.

The Audit Committee of the Board is headed by an independent non-executive director who is not a member of the Executive Committee. He is a retired Senior Financial Sector Specialist from the World Bank and a Ph.D. in Development Economics from University of Hawaii, USA and MBA from IBA Dhaka University with distinction. Besides the Chairman, another member of AC is a doctorate (Ph. D) in Economics and also a retired World Banker and currently Director, Policy Research Institute (PRI), a leading Policy & Research Think-Tank of Bangladesh. A third member of the Committee is a Managing Partner of a renowned audit firm and distinguished Fellow Chartered Accountant.

The Audit Committee has an approved Internal Audit Charter to operate and function independently and effectively. The TOR has been suitably designed to carry out its roles and responsibilities to attain the common objective of oversight. As per Charter, Head of Internal Audit has direct access to the audit committee and can raise his concerns whenever situation so warrants.

Responsibilities of the Audit Committee:

• To monitor integrity of the financial statements of the Bank (and any discussion or analysis thereof including annual and interim reports), and any formal announcements relating to the Bank’s actual and forecast financial performance, reviewing significant financial reporting judgments contained in them.

• To review any unusual items or matters brought to its attention requiring the exercise of managerial judgment affecting the preparation of the statements and announcements

• To provide a forum for the discussion and resolution of areas of disagreement in relation to the statements and announcements, e.g. between management and the External Auditor Accounting, Financial Reporting and Regulatory Compliance

• To review, and challenge where necessary, the actions, estimates and judgments of management (and any changes in them), in relation to the interim and annual financial statements before submission to the Board, paying particular attention to:

1. Significant accounting policies and practices, and any changes in them

2. Disclosures and estimates requiring a major element of judgment

3. The extent to which the financial statements are affected by any unusual transactions in the year, the methods used to account for any significant or unusual transactions where different approaches are possible, and how such transactions are disclosed

4. The clarity and completeness of disclosures, and the context within which financial statements are made

5. Compliance with accounting standards

6. Compliance with legal and regulatory requirements

7. The going concern assumption

8. The representation letter to the auditors; and

9. All material information presented with the financial statements including the business review, and corporate governance statements relating to the audit and risk management.

• Make recommendations to the Board for approval at the Annual General Meeting on the appointment, reappointment and removal of the external auditor. The Audit Committee also ensures that process for appointment of external auditor passes through due procedure.

• Oversee the relationship with the external auditor, including:

i. Approving the terms of engagement (and the engagement letter) of the external auditor, including the remuneration to be paid

j. Assessing the external auditor’s effectiveness, independence and objectivity, ensuring that key partners are rotated at appropriate intervals

k. Agreeing the policy for, and where required by that policy, approving the provision of non-audit services by the external auditor and the related remuneration

l. Agreeing with the Board policy on the employment of former employees of the Bank’s auditor, and monitoring the implementation of this policy

• Review and approve the annual audit plan, and ensure that it is consistent with the scope of the audit engagement, and coordinated with the activities of the Internal Audit function

• Discuss with the external auditor, before the audit commences, the nature and scope of the audit and review the auditor’s quality control procedures and steps taken by the auditor to respond to changes in regulatory and other requirements

• Review the findings of the audit with the external auditor, considering the external auditor’s management letter and management’s responsiveness to the auditor’s findings and recommendations

• Review reports prepared by the external auditor as the Audit Committee shall require, considering management’s response to any major external audit recommendations

• Review annually and report to the Board on the qualification, expertise and resources, and independence of the external auditors and the effectiveness of the audit process, with a recommendation on whether to propose to the shareholders that the external auditor be reappointed. The assessment should cover all aspects of the audit service provided by the audit firm, and include obtaining a reporting on the audit firm’s own internal quality control procedures and consideration of the audit firm’s annual transparency report where available.

• Ensure that the audit committee section of the annual report should include an explanation of how the committee has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external auditor, including length of term

• Review the audit representation letters before signature, giving particular consideration to any nonstandard issues within the representations.

65PRIME BANK

Internal Control:

A system of effective internal controls is a critical component of bank management and a foundation for the safe and sound operation of the organization. A system of strong internal controls can help ensure that the goals and objectives of a banking organization will be met, that the bank will achieve long-term profitability targets, and maintain reliable financial and managerial reporting. Such a system can also help ensure that the bank will comply with laws and regulations as well as policies, plans, internal rules and procedures, and decrease the risk of unexpected losses or damage to the bank’s reputation.

Internal control is a process established by the board of directors, senior management and all levels of personnel. It is not solely a procedure or policy that is performed at a certain point in time, but rather it is continually operating at all levels within the bank. The board of directors and senior management are responsible for establishing the appropriate culture to facilitate an effective internal control process and for monitoring its effectiveness on an ongoing basis; however, each individual within an organization must participate in the process. The main objectives of the internal control process can be categorized as follows:

13. Efficiency and effectiveness of activities (performance objectives);

14. Reliability, completeness and timeliness of financial and management information (information objectives); and

15. Compliance with applicable laws and regulations (compliance objectives).

Performance objectives for internal controls pertain to the effectiveness and efficiency of the Bank in using its assets and other resources and protecting the bank from loss.

Information objectives address the preparation of timely, reliable, relevant reports needed for decision-making within the banking organization. They also address the need for reliable annual accounts, other financial statements and other financial-related disclosures and reports to shareholders, supervisors, and other external parties.

Compliance objectives ensure that all banking business complies with applicable laws and regulations, supervisory requirements, and the organization’s policies and procedures. This objective must be met in order to protect the Bank’s reputation.

Key features of Internal Control System and the manner in which the system is monitored:

Key features of Internal Control System of the bank are as follows:

1. Management oversight and the control culture

2. Risk recognition and assessment

3. Control activities and segregation of duties

4. Information and communication

5. Monitoring activities and correcting deficiencies

The board of directors of Prime Bank performs the following activities to monitor the Internal Control System:

1. Periodic discussions with management concerning the effectiveness of the internal control system.

2. Timely review of evaluations of internal controls made by management, internal auditors, and external auditors.

3. Periodic efforts to ensure that management has promptly followed up on recommendations and concerns expressed by auditors and supervisory authorities on internal control weaknesses.

4. Periodic review of the appropriateness of the bank’s strategy and risk limits.

Through the establishment of the Audit Committee, the Board of Directors monitors the effectiveness of internal control system. The Audit Committee evaluates whether management is setting the appropriate compliance culture by communicating the importance of internal control among the employees. They also review the corrective measures taken by the management relating to operational lapses.

Senior management of Prime Bank develops processes that identify, measure, monitor and control risks incurred by the bank; maintains an organizational structure that clearly assigns responsibility, authority and reporting relationships; ensures that delegated responsibilities are being carried out effectively; sets appropriate internal control policies; and monitors the adequacy and effectiveness of the internal control system. They ensure proper control through techniques such as top level reviews, activity controls, physical controls, compliance with exposure limit, approvals & authorizations and verification & reconciliation of transactions of the Bank.

Review of the adequacy of the system of internal controls by Board of Directors:

In almost every Audit Committee meeting the issue of adequacy of the system of internal controls is a factor that is taken into consideration. The Audit Committee is responsible to the Board of Directors to ensure that the system of internal controls is adequate to protect against any type of fraud & forgeries. The committee reviews the corrective measures taken by management relating to fraud-forgery and deficiencies in internal control. The Audit Committee places all the compliance report before the Board of Directors and regulators on a timely basis and has performed all other oversight functions in relation to Internal Control System of the Bank. In this way, the Directors review the adequacy of the system of internal controls in consistent manner.

Risk Management:

Key objective is Identification of risks to which PBL is exposed internally and externally since Banking industry is unique in many ways and one of the features that set it apart from other business is the diversity and complexity of the risks it is exposed to. Deregulated regimes along with globalization of business have opened new frontiers that warrant risk management an even greater priority. The failure to adequately manage these risks exposes banks not only to business losses but also may result in circumstances that they cannot remain in business.

Following are the core risk areas of banking:

1. Credit Risk2. Asset and Liability/Balance Sheet Risk3. Foreign Exchange Risk4. Internal Control and Compliance risk

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ANNUAL REPORT 2018

5. Money laundering Risk6. Information and Communication Technology Security Risk7. Environment Risk

Banking companies in Bangladesh, while conducting day to-day operations, may face additionally some other risks both internally and externally. i.e.

• Credit risk also includes concentration risk, country risk, transfer risk, and settlement risk

• Market risk (including interest rate risk in the banking book, foreign exchange risk and equity market risk)

• Liquidity Risk• Operational Risk• Strategic Risk• Reputation Risk

Strategies adopted to manage and mitigate the risks

Prime Bank adopted following strategies to manage and mitigate the risk but not limited to:

• Setting targets for capital ratios and capital composition

• Managing balance sheet

• Managing the funding structure

• Determining general principles for measuring, managing, and reporting the bank’s risks

• Developing risk policies for business units

• Determining the overall investment strategy

• Identifying, monitoring, and managing the bank’s current and potential operational risk exposures

• Handling “critical risks” (risks that require follow-up and further reporting)

• Following up on reviews by and reports from Bangladesh Bank and informing the Board of issues affecting the bank’s operational risks

• Following up on reports prepared by Internal Audit and informing the Board through Audit Committee of unusual circumstances

• Preparing management information on issues such as IT security, physical security, business continuity, and compliance.

More information regarding Risk management techniques used by management to identify and mitigate risk can be found in the Risk Management chapter.

Formation of Nomination and Remuneration Committee:

As per BSEC notification BSEC/CMRRCD/2006-158/207/Admin/80 dated 3rd June 2018 on Corporate Governance Code, the Board of Directors in its 485th Meeting held on 28.10.2018 constituted a new committee named ‘Nomination and Remuneration Committee’ (NRC) with the following 03 (three) members:

i. Dr. G M Khurshid Alam, Independent Director - Chairman

ii. Mr. Md. Nader Khan, Director - Member

iii. Mr. Md. Shirajul Islam Mollah, Director - Member

All the members belong to nonexecutive category and are financially literate as they have years of experience in banking, businesses and financial sector.

Furthermore, as per the BSEC Code, the Chairperson of the Committee may appoint or co-opt any external expert and/or member(s) of staff to the Committee as advisor who shall be non-voting member, if the Chairperson feels that advice or suggestion from such external expert and/or member(s) of staff shall be required or valuable for the Committee.

The Committee is headed by an Independent Director who is a retired Senior Private Sector Development Specialist of the World Bank and a Ph.D. in Economics from Boston University, USA. He is currently Director, Policy Research Institute (PRI), a leading Policy & Research Think-Tank of Bangladesh. Other two members of the Committee are also renowned business personality of the Country.

Role Of The NRC:

NRC shall be independent and responsible or accountable to the board of directors and to the shareholders. NRC shall oversee, among others, the following matters and make report with recommendation to the board of directors:

1. (1) Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board of Directors’ a policy, relating to the remuneration of the directors, top level executives, considering the followings;

a. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate suitable directors to run the company successfully;

b. The relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

c. Remuneration to directors, top level executives involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

2. Devising a policy on Board’s diversity taking into consideration age, gender, experience, ethnicity, educational background and nationality.

3. Identifying persons who are qualified to become directors and who may be appointed in top level executive positions in accordance with the criteria laid down, and recommend their appointment and removal to the Board.

4. Formulating the criteria for evaluation of performance of Independent Directors and the Board;

5. identify the company’s needs for employees at different levels and determine their selection, transfer/replacement and promotion criteria;

6. Developing, recommending and reviewing annually the company’s human resources and training policies; and

7. The company shall disclose the nomination and remuneration policy and the evaluation criteria and activities of NRC during the year at a glance in its annual report;

Despite the formation of NRC in compliance with the BSEC Corporate Governance Code, activation of the committee has been put on hold as per decision of Central Bank, the Primary Regulator of the Bank Companies for further clarification on apparent conflict with the Bank Companies Act with regard to number/formation of committees by the Board of Directors.

67PRIME BANK

Ethics, Integrity and Compliance:

Prime Bank is committed to establishing highest level of business compliance and ethical standard.

The Bank has an ‘Employee Code of Ethics and Business Conduct’ – a framework of ethical behavior for all the employees of the organization.

The leaders/managers are required to exemplify the highest standards of conduct and ethical behavior. Leaders/managers at Prime bank are expected to:

• Lead according to Prime Bank standards of ethical conduct, in both words and actions.

• Create and maintain an environment where employees feel comfortable asking questions or reporting concerns.

• Be diligent in enforcing the Bank’s ethical standards and taking appropriate action if violations occur.

• Contact the Human Resources Division when in need of assistance. The Employee Code of Ethics and Business Compliance also specify the grounds of punishment to refrain employees from any unwanted behavior. For instances, an employee shall be liable to disciplinary actions, if he/she:

• Is convicted of any offence involving moral turpitude; or

• Is corrupt or may reasonably be considered to be corrupt; or

• Assumes a style of living beyond his/her ostensible means; or

• Is engaged or is reasonably suspected of being engaged in subversive activities, or is reasonably suspected of being associated with others engaged in subversive activities, and whose retention in service is therefore considered prejudicial to national security; or

• Is in possession of pecuniary resources or property disproportionate to his/her known sources of income etc.

• The code of employee ethical behavior gives focus on the followings:

• Protecting Privacy of Customers’ and Confidential Company Information,

• Preventing Money Laundering and/or Fraud,

• Avoiding Drug/Substance/Alcohol Abuse in the Workplace

• Protecting Bank’s assets

• Avoiding any conflict of interest etc.

Each of the above stated issue is properly explained as separate section in the ‘Employee Code of Ethics and Business Conduct’.

The ‘Employee Code of Ethics and Business Conduct’ starts with the phrase “Uncompromising integrity”. Employees of Prime Bank are judged not only in terms of competencies, but also with their integrity. The reputation and continued success of Prime Bank largely depend on a shared commitment to the core value of integrity. Respecting this value is the responsibility of each and every member of the organization.

The Code of Ethics and Business Conduct aware employees to avoid situations where their personal interests conflict, or may appear to conflict, with those of the Bank. Employees

are advised to take particular care when they are responsible for dealing with customers, suppliers, agents on behalf of the Bank. Any failure to disclose a conflict of interest leads to a disciplinary action.

Communication on the statement of ethics & business practices:

All employees are educated to comply with Code of Ethics and conform to the relevant laws and regulations. HR Division makes sure that during joining employees read, understand the ‘Code of Ethics and Business Conduct’ and acknowledge the same by signing. HR continuously raises awareness on regular interval among employees to ensure that business decisions and actions undertaken by employees are completely in compliance with the prevalent rules and regulations. The leaders/managers of the Bank are mandatorily required to communicate and help their employees to understand how ethics apply to their positions and everyday behavior.

The Board of Directors of Prime Bank has approved ‘Employee Code of Ethics and Business Conduct’ with a commitment to setting high ethical standards so that customers’ expectations and interests are protected in a compliant manner.

Whistle Blowers Protection Policy:

Whistle blowing about bad practices can help ensure that problems are identified before it is too late. This helps prevent disasters ranging from customer mistreatment to huge financial loss. Prime Banks whistle blowing procedures encourage employees to disclose concerns using appropriate channels before these concerns become a serious problem which might jeopardize Bank’s reputation through negative publicity, regulatory investigation, fines and/or compensation.

Employees are encouraged to report any wrong-doing within the Bank. The Head of Internal Control and Compliance and Human Resources Divisions are the primary channel to report any incident. The Reporting channels offer the employees the opportunity to report while maintain their identity confidential. However, from experience Prime Bank understands that an effective whistle blowing policy demands for a shift in the culture. The Bank has a division named Internal Control and Compliance Division which dedicatedly works to ensure effective controls mechanism in the entire business entity.

Disclosure of Remuneration of Directors, Chairman, Chief Executive and Senior Executives

The Directors of the Bank are paid only honorarium for attending Board or Committee meetings. On the other hand, the Managing Director is paid salary and allowances as fixed by the Bangladesh Bank. The total cost related to employee compensation is shown in the profit and loss account.

Human Capital:

Employees are the key driving force of Prime Bank’s continuous success. A group of motivated and engaged employees with diverse talents are the key asset of Prime Bank. Prime Bank is highly reputed in the market as an employer of choice. The Bank has positioned itself with a performance-driven rewarding work culture; where employees are treated with respect and

68 PRIME BANK

ANNUAL REPORT 2018

receive widened opportunities to realize their diverse potentials fully as well as benefit the organization by demonstrating value creating behaviors.

To ensure long term sustainability, Prime Bank has a special focus on skill and merit based recruitment and selection process, highly competitive remuneration package, adequate training and development programs, career growth with succession planning, high-performance culture and pleasant working atmosphere where employees are able to escalate their grievance and receive counseling. Following are highlights by which human resources are nourished and career progressions are ensured:

• Recruitment and selection process with ‘best-fit’ ethos followed by clearly defined policy and procedures

• Ensuring adequate learning & development opportunities through effectively designed training programs and on-the-job experience

• Well-crafted compensation & benefits package to have a positive impact on employees’ overall wellbeing

• Ensuring horizontal and vertical career growth

• Succession planning for the talents in different layers of the organizational hierarchy

• Comprehensive performance management program to reward employees and drive further development

• Reward & recognition program to meet employees’ intrinsic psychological need for appreciation

• Grievances and counseling

• Ensuring a decent workplace where employees can participate in work with respect

Communication to Shareholders & Stakeholders:

Prime Bank ensures that all shareholders are notified at least 2 weeks before the AGM so that they can attend on the day. Financial Statements (Quarterly and Half yearly) or relevant information are updated on the website and notified to all stakeholders duly. The Bank tries to maintain liaison with the shareholders as much as possible and ensures that all stakeholders are informed about the bank’s activities on a routine basis. PBL also engages with all types of stakeholders as much as possible to ensure that information is effectively communicated.

The Directors appreciate the importance of general shareholders of the Bank and use the Bank’s AGM as further opportunities to communicate with them. PBL provides copies of the annual report in order that these are made available to them well in advance for detail and constructive discussion. It is the company’s policy to give the shareholders the opportunity to ask questions about its activities and prospects at the AGM. The Board also structures these meetings so that shareholders can vote separately on each matter, by proposing separate resolutions for each item to be considered.

PBL tries utmost to ensure that all shareholders can participate in the AGM. Annual Reports are sent at least 2 weeks before the AGM to ensure all shareholders are notified about the event date, place and time. Also, PBL ensures that AGM is held at a convenient place where all shareholders may attend. Notices to

shareholders are made by publication in the daily newspapers and through the digital media as well. To ensure compliance with regulatory bodies, PBL ensures that it publishes in two widely circulated newspapers in English and Bangla and sent to the stock exchanges and BSEC.

PBL ensures effective communication with the shareholders and encourages shareholder participation at the AGM. PBL connects with the investors through AGM, EGM, Annual Report and Company’s website. Shareholders are offered the chance to enquire with the Board regarding the operation of the Bank. They are also presented the opportunity and scope to make queries with the Company’s auditors concerning topics linked to the audit of the Company’s financial statements at the AGM.

Environmental and Social Obligation:

A natural and fresh environment, efficient use of reserves and appreciation for people’s well-being and safety are what PBL has always believed in. In harmony with this, PBL is constantly working towards decreasing consumption of energy (especially electricity, water, gas, papers etc.) at its branches, removal of the use of hazardous substances from its practices and reducing waste generation. The importance is on diminishing paper transactions to the extent that the Credit Committee has already been made paperless, and PBL is moving forward and thinking about implementing it more through the branches. Board and its Committee Meetings are also made paperless through using in-house built software. One of the key objectives for financing manufacturing companies is to ensure that they try to lessen their carbon footprint.

Bangladesh Bank has taken steps to inspire green banking in Bangladesh through issuance of guidelines on green banking and Environmental Risk Management (ERM). It is always inspiring banks in lessening paper communications and fitting solar power system in branches and giving refinance to the solar energy, bio-gas and effluent treatment plant (ETP) sectors at concessional pricing. PBL has always been committed to the environment and also been active in social activities throughout the year 2018, and will remain so in the future as well.

PBL has always been active regarding its activities for the environment. One of its achievements was to make the Credit Committee & Board Meetings paperless. It is also in the process of issuing a green manual for how to make all branches and divisions more environmental friendly. Also, solar panels have been set up in quite a few branches as well, and the initiative has been taken to install more solar panels in branches in the future. Environmental activities during the year can be found more in details in the Green Banking Report.

PBL has always been an active member of society and has tried to enhance people’s lives and its employees as well.

Prime Bank Foundation was initiated solely for the purpose of Corporate Social Responsibility. PBL’s social activities can be found on the Prime Bank Foundation chapter and its commitment to its employees can be found in the Employee’s Report.

69PRIME BANK

CERTIFICATE ON CORPORATE GOVERNANCE

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ANNUAL REPORT 2018

Annexure – C

Status of compliance with the conditions imposed by the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 dated June 03, 2018 issued under section 2CC of the Securities and Exchange Ordinance, 1969:

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

1 (1)

Size of the Board of Directors

Board’s size shall not be less than 5 (five) and more than 20 (twenty).

√

1(2) (a)Independent Directors

At least 1/5th of the total number of directors;√

1(2) (b) For the purpose of this clause:

1(2) (b) (i)

Independent Director does not hold any share or holds less than one percent (1%) shares of total paid up capital;

√

Independent Director does not hold any shares of the company.

1(2) (b) (ii)

Independent Director is not a sponsor of the company or is not connected with the company’s any sponsor or director or nominated director or shareholder or any of its associates, sister concerns, subsidiaries and parents or holding entities who holds one percent (1%) or more shares of the total paid-up shares of the company on the basis of family relationship and his or her family members also shall not hold above mentioned shares in the company:

√

1(2) (b) (iii)Independent Director has not been an executive in immediately preceding 2 (two) financial years;

√

1(2) (b) (iv)

Independent Director does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies;

√

Independent Directors are engaged as nominated Director of subsidiary companies.

1(2) (b) (v)Independent Director is not a member or director or officer of any stock exchange;

√

1(2) (b) (vi)Independent Director is not the shareholder, director or officers of any member excepting Independent Director or TREC holder of Stock Exchange or an Intermediary of the capital market;

√

1(2) (b) (vii)

Independent Director is/was not the partners or executives during preceding 3 (three) years of concerned company’s statutory audit firm or audit firm engaged in internal audit services or audit firm conducting special audit or professional certifying compliance of this Code;

√

1(2) (b) (viii)Independent Director is not the Independent Director in more than 5 (five) listed companies;

√

1(2) (b) (ix)Independent Director is not convicted by a court of competent jurisdiction as a defaulter in payment of any loan or any advance to a bank or a non-bank financial institution (NBFI);

√

1(2) (b) (x)Independent Director has not been convicted for a criminal offence involving moral turpitude;

√

BSEC CHECKLIST ON CORPORATE GOVERNANCEStatus of Compliance With Corporate Governance Code (CGC)

71PRIME BANK

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

1(2) (c)The independent Director shall be appointed by the Board of Directors and approved by the Shareholders in the AGM;

√

1(2) (d)The post of Independent Directors cannot remain vacant for more than 90 days; √

No such event occurred.

1(2) (e)The tenure of office of an Independent Directors shall be for a period of 3 (three) years which may be extended for 1 (one) tenure only;

√

1(3) Qualification of Independent Director (ID)

1(3) (a)Independent Director shall be a knowledgeable individual with integrity who is able to ensure required compliance.

√

1(3) (b) Independent Director shall have following qualifications:

1(3) (b) (i)

Business Leader who is or was a promoter or director of an unlisted company having minimum paid-up capital of Tk.100.00 million or any listed company or a member of any national or international chamber of commerce or business association;

√

1(3) (b) (ii)

Corporate Leader who is or was a top level executive not lower than Chief Executive Officer or Managing Director or Deputy Managing Director or Chief Financial Officer or Head of Finance or Accounts or Company Secretary or Head of Internal Audit and Compliance or Head of Legal Service or a candidate with equivalent position of an unlisted company having minimum paid-up capital of Tk.100.00 million or of a listed company;

√

1(3) (b) (iii)

Former official of government or statutory or autonomous or regulatory body in the position not below 5th Grade of the national pay scale, who has at least educational background of bachelor degree in economics or commerce or business or Law;

√

1(3) (b) (iv)University Teacher who has educational background in Economics or Commerce or Business Studies or Law;

N/A

1(3) (b) (v)

Professional who is or was an advocate practicing at least in the High Court Division of Bangladesh Supreme Court or a Chartered Accountant or Cost and Management Accountant or Chartered Financial Analyst or Chartered Certified Accountant or Certified Public Accountant or Chartered Management Accountant or Chartered Secretary or equivalent qualification;

√

1(3) (c)The Independent Director shall have at least 10 (ten) years of experiences in any field mentioned in clause(b);

√

1(3) (d)In special cases, above qualification or experiences may be relaxed by the Commission.

√

1(4) Duality of Chairman of the Board of Directors and Managing Director or CEO-

1(4) (a)The Positions of the Chairman of the Board and the Managing Director (MD) and/or Chief Executive Officer (CEO) of the company shall be filled by different individuals;

√

1(4) (b)The Managing Director (MD) and/or Chief Executive Officer (CEO) of a listed company shall not hold the same position in another listed company;

√

1(4) (c)The Chairman of the Board shall be elected from among the non-executive directors of the company;

√

1(4) (d)The Board shall clearly define respective roles and responsibilities of the Chairman and the Managing Director and/or Chief Executive Officer;

√

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ANNUAL REPORT 2018

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

1(4) (e)

In the absence of the Chairman of the Board, the remaining members may elect one of themselves from non-executive directors as Chairman for that particular Board’s meeting; the reason of absence of the regular Chairman shall be duly recorded in the minutes.

√

1(5) Directors’ Report to Shareholders

1(5) (i) Industry outlook and possible future developments in the industry; √

1(5) (ii) Segment-wise or product-wise performance; √

1(5) (iii)Risks and concerns including internal and external risk factors, threat to sustainability and negative impact on environment;

√

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 activities and their implications (gain or loss);

√

1(5) (vi)Basis for related party transaction- along with a statement showing amount, nature of related party, nature of transactions and basis of transactions of all related party transactions;

√

1(5) (vii)Utilization of proceeds raised through public issues, right issues and/ or through any others instruments;

N/A

1(5) (viii)An explanation if the financial results deteriorate after the company goes for IPO, RPO, Rights Offer, Direct Listing etc.;

N/A

1(5) (ix)

If significant variance occurs between Quarterly Financial performance and Annual Financial Statements the Management shall explain about the variance on their Annual Report’

√

1(5) (x)Remuneration paid to directors including Independent Directors;

√

1(5) (xi)The financial statements prepared by the Management of the company present fairly its state of affairs, the results of its operation, cash flows and changes in equity;

√

1(5) (xii)Proper books of account of the company have been maintained;

√

1(5) (xiii)

Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment;

√

1(5) (xiv)

International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as --applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there-from has been adequately disclosed;

√

1(5) (xv)The system of internal control is sound in design and has been effectively implemented and monitored;

√

1(5) (xvi)Minority shareholders have been protected from abusive actions by or in the interest of, controlling shareholders acting either directly or indirectly and have effective means of redress;

√

1(5) (xvii)There are no significant doubt upon the company’s ability to continue as a going concern;

√

1(5) (xviii)Significant deviations from the last year’s operating results of the company shall be highlighted and the reasons thereof should be explained;

√

73PRIME BANK

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

1(5) (xix)Key operating and financial data of at least preceding 5 (five) years shall be summarized;

√

1(5) (xx)If the company has not declared dividend (cash or stock) for the year, the reasons thereof shall be given;

N/A

1(5) (xxi)Board’s statement to the effect that no bonus share or stock dividend has been or shall be declared as interim dividend; √

No such event occurred.

1(5) (xxii)Total number of Board meetings held during the year and attendance by each director.

√

1(5) (xxiii)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) (xxiii) (a)Parent or Subsidiary or Associated Companies and other related parties (name- wise details);

√

1(5) (xxiii) (b)Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and Compliance and their spouses and minor children (name- wise details)’

√

1(5) (xxiii) (c) Executives; and √

1(5) (xxiii) (d)Shareholders holding ten percent (10%) or more voting interest in the company (name- wise details).

N/A

1(5) (xxiv)In case of the appointment/re-appointment of a Director, a disclosure on the following information to the Shareholders:-

1(5) (xxiv) (a) a brief resume of the Director; √

1(5) (xxiv) (b) Nature of his/her expertise in specific functional areas; √

1(5) (xxiv) (c)Names of companies in which the person also holds the directorship and the membership of committees of the Board.

√

1(5) (xxv)A Management’s Discussion and Analysis signed by CEO or MD presenting detailed analysis of the company’s position and operations along with a brief discussion of changes in the financial statements, among others, focusing on:-

1(5) (xxv) (a)Accounting policies and estimation for preparation of financial statements;

√

1(5) (xxv) (b)

Changes in accounting policies and estimation, if any, clearly describing the effect on financial performance or results and financial position as well as cash flows in absolute figure for such changes;

√

1(5) (xxv) (c)

Comparative analysis (including effects of inflation) of financial performance or results and financial position as well as cash flows for current financial year with immediate preceding five years explaining reasons thereof;

√

1 (5) (xxv) (d)Compare such financial performance or results and financial position as well as cash flows with the peer industry scenario;

√

1 (5) (xxv) (e)Briefly explain the financial and economic scenario of the country and the globe;

√

1 (5) (xxv) (f)Risks and concerns issues related to the financial statements, explaining such risk and concerns mitigation plan of the company;

√

1 (5) (xxv) (g)Future plan or projection or forecast for company’s operation, performance and financial position, with justification thereof, i.e., actual position shall be explained to the shareholders in the next AGM;

√

1 (5) (xxvi)Declaration or certification by the CEO and the CFO to the Board as required under condition No.3(3) shall be disclosed as per Annexure-A;

√

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ANNUAL REPORT 2018

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

1 (5) (xxvii)The report as well as certificate regarding compliance of conditions of this Code as required under condition No.9 shall be disclosed as per Annexure –B and Annexure-C.

√

1 (6) Meetings of the Board of Directors √

The Company shall conduct its Board meetings and record the minutes of the meetings as well as keep required books and records in line with the provisions of the relevant Bangladesh Secretarial Standards (BSS) as adopted by the institute of Chartered Secretaries of Bangladesh (ICSB) in so far as those standards are not inconsistent with any condition of this Code.

√

1 (7) Code of the conduct for the Chairman, other Board members and Chief Executive officer

1 (7) (a)

The Board shall lay down a code of conduct, based on the recommendation of the Nomination and Remuneration Committee (NRC) at condition No.6, for the Chairman of the Board, other board members and Chief Executive Officer of the company;

√

1 (7) (b)

The code of conduct as determined by the NRC shall be posted on the website of the company including, among others, prudent conduct and behavior; confidentiality; conflict of interest; compliance with laws, rules and regulations; prohibition of insider trading; relationship with environment, employees, customers and suppliers; and independency.

Under process.

2 Governance of Board of Directors of Subsidiary Companies-

2 (a)Provisions relating to the composition of the Board of the holding company shall be made applicable to the composition of the Board of the subsidiary company;

√

2 (b)At least 1 (one) Independent Director on the Board of the holding company shall be a director on the Board of the subsidiary company;

√

2 (c)The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company;

√

2(d)The Minutes of the respective Board meeting of the holding company shall state that they have reviewed the affairs of the Subsidiary Company also;

√

2 (e)The Audit Committee of the holding company shall also review the Financial Statements, in particular the investments made by the Subsidiary Company.

√

3Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal Audit and Compliance (HIAC) and Company Secretary (CS)-

3(1) Appointment

3 (1) (a)

The Board Shall appoint a Managing Director (MD) or Chief Executive Officer (CEO), a Company Secretary (CS), a Chief Financial Officer (CFO) and a Head of Internal Audit and Compliance (HIAC);

√

3 (1) (b)

The positions of the Managing Director (MD) or Chief Executive Officer (CEO), Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal Audit and Compliance (HIAC) shall be filled by different individuals;

√

3 (1) (c)The MD or CEO, CS, CFO and HIAC of a listed company shall not hold any executive position in any other company at the same time;

√

75PRIME BANK

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

3 (1) (d)The Board shall clearly define respective roles, responsibilities and duties of the CFO, the HIAC and the CS; √

3 (1) (e)The MD or CEO, CS, CFO and HIAC shall not be removed from their position without approval of the Board as well as immediate dissemination to the Commission and stock exchange(s).

No such event occurred.

3 (2) Requirement to attend Board of Directors’ Meetings

The MD or CEO, CS, CFO and HIAC of the company shall attend the meetings of the Board:Provided that the CS, CFO and/or the HIAC shall not attend such part of a meeting of the Board which involves consideration of an agenda item relating to their personal matters.

√

3 (3) Duties of Managing Director (MD) or Chief Executive Officer (CEO) and Chief Financial Officer (CFO)

3 (3) (a)The MD or CEO and CFO shall certify to the Board that they have reviewed financial statements for the year and that to the best of their knowledge and belief:

√

3 (3) (a) (i)These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

√

3 (3) (a) (ii)These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws;

√

3(3) (b)

The MD or CEO and CFO shall also certify that there are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board or its members;

√

3 (3) (c)The Certification of the MD or CEO and CFO shall be disclosed in the Annual Report.

√

4

Board of Directors’ Committee-

For ensuring good governance in the company, the Board shall have at least following sub-committees:

√

4 (i) Audit Committee; and √

4 (ii) Nomination and Remuneration Committee. √

5 Audit Committee

5(1) Responsibility to the Board of Directors

5 (1) (a) Audit Committee shall be the sub-committee of the Board; √

5 (1) (b)

The Audit Committee shall assist the Board in ensuring that the financial statements reflect true and fair view of the state of affairs of the Company and in ensuring a good monitoring system within the business;

√

5 (1) (c)The Audit Committee shall be responsible to the Board; the duties of the Audit Committee shall be clearly set forth in writing.

√

5 (2) Constitution of the Audit Committee

5 (2) (a) The Audit Committee shall be composed of at least 3 members; √

5 (2) (b)

The Board shall appoint members of the Audit Committee who shall be non-executive Directors of the company excepting Chairman of the Board and shall include at least one Independent Director.

√

76 PRIME BANK

ANNUAL REPORT 2018

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

5 (2) (c)

All members of the Audit Committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management background and 10 (ten) years of such experience.

√

5 (2) (d)

The Board shall appoint the new Committee member if less than 03 members to fill up the vacancy immediately or not later than 1 (one) month from the date of vacancy in the Committee to ensure continuity of the performance of work of the Audit Committee;

No such event occurred.

5 (2) (e)The Company Secretary shall act as the secretary of the Committee;

√

5 (2) (f)The quorum of the Audit Committee meeting shall not constitute without at least 01 Independent Director.

√

5(3) Chairman of the Audit Committee

5 (3) (a)Chairman of the Audit Committee shall be an Independent Director.

√

5 (3) (b)

In the absence of the Chairman of the Audit Committee, the remaining members may elect one of themselves as Chairman for that particular meeting, in that case there shall be no problem of constituting a quorum as required under condition No.5(4) (b) and the reason of absence of the regular Chairman shall be duly recorded in the minutes.

√

5 (3) (c)Chairman of the audit committee shall remain present in the Annual General Meeting (AGM):

√

Chairperson of the Audit Committee was present in the last AGM. This year it will be ensured by the Management.

5 (4) Meeting of the Audit Committee

5 (4) (a)The Audit Committee shall conduct at least 04 (four) meetings in a financial year:

√

5 (4) (b)

The quorum of the meeting of the Audit Committee shall be constituted in presence of either two members or two-third of the members of the Audit Committee, whichever is higher, where presence of an Independent Director is must.

√

5 (5) Role of Audit Committee

5 (5) (a) Oversee the financial reporting process; √

5 (5) (b) Monitor choice of accounting policies and principles; √

5 (5) (c)

Monitor Internal Audit and Compliance process to ensure that it is adequately resourced, including approval of the Internal Audit and Compliance Plan and review of the Internal Audit and Compliance Report;

√

5 (5) (d) Oversee hiring and performance of external auditors; √

77PRIME BANK

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

5 (5) (e)Hold meeting with the external or statutory auditors for review of the annual financial statements before submission to the Board for approval or adoption;

√

5 (5) (f)Review along with the management, the annual financial statements before submission to the board for approval;

√

5 (5) (g)Review along with the management, the quarterly and half yearly Financial Statements before submission to the Board for approval;

√

5 (5) (h) Review the adequacy of internal audit function; √

5 (5) (i)Review the Management’s Discussion and Analysis before disclosing in the Annual Report;

√

5 (5) (j)Review statement of a related party transactions submitted by the Management;

√

5 (5) (k)Review Management Letters/ Letter of Internal Control weakness issued by statutory auditors.

√

5 (5) (l)

Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate the performance of external auditors; and

√

5 (5) (m)

Oversee whether the proceeds raised through Initial Public Offering ((IPO) or Repeat Public Offering (RPO) or Rights Share Offer have been utilized as per the purposes stated in relevant offer document or prospectus approved by the Commission.

N/A

5 (6) Reporting of the Audit Committee

5 (6) (a) Reporting to the Board of Directors

5 (6) (a) (i) The Audit Committee shall report on its activities to the Board. √

5 (6) (a) (ii)The Audit Committee shall immediately report to the Board on the following findings, if any:

5 (6) (a) ii) (a)Report on conflicts of Interests.

√No such event occurred.

5 (6) (a) ii) (b)Suspected or presumed fraud or irregularity or material defect identified in the internal audit & compliance process or in the financial statements;

√No such event occurred.

5 (6) (a) (ii) (c)Suspected infringement of laws, regulatory compliances including securities related laws, rules and regulations; √

No such event occurred.

5 (6) (a) ii) (d)Any other matter which the Audit Committee deems necessary shall be disclosed to the Board immediately. √

No such event occurred.

5 (6) (b) Reporting to the Authorities

If the Audit Committee’s reporting to the Board is unreasonably ignored, the Audit Committee shall report such findings to the Commission following due procedures.

No such event occurred.

5 (7) Reporting to the Shareholders and General Investors

Report on activities carried out by the Audit Committee, including any report made to the Board under condition No.5(6) (a) (ii) above during the year, shall be signed by the Chairman of the Audit Committee and disclosed in the annual report of the issuer company

No such event occurred.

78 PRIME BANK

ANNUAL REPORT 2018

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

6 Nomination and Remuneration Committee (NRC)

6 (1) Responsibility to the Board of Directors

6 (1) (a)The Company shall have a Nomination and Remuneration Committee (NRC) as a sub-committee of the Board;

√

6 (1) (b)

The NRC shall assist the Board in formulation of the nomination criteria or policy for determining qualifications, positive attributes, experiences and independence of directors and top level executive as well as a policy for formal process of considering remuneration of directors, top level executive;

√

6 (1) (c)The Terms of Reference (ToR) of the NRC shall be clearly set forth in writing covering the areas stated at the condition No. 6 (5) (b)

√

6 (2) Constitution of the NRC

6 (2) (a)The Committee shall comprise of at least three members including an Independent Director;

√

6 (2) (b) All members of the Committee shall be non-executive directors; √

6 (2) (c)Members of the Committee shall be nominated and appointed by the Board;

√

6 (2) (d)The Board shall have authority to remove and appoint any members of the Committee;

√

6 (2) (e)

In case of death, resignation, disqualification, or removal of any member of the Committee or in any other cases of vacancies, the Board shall fill the vacancy within 180 (hundred eighty) days of occurring such vacancy in the Committee;

No such event occurred.

6 (2) (f)

The Chairman of the Committee may appoint or co-opt any external expert and/or member(s) of staff to the Committee as advisor who shall be non-voting member, if the chairman feels that advice or suggestion from such external expert and/or member(s) of staff shall be required or valuable for the Committee;

No such event occurred.

6 (2) (g)The company secretary shall act as the secretary of the Committee;

√

6 (2) (h)The quorum of the NRC meeting shall not constitute without attendance of at least an Independent Director;

√

6 (2) (i)

No member of the NRC shall receive, either directly or indirectly, any remuneration for any advisory or consultancy role or otherwise, other than Director’s fees or honorarium from the company;

√

6 (3) Chairman of the NRC

6 (3) (a)The Board shall select 1 (one) member of the NRC to be Chairman of the Committee, who shall be an Independent Director;

√

6 (3) (b)

In the absence of the Chairman of the NRC, the remaining members may elect one of themselves as Chairman for that particular meeting, the reason of absence of the regular Chairman shall be duly recorded in the minutes;

√

6 (3) (c)

The Chairman of the NRC shall attend the annual general meeting (AGM) to answer the queries of the shareholders;

Will be ensured by the Management.

79PRIME BANK

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

6 (4) Meeting of the NRC

6 (4) (a)The NRC shall conduct at least one meeting in a financial year; Under

process.

6 (4) (b)The Chairman of the NRC may convene any emergency meeting upon request by any member of the NRC;

N/A

6 (4) (c)

The quorum of the meeting of the NRC shall be constituted in presence of either two members or two third of the members of the Committee, whichever is higher, where presence of an Independent Director is must as required under condition No. 6 (2) (h);

N/A

6 (4) (d)The proceedings of each meeting of the NRC shall duly be recorded in the minutes and such minutes shall be confirmed in the next meeting of the NRC.

N/A

6 (5) Role of the NRC

6 (5) (a)NRC shall be independent and responsible or accountable to the Board and to the shareholders

√

6 (5) (b)NRC shall oversee, among other, the following matters and make report with recommendation to the Board:

√

6 (5) (b) (i)

Formulating the criteria for determining qualifications positive attributes and independence of a director and recommend a policy to the Board, relating to the remuneration of the directors, top level executive, considering the following:

√

6 (5) (b) (i) (a)The Level and composition of remuneration is reasonable and sufficient to attract, retain and motivate suitable directors to run the company successfully;

√

6 (5) (b) (i)(b)The relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

√

6 (5) (b) (i)(c)

Remuneration to directors top level executive involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals;

Remuneration of directors and CEO’s is determined by Bangladesh Bank.

6 (5) (b) (ii)Devising a policy on Board’s diversity taking into consideration age, gender, experience, ethnicity, educational background and nationality;

Under process.

6 (5) (b) (iii)

Identifying persons who are qualified to become directors and who may be appointed in top level executive position in accordance with the criteria laid down, and recommend their appointment and removal to the Board;

N/A

6 (5) (b) (iv)Formulating the criteria for evaluation of performance of Independent Directors and the Board;

Under process.

6 (5) (b) (v)Identifying the company’s needs for employees at different levels and determine their selection, transfer or replacement and promotion criteria, and

Under process.

6 (5) (b) (vi)Developing, recommending and reviewing annually the company’s human resources and training policies;

Under process.

6 (5) (c)The Company shall disclose the nomination and remuneration policy and the evaluation criteria and activities of NRC during the year at a glance in its annual report.

√

80 PRIME BANK

ANNUAL REPORT 2018

Condition No.

Title

Compliance Status(Put √ in the appropriate column)

Remarks(if any)

Complied Not complied

7 External or Statutory Auditors

7 (1)The issuer company shall not engage its external or statutory auditors to perform the following services of the Company, namely:-

√

7 (1) (i) Appraisal or valuation services or fairness opinions; √

7 (1) (ii) Financial information systems design and implementation; √

7 (1) (iii)Book-keeping or other services related to the accounting records or financial statements;

√

7 (1) (iv) Broker-dealer services; √

7 (1) (v) Actuarial services; √

7 (1) (vi) Internal audit services or special audit services; √

7 (1) (vii) Any service that the Audit Committee determines; √

7 (1) (viii)Audit/certification services on compliance of corporate governance as required under clause(i) of condition No.9 (1), and

√

7 (1) (ix) Any other service that creates conflict of interest; √

7 (2)

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; his or her family members also shall not hold any shares in the said company:

√

7 (3)

Representative of external or statutory auditors shall remain present in the Shareholders’ Meeting ((Annual General Meeting or Extraordinary General Meeting) to answer the queries of the shareholders.

Auditor was present in the last AGM. This year it will be ensured by the Management.

8 Maintaining a website by the company

8 (1)The company shall have an official website linked with the website of the stock exchange;

√

8 (2)The Company shall keep the website functional form the date of listing;

√

8 (3)The company shall make available the detailed disclosures on its website as required under the listing regulations of the concerned stock exchange(s);

√

9 Reporting and Compliance of Corporate Governance

9 (1)

The company shall obtain a Certificate from a practicing Professional Accountant/Secretary (CA/CMA/CS) other than its statutory auditors or audit firm an yearly basis regarding compliance of conditions of Corporate Governance code of the Commission and shall such certificate shall be disclosed in the Annual Report;

√

9 (2)The professional who will provide the certificate on compliance of this Corporate Governance Code shall be appointed by the shareholders in the annual general meeting;

Under process.

9 (3)The directors of the company shall state, in accordance with the Annexure-C attached, in the directors’ report whether the company has complied with these conditions or not.

√

81PRIME BANK

A- Statement on Directors’ Responsibility to Establish Appropriate System of Internal Control:

Banking transactions are diversified, complex and fraught with inherent risks. Again these are also no longer limited within the geographical boundaries of a country. Under the circumstances, issues relating to effective internal control systems, corporate governance, transparency and accountability has become of immense significance.

The primary objectives of internal control system in a bank are to help bank perform better through use of its resources, to communicate better internally and the external stakeholders and to comply with the applicable laws and regulations. The Bank, therefore, needs to have in place an appropriate and effective internal control environment under which controls are developed, implemented and monitored. The control environment consists of the mechanisms and arrangements that ensure internal and external risks, to which the Bank is exposed to, are identified; then appropriate and effective internal controls are developed and implemented to manage those.

The Directors recognize their obligation for the Bank’s systems of internal control for establishing effciency, effectiveness, consistency and appropriateness with regard to compliance with the relevant laws and regulations.

The Directors affirm that they are actively concerned with sound corporate governance and diligently discharge their responsibilities for establishing business strategies and adopting policies for internal control, risk management and implementing risk based internal audit as per ‘section 15 kha of Banking Company (amended) Act 1991’ for ensuring Bank is appropriately and effectively managed and controlled.

The Directors also affirm that the Board, through its committees, has appraised the effectiveness of the bank’s systems of internal control for the year ended 31 December, 2018. The Directors have attended periodical review meetings with senior management to discuss the effectiveness of the internal control systems of the Bank and ensure that management has taken appropriate actions as per recommendations of the auditors and regulators.

B- Board’s Statement on its commitment to establishing high level of Ethics and compliance within the organization:

Compliance is a comprehensive program that helps Bank and their employees conduct operational activities ethically with the highest level of integrity as per legal and regulatory requirements. Establishing an effective Compliance and Ethics system has become a necessity to protect any regulated organization. At its core, an effective system protects an organization by detecting and preventing improper conduct

and promoting adherence to the organization’s legal and ethical obligations.

The Board believes failure in corporate governance is a real threat to the future of the Bank. With effective corporate governance based on core values of integrity and trust the Bank will have competitive edge in attracting and retaining talent and generating positive reactions in the market place- if the Bank has a reputation for ethical behavior in today’s marketplace, it creates not only customer loyalty but employee loyalty as well. Effective corporate governance can be achieved by adopting set of principles and best practices. A great deal depends upon fairness, honesty, integrity and the manner in which the Bank conduct its affairs. Prime Bank makes profit in order to survive and grow; however, the pursuit of profits must stay within ethical bounds. The Bank has adopted policies that include environmental protection, whistle blowing, ethical training programs and so on. Such compliance mechanisms help develop and build a corporate image and reputation, gain loyalty and trust of the consumers and heighten commitment of the employees.

The Board is knowledgeable about the content and operation of the compliance and ethics system in the Bank and exercise reasonable oversight with respect to the implementation and effectiveness of the same. The Board also helps establish an organizational culture that encourages ethical conduct and a commitment towards compliance with the law.

The Board, therefore, would like to state that it has been actively involved in establishing standards and procedures designed to prevent and detect misconduct and also promote a high level of ethics and compliance within the Bank.

C- Statement that the Directors have reviewed the Adequacy of the System of Internal Control:

The Board of Directors has certain roles as stipulated in the ‘Bank Company (amended) Act 1991’. Accordingly, the Directors have worked on maintaining sound corporate governance and diligently discharged their responsibilities. The Directors have established broad business strategies, adopted significant policies for internal control and risk management and implemented risk based internal audits as per ‘sections 15 Kha & 15 Ga of the Bank Company (amended) Act 1991’ for ensuring that the Bank is appropriately and effectively managed and controlled.

The Board has reviewed the policies and manuals of various segments of businesses in order to establish an effective internal control system which is adequate for achieving sustainable growth through orderly and efficient conduct of business. The Directors have also checked the control procedures for ensuring safeguard of the Bank’s asset, prevention and detection of fraud and error, adequacy and completeness of accounting records, timely preparation of financial information and the efficient management of risk.

STATEMENT OF THE BOARD OF DIRECTORS

82 PRIME BANK

ANNUAL REPORT 2018

The Board has overseen the policies for creating a productive internal control system which is vital for sustainable development while upholding an effcient manner of business. They have also considered the competence and fullness of accounting records, sound preparation of financial information, and systematic management of risk and overall internal control processes.

The Board of Directors monitors the adequacy and effectiveness of Internal Control systems through formation of Audit Committee. While forming the Committee, all the conditions mentioned in the Banking Company’s (amended) Act 1991, Bangladesh Bank guidelines and the Corporate Governance guidelines by Bangladesh Securities and Exchange Commission were adequately addressed. The committee has reviewed the system of internal control and management of core risks faced by the Bank. It has also reviewed the audit process, the Bank’s process for monitoring compliance with laws and regulations and codes of business conduct.

The Audit Committee has reviewed the arrangements made by management for adding the control features to the existing Management Information System (MIS). The committee has also reviewed the corrective measures taken by management relating to fraud-forgery and deficiencies in internal control revealed in the previous years. It has placed all the compliance reports before the Board of Directors and regulators on a timely basis and has performed all other oversight functions relating to Internal Control Systems of the Bank.

83PRIME BANK

A- Statement on Audit Committee’s review to ensure that Internal Controls are well conceived, properly Administered and satisfactorily monitored:

Prime Bank Ltd. (Bank) has a defined internal control policy and guidelines for providing reasonable assurance that the Board’s objectives are attained in terms of operational activities, financial reporting, and compliance with prevailing laws and regulations. The Audit Committee through its oversight activities ensures that Management has put in place appropriate policies and procedures on internal control.

A successful internal control environment requires Management’s commitment and support. Management’s goal is not to make each person an expert in internal control but to increase awareness and understanding as to why the Bank needs those and how to use them. The Audit Committee always stresses on these facts and ensures that Management takes proper measures for raising awareness of the employees about the internal control processes. The Committee frequently guides Management on issues of internal control and also gives decisions on critical issues.

The Audit Committee, during the year 2018, held ten meetings to review the operational activities of the Bank and Management. Through the execution of the Internal Audit Plan, Special Investigations, and surprise inspections, the Committee ensures that internal controls are well conceived, have been properly administered and satisfactorily monitored by the Management. The Committee has been working on and monitoring closely the subject and the contents of internal control with the objective of ensuring that these are effective and workable.

B- Statement on Audit Committee’s role in ensuring Compliance with Laws and Regulations:

The Board, Audit Committee and the Management, all play critically important roles in promoting a compliance culture in the operation and management of the banking affairs. As per the directives of the regulators, the Board sets the policy guidelines for Management compliance and it’s the Audit Committee that ensures those are strictly complied with through its oversight functions.

As part of the responsibility, the Audit Committee, among others, also undertakes the following regular measures for ensuring compliance:

a. Reviews effectiveness of the system of monitoring compliance with the laws and regulations upon receiving investigations reports which are again followed up for regularization through appropriate actions including disciplinary ones, where warranted.

b. Establishes procedures for:

(i) The receipt, retention, and treatment of the complaints by the Bank regarding accounting, internal controls or auditing matters; and

(ii) The confidential and anonymous submission by the

employees of the Bank of any concerns regarding questionable accounting or auditing matters.

c. Reviews the findings of the examination by the regulatory agencies or other auditors.

d. Reviews the process for communicating code of conduct to the Bank personnel and monitoring compliance therewith.

e. Obtains regular updates from the Management and Bank’s legal counsel regarding compliance matters.

In addition, the Audit Committee ensures that legal fees are settled on a timely basis and that the Bank does not have to bear any penalties in this regard.

It can, therefore, be stated that the Audit Committee supervises and assures the Board that the Bank complies with all the applicable laws, rules and regulations, and also takes measures to ensure that all statutory dues are being settled on time.

C- Statement on Audit Committee’s involvement in the Review of the External Audit Functions:

The Audit Committee focuses on the financial management and reporting of the Bank. The Committee provides specific expertise in this critical area as effective financial management and reporting determines creditworthiness to outsiders and confirms the growth trend and successes to the insiders. These are the key determinants in establishing market value of Prime Bank – the ultimate scorecard of management’s success.

The Audit Committee undertakes the following responsibilities regarding review of the external auditors’ functions:

a. Reviews the external auditors’ proposed audit scope and approach, including coordination of audit efforts with internal audit team.

b. Reviews the performance of the external auditors and exercises final approval on the appointment of the auditors.In performing this review, the Committee:

i. At least annually, obtains and reviews a report by the independent external auditor describing the firm’s internal quality-control procedures; material issues raised by the recent internal quality-control review, and assesses the auditor’s independence in all relationships between the external auditor and the Bank.

ii. Takes into account the opinions of Management and Internal Audit Division.

iii. Reviews and evaluates the findings and recommendations of the independent external auditors.

iv. Presents conclusions with respect to the external auditors to the Board.

c. Reviews and approves any non-audit work assigned to the external auditors and ensures that such work does not compromise the independence of the external auditors.

d. Presents its conclusion with respect to the independence of the auditors to the Board.

STATEMENT OF THE AUDIT COMMITTEE

84 PRIME BANK

ANNUAL REPORT 2018

e. Meets separately with the external auditors to discuss any matters that the Committee or auditors believe should be discussed privately.

f. Recommends appointment/ re-appointment of external auditors.

D- Statement on Audit Committee involvement in 3.2.5 Selection of appropriate Accounting Policies:

The Audit Committee  is a vital Committee of the  Board of Directors  assigned with the responsibilities of oversight of the financial reporting and disclosure process.  The Audit Committee, as such, has a large degree of responsibility regarding selection of appropriate accounting policies for the Bank, and evaluation of the annual and quarterly financial statements. In addition, members of the Committee often discuss complex accounting figures, issues, and decisions made by the Management and the application of new accounting principles or regulations. Should significant complications with regard to accounting practices or personnel arise; a special investigation is instructed by the Audit Committee using outside consulting resources, if deemed necessary. External auditors are also expected to inform the Committee about a range of issues, such as their views on management’s selection of accounting principles, accounting adjustments arising from their audits, discrepancies or complexities faced in working with management, and any identified acts of fraud or illegal activities.

The Audit Committee is aware that the selection and application of the company’s accounting policies must be appropriately analyzed. The Committee is aware that investors increasingly demand full transparency of accounting policies and their effects. In line with this, the Committee always encourages management to disclose trends, events, or uncertainties that would materially affect the reported financial statements. The Committee is always apprised of the evaluation criteria by Management in their selection of the accounting principles and methods. Proactive discussion between the Audit Committee and Management always takes place before signing of the annual report regarding critical accounting policies.

In view of the above, the Audit Committee would like to state that it takes all necessary steps to ensure that management is taking adequate considerations when selecting accounting policies. The Committee is actively involved in selection of appropriate accounting policies that are in line with the applicable accounting standards, and annually reviews the same.

E- Statement on the Audit Committee involvement in the review and recommendation of the Annual and Interim Financial Releases:

The annual and interim financial statements released by the Bank contain sensitive financial information that needs to be addressed carefully. The Audit Committee, therefore, always actively involves itself in reviewing these releases and recommends to the Management on ways to improve these financials statements. The Committee reviews and discusses with management all significant correction/adjustments (whether or not made) to ensure that all material adjustments

are properly reflected in the financial reports.

The Audit Committee assumes the following responsibilities with regards to annual and interim financial statements:

a. Understands management’s responsibilities and representations with regard to annual and interim financial statements.

b. Understands and assesses the appropriateness of management’s selection of accounting principles and policies.

c. Understands management’s judgment and accounting estimates applied in financial reporting.

d. Confers with both management and the external auditors about the financial statements.

e. Assesses whether financial statements are complete and fairly presented in all material aspect.

f. Verifies that the financial position of the company and disclosures are clear and transparent.

g. Reviews financial statements and other information presented with it prior to release.

It is to be noted that it is management’s responsibility to prepare complete and accurate financial statements and disclosures in accordance with financial reporting standards and applicable rules and regulations. The Audit Committee assures itself that the external auditors are satisfied that the accounting estimates and judgments made by management, and that management’s selection of accounting principles reflect an appropriate application of IFRS, IAS and BFRS. The appropriateness, including the degree to which management bias, if any, is evident, of the Bank’s accounting principles and underlying estimates, and the transparency of the financial disclosures in reflecting financial performance, would be the core discussion between the committee and external auditors. The committee is always interested in discussing and understanding the auditor’s views on accounting issues and actively seeks to develop a relationship with the external auditor that allows a full, frank and timely discussion of all material issues. With regard to interim reports, the Committee always has an extensive discussion with management regarding material issues before approval of the interim accounts.

The Audit Committee of Prime Bank Limited has always been extensively involved in the review of the financial statements and has provided recommendations whenever needed. The committee has duly carried out such responsibilities throughout the year 2018, to the best of their ability.

85PRIME BANK

03 April 2019

The Board of Directors Prime Bank LimitedAdamjee Court Annex Building119/120 Moijheel C/A, Dhaka-1000

Subject: Declaration on Financial Statements for the year ended on 31 December 2018.

Dear Sirs,

Pursuant to the condition No. 1(5) (xxvi) imposed vide the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 dated 03 June 2018 under section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby declare that:

1. The Financial Statements of Prime Bank Limited for the year ended on 31 December 2018 have been prepared in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed;

2. The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view;

3. The form and substance of transactions and the Company’s state of affairs have been reasonably and fairly presented in its financial statements;

4. To ensure above, the Company has taken proper and adequate care in installing a system of internal control and maintenance of accounting records;

5. Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed; and

6. The management’s use of the going concern basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.

In this regard, we also certify that: -

i. We have reviewed the financial statements for the year ended on 31 December 2018 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 collectively present true and fair view of the Company’s 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 Company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board of Directors or its members.

Sincerely yours,

Sd/-Rahel AhmedManaging Director & CEO

Sd/-Mohammad Habibur Rahman Chowdhury FCADeputy Managing Director & CFO

CEO & CFO’S DECLARATION TO THE BOARD

86 PRIME BANK

ANNUAL REPORT 2018

Audit Committee of the Board is considered the overseer of the activities of the company for protecting interest of the relevant stakeholders and for which it stands out as a pivotal committee of the Board as per Bank Companies Act and Bangladesh Securities and Exchange Commission-the regulator of the listing companies in Bangladesh. The process of protection is primarily executed through regular oversight functions which, among others, include reviewing financial reporting process, system of internal controls, audit process, Management of financial risks and monitoring compliances with the prevailing laws and regulations of the country.

Considering importance of the committee in terms of ensuring corporate governance practices in the operational activities, regulators have been continuously endeavoring to enable the Audit Committees through revision of guidelines/directives etc. with the objective to shift focus on the governance issues and compliance culture for ensuring transparency. During the year, new set of Corporate Governance Code and Financial Reporting were promulgated by the BSEC where extra emphasis has been laid down for upholding fairness, transparency, accountability and independence- basic fundamentals of Corporate Governance. Audit Committee of Prime Bank also earnestly believes in such values and principles and aspires to give those a permanent shape in the progress of the bank.

In pursuant to the objective, during the year Internal Audit & Inspection teams were asked to develop strategies/processes, Charters/Manuals , Policies, risk grading matrix, audit grading template and other relevant tools and reference books for making the auditing approach purposeful and effective. All such auditing guidelines were prepared as per BB guidelines and those have been very useful for conducting auditing assignments in a structured and organized manner.

A- Constitution of Audit Committee:

The Board of Directors constituted the Audit Committee with 04 (four) members giving due emphasis on the suitability and following fit and proper test criteria. All the members chosen are financially literate and possess required qualifications in keeping with the spirit & objectives laid down in the regulatory guidelines. Among the members of the Committee, three (03) including the Chairman, are from the Independent category and none belong to the Executive Committee of the Board so as to avoid any conflict of interest. In addition, all the members are knowledgeable and keen to ensure compliance with the financial, regulatory and corporate laws. All of them have professional experiences due to long engagement with corporate & financial management in addition to having relevant academic background.

Current composition of the Audit Committee

The Company Secretary supports the Committee for effective functioning as per directives of BB and BSEC guidelines.

B- Activities of the Committee during the year 2018:

The responsibility of the Audit Committee has been widened with the promulgation of revised ICC Guidelines and Risk related circulars, the amended Bank Companies Act, 1991, Corporate Governance Code. Accordingly, the Committee has to discharge manifold functions including special assignments requested by the Board.

During the year, the Committee held in total ten (10) Meetings to deal with various Audit Reports/Agenda on the following nature of auditing:

i. Risk Based;ii. Comprehensive;iii. Information System & IT;iv. Special Inspection;v. Surprise Inspection;

Summary of activities under reference of the year:

Financial Reporting:

• Reviewed Draft Annual Financial statements for the year ending on December 31, 2017.

• Reviewed Un-audited quarterly financial statements of the Bank (Q1-Q3)

Internal Control:

• Reviewed half yearly Self-Assessment reports on Anti Fraud Internal Controls (SAAFIC).

• Reviewed/Evaluated overall effectiveness of the Internal Control Systems and Policies & procedures of the Bank and recommended it to the Board for endorsement

• Reviewed Internal Control & Compliance Manual of Prime Bank Limited.

Internal Audit:

• Reviewed and approved Audit Plan for the year 2018

• Reviewed major Audit findings and observations on Information Security Division conducted by IT Audit

• Reviewed Draft Internal Audit Manual

• Reviewed Summary Report of the Audit Findings for the year-2017

• Approved Annual Audit Plan – 2019

• Reviewed 03 years (2018-2020) Departmental Strategic

REPORT ON ACTIVITIES OF THE AUDIT COMMITTEE

Name Status with Bank Status with Committee Educational Qualification

Shamsuddin Ahmad Ph.D Independent Director Chairman Ph. D. (Economic Development), University of Hawaii, USAMr. Md. Nader Khan Director Member B.Sc.Dr. G.M. Khurshid Alam Independent Director Member Ph.D. (Economics), Boston University, USAMr. M. Farhad Hussain FCA Independent Director Member Fellow of Institute of Chartered Accountants.

87PRIME BANK

REPORT ON ACTIVITIES OF THE AUDIT COMMITTEE Planning of the Internal Audit & Inspection division and recommended to the Board

• Reviewed revision of Internal Audit Charter of the Audit & Inspection Division and recommended to the Board for approval

• Reviewed the risk based audit report of the branches, different department and divisions of Head Office.

• Reviewed IT Audit Progress report, Summary of IT Audit Report of different IT systems.

• Reviewed the audit reports of all foreign subsidiaries.

• Reviewed Draft Internal Audit Policy.

• Reviewed monthly Audit Departmental Operational Activities Update.

• Reviewed information on Year –To-date (YTD) progress reports.

• Reviewed Information on E-mail System, Active Directory & Anti-Virus conducted by IT Audit.

• Reviewed reports on Information Security Division(ISD),Network Infrastructure Management and SWIFT operation conducted by IT Audit

• Reviewed Information on RemitF@st System, ALTITUDE system, and BACH (BACPS & BEFTN) operation conducted by IT Audit.

• Reviewed major audit findings and observations on Disaster Recovery Management, Migration, and Up-gradation of CBS T24(R-16) and AML software (Sanction Screening & CTR) conducted by IT Audit.

External Audit & Auditors:

Exchanged views with the External Auditors in the 136th AC meeting held on 09.04.2018 where representatives of the Audit Firms namely M/S. Hoda Vasi Chowdhury & Co and Aziz Halim Khair Choudhury were present. All discussed and shared their observations/ findings with regard to internal control tools put in place for oversight including their adequacy.

Scrutinized applications for the aspiring External Auditors of the Bank for the year 2018 and recommending to the Board for consideration at the AGM for final appointment:

Inspections Reports (Internal & Bangladesh Bank):

Reviewed Inspection Report on the documentation status of different customers of the Bank (branch-wise)

Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on the position of 31.12.2017, 31.03.2018, 30.06.2018 and 30.09.2018 respectively.

Periodical Reporting:

Reviewed quarterly status report on Complaints received by Service Quality and Central Complaint Management Cell

Compliance Functions:

Reviewed Compliance Policy of the Bank

Reviewed progress and compliance status of the decisions/ Minutes of the Audit Committee Meetings, Board and Executive Committee.

Other functions:

Emphasized on training for the officials through setting up an ideal Training Academy including sending abroad to suit the purpose and requirement of the Bank

Annual Integrated Report on the Health of Prime Bank Limited for the year 2017

Reviewed status of Deferral(s) allowed to the customers for execution of documentation and other purposes on periodical basis.

C- The Committee also carried out the following activities those are linked with the events/ occurrences with the year 2019:

Reviewed Draft Annual Financial Statements for the year 2018 and recommended suitable changes before presenting the same to the Board. The Committee also held discussions with the representatives of External Auditors: 1) Hoda Vasi Chowdhury & Co. & 2) Aziz Halim Khair Choudhury, Chartered Accountants; to ascertain compliance with the regulatory directives and international standards in preparation of the financial statements.

Scrutinized the applications of the intending External Auditors of the bank and recommended to the Board for appointment at AGM.

Endorsed the Activity Report of the Audit Committee for the year 2018 and reports drafted for insertion in the Annual Report- 2018 and authorized the Chairman of the Committee to sign on its behalf.

Before concluding, I would like to express my gratitude to the Members of the Committee for their valuable time, useful suggestions and taking keen interest in fulfilling the objectives leading to protecting the interest of the stakeholders. I would also like to thank the Management & the Board of Directors for allowing the Committee to discharge its duties and responsibilities as an independent Committee of the Board.

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ANNUAL REPORT 2018

REPORT ON ACTIVITIES OF THERISK MANAGEMENT COMMITTEE

Risk Management Committee Disclosures

The Risk Management Committee (RMC) is one of the three assistive Committees of the Board besides the Executive Committee and the Audit Committee in compliance with the Banking Companies Act 1991 and BRPD Circular no. 11, dated October 27, 2013 of Bangladesh Bank. At Present, following Directors of the Board are representing the Risk Management Committee:

Sl Name Status in the Bank Status in the Committee

1 Dr. G.M. Khurshid Alam Independent Director Chairman

2 Mr. Mohammad Mushtaque Ahmed Tanvir Director Member

3 Mr. Shamsuddin Ahmad, Ph.D. Independent Director Member

4 Mr. M Farhad Hussain FCA Independent Director Member

Duties and Responsibilities

• Identifying different risks, introduce and implement proper strategies to control those risks, review existing risk management principles & procedures and take corrective measures if necessary;

• Ensure appropriate organizational structure for risk management;

• Form separate committees at Management level for compliance of instructions under risk related guidelines and supervision of their activities;

• Review risk management policies and guidelines, review loan approval limit and submission to the Board for necessary revision each year;

• Examine and approve the preservation of data and reporting implemented by the management and ensure implementation of the same;

• Inform the Board of Directors about the summary of minutes of meetings of the committee;

• Submit decisions/recommendations of the Committee to the Board on quarterly basis. If sought by the committee, internal and external auditors will submit evaluation report to the committee.

The Board of Directors of the Bank has formed the Risk Management Committee (RMC) as per guidelines of Bangladesh Bank. Risk Management Committee of the Board oversees the overall risk management of the bank. The committee also reviews risk management policies, process& guidelines of the bank and submit it to the Board for prior approval or renewal as necessary. During 2018, 04 (Four) RMC meetings were held and 26 (Twenty Six) memos were placed before the RMC. The agendas discussed in the RMC meeting are as below:

Sl Name of the Memo

1 Discussion of Sustainable Finance Activities

2 Review of restructured Large loans

3 Review of Information Security Policy and Procedures of the Bank

4 Review of Fraud Detection and Management Process

5 Review of Comprehensive Risk Management Report

6 Review of Borrower Rating and Capital Management status

7 Review of Stress Testing of the Bank

8 Review of Green Banking Policy

9 Risk Appetite Statement of the Bank

10 Internal Capital Adequacy Assessment Process of the Bank

11 Review of Quarterly Risk Management Report

12 Discussion on Annual Report of AML/CFT activities of last year

The committee likes to extend sincerest thanks to all the members of the Risk Management Committee for their valuable time and support for facilitating to carry forward the objectives of the Board. The Committee also likes to thank the Management & the Board for assisting the Committee to discharge its due role.

89PRIME BANK

Effective risk management is essential to perform consistently and sustainably for the sake of our stakeholders and therefore Prime Bank considers risk management as a core job beside its core business. We try to add value to clients and the communities by operating efficiently and generating returns for shareholders by taking and managing risk. Through our Risk Management Framework we try to manage enterprise wide risks with the objective of maximizing risk-adjusted returns while remaining within our risk appetite.

To ensure health of the Bankwhich is a significant part of the whole financial systems, identifying, measuring, monitoring and controlling various type of risks are crucial factors.. In addition to the traditional risks faced by the Banks in credit and market risks, various operational risks are also created due to various reasons like:

• Increasing use of automated technology

• Growing importance of IT integration and shared services across financial institutions and entities

• Necessity of reducing earnings volatility and achieving cost efficiencies

• Shifting from vanilla type products to technology based products which are creating more complexity in product and product development

• Increasing customer needs

• Evolving outsourcing arrangements and increasing dependency

• Increasing focus by regulators on legal, fraud, and compliance issues.

• Knowledge gap and lack of supervision.

This has necessitated development of enterprise wise risk management framework for the Banks. Prime Bank Limited (PBL) is increasingly focusing on development of appropriate risk management framework for managing risks of the Bank. Risk Management Division has been set up which identifies, monitors and reports various type of risks and develop Bank-wide integrated risk management culture. The Division has been working on identifying the gaps in the risk management procedure of the Bank, placing those issues to Executive Risk Management Committee (ERMC) comprising of members from all key business / risk areas and following up for rectification. Major activities of RMD include preparing Risk Management Paper, performing stress testing, vetting of different Product Program Guidelines, process manuals, developing various risk models and acting as an operation layer for Internal Capital Adequacy Assessment.

Credit Risk Management

The Bank in recent past has increased its focus in managing Credit Risk. Total Credit Administration Process has been centralized which have mitigated various risks arising from human error in branch banking. Similarly, Trade related functions of branches havebeen shifted to centralized Trade Service Division since 2016. To reduce the residual risks, the

security related documents is being revalidated by legal firms and also cross examined by the independent audit firms. Corrective measures are being taken as per the audit report issued. Periodical Stock verification and insurance coverage has been made mandatory before sanctioning or renewing any credit proposals. Since the Bank has significant exposure in RMG sector, a separate Merchandiser Team has been formed with people having adequate experience in RMG operation. This has enhanced the Bank’s capability to identify risks and mitigate them on time. In order to shift to risk adjusted return on capital, borrower’s rating is considered while considering any price adjustment which is encouraging the borrowers to complete rating procedure of External Credit Assessment Institute (ECAIs).

Operational Risk Management

Operational Risk Management  (ORM) is a continual cyclic process which includes risk assessment, risk decision making, and implementation of risk controls, which results in acceptance, mitigation, or avoidance of risk. ORM is the oversight of  operational risk, including the  risk  of loss resulting from inadequate or failed internal processes and systems;  human factors; or external events.Operational Risk Management of the bank is guided by the “principles for the sound management of Operational Risks” suggested by Basel committee on Banking supervision. One of the principles is to have a strong control environment that utilizes policies, processes, and systems; appropriate internal control; and appropriate risk mitigation and/or transfer strategies. Bank;, follows a sound internal control program that consists of five components of that are integrated to risk management process; Control environment, risk assessment, control activities, information & Communication and monitoring activities. As a part of strengthening Operational Risk Management, the Bank is now centralizing its total general banking operation which will hopefully significantly reduce various operational lapses that was prominent in Branch Banking.Credit Administration and Trade Service Operation already centralized in the past years. At the end of 2018, the Bank has brought Liability Operations, Cash Management Operations, Treasury Operations, and Remittance Operations under the umbrella of centralized operations team along with Card Operations and Alternative Deliveries Channel (ADC) operations.

Risk Management and Control functions units of the bank requires to ensure appropriate operational risk management by implementing Segregation of duties, system automation, data accuracy, proper supervision, On and off-site monitoring with the aid of MIS & Reports and senior management overview. The bank is consciously driving the culture to implement bank wide operational risk management involving all its employees.

Information Technology Risk

PBL has an IT audit team, which has been formed as per the Central Bank’s guideline. The team conducts IT Audit in each branch on a periodic basis and provides suggestions to higher management.Moreover, independent Information

CRO’s REPORT ON RISK MANAGEMENT

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ANNUAL REPORT 2018

Security Department has been formed to assess the IT related risks faced by the Bank and suggest appropriatemeasures to mitigate risk.

Market Risk

Market risk is actively monitored by the Treasury Division of the Bank. As per stress testing, the Bank is unlikely to face any major risks in liquidity, interest rates and foreign exchange. A system based Value at Risk (VaR) Model is being used by the Bank to assess the risk related to the Foreign Exchange position. Treasury Mid office monitors risk limits including position limits and stop loss limits for the trading book and reviews periodically. Interest rate risk is also being monitored through the use of re-pricing gap analysis and duration analysis.

Environmental & Social (E&S) Risk Management

Prime Bank Limited (PBL) recognizes that its financing decisions have potential impact on human health and environment. Under this purview, PBL has developed Environmental & Social Risk Management policy statement and procedure manual in 2017 which was fully implemented and effective from the Beginning of 2018. The Environmental and Social (E&S) Risk Management Policy Statement represents the Banks commitment towards being E&S compliant in its activities and financing and the E&S Risk Management Procedure Manual is a detailed document on the process flow, roles and responsibilities and operational procedure of E&S Risk Management for the Bank.

PBL always committed to promote sustainable growth in the economy. During the year 2018, PBL strictly followed the ESRM guideline and total 1,271 borrowers were eligible for Environmental Social Risk Rating (ESRR).During 2018, the Bank has financed total amount of BDT 335.70 million among which 287.20 million for installation of ETP in 04 projects, BDT 28.0 million in 06 Eco Friendly Brick Production projects, BDT 0.0786 million in a solar system project, BDT 0.1 million in two bio-gas plant in existing Dairy & poultry Farm, 19.6 million in a LED Bulb/Tube Assembly Plant.. As a part of exploring new ventures in environment friendly projects, the Bank has also conducted several field visits, meetings with existing and prospective entrepreneurs, consultants and Central Bank officials. To strengthen E&S Risk Management PBL had also organized a number training, workshops, seminars etc. during 2018.

Pillar 1 Risk Management

PBL has been maintaining capital well above the minimum capital requirement as against Credit, Market and Operational risk. The Bank has proper credit risk mitigation process in place. Moreover, PBL is consistently trying to rate its corporate borrowers not only to have expert opinion on the borrowers but also to strengthen capital base. As of December 2018, PBL has 68.43 percent of its corporate borrowers rated through External Credit Assessment Institutions (ECAIs). Through borrower rating, PBL achieved capital relief of 13,093.90 million during 2018. In terms of Capital Adequacy, PBL was well above of minimum capital requirement i.e. 10 percent in all the four quarters of 2018, to be exact Capital to Risk weighted Asset Ratio of the Bank was 14.10% at the end of March, 15.07% at the end of June, 16.65% at the end of September and 17.04%

at the end of December, 2018. Besides, Proper organizational structure and procedures are also in place to ensure mitigation of operational risk and market risk.

Pillar 2 Risk Management

The key principle of the Supervisory Review Process (SRP), the second Pillar of Basel-III is that “Banks shall have a process for assessing overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital at an adequate level”. SRP covers additional risks like Residual Risk, Concentration Risk, Liquidity Risk, Reputation Risk, Strategic Risk, Settlement Risk etc. PBL assessed its additional capital requirement under Pillar 2 and submitted the statements on Internal Capital Adequacy Assessment Process (ICAAP) to Bangladesh Bank. PBL has also been conducting stress testing on its financials and asset portfolio on quarterly basis and reporting the outcomes to Bangladesh Bank, as a part of Pillar 2 risk management.

Pillar 3: Market Discipline

PBL always delivers the appropriate disclosures not only to meet the regulatory requirements but also as per international best practices. Disclosures on the position of PBL’s risk profile, capital adequacy, and risk management system has been included in this Annual Report also.As per the Bank Companies Act  1991(Amended up to 2013),and as guided by the Bangladesh Bank BRPD Circular no. 11 dated October 27, 2013 the Risk Management Committee (RMC) of the Board has been formed to look after the risk management issues of the Bank.

Revised Regulatory Capital Framework for banks in line with Basel III

Bangladesh Bank vide BRPD Circular No – 18 dated December 21, 2014 issued“Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for banks in line with Basel III)” with effect from January 01, 2015. The new guidelines aimed to strengthen the quality and quantity of the regulatory capital base and enhance the risk coverage of the capital framework. PBL is well poised for implementing Basel III phase by phase during the period 2015-2019. It is mentionable that, PBL is maintaining much higher Common Equity Tier-1 (CET-1) capital ratio than the prescribed minimum ratio of 4.5% by Bangladesh Bank. Though in reality, risk capital will remain only a number and might not be effective if banks do not assess their risk periodically and take timely corrective action when the risk exceeds the threshold limit. Thus, whether it is Basel II or Basel III, it is crucial that PBL does not depend solely on “regulatory capital”. What is needed is a dynamic risk mitigation strategy, where all employees act as risk managers in their own area. RMD is trying to develop a proper risk culture across the organization where “risk” is an integral part of future business decision-making. Having said that, PBL always had the reputation of being one step ahead and committed to continue the same in the coming days.

91PRIME BANK

ETHICS & COMPLIANCE

Professional Ethics

The Board and senior management have a vital role to play in shaping and embedding a healthy corporate culture, and this continued to be a focus in 2018. Main aspect of our culture is Professional ethics which encompass the personal and corporate standards of behavior expected from the Prime Bank officials. The commitment of our employees, at all levels, to compliance issues serves as a reflection of our shared values. Prime Bank has its own Charter of Professional Ethics that reflects our ambitions, commitments and principles of excellence. It sets out our fundamental ethical principles and serves to guide our professional conduct.

Respect for rules and others

Rules on professional conduct and compliance have always been a key part of our business. These rules go beyond simply applying the legal provisions and regulations currently in force. The conduct of each individual should be guided by the principles of good faith and honesty. Everyone has a responsibility to comply with the law and regulations – particularly those that relate specifically to banking – in the interests of all stakeholders.

Customer insight

Prime Bank has put in place a series of procedures and tools that enable it to identify and gain a better understanding of its customers. The processes for opening accounts for new customers and for creating and updating customer files are governed by strict rules.

Preventing conflicts of interest

Prime Bank has put in place decision-making systems to prevent conflicts of interest from arising, in particular by separating its Investment and commercial divisions and adopting a collective approach to lending decisions.

Respect for others

This principle demands that the conduct of every individual be governed by the notions of good faith, honesty, moral integrity, Precision and professionalism. Employees are expected to serve customers with loyalty, care and discretion.

Respect for professional secrecy

Prime Bank employees are bound by professional secrecy. They are prohibited from using any confidential information of which they may become aware in the course of their work to perform transactions, whether directly or indirectly, for their own profit or that of others.

Transparency

Our Banks inform customers of the conditions and rates that apply to the products and services they offer. Our employees are expected to give their customers clear information about the services, products and loans on offer.

Meeting our commitments

Customer-facing employees must be aware of the level of service that can be delivered to customers and take care not to enter into commitments that cannot reasonably be met.

Collective disclosure requirements

Employees can directly alert the Group’s managers, directors or shareholders of any anomalies that they notice, particularly with regard to ethics, without fear of reprisals or sanctions.

Combating money laundering and the financing of terrorism

Prime Bank have introduced an internal handbook on ways of combating money laundering and the financing of terrorism. All employees are expected to remain vigilant in this regard. This vigilance is based upon knowing their customers well. The bank does not engage in transactions or financial deals with individuals or corporations of whose identity and/or activities it is not aware.

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ANNUAL REPORT 2018

One-stop services offered to CnIB clients, starting from structured solutions to cash management under one roof, paid off in terms of volume of business and earnings as well. This initiative made CnIB clients more comfortable in doing business with Prime Bank and reap best possible synergy from the relationship. We hope to continue this approach in the days ahead with particular focus on cash management services and onboarding of more rewarding relationships for the bank.

The Team CBD has set its vision statement for 2018-2021 “Quality Credit for Sustainable Growth” and the officials/executives of the division have taken the challenges to reach at emerging stage from disperse situation under centralization of corporate business of the bank. CBD will bring new dimension as well in 2019 & onward by adapting to changing client needs, benchmarking mobility solutions and bespoke products & services through better client knowledge.

“In-depth review of business & performance assists to have an understanding of economic environment, trend of business dynamics which shows more opportunities that ultimately leads to sustainable operations.”

BUSINESS REVIEW AND ANALYSIS

Corporate And Institutional Banking

Commercial Banking Division

93PRIME BANK

Prime Bank initiated a revamped MSME banking in 2017 and made it ready to serve customer thoroughly in 2018. The Bank adopted appropriate and conducive policies in this arena and took MSME as a high potential enterprise market segment and in this regard, started operation by adding a dedicated and customer-driven sales force, cash flow-oriented lending assessments, decentralized decision-making through 146 touch points.

MSME Banking 2018

Diversification is one of our core strengths. PBL always trys to understand needs of customers of all segments and recently we launched “PRIME DIGI” 1st

ever digital account in the country.

In Prime BankNet Profit grow 106.60%CRAR 17.04%

Diversified Products & Services

Monarch team recorded a milestone on net deposit growth in 2018 which helped the team to cross 1,000 crore marking just in 04 years of operation. This has been possible through an all-out team effort and superior service provided by the Monarch team.

Consumer Banking

BUSINESS REVIEW AND ANALYSIS

Management Review

Segmental Analysis

Report on Human Resource Management

Report on Non-Performing Asset (NPA)

Products and Services

95PRIME BANK

Prime Bank passed another successful year in terms of its operating performance despite many political and economic uncertainties. The Bank did well in 2018 indeed in terms of net profit and return on assets. The growth rate of net profit and return on assets were 107 and 100 percent respectively. This was possible due to prudent balance sheet management. Prime Bank focuses on sustainable growth and as such emphasized on diversification of assets, increasing non-funded revenue generating services, strengthening internal control and compliance through the implementing process of centralization.

With the view to deploying concentrated effort, the business are controlled and monitored through its major four segments; CNIB, CBD, MSME and Retail. Besides conventional mode of business PBL gives parallel emphasis on its Islamic banking wing. Moreover, other key divisions also plays vital role in achieving organization goal. A brief review of business of the key segments and divisions has been stated below including an analysis of financial position and the performance of the bank during the year under review.

Wholesale Banking Segment

The Wholesale Banking segment of Prime Bank Limited started its journey from [December 2015], soon after accomplishing centralization of key processes across the bank. The segment provides comprehensive relationship coverage to corporate clients & financial institutions and became the most dominant business segment for the bank in terms of both income & profit, since its inception.

The segment comprises of 5 (five) key divisions – namely, Corporate & Institutional Banking (CnIB) Division, Commercial Banking Division (CBD), Transaction Banking (TB) Division, International Division (ID), and Treasury Division (TrD). Accordingly, it offers a full suite of products and services, including but not limited to term & working capital financing under both conventional & Islamic window, trade financing, treasury support, cash management solutions, and project & syndication financing, etc.

Segregation of business into CnIB and CBD, based on group turnover, in the clients’ ecosystems helped Prime Bank to serve better than the previous with focused & customized manner and strengthen bonding further with existing & newly inducted clients as well. Notably, Commercial Banking Division (CBD) serves corporate clients with an annual turnover ranging from BDT 250 ~ 8,000 million, while the Corporate & Institutional Banking (CnIB) Division serves only to those clients having turnover beyond the highest threshold of CBD.

In 2018, the Wholesale Banking segment contributed [80%] and [23%] respectively in the asset and liability pool of the entire bank. The trade business of [USD 3.9 billion], highest ever since the inception of this segment, also contributed [4.67%] to the overall trade of Bangladesh.

Corporate and Institutional Banking (CNIB)

Being the election year, 2018 was a challenging year for the banking community. However, our careful strategy for

increasing portfolio on a selective manner, onboarding funds at optimum price, and focused services helped us to attain [39%] overall income growth during the year.

Due to strategic rebalancing of overall asset portfolio mix for the bank, CnIB’s asset portfolio growth was rationally kept at [6%]. Nevertheless, optimization of wallet shares from rewarding & risk minimal customers helped us to augment funded income by [1.42] times over the last year.

Due to persisting demand-supply gap existed in foreign currency market throughout the year, we grew our Export business by [1.4] times over last year, but controlled Import business with a reversed growth. As a result, a marginal increase of [2%] could be achieved in non-funded income. We also remained careful with our Guarantee business and controlled its growth similar to Import business.

To support the growth of CnIB’s asset portfolio with self-supported liability within next 5 years, we put additional focus

MANAGEMENT REVIEW

Financial Closure of the Syndication for Hashem Rice Mills Limited

Musical Program for Wholesale Banking Sponsors

Mezban Program for Wholesale Banking Customers

96 PRIME BANK

ANNUAL REPORT 2018

on our liability products and could posted a [20.40%] growth in 2018, despite high volatility continued at local liquidity market with occasional spiky offers from competing banks.

To excel further, we continued our journey for onboarding committed & experienced personnel to our team and strategically focus on business segments with high growth potentials. Creation of a dedicated team for public sector & infrastructure projects, was the latest initiative under this endeavor.

Notably, one-stop services offered to CnIB clients, starting from structured solutions to cash management under one roof, paid off in terms of volume of business and earnings as well. This initiative made CnIB clients more comfortable in doing business with Prime Bank and reap best possible synergy from the relationship. We hope to continue this approach in the days ahead with particular focus on cash management services and onboarding of more rewarding relationships for the bank.

Commercial Banking Division

The centralization of Relationship Management for Corporate customers of Prime Bank Limited started with Board’s decision to segregate the corporate customers based on their annual turnover. Accordingly, Commercial Banking Division (CBD) was assigned for the corporate having annual turnover in the range of BDT 250 million & above to below BDT 8,000 million.

CBD started its operation on 13 October 2015. At present, CBD has 05 segments for which there are 05 Segment Heads, 16 Relationship Managers (RMs) and 23 Associate Relationship Managers (ARMs). One of the segments cover Chittagong region. Moreover, CBD has two Hubs at Rajshahi & Khulna under two segments. The team CBD is headed by the Deputy Managing Director & Chief Business Officer (CBO) of Commercial Banking Division. The CBO is also assisted by the Business Planning Manager (BPM), Management Information System (MIS) Official and the Secretary to plan and manage the overall activities of CBD.

Key features of customers of CBD are- they are of diverse nature, from different cultural background, have different management patterns, requirements and expectations. The RMs & ARMs have been discharging their responsibility for providing services to these Commercial Banking customers, retaining existing customers in a stiff competitive market, booking of new clients to ensure sustainable growth, regularizing problematic accounts as well as ensuring internal & regulatory compliance.

As at end December-2018, customers under relationship of CBD had total funded & non-funded exposure of BDT 111,416 million against which funded outstanding was BDT 39,901 million whereas non-funded outstanding was BDT 25,864 million. The portfolio was adequately covered by securities and well diversified among different sectors of the economy like Readymade Garments, Textile, Iron & Steel, Construction, Healthcare, Manufacturing, Agriculture etc.

The funded outstanding as a whole witnessed a growth over 11 percent in 2018 over the same of 2017. CBD had no non-performing loan for core relationship customers as at end December-2018.

The deposit volume of the Commercial Banking customers stood at BDT 11,319 million whereas import, export and guarantee business channeled through the Bank in 2018 stood at BDT 51,996 million, BDT 50,222 million and BDT 8,080 million respectively.

During the year 2018, CBD officials conducted 324 factory/project visits to the customers. Moreover, they had visits to Head Office and other establishments of the customers whenever required.

Among the eligible loan customers of CBD, 239 customers were rated by External Credit Rating Agencies which resulted to capital relief for the Bank.

In addition to procuring core business, the RMs/ARMs of CBD also contributed through cross-selling of products and services offered by other business segments of the Bank in 2018 which included among others 08 payroll agreements.

Throughout the year 2018, different talent development programs (training, workshop and seminar) on topics like relationship management, negotiation, communication skill, trade finance, syndication financing, anti money laundering etc. were arranged for the employees of CBD.

A Jeans Manufacturing Factory financed by the Bank

Loan Agreement Signing with a customer

Manufacturing (Other than Food)Food ManufacturingAgricultureCeramicsICTPoultryPharmaceuticalsTourism

Sectoral allocation of CBD loan portfolio

RMGIron & SteelTextileTrandingShip BreakingReal EstateFurnitureLeatherShip Building

ConstructionPrinting & PackgingHealthcareServiceJuteTransportTelecomCold-StorageOthers

Strategic Priorities ofCBD are to ensure:

• Quality Credit• Sustainable profitability• Low NPL (Less than 2%)• Human Capital• Retain worthy Client• Best-in-class in quality of

service and reputation• Capital Relief for Higher

Capital Adequacy• Compliance• Diversified Portfolio• Better Relationship

Management.

97PRIME BANK

The Team CBD has set its vision statement for 2018-2021 “Quality Credit for Sustainable Growth” and the officials/executives of the division have taken the challenges to reach at emerging stage from disperse situation under centralization of corporate business of the bank. CBD will bring new dimension as well in 2019 & onward by adapting to changing client needs, benchmarking mobility solutions and bespoke products & services through better client knowledge.

Consumer Banking

Consumer Banking Division took a number of major initiatives in 2018 for the advancement of Consumer Banking business and operations while keeping customers in the center of all activities.

Some noteworthy initiatives of 2018 were:

• Consumer Banking was redefined. Branches, Cards, ADC along with the existing Product, Segment, Sales, Collection, Consumer Finance and Consumer Compliance came under Consumer Banking Division.

• Monarch was established as a strong player in the High Net Worth Segment market through enhanced customer relationship management

• The productivity of Sales Team has been increased through structured approach.

• CASA mix in the deposit portfolio was increased.

• Home Loan portfolio was increased through realigning the product features

• Launch new and revamped competitive products to meet the lifestyle aspirations of the customers

• Enhanced MIS and Analytics support for all wings of the Consumer Banking division

• Controlled Portfolio at Risk (PAR) at a minimum level for a healthy Consumer Loan Portfolio

Monarch: Crossing a Milestone

Monarch team recorded a milestone on net deposit growth in 2018 which helped the team to cross 1,000 crore marking just in 04 years of operation. This has been possible through an all-out team effort and superior service provided by the Monarch team.

The Customer Value Proposition (CVP) has further been enhanced through a number of new corporate alliances

with different partners for specialized privileges for Monarch customers which include local and international brands like The Westin Dhaka, Le Meridien, Pan Pacific Sonargaon, Sarah Resort, Dusai Resort & Spa, Manipal Hospital (India) etc. Monarch became a trendsetter by introducing overseas travel insurance facility for its valued customers. This has been introduced for the first time in priority banking space in Bangladesh.

Monarch also hosted various customer engagement events focusing on entertainment, lifestyle and health issues throughout the year which were highly appreciated by its valued Monarch Customers that in turn helped enhancing Prime Bank’s brand recognition and value.

With its robust deposit portfolio, a resilient team coupled with excellent service standard, Monarch is poised to become a strong player in the Priority segment of the banking industry in the offing.

New and Revamped Consumer Products

Focusing on customer requirements and convenience remains the pivotal element in designing Consumer Products. Product team always provide relentless efforts to improve and redesign products with changing requirements of consumers. The team launched a new deposit scheme, “Kotipoti Deposit Scheme” (KDS) as well as revamped the existing schemes: Prime Millionaire Scheme (PMS) Monthly Benefit Deposit Scheme (MBDS), Double Benefit Deposit Scheme (DBDS), Contributory

Savings Scheme (CSS), Laksma Puron Deposit Scheme (LPDS) and Lakhopati Deposit Scheme (LDS) with the attractive features. All of these stand out as very competitive products in the market.

Moreover, the prevailing RFCD account has also been revamped with more competitive & attractive features.

1050

1000

950

900

850

800

750

BDT

CRO

RE

Dec-17

Dec-18Ja

n-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-1

8

Aug-18

Sep-18

Oct-18

Nov-18

792800

843 852 864 860 865

Portfolio (Monarch)

889911 904

931961

1019

Consumer Banking Deposit Mix : 2017 vs. 2018

2017

FDR35%

CASA32%

Scheme33%

2018

CASA34% FDR

41%

Scheme25%

98 PRIME BANK

ANNUAL REPORT 2018

The new Consumer Loan PPG (Product Program Guide), specially Home Loan PPG has provided impetus to the growth of Home Loan portfolio.

Consumer Loan Outstanding Balance : 2017 vs. 2018

Sales Team Attained Higher Productivity

Consumer Banking division made keen efforts to increase the productivity of the Sales Teams by equipping them with good product knowledge, on the job training and rigorous monitoring of performance on a day to day basis. Both Liability and Asset team have enhanced its productivity level and they are all set to take up the challenges for the coming years.

To reach out to the customers and provide doorstep service, Sales team took initiative to set up a small kiosk at reputed organizations (e.g. United Hospital) for Consumer Loan products.

Meanwhile, the Payroll Team of Consumer Banking on boarded in total 43 new companies with 3,352 salary accounts in 2018.

Deeper Insights of Consumer Banking Data

Consumer Banking greatly depends on MIS and Analytics. As a big stride in this path, RM Coding and Segment Coding have been successfully completed to measure business performance based on system based reports.

Consumer Finance team has also started Payroll Database analysis. This has given the Consumer Banking Management better insights into the health of the payroll portfolio. The team introduced Monthly MIS Pack/ Report to provide a monthly overview of deposit, loans, cards and collection performance of Consumer Banking Division.

Consumer Finance department has developed a number of automated tools for asset, liability, transactions, payroll, Monarch, service quality etc. to support the growing business need of Consumer Banking division. They have developed their own robust Consumer Banking Data Warehouse for Deposit, Asset, Customer, Transaction and Average Balance Datamart.

The team also successfully conducted Interest Rate Review Project for rationalization of loan revenue.

Portfolio Risk Minimization

Portfolio at Risk (PAR) is a major indicator of the health of the asset portfolio of a bank. Consumer Banking’s PAR reduced from 16.80% in 2015 to 4.71% in 2018, indicating a giant leap in improvement of the portfolio health.

The structured approach of the Collection team along with close monitoring has resulted in continuous improvement in PAR.

MSME Banking 2018 – Traversed another Horizon

There are 7.81 million economic entities in Bangladesh, according to BBS Economic Census 2013 of which around 99% are CMSME in reference to size of operation. According to another ADB Institute study conducted in 2016, 99% formal businesses in Bangladesh are SME. They constitute 75% non-agricultural employment and contribute about 25 percent to the national GDP by only manufacturing set ups.

Small and Medium Enterprises (SMEs) are treated as the engines of growth and drivers of innovation worldwide. They play a significant role in driving economic growth and generating jobs. In Bangladesh, the sector is actually changing the face of the economy. SMEs are playing a vital role for the country’s accelerated industrialization and economic growth, employment generation and reducing poverty. SMEs now occupy an important position in the national economy.

Considering such large stake and potential in economy Prime Bank initiated a revamped MSME banking in 2017 and made it ready to serve customer thoroughly in 2018. The Bank adopted appropriate and conducive policies in this arena and took MSME as a high potential enterprise market segment and in this regard, started operation by adding a dedicated and customer-driven sales force, cash flow-oriented lending assessments, decentralized decision-making through 146 touch points. Moreover, key developments in 2018 in management, technology, customer service, operation, credit risk management, products, distribution and sales around MSME banking are illustrated below.

2017 2018

PERSONAL LOAN

741.1

3

BDT

Cro

re

1,000

800

600

400

200

-

673.

41

50.0

2

41.3

8

552.

66

598.

49

301.4

2

247.3

7

5.62

4.68

CAR LOAN HOME LOAN SECURED EMISECUREDOVERDRAFT

No. of Payroll Accounts : 2015 to 2018

38,05130,169

20,039

10,283

50,000

40.000

30.000

20,000

10,000

-2015 2016 2017 2018

30+PAR up to 179 DPD

16.80%20%18%16%14%12%10%8%6%4%2%0%

5.46%

11.95%

4.71%

2015 2016 2017 2018

99PRIME BANK

In 2018 bank developed and launched a range of financial product comprising rising need of funds, guarantees and transactions of countrywide diversified cottage, micro, small and medium sized enterprise customer. Limit size, purpose, collateral and eligibility of the loan products were varied and accommodate rising trends, potential and circumstances of our growing economy.

MSME Islamic Banking

Being a leading private commercial bank having countrywide network, Prime Bank adopted remarkable steps to offer MSME Islamic Banking products and services through all the distribution channels (branches and MSME hubs) of the bank, with a view to cater the needs of customers who want to avail financial services under Islamic modes, for which, an Islamic Banking Unit within MSME Banking Division has been established for business vertical of MSME. Four MSME Islamic Banking Products have been developed in 2018 which gets applauding market response. The products are –

• Hasanah Shombhabona• Hasanah Emarat• Hasanah Chalti• Hasanah Sampad

Customers across the country are being served at their doorsteps by dedicated MSME Relationship Managers based on nearest business hubs and branches in addition to services from branch, ATMs, internet, mobile apps, POS and call centre. MSME Credit Risk Management, Credit Administration and Other functional units serve the solution value chain by adopting MSME conducive policy, procedure, infrastructure and technology. As a result of an all-out collective team effort banks traversed a remarkable horizon in 2018 in MSME banking.

MSME Banking – At a Glance As at 31 Dec 2018 or During 2018

Segmentspecific

organizationand people

Conduciveloan approval

policy

Relationshipprofessionalat customer

door step

SimplifiedAppraisalandDocuments

Broad rangeof financial

solutionMSME

Banking2018

MSME Banking - Loan Products

Prime Shahaj Business loan up to BDT 20 Lakh without collateral

Prime Shombhabona

Business Loan BDT 10 Lakh to 1 Crore by taking lien of 30-50% cash security/FDR having regular transactions in banks

Prime EmaratUp to BDT 10 Crore loan to build various type of buildings for accommodation, commerce and production

Prime Chalti

Up to BDT 5 Crore loan to finance operating capital of MSMEs in the form of Term Loan, CC (Hypo), Bill Purchase, SOD, LC, BG, LATR, Performance Security etc.

Prime Sampad

Up to BDT 5 Crore loan to finance fixed asset purchase (machinery, equipment, vehicle, vessel) and/or building shop, factory, warehouse, new projects

Anchol Rin Loan for women led enterprise up to BDT 50 lakh

MSME Banking – Deposit Products

MSME Business Account

A transactional account for MSMEs to facilitate sales proceeds realization, trade and administrative payments and other enterprise transactions

MSME Special Notice Deposit

An interest bearing transactional account for MSME having auto balance swapping facility with linked accounts

MSME Fixed Deposit

A Fixed Deposit Accounts for MSME provides a higher rate of interest in return after fixed tenor of time – 1, 3, 6 & 12 month

1,350 New Loan Customer Booked

4,581 Loan Customer Live

7,066 Loan Account Live

124,000 Deposit Customer Live

18,390,000,000 Taka Customer Deposit Balance

21,120,000,000 Taka Loan Outstanding

21,150,000,000 Taka Loan Disbursed

100 PRIME BANK

ANNUAL REPORT 2018

MSME – Women Entrepreneur Development Banking

A good number of women are entering into entrepreneurship in Bangladesh while many other are in queue by making an extra effort to overcome family and societal responsibilities together. Prime Bank recognizes their potential and sets affirmative initiatives to facilitate women in business success. Led by a dedicated Women Entrepreneurship Development Manager MSME Banking take initiatives and implemented actions plans round the year. Some of these are –

International Awards

In 2018, Prime Bank Ltd. has got Best SME Deal Award from Asian Development Bank (ADB).Rahel Ahmed, MD & CEO accompanied by Head of MSME Banking received this prestigious award at fourth Annual ADB Trade Finance Program (TFP) Award-2018 held on 4 September 2018 in Singapore.Over 200 guests from banks and other financial institutions around the world attended the event.

Trade Services Division

Trade Services Division (TSD) is running with a team of dedicated and qualified, certified trade Specialists who are well conversant in International Trade & Foreign Exchange Business. At present Trade Services Division supports all segments of Trade Finance clients of the Bank by opening all forms of LCs, Issuing Shipping Guarantees, Handling Import Documentary Collections, Advising LCs, Purchasing or Negotiating Local & Foreign Export Documents, Handling of Export Documentary Collections. Besides this trade service division has also been providing all sorts of demand guarantee (Local & Foreign) service to our valued customers and demand guarantees to the different government and autonomous bodies against foreign counter guarantees.

With the competent guidance, support and supervision of competent authority of the Bank, cordial cooperation of Business segments and customers, Prime Bank has successfully set and made fully operational centralized trade services including demand guarantees of the Bank. At present Trade Services Division has centralized Import & Export and BG activities of all segments of clients of the Bank through three service points namely: Motijheel, Gulshan and Chattagram.

In 2018, TSD has successfully supported 26 % increase in export volume compared to that of last year. Other trade transaction of different sectors also shown an increasing trend in the current year.

Since inception as a Division, the primary objective of centralization of Trade Finance through this division has been to ensure efficiency, grow specialized expertise in Trade Finance and necessary utilization of Manpower performing compliance of rules and regulation of concerned regulatory authorities like Bangladesh Bank, other concerned Govt. authorities, ICC rules and publications for International Trade transactions and international standard banking practices.

Trade Finance is process-oriented, document-intensive and highly skill demanding division. Due to centralization of Trade activities, the bank has been able to derive the following benefits which ultimately impacted hugely in good governance, adherence to compliance and most importantly a maintaining a congenial business friendly environment for the valued clientele of the bank.

Key Benefits

• Centralized trade operations with trade finance processing at a central hub

• Trade business can be extended at the doorstep of all segment of customers

• With ease of implementing new products, new revenue generation opportunities are envisaged

• Better reconciliation and effective financial control

• Compliance, monitoring of transaction and uniformity in transactions in line with the International Banking standard practice and regulations of Central bank and other Govt. authorities.

Preferred and Low Cost Finance

Market PromotionEntrepreneurship

Development WorkshopCelebration Women Day

Bank partnered with Bangladesh Bank and provides preferred loans without security up to BDT 2.5 Million and with security up to BDT 5 Million to eligible women led enterprises at rebated rate

Selected women enterprises are offered Prime Bank Sponsored stall at annual women entrepreneur fair organized by Bangladesh Bank.

Bank organized workshop to illustrate business management and banking issues among women in business or are interested to be in business in near future.

Bank celebrates Women Day to recognize contribution of women in workplace with special attention and differentiation thru distribution of gifts, cakes and circulating messages highlighting them.

101PRIME BANK

Treasury

What we do in Prime Bank Treasury:

Every day the Banking industry is facing the growing challenges in technology, regulation and compliance. And as such to cope up with it, Treasury has become a strategically very important business partner for all the business segments across the Bank. Now a day’s, Treasury is more responsible for making sound financial investments with the available liquidity while reducing financial risks, although, the function of Treasury is mainly to ensure adequate liquidity and capital of the Bank while administering the financial assets. Prime Bank Treasury is not an exception. Over the last couple of years Prime Bank Treasury has been performing excellently well in spite of the market volatility, uncertainty, complexity & ambiguity that has been observed globally as well as within the country.

Prime Bank Treasury primarily focuses on the followings:

Expanding transaction volume;

Utilizing different market opportunities within all risk and regulatory limits;

Strengthening ALM operations in line with market changes & regulatory guidelines;

Creating a diversified fund management channel;

Minimize market, liquidity and interest rate risks;

Enhancing profitability;

Prime Bank Treasury has the following desks through which it offers a complete and well diversified range of services to its customers both in the interbank and corporate market.

Prime Bank Treasury Structure:

How was 2018?

In the year 2018 the overall business environment observed in the country was quite calm. But since it was an election year Business houses were very cautious and reluctant about investment at the later part of the year which was witnessed through decline in growth of private sector credit.

However in 2018, the Local Money Market was more or less liquid throughout the year. This was mainly due to lack of Govt. borrowing from the Banking Sector. Deficit budget financing shifted from market-based tools (bank loans and government securities) to non-marketable instruments, e.g., National Savings Certificates (NSCs). Such large scale recourse to non-marketable borrowing is creating an environment that is stifling development of different markets like bond, pension fund, mutual fund, group insurance fund and so forth. In this situation, to support country’s economic growth, Bangladesh Bank took several steps under inclusive banking specially credit accessibility for agricultural as well as small and medium enterprises (SME), empowerment of women, green banking, modernization of financial sector, mobile banking, e-commerce, export promotion and liberalizing foreign exchange transaction. All these steps along with the prudent monetary policy adopted by Bangladesh Bank ensured steady

economic growth in 2018 while containing inflation within 5.55%.

Policy rate, Call Money rate & Inflation:

Outlook of 2019:

The GDP is expected to grow by 7.20% in FY2019 as consumption demand slackens despite a rebound in worker remittances. Remittance beneficiaries are likely to adopt a cautious approach to spending, repaying debt incurred in recent years of remittance declines. Private investment is nevertheless expected to edge up with support from an accommodative credit policy, and public investment will expand as the authorities seek to speed the implementation of infrastructure projects. Export performance is expected to strengthen on projected higher growth in the euro area and the US. However, net exports will not add to growth, as imports

PrimaryDealership

(PD) & FixedIncome

Securities

AssetLiability

Management(ALM)

MoneyMarket

ForeignExchange

Treasury

Jan-

18

Feb-

18

Mar

-18

Apr

-18

May

-18

Jun-

18

Jul-1

8

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

13.20%

16.95%

18.36%

22.00%

20.00%

18.00%

16.00%

14.00%

12.00%

10.00%

Private Sector Credit Growth in 2018

102 PRIME BANK

ANNUAL REPORT 2018

are expected to expand strongly with rising fuel requirements, and a steady increase in imports of capital goods. Agriculture growth is projected to be slightly higher at 2.5% as higher rice prices encourage farmers to plant more of the staple crop. With an expected improvement in domestic and external demand, industry growth will likely be stronger at 10.6%, as services edge up to 6.5%. Inflation is projected to edge up to 6.3% in FY2019 because of further increases in natural gas and electricity prices and continued taka depreciation. However, normal weather and projected stability in global oil prices should temper price pressures compared with this year. Call money rate is likely to rise on some pickup in Government borrowing. Policy support will continue for micro, small, and medium-sized enterprises with renewed emphasis on employment-focused manufacturing and services, and on expanding the availability of low-interest agricultural loans. The central bank is cooperating with capital regulators to encourage startup financing for entrepreneurs in Bangladesh.

With a continued favorable global outlook, export growth is projected at 14.0% in FY2019. Taking into account central bank’s policy measures, imports are forecast to grow 7.50% in FY2019 since Annual development spending was slated to grow by 38.5% to accelerate the implementation of some large infrastructure projects including the Padma Bridge, Dhaka Metro Rail, Rooppur Nuclear Power Plant, Payra Port, coal-fired power plants at Rampal and Matarbari and Kornophuli under water tunnel. As the dynamics of the recovery stabilize, remittances are expected to grow by 11.0% in FY2019. Due to rising of remittances and exports, the current account deficit is expected to lower, at 2.0% of GDP with monetary policy beginning to moderate import demand for FY2019.

Forecasts for FY2019 are based on several assumptions: The

current account deficit may deteriorate further if policies to rein in import demand do not succeed. Failure to boost revenues and tap foreign financing could unduly limit spending on needed infrastructure. Finally, climate & disaster resilience and whether remains a risk.

Treasury performance in 2018:

In the year 2018, Treasury achieved all of its KPIs successfully, even exceeded in some areas like Exchange Gain & Cross Currency dealing.

Prime Bank Treasury, at the very beginning of the year, through its own market research and market intelligence anticipated the market condition and accordingly adopted a dynamic fund management and investment strategy for the bank. Our prudent investment strategies in Money Market, Foreign Exchange Management as well as in Primary Dealership & Fixed Income securities again contributed to a very successful Year 2018.

Prime Bank Money Market (MM) Operation:

Over most of the period of 2018 the interbank money market experienced a liquid scenario. The number of days when money market felt a bit stretched was very limited. This was mainly possible for the accommodative monetary policy stance that was adopted by Bangladesh Bank. Call money rate hovered around 3.00% - 4.50% throughout the year 2018. Alike the previous years, Prime Bank Money Market Desk was very active in the money market all through the year 2018. The revenue generated by MM Desk in 2018 was BDT 1,195.86 million compared to BDT 1,090.07 million of 2017. The biggest challenge in 2018 was to ensure the best utilization of fund, which Money Market desk of Prime Bank did very successfully.

Daily Average Call Money Position & rate of Prime Bank

Jan-

18

Feb-

18

Mar-1

8

Apr-1

8

May-1

8

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct-1

8

Nov-1

8

Dec-1

8

Call Borrowing Call Lending W. Avg Rate (%) of Borrowing W. Avg Rate (%) of Lending

300275250225200175150125100755025

5.00%4.50%4.00%3.50%3.00%2.50%2.00%1.50%1.00%0.50%0.00%

Repo Reverse Repo

Industry Repo, Reverse Repo, Call Money Rate and Inflation

7.50% 6.75%

6.00%5.55%4.75%4.09%

5.76%

4.75%

3.90%

1.50%

2.50%

3.50%

4.50%

5.50%

6.50%

Jan-

18

Feb-

18

Mar

-18

Apr

-18

May

-18

Jun-

18

Jul-1

8

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Call Money Rate Inflation

103PRIME BANK

Prime Bank Primary Dealership & Fixed Income Operation:

In 2018, Prime Bank continued its position as one of the Best Primary Dealer Bank in Bangladesh. It expanded its dominance in both Primary & Secondary Market of Govt. securities trading.

Prime Bank Foreign Exchange Dealing:

In FX market, Interbank Foreign Exchange rate was quite volatile and illiquid throughout the year 2018. USD appreciated against BDT and stood at 83.90 level as of 31th December’18 which was 82.70 at the very beginning of 2018. Our FX Desk was able to forecast the situation very early and as such handled the situation pragmatically. In 2018, FX Desk generated BDT 111.18 crore as Exchange Gain in comparison to 105.49 crore of 2017. FX Corporate sales Desk was also very active in the interbank as well as the corporate foreign exchange market throughout the year 2018. The total volume in 2018 handled by FX Corporate sales Desk was USD 657.71 million compared to USD 361.24 million in 2017.

In the year 2018, FX Cross Currency desk registered a growth of 16.71% in exchange gain over 2017. During the said period, profit earned from speculative dealing was BDT 1.76 crore compared to BDT 1.48 crore of 2017.

Asset Liability Management (ALM) Desk:

Asset Liability Management (ALM) is an integral part of Bank Management. Head of Treasury is the member secretary of ALCO. Through ALM our Bank mainly aims to achieve objectives such as:

• Quality growth in assets & liabilities;

• Containment of risk in a coherent manner;

• Ensuring regulatory compliance;

• Stability and consistency in earnings;

• Profitability & increasing value of the Stakeholders;

ALM desk, through its own market research and market intelligence presented the market outlook throughout the year, gives an explicit idea about the market liquidity for availing market opportunities for investment and fund deployment in the market. Throughout 2018, the desk helped in pricing the products of both assets and liabilities to gain the competitive

advantage from the market movement. It also presented the bank’s overall financial position in front of the senior management to formulate an effective investment and fund management strategy for the bank.

T Bill BGTB BB Bill PBL Avg

Prime Bank G.Sec portfolio in Comparison to Avg. Market Yield of G.Sec in 2018

2,60011.00%10.00%9.00%8.00%7.00%6.00%5.00%4.00%3.00%2.00%

2,100

1,600

1,100

600

100

Jan-

18

Feb-

18

Mar

-18

Apr

-18

May

-18

Jun-

18

Jul-1

8

Aug

-18

Sep-

18

Oct

-18

396 396 396 497 497 497

Nov

-18

Dec

-18

4308.29%

1,788

1,839

1,867

1,893

1,893

1,928

1,944

1,981

2,0

22

2,04

2

2,04

2

2,0

558.65%

570 410

5.52% 4.88%

Mkt Avg

Net Open Position & Exchange Rate Movement-2018

84.0000

83.6000

83.2000

82.8000

82.4000

82.000

(10.00)

(20.00)

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1-Jan

-18

31-J

an-18

2-M

ar-18

1-A

pr-18

1-M

ay-18

31-M

ay-18

30-J

un-18

30-J

ul-18

29-A

ug-18

28-S

ep-18

28-O

ct-18

27-N

ov-18

27-D

ec-18

NOP USD/BDT Exchange Rate

Proprietaty/ speculative Dealing Performance 2018, 2017 & 2016

Amount in USD

Year Total Deal Volume Growth in Volume

2018 5,005 2,014,447,970.14 119.36%

2017 2,689 918,320,927.50 33.02%

2016 2,513 690,368,745.00 135.24%

104 PRIME BANK

ANNUAL REPORT 2018

In 2018, Treasury operated within all regulatory limits. This reflects Prime Bank Treasury’s commitment to operate within the rules and regulations of the Bank as well as other regulatory bodies.

Treasury Income in 2018:

We all are well aware that, a Bank as a whole fixes its yearly business target and accordingly Treasury being a strategic

partner fixes its own business strategy. Being a major contributor of the bank’s revenue line, Treasury contributed significantly in 2018. All the strategy and policies that were implemented in 2018 paid us very well and helped us to have a profitable 2018. Overall Treasury revenue numbers in 2018 from different revenue heads are given below with a comparison of 2017 & 2016 to show the growth in its business horizon and revenue line.

Treasury Priorities in 2019:

• Maximizing Treasury Portfolio return through exploring existing & new areas of business;

• Emphasizing on developing market research expertise under ALM operation;

• Strengthening on proprietary/speculative trading under FX dealing;

• Strengthening Foreign Exchange corporate sales operation;

• Emphasizing on providing Forex Advisory services;

• Strengthening relationship with all counterparts (both Interbank & Corporate);

• Managing Balance sheet in the most efficient and professional manner;

• Special Emphasize for building awareness among corporate customers regarding hedging and its benefits;

• Updating the policies related with treasury in line the changed/modified/amended policies as endorsed by Bangladesh Bank from time to time;

• Organizing knowledge sharing programs e.g. Trainings, Seminars on Treasury and Market risk Management;

Treasury Income 2016 - 2018

Treasury Income

Figures in Million

Particulars 2018 2017 2016

Foreign Exchange Gain 1,111.82 1,054.95 633.28

Interest Income Call Loan 85.70 43.80 24.02

Interest Income on Placement /Deposit (Local) 750.38 725.91 105.39

Interest Income on Placement /Deposit (Foreign) 359.78 320.35 257.34

Interest Income on Govt. Securities 2,011.55 2,312.01 3,326.80

Interest Income on Debenture/Bonds 13.55 23.45 37.19

Capital Gain for Sell of Govt. Sec. 19.15 1,558.59 1,946.67

Gain on discounted bond/bills 21.67 363.25 784.52

Underwriting Commission regarding Treasury Bill/Bond 3.87 6.19 28.25

Total 4,377.46 6,408.51 7,143.46

-31.69% -10.29% -24.64%

105PRIME BANK

International Division

Foreign Remittance:

During the year 2018, Prime Bank received foreign remittance of USD 547.90 million which is 16.07% higher than previous year. In addition to commercial remittance, Prime Bank gives very high priority to mobilise wage remittance by maintaining bilateral business relationship with the renowned exchange houses and banks in Saudi Arabia, Kuwait, Qatar, Bahrain, UAE, Oman, Malaysia, USA, South Korea and the global players like Western Union Money Transfer & Continental Exchange Solutions Inc. (RIA Financial Services).  In 2018, Prime Bank took initiative to reach unexplored market and established new relationship with ‘Kookmin Bank, Korea’.

As a part of Bank’s strategic initiative to handle increased volume of inward foreign remittance, the NRB Remittance Operations Unit of the Bank, backed by IT facilities, provided efficient service to procure remittance and speedy delivery of foreign remittance through wide distribution network comprising of own branches along with country-wide network of two reputed NGOs- BURO Bangladesh and UDDIPAN.

Correspondent Banking:

PBL maintains active relationships with an extensive network of banks and financial institutions all over the world and provides a wide range of correspondent banking services generating benefits to its customers. Correspondent network of PBL includes 672 members, covering 255 banks spread across 69 countries as on December 31, 2018. PBL also maintains 32 Nostro Accounts in 9 major currencies with reputed international banks around the world in all the important global financial centres.

During 2018, Correspondent Banking has been reoriented to a relationship-based model and aligned with Wholesale Banking stream which has created synergy to offer cross border trade transactions at very competitive term for LC advising, confirmation, negotiation and discounting, issuance and/or confirmation of bonds, guarantees and counter-guarantees; processing of documentary collections and Vostro Account services to correspondents. In During the year, bank has initiated a number of structured transactions with support from partner banks backed by globally renowned Export Credit Agencies.

PBL enjoys sufficient credit limits with a large number of international banks including ADB and IFC under trade finance program. In recognition to a unique solution of cross border trade transaction in SME sector, Prime Bank received “Best Trade SME Deal Award” from ADB for the year 2018.

PBL continued borrowings from foreign Banks and multilateral institutions viz. IFC, ICD and FMO to meet increasing demand in foreign currency lending through Offshore Banking Units. During the year, bank’s executives met representatives of international banks and participated in a number of international conferences, seminars including SIBOS 2018 in Sydney which has further strengthened correspondent relationship with Banks.

Offshore Banking

PBL is offering Offshore Banking facilities in foreign currencies through its three Offshore Banking Units (OBUs) located in Dhaka

Export Processing Zone, Chittagong Export Processing Zone and Adamjee Export Processing Zone. OBUs accept deposit/borrow from non-resident persons/institutions including Bangladesh nationals working abroad and 100% foreign owned enterprises in Export Processing Zones in Bangladesh. OBUs also make loans/advances to foreign owned enterprises in Export Processing Zones in Bangladesh and joint venture /local firms subject to approval from Bangladesh Investment Development Authority. OBUs offer wide range of services including trade finance, working capital, term loan, discounting of UPAS L/Cs and export bill of on-shore customers etc. Loan book of OBUs registered growth of 2.95% over previous year reaching to USD 284.04 million as on December 31, 2018 which is 11.59% of overall loan portfolio of the Bank. During the year 2018, OBUs have made a profit of USD 3.48 million compared to USD 3.00 million in 2017 registering a growth of 15.83%.

Prime Exchange Co. Pte. Ltd., Singapore

Since its modest beginning in 2006 with single branch-single corridor business in Singapore, Prime Exchange Co. Pte. Ltd. (PEC) has grown over the years and now has 3 (three) strategically located outlets in Singapore and distribution network in India and Philippines in addition to its core market in Bangladesh. With over 12 years of experience PEC, Singapore has established itself as a trusted brand in the Singapore Remittance Industry. The company has banking and agency relationship with banks having large network in Bangladesh and internationally renowned banks such as DBS Bank Ltd Singapore, BDO Bank Philippines, ICICI Bank Ltd and HDFC Bank Ltd of India.

Total volume of remittance was SGD 74.80 million in 2018 compared to SGD 71.70 million in 2017. The company made operating profit of SGD 24,500 in 2018 compared to SGD 186,970 in 2017.

PEC always strives to expand presence in Singapore through agency arrangement with remittance companies, bringing customers under its network coverage at competitive rates and fee. PEC Singapore is also actively considering to utilise fintech-based remittance companies to offer customers a faster and more convenient money transfer experience.

PBL Exchange (UK) Limited

The company has been operating with three Branches in London, Birmingham and Manchester since its inception in 2010. Since 2017, the company, as an Authorised Payment Institution (API), began Agents operation to reach the Non Resident Bangladeshi (NRB) community throughout the UK. As per FCA’s re-authorisation process, the Company has been authorisation to carry on payment services activities as an Authorised Payment Institution (API) from 16 May 2018, under Payment Services Regulations 2017 (PSRs).

The company has been operating by remaining compliant with rigorous regulatory guidelines. Despite fierce competition in the Money Service Business Sector, total number of remittance for the year 2018 has reached to 70,016, with the remittance volume hitting GBP 37.51 million, compared to GBP 31.98 million in 2017. The company has managed to make some marked progress in business by doubling its total Agent network from

106 PRIME BANK

ANNUAL REPORT 2018

18 in 2017, to 51 Agents by the end of 2018. There has been a significant growth in the transaction volume through agent network, from GBP 9.5 million in 2017 to GBP 15.45 million in 2018.

The company expects to deploy more Agents in its service network in 2019 with a view to expand service coverage to newer areas in UK. Along with the expected deployment of the new software, PBL Exchange UK will pursue more marketing programs to further enhance its mark in the remittance service sector. In the later part of 2019, PBL Exchange (UK) Ltd will seek to tap in to the digital domain by offering mobile Apps and web access to the wider community, in order to remain competitive and increase coverage. Despite challenges due to Brexit and its impact on UK economy, PBL Exchange (UK) Ltd. is expected to grow in 2019.

PBL Finance (Hong Kong) Limited

PBL Finance (Hong Kong) Ltd., the third fully owned overseas subsidiary of Prime Bank Limited, has become well acquainted within the Hong Kong business houses having major trading relationship with Bangladeshi industries importing fabrics, accessories for RMG sector, clinkers and minerals products like gypsum and limestone for cement manufacturing industries, capital machineries for different sectors, mobile phone accessories & IT products. The coverage is growing in other sectors as clientele have been widening with continuous effort from both of Hong Kong office and parent bank – PBL’s Head Office with help of marketing cell. Since its launch of business in September 2011, Company’s professional and expert officials deputed from PBL and local recruits from Hong Kong have been rendering personalized services to corporate/ businesses in Hong Kong.

The business trend throughout the year 2018 was mixed due to the consequences of US-China trade & tariff war percolates into Hong Kong economy causing Hong Kong investors become more vigilant and cautious. However, within this market scenario, the company has earned an operating profit of HKD 5,447,754 in 2018 compared to HKD 6,398,652 in 2017. The Core Banking Software (CBS) Temenos T24 system connectivity has made the company better equipped from Oct 2018 for ensuring faster service which is a milestone migration achievement. So far it has established RMA with 44 banks which help to run its trade finance services smoothly and formulation of FI marketing Team at PBL, Head Office from October 2018 for ensuring and enhancing the trade finance business is another addition to help handle more trade-based business in 2019 and onward. The company is going to strive forward to increase its revenue/ fee-based income through advising, negotiation, confirmation in addition to funded business through discounting facilities against banker’s acceptance on L/Cs originating from Prime Bank Limited and other Bangladeshi Banks.

Agriculture Financing

The overall economic development of Bangladesh is closely interlinked with the development of the agricultural sector. At the moment, 14.23% of Bangladesh’s GDP originates from agricultural sector, and the sector absorbs about 41% of the total labor force of the country, which indicate that Agriculture

is one of the key driving forces of the economy of Bangladesh. There is no alternative but to increase production through the development of agriculture to ensure food security. Similarly, agriculture is still now the largest employment generating sector of Bangladesh. Besides, agriculture makes the largest contribution to favorable Balance of Payment position through poverty alleviation, providing raw materials for industry, reducing imports and enhancing exports. According to the Agricultural & Rural Credit Policy and Program of Bangladesh Bank, crop, fisheries and livestock will have to be given priority.

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.

In line with Government efforts as well as the Bangladesh Bank’s Agricultural & Rural Credit Policy and Program, Prime Bank continued its proactive policy and program support to boost up agriculture financing.

Prime Bank Limited recognized that Agriculture / Rural Credit is one of the major tools for ensuring “inclusion” of the rural people into the banking activities and plays a major role in the overall economic development of the country. As such Bangladesh Bank’s timely guidance to emphasize on this sector has created a far reaching effect not only on this particular sector but on the economy as a whole. Prime Bank Limited, in line with the guidance of the Bangladesh Bank, has been relentlessly working to increase its activities in the agricultural / rural sector and the bank has been ceaselessly trying to contribute in the sector and will continue doing so in the future for the greater interest of the country.

Introduction of Agricultural Loan products in Prime Bank Limited

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 (Crops loan)

Rural people of Bangladesh are dependents on agriculture. For helping and encouraging and betterment of rural people / share cropper/ marginal farmers/ small farmers/ medium farmers to cultivate crops/ vegetables, Prime Bank provides Abad (crop loan) to bear the cost of tilling of land, fertilizer, pesticides, irrigation, seed etc.

This product has been designed to ensure desired amount of money for the share cropper, the marginal, small and medium scale farmers at the beginning of cultivation. The farmers can repay their loan after harvesting time. This product helps them a lot in terms of benefit as they need not to take high interest loan from the local money lenders, businessmen and MFIs/NGOs. Moreover, this flexible repayment system removes their mental pressure of weekly/monthly/quarterly installments and farmers are contributing to the national production over the year by their better production.

107PRIME BANK

Khamar (for farm loan)

Prime Bank has been providing Khamar Loan to meet up working capital and capital expenditure requirements of the farm of Fisheries, Hatchery, Poultry, Beef Fattening, Milching cow/Dairy, Bio-gas Plant (for Farm) , Duck rearing, Integrated Farm , etc.

Nabanno (any agri- purpose loan)

Prime Bank has been providing Nabanno Loan to MFIs (for onward lending to Agriculture sector), 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 and to meet up the capital requirement of Nursery farming, Weavers (Handloom Industry), Tissue culture farming, Others (related to Agriculture), etc.

Agriculture Loan by purpose

The Bank has been involved in disbursing quite a large portfolio of agriculture loans for various purposes during the year 2018, which are listed below:

Table: Agriculture Loan by purpose

BDT in Million

Purpose2018

Disbursement Outstanding

Crops / Vegetables cultivation 2895.00 1942.90

Fisheries 183.82 195.54

Livestock 715.02 564.73

Irrigation equipment 146.95 51.10

Farm Machineries 1.82 1.86

Crop storage & Marketing and Others 91.50 172.33

Poverty Alleviation 770.07 499.10

Total 4804.18 3427.56

Bangladesh is endowed with a favorable climate and soil conditions for the production of variety of crops all the year round. The major crops cultivated in the country are rice, wheat, jute, pulses, potato, oilseeds, spices, maize, sugarcane and vegetables. For climate change, there is a growing need to change the cropping pattern in the country. Water efficient high value crops (such as maize, spices, oilseeds and pulses) should be promoted in the drought prone region of the country through distribution of high quality seeds and saplings at subsidized price along with provision for agricultural credit at rebate / low interest rate.

The Central Bank has advised all banks that Credit facilities shall be allowed at rebate rate (4%) under interest loss compensation scheme of Government for cultivation of pulse, oil seeds, spices & maize to reduce dependency on import and to save huge amount of foreign exchange incurred for importing

the items. Bank may receive 6% interest loss compensation from Government through Central Bank after realizing the loan from borrower in full. Prime Bank Limited has positive intention to contribute in flourishing the crop diversification in the country with a view to attaining multifarious output in production, saving foreign exchange, substituting rice and other conventional crops.

In line with this the Bank has financed a substantial amount for cultivation of spices and maize. Credit facilities are allowed at rebate rate (4 percent) under interest loss compensation from Government for cultivation of spices and maize to reduce dependency on import and save huge amount of foreign currency incurred for importing the items. During the year of 2018, PBL has disbursed Tk.4.02 million among 44 farmers at rebate rate (4 percent) for cultivation of species and maize.

3.83%

60.26%

16.03%

Crops / Vegetables cultivation

Fisheries

Livestock

Irrigation equipment

1.90%0.04%

3.06%

14.88%

Agricultureral Loan Disbursement During 2018

Farm machineries

Crop storage & Marketing and others

Poverty Alleviation

56.68%

14.56%

5.04%

0.05%1.49%

5.70%

3.06%

Purpose-wise Outstanding as on 31.12. 2018

Crops / Vegetables cultivation

Fisheries

Livestock

Irrigation equipment

Farm machineries

Crop storage & Marketing and others

Poverty Alleviation

108 PRIME BANK

ANNUAL REPORT 2018

Pictures of some PBL financed projects on Agriculture

Financing in Guava cultivation Financing for Fish Farming

BDT in Million

Crops Loan disbursed @ 4% interest(Jan 2018 to Dec 2018)

No. of Clients

Spices 2.52 18

Maize 1.50 26

Total 4.02 44

Moreover, Prime Bank has disbursed Tk. 8.17 million to 10 (ten) taka account holders under financial inclusion program during the year of 2018.

Target and achievement

Prime Bank Limited has disbursed Agricultural & Rural Credit of Tk. 4804.18 million in the year 2018. However, considering the FY 2017-2018, Tk. 4396.79 million against the total target of Tk.2730.00 million has been disbursed.

In line with the Agricultural & Rural Credit Policy and Programme of Bangladesh Bank, a target of agricultural credit amounting to Tk. 3240.00 million has been set for Prime Bank for the FY 2018-2019, out of total target, an amount of Tk.2573.35 million has already been disbursed/achieved during the period from July 2018 to December 2018.

Financing in Dairy Farm Financing in poultry farm

Disbursement of Crop loan among the farmers

109PRIME BANK

Performance of Research and Development (R&D) Division

A keen understanding of business environment, trend of industry’s dynamics and forecast of major indicators play a crucial role in formulating strategies for growth and sustainable operation. Data, information and insight gathered through systematic process help the business to take the right decision. Besides, opportunities of business avenues can also be explored and existing business can be also given new dimension to increase the business volume and sustainable growth. Most importantly, what the customer/stakeholders think about the organization and its peer organization, determine competitive advantage. To gather the insight, there is no alternative to qualitative and quantitative studies.

R&D division of the Bank undertakes research studies to provide reliable, accurate, valid information on economy, market, customer and contemporary issues. Considering the business trend, present scenario and forecast- R&D designs and reengineers products and services, gathers consumer insight, proposes prospective locations for banking business, analyzes sectors, disseminates knowledge through economic publication and undertakes ad-hoc research.

R & D DIVISION’S ACTIVITIES

Market Research

OperationsResearch

Business and Economic

Policy Research

IndustryStudies

New ProductDevelopment,

ProductReengineering

ConsumerInsight

BranchExpansion

Program (BEP)ATM xpansion

Program

MonthlyNewsletter”In-Focus”

Weeklye-Newsletter

MiscellaneousFunctions

CommodityBusinessPrioritySectors

Major activities performed by R&D Division are as follows:

Market Research

Product Development

• New Product Development: R&D Division designed Product Program Guideline (PPG) of New Deposit Product “Money Building Scheme” combining FD with Scheme.

• Product Re-engineering: A number of recommendations have been made here to make our scheme accounts lucrative.

• PPG of Single Installment Schemes in association with Consumer Banking Division

• PPG of Motorcycle Loan in association with Consumer Banking Division

• revision of interest rate, provisional profit rate tenure and all the applicable and expected installment sizes for the DBDS, MBDS Schemes products had been done following the suggestions of the Bank’s ALCO.

Marketing Research:

• Credit Card Market Scenario of Bangladesh: Overall Banking Industry and Peer Banks

• Sector-Wise Credit Concentration Status: Overall Banking Industry and Peer Banks

• A feasibility study has been conducted on Agent Banking in some areas as a part of pilot study to expand alternative delivery channel of the bank.

Sector Research on Local Industry

R&D Division provides up-to-date information on the industry/sector as per instruction of the Board of Directors of the Bank. In addition, it is also a requirement of CRM of the Bank and different business units of the Bank. In this regard, R&D Division has already prepared and submitted the following reports to the Bank’s internal stakeholders:

• Ceramic Industry • Steel Industry • Vaccine Industry• Electronics Industry

These reports have provided market information focusing on size of market, total supply, production capacity/utilization, top market players, future outlook/prospect of the respective industry based on primary as well as secondary data available from numerous sources.

Banking Market

Economy

Consumer

R&D’S PRIORITY AREAS

110 PRIME BANK

ANNUAL REPORT 2018

Operations Research

The Business Feasibility Study is one of the crucial and frequent studies undertaken by R&D for serving the bank in setting up any Branch, ATM Booth at recommended and prospective areas over the country based on geographical, demographic, business, financial and economic data analysis.

• To explore potential geographic locations where the bank can extend its services to contribute to the socio-economic development of the area, Feasibility Studies have been conducted on around Thirty (30) new locations all over the country for new branch and ATM expansion and business growth.

• Branch Relocation Study has been conducted in One (01) place to make a comparative analysis between existing and proposed premises of the branch

• A Feasibility Study on Ascertaining the Scope of Prospective Green Branch of Prime Bank.

Business and Economic Policy Research

• The monthly publication “In-Focus” has focused on contemporary issues that are critical to global and domestic economy as well as financial markets and institutions. In total Five (05) unique issues have been circulated to all stakeholders (inside and outside).

• Besides, a weekly e-newsletter is being disseminated to provide financial insights to valued readers on a weekly basis. Fifty (52) issues have been communicated to the internal stakeholders of the Bank.

Miscellaneous Activities

• Write up for Sustainability Report of the Bank

• Write up for different issues such as for CAMEL’s reporting, Financial Stability Report etc.

R&D will endeavor to provide insight, information in an innovative and insightful manner to align the Bank’s vision in being the best commercial bank.

Core Banking Software and its operations

Since 2007, Prime Bank has been using Core Banking Software, T24 of TEMENOS, one of the best available in the global market with cutting-edge technology. Recently, it has upgraded its CBS T24 to the latest version R16 to offer new products and open new avenues to serve its customer in more flexible and cost-efficient ways.

With the latest version of Core Banking Software i.e. T24 (R16), Prime Bank is now running all three types of banking services i.e. Conventional Banking, Islamic Banking, and Off-Shore Banking as well through a single platform and has managed to reduce infrastructure and administrative costs significantly.

After implementing this latest version of CBS, Bank has acquired the capability to run all of its foreign operations and subsidiaries with T24-R16, and recently on 2nd October 2018, Prime Bank has implemented T24 (R16) in one of its subsidiary company at Hong Kong i.e. PBL Finance (Hong Kong) Ltd., and now running its business operations under T24 (R16), while all CBS related functional & technical supports and day end processes are being provided and managed centrally from Bangladesh.

This system also has several built-in security features to protect the Bank against the threats like Cross-site scripting, SQL injection, DOS attacks, blocking of Directory Traversal, Command Injection, Replay Attacks, and even can protect the users from the “Coffee Shop Scenario”.

Bank’s vision to provide more convenient ways to perform banking transactions through new and improved alternate delivery channels like Internet Banking, Digital Wallet, Mobile Banking/Apps, Agent Banking has moved one step closer with the implementation of this latest version of CBS. With this new and improved technology, Prime Bank aims to create new markets, improve efficiency and advance toward greater prosperity.

Internal Control & Compliance Division

Banking is a diversified and multifarious financial activity which involves different types of risks. An effective internal control and compliance system has become essential in order to underpin effective risk management practices and to ensure smooth performance of the banking industry.

The objective of internal control and compliance function is to assist Management in ensuring that all activities of the Bank and its staffs are conducted in accordance with ever evolving compliance laws, rules and standards. A system of internal control allows management to stay focused on the organization’s pursuit of its operations and financial performance goals, while operating within the confines of relevant laws and minimizing surprises along the way.

The responsibility of implementing internal controls starts with the business lines, which are the “first lines of defense” against breaches that could cause the bank not to fulfill its objectives, not to report properly, or not to comply with laws and regulations. Beyond that, in any bank, the three important “control functions” are risk management, compliance, and internal audit. This triumvirate of key functions is underpinned by, and in turn implements and reinforces, the system of internal controls. The first two of these control functions constitute the “second lines of defense” against mishaps. The final, or “third line of defense” is the internal audit function.

The Directors are responsible for maintaining and reviewing the effectiveness of overall internal control system of the bank in order to accomplish a satisfactory standard of its portfolio. To meet this requirement and to discharge its obligations, procedures have been designed for achieving bank’s basic mission and vision; for ensuring timely, accurate, and comprehensive reporting concerning financial and non-financial, internal and external; and for conducting activities and taking specific actions in accordance with applicable laws and regulations. These procedures can only provide reasonable assurance, not absolute assurance, with regard to achievement of the organization’s objectives.

These procedures are designed covering five components of internal control system to ensure the effectiveness of internal control system within the Bank in accordance with “Guidelines on Internal Control & Compliance in Banks” issued by Bangladesh Bank.

The Bank maintains a culture and environment that provides for a sound and effective internal control system, together with a

111PRIME BANK

commitment by all employees to adhere with the principles of integrity and transparency. Accordingly, the bank has prepared banks own Internal Control & Compliance guidelines requiring that management and staff at every level in the bank have a role, duly and responsibility for maintaining sound internal control. The Bank has also established an organizational structure of ICCD after getting proper approval from Audit Committee of the Board & Board of Directors. The Board of Directors of the Bank demonstrated independence from Management and formed an Audit Committee with such directors who are not the members of Executive Committee of Board and exercises oversight over the development and effectiveness of the internal control environment.

Banks are in the business of risk-taking. Consequently, it is imperative that, as part of an internal control system, these risks are being recognized and continually assessed. From an internal control perspective, a risk assessment should identify and evaluate the internal and external factors that could adversely affect the achievement of banking organization’s performance, information and compliance objectives. The Bank promotes a strong compliance culture, where compliance risk is identified and continuously monitored. The Internal Auditors of the Bank set out annual risk based audit plan, approved by the Audit Committee of the Board (ACB) and conducted audit activities accordingly. The Risk Management Committee of the Board continually reviews and monitors the development, identification & assessment of risks relating to business objectives, assessment procedures.

The Bank has formal policies, procedures and guidelines that are designed to ensure compliance with generally accepted conduct, ethics and business practices by ensuring regulatory instructions and global standard which includes a well-defined ICC Manual for the Bank comprising of Compliance Policy, Compliance Rating Criteria etc. In order to ensure the effectiveness of the internal control system, it is continually verified that these control policies & procedures are being complied with. A summary report on the overall audit observations and compliance thereof had also been reviewed by the SMT & Audit Committee on quarterly basis.

The Bank initiates MIS Committee to ensure supply of correct and accurate information to Management and other stakeholders. The decisions of SMT, ALCO, ECB, ACB and Board meeting had been minuted properly & communicated with the concerned Divisions/Departments for rectification and comply thereof.

In addition to the above, the bank developed control activities and taken key strategies that contributes to the mitigation of risks amongst which the followings are newsworthy:

• An explicit way of storing, analyzing and reviewing all the policy, process, guidelines, procedures, Product Program Guidelines of the Bank to ensure internal control and compliances;

• Evaluating performance and effectiveness of the Bank periodically;

• Review of internal and external audit reports and compliances thereof at regular basis;

• Ensures multi-typed, periodic statements to ensure the compliance of all audit findings;

• Look over the decisions taken over at the meetings of Audit Committee of the Board of Directors, Executive Committee of the Board of Directors, Board of Directors etc.;

• Dissemination of regulatory instructions among all the concerns;

• Follow up proper correspondence with the regulators against their queries in the neck of time;

• Extending the coverage and frequency of Compliance Tests;

• Developed action plans for corrective action and improvements in internal controls environment by the ICCD itself;

• As a part of green banking initiatives, ICCD adopted web portal for collecting DCFCL, QOR, LDCL, sending and receiving Audit and Compliance Reports instead of hard copies to save usage of papers.

• Ensuring accuracy in Self-Assessment Anti-Fraud & Internal Controls through physical verification

• Minimizing the observations / lapses as well as develop compliance culture within the Bank

• Introducing compliance rating on Branches and reward best compliant branch

• Introduced online partial daily DCFCL for Branches. Fully automation of DCFCL & QOR will be accomplished with the help of IT.

• Extending on-site inspection of DCFCL, QOR and LDCL and cover at least 30%-40% branches according to ICC Guidelines

• Introducing concurrent audit at selective Divisions as per ICC Guidelines

• Minimizing credit deferrals as well as enriching documentation status within the Bank

• Introduced IT Unit for compliance of IT audit report

112 PRIME BANK

ANNUAL REPORT 2018

Financial Analysis

Total Assets

Total Assets of PBL stood at BDT 293,901 million as on 31 December 2018 as against BDT 281,275 million of previous year registering a growth of about 4.49 percent over the year 2017. In total assets, loan and advances covered 70.03% of total assets. Contents of total assets of PBL is shown in following table:

(BDT in Million)

Assets 2018 2017Growth

Volume %

Cash 17,640 18,005 (365) -2.03%

Balance with other banks and financial institutions 13,405 10,083 3,322 32.95%

Money at call and short notice - 1,500 (1,500) 100.00%

Investments 26,046 23,807 2,239 9.41%

Loans, advances and lease / investments 205,810 198,323 7,487 3.78%

Fixed assets 6,943 6,434 509 7.92%

Other assets 23,837 22,903 934 4.08%

Non - banking assets 221 221 - 0.00%

Total assets 293,901 281,275 12,626 4.49%

Cash and bank balance

Cash and bank balance includes notes and coins in hand, balance with Bangladesh bank and its agent bank and balance with other banks and financial institutions. In 2018, total Cash and bank balance was BDT 31,044 million compared to BDT 28,087 million in December 2017. Details are as follows:

(BDT in Million)

Assets 2018 2017Growth

Volume %

Cash 17,640 18,005 (365) -2.03%

Balance with other banks and financial institutions 13,405 10,083 3,322 32.95%

Total 31,044 28,087 2,957 10.53%

Money at Call on Short Notice

Call lending is a part of the treasury function. Bank’s lending under this head of BDT 903,070 million as on December 31, 2018 and it was BDT 470,000 million in the same date of last year which is equivalent of 92.14 percent growth compared to the corresponding period. Positive growth indicates that banks has strong liquidity position as well as bank is efficient in generating income.

Investment

Investment in Treasury bill/bond occupies a significant portion of the total investment of the Bank which is BDT 18,662 million as on December 31, 2018 and it was BDT 21,354 million in 2017. Details are as follows:

(BDT in Million)

Assets 2018 2017Growth

Volume %

Government Securities:

Held for trading (HFT) 5,981 - 5,981 100%

Held to maturity (HTM) 18,662 21,354 (2,692) -13%

Prize Bond 3 2 1 26%

Other Investments: -

Share 398 149 249 166%

Bangladesh Bank Bills - 2,301 (2,301) -100%

Bonds 1,002 - 1,002 100%

Total 26,046 23,807 2,239 9%

113PRIME BANK

Loans and advances

PBL’s loans and advances increased by BDT 7,487 million during the year 2018 and stood at BDT 205,810 million which was BDT 198,323 million in 2017 showing a substantial growth of 3.78 percent over the previous year. Concentration of loans and advances was well managed and details of concentration are given at notes to the financial statements. The ratio of non-performing loan was 6.16 percent which is much lower than the industry average. The Bank continued its participation in different credit program for financing in industrial projects, import, export, house building, retail, agriculture etc.

Fixed Assets

Fixed assets include land, building, furniture & fixture, office equipment and vehicles etc. PBL’s fixed assets decreased by BDT 509 million during the year 2018 and stood at BDT 6,943 million which was BDT 6,434 million in 2017.

Other Assets

Other assets of the bank increased by BDT 934 million during the year 2018 and stood at BDT 23,837 million and it was BDT 22,903 million in 2017. The main components of other assets are investment in subsidiaries, advance income tax, advance rent, interest receivable, branch adjustment account and suspense account etc.

Borrowings from other Banks, Financial Institutions and Agents

PBL has borrowed fund from other banks and financial institutions as well as Bangladesh Bank as Refinance against SME loan. PBL has also borrowed foreign currency for its OBU operation. The bank has also raised fund by issuing subordinated bond. In 2018, borrowings of the Bank stood at BDT 33,945 million which was BDT 22,087 million in 2017.

Deposits

During the year 2018 total deposits of the bank decreased by BDT 1,496 million and stood at BDT 197,518 million and it was BDT 199,014 million in 2017. Total deposit include Bank deposit and Customer deposit.

Shareholders’ Equity

Total shareholders’ equity includes paid up capital, share premium, statutory reserve and retained earnings and other reserves. By the end of the year 2018, total shareholders’ equity increased by BDT 1,473 million from BDT 24,708 million in 2017 which is equivalent of 5.96 percent growth. Detail are as follows:

Assets 2018 2017Growth

Volume %

Paid up capital 11,323 10,293 1,030 10%

Share premium 1,212 2,241 (1,029) -46%

Statutory reserve 10,353 9,566 787 8%

Revaluation 1,534 1,528 6 0%

Retained earnings 1,759 1,079 680 63%

Total Shareholders’ Equity 26,181 24,708 1,473 6%

20182017201620152014

Loans and AdvancesBDT in Million

205,

810

198,

323

170

,212

151,8

65

147,

367

20182017201620152014

DepositsBDT in Million

197,

518

199,

014

197,

934

194,

82520

4,83

8

2018

Foreign CurrencyTranslation Gain 15

Revaluation Gain 1,519

StatutoryReserve 10,353

Retained Earnings1,759

Paid-up Capital11,323

Share Premium1,212

2017

Foreign CurrencyTranslation Gain 13

Revaluation Gain 1,515

Statutory 9,566Reserve

Retained Earnings 1,079

Paid-up Capital10,293

Share Premium2,241

(BDT in Million)

114 PRIME BANK

ANNUAL REPORT 2018

Analysis of Operating results of PBL

In 2018, PBL made operating income of BDT 12,978 million (it was BDT 12,207 in 2017) whereas operating expense was BDT 7,258 million in 2018 compared to BDT 6,834 million in 2017. Profit before provision and tax was BDT 5,719 million compared to BDT 5,373 million in 2017. Profit after tax was BDT 2,188 million against BDT 1,059 million in 2017. Earnings per Share stood at BDT 1.93 which was BDT 0.94 in 2017. Detail are as follows:

(BDT in Million)

Assets 2018 2017Growth

Volume %

Interest Income 18,390 14,769 3,621 25%

Interest Expense 10,740 9,875 865 9%

Net Interest Income (NII) 7,650 4,894 2,756 56%

Non-Interest Income 5,249 7,254 (2,005) -28%

Operating Expenses 7,180 6,775 405 6%

Profit before Provision & Taxes 5,719 5,373 346 6%

Profit before Taxes (PBT) 3,938 1,809 2,129 118%

Net Profit after Taxes (NPAT) 2,188 1,059 1,129 107%

Interest Income

During the year 2018, interest income increased by BDT 3,621 million and stood at BDT 18,390 against BDT 14,769 million in 2017. The major interest earning came from follows:

(BDT in Million)

Assets 2018 2017Growth

Volume %

Interest on loans and advances 17,195 13,679 3,516 25.70%

Interest on balances with other Banks & FI’s 750 726 24 3.31%

Interest on balance with foreign Bank 360 320 40 12.50%

Interest on call loans 85 44 41 93.18%

Total 18,390 14,769 3,621 24.52%

Interest Expense

In 2018, PBL incurred BDT 10,741 million as interest expense and it was BDT 9,875 million in 2017. It reveals a growth of 8.76 percent during 2018. The Bank was able to maintain a strong liquidity position during the period and simultaneously managed to procure deposit at lower cost. Our average cost of deposits in 2018 was 4.72 percent which was 4.52 percent in 2017.

Net Interest Income

PBL earned total BDT 7,650 million as net interest income during the year 2018 registering increase by BDT 2,755 million which is equivalent to 56.31 percent growth over previous year. It indicates that the management of the Bank is more efficient to manage the interest rate of loans and deposits.

Income from Investment

PBL has earned investment income of BDT 2,154 million during the year 2018 which was BDT 4,246 million in 2017. In investment income, interest income was BDT 2,132 million (equivalent to 98.97 percent) and non-interest income was BDT 22 million.

Commission, Exchange and Brokerage

During the year 2018, PBL earned total BDT 2,209 million as commission, exchange and brokerage which was BDT 2,245 million in 2017. Commission, exchange and brokerage income slightly decreased by BDT 36 million from previous year.

20182017201620152014

Commission Exchange and BrokerageBDT in Million

2,20

9

2,24

5

1,693

1,9562,0

33

115PRIME BANK

Other Operating Income

Other operating income increased by BDT 123 million and stood at BDT 887 million in 2018. It was BDT 764 million in 2017.

Operating Expenses

Total operating expenses during 2018 has increased by BDT 405 million to compute total amount of BDT 7,180 million. It reveals an increase of 5.98%. The main components of the operating expenses are as follows:

(BDT in Million)

Assets 2018 2017Growth

Volume %

Salaries and allowances 4,159 3,824 335 9%

Rent, taxes, insurance, electricity, etc. 961 906 55 6%

Legal expenses 106 83 23 28%

Postage, stamp, telecommunication, etc. 70 78 (8) -10%

Stationery, printing, advertisements, etc. 226 198 28 13%

Managing Director’s salary and fees 10 12 (1) -12%

Directors’ fees 4 4 (1) -18%

Auditors’ fees 1 1 - 0%

Depreciation and repair of Bank’s assets 407 365 41 11%

Other expenses 1,236 1,304 (68) -5%

Total 7,180 6,775 405 6%

Operating Profit

The total operating profit of the bank for the year 2018 stood at BDT 5,719 million in comparison with BDT 5,373 million in 2017.

Profit before Tax

Profit before tax of the Bank stood at BDT 3,938 million in 2018 compared to BDT 1,809 million in 2017. The Bank maintained adequate amount of provision against loans and advances, off-balance sheet items, and other assets. Bank maintained adequate provision during 2018 as per regulatory requirement.

Net Profit after Tax

During the year 2018, net profit after tax increased by BDT 1,129 million and stood at BDT 2,188 million. It was BDT 1,059 million in 2017.

Earnings per Share

In 2018, PBL’s earnings per share (EPS) was BDT 1.93 compared to BDT 0.94 in previous year.

20182017201620152014

Operating ProfitBDT in Million

5,71

9

5,37

35,75

7

5,90

6

6,15

7

20182017201620152014

Net Profit After TaxBDT in Million

2,18

8

1,059

2,19

5

2,13

92,39

3

20182017201620152014

Earnings Per Share (BDT)

1.93

0.9

4

1.94

1.89

2.11

116 PRIME BANK

ANNUAL REPORT 2018

PBL is dedicated to provide best services by offering innovative products to the society where it operates. PBL also provides services in local geographic areas and demographics segment. PBL can often best define market segments based on product benefits when it offers multiple products. In segmenting the market, the potential customers are divided into several sections with similar needs. From the very beginning, PBL is offering attractive financial products and services considering the concurrent needs of customers.

Prime Bank has 3 Off-shore banking units, 5 Islamic Banking branches, 2 local subsidiaries and 3 foreign subsidiaries. The business and performance overview of those segments are enumerated as follows:

(BDT in Million)

Particulars2018 2017

2018 vs 2017 %Amount

% of total assets

Amount% of total

assets

Gro

up A

sset

s

Prime Bank Limited 239,552 81% 230,797 82% 4%

Islamic Banking Branches 19,850 7% 17,857 6% 11%

Off Shore Banking Units 24,988 8% 23,365 8% 7%

Prime Bank Investment Limited 6,951 2% 7,021 2% -1%

Prime Bank Securities Limited 1,228 0.4% 1,295 0.5% -5%

Prime Exchange Pte. Ltd. (Singapore) 92 0.03% 118 0.04% -22%

PBL Exchange (UK) Ltd. 30 0.01% 48 0.02% -37%

PBL Finance (Hong Kong) Ltd. 2,321 1% 1,894 1% 23%

Total 295,011 100% 282,395 100% 4%

Particulars

2018 20172018 vs 2017

%Amount% of total revenue

Amount% of total revenue

Gro

up R

even

ue

Prime Bank Limited 11,855 88% 11,051 87% 7%

Islamic Banking Branches 710 5% 824 7% -14%

Off Shore Banking Units 334 2% 273 2% 22%

Prime Bank Investment Limited 243 2% 207 2% 18%

Prime Bank Securities Limited 59 0.4% 67 1% -11%

Prime Exchange Pte. Ltd. (Singapore) 52 0.4% 64 1% -19%

PBL Exchange (UK) Ltd. 61 0.5% 49 0% 23%

PBL Finance (Hong Kong) Ltd. 102 1% 110 1% -7%

Total 13,416 100% 12,645 100% 6%

SEGMENTAL ANALYSIS

Prime Bank

Overseas Subsidiaries

• Prime Exchange Pte. Ltd. (Singapore)

• PBL Exchange (UK) Ltd.

• PBL Finance (Hong Kong) Ltd.

Local Subsidiaries

Islamic Banking BranchesOff-Shore Units

• Prime Bank Investment Ltd.

• Prime Bank Securities Ltd.

117PRIME BANK

Business Segmentation

PBL business has been divided into four major segments i.e Corporate & Institutional Banking, Commercial Banking, MSME and Consumer. Highest deposits is in Consumer segment which represents 67 percent of total deposit & highest loans is in Corporate & Institutional Banking segment representing 55 percent of total loans and advance of the bank. Segmental business (Deposits & Loans) as on 31 December 2018 has been stated as follows:

(BDT in Million)

Particulars

2018 20172018 vs 2017

%Amount% of total deposits

Amount% of total deposits

Dep

osits

Corporate & Institutional Banking 34,504 17% 28,744 14% 20%

Commercial Banking Division 11,990 6% 14,470 7% -17%

MSME 18,390 9% 17,994 9% 2%

Consumer & Others 132,634 67% 137,806 69% -4%

Total 197,518 100% 199,014 100% -1%

(BDT in Million)

Particulars2018 2017

2018 vs 2017 %Amount

% of total loans

Amount% of total

loans

Loan

s an

d ad

vanc

es

Corporate & Institutional Banking 114,058 55% 107,633 54% 6%

Commercial Banking Division 52,321 25% 48,915 25% 7%

MSME 21,120 10% 22,232 11% -5%

Consumer & Others 18,310 9% 19,543 10% -6%

Total 205,810 100% 198,323 100% 4%

Deposits

Loans and Advances

MSME11%

Consumer& Others

10%

CommercialBankingDivision

25%

Corporate &Institutional

Banking54%2017

MSME:10%

Consumer& Others:

9%

CommercialBankingDivision:

26%

Corporate &Institutional

Banking:55%2018

2017

Corporate &InstitutionalBanking: 15%

CommercialBankingDivision: 7%

MSME: 9%Consumer &Others: 69%

2018

Corporate &InstitutionalBanking: 18%

CommercialBankingDivision: 6%

MSME: 9%Consumer &Others: 67%

118 PRIME BANK

ANNUAL REPORT 2018

Many Banks in Bangladesh aspire to be the Best in the Market. But very few have all the elements required: talent, resources, and perseverance. The term human capital in an

organizations and businesses are an important and essential asset who contributes to development and growth, in a similar way as physical assets such as machines and money. The collective attitudes, skills and abilities of people contribute to organizational performance and productivity. Any expenditure in training, development, health and support is an investment, not just an expense. An organization can’t survive if there are no employees. Organization runs with the help of individuals who contribute in their own way in its success and productivity. Employees spend maximum part of their day in offices and strive hard to achieve the goals and objectives of the organization. Employees ought to be motivated from time to time so that they develop a sense of attachment towards their organization and also deliver their best. Knowledge and expertise which employees develop in due course of time to further increase the productivity of organizations refer to human capital. Human capital is defined as the collective stock of skills, attributes, knowledge, and expertise of employees which further plays an integral role in increasing the productivity of the organization.

Motivated and Engaged Employees

Prime Bank has a diverse group of motivated and engaged employees. From experience it knows that if employees are properly empowered, they become more engaged and go extra miles to fulfil organization’s ambition. Engaged employees are likely to take more responsibility and embrace accountability which helps to achieve the sustainability strategies. The Bank has positioned itself with a performance-driven rewarding work culture; where employees are treated with respect and receive plenty of development opportunities. Prime Bank has a special focus on:

• Ensuring a balanced diversity

• Promoting human capital development

• Providing competitive compensation and benefits

• Promoting a performance centric culture

• Protecting human rights

• Ensuring workplace health and safety

• Ensuring equal opportunity

All the people related issues in Prime Bank are governed by the well-defined policies and procedures which are duly reviewed by the Management time to time.

Compensation & Benefits

To maintain the market competitiveness, the compensation and benefits of Prime Bank are regularly reviewed through market and peer group study. The well-crafted total rewards help the Bank to attract, motivate and retain talent.

In PBL, the Board of Directors is not eligible for any compensation. They are paid honorarium for attending meetings only. On the other hand, all employees are paid competitive remuneration

package. The remuneration policy of the Bank does not allow any discrimination between male and female employees. In addition, employees are paid bonus based on yearly business performance.

In addition to monthly competitive base pay and a good number of allowances (e.g., House Rent allowance, Medical allowance, Conveyance allowance etc.), Prime Bank has variety of market-competitive Benefits schemes designed to motivate the employees. The various cash and non-cash benefits include:

• Company provided car for top level Executive employees

• Car allowance for all Executive level employees

• Leave fair assistance allowance

• Medical treatment allowance

• Maternity benefits

• Car loan facility

• House loan facility

• Staff loan at reduced interest rate

• House furnishing allowance

• Mobile phone allowance

• Travel allowance

• Technical allowance

• Festival bonus

• Allowance for employees’ meritorious students

• Annual leave

• Maternity leave

• Study leave etc.

The Bank also provides long-term as well as retirement benefits to employees:

• Leave encashment

• Provident fund

• Gratuity benefit

• Retirement benefit

• Partial and full disability benefit

• Death benefit to family members etc.

Broadbanding Pay Structure:

The Management introduced Broadbanding Pay Structure which aims to ensure a performance driven work culture through a strategic compensation plan synced with the performance of individual employee. Since inception, Prime Bank has practiced a scale based pay structure for each grade, so to reward individual performance the new policy offers a flexible pay plan that will compensate the person, not the grade. It places an increased emphasis on encouraging employees to develop new skills and paying for the skills according to their contribution and equity. In a nutshell, broadbanding is a more flexible pay system for both the employees and for the employers where career progression takes a different route. Given that, the specific reasons behind introduction of this new pay structure is:

REPORT ON HUMAN RESOURCE MANAGEMENT

Human Capital

119PRIME BANK

1. It facilitates/encourages internal /lateral movement (Through Job Rotation)

2. It rewards performers than the non performers (Through Pay for Performance)

3. It puts added trust & greater autonomy in line management (Through Teamwork/ Relationship)

Moreover, the policy states that when one employee reaches the highest grade within a Band, the employee will grow further when he/she is ready to take or has taken higher responsibilities and match the criteria of the next Band.

The total compensation and benefits system of Prime Bank tracks costs and is linked with performance, while maintaining a balance with the business affordability.

Performance Management Program

Prime Bank has a comprehensive performance management program that evaluates employees’ yearly performance against business targets at the year-end. In addition, their functional and leadership competencies are also rated by the line management. This appraisal process also identifies the competency gap and training needs of employees. All employees (except employees under probation or training) of the Bank undergo annual performance appraisal process. The process ensures that clear feedback on improvement points (performance and professional capabilities) is provided to employees by their Managers to promote employees’ long-term career development and improved contribution to organizational performance. All regular employees undergo the annual performance and career development review.

Work-life Balance

Prime Bank wants its’ employees to balance the work and personal life and has organization-wide practices and policies that actively support employees to achieve success at both work and home. Management is also open and shows flexibility in regard to a balanced work-life.

In Prime Bank, employees are entitled to sufficient annual leave and sick leave with pay. To enjoy vacation with family, Bank provides Leave Fare Assistance Allowance to employees. All female employees are eligible for Maternity Leave (Parental Leave) with pay for a period of six months. In 2018, a total of 53 female employees availed Maternity leave. After completion of the leave, they returned to work and are still continuing with the organization.

Culture

Culture plays a vital role to create a high performance environment that supports sustainability strategy implementation. Prime Bank carefully develop, shape and impact organizational culture by: practicing values appropriate for the bank; defining working relationship and communication pattern between superior and subordinates; governing rules and regulations which control employees’ behaviour; promoting a strong employer brand through which employees identify with the organization; maintaining effective reward system that affects employees loyalty and empowering employees to demonstrate their innovativeness not only to be competitive in the market but also to achieve a sustainable growth.

Healthy and Safe Work Environment

In Prime Bank, the physical, mental and social well-being of the employees always gets priority. Healthy, productive and motivated employees are the foundation of a successful organization. Prime Bank helps employees to assume responsibility for their own personal behaviour in health-related matters, and support health-promoting general conditions within the Company. We continuously focus on improving health and safety of employees that includes proper work place design and decoration of head office and branches, maintaining the cleanliness at work space, holding awareness session related to physical and psychosocial well-being, email communication on various health and safety related topics, sending alerts to employees on emergency situations, arranging fire drill sessions, financial support for medical care etc. Because of the nature of operations, Bank employees are not usually exposed to work-related injury, occupational diseases or fatality. Yet, the Bank remains cautious so as not to create any hazardous work condition.

Decent Workplace

Prime Bank has a decent work environment where employees can work with dignity, have the freedom to express opinions, can participate in the decision making process that affect their lives, and receive equal treatment and opportunity. The Bank is committed to ensure the best practices in compliance with the labour code of the country. Bank Management believes that the business can grow favourably if the organization enables employees through creating and maintaining a decent workplace.

In Prime Bank, employees have the right to exercise freedom of association or collective bargaining following the legal procedure of country laws. However, employees have never formed or wanted to form any collective bargaining agency. The Bank follows non-discriminatory approach in all HR policies and practices. The salary of an employee is determined based on his/her competency, experience and performance. The Bank neither employs child labour nor has any provision for forced labour. Employees have the right to resign from their employment serving proper notice period and following the internal procedures.

Ensuring a decent workplace also encompass Bank’s investment decisions as well as agreements with the suppliers and contractors. For instance, human right, as appropriate, is covered as an integral part of decision making for major financial investments. Among all the significant investments, garments and manufacturing industry contain major stakes where issues related to human rights are more relevant and critical. Hence, any such investment agreement is subject to screening of human right issues along with other criteria.

On the other hand, all the agreements of Prime Bank with suppliers or contractors undergo due assessment process which requires complying with Labour Code and other applicable laws of the country. Moreover, the procurement decisions are also subject to conformity with International Labour Conventions. The team involved in procurement visits suppliers and contractors’ premises on need basis to monitor working conditions and other relevant issues like labour practices, human right etc.

120 PRIME BANK

ANNUAL REPORT 2018

The security personnel employed by the Bank are formally trained and aware of policies and procedures regarding human right issues. The training requirement also applies to third party organizations that provide security personnel to the Bank.

The most recent addition to encourage female employees at the workplace is that they are now able to avail child day-care facility in Motijheel area. Female employees having offices in Motijheel and peripheral area now can avail child day-care facility where they can keep their children in a safe and secured environment. This will not only help to retain female employees but will relieve them of the dilemma of leaving their child/children at home.

Diversity in Workplace

Prime Bank believes that diverse, heterogeneous teams generate greater creativity, innovation and business development. An inclusive culture maintains and drives workforce diversity by fostering the exchange of ideas and collaboration among individuals and across groups. To speak simply, our constant success depends in part on maintaining a plurality of perspectives.

Employees by age group and gender:

Age group No. of Emp. Percentage

Less than 30 years 251 7.81%

30 to 50 years 2,809 87.45%

Over 50 years 152 4.73%

Grand Total 3,212 100%

We practice equal employment opportunity; for competent candidates regardless of their gender, age, locality or ethnicity. While recruiting fresh graduates, the Bank sources the pool from different recognized public and private universities; with a view to create a diverse work force.

Employees by religion:

Religion No. of Emp. Percentage

Islam 2,947 91.75%

Hindu 251 7.81%

Buddhist 12 0.37%

Christian 2 0.06%

Total 3,212 100%

Gender diversity among employees:

Gender No. of Emp. Percentage

Male 2,532 78.83%

Female 680 21.17%

Total 3,212 100%

Besides, our ration of male and female employees has been increasing over the time. Currently, approximately 21.17% of total employees are female. On the other hand, 16.67% of the Board of Directors represents females.

Percentage of female employee over the years:

Year % of Female Employees

2014 21.00%

2015 21.64%

2016 21.93%

2017 20.92%

2018 21.17%

Gender diversity among Board members:

Gender No. of Members Percentage (%)

Male 15 83.33%

Female 03 16.67%

Total 18 100%

New recruitment by gender and age:

By Gender:

Gender No. of Emp. %

Male 62 84.93%

Female 11 15.07%

Total 73 100%

By Age:

Age group No. of Emp. %

Below 30 years 23 31.51%

30 to 50 years 49 67.12%

Over 50 years 1 1.37%

Total 73 100%

Employee turnover by gender and age:

By Gender:

Gender No. of Emp. %

Male 295 81.94%

Female 65 18.06%

Total 360 100%

By Age:

Age group No. of Emp. %

Below 30 years 44 12.22%

30 to 50 years 308 85.56%

Over 50 years 8 2.22%

Total 360 100%

For the year 2018, the turnover rate is 10.73%.

121PRIME BANK

Learning & Development

In Prime Bank, Human Resources (HR) Division regularly undertakes effectively designed training programs targeting the right group of employees through proper training need assessment. Prime Bank believes that continuous efforts should be given so that employees acquire and develop the right set of skills required to face the challenge of ever changing market.

In Prime Bank, the employee development plan is based on proper training need assessment. In 2018, Bank’s internal HR Training and Development Centre arranged training on different topics for 3548 enthusiastic participants. Besides, a total of 311 employees were sent to participate in various training programs/conferences in home and abroad.

The banking sector is complex and diverse with evolving nature of threats and the risks. So, the training module is updated time to time for employees of the Bank in the changing context of financial market.

Openness in communication for a better employee-management relation

Employee communications and consultation are the lifeblood of any business. Proper exchange of information and instructions help the Bank to function more efficiently and provides the opportunity to build greater trust among employees and management in discussing issues of mutual interest. To ensure effective employee communications, management takes a positive lead.

The Management has introduced a Whistleblower Protection Policy which intendeds to encourage and enable employees and others to raise serious concerns internally so that the Management can address and correct inappropriate conduct and actions. Employees have an avenue to report concerns about violations of code of ethics or suspected violations of law or regulations. The policy covers the protection of a whistleblower in two important areas – confidentiality and against retaliation. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment.

Additionally, now there is an avenue to report sexual harassment in the workplace. The policy aims to ensure a working environment in line with our values, where all individuals are treated equally, fairly and with dignity and also foster compliance with governing laws pertaining to sexual harassment. Such policy creates awareness about the nature of offences and the consequences of an offender. This not only fosters a neutral environment but gives a feeling of assurance that any wrong doing will be strictly addressed by the Management.

Any operational changes are properly planned and managed. Management follows a participative approach during any major transformation followed by prior communication to the employees. Since there is no trade union or employee association, no notice period regarding operational change is stipulated by any collective agreement.

Ethical and Lawful Behavior in Prime Bank

Prime Bank is always committed to establish the highest level of ethical standard. Employees are properly oriented to comply with Code of Ethics & Business Conduct. All employees duly signed the ‘Code of Ethics & Business Conduct’ and the copy is preserved in respective Employee Records. During joining, HR Division makes sure that all the new employees read and accept this policy by signing.

Bank also has ‘Service Excellence Handbook’ & ‘General Code & Discipline’, which are read by each employee including new employees while joining in the Bank and record of these are preserved in personal file after signing by employees.

“The Prime Bank Employee Code of Ethics and Business Conduct” – is a framework of ethical behavior for all the employees of the organization that embodies all the factors mentioned above. It is a reflection of Prime Bank’s role as a socially responsible corporate citizen which believes in providing the most courteous and efficient service through innovative banking services and products. However, Prime Bank’s most farsighted objective is to uphold and build upon the honour of Bangladesh as a nation, through exhibiting its own competence as a local organization that can perform at least on par with a multinational one, if not better than one.

The employees of Prime Bank are trained to put their own duties and ethics before everything else. They treat their colleagues with reverence and honour, and their customers as esteemed guests. They also learn to abide by the laws that govern our business, and contribute to the strength and wellbeing of our community and shareholders. In addition to their regular responsibilities employees are also expected to demonstrate the below ethical behavior:

• Protect Privacy of Customers’ and Confidential Company Information;

• Prevent Money Laundering and/or Fraud;

• Demonstrate Workplace Respect;

• Avoid Offensive Behavior and Sexual Harassment;

• Avoid Drug/Substance/Alcohol Abuse in the Workplace;

• Protect the Bank’s Assets;

“The Prime Bank Employee Code of Ethics and Business Conduct”

122 PRIME BANK

ANNUAL REPORT 2018

It is mandatory for every employee of Prime Bank Limited to abide by the ‘Employee Code of Ethics and Business Conduct’ and also comply with any other orders or directions provided by the Management or Board of Directors from time to time.

Integrity/ Ethics Committee

As per the Bangladesh Bank’s Instructions first Integrity/ Ethics Committee, Prime Bank Limited, Head Office, Dhaka was formed in the year of 2013 for the implementation of National Integrity Strategy which has been designed and modelled by the Government of People’s Republic of Bangladesh envisioning happy-prosperous and corruption free Bangladesh and establishing rule of law in its different organs/organizations. Thereafter, lastly on 11.12.2018, the abovementioned Committee was restructured. Currently, Mr. Ziaur Rahman, Senior Executive Vice President & Head of Human Resources Division is holding the position as Focal Point of the Committee. Apart from Focal Point, the Integrity/Ethics Committee, Prime Bank Limited, Head Office is comprised of 05 (five) members from different Divisions/ Departments of the Bank, i.e. Branch Network Division, Legal Division, Human Resources Training & Development Centre, Brand & Communications and Compliance Department. In addition, 173 Integrity/ Ethics Committee(s) are also formed in different locations in the Bank, i.e. Regional, Cluster-wise & Branch-wise Committee(s).

Moreover, on 28.12.2017 a separate “Integrity Strategy Implementation Unit/ Cell”, Prime Bank Limited, Head Office, Dhaka has also been formed comprising of 05 (five) Officials/ Executives of the Bank. This Unit/ Cell came into force with immediate effect and might furnish its obligations according to the guidelines provided by Integrity Strategy Implementation Cell of Bangladesh Bank. Thereafter, on 11.12.2018, the abovementioned Unit/ Cell was restructured.

As per the implementation process of integrity strategy in the Prime Bank Limited, topic on integrity/ ethics has already been included in training curriculum and Human Resources Training & Development Centre has also started its effort in this regard. It is also worth mentioning here that the Branch Network Division of the Bank in their regular monthly meeting with Head of Branches and Other Branch Executives/ Officials conducts a session titled “Improvement of Ethical Values of Officials”.

Besides, as per Clause No # 6.1 of the National Integrity Strategy work plan and its implementation quarterly progress report, on 11.05.2017 “Innovation Team” is also formed envisioning to ensure customer services at mass people, to increase the standard of services and to make customer friendly access to such services. Furthermore, reference to the Clause No # 6.3 of abovementioned progress report, the Right to Information Act, 2009 and in line with Bangladesh Bank’s guidance on 31.12.2017 a “Responsible Officer” and “Appellate Authority” is appointed. As per Section 24 of the Right to Information Act, 2009, The “Appellate Authority” shall dispose of the application filed by any person who is aggrieved by the decision of “Responsible Officer”. The “Responsible Officer” shall discharge his duties in accordance with the provisions of Section 7–10 of the said Act.

Integrity Strategy Work Plan and Implementation quarterly report of Prime Bank Limited is submitted to Bangladesh Bank regularly.

123PRIME BANK

Prime Bank Limited has mandated reduction of NPA to be treated as ‘Top Most Priority’. Addressing the problematic customers and bringing down the Non-Performing Assets (NPA) by instilling strict lending and recovery discipline remain the key imperatives for Prime Bank Limited. The overall banking sector got impacted by certain factors like very high NPA and probability of re-classification of loans earlier rescheduled. Establishing or maintaining good governance, managing NPA including collecting bad loans and increasing profitability were major challenges for 2018 since recovery from rescheduled loans was not encouraging. Major industrial sectors did not perform in line with expectations mainly due to infrastructural bottlenecks.

Non-Performing Asset (NPA) is a debt obligation where the borrower has not paid previously agreed upon interest and principal repayments to the designated lender for an extended period of time. The non-performing assets are therefore not yielding any income to the lender in the form of principal and interest payments. Therefore, managing Non-Performing Asset (NPA) to keep it at the lowest possible level is at the core of our business priorities. We have embedded the essence of asset quality in our business values, therefore, instituted the best local as well as international industry practices throughout our business processes.

Prime Bank has a fully capable Special Asset Management Division (SAMD), dedicated for management and recovery of problem credits. Major responsibilities of this Division is to formulate strategy and action plans for prevention of credit losses, maximization of recoveries, rescheduling, and/or pursuing legal actions.

Under the present overall socio economic dynamics, Prime Bank has prioritized to extend purpose-oriented credit facilities with required security/collateral support as their policy priority since diversion of fund is one of the identified causes of loan default. So, it becomes imperative need to keep a close watch on the borrower’s business operations and the movement of its financial indicators in an empirical manner.

Prime Bank has formulated well-structured NPA management strategy and we believe that Bank’s intense recovery strategies and innovative approaches will lead to a better asset portfolio of the Bank.

During the year 2018, the NPA Ratio of the Bank has significantly increased to 6.16% from previous year’s 5.45%. The absolute figure shows a rise in classified portfolio from BDT 10,799.05 million in 2017 to BDT 12,685.77 million in 2018 due to sudden non-performance of some large borrowers. Special efforts are being made by the Special Asset Management Division through stringent and rigorous monitoring over the loan portfolio.

Movement of NPA:

The movement in NPA accounts during the years 2018 & 2017 has been depicted in the following table:

ParticularsBDT in Million

2018 2017

Opening Balance (NPA) 10,799.05 10,139.48

Add: Additional NPA during the period

8,806.93 8,007.07

Less: NPA recovered during the period

(1,346.72) (1,635.79)

Less: NPA declassified/regularized as performing during the period

(1,632.05) (2,333.23)

Less: NPA written-off during the period

(3,941.44) (3,378.48)

Closing Balance (NPA) 12,685.77 10,799.05

No. of rescheduled loans 48 nos. 102 nos.

Written-offs:During the years 2018 & 2017, the movement of written-off accounts is as under:

ParticularsBDT in Million

2018 2017

Opening Balance 18,236.77 15,428.92

Add: Addition during the year 3941.44 3,378.48

Less: Collection/Reduction during the year

(267.05) (570.63)

Closing Balance 21911.16 18,236.77

Movement of provisions made against NPA

ParticularsBDT in Million

2018 2017

Opening Balance 4,269.93 3,824.06

Add: Addition during the year 2,904.78 2,558.40

Less: Adj. during the year (2,607.43) (2,112.53)

Closing Balance 4,567.28 4,269.93

Sector-wise Loan Exposure and Non-Performing Asset (NPA) Status:

Following Table shows sector-wise exposure vis-à-vis sector-wise NPA of Prime Bank Ltd.:

REPORT ON NON-PERFORMING ASSET (NPA)

124 PRIME BANK

ANNUAL REPORT 2018

Sectors Sub-sectors

Amount in Taka (Million)

Year 2018 Year 2017

Total Loans &

AdvancesTotal NPA

Sector-wise

NPA in % of Total

Portfolio

Total Loans &

AdvancesTotal NPA

Sector-wise

NPA in % of Total

Portfolio

Agricultural Credit 3,428.00 15.90 0.46% 5,782.40 18.10 0.31%

Industry

1. Large Scale

a) Food Manufacturing 6,963.80 410.40 5.89% 10,469.00 646.50 6.18%

b) Beverage 635.80 - - 1,061.00 - -

c) Tobacco 713.30 - - 833.80 - -

d) RMG 23,264.50 607.40 2.61% 15,112.50 1,432.46 9.48%

e) Textile 11,384.70 51.20 0.45% 9,816.80 40.90 0.42%

f) Footwear, other wearing apparel & made up Textiles

1,318.10 116.60 8.85% 1,124.20 124.40 11.07%

g) Wood cork & allied products

- - - - - -

h) Furniture & Fixture 1,088.80 0.30 0.03% 1,414.80 0.10 0.01%

i) Paper & paper products 243.00 42.60 17.53% 14.00 - -

j) Printing, publishing & allied industries

1,471.00 - - 1,439.50 1.90 0.13%

k) Leather & leather products 29.80 - - - - -

l) Rubber products 3,312.70 5.10 0.15% 4,333.00 0.30 0.01%

m) Chemical & chemical products

774.30 20.60 2.66% 456.30 - -

n) Petroleum & coal products - - - - - -

o) Non-metallic mineral products

7,359.10 1.90 0.03% 5,548.40 4.60 0.08%

p) Basic metal products 14,221.10 162.30 1.14% 13,985.90 174.50 1.25%

q) Electrical machinery & apparatus

1,087.90 19.20 1.76% 1,180.80 - 0.00%

r) Other manufacturing industries

4,593.10 23.30 0.51% 5,165.50 20.20 0.39%

s) Ship building 945.50 - - 771.00 - -

t) Ship breaking 978.20 52.90 5.41% 829.40 - -

u) Pharmaceutical 4,935.80 - - 4,221.90 - -

2. Small Scale 739.40 1.70 0.23% 794.60 46.70 5.88%

Construction 14,807.10 4,500.30 30.39% 18,149.20 2,326.10 12.82%

Power, Gas, Water & Sanitary Services

1,884.20 - - 215.20 - -

Transport, Storage & Communication

5,646.20 597.20 10.58% 4,958.70 404.40 8.16%

Trade Services 22,484.80 1,985.60 8.83% 21,626.70 1,557.90 7.20%

Housing Services

1. Urban

a) Commercial 3,538.10 361.60 10.22% 3,956.80 719.20 18.18%

b) Residential 4,140.10 274.10 6.62% 3,923.50 280.60 7.15%

2. Rural 403.50 20.00 4.96% 391.50 25.60 6.54%

125PRIME BANK

Sectors Sub-sectors

Amount in Taka (Million)

Year 2018 Year 2017

Total Loans &

AdvancesTotal NPA

Sector-wise

NPA in % of Total

Portfolio

Total Loans &

AdvancesTotal NPA

Sector-wise

NPA in % of Total

Portfolio

Professional and Miscellaneous Services

7,254.00 700.10 9.65% 5,985.40 798.40 13.34%

Others 32,331.39 1,865.97 5.77% 31,944.49 1,338.89 4.19%

OBU 23,832.23 849.50 3.56% 22,816.44 837.30 3.67%

Total 205,809.52 12,685.77 6.16% 198,322.73 10,799.05 5.45%

Prime Bank projects domestic demand-driven economic activity will remain relatively buoyant, as indicated by credit growth, industrial activity and import needs which are reflected in the loan portfolio of our Bank. During past few years, Prime Bank maintained a supervisory vigilance on lending efficiency and risk management which will further be strengthened.

In order to arrest NPA, our focus was not only on reducing NPA portfolio, but also avoiding further NPA. In line with that, we have strengthened our recovery and monitoring drives,

deployed external sources where found suitable, strengthened our legal team, thereby intensified recovery initiatives which brought in defaulting clients under negotiation and thereby sizable recovery was possible in the year 2018. On the other hand, in order to check any further significant NPA, we have extensively reorganized our Division and re-engineered business and operational processes putting into a strong risk management framework in place which are expected to result further improvement in the year 2019.

7.61 7.82 5.965.45

6.16

20182017201620152014

NPL Coverage NPLs to total loans and advances

100

80

60

40

20

-

10.00

8.00

6.00

4.00

2.00

-

PREC

ENT

PREC

ENT

6583726556

20182017201620152014

8,29

3

12,6

86

8,91

6 10,7

99

7,29

0 10

,139

7,78

0

11,8

83

6,32

7

11,2

15

Non-performing loans (NPLs) Provision for loans and advance

(BD

T in

Mill

ion)

126 PRIME BANK

ANNUAL REPORT 2018

Islamic Deposit ProductsAl-Wadeeah Current Account (AWCA)Mudaraba Savings Account (MSA)Mudaraba Payroll AccountMudaraba Special Notice Deposit (MSND)Other Mudaraba Deposit AccountsMudaraba Term Deposit Receipt (MTDR)

Single-Installment Based Deposit Schemes • Mudaraba Double Benefit Deposit Scheme (MDBDS) • Mudaraba Monthly Benefit Deposit Scheme (MMBDS) • Mudaraba 150% Deposit Scheme • Mudaraba Education Savings Scheme (MESS)Monthly-Installment Based Deposit Schemes • Mudaraba House Building Deposit Scheme (MHBDS) • Mudaraba LaksmaPuron Deposit Scheme (MLPSS) • Mudaraba Lakhopati Deposit Scheme (MLDS) • Mudaraba Contributory Savings Scheme (MCSS) • Mudaraba Hajj Savings Scheme (MHSS) • Mudaraba Cash Waqf Deposit Scheme

Corporate Loan ProductsWorking Capital FinanceCapital Machinery FinanceReal Estate FinanceWork order FinancingImport and Trade FinanceExport FinanceProject FinanceStructured FinanceLease Finance

Retail Loan ProductsSwapna Neer Home Loan Swapna Shaj Home LoanAbash Home LoanCar LoanPersonal LoanRetail SOD (FO)Retail Secured EMI

Islamic Banking Hasanah(Investments) ProductsHome Investment (Manjeel)Auto Investment (Burak)Household Durables Investment (Asbab)Medical Investment (Shifa)Quard-e-Hasana

SME Loan ProductsAnchol (Women Entrepreneur’s Loan)Chalti Rin (Working Capital Loan)Prime Sampad (Capital LoanSahaj Rin (Collateral Free Loan)Moushami Rin (Seasonal Loan)Prime ShomhabonaPrime Emarat

ServicesPremium Banking “Monarch”Internet Banking “ALTITUDE” Off-Shore BankingSMS BankingPhone Banking through IVRLocker ServicesForeign RemittanceInvestment Bond for NRBsAccounts Facilities for NRBsForex & Fund ManagementMoney Market Services Primary Dealer ServicesATM ServicesPrepaid Cards Debit Cards Master Debit Card JCB Debit Card Proprietary Debit CardCredit Cards MasterCard Gold Credit Card MasterCard Silver Credit Card VISA Gold Credit Card VISA Classic Credit Card International Credit Card Platinum Credit Card Hasanah Credit Card JCB Credit CardFund Transfer SWIFT Foreign Drafts BEFTN BACPS RTGS

Agriculture Loan ProductsAbad (Crop Loan)Khamar (Farm/Non-Crop Loan)Nabanno (for any Agri-purpose Loan)

Conventional Deposit ProductsCurrent AccountSavings Account Short Notice Deposit (SND)Fixed DepositsMy First Account (School Banking)Shukonna’ (Female SB Account)Prime PremiumPrime ExcelPrime PowerPrimeDiGiSingle-Installment Based Deposit Scheme • Double Benefit Deposit Scheme • Monthly Benefit Deposit Scheme • Account 150% Deposit Scheme • Brighter TomorrowMonthly-Installment Based Deposit Scheme • House Building Deposit Scheme • LaksmaPuron Deposit Scheme • Lakhopati Deposit Scheme • Nobagoto Account • Contributory Savings Scheme • Prime Millionaire Scheme • Kotipoti Deposit Scheme

PRODUCTS & SERVICES

127PRIME BANK

Islamic Deposit ProductsAl-Wadeeah Current Account (AWCA)Mudaraba Savings Account (MSA)Mudaraba Payroll AccountMudaraba Special Notice Deposit (MSND)Other Mudaraba Deposit AccountsMudaraba Term Deposit Receipt (MTDR)

Single-Installment Based Deposit Schemes • Mudaraba Double Benefit Deposit Scheme (MDBDS) • Mudaraba Monthly Benefit Deposit Scheme (MMBDS) • Mudaraba 150% Deposit Scheme • Mudaraba Education Savings Scheme (MESS)Monthly-Installment Based Deposit Schemes • Mudaraba House Building Deposit Scheme (MHBDS) • Mudaraba LaksmaPuron Deposit Scheme (MLPSS) • Mudaraba Lakhopati Deposit Scheme (MLDS) • Mudaraba Contributory Savings Scheme (MCSS) • Mudaraba Hajj Savings Scheme (MHSS) • Mudaraba Cash Waqf Deposit Scheme

Corporate Loan ProductsWorking Capital FinanceCapital Machinery FinanceReal Estate FinanceWork order FinancingImport and Trade FinanceExport FinanceProject FinanceStructured FinanceLease Finance

Retail Loan ProductsSwapna Neer Home Loan Swapna Shaj Home LoanAbash Home LoanCar LoanPersonal LoanRetail SOD (FO)Retail Secured EMI

Islamic Banking Hasanah(Investments) ProductsHome Investment (Manjeel)Auto Investment (Burak)Household Durables Investment (Asbab)Medical Investment (Shifa)Quard-e-Hasana

SME Loan ProductsAnchol (Women Entrepreneur’s Loan)Chalti Rin (Working Capital Loan)Prime Sampad (Capital LoanSahaj Rin (Collateral Free Loan)Moushami Rin (Seasonal Loan)Prime ShomhabonaPrime Emarat

ServicesPremium Banking “Monarch”Internet Banking “ALTITUDE” Off-Shore BankingSMS BankingPhone Banking through IVRLocker ServicesForeign RemittanceInvestment Bond for NRBsAccounts Facilities for NRBsForex & Fund ManagementMoney Market Services Primary Dealer ServicesATM ServicesPrepaid Cards Debit Cards Master Debit Card JCB Debit Card Proprietary Debit CardCredit Cards MasterCard Gold Credit Card MasterCard Silver Credit Card VISA Gold Credit Card VISA Classic Credit Card International Credit Card Platinum Credit Card Hasanah Credit Card JCB Credit CardFund Transfer SWIFT Foreign Drafts BEFTN BACPS RTGS

Agriculture Loan ProductsAbad (Crop Loan)Khamar (Farm/Non-Crop Loan)Nabanno (for any Agri-purpose Loan)

Conventional Deposit ProductsCurrent AccountSavings Account Short Notice Deposit (SND)Fixed DepositsMy First Account (School Banking)Shukonna’ (Female SB Account)Prime PremiumPrime ExcelPrime PowerPrimeDiGiSingle-Installment Based Deposit Scheme • Double Benefit Deposit Scheme • Monthly Benefit Deposit Scheme • Account 150% Deposit Scheme • Brighter TomorrowMonthly-Installment Based Deposit Scheme • House Building Deposit Scheme • LaksmaPuron Deposit Scheme • Lakhopati Deposit Scheme • Nobagoto Account • Contributory Savings Scheme • Prime Millionaire Scheme • Kotipoti Deposit Scheme

PRODUCTS & SERVICES

RISK MANAGEMENT

Risk Management Framework & Mitigation Methodology

Market Discipline Disclosures on Risk Based Capital (Basel-III)

129PRIME BANK

Risk is inherent in all our business activities. Sound risk management enables us to serve our customers and deliver for our shareholders. If not managed well, risks can result in financial loss, regulatory sanctions and penalties, and damage to our reputation, each of which may adversely impact our ability to execute our business strategies. We take a comprehensive approach to risk management with a defined Risk Framework and an articulated Risk Appetite Statement which are approved annually by the Risk Management Committee (RMC) and the Board.

Bank’s risk appetite statement indicates the amount of capital, earnings or liquidity we are willing to put at risk to achieve our strategic objectives and business plans, consistent with applicable regulatory requirements. Our risk appetite provides a common and comparable set of measures for senior management and the Board to clearly indicate our aggregate level of risk and to monitor whether the bank’s risk profile remains in alignment with our strategic and capital plans. Our risk appetite is formally articulated in the Risk Appetite Statement, prepared in accordance with the regulatory guidance and template.Our overall capacity to take risk is limited; therefore, we prioritize the risks we take in order to maintain a strong and flexible financial position so we can withstand challenging economic conditions and take advantage of organic growth opportunities. Therefore, we must set objectives and targets for capital and liquidity that are intended to permit us to continue to operate in a safe and sound manner.

The setting of an appropriate strategy and risk tolerance/appetite levels, a holistic risk management approach and effective reporting lines to the competent authority in its management and supervisory functions, enables management to take risks knowingly and treat risks where appropriate. Risk management is a part of internal governance involving all areas of bank. There is a strong link between good corporate governance and sound risk management. Without proper risk management, the various functions in a banking institution cannot work together to achieve the bank’s objectives. It is an essential part of helping the bank grow and promote sustainability and resilience.

Trends in Risk Management

Risk management in banking has been transformed over the past decade, largely in response to regulations that emerged from local as well as global financial crisis. But important trends are afoot that suggest risk management will experience even more sweeping change in the next decade.

The change expected in the risk function’s operating model illustrates the magnitude of what lies ahead. Six trends are shaping the role of the risk function of the future:

i. Regulation will continue to broaden and deepen;

ii. Customer expectations are rising in line with changing technology;

iii. Technology and advanced analytics are evolving;

iv. New risks are emerging;

v. The risk function can help banks remove biases;

vi. The pressure for cost savings will continue.

The six trends suggest a vision for a high-performing risk function is inevitable. It will need to be a core part of banks’ strategic planning, collaborate closely with businesses, and act as a center of excellence in analytics and de-biased decision making. Bank to manage multiple risk types while complying with existing regulation and preparing for new rules will make it more valuable still, while its role in fulfilling customer expectations will probably render it a key contributor to the bottom line.

Risk management functions will need to transform its operating models;initiatives can be implemented that will bring short-term business gains while helping build the essential components of a high-performing risk function over the next few years. Here are some examples of such initiatives that can be launched immediately:

i. Digitize core processes

ii. Experiment with advanced analytics and machine learning.

iii. Enhance risk reporting.

iv. Collaborate for balance-sheet optimization

v. Build a strong risk-management culture

Risk management is a discipline at the core of every enterprise and encompasses all activities that affect its risk profile. The objective of risk management is to identify and analyze risks and manage their consequences. Basel II/III Accord, the standards of Risk Management as guided by the Bank for International Settlements (BIS) and particularly Basel Committee on Banking Supervision (BCBS), has been applied by bank regulators across the world. The Central Bank of Bangladesh i.e. Bangladesh Bank also issued guidelines to comply with the global norms which forms the basis of risk management of all scheduled banks in Bangladesh. The guidelines require that Banks adopt enhanced policies and procedures of risk management. PBL’s risk management strategy is based on a clear understanding of various risks, disciplined risk assessment, measurement procedures and continuous monitoring. PBL continues to focus on improving its risk management systems not only to ensure compliance with regulatory requirements but also to ensure better risk-adjusted return and optimal capital utilization keeping in mind of the business objectives. For sound risk management, PBL manages risk in strategic level, managerial level, and operational level.

The risk management process of the bank operates under following structure:

• The Board of Directors (BoD) approves overall risk management policies of the Bank in line with the regulatory guidelines; The Board also sets the Risk Appetite of the Bank at the beginning of the year.

• Executive Committee (EC) of the Board is responsible for all sort of decision making as set by the Board. All decisions taken by EC are ratified by the Board afterward;

RISK MANAGEMENT FRAMEWORK &MITIGATION METHODOLOGY

130 PRIME BANK

ANNUAL REPORT 2018

• Audit Committee (AC) of the Board reviews the internal audit reports of the bank and operational risk and assesses whether internal control of the Bank is proper or not;

• Risk Management Committee (RMC) of the Board oversees the overall Risk Management of the Bank. The committee also reviews risk management policies & guidelines, loan approval limit and submits to the Board for necessary revision each year;

• For managing risk, PBL established Credit Risk Management Division (CRM), Credit Administration Division (CAD), Recovery Division, Legal Division, Internal Control and Compliance Division (ICCD), Internal Audit & Inspection Division and Risk Management Division (RMD). For managing money laundering risk, Branch Anti Money Laundering Compliance Officer (BAMLCO) for every Branch under dedicated Chief Anti Money Laundering Compliance Officer (CAMLCO) has been placed;

PBL also formed various risk committees at management level, like Head Office Credit Review Committee (HOCRC), Asset Liability Committee (ALCO), Senior Management Team (SMT), Central Compliance Committee(CCC), and Enterprise Risk Committee (ERMC) to Identify, assess, mitigate and monitor of risk throughout the organization; In addition to these Committees, a Risk Management Forum (RMF) has also been introduced by Risk Management Division (RMD) to escalate &capture,evaluate and mitigate operational risk at different level of activities through combined effort. To assist this forum and formally capture various events, an online module named Risk Platform has also been developed where employees of the bank can escalateor register any anticipated or potential risks.

Risk Management Committee of the Board:

To oversee the risk management of the Bank, the Board has formed a Risk Management Committee as per the guidelines of Bangladesh Bank. The Committee supervises various risks arise from cores risks namely Credit Risk, ICC Risk, ICT Risk, FX Risk, ALM Risk &, AML Riskand also Operational risk, which is key risk component of day to day banking operation. Presently four(04) members of the Board of Directors are representing in the Risk Management Committee. During 2018 four(04) RMC meetings were held where following memos were placed before the Committee:

SI Subject

1 Discussion of Sustainable Finance Activities

2 Review of restructured Large loans

3Review of Information Security Policy and Procedures of the Bank

4 Review of Fraud Detection and Management Process

5 Review of Comprehensive Risk Management Report

6 Review of Borrower Rating and Capital Management status

7 Review of Stress Testing of the Bank

8 Review of Green Banking Policy

9 Risk Appetite Statement of the Bank

10 Internal Capital Adequacy Assessment Process of the Bank

11 Review of Quarterly Risk Management Report

12 Discussion on Annual Report of AML/CFT activities of last year

Basel III implementation status

Basel III is an evolution rather than a revolution for many banks. It was developed from the existing Basel II framework, and the most significant differences for banks are the introduction of liquidity and leverage ratios, and enhanced minimum capital requirements.

Globally Basel III was introduced in 2010 as the previous version of capital standard, was felt inadequate to maintain financial stability during global financial crisis started in 2007 with the intention of gradual implementation starting from January 01, 2013 and full implementation starting from January 01, 2020. In Bangladesh, Basel III phase wise implementation started back in 2015 and will fully be implemented from January 2020.Basel III changes & implementation status of Prime Bank briefly stated below -

Capital: Banks are required to hold at least 4.5% of risk-weighted assets in the form of Core Equity Tier-1 as prescribed by Bangladesh Bank. This rule is an effort to ensure that banks maintain high quality capital. In contrast to the requirement Tier-1 capital of PBL is 10.92% at the end of Dec 2018.

Liquidity ratios: The Liquidity Coverage Ratio (LCR) mandates that banks must hold high-quality liquid assets that would cover the bank’s cash outflows for a minimum of 30 days in a stress scenario whereas the Net Stable Funding Requirement (NSFR) is for banks to have enough funding to last for a whole year in an emergency. PBL had a very healthy Liquidity throughout the year and was able to maintain LCR within the regulatory threshold during the year 2018, however, the said ratio was marginally above the threshold of 100% at the end of December 2018, efficient liquidity management will be a big challenge for banking sector so do the PBL, as the credit growth shows upward trend than the deposit growth at the end of Dec 2018 which stood at 13% and 9.4% respectively.

Leverage Ratio and its Impact on business: The new quality capital requirement policy and leverage ratio calculation will affect all businesses proportionally and the impact would be more pressing on marginally profitable businesses, but all businesses would suffer unless the cost rise could be passed on to customers as Banks need to ensure LCR and NSFR to comply with Basel III regulations. Moreover introduction of Leverage ratio means Banks will have to have sufficient Tier-1 capital for its business expansion. In comparison to LCR, NSFR, quality capital and Leverage Ratio, PBL is in good position as the Bank is maintaining above 10% of CET-1 capital against total RWA.

Risk Management Process

Risk management is nothing but balancing the trade-off between risk and return and ensure optimum risk-adjusted return on capital. Risk management function of PBL strives to proactively anticipate vulnerabilities at the transaction as well as at the portfolio level, through quantitative and qualitative examination of the embedded risks. Risk is managed through a framework of policies and principles approved by the Board of Directors which ensures that the Bank operates within its risk appetite. The policies and procedures established for this purpose are continuously benchmarked with international best practices. Furthermore, the Internal Capital Adequacy Assessment Process (ICAAP) of the Bank assesses all the

131PRIME BANK

significant risks other than the risks under Pillar-1 of Basel III and calculates the adequate capital requirement.

Identification: The first stage of risk management is to identify bank’s risk area in order to measure and manage i.e either mitigate or risk transfer. Typically PBL distinguishes Credit risk, Market risk, Liquidity risk, Operational risk, and Information & Communication Technology (ICT) risk. Beside these, concentration risk, strategic risk, residual risk, reputation risk, settlement risk, environmental & climate risk etc are covered under Internal Capital Adequacy Assessment Process (ICAAP).

Measurement: The consistent assessment of the above mentioned types of risks is an essential prerequisite for successful risk management. For example, in order to assess credit risk associated with any corporate financing proposal, PBL carries out various risk assessment like financial spreadsheet analysis, credit risk grading and other risk like concentration related to the borrower and the relevant industry.

Aggregation: PBL closely monitors aggregate risk in order to minimize its exposure to adverse financial developments- such as a credit crunch or even insolvency- arising from a counterparty or client. While aggregating risks, it is important to take into account correlation effects which cause a Bank’s 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.

Planning & Controlling: PBL takes into consideration the business strategy while planning and setting control for mitigating risk. As risk management is the trade-off between risk and return, PBL always tries to manage the risk without hampering the business growth and stakeholders return. Internal Capital Adequacy Assessment Process (ICAAP) is one of the largest part of planning and controlling of risk.

Monitoring: Risk monitoring is the most challenging task in the whole risk management cycle as monitoring helps the Bank to identify earlier any probable risk that may take in place in many cases. Risk monitoring also helps to track whether the risks actually incurred lie within the prescribed limits, thus ensuring an institution’s capacity to bear those risks.

The above process of risk management is being undertaken by PBL which implies that if any risk(s) remains un-attended, that will be addressed through the repetition of the process which started with identification of those factors and the process continues.

Credit Risk Management

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 Bank’s counterparties. Credit risk is most simply defined as the potential that a Bank’s borrower or counterparty will fail to meet its obligations in accordance with agreed terms, however, “migration risk” which refers to the potential deterioration of the credit quality of an un-defaulted exposure, also subsumed under broader definition of credit risk in a core principles of Basel Committee.

Credit risk is one of the significant risks of bank by the nature of their activities, according to the basel regulation, bank need to allocate high amount of capital for providing poor or risky credit. The quality of credit is considered by recognizing the rating of the exposure. If an exposure is rated as “AAA”, it treated as high quality credit than an exposure rated as” C” and it required less capital as per regulation.

The goal of credit risk management is to maximize a Bank’s 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 long-term success of any banking organization. That is 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 poor credit rating.

Sound practices that the Bank is trying to ensure are -

• Establishing an appropriate credit risk environment;

• Operating under a sound credit granting process;

• Maintaining an appropriate credit administration measurement and monitoring process;

• Ensuring adequate controls over credit risk

The following sets of principles are used for the sustainable risk management culture:

Balancing Risk and Return: Risk is taken considering the interest of Bank’s stakeholders, in line with Bank’s strategy and within its risk appetite.

Responsibility: All employees ensure that risk-taking is disciplined and focused.

Accountability: Risk is taken only by delegated authorities and where there is appropriate infrastructure and resources. PBL maintains a clear and transparent process for all risk-taking decisions.

Anticipation: PBL seeks to anticipate future risks and ensures awareness of all known risks.

Monitoring

Identification

Measurement

AggregationPlanning &Controlling

132 PRIME BANK

ANNUAL REPORT 2018

Competitive advantage: The bank seeks to achieve competitive advantage through efficient and effective risk management and control. The credit risk management policy of PBL operates under the following broad principles:

A. Establishing an appropriate Credit Risk environment

The Board of Directors is responsible for approving andreviewing the credit risk strategies and policies of the bank periodically. The strategy reflects Bank’s tolerance for risk and the level of profitability the bank expects to achieve for incurring various credit loss.

Senior management is responsible for implementing the credit risk strategy approved by the Board and for developing standard policies and procedures for identifying, measuring, monitoring and controlling any type of risk associated with the strategy. Such policies and procedures address credit risk of the Bank’s activities and at both the individual credit and portfolio level.

PBL ensures that the risks inherent in products and activities which are apparently new to the bank 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. Moreover, the Bank has centralized its corporate credit to ensure better management of corporate borrowers. Besides, Credit Risk Management Division also set different limits in regards to sector concentration, area concentration, Off-Balance Sheet Exposure etc.

B. Borrower evaluation

Borrower evaluation is at the core of the credit risk management. Bangladesh Bank vides BRPD Circular No 16 dated 30.10.2018 has circulated “Guidelines on Internal Credit Rating System for Banks”. From November, 2018, new Guidelines on Internal Credit Risk Rating System (ICRRS) is simultaneously effective besides existing CRG. From 01.07.2019, ICRRS willbe mandatory. ICRRS comprises with 20 (twenty) different rating templates for 20 industries/ sectors instead of just one template for all the sectors like previous CRG model.

Internal Credit Risk Rating System will be an integral part of credit risk management for the banks. The key uses of these guidelines are as follows:

i. To provide a granular, objective, transparent, consistent framework for the measurement and assessment of borrowers’ credit risk.

ii. To facilitate the portfolio management activities.

iii. To assess the quality of individual borrower to help the banks to determine the quality of the credit portfolio, line of business, the branch or the Bank as a whole.

iv. To be used for individual credit selection, credit pricing and setting credit limit and terms and conditions.

PBL will start preparation (including capacity building) for “Internal Credit Risk Rating System (ICRRS)’ simultaneously. Before adoption of Internal credit risk rating system in line with

the implementation of Internal Rating Based Approach (IRB), Bank shall continue existing Credit Risk Grading (CRG) System which was circulated vides BRPD Circular No. 18 in 2005 for implementation.

C. Operating under a sound credit granting process

PBL follows sound, well defined credit-granting criteria. These criteria include a thorough assessment 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 asset growth can be maintained ensuring optimum asset quality and without compromising the Bank’s standard of excellence;

• PBL carefully avoids name lending. Credit facility is being granted on business consideration with absolute due diligence;

• Risks inherent in a credit proposal are being identified and appropriate mitigating steps are taken accordingly;

• Collateral offered against a credit facility is properly valued and verified by the concerned Relationship Officer or Relationship Manager periodically. 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;

• Risk grading of the accounts is being done as per the Bangladesh Bank’s guidelines. Any credit approval/ sanction aresubject to the banking regulations in force or imposed by the regulatory body from time to time and subject to changes of the Bank’s policy. Data collection check list and limit utilization format are prepared for regular assessment. Internal Audit & Inspection Division independently reviews the risk assessment at the time of conducting internal audit.

• PBL also performs borrower rating to assess its borrowers for ensuring sound asset quality.

The bank has established overall credit limit at every level for groups of legally connected borrowers including individual borrowers and counterparties that aggregate in comparable and meaningful manner for different types of exposures, both in the banking & trading book and on & off 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 facilities to a single customer (Individual, Enterprise, Company, Corporate, Organization, and Group) are being treated as Large Loan if total limit amount exceeds 10 percent of the total capital of the Bank. As per BRPD Master Circular no. 02 dated January16, 2014on Single Borrower Exposure Limit,PBL has always maintained thepercentage ceiling of Large Loan Portfolio exposure.

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, conduct of account, and security against the proposed loan.

133PRIME BANK

The assessment originates from relationship manager/ account officer and is reviewed by Head Office Credit Review Committee. The Credit analyst or executive duly delegated by proper authority approves the credit proposals. Executive Committee of the Board approves the proposals beyond the delegated authority limit of the Management. The Board of Directors also reviews the proposals approved by the Executive Committee on post facto basis.

All credit extensions are made on an arm’s length basis. In particular, credits to related companies and individuals are monitored with particular care and other appropriate steps are taken to control or mitigate the risks of connected lending. Credit granting process at PBL operates within the defined risk limit so that the bank can achieve its growth target and superior return on capital.

D. 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 are developed for these purposes. Dedicated committees at management level have been set up to monitor risk. PBL segregated the total credit process into Relationship Management/Marketing, Credit Approval/Risk Management, Credit Administration to improve the knowledge levels and expertise in each department and to impose controls over the disbursement of authorized loan facilities and obtain an objective and independent judgment of credit proposals. Credit Administration Division completes security documentation after getting approval from Credit Risk Management Division and ensures adherence to approved terms and other requirements before limit creation and disbursement. To minimize credit losses, monitoring procedures and systems are placedwhich provides an early indication of the deteriorating financial health of a borrower.

Early Alert system is an example of such monitoring procedures. An Early Alert Account is one that has risks or potentialweaknesses of a material nature requiring monitoring, supervision, or close attention of the management. If such weaknesses are left uncorrected, they may result in deterioration of the repayment prospects for the asset or in the Bank’s 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 Relationship Manager and sent to the approving authority in Credit Risk Management Division for any account that is showing signs of deterioration. The Risk Grade is also changed and referred to Credit Risk Management Division for assistance in recovery.

The bank has also put a system in place for monitoring the condition of individual credits including determining the adequacy of provisions and reserves. The guidelines established by the Bangladesh Bank for Credit Information Bureau (CIB) reporting, provisioning and write-off of bad and doubtful debts and suspension of interest are followed meticulously in all cases. Provision is maintained for any shortfall in the Forced Sale Value (FSV) to cover total loan outstanding once an account is classified.

PBL also has information systems and analytical techniques that enable the management to measure the credit risk inherent in all on- and off-balance sheet activities. PBL has taken initiative to make management information system more robust and sophisticated for monitoring the asset quality of the Bank. At present total limit loading and disbursement procedure of the Bank is fully centralized within Credit Administration Division (CAD) and various MIS reports for monitoring purpose e.g overdue report, EOL report, disbursement report etc. can be generated from this end as well. All credit approvals are given complying with the requirements of Bank’s Memorandum and Articles of Association, the Bank Company Act-1991(amended up to2013), as amended from time to time, the Bangladesh Bank’s circulars, guidelines and other applicable laws, rules and regulations, Bank’s Credit Risk Management Policy, Credit Operational Manual and all relevant circulars that are currently in force. Any deviations from the internal policy of the bank are well documented and subject to approval from competent authority/Board of Directors. The portfolio is well diversified with respect to sector and industry. Concentration of credit is carefully avoided to minimize risk.

PBL takes into consideration of potential future changes in economic conditions while assessing individual credits and credit portfolios. An important element of sound credit risk management involves discussing what could potentially go wrong with individual credits and within the various credit portfolios, and factoring this information into the analysis of the adequacy of capital and provisions.

E. 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 levels, consistent with prudential standards and internal limits. The bank 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.

Prime Bank Limited has taken initiative to introduce Risk Based Pricing Model and the model has already been developed which is currently under scrutiny of senior management. After getting vetting by RMC and subsequently approved by the

Sales Risk Analysis Processing

Aquisition ofcredit Specific

Customer

Collect & RebiewDocuments

ApprovalDecline

Credit Review

Risk & CollteralAssessment

Documentation

Monitoring

Disbursement

Send Documentsto Central

Review Unit

134 PRIME BANK

ANNUAL REPORT 2018

Board of Directors, the Risk Based Pricing Model will be in place for pricing corporate loans. Benefits of Risk Based Pricing are:

• Enhance shareholders value by ensuring that credit risk associated with the transaction is appropriately measured and priced

• Enable the Bank to know well ahead of time, what kind of price will satisfy its risk/return preferences

• Enhance the achievement of credit portfolio goals and objectives.

PBL also 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 Division, 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 doubtful.

Environmental & Social Risk Management

Environmental & Social risk may be defined as an actual or potential threat of adverse effects on living organisms and environment by effluents, emissions, wastes, resource depletion, etc., arising out of an organization’s activities. These effects increase risks as they bring an element of uncertainty or possibility of loss in the context of a financing transaction.

Environmental & Social Risk Management is the process of identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable environmental & Socialrisks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) in proper management of future events having impact on the environment.

Environmental & Socialrisk is one of the several risks that the Bank must take into account while assessing financing opportunities as it affects credit risk to a great extent. As environmental risk is a facilitating element of credit risk, the Bank has integrated Environmental & SocialRisk Management with Credit Risk Management in all aspects.

As instructed by the Bangladesh Bank, PBL has Environmental & Social Risk Management policy statement and Environmental & Social Risk Management Procedure Manual. The loan categories for which PBL uses Environmental & Social Risk Management Manual (ESRM) are agriculture, retail, trade, microfinance, SME, corporate finance and project finance and it is applicable forall loan proposals (New/Renewal/Enhancement/ Rescheduling/Restructuring).

• If the Environmental & Social Risk Rating (ESRR) is low, then the transactions are approved as per the Delegation of Business Power (DBP) holder.

• If the Environmental & Social Risk Rating (ESRR) is medium, then the transactions are escalated to one (1) level up from the authority that approves low risk transactions conforming to DBP but up to the Managing Director.

• If the Environmental & Social Risk Rating (ESRR) is high, then the transactions are escalated to the Board/Executive Committee (as applicable) after review by the MD, for approval.

Wherever the ESRR is “High”, the credit risk management function is to ensure drafting an E&S Action Plan (ESAP) and include additional covenants/conditions to be used to mitigate the identified problems.

Liquidity Risk Management

Liquidity risk is the failure to meet obligations leading to an inability to support normal business activity and to meet liquidity regulatory requirements. Liquidity risk can arise due to market liquidity or funding liquidity. Market liquidity risk is the risk of the inability to sell assets due to lack of liquidity in the market. Funding liquidity risk is the risk of the inability to meet liabilities when they fall due or can only be met at abnormal high price.

To manage liquidity risk, PBL maintains diversified and stable funding base comprising of core retail, corporate and institutional deposits. The principle responsibility of the liquidity risk management of the bank rests with Treasury Division which maintains liquidity based on historical requirements, current liquidity position, anticipated future funding requirement, sources of fund, options for reducing funding needs, present and anticipated asset quality, present and future earning capacity, present and planned capital position. ALCO manages the liquidity risk by:

• Setting tolerance limit for cumulative cash flow mismatches,

• Setting limit on loan to deposit ratio and

• Setting limits on dependence on institutional deposits which are volatile in nature.

From the liquidity statement it can be seen that out of total deposit liabilities of BDT 267,584 million, contractual maturity of liability within 1 year is BDT 160,134 million. In the liquidity statement it is apparent that there is moderate negative gap in 3-12 months and 1-5 years’ bucket which reveals that pressure on liquidity is nominal.  In reality, approximately 85-90 percent of fixed term deposits are renewed on maturity. As such, the negative gap actually converts into positive gap.

Mar-18 Jun-18 Sep-18 Dec-18

4.74%

4.72%4.70%

4.68%

4.66%

4.64%

4.68%

4.75% 4.74%

4.72%

Cost of Deposit based on daily average

Fixed Deposit, 7,396.00

Short TermDeposit, 1,293.76

Current Deposit, 1,989.84

Others, 1,589.44

Savings Deposit,4,317.62

Scheme Deposit, 3,165.00

Deposit Mix (BDT in Crore)

2018

135PRIME BANK

Market Risk Management

Market risk is defined as the risk of losses in on and off-balance sheet positions arising from adverse movements in market prices which may impact the Bank’s earnings and capital. The purpose of market risk management framework is to minimize the risk of loss and maximize profit in trading portfolio. The risk may pertain to interest rate related instruments (interest rate risk), equities (equity price risk) and foreign exchange rate risk (currency risk). Besides, the Bank is also exposed to liquidity or funding risk.

Market Risk management is guided by well laid policies, guidelines, processes and systems for the identification, measurement, monitoring and reporting of exposures against various risk limits. The Asset Liability Management Committee (ALCO) meets periodically and reviews the positions of trading groups, interest rate sensitivity, sets deposit and benchmark lending rates and determines the asset liability management strategy, as deemed fit, in light of the current and expected business environment. Treasury Front office has developed MAT policy to manage stressed liquidity. Treasury mid office has been formed which is responsible to monitor, measure and analyze the risks inherent in treasury operations of the Bank. Treasury back office before formation of Mid office used to monitor risk limits including position limits and stop loss limits for the trading book and reviews periodically. For managing and monitoring foreign exchange risk PBL has started calculation of Value at Risk (VaR). Interest rate risk is monitored through the use of re-pricing gap analysis and duration analysis. Interest rate risk is further monitored through the ALCO.

PBL uses various tools like structural liquidity profile, stress testing etcfor measuring liquidity risk. PBL maintains diversified sources to facilitate the bank to meet funding requirements.

Interest Rate Risk

Interest rate risk is the risk of losing revenueby an interest-bearing asset, such as a loan or a treasury bond etc due to variability of interest rates. In general, as rates rise, the price of a fixed rate bond will fall, and vice versa.

PBL monitors interest rate risk through duration gap analysis, sensitivity analysis, andDaily Earning At Risk (DEAR) analysis. The short term impact of changes in interest rates is on the bank’s 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, which raise the risk of losing the

net worth 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 positive gap in first quarter and moderate negative gap in the second to third quarters. If interest rate increases by 1 percent, the Bank will enjoy positive earnings of BDT 23.52 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 8.88% impact on quarterly net profit which is also within the stipulated limit of 10 percent.”

Moreover interest rate risk is also monitored through DEAR or Daily Earnings at Risk. DEAR is defined as the estimated potential loss of a portfolio’s value over a one-day period as a result of adverse movement in market conditions, such as changes in interest rates, foreign exchange rates or market volatility.

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 currency. In addition, the bank is also exposed to interest rate risk and settlement risk on account of its foreign exchange business.

To evaluate the extent of foreign exchange risk, a Liquidity Gap Report is prepared for each currency. Gap or mismatch of maturities can arise due to a customer transaction resulting in a long or a short position for the bank. The Net Open position Limit (NOP) of the Bank is ± USD 75.23 million which is equivalent to ± BDT 6,311.79 million on overnight basis as fixed by Bangladesh Bank. The actual Net Open Position (NOP) of the Bank as on December 31, 2017 was Tk. 1,946.61 million which is equivalent to USD 23.20 million. The overall exposure did not exceed the stipulated limit at any point of time.

Market Risk

InterestRate Risk

EquityRisk

ForeignExchange

Risk

Duration Gap1.041.02

10.980.960.940.920.90.880.860.84

March-18 June-18 September-18 December-18

48,290.82

March-18

April-18

May-18

June-18

July-

18August-

18Septe

mber-1

8Octo

ber-18

Novem

ber-18

December-1

8

99,388.16 122,140.56

45,704.89

Value at Risk (VaR) (at 99% confidence level)Amount in USD

136 PRIME BANK

ANNUAL REPORT 2018

Furthermore Foreign Exchange Risk is also measured and monitored through Value at Risk (VaR) under variance – covariance method. The Value-at-Risk is the maximum loss that the Bank is likely to face within a given time period with (usually) a 95% (high) & 99% (extremehigh) probability.

Equity Risk Management

Equity risk is defined as losses due to changes in market price of equity held by the bank. 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.

Equity Risk of the Bank is also monitored through analysis of own investment on shares by subsidiaries, margin loan against investment in share by subsidiaries and loan statement against shares.

Furthermore, PBL measures equity risk through stress testing by devaluing equity portfolio held by the bank 10%, 20% and 40% under minor, moderate and major shock level respectively. During 2018, Capital to Risk weighted Asset Ratio (CRAR) was greater than 10% under all equity shock levels.

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 impact and some are low occurrence with high impact risks. Third consultative paper of Basel-II recommended following event based classification of operational risks:

• Internal 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.

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;

• Controls are evaluated as per Departmental Control Function Check List (DCFCL);

• Incident reporting and analysis of causes and actionstaken on losses from both internal & external fraud and control lapses;

• Review of safety and control measures of premises.

Risk control and measurement in PBL are as under:

• Manuals and Standard Operating Procedures are in place and implementation of those are regularly monitored;

• Regular review of system and network by concerned Divisions and related committees.

• Internal Audit & Inspection Division of the Bank undertake Risk Based Internal Audit, Comprehensive audit, special audit and IT audit of branches and departments at Head Office for review of the operation and compliance of statutory requirement respectively and submit the major audit findings to Audit Committee of the Board. Upon getting guidelines from the Committee Internal Control, Compliance & Government Relations Division communicate with related branches for immediate compliance on mentioned issues and thereafter submit the updated compliance status to the Audit Committee of the Board.

• Self-Assessment of Anti-Fraud Internal Control are being carried out with due diligence under the purview of best practices in the banking industry.

• Risk Based Internal Audit (RBIA)is being carried out by Internal Audit & Inspection Division.

• Independent Anti Money Laundering (AML) Inspection is being conducted at branch level byInternal Audit & Inspection Division.

• Segregation of duties and multi-tier approval procedure are in place.

• IT Audit is being carried out on regular basis

• Establishing a Data Center for backup of data and information

• Regular testing of system’s back-up procedure and contingency plan

Prevention of Money Laundering

Money Laundering means properties acquired or earned directly or indirectly through illegal means or illegal transfer or use of legally earned money, conversion and concealment of ownership and source of fund. Bangladesh Bank through 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.

PBL has updated Anti Money Laundering Guidelines in 2016, which includes Senior Management commitment to the anti-money laundering program. The Management has developed such a culture for the Bank so that all the employees strictly adhere to each and every provision of Money Laundering Prevention Act 2012 which was letter amended on 2015 and Anti-Terrorism Act-2009 with amendment of 2012 and 2013. All employees of the Bank, irrespective of the position they hold, are accountable to the Top Management and regulatory

Loan to own SubsidiaryLoan to other BrokerageLoan to Stock DealerBond DebentureShare

Loan to ownSubsidiary, 390

Share, 8.23

Loan to otherBrokerage, 60.72

Loan to StockDealer, 1

Bond/Debenture, 0

Capital Market Exposure

2018

137PRIME BANK

bodies for their activities which might directly or indirectly relate to money laundering. Details of Anti Money Laundering activities are included in the ‘Corporate Governance’ chapter of this Annual Report.

For mitigating the risks, the management of the Bank has formed Anti Money Laundering Department. The Bank has also nominated CAMLCO, Deputy CAMLCO centrally and BAMLCO at branches for monitoring compliance issues related to Anti Money Laundering. The regulatory requirements are being complied with the guidelines.

The CAMLCO of the Bank has been participating in the CAMLCO Conference organized by Bangladesh Bank every year. The Central Bank has been arranging district level AML related training for employees of all schedule Banks operating in the district(s).

Internal Control and Compliance

Internal Control and Compliance is a management process designed to achieve effectiveness and efficiency of operations, reliable financial reporting and compliance with laws and regulations.

Internal Audit & Inspection Division conducts internal audit in all the Branches of our Bank to identify lapses/irregularities related to account opening, preparation and update of KYC and other related issues, preparation of accurate Transaction Profile (TP) and to build up the knowledge about AML issues/matters and forwards those to Internal Control, Compliance & Government Relations Division for follow-up.

Pillar 1 and Pillar 2 of Basel Accord also focuses on operational risk and supervisory review respectively attaching considerable importance to internal control & compliance and on supervision & monitoring. As prescribed in the Bangladesh Bank core risk guideline on Internal Control & Compliance, Management Committee (MANCOM) of PBL reviews the overall effectiveness of internal control system.

The chapter on ‘Corporate Governance’ of this Annual Report contains detail discussion on internal control & compliance measures of the Bank.

Islamic Banking Risk Management

Islamic banking is becoming a popular mode of banking because of its Shari’ah 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 investment risk, market risk, liquidity risk and operational risk there are other risks in Islamic banking operation.

• Shari’ah Non-Compliance Risk arises from the failure of the banks to comply with Shari’ah rules and regulations. As more and more banks are operating under both conventional and Islamic banking, it is becoming increasingly important to comply with Shari’ah rules and regulations for the sustainability of Islamic banking. Based on historical reviews, the potential areas of Shari’ah non-compliance is assessing potential profits that cannot be recognized as eligible profits under Shari’ah Principle.

• Fiduciary risk is the risk that arises from Bank’s 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 Shari’ah non-compliance risk, the Muraqibs regularly conducted Shari’ah audit. Fiduciary risk is controlled through Bank’s risk management process.

Information &Communication Technology Risk Management

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 and communication technology. This risk may arise from malfunction of system, failure of network, lack of knowledge about the use of technology, virus attack, hacking etc.

PBL has a robust network infrastructure with scalable, secure, redundant and load balanced architecture to support its customers regarding the on-line transactions with highest level of security. PBL uses world renowned Active Devices in its network infrastructure.

PBL has adopted world class Core Banking Software “TEMENOS T24” and also implemented Disaster Recovery (DR) site which is located in Uttara to make sure that the bank operates smoothly under unavoidable circumstances. The Bank has relocated its Data center this year for better management of IT infrastructure and equipment. PBL has performed DR test during month of December2018, although the result of DR test was satisfactory but bank has to go a long way in Business Continuity &IT DisasterRisk Management. As the bank is transforming to centralized operation,the BCP & DRP need to be equally supplemented by contingency planning with adequate system, logistical& structural set up.

PBL has an IT audit team also, formed as per the Central Bank’s guideline. The team conducts IT Audit in each branch on a periodic basis and provides reports 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.

Information Security Management

Information security (InfoSec) is the practice of preventing unauthorized access, use, disclosure, disruption, modification, inspection, recording or destruction of information. On the other hand, Information security management (ISM) describes controls that an organization needs to implement to ensure that it is sensibly protecting the confidentiality, availability, and integrity of assets from threats and vulnerabilities. Information Security Division (ISD) is dedicated to provide information security services & expert security guidance to all employees

138 PRIME BANK

ANNUAL REPORT 2018

of Prime Bank Limited (PBL) to ensure confidentiality, integrity, & availability of the information assets & resources according to PBL’s Information Security Policy & Bangladesh Bank’s regulations & guidelines. Information Security Division directly reports to Chief Risk Officer.

Information Security Division conducting Information Security Risk Assessment of various Applications, Systems & Business Processes on regular basis with consideration of latest vulnerabilities, threats and information security breaches. In consequence, Information Security Divisionhas conducted Risk Assessment on Swift System, DCRMS (Debit Card Requisition Management System), Docudex System/Application, Altitude iOS Apps, and Risk Assessment Review on Network Devicesduring the year of 2018.

To fulfill the vision, Information Security Division (ISD) has been solely working for last three to four years to mitigate PBL’s information risks and ensure bare minimum information security breaches. ISD was able to successfully justify his role in the organization with some remarkable achievements in year 2018 and continues the succession by conducting Information Security Risk Assessment of various Applications, Systems & Business Processes on regular basis with consideration of latest vulnerabilities, threats and information security breaches. Moreover, ISD is actively engaged in various transformational projects of Prime Bank, like; Data Center Migration (TIER-III) project, Core Banking Up gradation project, EMV CO. and CMS up gradation project, Microsoft up gradation project as well as PCI-DSS (Payment Card Industry Data Security Standard) project.

ISD analyze information security incidents and set priority items mainly to eliminate information leaks. ISD have identified problems systematically and making improvement plans based on assessment results. ISD have conducted periodic vulnerability assessment and penetration testing internally to all critical systems or applications as well as externally through third party vendors to measures and find out the security threats and vulnerabilities in Banking Infrastructure.

Apart from this, ISD also conducting regular security awareness session/training to all end users of prime Limited through classroom or through online platform. ISD Provides end users’ information security training, awareness and periodically monitors the users’ knowledge regarding information security through training evaluation and communications.

Internal Capital Adequacy Assessment Process (ICAAP)

The Bank conducts ICAAP process every year as stipulated by the Bangladesh Bank. ICAAP is aimed at ensuring that the bank maintains an amount of capital commensurate to its risk profile and improves upon its risk management systems and framework. It involves realistic assessment of the level of risks inherent in the business operations of the bank and setting aside adequate capital to cover all such risks like Residual Risk, Concentration Risk, Liquidity Risk, Reputation Risk, Strategic Risk, Settlement Risk etc. The assessment is done considering the operational presence, activities, and processes etc. Monitoring all the material risks also forms part of ICAAP. In short, ICAAP is integrated into the management and decision making process and is reflected in the processes and business operations of the Bank.

Risk Management Reports

As per Bangladesh Bank (BB) requirement, Risk Management Division (RMD) prepares Risk Management Report which is presented in the meeting of Executive Risk Management Committee (ERMC) on monthly basis. At the end of each quarter, Risk Management Report along with the minutes is submitted to Bangladesh Bank by Risk Management Division. Risk Management Report is a comprehensive document related to riskissues which is being placed in the ERMCs’ monthly meeting.Italso allows identification and mitigation of risk under necessary guidance of the Senior Management of the Bank.

In addition to the prescribed format of Bangladesh Bank, PBL has incorporated various analyses on Credit Risk, Market Risk, Liquidity Risk, Operational Risk as well as Strategic Risk.

Risk Management Paper is also being submitted to the Risk Management Committee of the Board(BRMC) and the decisions are being communicated with relevant divisions of the bank for necessary initiatives.

Borrowers’ Rating

As prescribed by Bangladesh Bank (BB), all banks in Bangladesh assessing credit risk under the Standardized Approach of the Risk Based Capital Adequacy framework (Basel III), where External Credit Assessment Institutions (ECAIs) duly recognized by BB performs borrower rating against which risk weight mapped with the credit rating category and risk weighted assets (RWA) is determined for calculating the capital requirement of banks against credit risk.

Basel-III, in respect of capital measurement and capital standards, aligns capital of a bank more closely with the underlying risk. With a view to smooth implementation of Basel III Accord, The management of PBL decided to conduct Credit Rating for Corporate Borrowers through External Credit Rating Assessment Institutions (ECAIs).

Capital Management is one of the key strategic issues these days in the banking business. Borrower rating not only plays an important role in improving capital adequacy of the bank through capital relief but also helps the bank to understand the risk associated with the borrowers. In this regard, RMD calculates capital relief on the basis of rated customers quarterly.

As a result of vigorous effort and continuous persuasion, 570 (68.43%) borrowers out of total 833 eligible Corporate & Commercial borrowers of PBL was completed and for SME this number was 163. The rating distribution of the 733 Corporate & SME borrowers of PBL as on 31 Dec 2018 was asfollows:

BB Grade-3BB Grade-2BB Grade-1BB Grade-4

BB Grade-3, 44.07%

BB Grade-4, 8.87% BB Grade-1 , 14.87%

BB Grade-2, 31.92%

Borrowers Rating Distribution

139PRIME BANK

Stress Testing

A stress test, in financial terminology, is an analysis or simulation designed to test the ability of a given financial institution to deal during forecasted economic crisis. Instead of doing financial projection on a “best estimate” basis, a bank or its regulators do stress testing where it looks at how robust institutions is in certain crashes, a kind of “What-If” scenario analysis.

This type of analysis has become increasingly widespread, and has been taken up by various governmental bodies as a regulatory requirement on certain financial institutions to ensure adequate capital allocation to cover potential losses incurred during extreme, but plausible, events.

Stress testing framework as provided by Bangladesh Bank assesses the impact on Capital to Risk Weighted Asset Ratio (CRAR) due to minor, moderate and major level of shock in terms of credit risk, exchange rate risk, liquidity risk, equity price risk and interest rate risk. Stress testing for credit risk assesses the impact of increase in the level of Non-Performing Loans (NPLs) of the banks.

Performing loan directly downgraded to B/L- Sectoral Concentration Industry 1(Other Manufacturing)

It is a measure of the concentration risk where the bank has the highest investment. It assumes that 3 percent, 9 percent and 15 percent of the performing loan will be directly downgraded to B/L category in minor, moderate and major levels of shock

respectively. CRAR of PBL will be 16.78 percent, 16.06 percent and 15.32 percent in minor, moderate and major levels of shock respectively when considering individual shock.

Performing loan directly downgraded to B/L-Sectoral Concentration (RMG, SME & Construction)

It is a measure of the concentration risk where the bank has the second highest investment. It assumes that 3 percent, 9 percent and 15 percent of the performing loan will be directly downgraded to B/L category in minor, moderate and major levels of shock respectively. CRAR of PBL will be 16.94 percent, 16.52 percent and 16.11 percent 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. CRARof PBL will be 13.43 percent, 10.84 percent and 8.63 percent in minor, moderate and major levels of shock respectively when considering individual shock. PBL is trying to secure more collateral coverage to avert any negative impact on capital due to default of top large loan borrowers. Moreover, the bank is continuously monitoring the performance of large loan borrowers.

Negative shift in NPLs categories

It represents the shift of a loan from one NPL category to the next category. It is based on the assumption of 5 percent, 10 percent and 15 percent downward shift in the NPLs categories in minor, moderate and major levels of shock respectively. CRARof PBL will be 16.48 percent, 14.60 percent and 14.20percentin minor, moderate and major levels of shock respectively when considering individual shock.

Bangladesh Bank Rating

Grade

No. of RatedBorrowers of PBL

Percentage ofTotal Rated Borrowers

Corporate SME Total Percentage

BB Grade 1 109 0 109 14.87%

BB Grade 2 222 12 234 31.92%

BB Grade 3 213 110 323 44.07%

BB Grade 4 25 40 65 8.87%

BB Grade 5 1 1 2 0.27%

Total 570 163 733 100.00%

** Risk weight for unrated exposure is 125 percent.

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18Sep-18Oct-1

8Nov-1

8Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18Sep-18Oct-1

8Nov-1

8Dec-18

MinorModerateMajor

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

140 PRIME BANK

ANNUAL REPORT 2018

Decrease in the Forced Sale Value (FSV) of the collateral

It represents the Bank’s condition when FSV of collateral decreases sharply. It is based on the assumption that FSV of collateral will fall by 10 percent, 20 percent and 40 percent in minor, moderate and major levels of shock respectively. CRARof PBL will be 16.97 percent, 16.80 percent and 16.45 percent in minor, moderate and major levels of shock respectively when considering individual shock.

Increase in NPLs

It represents the condition of the bank when Non-Performing Loans increases significantly. It is based on the assumption that 3 percent, 9 percent and 15 percent of performing loans will be downgraded to Bad & Loss category having 100% provisioning requirement in minor, moderate and major levels of shock respectively. Capital Adequacy Ratio (CAR) of PBL will be 15.52 percent, 12.00 percent and 7.75 percent 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 percent, 2 percent and 3 percent in minor, moderate and major levels of shock respectively. Capital Adequacy Ratio (CAR) of PBL will be 16.88 percent, 16.61 percent and 16.35 percent 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 percent, 10 percent and

15 percent in minor, moderate and major levels of shock respectively. Capital Adequacy Ratio (CAR) of PBL will be 17.11 percent, 17.07 percent and 17.03 percent in minor, moderate and major levels of shock respectively when considering individual shock.

Equity shock

It represents the Bank’s condition when market value of share falls sharply. It is based on the assumption that share price will change by 10 percent, 20 percent and 40 percent in minor, moderate and major levels of shock respectively. Capital Adequacy Ratio (CAR) of PBL will be 17.06 percent, 16.98 percent and 16.81 percent 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 14.31 percent, 8.36 percent and 2.89 percent 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.

For absorbing different shocks under Stress Testing, PBL took the following measures:

• Exposure on large loan customers are being monitored closely

• Emphasize on enhancing collateral coverage against large loan exposure;

• Encouraging focus on MSME & Consumer loanlending;

• Regular loans are being monitored closely in order to avoid classification;

• Persuading unrated Corporate and MSME customers to bring them under the umbrella of ECAI’s credit rating.

Mar-18Apr-18

May-18

Jun-18Jul-18 Aug-18

Sep-18Oct-18

Nov-18Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18Sep-18Oct-1

8Nov-1

8Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Mar-18Apr-18

May-18

Jun-18Jul-18 Aug-18

Sep-18Oct-18

Nov-18

Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Mar-18Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18Oct-1

8Nov-1

8Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Mar-18Apr-18

May-18Jun-18

Jul-18 Aug-18Sep-18

Oct-18Nov-18

Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Mar-18Apr-18

May-18

Jun-18Jul-18 Aug-18

Sep-18Oct-18

Nov-18Dec-18

MinorModerateMajor

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

141PRIME BANK

MARKET DISCIPLINE DISCLOSURES ON RISK BASED CAPITAL (BASEL-III)

1. Scope of Application

Qualitative disclosure

a)The name of the top corporate entity in the group to which this guidelines applies.

Prime Bank Limited

b)

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 is given below:

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 146 (One Hundred and Forty Six) Branches including 18 (Eighteen) SME Centers/ Branches all over Bangladesh and 2 (Two) booths located at Dhaka Club, Dhaka and at Chittagong Port, Chittagong. Out of the above 146 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), 5 (Five) subsidiary Companies (3 Foreign subsidiaries & 2 Local subsidiaries). The Bank went for Initial Public Offering in 1999 and its shares were listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly traded company for its general classes of share.

The principal activities of the Bank are to provide all kinds of commercial banking services to its customers through different business divisions and branches.

Subsidiaries of PBL:

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.

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 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. The company commenced its operation from May 2011.

142 PRIME BANK

ANNUAL REPORT 2018

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 with one (1) Branch from July 08, 2006. In 2011 the Company has also opened another Branch located at Jurong East Branch, Block: 134 #01-305 Jurong Gateway Road, Singapore 600134 and in 2016 it has opened its 3rd branch located at Joo Koon Branch, 55 Benoi Road , #01-14, Joo Koon Bus Interchange (Opposite KFC), Singapore-629907. 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.

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.

PBL Finance (Hong Kong) Limited:

PBL Finance (Hong Kong) Limited, a fully owned subsidiary of Prime Bank 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 Suite 1407, 14/F, Admiralty Centre, Tower-1, 18 Harcourt Road, Hong Kong.

c) Any restrictions, or other major impediments, on transfer of funds or regulatory capital within the group.

Not applicable

Quantitative disclosure

d) 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

a)

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 CET1, Additional Tier 1 or Tier 2.

As per Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for Banks in line with Basel III) introduced by Bangladesh Bank, ‘Common Equity Tier-1 (CET 1)’ Capital of PBL consists of (i) Paid-up Capital, (ii) Non-repayable Share Premium Account, (iii) Statutory Reserve, (iv) Retained Earnings and (v) Minority Interest in Subsidiaries.

Prime Bank does not have ‘Additional Tier 1 (AT 1)’ Capital since it did not issue any instrument that meets the qualifying criteria for Additional Tier 1 Capital. Subsidiaries did not issue AT 1 capital to third parties as well.

Tier-2 Capital consists of (i) General Provision (ii) Subordinated Debt/Instruments issued by the Banks that meet the qualifying criteria for Tier 2 Capital. (iii) Revaluation Reserves (50% of Fixed Assets & Govt. Securities and 10% of equity instruments) subject to regulatory adjustment/deduction i.e. 80% for 2018.

143PRIME BANK

Quantitative disclosure

b)

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

Taka in CroreCommon Equity Tier 1 (CET 1) Capital:i. Fully Paid up capital 1,132.28 1,132.28ii. Non repayable share premium account 121.19 121.19

iii. Statutory reserve 1,035.34 1,035.34iv. General reserve - 2.80v. Retained earnings 175.90 179.88vi. Minority interest in subsidiaries - -vii. Dividend equalization account - -Sub-Total 2,464.71 2,471.49Additional Tier 1 Capital - -Total Tier 1 Capital 2,464.71 2,471.49Tier 2 Capital 1,470.22 1,471.24Total amount of Tier 1 and Tier 2 capital 3,934.93 3,942.73

c) Regulatory Adjustments/Deductions from capital (109.03) (112.53)

d) Total eligible capital 3,825.90 3,830.20

3. Capital Adequacy:

Qualitative disclosure a)

A summary discussion of the bank’s 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 to Risk Weighted Asset Ratio (CRAR) at 17.04% & 16.58% for stand-alone and for consolidated group respectively. As per guideline, Bank is required to maintain a Capital Conservation Buffer (CCB) of 2.50%, comprised of Common Equity Tier-1 (CET-1) Capital, above the regulatory Minimum Capital Requirement (MCR) of 10%. The following table shows that Bank has adequate Tier-1 & Tier-2 Capital to maintain all the ratios at the required level. It has covered both MCR as well as CCB (required for 2018) with its eligible capital after considering all regulatory adjustments.

The Bank’s 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 main objective of the capital management process in the Bank is to ensure that Bank has adequate capital to meet up its all sorts of obligations any time.

Quantitative disclosure

Solo Consolidated

Particulars Taka in Croreb) Capital requirement for Credit Risk 19,726.55 20,128.42

c) Capital requirement for Market Risk 211.13 400.32d) Capital requirement for Operational Risk 2,513.98 2,578.96

Total Risk Weighted Assets (RWA) 22,451.65 23,107.71Total Regulatory Capital (Tier 1 & Tier 2) 3,825.90 3,830.20

e) Capital To Risk Weighted Asset Ratio (CRAR) 17.04% 16.58%

Common Equity Tier 1 (CET 1) Capital to RWA Ratio 10.84% 10.55%Tier 1 Capital to RWA Ratio 10.84% 10.55%

Tier 2 Capital to RWA Ratio 6.20% 6.03%

Minimum Capital Requirement (MCR) 2,245.17 2,310.77f) Capital Conservation Buffer (2.50% * RWA) 561.29 577.69

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ANNUAL REPORT 2018

• Minimum Tier 1 Capital Ratio: 6.00%,• Minimum Total Capital Ratio: 10.00%, • Capital Conservation Buffer: 2.50%• Minimum Total Capital plus Capital Conservation Buffer: 12.50%

4. Credit Risk:

Qualitative disclosure

a) The general qualitative disclosure requirement with respect to credit risk, including:

i) Definitions of past due and impaired (for accounting purposes);

With a view to strengthening credit discipline and bring classification and provisioning regulation in line with international standard, a phase-wise 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/investments 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.

In case of any installment(s) or part of installment(s) of a Fixed Term Loan amounting up to Taka 1 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 Taka 1 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 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 and will be 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, is treated as “Special Mention Account (SMA)”.

145PRIME BANK

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 Enterprise (SME) financing.

0.25%

General provision on unclassified loans and advances/investments other than Consumer Financing, Loans to Brokerage House, Merchant Banks, Stock Dealers etc., SMA as well as SME Financing).

1%

General provision on Short-term Agricultural & Micro-credits. 1%

General provision on interest receivable on loans / investments.

1%

General provision on off-balance sheet exposures (Provision has been made on the total exposure and amount of cash margin & value of eligible collateral were not deducted while computing off-balance sheet exposure).

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 of loans kept in Special Mention Account (SMA) will be at the same respective rate as stated above (0.25% to 5%) as per BRPD Circular No. 05 dated 29.05.2013.

Specific provision on Sub-Standard loans & advances / investments

20%

Specific provision on Doubtful loans & advances / investments 50%

Specific provision on bad / loss loans & advances / investments 100%

Quantitative disclosure

b) Total gross credit risk exposures broken down by major types of credit exposure.

Total gross credit risk exposures broken down by major types of credit exposure of the Bank:

Particulars Taka in Crore

Secured Overdraft/Quard Against TDR 3,415.81

Cash Credit/Mudaraba 2,539.88

Loan (General) 6,541.92

House Building Loan 213.59

Loan Against Trust Receipts (LTR) 989.81

Payment Against Documents (PAD) 1.06

Retail Loan 1,564.75

Lease Finance/Izara 421.62

Credit Card 88.92

Hire Purchase 1,162.54

Other Loans & Advances 2,705.74

Bill purchased/discounted-Inland 597.65

Bill purchased/discounted-Foreign 337.69

Total 20,580.95

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ANNUAL REPORT 2018

c) Geographical distribution of exposures, broken down in significant areas by major types of credit exposure.

Geographical distribution of exposures, broken down in significant areas by major types of credit exposure of the Bank:

Particulars Taka in Crore

Urban: Dhaka Zone 16,499.00

Chittagong Zone 2,424.01

Khulna Zone 365.13

Rajshahi Zone 458.64

Barishal Zone 10.46

Sylhet Zone 149.71

Rangpur Zone 192.99

Sub-Total: Urban 20,099.95

Rural: Dhaka Zone 196.77

Chittagong Zone 118.23

Khulna Zone 7.68

Rajshahi Zone 116.24

Rangpur Zone 16.11

Sylhet Zone 25.97

Sub-Total: Rural 481.01

Grand Total (Urban + Rural) 20,580.95

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 Crore

Commercial Lending 2,140.28

Export Financing 1,264.63

House Building Loan 213.59

Retail Loan 1,564.75

Small & Medium Enterprises (SME) 2,112.04

Special Program Loan -

Staff Loan 0.51

Loans, Advances & Lease/Investments to Managing Director / CEO and other senior executives

158.53

Industrial Loans/Investments (Details are given below) 11,674.12

Other Loans & Advances 1,452.49

Total 20,580.95

Industrial Loans/Investments

Particulars Taka in Crore

Agriculture 356.05

Textile Industries 1,803.17

Food and allied industries 649.01

Pharmaceutical Industries 451.29

Leather , Chemical, Cosmetics, etc. 159.94

Tobacco Industries 70.43

Cement and Ceramic Industries 467.72

Service Industries 2,323.02

Transport & Communication Industries 533.42

Other Industries including bills purchased and discounted 4,860.06

Total 11,674.12

147PRIME BANK

e) Residual contractual maturity breakdown of the whole portfolio, broken down by major types of credit exposure.

Residual contractual maturity break down of the whole portfolios, broken down by major types of credit exposure of the Bank:

Particulars Taka in Crore

Repayable on Demand -

Up to 1 month 2,915.75

Over 1 month but not more than 3 months 3,910.38

Over 3 months but not more than 1 year 5,779.97

Over 1 year but not more than 5 years 5,266.67

Over 5 years 2,708.18

Total 20,580.95

f) By major industry or counterparty type:

i) Amount of impaired loans and if available, past due loans, provided separately;

The amount of classified loans and advances/investments of the Bank are given below as per Bangladesh Bank guidelines.

Particulars Taka in Crore

Standard 18,459.89

Special Mention Account 852.48

Sub-standard 137.28

Doubtful 260.33

Boss/Loss 870.97

Total 20,580.95

ii) Specific and general provisions; and

Specific and general provisions were made on the amount of classified 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 Crore

Provision on classified loans/investments 406.04

Provision on unclassified loans/investments 348.00

Provision on Off-balance sheet exposures 151.31

Provision for Off-shore Banking Units 74.35

Provision for interest receivable on loans & advances/investments

0.95

Provision for other assets 25.74

Provision for diminution in value of investments. 3.56

Total 1,009.95

iii) Charges for specific allowances and charge-offs during the period.

During the year the specific and general provisions were made on the amount of classified and unclassified loans and advances/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 Crore

Provision on classified loans/investments 269.03

Provision on unclassified loans/investments (93.60)

Provision on Off-balance sheet exposures (16.50)

Provision for Off-shore Banking Units 2.72

Provision for interest receivable on loans & advances/investments

-

Provision for other assets 5.33

Provision for diminution in value of investments 1.87

Provision for impairment loss for investment in subsidiaries 8.61

Total 177.46

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ANNUAL REPORT 2018

g) Gross Non Performing Assets (NPAs).

Non Performing Assets (NPAs) to Outstanding loans and advances.

Movement of Non-Performing Assets (NPAs).

Particulars Taka in Crore

Opening balance 1,079.90

Addition/adjustment during the year 188.68

Closing balance 1,268.58

Movement of specific provisions for NPAs.

Particulars Taka in Crore

Opening balance 377.37

Provisions made during the period 269.03

Transferred from unclassified loan & advances including OBU

-

Write-off (260.74)

Recoveries of amounts previously written off 20.38

Closing Balance 406.04

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:

i) Quoted Securities (Common or Preference Shares & Mutual Fund) that are traded in the secondary market (Trading Book Assets).

ii) Unquoted securities include shares of Central Depository Bangladesh Limited (CDBL), investment in SWIFT, Star Ceramics Preference Share, Golden Harvest Ice Cream Ltd and Market Stabilization Fund (MSF).

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 invest 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.

149PRIME BANK

Quantitative disclosure

Solo Consolidated

Taka in Crore

At costAt market

valueAt cost

At market value

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.

11.25 8.23

151.72

102.83

c)The cumulative realized gains (losses) arising from sales and liquidations in the reporting period. - -

d)• Total unrealized gains (losses) (3.02) (48.89)

• Total latent revaluation gains (losses) - -

• Any amounts of the above included in Tier-2 capital. - -

e) Capital requirements broken down by appropriate equity groupings, consistent with the bank’s 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 0.82 10.28

• General Market Risk 0.82 10.28

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). To evaluate the impact of interest rate risk on the net interest margin, Prime Bank monitors the size of the gap between rate sensitive assets and rate sensitive liabilities in terms of the remaining period to repricing. Repricing refers to the point in time when adjustments of interest rates on assets and liabilities occur owing to new contracts, renewal of expiring contracts or that a contract specifies a floating rate that adjusts at fixed time intervals.

A maturity mismatch approach is used to measure Prime Bank’s exposure to interest rate risk. A positive mismatch means that more assets than liabilities are repriced in a given period. With a positive mismatch, a rise in market interest rates will have a positive effect on the bank’s earnings. On the other hand, a negative mismatch, where more liabilities are repriced than assets in a given period, means a drop in earnings if interest rates had increased.

The table presented below showing the Interest Rate Risk Analysis of Prime Bank Limited. The analysis shows that Bank may have a positive earnings impact of Taka 3.2454 crore in the first quarter which has also been positive in the second quarter. In the third quarter, the total year-to-date accumulated earnings impact has also been positive (Taka 4.6741 crore). Hence, accumulated earning for the year 2018 owing to a 1% increase in interest rate is a gain of Taka 2.3519 crore.

The rule of thumb suggests that quarterly gaps, causing an earnings impact of 10% of the Bank’s average quarterly net profit for each 1% change in interest rates, should be carefully handled by the Bank’s Management. The last row of the following table reveals that earnings impact on Prime Bank’s average quarterly net profit is not significant and remains within the acceptable limit as prescribed by Bangladesh Bank.

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ANNUAL REPORT 2018

6. Interest Rate Risk Analysis (for 1% change in the market rate of interest)

Quantitative disclosure

b) The increase (decline) in earnings or economic value (or relevant measure used by management) for upward and downward rate shocks according to management’s method for measuring IRRBB, broken down by currency (as relevant).

Particulars 1 to 90 days

Over 3 months

to up to 6 months

Over 6 months

to up to 9 months

Over 9 months to

up to 1 year

Taka in Crore

Rate Sensitive Assets

8,660.00 3,385.97 850.96 725.25

Rate Sensitive Liabilities

7,343.80 4,059.93 1,556.02 1,604.22

GAP 1,316.20 (673.96) (705.06) (878.97)

Cumulative GAP 1,316.20 642.24 (62.82) (941.79)

Adjusted Interest Rate Changes (IRC)

1.00% 1.00% 1.00% 1.00%

Quarterly earnings impact (Cum. GAP * IRC)

3.2454 1.5836 (0.1549) (2.3222)

Accumulated earning impact to date

3.2454 4.8290 4.6741 2.3519

Earning impact/Avg. quarterly net profit 12.26% 18.24% 17.66% 8.88%

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 off-balance 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 bank’s 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:

• Interest rate risk

• Equity position risk

• Foreign exchange (including gold) position risk throughout the bank’s balance sheet and

• Commodity risk.

ii) Methods used to measure Market risk.

Measurement Methodology:

As banks in Bangladesh are now in a stage of developing risk management models, Bangladesh Bank has 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 re-pricing date.

151PRIME BANK

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.:

Capital Charge for Interest Rate Risk = Capital Charge for Specific Risk + Capital Charge for General Market Risk;

Capital Charge for Equity Position Risk = Capital Charge for Specific Risk + Capital Charge for General Market Risk;

Capital Charge for Foreign Exchange Risk = Capital Charge for General Market Risk;

Capital Charge for Commodity Position Risk = Capital charge for general market risk.

iii) Market Risk Management system.

Treasury Division manages the market risk and ALCO monitors the activities 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 Division’s 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 have been set up and followed.

The Treasury Division are taking following measures to minimize the several market risks:

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 is measured and monitored by the Treasury Division. To evaluate the extent of foreign exchange risk, a liquidity Gap report is prepared 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 of the investment portfolios of share is being done. Mark to market valuation is done against a predetermined limit. At the time of investment, following factors are taken into consideration:

• Security of Investment • Fundamentals of securities• Liquidity of securities• Reliability of securities• Capital appreciation • Risk factors and• Implication of taxes etc.

Quantitative disclosure

b) The capital requirements for: Solo Consolidated

Taka in Crore

• Interest rate risk - -

• Equity position risk 1.65 20.57

• Foreign exchange risk and 19.47 19.47

• Commodity risk - -

Total Capital Requirement 21.11 40.03

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8. Operational Risk:

Qualitative disclosure

a) i) Views of BOD on system to reduce Operational Risk

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition 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 Directors (BOD) of the Bank and its Management firmly believe that an effective internal control systems has been established within the Bank to ensure adequacy of the risk

management framework and compliance with a documented set of internal policies concerning the risk management system which mainly include,

# Top-level reviews of the Bank’s progress towards the stated objectives;

# Checking for compliance with management controls;

# Policies, processes and procedures concerning the review, treatment and resolution of non-compliance issues; and

# A system of documented approvals and authorizations to ensure accountability to the appropriate level of management.

Bank has ensured some other internal practices to be in place as appropriate to control operational risk. Examples of these include:

# Close monitoring of adherence to assigned risk limits or thresholds;

# Maintaining safeguards for access to, and use of, bank’s assets and records;

# Ensuring that staffs have appropriate expertise and training;

# Regular verification and reconciliation of transactions and accounts.

The BOD has modified Bank’s 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 bank’s business, with reduced staffing levels.

ii) Performance gap of executives and staffs.

Motivated and Engaged Employees

Prime Bank has a diverse group of motivated and engaged employees. From experience it knows that if employees are properly empowered, they become more engaged and go extra miles to fulfill organization’s ambition. Engaged employees are likely to take more responsibility and embrace accountability which helps to achieve the sustainability strategies. The Bank has positioned itself with a performance-driven rewarding work culture; where employees are treated with respect and receive plenty of development opportunities. Prime Bank has a special focus on:

• Ensuring a balanced diversity

• Promoting human capital development

• Providing competitive compensation and benefits

• Promoting a performance centric culture

• Protecting human rights

• Ensuring workplace health and safety

• Ensuring equal opportunity

All the people related issues in Prime Bank are governed by the well-defined policies and procedures which are duly reviewed by the Management time to time.

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Compensation & Benefits

To maintain the market competitiveness, the compensation and benefits of Prime Bank are regularly reviewed through market and peer group study. The well-crafted total rewards help the Bank to attract, motivate and retain talent.

In PBL, the Board of Directors is not eligible for any compensation. They are paid honorarium for attending meetings only. On the other hand, all employees are paid competitive remuneration package. The remuneration policy of the Bank does not allow any discrimination between male and female employees. In addition, employees are paid bonus based on yearly business performance.

In addition to monthly competitive base pay and a good number of allowances (e.g., House Rent allowance, Medical allowance, Conveyance allowance etc.), Prime Bank has variety of market-competitive Benefits schemes designed to motivate the employees. The various cash and non-cash benefits include:

• Company provided car for top level Executive employees

• Car allowance for all Executive level employees

• Leave fair assistance allowance

• Medical treatment allowance

• Maternity benefits

• Car loan facility

• House loan facility

• Staff loan at reduced interest rate

• House furnishing allowance

• Mobile phone allowance

• Travel allowance

• Technical allowance

• Festival bonus

• Allowance for employees’ meritorious students

• Annual leave

• Maternity leave

• Study leave etc.

The Bank also provides long-term as well as retirement benefits to employees:

• Leave encashment

• Provident fund

• Gratuity benefit

• Retirement benefit

• Partial and full disability benefit

• Death benefit to family members etc.

Broadbanding Pay Structure:

The Management introduced Broadbanding Pay Structure which aims to ensure a performance driven work culture through a strategic compensation plan synced with the performance of individual employee. Since inception, Prime Bank has practiced a scale based pay structure for each grade, so to reward individual performance the new policy offers a flexible pay plan that will compensate the person, not the grade. It places an increased emphasis on encouraging employees to develop new skills and paying for the skills according to their contribution and equity. In a nutshell, broadbanding is a more flexible pay system for both the employees and for the employers where career progression takes a different route. Given that, the specific reasons behind introduction of this new pay structure is:

1. It facilitates/encourages internal /lateral movement (Through Job Rotation)

2. It rewards performers than the non-performers (Through Pay for Performance)

3. It puts added trust & greater autonomy in line management (Through Teamwork/ Relationship)

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Moreover, the policy states that when one employee reaches the highest grade within a Band, the employee will grow further when he/she is ready to take or has taken higher responsibilities and match the criteria of the next Band.

The total compensation and benefits system of Prime Bank tracks costs and is linked with performance, while maintaining a balance with the business affordability.

Performance Management Program

Prime Bank has a comprehensive performance management program that evaluates employees’ yearly performance against business targets at the year-end. In addition, their functional and leadership competencies are also rated by the line management. This appraisal process also identifies the competency gap and training needs of employees. All employees (except employees under probation or training) of the Bank undergo annual performance appraisal process. The process ensures that clear feedback on improvement points (performance and professional capabilities) is provided to employees by their Managers to promote employees’ long-term career development and improved contribution to organizational performance. All regular employees undergo the annual performance and career development review.

Work-life Balance

Prime Bank wants its’ employees to balance the work and personal life and has organization-wide practices and policies that actively support employees to achieve success at both work and home. Management is also open and shows flexibility in regard to a balanced work-life.

In Prime Bank, employees are entitled to sufficient annual leave and sick leave with pay. To enjoy vacation with family, Bank provides Leave Fare Assistance Allowance to employees. All female employees are eligible for Maternity Leave (Parental Leave) with pay for a period of six months. In 2018, a total of 53 female employees availed Maternity leave. After completion of the leave, they returned to work and are still continuing with the organization.

Culture

Culture plays a vital role to create a high performance environment that supports sustainability strategy implementation. Prime Bank carefully develop, shape and impact organizational culture by: practicing values appropriate for the bank; defining working relationship and communication pattern between superior and subordinates; governing rules and regulations which control employees’ behaviour; promoting a strong employer brand through which employees identify with the organization; maintaining effective reward system that affects employees loyalty and empowering employees to demonstrate their innovativeness not only to be competitive in the market but also to achieve a sustainable growth.

Healthy and Safe Work Environment

In Prime Bank, the physical, mental and social well-being of the employees always gets priority. Healthy, productive and motivated employees are the foundation of a successful organization. Prime Bank helps employees to assume responsibility for their own personal behaviour in health-related matters, and support health-promoting general conditions within the Company. We continuously focus on improving health and safety of employees that includes proper work place design and decoration of head office and branches, maintaining the cleanliness at work space, holding awareness session related to physical and psychosocial well-being, email communication on various health and safety related topics, sending alerts to employees on emergency situations, arranging fire drill sessions, financial support for medical care etc. Because of the nature of operations, Bank employees are not usually exposed to work-related injury, occupational diseases or fatality. Yet, the Bank remains cautious so as not to create any hazardous work condition.

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Decent Workplace

Prime Bank has a decent work environment where employees can work with dignity, have the freedom to express opinions, can participate in the decision making process that affect their lives, and receive equal treatment and opportunity. The Bank is committed to ensure the best practices in compliance with the labour code of the country. Bank Management believes that the business can grow favorably if the organization enables employees through creating and maintaining a decent workplace.

In Prime Bank, employees have the right to exercise freedom of association or collective bargaining following the legal procedure of country laws. However, employees have never formed or wanted to form any collective bargaining agency. The Bank follows non-discriminatory approach in all HR policies and practices. The salary of an employee is determined based on his/her competency, experience and performance. The Bank neither employs child labour nor has any provision for forced labour. Employees have the right to resign from their employment serving proper notice period and following the internal procedures.

Ensuring a decent workplace also encompass Bank’s investment decisions as well as agreements with the suppliers and contractors. For instance, human right, as appropriate, is covered as an integral part of decision making for major financial investments. Among all the significant investments, garments and manufacturing industry contain major stakes where issues related to human rights are more relevant and critical. Hence, any such investment agreement is subject to screening of human right issues along with other criteria.

On the other hand, all the agreements of Prime Bank with suppliers or contractors undergo due assessment process which requires complying with Labour Code and other applicable laws of the country. Moreover, the procurement decisions are also subject to conformity with International Labour Conventions. The team involved in procurement visits suppliers and contractors’ premises on need basis to monitor working conditions and other relevant issues like labour practices, human right etc.

The security personnel employed by the Bank are formally trained and aware of policies and procedures regarding human right issues. The training requirement also applies to third party organizations that provide security personnel to the Bank.

The most recent addition to encourage female employees at the workplace is that they are now able to avail child day-care facility in Motijheel area. Female employees having offices in Motijheel and peripheral area now can avail child day-care facility where they can keep their children in a safe and secured environment. This will not only help to retain female employees but will relieve them of the dilemma of leaving their child/children at home.

Diversity in Workplace

Prime Bank believes that diverse, heterogeneous teams generate greater creativity, innovation and business development. An inclusive culture maintains and drives workforce diversity by fostering the exchange of ideas and collaboration among individuals and across groups. To speak simply, our constant success depends in part on maintaining a plurality of perspectives.

Employees by age group and gender:

Age group No. of Emp. Percentage

Less than 30 years 251 7.81%

30 to 50 years 2,809 87.45%

Over 50 years 152 4.73%

Grand Total 3,212 100.00%

We practice equal employment opportunity; for competent candidates regardless of their gender, age, locality or ethnicity. While recruiting fresh graduates, the Bank sources the pool from different recognized public and private universities; with a view to create a diverse work force.

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Employees by religion:

Religion No. of Emp. Percentage

Islam 2,947 91.75%

Hindu 251 7.81%

Buddhist 12 0.37%

Christian 2 0.06%

Total 3,212 100.00%

Besides, our ration of male and female employees has been increasing over the time. Currently, approximately 21.17% of total employees are female. On the other hand, 16.67% of the Board of Directors represents females.

Gender diversity among employees:

Gender No. of Employees Percentage

Male 2,532 78.83%

Female 680 21.17%

Total 3,212 100.00%

Percentage of female employee over the years:

Year % of Female Employees

2014 21.00%

2015 21.64%

2016 21.93%

2017 20.92%

2018 21.17%

Gender diversity among Board members:

Gender No. of Members Percentage (%)

Male 15 83.33%

Female 03 16.67%

Total 18 100%

New recruitment by gender and age:

By Gender:

Gender No. of Emp. %

Male 62 84.93%

Female 11 15.07%

Total 73 100.00%

By Age:

Age group No. of Emp. %

Below 30 years 23 31.51%

30 to 50 years 49 67.12%

Over 50 years 1 1.37%

Grand Total 73 100.00%

Employee turnover by gender and age:

By Gender:

Gender No. of Emp. %

Male 295 81.94%

Female 65 18.06%

Total 360 100.00%

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By Age:

Age group No. of Emp. %

Below 30 years 44 12.22%

30 to 50 years 308 85.56%

Over 50 years 8 2.22%

Grand Total 360 100.00%

For the year 2018, the turnover rate is 10.73%.

Learning & Development

In Prime Bank, Human Resources (HR) Division regularly undertakes effectively designed training programs targeting the right group of employees through proper training need assessment. Prime Bank believes that continuous efforts should be given so that employees acquire and develop the right set of skills required to face the challenge of ever changing market.

In Prime Bank, the employee development plan is based on proper training need assessment. In 2018, Bank’s internal HR Training and Development Centre arranged training on different topics for 3548 enthusiastic participants. Besides, a total of 311 employees were sent to participate in various training programs/conferences in home and abroad.

The banking sector is complex and diverse with evolving nature of threats and the risks. So, the training module is updated time to time for employees of the Bank in the changing context of financial market.

Openness in communication for a better employee-management relation

Employee communications and consultation are the lifeblood of any business. Proper exchange of information and instructions help the Bank to function more efficiently and provides the opportunity to build greater trust among employees and management in discussing issues of mutual interest. To ensure effective employee communications, management takes a positive lead.

The Management has introduced a Whistleblower Protection Policy which intendeds to encourage and enable employees and others to raise serious concerns internally so that the Management can address and correct inappropriate conduct and actions. Employees have an avenue to report concerns about violations of code of ethics or suspected violations of law or regulations. The policy covers the protection of a whistleblower in two important areas – confidentiality and against retaliation. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment.

Additionally, now there is an avenue to report sexual harassment in the workplace. The policy aims to ensure a working environment in line with our values, where all individuals are treated equally, fairly and with dignity and also foster compliance with governing laws pertaining to sexual harassment. Such policy creates awareness about the nature of offences and the consequences of an offender. This not only fosters a neutral environment but gives a feeling of assurance that any wrong doing will be strictly addressed by the Management.

Any operational changes are properly planned and managed. Management follows a participative approach during any major transformation followed by prior communication to the employees. Since there is no trade union or employee association, no notice period regarding operational change is stipulated by any collective agreement.

Ethical and Lawful Behavior in Prime Bank

Prime Bank is always committed to establish the highest level of ethical standard. Employees are properly oriented to comply with Code of Ethics & Business Conduct. All employees duly signed the ‘Code of Ethics & Business Conduct’ and the copy is preserved in respective Employee Records. During joining, HR Division makes sure that all the new employees read and accept this policy by signing.

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Bank also has ‘Service Excellence Handbook’ & ‘General Code & Discipline’, which are read by each employee including new employees while joining in the Bank and record of these are preserved in personal file after signing by employees.

“The Prime Bank Employee Code of Ethics and Business Conduct” – is a framework of ethical behavior for all the employees of the organization that embodies all the factors mentioned above. It is a reflection of Prime Bank’s role as a socially responsible corporate citizen which believes in providing the most courteous and efficient service through innovative banking services and products. However, Prime Bank’s most farsighted objective is to uphold and build upon the honour of Bangladesh as a nation, through exhibiting its own competence as a local organization that can perform at least on par with a multinational one, if not better than one.

The employees of Prime Bank are trained to put their own duties and ethics before everything else. They treat their colleagues with reverence and honour, and their customers as esteemed guests. They also learn to abide by the laws that govern our business, and contribute to the strength and wellbeing of our community and shareholders. In addition to their regular responsibilities employees are also expected to demonstrate the below ethical behavior:

• Protect Privacy of Customers’ and Confidential Company Information;

• Prevent Money Laundering and/or Fraud;

• Demonstrate Workplace Respect;

• Avoid Offensive Behavior and Sexual Harassment;

• Avoid Drug/Substance/Alcohol Abuse in the Workplace;

• Protect the Bank’s Assets;

It is mandatory for every employee of Prime Bank Limited to abide by the ‘Employee Code of Ethics and Business Conduct’ and also comply with any other orders or directions provided by the Management or Board of Directors from time to time.

Human Resources Accounting in Prime Bank

To understand and draw an inference on how well the Human Resources are yielding on the investment made, Prime Bank tracks the profit and related HR costs. In this process, the costs of recruitment, training, compensation, other direct cost related to employees are measured to estimate the overall investment. The costs are then compared with several parameters. This analysis helps the Bank to have an outlook and make prudent decisions on future HR investment. Valuing the human resources and measuring the direct impact of the cost spent for employees is difficult as there is no specific or widely adopted method. Human Resources accounting is the process of valuing human resources as assets. Presently, this is not accounted in the conventional accounting practices. The period of existence of a set of human resources in an organization cannot be predicted; hence treating and valuing them as assets in strict sense is not plausible. However, followings are some of the parameters which are tracked year on year:

ParticularsAmount in BDT Million

2018 2017

Salary cost per employee 1.29 1.10

Operating cost per employee 2.24 1.94

Operating income per employee 4.02 3.47

Profit before provision per employee 1.78 1.54

Profit before tax per employee 1.23 0.52

Salary cost as percentage of operating cost 58.06 56.61

Salary cost as percentage of operating income 32.32 31.57

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iii) Potential external events

Risk factors/Potential external events:

There are certain risk factors which are external in nature but can affect the business of the Bank. The factors discussed below can significantly affect the banking business:

• General business and political condition

Some major economic-financial indicators performed well below par in the outgoing calendar year i.e. 2018, casting their adverse impacts on Bangladesh’s economic health. The underperformances are: a negative overall balance of payments (BoP), net domestic asset with the central bank and inadequate broad-money growth as a result of poor demand deposits. The net sales of national savings certificates continued to rise over expectation, leading to low growth in the banking sector and leaving huge liabilities for the government. And imports expanded substantially, driven mainly by import of food and machinery mostly meant for Padma Bridge and capital machinery, affecting the balance of trade.

Performance of Prime Bank greatly depends on the general economic conditions of the country. For Bangladesh 2018 has been a mixed year of achievements and challenges. Though some macro indicators reflect the positive trends, the overall strength of the economy is weakening due to a number of developments toward the second half of the year. One of the major achievements of the economy has been a 7.86 percent economic growth in FY 2017-18 breaking the six percent cycle that continued for a decade or so. Like previous years, major boost of growth has come from the industrial sector followed by the services sector. Though average inflation has been around 5.54 percent, food inflation is showing a declining rate in recent months, mainly because of agricultural achievement in rice production result in decline of price. Investment is a major impetus to Bangladesh’s growth. Despite the relative calm in the political scenario, private investment has not picked up. Target was set to increase investment to 31.90 percent of GDP in FY 2017-18, keeping in mind the need for a growing economy.

The external sector has been a source of strength for the Bangladesh economy for several years. This has changed in recent periods. A glimmer of hope is in the horizon with both RMG and total exports picking up during July-December of FY 2018-19. Current account deficit of Bangladesh reached its historical highest at USD 9.8 bn in 2018. High import growth arising primarily from one–time surge in food grain import due to flood and sharp increase in petroleum products import exerted significant pressure on current account. Modest performance in export and remittance turned out to be insufficient to ameliorate it. As a result USD gets dearer. Central bank supported the currency throughout the year, soaking up further BDT liquidity from the market.

• Good Governance

Despite a bounce back in a sluggish growth and the rise in import volumes in recent months, the financial sector faced a number of serious challenges, which could threaten progress in the year 2019. A severe governance crisis caused the industry to face a record increase in non-performing loans (NPL), financial scams and liquidity shortages. Bad loans and recapitalization in the banking sector, have always been a cause for concern in Bangladesh.

The lack of good governance is another reason for the deterioration of the banking sector’s health. Government’s move to award licenses to new banks at a time when the sector is struggling may cause further imbalance in the economy. There was a saying that the existing 58 (2 newly opened in 2018) banks cannot cover all the people across the country; the new banks will bring all people under the banking umbrella. Economic experts opined that this is totally wrong because the new banks can never give service in the villages due to high costs, rather the existing banks could have extended their branch network to achieve the same goal.

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The new law allowing more members of the same family to be directors of the privately owned banks and extension of their tenure are apprehended to further deteriorate the governance in private banks. Despite the central bank’s attempt to improve performance of the banking sector, improvements are not visible yet. The independence of the central has been gradually diminishing due to political influence. If reform measures are not taken, the crisis of the banking sector will have serious implications for the economy.

• Foreign remittance

In FY 2017-18 remittance earning growth experienced a growth of 14.86 percent with the increase of manpower export. The uptrend in fuel oil prices globally also contributed to raise the inflow of remittance, particularly from the Middle-Eastern countries. The Bangladesh Bank as well as the government is working continuously to expedite remittance inflows from different parts of the world through formal banking channel. The depreciating mode of Taka against the US Dollar also played a role for high export and remittances growth to some extent. The exchange rate of taka depreciated significantly against dollar last year mainly due to a higher demand for the greenback for settling import bills. The country’s stable outlook would continue with this upward trend in inward remittances in 2019.

• Inflation

Inflation came down to 5.35 percent in December 2018, from 5.37 percent a month ago, riding on a decline in food as well as non-food prices, according to Bangladesh Bureau of Statistics. In 2018, food inflation decreased and for the last two months, non-food inflation also decreased, the overall inflation fell. The lower price of rice mainly influencing the decline of food inflation. In addition oil price in the global market, stable exchange rate over the year result in lower inflation in December 2018. The government has set the inflation target at 5.6 percent for fiscal 2018-19.

• Changes in credit quality of borrowers

Nonperforming loans in the banking sector are on the rise this year on the back of increasing tendency of habitual defaulters to file writ petitions, which stall the loan recovery process. The share of NPLs in the total outstanding loans came down to 10.30 per cent as of December 31 in 2018 from 11.45 per cent three months back. It was 9.31 per cent on December 31, 2017. Some willful defaulters continue to file writ petitions with the High Court to show their loans as unclassified. The habitual defaulters take fresh loans from banks soon after filing the writs as these give them a clean slate. The Credit Information Bureau reports they present then are flawless. “But they do not pay back the loans”. Banks are yet to take the requisite tough administrative and legal actions against those habitual defaulters. Stronger recovery drives by the commercial banks and rescheduling of loans before the last parliament election pushed down the volume of default loans in the final quarter (Q4) of 2018. Credit flow to the private sector needs to be monitored properly to ensure that disbursed loans are being used properly and there is no fund diversion at the borrowers’ end.

• Implementation of Basel-III in Bangladesh

In 2018, the banking sector exposed further weaknesses through major indicators such as rise of nonperforming loans, lower capital adequacy and the overall lack of governance in the sector. Though the period of BASEL III implementation is approaching in 2019, most banks are not prepared. The government has been recapitalizing the state-owned banks for their loss every year without any fruition. This has been an unfortunate example of using public money towards compensating for the greed of bank defaulters.

• Volatility in equity market

Overall, 2018 was not good for the market. The market was depressed due to this year being election year and unrest in the banking sector. Investors went

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through a volatile financial sector amid financial scams, non-performing loans, and poor management that dampened investor moods. In 2018, financial sector was adversely affected by rising interest rate and growing NPL problems which dominated its stock market performance. Financial composite which includes Bank, NBFI, and Insurance declined by 18.60% against overall market decline of 13.80%. On the other hand, outperforming the market in 2018. However, 2018 witnessed a number of developments in the form of partnerships and regulations. The strategic partnership between DSE and a Chinese consortium of Shanghai and Shenzhen Stock exchanges is expected to contribute in capital market improvement. Provided that interest rates remain under control and liquidity conditions improve, the market is expected to perform better. Stable political environment will attract foreign investment and improvement of exports and remittance can help ease pressure on currency.

• Liquidity Crisis:

Senior bankers and experts suggest Bangladesh’s banks be cautious in liquidity management from the start of 2018 as well as 2019 as a majority of them have been facing a shortage of available liquid funds at the extreme end of this year. Over the year Bangladesh Bank has taken different initiatives such as to reduce the AD ratio, CRR and SLR requirement to cope up with the liquidity crisis. An increasing trend in private sector credit growth, large import payments and declining depositors’ confidence on the banking sector may erode banks’ liquidity base. The banks may also face a shortage of foreign currency funds because of the need to make a huge amount of import payments. The latest volatile situation in the banking sector might also put an adverse impact on depositors’ confidence which will add extra pressure on banks’ efforts to collect the fund from common people. The rate of interest on deposit has increased sharply which indicated that the banks are now facing a shortage of available funds. Higher interest rate on savings tools continues to encourage the common people to keep their money on the instruments avoiding the bank. Such phenomenon has emerged as a challenge for the banks.

• Digital security

Cyber heist in baking sector in different countries in recent time has jolted the board and bank management out of the stupor. SWIFT, the global messaging system used to move trillions of dollars each day, warned banks that the threat of digital heists is on the rise as hackers use increasingly sophisticated tools and techniques to launch new attacks. To prevent cyber heist Banks need to become very much alert and to make investments in strengthening their own IT infrastructure along with security measures.

• 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.

iv) Policies and processes for mitigating operational risk.

Operational risk can broadly be defined as the risk of direct or indirect losses or damaged reputation due to failure attributable to technology, employees, processes, procedures or physical arrangements, including external events and legal risks. In other words, operational risk can be defined as any risk which is not credit risk, market risk, liquidity risk, strategic risk nor compliance risk. The Bank’s operational risk management focuses on proactive measures in order to ensure the accuracy of information used internally and reported externally, a competent and well-informed staff, and its adherence to established rules and procedures as well as on security arrangements to protect the physical and ICT infrastructure of the Bank.

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The Operational Risk Management Function is responsible for monitoring, coordinating measures, reporting on operational risks and developing the framework models and methodologies as required.

The Bank identifies and assesses the operational risk inherent in all its material products, activities, processes and systems. Furthermore the Bank ensures that before new products, activities, processes and systems are introduced or undertaken, the operational risk inherent in them is subject to adequate assessment procedures. The Bank mitigates operational risks by defining, documenting and updating the relevant business processes. Furthermore, the Bank mitigates operational risk by following strict rules for the assignment of duties and responsibilities among and within the functions and a system of internal control and supervision. The main principle for organizing work flows is to segregate the business-generating functions from the recording and monitoring functions. An important factor in operational risk mitigation is also the continuous development and upgrading of strategic information and communication systems.

Risk Management Division (RMD) of the bank is primarily responsible to drive and look after the overall risk management function including operational risk management. RMD under the leadership of Chief Risk Officer (CRO) is entrusted to ensure:

• Drive and populate the culture of pro-active risk identification and mitigation;

• Lead Bank wide integrated risk management approach;

• Validate and improve the reliability and effectiveness of business operation and the operations of the risk management framework;

• Identify the Bank’s operational deficiencies;

• Increase accuracy and visibility of risk information;

• Designing of organizational structure by clearly defining roles and responsibilities of individuals to support the identification, assessment, control and reporting of key risk indicators;

• Ensure compliance with the core risks management guidelines at the department level, and at the desk level;

• RMD will work under Bank’s organizational structure and suggest to the management to take appropriate measures to overcome any existing and potential financial crisis;

• Initiation to measure different market conditions, vulnerability in investing in different sectors;

• RMD 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 (RMD) is the propagator of effective risk management across the bank;

• Aligned the division’s structure and committees in line with the Central Bank directives/circulars;

• Ensured all the regulatory reporting are prepared and submitted on time;

• Reviewed Product Program Guidelines (PPG) and suggested a standard template to bring discipline and uniformity in managing asset and liability products.

• Driving the initiatives of business continuity management across the Bank;

• Ensured that development or review of internal processes/policies/guidelines/Manuals are vetted by RMD;

• RMD played a vital role in determining strategies in consistency with risk management policy, which can measure, monitor, and maintain acceptable risk level of the Bank;

• Prudently oversaw Capital Management, Internal Capital Adequacy Assessment Process (ICAAP), Credit Risk, Market Risk (Foreign Exchange Risk, Interest Rate Risk, and Equity Risk), Liquidity Risk, Operational Risk (Internal Control & Compliance Risk, Reputation Risk, and Money Laundering Risk) as guided by the Central Bank;

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v) Approach for calculating capital charge for operational risk.

• RMD analyzed the overall portfolio of the Bank through Risk Management Paper, Stress Testing and ICAAP, also effectively engaged in preparation of efficient Management Information System (MIS) report for the higher management and for the Risk Management Committee of the Board.

• Risk Management Division has recently formed a Risk Management Forum (RMF), a common platform among the all divisions for driving the culture of pro-active risk identification and escalation of risk across the bank. The member of Risk Management Forum meets regularly in monthly meeting to analyze identified/potential risks and suggest mitigation followed by monitoring.

Risk Management Division (RMD) has developed an online module named ‘Risk Platform’ for escalation and reporting of identified & anticipated risk events of the Bank proactively to the management as part of integrated risk management approach.

Stress Testing in PBL:

Stress testing framework as provided by Bangladesh Bank assesses the impact on CRAR (Capital to Risk Weighted Asset Ratio) due to minor, moderate and major level of shock in terms of credit risk, exchange rate risk, liquidity risk, equity price risk and interest rate risk. Stress testing for credit risk assesses the impact of increase in the level of Non-Performing Loans (NPLs) of the banks for the following scenario -

• Performing loan directly downgraded to B/L- Sector wise Concentration 1

• Performing loan directly downgraded to B/L- Sector wise Concentration 2

• Increase in NPLs due to default of top large loan borrowers

• Negative shift in NPLs categories

• Decrease in the Forced Sale Value (FSV) of the collateral

The stress testing based on the financial performance of the Bank as on December 31, 2018 has also been completed which shows that the Bank has adequate capital to absorb minor level of shocks for combined shock. However, for absorbing moderate and major levels of shock which is very unlikely in the industry, the Bank may require additional capital.

Quantitative disclosure Particulars

Solo Basis Consolidated

Taka in Crore

b) The capital requirement for operational risk 251.40 257.90

9. Liquidity Ratio:

Qualitative Disclosure

(a) - Views of BOD on system to reduce Liquidity Risk- Methods used to measure Liquidity Risk- Liquidity risk management system- Policies and processes for mitigating Liquidity Risk.

Bank is maintaining the ratios mentioned in the Bangladesh Bank guideline considering all the relevant factors, policies and procedures to mitigate Liquidity Risk. A brief discussion on the emergence of those ratios and their interpretation is stated in the following part:

In the aftermath of the financial crisis of 2008-09, the Basel Committee of Banking Supervision (BCBS) emphasized on a program of sustainability revising its existing guidelines with a goal to promote a more resilient banking sector through further restructuring of the existing approach by strengthening global capital and liquidity rules within the global regulatory framework.

BCBS proposed two liquidity ratios in December 2009 i.e. 1. Liquidity Coverage Ratio (LCR) and 2. Net Stable Funding Ratio (NSFR). Following that Bangladesh Bank vide its BRPD Circular No-07 dated March 31, 2014, declared the road map for implementing the Revised Regulatory Capital Framework for banks in line with Basel III in Bangladesh starting from the year 2015. According to the revised road map issued vide BRPD Circular No. 18/2014, from January 2015 and onwards Banks have to maintain a standard LCR and NSFR, the minimum standard of which is defined by Bangladesh Bank.

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Prior to LCR and NSFR, Cash Reserve Ratio (CRR), Statutory Liquidity Reserve (SLR), and Advance Deposit Ratio (ADR) were grossly used as benchmark parameter of measuring a bank’s liquidity in most of the countries. But in the wake of financial crisis due to the limitations, as well as ineffectiveness of those ratios, the BCBS suggested more reforms in the liquidity measures like LCR and NSFR which are more relevant with the structure and mix of Bank’s balance sheet as well as funding.

For the LCR, the stock of high quality liquid assets is compared with expected cash flows over a 30 day stress scenario. The expected cash outflows are to be covered by sufficient liquid, high quality assets. It aims to ensure that a bank maintains an adequate level of unencumbered, high-quality liquid assets that can be converted into cash to meet its liquidity needs for 30 calendar days. The minimum standard set by BB is that LCR shall be greater than or equal to 100.

On the other hand, the NSFR compares available funding sources with funding needs resulting from the assets on the Balance Sheet. Like the LCR, the NSFR calculations assume a stressed environment. It aims to limit over-reliance on short-term wholesale funding (mostly interbank) during times of abundant market liquidity, increase stability of the funding mix, encourage better assessment of liquidity risk across all on- and off-balance sheet items, and promotes funding stability. The minimum standard set by BB is that NSFR shall be greater than 100.

Quantitative Disclosures

(b) - Liquidity Coverage Ratio : 101.41%%

- Net Stable Funding Ratio (NSFR): 127.94%

- Stock of High quality liquid assets: BDT 4,236.46 crore

- Total net cash outflows over the next 30 calendar days: BDT 4,177.42 crore

- Available amount of stable funding: BDT 23,377.54 crore

- Required amount of stable funding: BDT 18,272.51 crore

(The above ratios and balance are stated as per position of December 31, 2018)

10. Leverage Ratio

Qualitative Disclosures

(a) Views of BOD on system to reduce excessive leverage policies and processes for managing excessive on and off-balance sheet leverage:

In order to avoid building-up excessive on- and off-balance sheet leverage in the banking system, a simple, transparent, non-risk based leverage ratio has been introduced. The leverage ratio is calibrated to act as a credible supplementary measure to the risk based capital requirements. The leverage ratio is intended to achieve the following objectives:

a. constrain the build-up of leverage in the banking sector which can damage the broader financial system and the economy

b. reinforce the risk based requirements with an easy to understand and a non-risk based measure

Prime Bank calculates leverage ratio on quarterly basis and submits it to the Department of Off-site Supervision (DOS), Bangladesh Bank along with CRAR report.

Approach for calculating exposure:

A minimum Tier-1 leverage ratio of 3% has been prescribed by Bangladesh Bank to maintain by the Banks both at solo and consolidated level. Accordingly, Prime Bank maintains leverage ratio on quarterly basis. The formula for calculating leverage ratio is as under:

Leverage Ratio = Tier-1 Capital (after related deductions)/ Total Exposure (after related deductions)

Quantitative Disclosures

(b) Solo Consolidated

Sl. Particulars In crore Taka

A. Tier-1 Capital 2,433.48 2,437.57

B. On balance sheet exposure 28,933.34 29,044.40

C. Off-balance sheet exposure 8,449.07 8,449.07

D. Total deduction from on and off-balance sheet exposure 31.23 33.92

E. Total exposure (B+C-D) 37,351.18 37,459.55

F. Leverage Ratio (A/E)*100 6.52% 6.51%

165PRIME BANK

11. REMUNERATION:

11.1 Qualitative Disclosure:

Qualitative Disclosure

(a) Information relating to the bodies that oversee remuneration. Disclosures should include:

Name, composition and mandate of the main body overseeing remuneration.

External consultants whose advice has been sought, the body by which they were commissioned, and in what areas of the remuneration process.

A description of the scope of the bank’s remuneration policy (e.g. by regions, business lines), including the extent to which it is applicable to foreign subsidiaries and branches.

A description of the types of employees considered as material risk takers and as senior managers, including the number of employees in each group.

Prime Bank has a flexible compensation and benefits system that helps to ensure pay equity, is linked with performance that is understood by employees, and keeps in touch with employee desires and what’s coveted in the market, while maintaining a balance with the business affordability. The compensation and benefits are reviewed through market and peer group comparison. The balanced total rewards help the Bank to attract, motivate and retain talent that produces desired business results.

Remuneration Committee is generally understood to be derived from among the Board. The Board of Directors of the Bank approves the remuneration policy in accordance with the Remuneration and Increment & Promotion Policy recommended by the Senior Management. The policy approved by the Board of Directors is implemented by the Management with the support and/or under the supervision of Human Resources Division. The officials are evaluated by a Committee which is formed comprising of all DMDs and Head of HR. The Committee is responsible for Performance Appraisal Rating, Promotion and implementation of the Pay Progression Strategy of the Bank.

Though the Bank has no permanent external consultant for managing remuneration, but expert opinion may have been sought by the Management, in case to case basis, regarding Gratuity related provisioning accounting and settlement of end service benefits of the separated employees.

(b) Information relating to the design and structure of remuneration processes. Disclosures should include:

An overview of the key features and objectives of remuneration policy.

Whether the remuneration committee reviewed the firm’s remuneration policy during the past year, and if so, an overview of any changes that was made.

A discussion of how the bank ensures that risk and compliance employees are remunerated independently of the businesses they oversee.

Policy Objective:

Prime Bank Limited aims to create a future-oriented, strategic compensation plan in order to attract and retain its talent through using a modern compensation strategy called “Broadbanding Pay Structure”. This policy applies to all the Full Time and Permanent Employees of Prime Bank Limited. The Remuneration Policy is designed to establish broad pay-ranges based on performance, skills or competencies and avoid multiple pay structures. The policy is also empowering managers & encourage the professionals for career development

Broadbanding Pay Structure:

The Management introduced Broadbanding Pay Structure which aims to ensure a performance driven work culture through a strategic compensation plan synced with the performance of individual employee. It places an increased emphasis on encouraging employees to develop new skills and paying for the skills according to their contribution and equity. In a nutshell, broadbanding is a more flexible pay system for both the employees and for the employers where career progression takes a different route.

Salary Structure:

Salary component is as under:

Part–I: (i) Basic; (ii) House Rent; (iii) Medical Allowance;Part–II: (i) Conveyance; (ii) Leave Fare Assistance

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Annual Performance Bonus:

As a part of employee motivation through monetary incentive, a bonus policy formulated. The Bank has been paying the bonus to the employees every year on the basis of their performance. The objective of bonus policy is to promote the performance of individual employee as well as team.

(c) Description of the ways in which current and future risks are taken into account in the remuneration processes. Disclosures should include:

An overview of the key risks that the bank takes into account when implementing remuneration measures.

An overview of the nature and type of the key measures used to take account of these risks, including risks difficult to measure (values need not be disclosed).

A discussion of the ways in which these measures affect remuneration.

A discussion of how the nature and type of these measures has changed over the past year and reasons for the change, as well as the impact of changes on remuneration.

Bank takes into account the following key risks when managing and determining remuneration arrangements:

(a) Financial Risks;

(b) Operational Risks; and

(c) Compliance Risks.

While evaluating the performance of each employee annually, all the financial and non-financial indicators as per pre-determined set criteria are considered and accordingly the result of the performance varies from one to another and thus affects the remuneration as well.

(d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration. Disclosures should include:

An overview of main performance metrics for bank, top-level business lines and individuals.

A discussion of how amounts of individual remuneration are linked to bank-wide and individual performance.

A discussion of the measures the bank will in general implement to adjust remuneration in the event that performance metrics are weak.

Prime Bank Ltd. uses modern standardized strategies for determining pay progression within the newly proposed Bands to adjust pay rates of individual employees over time. It is determined on the following basis:

Inflation Support based: It includes process for adjusting basic pay increase across the Organization & all employees receive the same amount of percentage increase to maintain & balance lifestyle expenditures; what is commonly referred to as inflation support.

Performance based: It includes process for Performance Planning & Management, Performance Assessment, Incentives and Recognition to determine the amount of pay increases. It differentiates performers from non-performers and also creates positive effects on employee motivation.

(e) Description of the ways in which the bank seek to adjust remuneration to take account of longer-term performance. Disclosures should include:

A discussion of the bank’s policy on deferral and vesting of variable remuneration and, if the fraction of variable remuneration that is deferred differs across employees or groups of employees, a description of the factors that determine the fraction and their relative importance.

A discussion of the bank’s policy and criteria for adjusting deferred remuneration before vesting and (if permitted by national law) after vesting through clawback arrangements.

To maintain the market competitiveness, the compensation and benefits of Prime Bank are regularly reviewed through market and peer group study. The well-crafted total rewards help the Bank to attract, motivate and retain talent. All employees are paid competitive remuneration package. The remuneration policy of the Bank does not allow any discrimination between male and female employees. Prime Bank has variety of market-competitive Benefits schemes designed to motivate the employees. The various cash and non-cash benefits include:

• Company provided car for top level Executive employees

• Car allowance for all Executive level employees

• Leave fair assistance allowance

• Medical treatment allowance

167PRIME BANK

• Maternity benefits

• Car loan facility

• House loan facility

• Staff loan at reduced interest rate

• House furnishing allowance

• Mobile phone allowance

• Travel allowance

• Technical allowance

• Festival bonus

• Allowance for employees’ meritorious students

• Annual leave

• Maternity leave

• Study leave etc.

• The Bank also provides long-term as well as retirement benefits to employees:

• Leave encashment

• Provident fund

• Gratuity benefit

• Retirement benefit

• Partial and full disability benefit

• Death benefit to family members etc.

(f) Description of the different forms of variable remuneration that the bank utilizes and the rationale for using these different forms. Disclosures should include:

An overview of the forms of variable remuneration offered (i.e. cash, shares and share-linked instruments and other forms.

A discussion of the use of the different forms of variable remuneration and, if the mix of different forms of variable remuneration differs across employees or groups of employees), a description of the factors that determine the mix and their relative importance.

The Bank pays variable remuneration on cash basis (i.e. direct credit to the employee Bank account and/or Pay Order/ Cheque), as the case may be, as per Employees’ Service Rule/ practice.

Bank provides annual increments based on performance to the employees with the view of medium to long term strategy and adherence to Prime Bank’s values.

11.2 Quantitative Disclosure:

Quantitative Disclosure

(g) Number of meetings held by the main body overseeing remuneration during the finanhm.marufcial year and remuneration paid to its member.

There were 06 (six) meetings of the Committee, which is responsible for Performance Appraisal Rating, Promotion and implementation of the Pay Progression Strategy of the Bank, held during the year 2018. All the members of the Committee are from the core banking area/operation of the Bank. No additional remuneration was paid to the members of the Committee for attending the meeting except their regular remuneration.

(h) Number of employees having received a variable remuneration award during the financial year.

Number and total amount of guaranteed bonuses awarded during the financial year.

• Performance Bonus/incentives: BDT 98.39 Million

• Number of total festival bonus: 03

• Total amount of festival bonus: BDT 575.96 Million

• Number of severance payments: 298

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ANNUAL REPORT 2018

Number and total amount of sign-on awards made during the financial year.

Number and total amount of severance payments made during the financial year.

• Total amount of severance payments: BDT 805.06 Million

• (including provident fund, gratuity fund, retirement benefit and leave encashment)

(i) Total amount of outstanding deferred remuneration, split into cash, shares and share-linked instruments and other forms.

Total amount of deferred remuneration paid out in the financial year.

No deferred remuneration was paid out in the financial year 2018.

(j) Breakdown of amount of remuneration awards for the financial year to show:

- fixed and variable.

- deferred and non-deferred.

- different forms used (cash, shares and share linked instruments, other forms).

Part–I: BDT 2,824.62 & Million

Part–II: BDT 445.48 Million

(k) Quantitative information about employees’ exposure to implicit (e.g. fluctuations in the value of shares or performance units) and explicit adjustments (e.g. clawbacks or similar reversals or downward revaluations of awards) of deferred remuneration and retained remuneration:

Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and/or implicit adjustments.

Total amount of reductions during the financial year due to ex post explicit adjustments.

Total amount of reductions during the financial year due to ex post implicit adjustments.

No amount is outstanding of deferred remuneration and retained remuneration exposed to ex post explicit and/or implicit adjustments.

There were no reductions during the financial year 2018 due to ex post explicit adjustments.

There were no reductions during the financial year 2018 due to ex post implicit adjustments.

SUSTAINABILITY ANALYSIS

Sustainability Report

Social Responsibility Initiatives

Report on Prime Bank Foundation

Green Banking Report

Corporate Culture

Capital Plan

Environmental & Social Initiatives

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ANNUAL REPORT 2018

“Act Responsible, Think Sustainable”

Sustainability report conveys disclosures of an organization’s most critical impacts – be they positive or negative – on the environment, society and the economy. As part of our constant commitment to disclose the impacts on the economy, the environment, and /or society to stakeholders against the activities of Prime Bank Limited, the bank has been publishing Sustainability Report since 2013.

Prime Bank successfully completed the  GRI Materiality Disclosures Service  for the earlier Sustainability Reports and those Report had already been achieved “materiality disclosure” icon from GRI, the Netherlands for quality report & for maintaining the all guidelines as well under GRI G4. The ‘GRI Materiality Disclosures Service’ organizational mark is the formal confirmation that  the report has undergone and successfully completed the ‘GRI Materiality Disclosures Service’ and in line with the international standard one under latest guidelines of GRI G4 or GRI standard 2016. The Sustainability Reports of the bank had uploaded in GRI website (based on headquarter at Netherlands).

In 2018 Prime Bank has been awarded as  “GOLD” Rank in  Asia Sustainability Reporting (ASR) Rating for Sustainability Report-2017 by the National Center for Sustainability Reporting (NCSR), Indonesia, which indicates that Prime Bank is striving for excellence to create Social, Environmental and Economic Benefits.

In order to prepare Sustainability Report uniformly, GRI has announced new Guidelines named “GRI Standards” in 2016. Under this guideline, all organizations / companies have to prepare Sustainability Report under new standards from July 2018.  Mentionable that previous GRI G4 Guidelines have been transitioned to GRI Standards for preparing Sustainability Report  which was  released by the Global Sustainability Standards Board (GSSB), GRI. As per new guidelines, the companies to be more transparent about the impacts their activities and assets have on the environment, economy and society.  The Supplement for Financial Sectors has also been developed according to a multi-stakeholder process and have included some new criteria’s and indexes to prepare report for the banking sector.

As Prime Bank is striving for excellence to create Social, Environmental and Economic Benefits, the Bank has taken initiative to prepare Sustainability Report uniformly by following the new Guidelines named “GRI Standards” in 2016 to communicate to it’s stakeholders about it’s impacts on the economy, the environment, and /or society.

GRI Sustainability Reporting Standards (GRI Standards) are used by organizations around the world to communicate to stakeholders about their impacts on the economy, the environment, and /or society. The use of the GRI Standards helps organizations to disclose this information in a consistent and comparable way. It also helps to promote greater transparency and accountability of organizations.

Overview of the set of GRI Standards:

A. Universal Standards: The Universal Standards apply to all organizations preparing a report in accordance with the GRI Standards:

GRI 101 - Foundation: Starting point for using the GRI Standards.

GRI 102 - General Disclosures: The report contextual information about an origination.

GRI 103 - Management Approach: To report the management approach for each material topic.

(B) Topic-specific Standards: There are various topic-specific Standards, organized in three series:

• Economic topics (200 Series)

• Environmental topics (300 series)

• Social topics (400 series)

Prime Bank is strategically moving towards a sustainable future and playing a role of private sector partner of the Bangladesh Government who has already adopted ‘whole of society’ approach to ensure attainment of ‘Sustainable Development Goals (SDGs)’. Innovation and Sustainability – which are closely related – are key pillars of Prime Bank’s strategy. The Bank started its journey in the year 1995 with the firm commitment of excellence in customer service with a difference and with a mission to be an efficient, market driven, customer focused institution with good corporate governance structure through designing and adopting policies to embed sustainability into its operations, undertaking awareness and capacity building activities, supporting & financing environment friendly business initiatives, covering social dimension of sustainability concerns and ensuring transparency in financial as well as sustainability reporting.

By using the Global Reporting Initiative (GRI) standards, reporting organizations can generate reliable, relevant and standardized information with which to assess opportunities and risks, and enable more informed decision-making – both within the business and among its stakeholders. By developing and communicating their understanding about the connections between sustainability and business, companies can enhance their value, measure and manage change, and drive improvement and innovation.

Prime Bank Limited believes in eco-friendly socially responsible banking system which drives the whole nation towards a healthy environment and presents an excellent and hazardless banking. In order to protect the environment, Bank is spreading its wings by introducing both in-house & external green activities towards supporting Green Economy. Sustainability strategy of Prime Bank Limited entails adopting environmentally responsible operations, monitoring our consumption of internal environmental resources and embracing efficiency as a way to reduce the environmental footprint of our operations. Our direct environmental impacts are limited to paper, energy, water consumption, and the greenhouse gases (GHG) emissions they produce. Bank’s Green banking activities are day-by-day flourishing towards creating a “Greener” future for the welfare of the society. For a sustainable economy Prime Bank Limited plays crucial role in financing environment friendly projects led by green banking which believes in social responsibility. We currently have no premises located or planned in areas of high biodiversity value.

The emerging idea of integrating strategic sustainability-related information with other material financial information is a significant and positive development. Sustainability is, and will increasingly be, central to the change that companies, markets and society will be navigating. Sustainability information that

SUSTAINABILITY REPORT

171PRIME BANK

is relevant or material to a company’s value prospects should therefore be at the core of integrated reports.

Corporations have become more sensitive to social issues and stakeholder concerns are striving to become better corporate citizens. Whether the motivation is a concern for society and the environment, government regulation, stakeholder pressures, or economic profit, the result is that managers must make significant changes to more effectively manage their social, economic, and environmental impacts. Companies hunt for ways to improve their performance, determining the best ways to thoroughly integrate these improvements into all parts of the organization still facing challenges. These challenges are because implementing sustainability is fundamentally different than implementing other strategies in the organization. For operating goals, the direct link to profit is usually clear. For innovation, the goals are long-term and often difficult to predict and measure, the intermediate goal is new products and the ultimate goal is increased profit. However, for sustainability, the goal is to simultaneously achieve excellence in both social and environmental and financial performance.

It is difficult to implement the proper systems to pursue sustainability and to evaluate the impacts of sustainability on financial performance and the trade-offs that ultimately must be made. Often, it is unclear how trade-offs between financial and environmental or social performance should be made. There is considerable uncertainty about how shareholders will respond to these trade-offs. Moreover, the trade-offs keep changing—at certain times, shareholders may want the company to place substantial weight on social performance and the environment, whereas at other times they may want the company to place more weight on short-term profits. The costs of implementing sustainability are also constantly changing. For example, potential technology improvements may make it far cheaper to implement pollution reduction later rather than earlier. Even when sustainability is thought to provide financial benefits, the benefits can, at best, only be measured over long time horizons, which make it difficult to measure the impact of social and environmental performance and to quantify the resulting benefits. The constant uncertainty about how far to move toward sustainability, the constantly changing emphasis on and costs of implementing sustainability, and the long time horizons therefore make it difficult to implement sustainability in the same way that other strategic initiatives are implemented.

The standard implementation approaches often fail. In order to improve the integration of social and environmental impacts into day-to-day management decisions, companies must tie the measurement and reporting of these impacts into decision making processes. Further, these impacts must be measured and reported in financial terms and then integrated into the traditional investment models. So how can companies integrate sustainability into day-to-day decision-making? Through the combination of a clear and well-articulated and communicated sustainability strategy, senior management commitment to a broader set of objectives than profit alone, and utilizing appropriate structures and systems to drive sustainability through the organization.

The importance of vision and communicated core values are well accepted. But these commitments to social and environmental concerns must be consistently communicated both in words and actions. Companies must exercise leadership to decide how much integration of social and environmental concerns they want and how they want to do it, align the organization, articulate the trade-offs to managers, and continually reinforce

these objectives throughout the organization. They must also choose a strategy that is consistent with the mission, culture, and aligned with geography, customer, product, community, and other stakeholder requirements. Strategy and leadership are minimum enablers to successful sustainability implementation. Just as the formulation of sustainability strategy is critical, so is the execution. Management must also make choices about how to implement the sustainability strategy and integrate economic, social, and environmental impacts into their organizations. These impacts are sometimes managed using “soft” leadership elements and culture along with a variety of informal systems. In their recruitment and developing practices, companies may seek to create in their employees a passion and commitment to sustainability. They in effect create a culture to support sustainability decisions. This culture is firmly embedded in the beliefs, values, and mission and vision statements of companies that serve to inspire and motivate employees to take sustainability obligations seriously.

Prime Bank has developed “Environmental & Social (E&S) Risk Management Policy Statement” and “Environmental & Social Risk Management Procedure Manual” in line with the Bangladesh Bank Guidelines. These documents comprise of prime bank’s commitment towards being Environmentally & Socially (E&S) compliant, include the social risk factors, excluded activities, discouraged sectors, define environmental and social requirements for lending, E&S risk management procedures, tools, roles & responsibilities etc. These two policy and procedural documents played a vital role in strengthening ESMS in Prime Bank Limited.

Prime Bank has an independent ‘Sustainable Finance Unit’ which is being headed by the Head of Credit Risk Management (CRM) Division. Five fulltime officials have been deployed in this unit to plan, execute and monitor Bank’s sustainable banking and sustainable financing activities. The main activities of this Unit includes formulation, amendment & up-gradation of policies related to green banking, Corporate Social Responsibility, environmental and social risk management, green office guide, green strategic plan etc. They monitor all the process and procedures related to carbon footprint measurement, green marketing, and management of climate risk fund. They will also ensure implementation of directives related to sustainable development goals (SDGs) provided by the Bangladesh Government and Bangladesh Bank from time to time. They assist concerned business division and international division of the Bank in signing participation agreement and applying all on-lending / on-blending (re-finance/pre-finance/re-imbursement) scheme/fund/facility/project under ‘Sustainable Finance Department’ of Bangladesh Bank. They liaise in designing financial instruments and products under green finance and sustainable finance with concerned business division and Bangladesh Bank and seek approval from Bangladesh Bank in this regard. We have a ‘Sustainable Finance Committee’ to set annual objective of Sustainable Finance Unit and to evaluate its performance. This committee ensures appropriate coordination and support among all the relevant divisions of the Bank to accomplish the activities of Sustainable Finance Unit. All these activities of the Bank are reported separately by another committee named ‘Sustainability Reporting Committee’ through Sustainability Report following GRI standards and receive GRI ‘Materiality Disclosure Certification’ every year which ensure transparency of our sustainable initiatives to a larger extent to the internal and external stakeholders.

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ANNUAL REPORT 2018

The modern concept of Corporate Social Responsibility (CSR) is evolving gradually despite several obstacles. Driving forces behind this evolution is pressure from various stakeholders (Importers, Environmentalists, etc.) while slow progress is attributed to lack of Good Governance, consumer forums and above all lack of understanding by business houses that CSR is not charity but is rather an instrumental investment to achieve sustainable growth. Corporate Social Responsibility (CSR) is gaining fast global acceptance as a standard to assume environmentally sustainable and socially equitable business practices. The role of business world-wide and specifically in the developed economies has evolved from classical ‘profit maximizing’ approach to a ‘social responsibly’ approach, where businesses are not only responsible to its stockholders but also to all of its stakeholders in a broader inclusive sense. With increased globalization, local businesses are being integrated with the global economy than ever hence pressure is mounting on local businesses to converge on international standards of socially responsible business. As a member of the global economy, Bangladesh is also aware of the need to take positive initiative to establish an image of environmentally and socially responsible businesses. CSR as a concept is being gradually interwoven into the psyche of local business, however, the process is slow and only in its infancy.

The banking sector of Bangladesh has been actively participating in various social activities. However, these efforts were hardly recognized and labeled as CSR activities since most of the banks have not integrated CSR in their routine operation; rather these were in the form of occasional charity or promotional activities. Bangladesh Bank (BB) has taken initiatives in respect of formalizing CSR in the banking sector of Bangladesh and issued a directive to the banks and, financial institutions on June 01, 2008 in this regard. It defined the strategic objective for CSR engagement, provided some priority areas with a suggestion to foster CSR in their client businesses, and suggested a first time CSR program indicating some likely action plans.  BB’s DOS Circular No 01 of June 2008 and the subsequent circulars on the subject comprehensively enumerate the expected ranges and areas of CSR engagements of banks in the communities they operate in. Given the current pattern of relative urgencies of needs in diverse areas, broad adherence to the following allocation pattern is advisable:

i) Education and job focused vocational training being crucial in widening advancement opportunities for the underprivileged population segments, around thirty percent of total CSR expenditure should be:

(a) for scholarships/stipends for students from low income family in reputed academic and vocational training institutions, and

(b) for support towards upgrading of facilities in academic and vocational training institutions substantially engaged with students and trainees from the underprivileged rural and urban population segments. Selection processes for scholarships and stipends should elicit enough information to preclude applicants from drawing benefits from multiple banks sources.

ii) Preventive and curative healthcare support assistance for underprivileged population segments comes next in priority,

around twenty percent of total CSR expenditure allocation in this area would be appropriate.

a) Support assistances in this area would include direct grants towards costs of curative treatment of individual patient, towards costs of running hospitals and diagnostic centers engaged substantially in treatment of patients from underprivileged population segments, and

b) towards costs of preventive public health and hygiene initiatives like provision of safe drinking water, hygienic toilet facilities for poor households and for floating population in urban areas, and so forth.

iii) The remainder of direct budgetary CSR expenditure allocations should be used in such other areas as:

a) emergency disaster relief, promoting adoption of environmentally sustainable output practices and

b) lifestyles, promoting artistic, cultural, sports and recreational facilities for the underprivileged, upgrading facilities and lifesavings equipment’s in emergency rescue services like the fire brigades etc.,

c) infrastructure improvement for disadvantaged communities in remote far flung areas and so forth.

The above outlined indicative allocation guidelines are for direct budgetary CSR expenditures only. Indirect costs associated with promotion of inclusive financing for productive SME initiatives in agriculture, manufacturing and services, and for environmentally beneficial ‘green’ projects are partly mitigated by such policy supports as concessional refinance lines, with the remainder to be viewed as investment costs of expanding into newer client bases.

Over the past 11 years, Prime Bank Foundation (PBF) has played a pivotal role in the field of national development in the education and health sector. PBF is a staunch believer of empowerment rather than aid and this belief is reflected clearly in the long term projects that PBF has undertaken over the years. Sustainable growth, rather than charity has been the core objective of all of PBF’s projects. The projects of PBF aim not only to make health and education more accessible to the target population but also to contribute to the national development through its initiatives. A country’s development depends largely on the well-being of its population as well as a strong educational backbone, and that is exactly what PBF strives to accomplish. PBF hopes to expand its sphere of influence through its initiatives and provide more opportunities of better health and education in order to ensure equal opportunities for the less privileged people of our society.

Prime Bank Foundation (PBF), being the CSR wing of Prime Bank, has a unique business philosophy which believes that “Sustainability for self and others, private and public interests are one and the same.” This means that PBF’s business activities must sustain not only for the Foundation’s own benefits, but also for the society and the nation. The idea behind this dogma represents the essence of our CSR, and has been carried on in the Foundation’s Mission Statement, which also includes: “We aim to constantly stay a step ahead in dealing with change, create new value, and contribute broadly to society and its development.”

SOCIAL RESPONSIBILITY INITIATIVES

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174 PRIME BANK

ANNUAL REPORT 2018

In 2017, Prime Bank Eye Hospital (PBEH) examined 20,211 patients at

the base hospital. On the other hand, 16,608 patients were

examined in the fields through its outreach eye camps. In the

reporting year 1,398 patients were operated at PBEH which was 992

only in 2016 (surgery growth 40.92%).

Prime BankFoundationPrime BankFoundation

An Enlightened TomorrowAn Enlightened Tomorrow

A Winning TeamA Winning Team

The Future VisionThe Future Vision

Nursingis CaringNursing

is CaringAll the students from Prime College of Nursing,

Dhaka (PCND)’s 1st and 2nd batch are already employed in different public and private

hospitals and organisation as a Senior Staff Nurse. Among these 66 students, 15 have joined as Govt. 2nd class Gazette Officer and posted at Medical College Hospital / city/ division/ district/ upazilla level service delivery points and rest of

the 41 graduates are employed in different private hospitals like Apollo, Asgar Ali Hospital,

Square, United, Delta, Pran RFL Group Hospitals of Bangladesh.

Prime Bank Cricket Club (PBCC) was established in November 2011 by acquiring a

club of Dhaka Premier Division. It has been able to rise as one of the best cricket clubs of

Bangladesh, with championship title in key tournaments of domestic cricket within a short

time through high professionalism and well-organized administration.

Prime Bank Foundaion came forward and is helping students through Education Support

Programme (ESP) to gain higher education. These students are now working in higher

positions of different organizations. If more opportunity is given, these students would be

able to move forward.

Prime Bank English Medium School (PBEMS) started its

journey in 2008. PBEMS initiated with a unique approach of teaching methodology which focuses on low cost and values

oriented education. The year 2018 was a year of

great achievement as PBEMS obtained the Cambridge

Approval under British Council and also approval from Primary

Education and Dhaka Board.

175PRIME BANK

In 2017, Prime Bank Eye Hospital (PBEH) examined 20,211 patients at

the base hospital. On the other hand, 16,608 patients were

examined in the fields through its outreach eye camps. In the

reporting year 1,398 patients were operated at PBEH which was 992

only in 2016 (surgery growth 40.92%).

Prime BankFoundationPrime BankFoundation

An Enlightened TomorrowAn Enlightened Tomorrow

A Winning TeamA Winning Team

The Future VisionThe Future Vision

Nursingis CaringNursing

is CaringAll the students from Prime College of Nursing,

Dhaka (PCND)’s 1st and 2nd batch are already employed in different public and private

hospitals and organisation as a Senior Staff Nurse. Among these 66 students, 15 have joined as Govt. 2nd class Gazette Officer and posted at Medical College Hospital / city/ division/ district/ upazilla level service delivery points and rest of

the 41 graduates are employed in different private hospitals like Apollo, Asgar Ali Hospital,

Square, United, Delta, Pran RFL Group Hospitals of Bangladesh.

Prime Bank Cricket Club (PBCC) was established in November 2011 by acquiring a

club of Dhaka Premier Division. It has been able to rise as one of the best cricket clubs of

Bangladesh, with championship title in key tournaments of domestic cricket within a short

time through high professionalism and well-organized administration.

Prime Bank Foundaion came forward and is helping students through Education Support

Programme (ESP) to gain higher education. These students are now working in higher

positions of different organizations. If more opportunity is given, these students would be

able to move forward.

Prime Bank English Medium School (PBEMS) started its

journey in 2008. PBEMS initiated with a unique approach of teaching methodology which focuses on low cost and values

oriented education. The year 2018 was a year of

great achievement as PBEMS obtained the Cambridge

Approval under British Council and also approval from Primary

Education and Dhaka Board.

176 PRIME BANK

ANNUAL REPORT 2018

The Corporate who take into account the financial and social return in CSR are more likely to not only increase their profitability but enhance their sustainability as well. It is wise to be sufficient and expect return in order to make a life-time impact for a nation and help the project stand on its own feet. Self-sufficiency is the quality of feeling secured and contented with an organisation, a deep-rooted sense of inner completeness and stability. Self-sustainability  and  self-sufficiency of an organisation are overlapping states of being in which the organisation needs little or no help from others. It is our belief that self-sufficiency entails the organisation enough to fulfil needs, while a self-sustaining entity can maintain self-sufficiency indefinitely. But there is no definitive guide on how to become self-sufficient. Instead of specific steps, it is more important that we may have to change the way we look at and think about our actions and dependency and seek alternatives in each area. For the Prime Bank Foundation (PBF), this is the year we take a closer look to witness the achievement from our initiatives of CSR over the past years.

In 2018, we have achieved the point of sustainability of another income generating projects of PBF. Now we feel pressure to work harder to earn more and have more for being a self-reliant project and make all the beneficiaries self-sufficient. We believe that the principles and examples of achievement will remain forever, while the social problems and technological changes will persist.

In the face of such unevenness, some organisations will assume achievement requires a winner-takes-all approach. They believe that achievement depends on putting all their energy into attaining one goal, such as single-minded focus on priority area or a commitment to being one of the best contributors in the society. If an organisation develops in the right way, the ideals of that organisation itself and society can become powerful and manageable-factors of success. So in PBF, we believe that the utmost priority of achievement is being independent in terms of projects and having the financial and social return.

2018 was an important landmark on our path toward our long-term sustainability goal. It is our belief that all our CSR work is important when it has impact on other lives as our CSR is designed to make social impact and have the return in terms of economical and social.

For such entities to become and remain successful, each individual ought to work towards the common goal of the organisation, and the organisations have to value individuals. Our team members of both PBF and projects level like to feel proud not only of being a part of something bigger than themselves, but also of being validated for their individual ideas, contributions and achievements.

As you read this annual report, we hope it will remind you of our sustainable projects and energise you for the future. For those of PBF and its projects’ team who have tirelessly committed time and energy to the success of this organisation, I do salute and thank you a lot.

I would like to thank our governing bodies, the Board of Directors of Prime Bank Limited and Foundation Management Committee for their invaluable guidance and advice. I would also like to especially thank you, our shareholders, for their continued trust and support. And finally, I would like to thank our clients and beneficiaries around the county for their confidence in our organisation, people, brands and technologies.

Before I come to an end, I extend my sincere thanks to you all for taking time to review our activities this year and for sharing with us a sense of optimism for what we make things possible.

Sincerely yours,

Dr. Iqbal AnwarChief Executive OfficerPrime Bank Foundation

MESSAGE FROM THE CEO OF PRIME BANK FOUNDATION

177PRIME BANK

In the year 2002, a reverie of Prime Bank Limited started its journey with a longing to help the society in a lifetime. Now it is 2019, after 12 years of project intensification in 2007, the desire to help the people of Bangladesh has now become perpetual. Prime Bank Foundation started with the initiatives for the welfare of our society in the Corporate Social Responsibility (CSR) sector. The projects of Prime Bank Foundation have become sustainable and at the same time serving the society as well. Prime Bank and Prime Bank Foundation believe that sustainability can only be achieved if there is a social and financial return from the CSR project.

As we reflect on the previous years, we travelled a long way, and the footsteps left behind have shown that a CSR project can sustain if it runs on its own and at the same time help the society. Now, we will head towards an end of a new beginning of the journey. 12 years have passed after project intensification in 2007, and with time the projects of Prime Bank Foundation now stand on its own feet and also serving the people and society to stand on its own.

As part of a CSR guideline by the Bangladesh Bank, CSR projects of Banks should focus on education and health sector of Bangladesh. Reflecting on this, Prime Bank Foundation started Prime Bank English Medium School (PBEMS) in Uttara in the year 2008. PBEMS initiated with a unique approach of teaching methodology which focuses on low cost and values-oriented education. In the year 2015, the project was nurtured in a way by all the team effort of Prime Bank Foundation family that it became sustainable. The project now generates enough revenue for its survival and at the same time save for future expansion. Achievement came forward to PBEMS as the existence of the school has been approved by international and local governing bodies. PBEMS envisaged bringing out the best of the education methodology and curriculum in our country only by becoming sustainable in it.

In continuation of the Education project, Prime Bank and Prime Bank Foundation introduced a unique combination of helping the youth to build a better future. The Education Support Programme (ESP) stepped in the year 2007. The Programme was designed to serve the nation builders of the future of Bangladesh. ESP is a fully subsided project, which has a social return. The classification of social return falls into the national level of a country as 1671 students completed their graduation under different fields with the help of a monthly stipend from Prime Bank Foundation. When a project helps a nation to produce Doctors, Engineers, Lawyers, Police officers, BCS-Cadre, Professor and many more, this return can be measured as it is a direct contribution to GDP in the form of employment. Even if the designation cannot be classified directly in accordance with GDP, an educated individual can

obviously earn for his/her survival and at the same time support education for others.

Moving forward, the passion which triggered in 2007 led to the commencement of another Education Project. Prime Bank Foundation inaugurated Prime College of Nursing, Dhaka, in the year 2013. The college has been able to successfully complete 6 years of its journey as the project became sustainable in 2018. Prime College of Nursing, Dhaka feels proud to share that it started with Diploma in Nursing Science and Midwifery course and now with the affiliation of Dhaka University offering B. Sc. in Nursing both Basic and Post Basic Courses. The year 2018 brought a new horizon of achievement for PCND as it reached the point of sustainability, which bears the evidence to the strategic path provided by the Board of Prime Bank Limited in managing the project. With the introduction of two new programmes B. Sc. in Nursing both Basic and Post Basic Courses in 2018, and with efficient staff and teachers, PCND achieved sustainable growth which is an example for other nursing institutions in Bangladesh. The year 2018 was a year of Achievement as PCND became self reliant in the 3rd year of its 3 year strategic plan.

With the education project, Prime Bank and Prime Bank Foundation also took the initiative to open Prime Bank Eye Hospital under its health project. Prime Bank Eye Hospital was established in 2012 at House # 82, Road # 8A, Satmasjid Road, Dhanmondi, Dhaka-1209 with the management & technical assistance of Aravind Eye Care System (AECS), one of the centres of excellence in eye care in India.

According to National Eye Care Plan and National Institute of Ophthalmology and Hospital (NIOH), around 250,000 people in Bangladesh are at risk of losing eyesight because of diabetic retinopathy. Also, about 750,000 people in Bangladesh are suffering from blindness. In 2018, PBEH examined 36,917 patients of which 1,677 patients underwent surgery from PBEH which is an indirect contribution to the economic growth of Bangladesh. Among these people, many have joined the employment sector and now are able to contribute to the family. Prime Bank Eye Hospital is indirectly helping to eradicate unemployment and poverty from Bangladesh. Although the percentage of contribution is small, but we all know that “We can do no great things, only small things with great love”.

~Mother Teresa.

Introduction

PBEM

S

PBEH

PCN

D

Cost Recovery Break Even Point

ESP

178 PRIME BANK

ANNUAL REPORT 2018

Education Support Programme (ESP)

From the beginning of Prime Bank’s journey, the Board and management of Prime Bank believed that Corporate Social Responsibility (CSR) should focus on making some return to the society, for which Prime Bank through Prime Bank Foundation subsequently started Corporate Social responsibility, especially in the field of Health & Education.

Scholarship programme is one of the unique programmes in the Education sector of Bangladesh. As part of the uniqueness, ESP was launched in the year 2007. According to a famous quote by Mother Teresa “As Jesus said love one another. He didn’t say love the whole world.” Prime Bank and Prime Bank Foundation understand that country’s growth and development depends largely on the strong educational backbone. Education is the most powerful weapon which can be used to improve the economic growth of Bangladesh, as it is directly linked with alleviating poverty. Bangladesh has the seventh largest population in the world. It is needless to emphasize the immense role; such a huge manpower can play in the economic, social and intellectual development of the country. But poverty and financial hardship is the main reason in the discontinuation rate of higher studies.

Prime Bank Foundation’s Education Support Programme (ESP), is a long term renewable scholarship programme for underprivileged but meritorious students. Eligible students receive monthly stipend that allows them to pursue undergrad/graduation level studies. Our scholarship programme has spread to all the 64 districts of Bangladesh.

Investment through social contribution never fails. It is a hard-edged business decision which is first-rated for a business. As per Bangladesh Bank CSR guideline (GBCSRD circular No-7, dated December 22, 2014) and around 30% (thirty percent) of the total CSR expenditure should be spent in the education sector, including scholarships/stipends for underprivileged but meritorious students of Bangladesh.

As a part of Prime Bank’s CSR activities, this unique programme was launched in 2007 with 170 awardees. Today, after 12 rewarding years, we are proud to say that our ESP has been able to witness the achievement which influenced the lives of 3445 awardees and their family across the country.

In keeping the continuity of the past years’ selection process, the same steps of the previous years were followed this year. Applications were invited from potential underprivileged but meritorious students through advertisements in the country’s leading national dailies. We received 6662 applications from 64 districts of the country. As per selection criteria set by the honourable Advisory Committee, 776 students were primarily selected. After on site & off site Validation Exercises and conducting all other relevant processes, most deserving 291 meritorious students were finally selected for 2018. The first instalment of stipends for all the students selected in 2018 is to be disbursed to their individual accounts through a formal Award Giving Ceremony.

In order to ensure that most deserving students are awarded for the scholarship, PBF has a three member Advisory Committee which is commissioned to develop neutral selection criteria. The Advisory Committee consists of three

distinguished personalities of Bangladesh, namely Prof. M. Q. K. Talukder, Chairman, Centre for Women and Child Health and Chairperson, Bangladesh Breast Feeding Foundation (Chairperson of the Advisory Committee), Prof. Jamilur Reza Choudhury, Educationalist, Vice Chancellor of Asia Pacific University, Former Vice Chancellor of BRAC University (Member of the Advisory Committee) and Ms. Rasheda K. Chowdhury, Director, Campaign for Popular Education (CAMPE), (Member of the Advisory Committee).

The ESP follows guidelines very strictly where gender equality is concerned; the female to male ratio of 3:7 must be maintained to ensure that a sufficient number of both genders receive assistance. Students from all 64 districts of the country are recipients of the PBF scholarship. We can proudly mention that PBF has made a country-wide impact through its commendable initiative and is helping students build a strong foundation for their families’ & society’s future.

With the help of the PBF stipend the first 7 batches from 2007 to 2013 have successfully completed their graduation. In addition to this, more than 1055 out of 1671 passed out awardees are now established in Public & private University & College Teachers/Medical Officers/Engineers/Civil Service & Custom officers/Class-1 Officers/Bankers/Business etc. All these established young people play a key role in helping their family, developing the society and serving the nation.

Ms. Rasheda K. Chowdhury

Prof. Jamilur Reza Chowdhury

Prof. M. Q. K. Talukder

179PRIME BANK

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180 PRIME BANK

ANNUAL REPORT 2018

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181PRIME BANK

Our proud ESP awardees who were uncertain about their graduation. Today! With the help of ESP stipend the awardees successfully completed their graduation and many of them has obtained outstanding result. Some awardees are shown as under:

Name: Md. Anwar HossainPBF ID # 11-1-061Result: 8th PositionSubject: Applied PhysicsInstitution: Pabna University of Science and Technology

Name: Md. Imam UddinPBF ID # 13-1-2-290Result: 8th PositionSubject: Social WelfareInstitution: Dhaka University

Name: Ms. Asia KhatunPBF ID # 11-1-198Result: 1st PositionSubject: Account and Information SystemInstitution: Dhaka University

Name: Ms. Tasmia IslamPBF ID # 13-2-1-203Result: 1st Class 5thSubject: BanglaInstitution: Rajshahi University

Name: Md. Shahin KabirPBF ID # 12-1-2-235Result: 5th PositionSubject: Islamic History and CultureInstitution: Dhaka University

Name: Mohammad Saiful IslamPBF ID # 14-1-1-112Result: 1st PositionSubject: Civil EngineeringInstitution: Chittaong University of Engineering & Technology

Name: Ms. Tandra BagchiPBF ID # 12-2-1-178Result: 1st Class 3rdSubject: Urban & Regional PlanningInstitution: Khulna University of Engineering Technology

Name: Ms. Tasmia IslamPBF ID # 13-2-1-203Result: 4th PositionSubject: Generic EngineeringInstitution: Dhaka University

Name: Mr. Anondo MohonPBF ID # 12-1-1-83Result: 6th PositionSubject: Computer Science and EngineeringInstitution: Islamic University

Name: Md. Shah ParanPBF ID # 14-1-2-251Result: 3rd PositionSubject: Development StudiesInstitution: Dhaka University

Name: Ms. Fahima AkterPBF ID # 13-2-1-167Result: 1st PositionSubject: ChemistryInstitution: Begum Rokeya University, Rangpur

Name: Ms. Sadia AfrinPBF ID # 14-2-2-338Result: 1st ClassSubject: Population Science and Human ResourceInstitution: Dhaka University

182 PRIME BANK

ANNUAL REPORT 2018

Prime Bank recognized and encouraged Sumon Ali and Ms. Shahnaj Parvin for their bravery and outstanding

contribution

Paikpara, a beautiful village looks like a painting coloured in green. It is located in the Hondial Union of Chatmohar Upazila of Pabna. Beside the village, the ‘Chalanbil’ gave a new dimension to the beauty of Paikpara. People from all walks of life visit the place regularly. On 31st August, 2018, in the evening, a group of 22 people came to the ‘Chalanbil’ in Paikpara village to enjoy the boat ride. They climbed on to the roof of the boat to capture the memory for which the boat got stranded at one stage with the load of the people.

Nearby the Chalanbil, Sumon Ali, a student of Class-VII of Hondial Dimukhi High School was sitting on the dike in his tiny boat (dinghy).Confused by the unexpected incident, at that moment, Sumon jumped out of his tiny boat (dinghy) to save the lives of the people. With Sumon’s prompt action, alertness and bravery, he was able to save 17 people with the help of Shahnaj, another comrade in the rescue team.

Suman and Shahnaj are now among the outstanding personalities of the Paikpara village. On September 8, 2018, the “Daily Prothom Alo” gave special appreciation and encouragement to them by publishing an article “Shadharoner Oshadharon Shahosh”. Prime Bank recognised Suman and Shahnaj’s bravery and outstanding contribution. Accordingly, Sumon Ali received a long time monthly stipend under ESP of Prime Bank Foundation. Also, Ms. Shahnaj Parvin received a one-time amount of Tk. 25,000. With the approval of the Board of Directors of Prime Bank/Foundation Management Committee, Chief Executive Officer of Prime Bank Foundation & Deputy Managing Director Mr. Golam Rabbani of Prime Bank Limited along with the help of Mr. Md. Jasim Uddin, Deputy Commissioner of Pabna distributed the recognition through a formal ceremony in Pabna on October 22, 2018. The eventhad a widespread publicity and it was publsihed in the print media.

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f~wgKv:

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Total Contribution Taka: 27,78,09,378.00Financial statement of Education Support Programme

Total Awardees 3445

ESP Expenditure by year

1,292

,556

4,30

1,890

Y-2008Y-2007 Y-2009 Y-2010 Y-2011 Y-2012 Y-2013 Y-2014 Y-2015 Y-2016 Y-2017 Y-2018

37,2

01,8

78

42,7

66,3

84

42,0

43,0

09

37,6

11,3

39

31,9

61,5

36

26,0

81,0

54

18,3

49,8

00

15,7

15,19

3

11,9

55,7

198,52

9,0

20

At a Glance ESP Awardees

Dropped OutAward,

56Recently

Gratuated620

Awardeesnow in

Job, 1051

Passed OutAwardees,

1671

ExistingAwardees,

1718

183PRIME BANK

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Prime Bank English Medium School (PBEMS)

Ten Years of Achievement

Prime Bank English Medium School (PBEMS), one of the initiatives of Prime Bank Foundation started its journey in the

year of 2008 in Uttara. The voyage of establishing a quality and unique English Medium School commenced with the vision to help the society to carry on the paramount level of creativity and individualism which can be transferred to others. In the long run, this helps the community in creating leaders who can build a better future for a nation. Over all these years, PBEMS with its Interactive Methodology successfully completed its 10 year long journey. However, with time, the urge of establishing the school with Cambridge guided all to obtain the approval.

PBEMS’s unique approach of teaching nurtured the project in such way that the project is now sustainable. The first batch of PBEMS students who started their journey in 2008 are now preparing for their O-Level examination in 2019. PBEMS has given a praiseworthy performance in an environment where the vision and mission of the project was difficult to comprehend to the society of Bangladesh. After 10 long years, we can proudly say that we not only dream of becoming self-sustainable, but we already did and initiated some of the work of expansion of PBEMS by planning to hire another campus of the school.

The year 2018 was a year of great achievement as PBEMS obtained the Cambridge Approval under British Council. We have finally proved that PBEMS is a quality English Medium School with low cost. Also, PBEMS has obtained the approval from Primary Education and Dhaka Board. The quality of education of PBEMS has not only been recognized by International Body but also by the government of Bangladesh. In line with the projection, PBEMS got the approval from the Board of Prime Bank Limited to open another campus after completion of 2019.

“Achievement” has come in the path of PBEMS as the integrity of the school has been seen and approved by international and local governing bodies. In the starting of its journey, PBEMS envisaged to bring out the best of the method and curriculum in our country. Prime Bank English Medium School would like to thank Prime Bank, Prime Bank Foundation and all its well-wishers, without them the journey of a decade and achievements would not have been possible. Our project is an example for others and eventually it has been able to achieve the common vision of the management, Prime Bank, Prime Bank Foundation and the society.

PBEMS is now registered as a Cambridge International School

184 PRIME BANK

ANNUAL REPORT 2018

From the Desk of the Principal, PBEMS

The one year journey with Prime Bank English Medium School for me has been an exciting, engaging and requiring abundant energy. Resilience is definitely a common value that most people in Bangladesh possess and is to be admired.

Confidence is one of the attributes of PBEMS teachers, staff and students.  What we are most confident about is that there is a great future for the school.  Everyone involved with PBEMS is confident that together we can continue to build on what is already a great place for students to grow and learn.

Innovation is one of the attributes of the Cambridge teacher and learner.  You might ask how we are innovative. The model for our English Medium School encourages students to interact with each other and the teaching methodology engages the students in the learning process. To be engaged in the learning process is another attribute that allows PBEMS students to experience hands on learning opportunities and be more involved with the community and service. As a responsible human being, the students are learning to value authenticity

and we expect them to demonstrate responsibility for learning, for their actions and for the environment.

Reflecting on the year 2018, I have reflected on the bigger picture of PBEMS and what we need to do to continue to grow and develop the school in a purposeful and innovative direction. In the year 2018, the focus was on establishing the foundation of the school by determining the quality of the school. In order to make the journey of accomplishment memorable, I needed the support of all my team members and Prime Bank Foundation to obtain the registration of the school as a Cambridge International School from the British Council. It was a challenging time for the school, as the team needed to include and upgrade more facilities within the budget. PBEMS compared to other English Medium Schools has an element of difference, as it is one of the CSR projects of Prime Bank Foundation. The policy, guidelines and requirements of Cambridge, does not compromise with any of the prerequisites, including the financial ability of a school. The need to have all the physical facilities was given priority. Also, the registration of Primary Education and Dhaka Board was one of the important necessities. Teaching and learning was an emphasis and through hard work and dedication by the staff from both campuses, Cambridge syllabus was planned and implemented as a written, taught and assessed curriculum. Ongoing Professional Development in teaching and learning strategies aligned with Cambridge, was another focus. Finally, through hard work, satisfying the requirements and submitting all documentation, PBEMS finally obtained the Cambridge approval in November 2018. Now, we have verification that PBEMS is a quality English Medium School, which has been approved by National and International Bodies.

I believe that resilience is one of the most important attributes for anyone to acquire. I have become extremely resilient - I have to bounce back when maybe I have not achieved what I set out to do within a timeframe. But one of the most important things I have learned that I cannot achieve on my own - I need my team and the support of the wider community and Prime Bank Foundation.  As they say there is no ‘I’ in TEAM. I would like to take this opportunity to thank all of the staff, parents and students of PBEMS and also the Foundation for the support I have received in 2018.

Helen SalmonPrincipal (till Dec 2018),Prime Bank English Medium School

PBEMS is now registered under Dhaka Education Board

PBEMS is now registered as a Cambridge International School

Principal of PBEMS interview was published in The Daily Jugantor

185PRIME BANK

Commencement of a New Beginning….

Reean Rahman John of Class-10, a student of PBEMS Uttara, shared his views about his beloved school PBEMS. I am with PBEMS Uttara since 2011. “According to me, PBEMS gave me the perfect platform and the opportunity to explore and learn with the help of the Interactive Methodology. I would like to share that my respected teachers guided me in a way that now I am more focused in life and have the intention to become a global responsible citizen of Bangladesh. From extracurricular activities, physical education, project work, building moral values and obeying the elders, all these have guided me to develop my future and be determined in whatever I am engaged with”.

“Now in 2018, everything changed during the end of my junior year of school. I have started giving advice to my peers on what subjects they should take for their O and A-Level examination.

I also give advice to my sister on her projects and if there is any gap in her assignments, I ask her to study. Even though I stress her out sometimes, I knew it came with love. My parents; Mr. Anisur Rahman and Mrs. Umme Salma Rahman have been telling how my sister is jealous over my social enhancement and my English language skills. PBEMS helped me to visualize my aim to study in a quality English Medium School. I would be thankful to Prime Bank English Medium School for providing affordable fees which have made my dream come to reality. PBEMS also taught us the skill of compassion and being appreciative of others. At PBEMS, we have been educated that caring for someone cannot be based on conditions, it is something we do out of moral values”.

Finally I would conclude by asking for best wishes from all so that we graduate from school with flying colours in O-Level examination-2019.

186 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Eye Hospital (PBEH)

We are also in the field of success…

Prime Bank Eye Hospital (PBEH), one of the best ophthalmic and modern hospitals, located at House # 82, Road # 8A, Satmasjid Road, Dhanmondi, Dhaka-1209. Prime Bank Eye Hospital is a health project of Prime Bank Foundation (a CSR wing of Prime Bank Limited). The hospital started its journey in the year 2012 and is now able to provide all kinds of eye treatment services to the patients. By this time, Prime Bank Eye Hospital is already established as the hospital of choice among the patients. Since inception, this hospital is operating under the guidance of Aravind Eye Care System (AECS) as the management & technical partner of PBEH.

In the year 2018, among the three projects, Prime Bank English Medium School and Prime College of Nursing Dhaka, are now sustainable projects of PBF. Not only did the projects reach the point of sustainability, they are now contributing to some of the activities of PBF and also supporting themselves.

Prime Bank and Prime Bank Foundation believes that sustainability is achievable if there is a social and financial return from our CSR projects. When a hospital becomes sustainable, its desire to help the society for a life time is fulfilled. Reflecting on this, the need for making the health project sustainable arises. As PBEH is now a partially subsidised project, the hospital feels more pressurised to accomplish sustainability in order to be considered as an independent and recognised hospital in the health sector of Bangladesh.

From the year 2012, PBEH has been facing crucial time to provide reduced rate of eye care services to the poor. One of

the mandates of PBEH is to provide eye care services to both rich and poor. In the year 2018, PBEH performed 665 walk-in and 1012 camp surgeries. The cost associated with the camp surgeries was Tk. 33,88,936/-. On the other hand, the cost associated with walk-in surgeries was Tk. 38,29,612/-. In return of the services, PBEH incurred almost the same amount of cost to perform both camp and walk-in surgeries. Whereas, 43% revenue was achieved from walk-in and on the other hand 12% was achieved from camp surgery. The same amount of service was provided to the rich and the poor as it is one of the mandates of PBEH. So, the requirements of the hospital and the patients do not compromise with any of the provisions, including the financial ability of PBEH. The hospital had to set up its prices of different surgical procedures, investigations and pathological tests based on the requirements of daily patients and the catchment area. Every year, PBEH incurs a huge operating cost in order to provide the services with a comparatively lower priced fee. Therefore, it becomes challenging for PBEH to offer discount to the prices and maintain the financial sustainability which is an obstacle in generating enough revenue for the hospital. As PBEH provides services to all categories of patients in the country, the prices were set according to the financial solvency of the patients. In some cases, more than 60% discount is given for surgical procedures of the camp and walk-in poor patients. The average discount of all surgical procedures for the poor patients is almost 40%. The annual loss for offering such discounts is huge which definitely has some negative impact to enable PBEH to stand on its own feet. However, as per the trend of subsidy of PBEH, it is certain that the hospital is also on the verge of success with the directive ÒcÖwZw`b †`Le †fvi, bZzb Av‡jvq...Ó|

Some Statistics of Prime Bank Eye Hospital (2018)

In the year, Prime Bank Eye Hospital (PBEH) examined a total of 36,917 patients (pts). Of them, 22,552 patients were walk-in, 10,567 patients were from outreach eye camps and the rest 3,798 patients were examined at the Vision Centre, Narayanhat, Chattagram.

In 2018, the income growth of PBEH shows that it increased from 21% to 77% over the last six years because the amount of subsidy is gradually decreasing by year. The decrease in subsidy occurred due to increase in patient & increased number of surgeries.

187PRIME BANK

Walk-in Patient’s Surgery

Y-2012

147

250

391

504

698665

Y-2013 Y-2014 Y-2015 Y-2016 Y-2017 Y-2018

524

Walk-in Patient Examination

Y-2012

5676

9042

11900

15481

1890620211

22552

Y-2013 Y-2014 Y-2015 Y-2016 Y-2017 Y-2018

50000

45000

40000

35000

30000

25000

20000

15000

10000

5000

0

Camp Patient ExaminationY-2012 Y-2013 Y-2014 Y-2015 Y-2016 Y-2017 Y-2018

Y-2012

1497

2644

Camp Patient Surgery

3000

2500

2000

1500

1000

500

0

395 468700

1012

Y-2013 Y-2014 Y-2015 Y-2016 Y-2017 Y-2018

93

Note: In 2013 and 2014, camp patients were high as PBEH conducted 55 additional eye camps fully sponsored by Prime Bank Limited. Similarly, camp patients’ surgery was also high.

188 PRIME BANK

ANNUAL REPORT 2018

A Letter of a Patient to CEO, PBF

Respected Sir,

I am Md. Shahjahan Chowdhury. I am currently an UN retiree residing in Dhanmondi. Fortunately

or unfortunately, I have had three Operations in  three different hospitals namely, Square Hospital for

Orthopaedics Surgery,  Japan Friendship Hospital for Recta; Surgery and Prime Bank Eye Hospital for

Cataract Phaco Surgery at Satmasjid Road, Dhanmondi 15, Dhaka.  But I have been blessed to have

undergone my surgery at Prime Bank Eye Hospital.

Dr. Anthony Albert, who did my Cataract Phaco Operation, was a very peaceful, gentle and helpful person.

As a doctor, he handled my case with precision and care. I don’t think I could have met a better doctor

than Dr. Anthony.

The Counsellor on call, Dilruba Sultana, was an exceptionally cooperative, supportive and a cheerful

person at all times. She helped me to sort out my documents and enabled me to easily carry out the

hospital procedures.

The concerned support staff Stela, Jaya and Rina Dey of the hospital took care of my basic requirements

and catered to my various needs whenever required. I am very satisfied and content with my stay and

operation at Prime Bank Eye Hospital. And I hope your esteemed organisation will continue to deliver high

quality service in the future as well. I am extremely pleased with your hospital’s service and will definitely

recommend your hospital to family and friends.

Thanking you,Md. Shahjahan ChowdhuryCataract Phaco Patient

189PRIME BANK

Prime College of Nursing, Dhaka (PCND)

In the past years, Bangladesh has achieved tremendous success in the health sector. As a Nursing College in Bangladesh, we can proudly mention that Prime College of Nursing, Dhaka (PCND), an initiative of Prime Bank Foundation, is a part of this success as well. PCND’s aim is to make qualified and skilled nurses in Bangladesh. The college is proud to portray nursing as a prosperous profession in every corner of the country.

PCND was established in January 2013 and in the past six years of PCND since inception was well heeled. The journey started with 29 students and now the number of students in the 1st-2nd-3rd year of college stands to 137. PCND is uncompromisingly offering standard nursing education under the guidance & supervision of Dhaka University (DU) & Bangladesh Nursing and Midwifery Council (BNMC). A total of 121 “Diploma in Nursing Science & Midwifery” graduates are currently working in different public & private healthcare service delivery centres in Bangladesh at Medical College & Medical university/division/district/upazila level and private hospitals: Square, Apollo, Asgar Ali, and United Hospital etc. They have held the reputation of the PCND at every step of their work.

In both public and private sectors, students are making the name of the PCND proud. All the faculty members of PCND feel proud to mention that in 2018 a remarkable number of students have got the opportunity to join as the Govt. 2nd Class Officer and posted at different Public Medical College Hospitals including Bangabandhu Sheikh Mujib Medical University (BSMMUH), District level general hospitals and Upazila level Health Complexes.

To take this success further, two new feathers have been added to the crown as the great achievement in the year 2018. During the year, PCND obtained the affiliation of Dhaka University to offer two B. Sc. Nursing Courses: B. Sc. in Nursing (4 years) and Post Basic B. Sc. in nursing (2 years). Post Basic B. Sc. in nursing course already started from July 2018. A total of 30 students have enrolled in B. Sc. in nursing course under the govt. unified exam system by Directorate General of Nursing and Midwifery (DGNM) for the session 2018-19. Their classes will start from January 20, 2019.

The year 2018 was also the milestone of PCND for its achievement as a self sustaining project of PBF. During the period from 2013 to 2017, PCND expended/invested a total of Tk. 5.86 crores. As per projection of PCND, it is expected that its sustainability will be strengthened gradually. Accordingly, PCND will be able to pay back the total expended amount (Tk. 5.86 crores) by 2024 enabling PBF to invest needed for its vertical and horizontal expansion of its existing/new activities.

PCND has already achieved a high ranking position among other nursing colleges and institutes in Bangladesh. To keep the reputation ahead, all the faculty members and staff of PCND are working with full of devotion and dedication. PCND is committed to work persistently for providing standard nursing education and make students as qualified and efficient future nurse.

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190 PRIME BANK

ANNUAL REPORT 2018

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191PRIME BANK

New Initiative of Prime Bank Foundation

In order to implement Prime Bank Board’s/Foundation Management Committee’s approved wish-list of supply-side financing initiatives/enterprises on Prime Bank Foundation’s

own land at Ashulia, Savar, Dhaka; a partnership has been formed between Symon Capital Trust (SCT), an Australia based International Corporate Advisory Firm, specialising in Impact Investment, Capital Raising & International Development Assistance and Prime Bank Foundation (PBF). Accordingly, a Memorandum of Understanding (MOU) for partnership was signed between SCT and PBF on July 9, 2018 to develop an impact investment health services strategy, setup a medical college and multi-purpose hospitals on PBF’s land at Ashulia, Savar, Dhaka, Bangladesh. This MOU has been designed to establish the mentioned infrastructures and operations after consultation and completion of feasibility studies.

Prime Bank Cricket Club (PBCC)

Prime Bank believes that sports is not only a source of pure entertainment but also is connected with the mental and physical health, and the character development of the nation. As a whole, Prime Bank has long been a patron of culture in Bangladesh, having sponsored sporting events over many years. Cricket, no doubt, is a passion of the entire nation.

Along with the health and education sectors, Prime Bank also focused on cricket because it is popular in Bangladesh and helps our country to maintain an image as one of the important cricket nation. In this regard, Prime Bank Cricket Club (PBCC) was established in November 2011 by acquiring a club of Dhaka Premier Division. In the year 2018, PBCC participated in Bangladesh Cricket League (BCL) and was the winner in the tournament. PBCC also performed in Dhaka Premier League (DPL).

The MOU was signed between Prime Bank Foundation and Symon Capital Trust

Winner of BCL 2018-2019

CSR contribution Conducted Directly by PBL

Description of initiatives(Jan-Jun, 2018)

Amount of Expenditure

(in BDT)

1) Donation to Society for the Welfare of Autistic Children (SWAC) for continuing yearly salary of Occupational Therapist.

5,00,000/-

2) Donation to Bangladesh Thalassaemia Hospital.

1,00,000/-

3) Donation to BAPLC in connection with owning an office space.

10,00,000/-

4) Donation to Prime Minister’s Relief & Welfare Fund.

50,000,000/-

5) Donation to SWAC for the 11th World Autism Awareness Day Celebration Program-2018.

1,00,000/-

Total = 51,700,000/-

192 PRIME BANK

ANNUAL REPORT 2018

Description of initiatives(Jul-Dec, 2018)

Amount of Expenditure

(in BDT)

Education

Donation to Central Women’s College to build a female common room

300,000.00

Donation to Old Faujians Association for procuring micro bus

500,000.00

Donation to Chittagong Independent University regarding a research on ‘Expansion & Profitability’

20,000.00

Health

Donation to Mr. Mohammed Syed Noor for his own Medical Treatment

50,000.00

Others

Donation to 50,000pcs Blankets to Prime Minister’s Relief Fund.

1,97,10,000.00

Donation to 18,000pcs Blankets for underprivileged People through PBL Branches.

70,95,600.00

Donation to Debhata B.B.M.P Govt Institution for celebrating 100years of anniversary.

100,000.00

Donation to Tea Planters & Traders Association of Bangladesh, Sreemangal for installing 5 units Air Conditioners.

922,000.00

Donation to BAB (Bangladesh Association of Banks) for implementation of cultural development projects by concerned ministry of the Government.

53,60,000.00

Donation to Kara Odhidoptor for inauguration of the Book ‘Tin Hajar Tipanno Din’

10,00,000.00

Total 350,57,600.00

Strategic Goal 1Make education more accessible for all

• Prime Bank Foundation’s scholarship programme has been able to reach out to the poor but meritorious students from all sixty four districts of the country. Education Support Programme (ESP) has been successful in bringing change to the society. With the contribution of ESP, students graduated on time are now employed in a respectable position.

• Prime Bank English Medium School has been able to give a student the learning of moral development. As a result, these students have a positive perception towards life.

• Prime College of Nursing, Dhaka also has been able to witness the accomplishment as the students who graduated in the 1st and 2nd batch are employed in renowned hospitals in Bangladesh.

Strategic Goal 2Make health more accessible for all

• Prime Bank Eye Hospital is continuously helping the people in need of proper eye care service. The hospital looks after every patient as it is both for the rich and the poor at the same time.

Strategic Goal 3Build a strong and dynamic organisation, capable of facilitating effective education, eye and other components of the health programme

Our capacity development venture is envisioned to establish learning processes and methodically systematize information flow, experiences, best approach and lessons learned at project level and the organisation we work with.

We aim to institutionalize the values of being a responsible corporate citizenship into the way of doing business and to professionalize the practice of CSR.

Monitor, measure and report on the impact of the work that we do.

Implemented information sharing and communication systems to lead our people and programmes.

Increased efficiency in managing organisational resources.

Continued building capacity of project staff and systems to support our target people.

Strategic Goals

193PRIME BANK

The word “Green Banking” has been conceptualized to implement the broader concept like sustainable development. “Sustainable Development” is development that meets the needs of the present without compromising about the ability of future generations to meet their own needs. Various global initiatives are underway to counter the adverse effects of development such as global warming and climate change. Banks can play an instrumental role in these global efforts to make the planet a better place for livelihoods.

“Green Banking” means operating banking business in such a fashion that proper and adequate attention is allocated in social, ecological and environmental factors of environment by minimizing conservation of nature and natural resources. “Green Banking” is a form of banking taking into account the social and environmental impacts and their main objects are to safe-guard and conserve the environment. As the intermediary of financial sector, banks can ensure that business entities adopt environment-friendly practices. The main objective is to reduce carbon footprint from banking operations as well as from financed projects.

Bangladesh Bank’s initiatives

The Sustainable Finance Department of Bangladesh Bank is engaging and encouraging all Banks and NBFIs to expedite their green banking initiatives and standards. The necessary policy guidelines and strategies for Banks and NBFIs have been disseminated by the central bank which encompasses policy formulation and governance, incorporation of environmental & social risks into credit risk management, in-house environmental management, introduction of green finance, creation of a climate risk fund, capacity building through training and awareness along with periodical regulatory reporting on green banking practices.

With a view to incorporate sustainability in the financial sector; Bangladesh Bank undertook its first initiative during the year 2011 by introducing Green Banking Policy Guideline for the Banks (vide BRPD Circular No. 02 dated February 27, 2011) and later during the year 2013 it was made applicable for the NBFIs (vide GBCSRD Circular no. 04, dated August 11, 2013). In that policy guideline, Bangladesh Bank instructed the Banks and NBFIs to formulate green banking policy and establish a separate green banking unit/cell with an aim to evaluate and manage the activities related to green banking. Afterwards, Bangladesh Bank vide its GBCSRD Circular No. 08 dated December 24, 2013 instructed the Banks to assign the Risk Management Committee of the Board of Directors to supervise the overall green banking activities of the Bank.

Moreover, the Government of Bangladesh has taken initiatives to implement Sustainable Development Goals (SDGs) at national level which was announced by the United Nations to implement at global arena. In line with that, Honorable Prime Minister of Bangladesh has also instructed all to participate in combined manner to accomplish SDGs. In this connection, to bring stability in financial sector, Bangladesh Bank has

instructed the Banks & NBFIs (vide SFD Circular No. 02 dated 1st December, 2016) to:

i. Establish a Sustainable Finance Unit

ii. Establish a Sustainable Finance Committee chaired by senior most Deputy Managing Director.

iii. Ascertain the Terms of Reference (TOR) set by Bangladesh Bank for Sustainable Finance Unit and Sustainable Finance Committee in the Bank.

iv. Risk Management Committee (RMC) of the Board of Directors to oversee the formulation of policy, set strategies and programs and monitor the overall activities related to Sustainable Banking and Sustainable Finance (Green Banking & CSR) programs.

As a regulatory body of the Banking sector, Bangladesh Bank introduced Environmental & Social Risk Management (ESRM) framework for Banks and NBFIs. The framework includes the environmental & social risk management factors for ensuring the sustainable development and protection of the surroundings from further deterioration.

To promote Green Banking, Bangladesh Bank has declared the following preferential treatments for the compliant banks:

• Points to be awarded on management component while computing CAMELS rating resulted ultimately in overall rating of the Bank;

• Top 10 (ten) Banks’ name to be declared in the Bangladesh Bank website.

• Consideration will be given while according permission for opening new Branch of the Bank.

Bangladesh Bank also, vide GBCSRD Circular No. 04 dated September 04, 2014 instructed all scheduled banks to allocate 5% of its total funded disbursed loan for BB enlisted 52 (Fifty-two) Green products.

Prime Bank’s commitment

Prime Bank Limited believes in eco-friendly and socially responsible banking system which drives the whole nation towards a healthy environment and presents an excellent and hazardless banking. In order to protect and balance the environment, Prime Bank is spreading its wings by introducing both in-house & external Green activities towards supporting Green Economy.

Green Banking Governance at Prime Bank

As per instruction of Bangladesh Bank vide SFD Circular No. 02 Prime Bank Limited has established Sustainable Finance Unit (SFU) under CRM Division. Moreover, a Sustainable Finance Committee has been established which is chaired Deputy Managing Director & Chief Risk Officer. The Risk Management Committee (RMC) of the Board of Directors is to approve policies, strategies and programs related to Sustainable Banking and Sustainable Finance (Green Banking & CSR) programs.

GREEN BANKING REPORT

194 PRIME BANK

ANNUAL REPORT 2018

Sustainable Finance Unit (SFU): As per BB SFD Circular No. 02, Prime Bank established SFU under direct supervision of Head of CRM Division. The ToRs of SFU are as under:

• Formulation, amendment and implementation of Green Banking policy, Green Office Guide, E&S Risk Management Policy and other related policy

• Participation agreement signing and applying Refinance from BB

• Support in annual budget preparation & escalation• Provide necessary assistance to internal & external

stakeholders• Assisting Sustainable Reporting Committee (SRC) & FAD in

preparing Annual Sustainability Report• Conduct SFC Meeting regularly• Update RMC of the Board on quarterly basis regarding

Sustainable Banking• Regulatory & Internal Reporting

Sustainable Finance Committee (SFC): As per BB SFD Circular No. 02, Prime Bank established SFC chaired by DMD & CRO. The ToRs of SFC are as under:

Approve, monitor & evaluate the activities of Sustainable Finance Unit at management level.

Set annual objective of Sustainable Finance Unit and evaluate its performance.

Ensure appropriate coordination and support among all relevant division of the Bank to accomplish the activities of Sustainable Finance Unit.

Green Banking Policy of Prime Bank

In line with Circular No.02 dated February 27, 2011 of Banking Regulations & Policy Department, Bangladesh Bank; Prime Bank Limited outlined a comprehensive Green Banking Policy for implementing Green Banking activities. The updated Green Banking Policy of the Bank which was revised during year 2018 is in place which is duly approved by the Board of Directors and circulated vide instruction circular among all employees.

Green Office Guide of Prime Bank

As part of Prime Bank’s continuous effort of positively upholding the Green Banking initiatives, the Bank has developed Green Office Guide as a general guideline to facilitate the Green Banking objectives of the Bank. The Green Office Guide has pictorial demonstration for better understanding of the readers. The updated Green Office Guide of the Bank which was revised during year 2018 is in place which is duly approved by the management of the Bank and circulated vide instruction circular among all employees.

Major In house Green Banking Initiatives taken by Prime Bank Ltd

Prime Bank is aligned with Green Banking values. Here are some initiatives that we already have taken with a view to practice Green Management in the offices.

Solid waste management: 3R approach (Reduce, Reuse and Recycle) has been advised for lowering solid waste. However, careful management and disposal of solid waste has been advised.

Energy & water management: The Bank has advised the officials to adopt energy and water efficient practices. The officers have been advised to put emphasis to ensure efficient use of gas, fuel, electricity and water with a view to reduce carbon emission. Energy efficient equipments like energy saving bulbs, products with ecofriendly features are being used in the office.

Paper Consumption Management: Green Printing Guideline is an integral part of our Green Office Guideline which is being circulated among all employees. Internal communications are done through emails. All staffs have dedicated email IDs for office use. Customer communications are being done through emails, SMS or ATM displays also. Use of scrap or one side used papers has become usual practice in the workplace. One side used papers are also used for printing draft copies of the office assignments. All divisions and branches have been instructed to maintain a stock in-out register to prevent misuse of papers.

Renewable Energy Usage: Up to year 2018, the Bank has installed solar panels at 36 branches as well as at 4 ATM booths and as part of its commitment to the usage of renewable energy resources.

Green Travel: Prime Bank always encourages the officials to consider the following green approaches while travelling:

• Encourage employees to use Public Transport/Carpool Program.

• Encourage employees to use eco-friendly energy for private vehicles.

Online Banking and Internet banking facilities offered by Prime Bank

Online banking system is a great way to reduce paper consumption. Prime Bank has been one of the pioneers in introducing online Banking and it covers 146 branches. All the 146 branches of the Bank are providing online banking facilities through its core banking system namely “Temenos T24”. Fund Transfer to Other bank’s Accounts through BEFTN has been made available through Online Banking for the Consumer Banking Customers. As a result, customers can execute fund transfer through paperless and automated Online Banking over internet to any other account in Bangladesh.

Prime Bank Limited has also offered a safe and convenient Internet Banking, which is accessible 24/7. By using real-time internet banking our customers can avail services like balance enquiry, view account statement, view loans & deposit of their own, insurance premium payment, mobile & utility bill payment.

Automated Teller Machine (ATM)

In addition to the Bank’s own 164 ATMs, the Bank has joined National Payment Switch Bangladesh  (NPSB) network during the year 2014, which enabled the cardholders of the Bank to enjoy cash withdrawal facility from other ATMs under NPSB Network. Prime Bank uses the BACH and BEFTN mechanism for convenient payment activities which to a great extent supports the concept of green banking.

195PRIME BANK

Capacity Building initiatives taken by Prime Bank

For continuous capacity building of our human resource, all the foundation training courses organized by our HR-Training & Development Center has dedicated session to familiarize the participant with the concept related to Green Banking & sustainability.

Green Event organized by Prime Bank

Earth Day 2018: On 22nd April 2018 to celebrate “Earth Day”, Prime Bank arranged tree plantation program by planting trees at branch premise.

World Environment Day 2018: To observe World Environment Day on 5th June, 2018 an advertisement for print media was developed and published in leading daily newspapers. The theme was “Beat Plastic pollution” .

Green Carnival

Free Altitude subscription for one year (22 April – 31 May 2018): Alternate Delivery Channel (ADC) Division offered internet banking “Altitude” subscription fee (which is BDT 575 including vat) free for 1st year during 22 April -31 May 2018 and communicated about this offer to the valued accountholders by giving an SMS and displaying message on ATM screens. The outcome of the campaign was quite impressive.

Pot Bonsais to customers (22 April – 15 May 2018): Distributed number of pot bonsais among selected valued customer through Branches Network Division as a token to create awareness during 22 April 2018 - 15 May 2018.

Green Marketing performed by Prime Bank

As part of Green Marketing, Prime Bank commenced the mandatory use of jute in product packaging. Prime Bank Limited has been using its official website for advertising new products as well as the features of existing products to capture the market and also it will penetrate to get new customers. Prime Bank Limited also conveys various offers of different Credit Cards through SMS.

Field Visit to explore green financing opportunity: Member of SFU accompanied Agriculture Support Division and visited different areas of Natore & Rangpur during mid-September of 2018 to explore the opportunity of Green Finance. The team visited several poultry farms, dairy farms and solar irrigation pumping project. During the visit, the officials met & discussed with relevant stakeholders from different sectors including entrepreneur/farm owners.

Financing in Green projects by Prime Bank

Green financing could be one of the suitable opportunities to diversify the bank’s business. It is also sensible initiative to keep our environment better. Prime Bank is committed to promote sustainable growth in the economy. We have launched 52 lending products to support green and efficient energy projects. Prime Bank has financed various projects which are environment friendly. During 2018, the Bank has financed a total of 33.57 Crore in green finance of which BDT 28.72 crore for installation of ETP in 04 projects, BDT 2.80 crore in 06 Eco Friendly Brick Production projects, BDT 7.86 Lac in a solar system project, BDT 1 lac in two bio-gas plant in existing Dairy & poultry Farm, 1.96 crore in a LED Bulb/Tube Assembly Plant. In addition to the above, to explore new ventures in environment friendly projects, the Bank has conducted field visit, meetings with existing and prospective entrepreneurs and Central Bank officials. The outcome is positive and we aspire to see the ultimate outcome of this endeavor.

Disclosure and Reporting of Green Banking Activities Green by Prime Bank

Prime Bank has been regularly reporting its Green Banking Activities to Bangladesh Bank on quarterly basis since 2011. Moreover, there is a detail section namely “Sustainable Finance” in Bank’s official website for disclosing our Green Banking activities. Prime Bank has been reporting Sustainability Report based on the GRI framework as benchmark to show organizational performance with respect to laws, norms, codes, performance standards and voluntary initiatives; demonstrate organizational commitment to sustainable development; and compare organizational performance over time. It is mentionable that, Prime Bank has been awarded as  “GOLD “Rank in  Asia Sustainability Reporting (ASR) Rating for Sustainability Report-2017 by the National Center for Sustainability Reporting (NCSR), Indonesia.

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We understand that our ability to succeed ultimately depends on our culture and ensuring it holds everything we need to deliver: our strategies from performance and compliance to stewardship and responsibility. As an important determinant of the culture, we wish to build dynamic and engaged leadership teams who are charged with, living the Bank’s values each day and holding themselves accountable and responsible for the business, celebrating success and learning from their mistakes.

CORPORATE CULTURE

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Capital planning should be in tune with the business plan of a bank at present keeping in mind the desired business plan for the future. It should follow a forward looking approach taking into consideration, the target growth, target ROE and target CRAR (to cover both Pillar 1 and Pillar 2 risks). To achieve the objective, capital planning should be an integral part of ICAAP which is reviewed by the central bank every year to assess whether Bank has adequate quality capital in line with its strategies.

Capital planning is a dynamic and ongoing process that, in order to be effective, is forward-looking in incorporating changes in a bank’s strategic focus, risk tolerance levels, business plans, operating environment, or other factors that materially affect capital adequacy. Capital planning assists the bank’s Board of Directors and senior management to:

1. identify risks, improve their understanding of the bank’s overall risks, set risk tolerance levels, and assess strategic choices in longer-term planning;

2. identify vulnerabilities such as concentrations and assess their impact on capital;

3. integrate business strategy, risk management, capital and liquidity planning decisions, including due diligence for a merger or acquisition and

4. have a forward-looking assessment of the bank’s capital needs, including capital needs that may arise from rapid changes in the economic and financial environment.

The most effective capital planning considers both short-term and long-term capital needs and is coordinated with a bank’s overall strategy and planning cycles, usually with a forecast horizon of at least 5 years. The capital planning process should be tailored to the overall risk, complexity, and corporate structure of the bank. The bank’s range of business activities, overall risks and operating environment have a significant impact on the level of detail needed in a bank’s capital planning. A more complex institution with higher overall risk is expected to have a more detailed planning process than an institution with less complex operations and lower risks. While the exact content, extent, and depth of the capital planning process may vary, an effective capital planning process includes the following components:

a. Identifying and evaluating risks ;

b. Setting and assessing capital adequacy goals that relate to risk;

c. Maintaining a strategy to ensure capital adequacy and contingency planning ;

d. Ensuring integrity in the internal capital planning process and capital adequacy assessments.

Our approach to capital management is driven by our strategic objectives whilst ensuring that the regulatory requirements, capital targets and risk appetite are met at all times across the Bank. Effective capital management is fundamental to the sustainability of the Bank. As such, the Prime Bank proactively manages its capital position, capital mix and capital allocation to meet the expectations of key stakeholders such as regulators, shareholders, investors, rating agencies and analysts whilst ensuring that the return on capital commensurate with risks undertaken by respective business units and subsidiaries.

How Do We Managee Capital at Prime Bank

The Prime Bank’s approach, to managing capital in line with Basel-3 and other risk management frameworks, is approved by the Risk Management Committee (RMC) and the Board and includes amongst others:

Capital Management Framework

The Capital Management Framework comprises the governance, policies and procedures which set out the requirements for effective management of capital at Prime Bank level and its entities, including identification, assessment, monitoring, managing and reporting of any capital matters to relevant committees such as RMC and the Board. The Capital Management Framework contains the basis for setting of internal capital targets and also the principles for the development and usage of Risk Adjusted Return on Capital (RAROC) to measure and manage the return on capital across the Bank.

Capital Contingency Plan

The Capital Contingency Plan is to ensure robust monitoring of capital position and provides a framework for effective governance and escalation process in the event of a capital crisis. The Capital Contingency Plan also formalizes the basis, strategies and action plans to restore capital to required level in the fastest possible time without affecting business plans, assets growth and strategic agenda.

Annual Capital Plan

The Annual Capital Plan involves detailed planning of the Bank’s regulatory capital to highlight the capital projections, capital requirements, levels of capital and capital mix to support the Bank’s business plan and strategic objective.

Capital Structure

Prime Bank holds a significant amount of its capital in the form of common equity which is permanent and has the highest loss absorption capability on going concern basis. In addition to common equity, there are some other components like share premium, statutory reserve, retained earnings etc. in the core capital. The Bank also maintains subordinated debts in order to optimize capital mix and reduce overall costs of capital.

Capital to Risk Weighted Asset Ratio

As per Basel III guideline, Banks are required to maintain ‘minimum Total Capital Ratio’ of 10% including ‘Common Equity Tier-1 Capital Ratio’ of 4.50%. Additionally, Banks have to maintain ‘Capital Conservation Buffer’ of 2.50% by the end of the year 2019. There are some phase-in arrangements for Basel III implementation by the Bangladesh Bank which allow the Banks to maintain ‘Capital to Risk Weighted Asset Ratio (CRAR)’ at 11.25% & 11.875% by the end of 2017 & 2018 respectively. Prime Bank has already been able to maintain CRAR at 17.04% at the end of 2018. As a result of our efficient Balance Sheet management, the Bank has consistently been maintaining all Basel ratios after release of Action Plan/Roadmap for implementation of them by Bangladesh Bank.

CAPITAL PLAN

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What is Environmental & Social (E&S) Risk in financing?

Environmental & Social (E&S) risks are the potential negative consequences on the natural environment (air, water, soil, nature, animals or valuable sites) or community people (e.g. employees, customers, local residents) due to business operations.

Environmental Risk Management (ERM) Guideline:

In order to incorporate “Environmental Risk” in overall credit/investment management, Bangladesh Bank issued ‘Guidelines on Environmental Risk Management (ERM) for Banks and Financial Institutions in Bangladesh’ vide BRPD Circular No. 01/2011. Guideline on ERM has been a pioneering initiative from any central bank or financial sector regulatory body all over the globe in context of addressing environmental risk in the process of credit management in banks or financial institutions. Prime bank adopted the ERM policy as provided by Bangladesh Bank and incorporated it in the credit policy in 2011.

Evolution of Environmental & Social Risk Management (ESRM) Guideline from Environmental Risk Management (ERM) Guideline:

During  2017, Bangladesh Bank introduced “Guidelines on Environmental & Social Risk Management (ESRM)” for Banks and Financial Institutions with an Excel-based Risk Rating Model and circulated vide SFD Circular No. 02 dated February 08, 2017. The ESRM Guideline had replaced the Guidelines on ERM. Moreover, vide the same circular, Bangladesh Bank had declared that, year 2017 to be treated as phase-in period for implementation of ‘Guidelines on ESRM’ and from January 01, 2018 ‘Guidelines on ESRM’ to be enforceable under Bank Company Act, 1991 and Financial Institutions Act, 1993.

In 2014, long before Bangladesh Bank circulated the final ESRM guideline, Prime Bank took initiative to strengthen the then ERM guideline and expand the area from environmental risk management to environmental and social risk management considering both national and international standards.

The revision work in 2014 started with the help of a foreign consultant namely FI Konsult of Czech Republic under the background of Prime Bank borrowing some fund from FMO, a Netherlands based development bank.

During the policy revision series of meetings and consultations were held and with the help of the consultant in line with Bangladesh Bank guidelines, Prime Bank with its active co-operation drafted two (2) important documents namely “Environmental & Social (E&S) Risk Management Policy Statement” and “Environmental & Social Risk Management Procedure Manual”. These documents comprise of prime bank’s commitment towards being Environmentally & Socially (E&S) compliant, include the social risk factors, excluded activities, discouraged sectors, define environmental and social requirements for lending, E&S risk management procedures, tools, roles & responsibilities etc. These two policy and procedural documents played a vital role in strengthening ESMS in Prime Bank Limited.

After drafting, finally “Environmental & Social (E&S) Risk Management Policy Statement” and “Environmental & Social Risk Management Procedure Manual” was placed before the bank’s Risk Management Committee of the Board. With the consent of the Risk Management Committee of the Board, the policy & procedure documents were placed before the Board of Directors for approval. In November 2017, the “Environmental & Social (E&S) Risk Management Policy Statement” and “Environmental & Social Risk Management Procedure Manual” got approval from bank’s Board of Directors and it was fully rolled out across the bank from January 01, 2018.

Project milestones of Environmental & Social Management System (ESMS) Implementation in Prime Bank:

• In 2014, PBL deployed an E&S Manager and eight representatives of various divisions to form an ESMS Implementation Committee.

• In 2014, PBL appointed a foreign consultant namely FI Konsult of Czech Republic to provide technical assistance for developing and implementing a system for managing E&S risks.

• In 2015, Prime Bank organized three one-day training sessions (conducted by FI Konsult) to equip 90 bank staff.

• In 2015 & 2017, the bank reformed ESMS Implementation Committee by including more members from cross functional divisions.

• In 2017, Bangladesh Bank circulated ESRM Guidelines.

• In July 2017, Prime Bank organized a day long training session for 32 PBL officials. Training of Trainers (TOT) was also conducted in the duration.

• In November 2017, Prime Bank Board of Directors approved the “Environmental & Social (E&S) Risk Management Policy Statement” and “Environmental & Social Risk Management Procedure Manual”.

• From 01 January 2018, both the policy and the procedure was made effective on the entire lending portfolio of the bank.

• Continuous follow up and hand holding is done now. Moreover, currently periodical E&S review is being conducted for learning and to identify the scope of improvement.

What is “E&S Risk Management Policy Statement” and “E&S Risk Management Procedure Manual”?

• E&S Risk Management Policy Statement: It represents the Banks commitment towards being E&S compliant in its activities and financing. The applicability, excluded sectors and discouraged sectors are defined in this policy statement.

• E&S Risk Management Procedure Manual: It is a detailed document representing the process flow, roles and responsibilities and operation procedure of E&S Risk Management for the Bank.

ENVIRONMENTAL & SOCIAL INITIATIVES

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Highlights of major components of Environmental & Social Management System (ESMS):

• Exclusion List: List of identified 12 activities, where Prime Bank is committed not to finance for any such activity, production, use of, trade & distribution.

• Discouraged Sectors: List of identified 11 sector, where the Bank finance is discouraged under the purview of legal aspect, regulatory compliance, business risk and banking ethics

• Industry categorization by Department of Environment (DoE): Industries are being categorized based on environmental risk. The categorizations are recorded as Green, Orange A, Orange B and Red where industry categorized as “Green” is expected to have low environmental impact through its operation and industries categorized as “Red” is believed to pose the highest environmental risk.

• ESDD Checklist: It is an excel-based Risk Rating Model comprising of 12 questions for determining the associated environmental & social risk of a concern. The outcome of ESDD is known as environmental & social risk rating (ESRR) and categorized as high, medium & low.

• Environmental & Social Action Plan (ESAP): For “High” ESRR an E&S Action Plan (ESAP) needs to be drafted within a reasonable timeframe.

• E&S Covenants: For “Medium” and “High” ESRR E&S covenants/conditions is required to be incorporated in the Sanction Advice.

• Monitoring of E&S Risk: After disbursement monitoring by bank officials is required to address E&S risk issues.

Applicability of ESMS in Prime Bank Limited:

ESMS is applicable for all loan proposals (New/Renewal/Enhancement/ Rescheduling/Restructuring) under agriculture, retail, trade, microfinance, SME, corporate finance and project finance.

Process Flow Environmental & Social (E&S) Risk Management:

Environmental & Social (E&S) Risk Management Capacity Building:

For continuous capacity building of our human resource on E&S, both internal and external training/seminars & workshops has been arranged.

Environmental & Social Risk & Opportunities Management (ESROM 2.0):

In 2018, the Bank participated in ESROM 2.0 where 29 employees and 2 clients of the Bank attended 2-day long training program in 8 different sessions on “E&S Risk Management”. The training program was organized by FMO, DEG, proparco, Oe-EB, UNEP-FI facilitated by ERM- India and participated by 9 FIs operating in Bangladesh including Prime Bank Limited.

E&S Training by IFC:

In 2018, few officials of the Bank obtained “Training for ESRM Implementers” organized by IFC.

In-house Training on “E&S Risk Management”:

In 2018, Prime Bank Human Resources-Training & Development Center organized two dedicated training on E&S Risk management to familiarize the participant with the concept related to Environmental & Social Risk Management where 56 bank officials received training.

Workshop on “Environmental & Social Safeguard and Compliance Reporting” by BB:

In 2018, In October 2018, Bangladesh Bank organized a workshop on “Environmental & Social Safeguard and Compliance Reporting” where 2 Prime bank officials participated.

E&S Training by IFC & FI Konsult:

In 2017, to equip bank’s officials on ESRM, the bank arranged training by FI Konsult for 60 bank officials from different business segments.

Training of the Trainers:

In 2017, Training of Trainers Workshop was organized by foreign consultant Milan Tomik, FI Konsult where 11 officials received ToT.

4. REPORTING

E&S Performance ofBank & clients

1.POLICY

Bank’s environmental & socialcommitment & standards

2. E&S CAPACITY

Roles & responsibilitesTraining

Transaction Screening

Risk Categorization

E&S Due Diligence

Conditions of Financing

Managing Non-compliance

Reviewing Client’sE&S performance

Evaluating E&S Risk

Monitoring E&S Risk

3. ESRM PROCEDURES

INTEGRATED REPORTING

Integrated Reporting

Statement of Value Added and Its Distribution

Economic Value Added Statement

Market Value Added Statement

201PRIME BANK

This report is prepared around Prime Bank Limited (PBL)’s story of value creation. The crucial features of our value creation process are the different forms of capital that provide the inputs, and the value creating actions that result in outputs, outcomes and impacts, while the entire process is driven by bank governance.

Here is a description of the context and framework of our reporting.

The companies Act, 1994 requires that the Bank publishes its annual report within a specified period after the end of its financial year. It also stipulates particular requirements and disclosures that must be integrated in the annual report. In parallel, the Board’s commitment to stewardship demands transparency on matters related to stakeholders.

PBL’s value creation model aims to generate value while matching the bank’s responsibilities towards its various stakeholders, including its shareholder and the environment. How the bank achieved this over the last financial year through performance and conformance is discussed comprehensively through the different segments of the report.

The financial Statements of the bank as at 31 December 2018 have been prepared in accordance with the applicable Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs). In addition to, we have followed relevant criteria mentioned in the framework issued by the ‘International Integrated Reporting Council (IIRC)’ and the guidelines issued by the ‘Institute of Chartered Accountants of Bangladesh (ICAB)’ in the form of ‘Integrated Reporting Checklist’.

The sustainability requirements, as detailed separately in our Sustainability Report, comply the GRI Standards issued by the Global Reporting Initiative (GRI). To report the good governance

in the bank, we have prepared corporate governance report adhere to the revised Corporate Governance code issued by Bangladesh Securities and Exchange Commission (BSEC).

The information content of the report covers the economic, social and environmental impacts resulting from value creation activities of the bank and includes a rational assessment of prospective impacts. The assessment of materiality embedded in our process has ensured that we report on all material issues relating to sustainability with regard to aspects internal and external to the organization within the sphere of influence of the bank. The bank stakeholder identification process ensures stakeholder comprehensiveness.

This Annual Report relates to the activities of Prime Bank Limited and its subsidiaries, collectively referred to as the PBL Group, covering a 12-month period ended 31 December 2018. There have been no changes in reporting scope and/or boundaries from the previous year. Non-financial information in this report pertaining to the previous year has not been restated, unless otherwise stated. The Assurance Statement is available at the end of this report.

The Independent Auditor’s opinion on the Financial Statements is available in the Independent’s Auditor’s Report.

Responsibility of the Board of directors of PBL

We acknowledge the responsibility to ensure the integrity of this integrated report, which addresses all material issues, presents fairly PBL’s integrated performance. The integrated report, incorporated in this annual report has been prepared in line with the key guidelines of IIRC.

WELCOME TO OUR INTEGRATED REPORTING

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Competitive intensity and our response

A detailed analysis of competitive intensity PBL faces while conducting business in country’s vibrant banking industry and PBL responses to absorb the shock of these risks on its business model have been considered relevant in providing

information to our stakeholders. Our effort to manage the risks as those cannot be removed completely. We have done it through illustrating our risks structure by using Michael Porter’s five forces model.

Despite the regulatory and capital requirements of starting a new bank, a number of new banks have entered in the market. With so many new banks in the market is obvious to intensify the competition and the probability of new entrants will intensify it further.

The two main suppliers for a bank are the depositors who supply the primary resource of capital and employees who supply the resource of work. The power of the suppliers is largely based on the market, their power is often considered to fluctuate between low to medium.

Corporate and  high net worth individual  customers have relatively higher bargaining power. Individual consumers, especially in the retail banking marketplace, have relatively low bargaining power. However, in the aggregate, the bargaining power of consumers is greater.

In addition to the threat from the new entrants, PBL is also exposed to competition from the other financial intermediaries offering substitute products. These include the non-banking finance companies and the new entrants as well as the substitute products are adding on to the already existing competition from the present players.

Threat of new entrants

Supplier power

Competitive rivalry

Buyer power

Threat of substitute product

The banking industry of Bangladesh is considered highly competitive. Because of this, PBL must attempt to attract clients by offering cutting-edge services, higher rates, investment services, and greater conveniences compared to its rivals. The banking competition is often a race to determine whether PBL can offer both the best and fastest services.

One of the industry element that intensifies the importance of competition is the relatively low  switching costs  that customers face.

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VALUE CHAIN OF PBL

Inbound Logistics

Outbound Logistics

Marketing and Sales

ServicesOperations

Supp

ort a

ctiv

ities

Margin

• Financial reporting in compliance with regulatory guidelines

• Accounting Standards (BFRSs, BASs)

• Management Information System (MIS)

• Management Accounting

• Financial Accounting

• Dedicated customer service & complaint management

• Customer relationship management

• Apparent communication

• Corporate governance code

• Risk Audit• Risk based internal

audit • Regulatory compliance• Credit risk

management process• Operational risk

management process• Internal control

systems (ICSs)

• World class core banking software

• ATMs• Internet banking • Mobile banking • Automation of

operation• IT audit• IT security• Decision support

system

• Nondiscriminatory Recruitment and selection

• Training and development

• Career Development• Higher pay • Performance Appraisal• Succession planning

• Customer databank• Talented human

capital• Modern Technology

• Dedicated trade service desk for handling trade transactions

• Dedicated team for providing SME service

• Real time transactions

• Faster turnaround time

• Tailored made products and services

• High quality customer service

• Asset quality through e�icient credit risk management

• Advertising• Branding, market

development• Multi channel

management• Alternative delivery

channel• Direct sales

executives

Prim

ary

activ

ities

Governance and Risk Management

Human Capital Management

Technological Advancement

Finance and Reporting

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PESTEL Analysis

Macroeconomic factors Impact on industry Our Front

P-Political factors

Despite eleventh national election was held in 2018 Political stability was remaining same in the country. Political stability have encouraged the entrepreneurs to borrow more from local sources to meet their growing demand for investment.

The present government leads the country in last ten successive years and elected for next five years. As the present government effectively controlled the political environment so far so, it is expected it will continue in near future. As a result, policy and priority in infrastructure development will be emphasized.

Entrepreneurs took conservative steps in the year of election. However, It is expected that Entrepreneurs will be starting investment again. The demand of loans and advances will increase and pressure will put on liquidity.

Demands of public sector will increase as existing mega projects will be completed in timely manner and huge infrastructure projects will be taken.

The bank is ready to take up the opportunities which will open for the growth of private sector investment.

Suitable strategy will be taken by the management by assessing the environment.

The vigorous risk mitigation process of the bank is enable to mitigate the political risk.

E-Economic factors

Interest rate has been decreased to single digit. Lower interest rates on loans and advances has inspired the businessmen to borrow additional fund from local banks for investment.

The spread has declined affecting interest income of Banks.

PBL attracted low cost or no cost funds and decreased the loan rate which will help to retain present customers as well as to attract prospective customers.

In 2018, GDP growth rate hit 7.86% which was the highest ever in history of the country’s economy. GDP growth increased by 7.97% compared to last year’s growth.

After having excess liquidity for quite a long time, banks have faced liquidity pressure in the last half of 2018. Low-cost foreign loan has been taken by some of the entrepreneur.

The asset liability management committee has managed the assets and liabilities efficiently. Management has been working at high scale to increase its loan and advance portfolios in agriculture and SME from last few years which will continue for upcoming years.

S-Social Factors

The life styles of the citizens have changed due to advancement of information technology which has facilitated gathering of information in no time. Customers desire a seamless banking experience and technology is developing to allow customers to enjoy services easier.

Banks analyze the demands of customers in different methods as customers lifestyle has changed. Information providing sources have changed and qualities of services have improved due to increased awareness of the customers. Differentiation is the key driver to sustain in the market.

Per capita income in fiscal year 2017-2018 was $1751 which has a positive impact on the banking sector. Life style of people has improved and this led to opening new window of financing and PBL is ready to capitalize it through its superior products and services.

T-Technological

Technological development is growing fast as government invests at large scale to make IT infrastructure in the country.

Technology is changing how customers operate their accounts. Many banks offer a mobile app to operate accounts, transfer funds, generate E-statement and pay bills on smartphones.

Banks need further investment and improve operational efficiency to meet up the demand of customers following the regulatory rules and regulations.

The core banking system (CBS), Temonos version-R16, of PBL has been updated. This Updated CBS would further strength its processes and give opportunities for further growth with proper control in place.

PBL has launched a mobile app to operate accounts, transfer funds, generate E-statement and pay bills on smartphones.

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Macroeconomic factors Impact on industry Our Front

E-Environmental

The environment and climate change effect on human existence and the planet are now a global concern. The world is more conscious about green and environmentally sustainable banking. Sustainable finance is vastly appreciated by the community.

A separate department namely sustainable finance department has been opened by Bangladesh bank which is engaging and encouraging all banks and FIs to step-up their green banking initiative and standards.

Regulatory monitoring has been increased on green financing.

Bangladesh Bank also introduced green baking policy for all banks.

PBL has outlined an inclusive green banking policy for implementing green banking activities.

PBL has also incorporated the environmental risk management policy in its credit risk management policy as an integral part of environmental due diligence.

PBL has launched a mobile app to operate accounts, transfer funds, generate E-statement and pay bills on smartphones. Thus, PBL is trying to reduce individual environmental footprints.

L-Legal

Banking sector are faced with rigorous laws and regulations set by the different regulators.

Increase in regulatory demand placing greater pressure on employees and increasing the cost of compliance.

Emphasis has to be put on the application of provision for loans and advances and capital adequacy.

PBL has already developed a decent image for compliance issues.

PBL imparts training to employees, notify the customers about the new rules and regulations to ensure requirement of compliance.

SWOT Analysis

STRENGTH

Strengths Strengthening our bank further

Solid capital base Strong ability for playing important role on growth platform

Strong brand among local banks continue our efforts to boost up the goodwill for creating good image

Competent and experienced employees Invest in people as they are the main assets of the bank

Personalized products and services and high level of customer service

Continue market research to innovate new product and service line

Credit portfolio is diversified by multiple norms and classifications

Maintain the diversification to minimize the credit risk

Sound asset liability management Keep continuing top class practice

Advance risk management and pricing systems Continue proactive initiative to manage the risk

Clear structure, high degree of flexibility and fast decisions Invest in operations and technology to improve the decision making

Conventional and sustainable business policy Continue strong monitoring and response in time to cope up the changes

Rigorous regulatory adherence Comply the regulatory rules and regulations for the improvement of the bank

World class core banking software Obtain the best benefits for our sustainable growth

Excellent job environment Continue to uphold the pleasant environment where an employee can perform without any fear

PBL has 123 Conventional branches, 18 SME branches, 05 Islamic Banking branches, 03 OBU, 170 ATMs across the country.

PBL will establish more banking channels nationwide, in order to providing financial services effectively.

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WEAKNESS

Weaknesses Dealing our weaknesses

Dependency on interest income from loan and advance as a key source of income

Diversify the portfolio, innovate the new products and services in line with the demand of customers

OPPORTUNITY

Opportunities Capitalizing on opportunities

Unique culture and competitive positioning in the market continue to attract top talent

Talented employees will play strong role with the current talented employees

Building new client relationships Opportunity to expand the business

Several new initiatives introduced to increase the product portfolio and enhance cross-selling

Customers will attract for others products and services

Growing economy Opportunity to expand the loans and advances

Private sector credit growth has risen notably Opportunity to expand the loan and advances portfolio

THREAT

Threats Responding to threats

Client losses from aggressive competitor actions Providing topmost services to all customers

Liquidity surplus driving banking sector participants towards unhealthy price wars to grab the best customers

Creating new loan market, Select customers very carefully, Attract new customers by offering differentiated services

The increase in regulatory demand placing greater pressure on employees and increasing the cost of compliance

Train employees properly, Educate the customers, Change the system to cope up the changes

Scarce skills representing challenges for new appointments and potential loss of key employee to peers

Make the succession plan for the key positions

The Banking sector has been at risk for cyber security attacks since the inception of the internet

PBL is committed to ensure top-notch cyber security with the growing use of technology with banking transactions

The Capitals Report

ManufacturedCapital

IntellectualCapital

Social andRelationship

Capital

HumanCapital

Natural Capital

FinancialCapital

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An organization’s competitiveness depends to a great extent on the capability to efficiently manage the different sorts of capital, and that is what an integrated report is trying to capture. Delivering information about how the types of capital are managed is vital for capital providers. The bank cannot assume that its capital providers and other stakeholders will understand how different sorts of capital are linked to financial performance if the bank fails to communicate that information effectively.

Financial Capital

Financial capital is the familiar form of capital. It is generally understood as the pool of funds available to the organization. This includes both debt and equity finance. PBL uses both sort of finance to create value in short, medium and long term. Financial capital is a medium of exchange that releases its value through conversion into other forms of capital. Financial capital has an impact on the co-development and maintenance of capitals with other organization in the supply and value chain.

PBL currently uses the following major equities and debts to create value in short, medium and long term.

Paid Up Capital

Paid up capital represents total amount of shareholders’ capital that has been paid in full by the ordinary shareholders. It is a measure of how much money investors have pumped into the bank since inception in return for equity. The Paid up capital of PBL was Tk. 11,322,834,770 which played a significant role for creating value for the stakeholders.

Share Premium

Share premium is the capital that the bank raises upon issuing shares that is in excess of the face 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. The Share premium of the bank was Tk. 1,211,881,786 which played a vital role in value creation process.

Retained Earnings

Retained earnings refer to the percentage of net earnings not paid out as dividends to shareholders, but retained by the bank to be reinvested in its core business, or any other purposes. The current retained earnings position of PBL was Tk. 1,759,002,003 as on 31 December 2018.

Borrowings from other banks, financial institutions and agents

The bank has borrowed Tk. 33,944,516,693 from different banks and agents inside Bangladesh and outside Bangladesh.

PBL raised fund by issuing two Sub-ordinated bonds which played vital role in value creation.

Prime Bank Sub-ordinated Bond

PBL has issued unsecured non-convertible bond on February 19, 2015 namely “Prime Bank Subordinated Bond-2” after obtaining approval from Bangladesh Bank and Bangladesh Securities & Exchange Commission respectively. The bond shall bear interest with floating rate payable semi-annually

on 19th February and 19th August each year. Floating rate is determined by calculating a benchmark rate i.e. peer banks’ most recent average FDR rate and 2.75% margin with a floor at 11.50% and capped at 14.00% p.a.

Total outstanding balance of Prime Bank Subordinated Bond-2 was 2,000,000,000 as on December 31, 2018.

PBL has issued another unsecured non-convertible bond on August 12, 2018 namely “Prime Bank Subordinated Bond-3” after obtaining approval from Bangladesh Bank and Bangladesh Securities & Exchange Commission respectively. The bond shall bear interest with floating rate payable semi-annually on 12th February and 12th August each year. Floating rate is determined by calculating a benchmark rate i.e. peer banks’ most recent average FDR rate and 2.00% margin with a floor at 7.00% and capped at 10.50% p.a.

Total outstanding balance of Prime Bank Subordinated Bond-3 was 7,000,000,000 as on December 31, 2018.

Deposits

Currently a range of attractive products and services have been offered by PBL through 123 conventional branches, 5 Islamic banking branches and 18 SME branches. The major types of deposits are Current/Al-wadeeah current deposits, Bills payable, Savings bank/ Mudaraba term deposits, Term deposits/Mudaraba term deposits. Total amount of deposits and bills payable of the bank was Tk. 197,517,725,557 as on 31 December 2018. Deposits are the key source of finance that played crucial role in value creation process of the bank.

Manufactured Capital

This refers to our business structure and operational processes, including our physical and digital infrastructure, as well as information technology that provides the framework and machines of how we do business and make profit. Having identified the importance of this important capital, which is easily identifiable due to its nature, the bank focuses in developing infrastructure in order to support current business activities and also meet future challenges given the importance of this capital in the value creation process.

The bank has already been able to gain benefits of money spent on strengthening infrastructure of the bank. The bank will continuously invest in technology with the objective of delivering unmatchable customer experience through technology.

Further, the Bank is mindful of the requirement to maintain the state of art work environment within the bank premises and continuously invest sufficiently in upbringing the existing premises to be line with industry standards.

Consequent to above initiatives the total amount invested in the Manufactured Capital of the Bank which are represented in the form of Fixed Assets stood at Tk. 6,943,348,521 as on 31 December 2018.

Human Capital

It is represented by our people; our investment in management and leadership development; and the knowledge, skills and experience they collectively bring to enable innovative, convenient and competitive solutions for our customers.

Human capital in an organizations and businesses are an important and essential asset who contributes to development and growth, in a similar way as physical assets such as machines and money. The collective attitudes, skills and abilities of people

208 PRIME BANK

ANNUAL REPORT 2018

contribute to organizational performance and productivity. Any expenditure in training, development, health and support is an investment, not just an expense.

An organization can’t survive if there are no employees. Organization runs with the help of individuals who contribute in their own way in its success and productivity. Employees spend maximum part of their day in offices and strive hard to achieve the goals and objectives of the organization. Employees should be motivated from time to time so that they develop a sense of attachment towards their organization and also deliver their best. Every employee in his/her tenure acquires some set of skills through his experience, exposure, trainings and so on which further increase his/her productivity eventually benefitting the organization. Knowledge and expertise which employees develop in due course of time to further increase the productivity of organizations refer to human capital. Every employee tries his/her level best to sharpen his/her skills during his turn with the organization. Human capital is defined as the collective stock of skills, attributes, knowledge, and expertise of employees which further plays an integral role in increasing the productivity of the organization.

People should be treated as an asset rather than an expense item. Every effort should be taken, whether formally or informally, to develop skills and abilities and to provide opportunities for people to maximize their contribution.

Intellectual Capital

Intellectual Capital refers to our intellectual assets, such as our brand, research and development, innovative capacity, our reputation, and the knowledge of our employee.

This capital is enhanced through two important elements- our brand reputation and the value created by organizational intangibles. PBL is committed to learning and service excellence; we have thus generated several assets that do not appear in the Financial Statements. Our competitive strategy and differentiation have been leading facilitators to the creation of value in the form of Intellectual Capital.

During our glorious 23 years in business, we have collaborated with employees to build a massive pool of expertise and experience which is a key component of PBL’s intellectual capital. This pool of knowledge consists of specialized expertise in business field, and in capital management and risk management.

We know however that knowledge gained is only as valuable as its effect and influence on the work we do. At PBL we endeavor to document and share information in as many ways as possible to maximize the value of this most important element. Knowledge

sharing culture, extensive training and human capital management tools contribute to how we manage and exploit knowledge.

We believe that knowledge used and shared also depends on the unspoken norms of behavior that constitute PBL’s culture. It is these norms and our family friendly working environment, rather than formal systems, which shape our employees’ interaction with customers, colleagues and other stakeholders.

Our brand reputation has been carefully built through the PBL differentiation strategy. We have sought to differ from our rivals through technological excellence, effective customer relationship management, market presence and strong sense of responsibility and accountability.

Social and Relationship Capital

These capital reflect our citizenship and the strong relationship we have with all our stakeholders, including the communities we live in, as we recognize the important role that banks play in building a strong and thriving nation.

Relationship capital- made up of customers and business partners- has a significant role in the PBL value creation process.

Customers, and other interactions with them, thus have a strong influence on sustaining and enhancing PBL’s relationship capital. We believe that the new business environment requires companies to shift from being product-centric to being customer-centric. At PBL, customer capital thus goes beyond long term customer relationships to be viewed as an asset that is a source of organizational competitiveness.

The contribution of customers to current and future revenues is therefore fundamental to assessing how successful PBL is at converting customer relationships into a sustainable competitive advantage.

Our attitude to sustaining and enhancing customer capital involves managing customers’ experiences and superseding their expectations with our products and services. Understanding client needs and aspiration allows us to gear our supply chain better to finally deliver products that satisfy the customer. This is supported by our focus on regular engagement and ethical marketing.

PBL reaches its existing and potential clients across multiple platforms. Our branch networks and SME centers make up one of the largest, most modern banking networks in Bangladesh.

Relationships with our business partners are a key driver of value and an important part of our strategy. We engaged in partnership with only those who share our core values. Once we begin a relationship with a business partner, high priority is given to managing every aspect of that relationship in a mutually beneficial manner. This approach has enabled PBL to secure enriching relationships with local and global business partners.

Strong relationships cultivated over many years with the world’s best, have enabled us to deliver on our strategic approach of collaboration while offering unique products and services to diverse group of customers.

Natural Capital

Natural Capital refers to naturally occurring biological, physical, biophysical, chemical and mineral assets, as well as their interplay through healthy functioning ecosystems, on which all life depends. Within the financial sector, the impact, both positive and negative, of our operations and business activity on natural resources are considered.

Intellectual Capital

Organization based

Intangibles

Brand Reputation

209PRIME BANK

Our business model creates value by converting capital inputs (i.e. various types of capital e.g. financial, natural, human etc.). These inputs include the skills and our talent of the people within our organization and money from the customers, via our core products and services. It transforms these inputs into value outputs through value adding activities so that they make a positive contribution to the development of a healthy society that’s able to flourish within our planetary limits. A portion of bank’s operating profit is spent every year for performing social responsibilities which has a positive impact on social capital. PBL is also generating relationship capital along with social capital by contributing to the unprivileged segment of the society through providing them with education, health support as well as creating job opportunities by transforming them as competent human resources. Hence, our business model is

very much aligned with the ‘value creation process’ which is the key element of Integrated Reporting.

The financial resilience of this model is built on fair interest rates to savers; reasonable long-term returns for investors; and deposits that are lent to sustainable entrepreneurs working in the real economy to deliver real impact. We seek to satisfy the needs of our valued customers and valued clients by offering a well-rounded value proposition- a wide range of products and services- and thereby deliver a smoother income stream and sustainable returns.

We endeavor to deliver a healthy balance between loans and deposits so we are able to mobilize as much of our deposits as possible. We also maintain healthy levels of capital, well above regulatory requirements. This makes us more resilient over the long-term.

Our Value-Creating Business Model(Creating value in a sustainable manner through our Strategy)

210 PRIME BANK

ANNUAL REPORT 2018

OUR CAPITALSInputs

Human Capital3,212 talented employeesCreated 73 new job opportunitiesCustomer and people centered cultureRobust governance andcompliance culture

DELIVERING FINANCIAL PERPORMANCE(OUTPUTS)

Advances: BDT 205,810 million

Deposits: BDT 197,518 million

ProducesNet interestincome: BDT 7,650million less

Provision:

BDT 1,782 million

Taxes:Direct Tax: BDT 491.56 millionIn-direct Tax: BDT 3,928.29 million

Manufactured Capital

170 ATMs 146 digitally focused branchesand 3 OBUs Digital channels and products

Details have been illustrated in our capital report

Intellectual CapitalDetails have been demonstratedin our capital report

Social and Relationship CapitalDetails have been explainedin our capital report

Natural CapitalCarbon footprint reductionGrowth in green financing

Details have been describedin our capital report

ENABLE VALUEADDING ACTIVITIES

O�er Savings andinvestment products

Generate fair returns on investments

Extend credit to ourvaluable clients through

responsible lending practices

Reward performanceand invest in attracting,developing and retainingour people

Facilitate payments and transactions o�er global standard services

Manage, protect and grow wealth through asset andwealth managementsolutions

Non-interest income:BDT 5,249.91 millionincluding Commission and fees: BDT 2,208.57 million

Investment income:BDT 2,154.01 million

Other operating income: BDT 887.32 million

Expenses: BDT 7,180.03 million

ENABLE VALUE-ADDING ACTIVITIES(OUTPUTS)

EmployeesCreated 73 new permanent job opportunities Increased average employee salaries byBDT 0.10 millionIncurred training and developmentspend of BDT 13.36 millionCareer advancement and ability toreach individual potential

CustomersLoans and advances increased byBDT 7,486.79 million and growat 3.78% over the year Launched various innovativesolutions that address the needsof our customers02 New ATMsMaintained competitive pricing

ShareholdersYearly dividend 12.50 cash and net assetvalue per share BDT 23.12Maintained a robust balance sheetto protect against unforeseen risks

RegulatorsComply with regulation tomitigate against system riskAdhere to sustainable bankingpractices to protect our customersSupport government throughBDT 4,419.85 million Tax contribution(direct, indirect, PAYE and other)

CommunitiesCSR BDT 703.04 millionCarbon-neutral operationsProvided significant amount of loan inrenewable energy projects during the year.Almost 100% local procurement

Financial Capital

26,181 million Equity197,518 million Deposits

Equals

Income from lendingactivities: BDT 5,868 million

211PRIME BANK

OUR CAPITALSInputs

Human Capital3,212 talented employeesCreated 73 new job opportunitiesCustomer and people centered cultureRobust governance andcompliance culture

DELIVERING FINANCIAL PERPORMANCE(OUTPUTS)

Advances: BDT 205,810 million

Deposits: BDT 197,518 million

ProducesNet interestincome: BDT 7,650million less

Provision:

BDT 1,782 million

Taxes:Direct Tax: BDT 491.56 millionIn-direct Tax: BDT 3,928.29 million

Manufactured Capital

170 ATMs 146 digitally focused branchesand 3 OBUs Digital channels and products

Details have been illustrated in our capital report

Intellectual CapitalDetails have been demonstratedin our capital report

Social and Relationship CapitalDetails have been explainedin our capital report

Natural CapitalCarbon footprint reductionGrowth in green financing

Details have been describedin our capital report

ENABLE VALUEADDING ACTIVITIES

O�er Savings andinvestment products

Generate fair returns on investments

Extend credit to ourvaluable clients through

responsible lending practices

Reward performanceand invest in attracting,developing and retainingour people

Facilitate payments and transactions o�er global standard services

Manage, protect and grow wealth through asset andwealth managementsolutions

Non-interest income:BDT 5,249.91 millionincluding Commission and fees: BDT 2,208.57 million

Investment income:BDT 2,154.01 million

Other operating income: BDT 887.32 million

Expenses: BDT 7,180.03 million

ENABLE VALUE-ADDING ACTIVITIES(OUTPUTS)

EmployeesCreated 73 new permanent job opportunities Increased average employee salaries byBDT 0.10 millionIncurred training and developmentspend of BDT 13.36 millionCareer advancement and ability toreach individual potential

CustomersLoans and advances increased byBDT 7,486.79 million and growat 3.78% over the year Launched various innovativesolutions that address the needsof our customers02 New ATMsMaintained competitive pricing

ShareholdersYearly dividend 12.50 cash and net assetvalue per share BDT 23.12Maintained a robust balance sheetto protect against unforeseen risks

RegulatorsComply with regulation tomitigate against system riskAdhere to sustainable bankingpractices to protect our customersSupport government throughBDT 4,419.85 million Tax contribution(direct, indirect, PAYE and other)

CommunitiesCSR BDT 703.04 millionCarbon-neutral operationsProvided significant amount of loan inrenewable energy projects during the year.Almost 100% local procurement

Financial Capital

26,181 million Equity197,518 million Deposits

Equals

Income from lendingactivities: BDT 5,868 million

212 PRIME BANK

ANNUAL REPORT 2018

Strategy and Resource Allocation

Our strategy is primarily aimed at creating value for our shareholders (long-term capital providers) which has been described in “Strategic Priority” part of the annual .

The described objectives will be achieved by

• Satisfying the promises we make to our customers through vigilantly planned and executed processes that are fully leveraged by our scale.

• Crafting relentlessly excellent customer experience by understanding our customers and offering the products, services and solutions they require to serve their purpose.

• Serving our customers quickly, competently, consistently and courteously in person and/or online, as they choose.

• Continuing the investment in IT infrastructure to meet up the requirements of customers.

• Providing our employees with what they need to deliver outstanding customer experience.

• Fostering a deep connection among all our employees with our purpose and our customers.

• Creating state-of-the-art workstation

• Empowering our employee to deliver against our strategy by encouraging them to make the most of every opportunity to achieve their full potential, and by rewarding their contribution.

• Honoring our strong culture attributes while encouraging and entrenching focused customer-centric behavior.

• Continuing dynamic and engaged leadership teams who live our values and are focused on doing the right business the right way, who hold themselves accountable for the business, and who celebrate success and learn from their mistakes.

• Increasing research and development to deliver new products and services which meet the contemporary demand of customers.

• Creating a great place to work.

At PBL we believe that our purpose as a bank is to contribute to the sustainable development of society by empowering people to stay a step ahead in life and in business. In 2018, we made good progress implementing our strategy and promoting the organization and culture we need to deliver on our client promise.

In 2018, we continued to build on our think forward strategy to empower customers and provide them with a differentiating customer experience. That includes a focus on being leading bank in the digital customer experience based on easy, 24/7 access in ATMs, attractive products and services, and tools to support customers make sound financial decisions.

Those goals are reflected in our customer promise to be clear and easy, make financial services available anytime-anywhere, empower, and to keep getting better for customers.

Contributing to the sustainable development of the society is also an integral part of the think forward strategy. Our sustainability direction focuses on two areas: enhancing

the financial capabilities of clients and potential clients, and supporting companies to make the transaction to more sustainable business model.

Our main differentiators that powers PBL competitive advantage

We financially empower by making banking accessible and easier to understand in line with our customer needs. We see sustainability as a source of competitive advantage of bank. We broadened our sustainability approach in corporate lending and in general lending and also extended it in retail banking.

The success of our strategy will ultimately depend on how well it enables us to adopt to change and continue to deliver a superior experience for our customers.

PBL is focusing not on price leadership but on offering a superior customer experience, conforming that this is the area bank need to focus on to succeed.

Consumers are rapidly turning to digital services for an increasing number of needs. What they are experiencing with digital leading bank is shaping their expectations.

Economic growth rate of the country hit the highest point in the history of Bangladesh. However, interest rates were declining, putting pressure on savings and lending margins, which make up a large portion of our revenues. As a response, we are increasing our focus on services to clients that generate fee income.

Regulation is another challenging area for banking sector. Many regulations have introduced to increase the stability of banking system. New regulatory initiatives in the pipeline could further increase capital requirement for banks, putting pressure on returns. This will require banks to look for new sources of income and to lower costs.

All these developments in the external environment confirm to us that we are on the right track with our strategy to create a differentiating customer experience based on digital banking. We support that through the clear and easy approach embodied in our customer promise.

OUTLOOK

Challenges in executing our strategy

The following challenges offer a board forward looking view of what we need to manage as we carry out our strategy over the short to medium term as well as long term, and are reflective of the issues deliberated on by management across our business. To realize our vision we need to be proactive in how we plan for and handle these challenges, allowing us to leverage the associated opportunities.

Maintaining awareness of these challenges in our planning ensures that the way we do things is informed by strong decision making and ultimately results in better service to our customers, balanced by our commitments to our other stakeholders.

Changing Regulatory Landscape

The number of new financial services regulations continues to grow. The various ways in which new regulations are circulated

213PRIME BANK

within country can lead to uncertainty. Ensuring an efficient customers experience while adhering to regulatory demands is an ongoing consideration. Our customers focus align to the spirit of these regulations, which is ultimately protect customers.

Technological Advancement

New technologies present us with reflective opportunities to compete more effectively by meeting changing customer expectations. They also introduce major new challenges. Building a digital financial bank needs to be managed in a way that does not compromise system stability and customer experience. In addition to, the value of information as an asset makes it a potential target for cyber-attacks, furthermore, theft of fund. Globally, cyber-attacks are increasing in number and sophistication, as is the utilization systems and people.

Increasing Competition

Private Banks are expanding their presence in different areas of the country and competition is being driven by advances in technology. In this context, we need to defend and grow our position by providing our best services at cost effective rate. Our legacy and position as an integrated financial services bank differentiates us in the banking industry.

Customer Expectations

The competences of new technologies- and the speed with which they are being adopted- mean that customers increasingly expect highly customized yet affordable products and services that are available whenever they choose. The emergence of new services from competitors, the simplicity with which customers can change to a different bank and the speed at which negative experiences can be shared through the social media greater focus on customer experience.

People and Culture

Realizing our objectives of placing our customers at the center of everything we do finally depends on our employees’ ability to provide vast customer experience, whether directly through their communications with customers, through the products and services we develop or through the management of compliance processes that could impact on the perceived quality of service. Structuring a digital financial services bank requires us to employ and develop new skills, and for our employees to adjust to new ways of working. In light of the challenges in executing our strategy, and to maintain trust, we need to ensure a culture that values customer fairness and market integrity in everything we do.

Managing Associated Risks

Building a Risk-aware Culture

Building a flexible and steady risk-aware culture is vital in effectively managing the challenges that may arise in executing our strategy. We build a risk-aware culture by ensuring accountability, responsibility and sufficient coverage of the risk landscape.

Aligning Risk Management to Our Customer Focus

Understanding our customers forms a key part of managing risk on the continent and will benefit from our customer focus. A key initiative in this regard is bringing risk management closure to the functions where risk arise, identifying risks early and, in our customer-facing functions, gaining deeper insight into our customers.

Other projects include aligning the collection of financial and risk data to improve our view of the size and potential consequences of exposures, and implementing measures to better understand the complex interrelationships between different risk types.

These initiatives are supported by our investment in technology, and will allow us to customize our products and services in a way that better manages our risk exposures and reduces related capital requirements.

Acting Ethically and Fairly in Everything We Do

Conduct risk is the risk that the bank itself poses to our customers, and to the effective operation of financial markets, through conduct that is not ethical or fair. The way we execute our day-to-day activities-including how we design and market products, how we communicate with customers and how we meet their expectation-prescribes the culture we wish to build, and therefore determines our ability to keep the promises we make to our customers and place them to the center of everything we do.

(Risk Management Framework & Mitigation Methodology provides more details on the bank’s approach to risk management)

Determining Our Material Matters

Our proactive engagement with our stakeholders updates our business strategy and material issues, shapes our products and services, assists us handle and respond to social expectations, mitigates reputational risk and influences our operating environment.

Business units enabling functions are authorized to connect directly with stakeholders and are responsible for identifying stakeholder concerns and taking suitable action. For strategic engagement, the stakeholder relations team undertakes engagement based on the identified needs and concerns of our stakeholders.

We take the following steps to determine our material matters

Investigate

We identify all issues that have the potential to impact our earning sustainability and the ability to create value for our stakeholders. The process of identifying potential material maters is a group wide responsibility, requiring input from all business units and divisions, and taking into account input and feedback from all our stakeholders. Areas of potential impact that are assessed include financial, environmental, social, strategic, competitive, legislative, reputational, and regulatory matters (including policy matters), as well as our stakeholders.

214 PRIME BANK

ANNUAL REPORT 2018

Rank

The issues identified are prioritized according to greatest relevance and highest potential to impact significantly on the viability of our business and relationships with stakeholders.

Integrate

The material matters that have been identified and prioritized inform our long-term business strategies and targets as well as short-to-medium term business plans.

Assess

Material matters are continuously assessed to ensure that our strategic focus areas remain relevant to our stakeholder needs and the environment.

(The details of determining material aspects of the Bank have been reported in Sustainability Report)

ASSURANCE

External Assurance

PBL makes use of various independent service providers to get assurance on various aspects of the business operations including elements of internal and external reporting.

Annual integrated report includes information generated from various sources on which assurance has been provided by the external auditors, credit rating agencies and an independent professional actuary, such as:

• The consolidated annual financial statements and the financial statements of PBL for the year ended 31 December 2018 have been jointly audited by Hoda Vasi Chowdhury & Co., Chartered Accountants and Aziz Halim Khair Choudhury, Chartered Accountants and an unqualified opinion has been expressed on those financial statements by the auditors.

• Our compliance on revised corporate governance code for the year ended 31 December 2018 has been audited by Haque Fazlul & Co., Chartered Accountants. Auditor has certified that PBL has compiled with the conditions of the revised Corporate Governance Code issued by Bangladesh Securities and Exchange Commission (BSEC).

• The financial statements of Prime Bank Foundation for the year ended 31 December 2018 have been audited by S F Ahmed & Co., Chartered Accountants and an unqualified opinion has been expressed on those financial statements by the auditor.

• Actuarial valuation for Prime Bank Employees’ Gratuity Fund is performed by Z Halim & Associates, an actuarial firm, every year.

• The credit rating report of Prime Bank is issued to the Bank Management upon assessment by two External Credit Assessment Institutions (ECAI) namely “Credit Rating Information and Services Limited (CRISL)” and “Credit Rating Agency of Bangladesh (CRAB)”.

215PRIME BANK

The value added statement provides a detailed account of total value addition and the distribution of the value created by the organization. Prime Bank contributes significantly to socio economic development by empowering employees through the payment of salaries and allowances; by paying attractive and consistent dividend to the providers of capital; by assisting the regulatory capacities through paying taxes and of course keeping in mind company’s continuous expansion and business growth.

(BDT in million)

Particulars2018 2017

Amount % Amount %

Net interest income 7,650 90.67 4,894 82.65

Commission, exchange & brokerage 2,154 25.53 4,246 71.70

Investment income 2,209 26.18 2,245 37.91

Other income 965 11.44 823 13.90

Management expenses excluding salaries & allowances, depreciation (2,759) (32.71) (2,722) (45.96)

Provision for doubtful losses (1,782) (21.12) (3,564) (60.20)

Total value added by the company 8,437 100 5,921 100

Value added contributed to-

Employees:

As salaries and allowance 4,169 49.41 3,835 64.77

Provider of capital:

Dividend to shareholders 1,415 16.78 721 12.17

Government:

Corporate tax 1,750 20.74 750 12.67

To expansion and growth:

Retained income 772 9.16 338 5.71

Depreciation 330 3.91 277 4.68

Total distribution by the company 8,437 100 5,921 100

ECONOMIC VALUE ADDED STATEMENTEconomic value added (EVA) is the financial performance measure of true economic profit of an organization. It provides a measurement of a company’s economic success (or failure) over a period of time. Such a metric is useful for investors who wish to determine how well a company has added value for its investors and it can be compared against company’s peers for a quick analysis of how well the company is operating in its industry. Economic value added is calculated by taking a company’s net profit after tax, adding with it, the amount of provision charged to absorb the probable losses intrinsic in the investments. EVA is calculated as under:

STATEMENT OF VALUE ADDED AND ITS DISTRIBUTION

EmployeesProvider of capitalGovernmentTo expansion and growth

2018

Value added statement

20.74%

16.78%

13.07%

49.41%

EmployeesProvider of capitalGovernmentTo expansion and growth

2017

Value added statement

64.77%

10.39%

12.67%

12.17%

216 PRIME BANK

ANNUAL REPORT 2018

(BDT in million)

Particulars 2018 2017 2016 2015

Shareholders’ equity at year end 26,181 24,708 25,285 26,415

Accumulated provision 10,280 10,893 9,055 9,204

Average shareholders’ equity 36,031 34,971 34,979 33,753

Cost of equity (%) 5.40% 6.35% 5.76% 6.11%

Economic value added

Net profit after tax (before provision) 3,969 4,623 5,607 5,293

Less: Cost of equity 1,946 2,221 3,317 2,566

Economic value addition 2,024 2,403 2,290 1,738

Key ratios

EVA/Operating revenue (%) 15.69 19.78 19.05 14.39

EVA/Average shareholders’ equity (%) 5.62 6.87 6.55 5.15

Net profit after tax/Operating revenue (%) 16.96 8.72 18.26 17.72

MARKET VALUE ADDED STATEMENTUnlike EVA, which measures internal performance, market value added (MVA) is a measure of external performance that indicate how the market has evaluated the company’s performance in terms of market value of shares compared to book value of shares. MVA is the difference between the market value of equity of a company and the book value of equity invested in the company. A positive MVA indicates that the company added value to shareholders wealth. The following statement indicates the MVA at the year ended on 31 December of 2018 and 2017 :

(BDT in million)

Particulars 2018 2017

Market value of shares outstanding 20,155 28,204

Book value of shares outstanding 26,181 24,708

Market value added (6,026) 3,496

Explanation behind the negatige MVAMarket Value Added (MVA) is the difference between the current market value of a firm and the capital contributed by investors. In an ideal scenario, if MVA is positive, the firm has added value. If it is negative, the firm has lost value. But in some cases due to volatile market scenario and unusual/abnormal decrease of market index market value of shares outstanding may be less than the book value.

2018201720162015

EVA/Average shareholders’ equity (%)

5.62

6.87

6.55

5.15

2018201720162015

Economic value addedBDT in Million

2,0

24

2,40

3

2,29

0

1,738

SHAREHOLDERS’INFORMATION

Horizontal Analysis

Vertical Analysis

Graphical Presentation

Distribution of Shareholdings

Shares Held by Directors

Market Price Information

Financial Calendar 2018

218 PRIME BANK

ANNUAL REPORT 2018

HO

RIZ

ON

TAL

AN

ALY

SIS

Bala

nce

Shee

t Ite

ms

(BDT

in m

illio

n ex

cept

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Part

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ars

2018

18 v

s 17

2017

17 v

s 16

2016

16 v

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2015

15 v

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2014

14 v

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198,

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7,367

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6,9

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293

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281

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18 v

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2017

17 v

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2016

16 v

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2015

15 v

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2014

14 v

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6,19

4 10

.96%

Com

mis

sion

, exc

hang

e an

d br

oker

age

2,2

09

-1.62

% 2

,245

32

.58%

1,69

3 -1

3.44

% 1,

956

-3.7

9% 2

,033

-5

.68%

Oth

er o

pera

ting

inco

me

887

16

.14%

764

-6

.09%

814

-2

.47%

834

3.

44%

80

6 -0

.75%

Tota

l ope

ratin

g in

com

e 12

,899

6.

18%

12,14

8 1.0

4% 12

,023

-0

.41%

12,0

73

1.40

% 11

,90

6 -7

.58%

Sala

ry e

xpen

ses

4,16

9 8.

70%

3,8

35

4.75

% 3

,661

1.6

5% 3

,60

2 9.

53%

3,2

88

11.4

5%

Oth

er o

pera

ting

expe

nses

3,0

11

2.44

% 2

,940

12

.87%

2,6

05

1.56%

2,5

64

4.20

% 2

,461

0.

12%

Tota

l ope

ratin

g ex

pens

es

7,18

0

5.98

% 6

,775

8.

12%

6,2

66

1.61%

6,16

6 7.

25%

5,7

50

6.30

%

Ope

ratin

g pr

ofit

5,7

19

6.44

% 5

,373

-6

.67%

5,7

57

-2.5

2% 5

,90

6 -4

.06%

6,15

7 -1

7.63%

Prov

isio

n fo

r loa

ns a

nd a

dvan

ce &

oth

er a

sset

s 1,

782

-50.

02%

3,5

64

4.46

% 3

,412

8.

18%

3,15

4 9.

66%

2,8

77

-28.

60%

Tota

l pro

fit /

(loss

) bef

ore

taxe

s 3

,938

11

7.68%

1,80

9 -2

2.86

% 2

,345

-14

.79%

2,7

52

-16.

10%

3,2

80

-4.8

0%

Prov

isio

n fo

r tax

1,75

0

133.

33%

750

40

0.0

0%

150

-7

5.53

% 6

13

-30.

91%

887

-4

5.10

%

Net

pro

fit a

fter

taxa

tion

2,18

8 10

6.60

% 1,

059

-5

1.76%

2,19

5 2.

62%

2,13

9 -1

0.61

% 2

,393

30

.80

%

219PRIME BANK

VER

TIC

AL

AN

ALY

SIS

Bala

nce

Shee

t Ite

ms

BDT

in m

illio

n ex

cept

% w

hich

repr

esen

t per

cent

age

of to

tal a

sset

s

Part

icul

ars

2018

%

2017

%

2016

%

2015

%

2014

%

Loan

s an

d ad

vanc

e 2

05,

810

70

.03%

198,

323

70.5

1% 17

0,21

2 62

.53%

151,8

65

56.8

1% 14

7,367

54

.74%

Prop

ery

plan

t and

equ

ipm

ent

6,9

43

2.36

% 6

,434

2.

29%

6,5

90

2.42

% 6

,516

2.

44%

6,6

13

2.46

%

Tota

l ass

ets

293

,90

1 10

0%

281

,275

10

0%

272

,224

10

0%

267

,322

10

0%

269

,218

10

0%

Dep

osits

and

oth

er a

ccou

nts

197,5

18

67.2

1% 19

9,0

14

70.7

5% 19

7,934

72

.71%

194,

825

72.8

8% 2

04,8

38

76.0

9%

Shar

ehol

ders

’ equ

ity 2

6,18

1 8.

91%

24,

708

8.78

% 2

5,28

5 9.

29%

26,

415

9.88

% 2

4,46

1 9.

09%

Prof

it &

Los

s Ite

ms

BDT

in m

illio

n ex

cept

% w

hich

repr

esen

t per

cent

age

of g

ross

ope

ratin

g re

venu

e

Part

icul

ars

2018

%

2017

%

2016

%

2015

%

2014

%

Inte

rest

inco

me

/ pro

fit o

n in

vest

men

ts 18

,390

77

.79%

14,7

69

67.0

6% 13

,989

61

.63%

15,5

51

59.0

6% 18

,446

67

.13%

Inte

rest

/ pr

ofit

paid

on

depo

sits

, bor

row

ings

, etc

. (1

0,74

1)-4

5.43

% (9

,875

)-4

4.84

% (1

0,67

6)-4

7.03%

(14,

257)

-54.

15%

(15,

574)

-56.

67%

Net

inte

rest

/ ne

t pro

fit o

n in

vest

men

ts 7

,650

32

.36%

4,8

94

22.2

2% 3

,313

14

.60

% 1,

294

4.91

% 2

,872

10

.45%

Inve

stm

ent i

ncom

e 2

,154

9.11

% 4

,246

19

.28%

6,2

03

27.3

3% 7

,989

30

.34%

6,19

4 22

.54%

Com

mis

sion

, exc

hang

e an

d br

oker

age

2,2

09

9.34

% 2

,245

10

.19%

1,69

3 7.4

6% 1,

956

7.43%

2,0

33

7.40

%

Oth

er o

pera

ting

inco

me

887

3.

75%

764

3.

47%

814

3.

58%

834

3.

17%

80

6 2.

93%

Tota

l ope

ratin

g in

com

e ( n

et o

pera

ting

reve

nue)

12,8

99

54.5

7% 12

,148

55.16

% 12

,023

52

.97%

12,0

73

45.8

5% 11

,90

6 43

.33%

Gro

ss o

pera

ting

reve

nue

23,

640

10

0%

22,

024

10

0%

22,

699

100

% 2

6,33

0

100

% 2

7,480

10

0%

Sala

ry e

xpen

ses

4,16

9 17

.63%

3,8

35

17.4

1% 3

,661

16

.13%

3,6

02

13.6

8% 3

,288

11

.97%

Oth

er o

pera

ting

expe

nses

3,0

11

12.74

% 2

,940

13

.35%

2,6

05

11.4

7% 2

,564

9.

74%

2,4

61

8.96

%

Tota

l ope

ratin

g ex

pens

es

7,18

0

30.3

7% 6

,775

30

.76%

6,2

66

27.6

0%

6,16

6 23

.42%

5,7

50

20.9

2%

Ope

ratin

g pr

ofit

5,7

19

24.19

% 5

,373

24

.40

% 5

,757

25

.36%

5,9

06

22.4

3% 6

,157

22.4

0%

Prov

isio

n fo

r loa

ns a

nd a

dvan

ce &

oth

er a

sset

s 1,

782

7.54%

3,5

64

16.18

% 3

,412

15

.03%

3,15

4 11

.98%

2,8

77

10.4

7%

Tota

l pro

fit /

(loss

) bef

ore

taxe

s 3

,938

16

.66%

1,80

9 8.

21%

2,3

45

10.3

3% 2

,752

10

.45%

3,2

80

11.9

4%

Prov

isio

n fo

r tax

1,75

0

7.40

% 7

50

3.41

% 15

0

0.66

% 6

13

2.33

% 8

87

3.23

%

Net

pro

fit a

fter

taxa

tion

2,18

8 9.

25%

1,0

59

4.81

% 2

,195

9.67

% 2

,139

8.12

% 2

,393

8.

71%

220 PRIME BANK

ANNUAL REPORT 2018

GRAPHICAL PRESENTATION

20182017201620152014

Shareholders' EquityBDT in Million

26,18

1

24,7

08

25,2

85

26,4

15

24,4

61

20182017201620152014

Net Profit After TaxBDT in Million

2,18

8

1,059

2,19

5

2,13

92,39

3

20182017201620152014

Loans and AdvancesBDT in Million

205,

810

198,

323

170

,212

151,8

65

147,

367

20182017201620152014

Operating RevenueBDT in Million

12,8

99

12,14

8

12,0

23

12,0

73

11,9

06

20182017201620152014

DepositsBDT in Million

197,

518

199,

014

197,

934

194,

82520

4,83

8

20182017201620152014

Operating ProfitBDT in Million

5,71

9

5,37

35,75

7

5,90

6

6,15

7

20182017201620152014

Earnings Per Share (BDT)

1.93

0.9

4

1.94

1.89

2.11

Non- performing loans (BDT in Million)

Non- performing loans (percent)

Non- performing loans

20182017201620152014

6.16

5.45

5.96

7.82

7.61

12,6

86

10,7

99

10,13

9

11,8

83

11,2

15

Total capital (BDT in Million)

Total capital to RWA Ratio (percent)

20182017201620152014

17.0

4

14.0

1

12.4

5

12.74

12.7

1

38,2

59

32,2

51

31,6

32

29,2

83

27,3

13

Regulatory Capital

221PRIME BANK

20182017201620152014

Return on Assets (Percent)

0.7

6

0.3

8

0.8

1

0.8

0 0

.91

20182017201620152014

Net Asset Value per Share (BDT)

23.12

24.0

0

24.5

6

25.6

6

23.7

6

20182017201620152014

Yield on Advances (Percent)

8.51

7.428.

45

10.2

012.0

9

20182017201620152014

Return on Equity (Percent)

8.60

4.24

8.49

8.41

10.0

8

20182017201620152014

Cost of Deposit (Percent)

4.72

4.46

4.94

6.64

7.36

20182017201620152014

Dividend (Percent)12

.50

17.0

0

16.0

0

15.0

0

15.0

0

2018

Corporate &InstitutionalBanking: 18%

CommercialBankingDivision: 6%

MSME: 9%Consumer &Others: 67%

Deposits (by segments) Loans and Advances (by segments)

MSME:10%

Consumer& Others:

9%

CommercialBankingDivision:

26%

Corporate &Institutional

Banking:55%2018

222 PRIME BANK

ANNUAL REPORT 2018

DISTRIBUTION OF SHAREHOLDINGS

TypesAmount % of shares

2018 2017 2018 2017

Sponsors 4,152,053,350 3,915,393,490 36.67% 38.04%

Financial Institutions 3,076,157,170 2,503,815,050 27.17% 24.32%

Foreign Investors 348,688,820 385,416,330 3.08% 3.75%

Non- Resident Bangladeshi 2,6774,640 27,819,790 0.24% 0.27%

General Public 3,719,160,790 3,461,041,500 32.84% 33.62%

Total 11,322,834,770 10,293,486,160 100% 100%

SHARES HELD BY DIRECTORS

Sl.No.

Name of the Director Designation 31-12-2017 31-12-2018 Change

01Mr. Azam J Chowdhury (Representative of East Coast Shipping Lines Limited)

Chairman 20,601,158 22,661,273 10%

02 Mr. Mafiz Ahmed Bhuiyan Vice Chairman 20,591,099 22,650,208 10%

03 Mr. Imran Khan Vice Chairman 20,588,337 22,647,170 10%

04 Mr. Md. Nader Khan Director 38,019,361 41,821,296 10%

05 Quazi Sirazul Islam Director 20,616,158 22,677,773 10%

06 Mrs. Marina Yasmin Chowdhury Director 24,225,000 27,288,000 13%

07 Mr. Md. Shahadat Hossain Director 20,611,583 22,672,741 10%

08 Mr. Shirajul Islam Mollah Director 20,644,922 22,709,414 10%

09 Mrs. Nasim Anwar Hossain Director 23,365,749 25,702,323 10%

10 Mrs. Salma Huq Director 32,254,341 35,479,775 10%

11 Mr. Nafis Sikder Director 25,826,178 28,408,795 10%

12Mr. Waheed Murad Jamil(Representative of Mawsons Limited)

Director 20,587,749 22,646,523 10%

13 Mr. Tarique Ekramul Haque Director 20,600,391 22,660,429 10%

14Mr. Mohammad Mushtaque Ahmed Tanvir(Representative of Uniglory Cycle Industries Ltd.)

Director 20,760,250 22,836,275 10%

15 Mr. Shamsuddin Ahmad, Ph.D Independent Director - - -

16 Dr. G. M. Khurshid Alam Independent Director - - -

17 Mr. M. Farhad Hussain, FCA Independent Director - - -

18 Dr. M. Shamim Z. Bosunia Independent Director - - -

Total 329,292,276 362,861,995

Shareholding Positions

2018

Sponsors:36.67%

FinancialInstitutions:27.17%

GeneralPublic:32.84%

Non-ResidentBangladeshi: 0.24%

ForeignInvestors:3.08%

223PRIME BANK

FINANCIAL CALENDAR 2018

Quarterly Results

Audited consolidated results for the 4th quarter ended 31 December 2017 Announced on 10th April 2018

Unaudited consolidated results for the 1st quarter ended 31 March 2018 Announced on 13th May 2018

Unaudited consolidated results for the 2nd quarter and half-year ended 30 June 2018 Announced on 26th July 2018

Unaudited consolidated results for the 3rd quarter ended 30 September 2018 Announced on 28th October 2018

Dividends

Distribution of cash dividend of 7.00% in respect of financial year ended 31 December 2017 28th May 2018

Notice of Annual General Meeting 10th April 2018

Annual General Meeting 24th May 2018

MARKET PRICE INFORMATION

The reported high and low prices and volume of shares of Prime Bank Limited traded during the year 2018 on Dhaka Stock Exchange and Chittagong Stock Exchange are given below:

MonthDSE CSE Total Volume on

DSE & CSEHigh Taka Low Taka Volume High Taka Low Taka Volume

January 27.60 23.20 18643493 27.30 22.60 255655 18899148

February 24.00 20.50 9884555 24.40 20.50 209160 10093715

March 22.40 19.00 8096976 22.40 19.10 62617 8159593

April 22.50 19.40 13395766 23.00 18.90 283481 13679247

May 22.10 17.40 4608986 22.00 16.00 147137 4756123

June 18.30 15.80 11965235 18.20 16.10 226813 12192048

July 16.50 14.50 14837868 16.20 14.20 716734 15554602

August 18.90 15.30 42506010 19.00 15.40 1098701 43604711

September 18.30 15.60 33972653 17.60 15.50 566294 34538947

October 17.60 15.50 36071329 18.00 15.50 1884965 37956294

November 18.20 16.20 11993222 17.60 16.40 169156 12162378

December 18.50 16.70 16913821 18.80 16.80 366760 17280581

Total Trade Graph of PRIME BANK_ Trade

Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18

1000

900

800

700

600

500

400

300

200

100

0

FINANCIAL STATEMENTS

Independent Auditors’ Report to the Shareholders

Consolidated Balance Sheet

Consolidated Profit and Loss Account

Consolidated Cash Flow Statement

Consolidated Statement of Changes in Equity

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements

225PRIME BANK

Opinion

We have audited the consolidated financial statements of Prime Bank Limited and its subsidiaries (the “Group”) as well as the separate financial statements of Prime Bank Limited (the “Bank”), which comprise the consolidated and separate balance sheets as at 31 December 2018 and the consolidated and separate profit and loss accounts, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements of the Group and separate financial statements of the Bank give a true and fair view of the consolidated financial position of the Group and the separate financial position of the Bank as at 31 December 2018, and of its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note 2.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group and the Bank in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Description of key audit matters Our response to key audit matters

Measurement of provision for loans, advances and leases

The process for estimating the provision for loans, advances and leases portfolio associated with credit risk is significant and complex.

For the individual analysis for large exposure, provisions calculation consider the estimates of future business performance and the market value of collateral provided for credit transactions.

For the collective analysis of exposure on portfolio basis, provision calculation and reporting are manually processed that deals with voluminous databases, assumptions and estimates.

At year end the Group reported total gross loans and advances of BDT 208,196 million (2017: BDT 200,619 million) and provision for loans and advances of BDT 8,728 million (2017: BDT 9,390 million).

We tested the design and operating effectiveness of key controls focusing on the following:

• Credit appraisal, loan disbursement procedures, monitoring and provisioning process;

• Identification of loss events, including early warning and default warning indicators;

• Reviewed quarterly Classification of Loans (CL);

Our substantive procedures in relation to the provision for loans and advances portfolio comprised the following:

• Reviewed the adequacy of the general and specific provisions in line with related Bangladesh Bank guidelines;

• Assessed the methodologies on which the provision amounts are based, recalculated the provisions and tested the completeness and accuracy of the underlying information;

• Evaluated the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines.

• Finally, compared the amount of provision requirement as determined by Bangladesh Bank inspection team to the actual amount of provision maintained.

See note no 7 and 14 to the financial statements

Independent Auditor’s ReportTo the Shareholders of Prime Bank LimitedReport on the Audit of the Consolidated and Separate Financial Statements

226 PRIME BANK

ANNUAL REPORT 2018

Valuation of treasury bill and treasury bond

The classification and measurement of T-Bill and T-Bond require judgment and complex estimates.

In the absence of a quoted price in an active market, the fair value of T-Bills and T-Bonds is determined using complex valuation techniques which may take into consideration direct or indirect unobservable market data and complex pricing models which require an elevated level of judgment.

We assessed the processes and controls put in place by the Bank to identify and confirm the existence of treasury bills and bonds.

We obtained an understanding, evaluated the design and tested the operating effectiveness of the key controls over the treasury bills and bonds valuation processes, including controls over market data inputs into valuation models, model governance, and valuation adjustments.

We tested a sample of the valuation models and the inputs used in those models, using a variety of techniques, including comparing inputs to available market data.

Finally assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines.

See note no 6 to the financial statements

Impairment assessment of unquoted investments

In the absence of a quoted price in an active market, the fair value of unquoted shares and bonds, especially any impairment is calculated using valuation techniques which may take into consideration direct or indirect unobservable market data and hence require an elevated level of judgment.

We have assessed the processes and controls put in place by the Company to ensure all major investment decisions are undertaken through a proper due diligence process.

We tested a sample of investments valuation as at 31 December 2018 and compared our results to the recorded value.

Finally, we assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines.

See note no 6 to the financial statements

IT systems and controls

Our audit procedures have a focus on IT systems and controls due to the pervasive nature and complexity of the IT environment, the large volume of transactions processed in numerous locations daily and the reliance on automated and IT dependent manual controls.

Our areas of audit focus included user access management, developer access to the production environment and changes to the IT environment. These are key to ensuring IT dependent and application based controls are operating effectively.

We tested the design and operating effectiveness of the Bank’s IT access controls over the information systems that are critical to financial reporting.

We tested IT general controls (logical access, changes management and aspects of IT operational controls). This included testing that requests for access to systems were appropriately reviewed and authorized.

We tested the Bank’s periodic review of access rights and reviewed requests of changes to systems for appropriate approval and authorization.

We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit.

Legal and regulatory matters

We focused on this area because the Bank and its subsidiaries (the “Group”) operates in a legal and regulatory environment that is exposed to significant litigation and similar risks arising from disputes and regulatory proceedings. Such matters are subject to many uncertainties and the outcome may be difficult to predict.

These uncertainties inherently affect the amount and timing of potential outflows with respect to the provisions which have been established and other contingent liabilities.

Overall, the legal provision represents the Group’s and the Bank’s best estimate for existing legal matters that have a probable and estimable impact on the Group’s financial position.

We obtained an understanding, evaluated the design and tested the operational effectiveness of the Bank’s key controls over the legal provision and contingencies process.

We enquired to those charged with governance to obtain their view on the status of all significant litigation and regulatory matters.

We enquired of the Bank’s internal legal counsel for all significant litigation and regulatory matters and inspected internal notes and reports.

We assessed the methodologies on which the provision amounts are based, recalculated the provisions, and tested the completeness and accuracy of the underlying information.

We also assessed the Bank’s provisions and contingent liabilities disclosure.

227PRIME BANK

Carrying value of investments in subsidiaries by the Bank

The Bank has invested in equity shares of its five subsidiaries, namely Prime Bank Investment Limited, Prime Bank Securities Limited, Prime Exchange Co (Pte) Limited, Singapore, PBL Exchange (UK) Limited, PBL Finance (Hong Kong) Limited. As at 31 December 2018 the carrying value of this investment is BDT 3,814 million.

At the time of conducting our audit of the separate financial statements of the Bank we have considered the recoverable value of the Bank’s investments in all the above subsidiaries stated at cost.

Management has conducted impairment assessment and calculated recoverable value of its individual subsidiaries in accordance with IAS 36.

We have reviewed Management’s analysis of impairment assessment and recoverable value calculation of subsidiaries in accordance with IAS 36.

In particular, our discussions with the Management were focused on the continued appropriateness of the value in use model, the key assumptions used in the model, the reasonably possible alternative assumptions, particularly where they had the most impact on the value in use calculation.

We also checked mathematical accuracy of the model, recalculated discount rate used within the model, inputs used in the determination of assumptions within the model were challenged and corroborating information was obtained with reference to external market information, third-party sources.

Revaluation of property, plant and equipment

The Bank in prior year has undertaken revaluation of its land and building. As a result of this revaluation exercise, an amount of BDT 1,767 million is recognised as the fair value gain in revaluation reserve and BDT 270 million as resultant deferred tax liability. Determination of fair value in absence of any quoted price and active market require significant judgment

We assessed the process of revaluation previously taken by the Bank.

We reviewed revaluation report of the independent valuer along with relevant documents and applied our judgment to see whether the fair value is still relevant.

We checked related accounting treatments of fair value gain and associated deferred tax as recognized by the Bank.

Reporting on other information

Management is responsible for the other information. The other information comprises all of the information in the Annual Report other than the consolidated and separate financial statements and our auditors’ report thereon. The Annual Report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, on the other information obtained prior to the date of this audit report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated and Separate Financial Statements and Internal Controls

Management is responsible for the preparation and fair presentation of the consolidated financial statements of the Group and also separate financial statements of the Bank in accordance with IFRSs as explained in note 2, and for such internal control as management determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 and the Bangladesh Bank Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Bank. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries.

In preparing the consolidated and separate financial statements, management is responsible for assessing the Group’s and the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and the Bank’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

228 PRIME BANK

ANNUAL REPORT 2018

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Bank to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other Legal and Regulatory Requirements

In accordance with the Companies Act, 1994, the Securities and Exchange Rules 1987, the Bank Company Act, 1991 and the rules and regulations issued by Bangladesh Bank, 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 purpose of our audit and made due verification thereof;

ii. to the extent noted during the course of our audit work performed on the basis stated under the Auditor’s Responsibility section in forming the above opinion on the consolidated financial statements and considering the reports of the Management to Bangladesh Bank on anti-fraud internal controls and instances of fraud and forgeries as stated under the Management’s Responsibility for the financial statements and internal control:

a. internal audit, internal control and risk management arrangements of the Group as disclosed in the financial statements appeared to be materially adequate;

b. nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Group and its related entities {other than matters disclosed in these financial statements};

iii. Consolidated financial statements of the Bank include five subsidiaries, namely Prime Bank Investment Limited, Prime Bank

229PRIME BANK

Securities Limited, Prime Exchange Co (Pte) Limited, Singapore, PBL Exchange (UK) Limited, PBL Finance (Hong Kong) Limited reflect total assets of BDT 295,011,325,205 as at 31 December 2018 and total revenue of BDT 24,235,857,493 for the year ended 31 December 2018. These five subsidiaries of the Bank have been audited by other component auditors who have expressed unqualified audit opinion. The results of these subsidiaries have been properly reflected in the Group’s consolidated financial statements;

iv. in our opinion, proper books of account as required by law have been kept by the Group and the Bank so far as it appeared from our examination of those books;

v. the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements;

vi. the consolidated balance sheet and consolidated profit and loss account together with the annexed notes dealt with by the report are in agreement with the books of account and returns;

vii. the expenditures incurred were for the purpose of the Bank’s business for the year;

viii. the consolidated financial statements have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as related guidance issued by Bangladesh Bank;

ix. adequate provisions have been made for advance and other assets which are in our opinion, doubtful of recovery;

x. the information and explanations required by us have been received and found satisfactory;

xi. we have reviewed over 80% of the risk weighted assets of the Bank and spent over 8000 person hours; and

xii. Capital to Risk-weighted Asset Ratio (CRAR) as required by Bangladesh Bank has been maintained adequately during the year.

Aziz Halim Khair ChoudhuryChartered Accountants

Hoda Vasi Chowdhury & CoChartered Accountants

Dated, April 03, 2019

230 PRIME BANK

ANNUAL REPORT 2018

Consolidated Balance Sheetas at 31 December 2018

Particulars NotesAmount in Taka

2018 2017

PROPERTY AND ASSETSCash 3

Cash in hand (including foreign currencies) 3,132,734,166 3,140,588,297 Balance with Bangladesh Bank and its agent bank (s)(including foreign currencies) 14,539,287,480 14,973,037,651

17,672,021,646 18,113,625,948 Balance with other banks and financial institutions 4

In Bangladesh 10,300,411,247 7,471,466,377 Outside Bangladesh 3,327,554,977 2,773,249,334

13,627,966,225 10,244,715,711 Money at call on short notice 5 - 1,500,000,000

Investments 6Government 24,646,806,239 23,657,686,975 Others 3,341,464,542 2,222,449,188

27,988,270,780 25,880,136,163

Loans, advances and lease /investments

Loans, cash credits, overdrafts etc./ investments 7 196,586,141,191 184,066,239,687 Bills purchased and discounted 8 11,609,817,551 16,552,939,609

208,195,958,743 200,619,179,296 Fixed assets including premises, furniture and fixtures 9 6,996,504,016 6,487,041,211 Other assets 10 20,310,103,156 19,329,742,018 Non - banking assets 11 220,500,640 220,500,640

Total assets 295,011,325,205 282,394,940,987

LIABILITIES AND CAPITAL

Liabilities

Borrowings from other banks, financial institutions and agents 12 33,944,516,693 22,137,997,510

Deposits and other accounts 13

Current / Al-wadeeah current deposits 32,720,490,917 33,182,700,323

Bills payable 3,045,875,590 4,212,571,458 Savings bank / Mudaraba savings deposits 41,478,074,475 38,397,699,341 Term deposits / Mudaraba term deposits 120,248,988,239 123,207,326,047

Bearer certificate of deposit - - Other deposits - -

197,493,429,221 199,000,297,169

Other liabilities 14 37,274,782,999 36,443,698,544 Total liabilities 268,712,728,913 257,581,993,222 Capital / Shareholders' equity

Paid -up capital 15.2 11,322,834,770 10,293,486,160 Share premium 15.8 1,211,881,786 2,241,230,396

Non-controlling Interest 15.9 63 61 Statutory reserve 16 10,353,413,584 9,565,853,177

Revaluation gain / loss on investments 17 71,798,624 55,285,288 Revaluation reserve 18 1,496,759,104 1,496,759,104 Foreign currency translation gain 19 15,117,438 15,334,146 General reserve 28,002,888 28,002,888 Surplus in profit and loss account / Retained earnings 20 1,798,788,031 1,116,996,544 Total Shareholders' equity 26,298,596,289 24,812,947,765

Total liabilities and Shareholders' equity 295,011,325,205 282,394,940,987

231PRIME BANK

Consolidated Balance Sheetas at 31 December 2018

Particulars NotesAmount in Taka

2018 2017

OFF - BALANCE SHEET ITEMS

Contingent liabilities 21

Acceptances and endorsements 21.1 52,944,055,583 49,721,797,256

Letters of guarantee 21.2 57,826,844,429 72,966,435,302

Irrevocable letters of credit 21.3 38,072,832,383 34,112,938,262

Bills for collection 21.4 11,613,890,781 10,766,851,918

Other contingent liabilities - -

160,457,623,176 167,568,022,737

Other commitments

Documentary credits and short term trade -related transactions - -

Forward assets purchased and forward deposits placed 2,095,175,884 240,823,450

Undrawn note issuance and revolving underwriting facilities - -

Undrawn formal standby facilities , credit lines and other commitments - -

Liabilities against forward purchase and sale - -

- -

2,095,175,884 240,823,450

Total Off-Balance Sheet items including contingent liabilities 162,552,799,060 167,808,846,187

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

See annexed auditors' report to the Shareholders of the date.

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & Co

Chartered Accountants Chartered Accountants

Dated, 03 April 2019

232 PRIME BANK

ANNUAL REPORT 2018

Consolidated Profit and Loss Accountfor the year ended 31 December 2018

Particulars NotesAmount in Taka

2018 2017

Interest income / profit on investments 23 18,524,318,925 14,853,354,233

Interest / profit paid on deposits, borrowings, etc. 24 (10,741,904,936) (9,885,293,129)

Net interest / net profit on investments 7,782,413,989 4,968,061,104

Investment income 25 2,312,228,869 4,396,502,019

Commission, exchange and brokerage 26 2,379,034,115 2,453,506,591

Other operating income 27 942,121,164 827,182,771

Total operating income (A) 13,415,798,137 12,645,252,485

Salaries and allowances 28 4,328,098,311 3,966,047,129

Rent, taxes, insurance, electricity, etc. 29 1,030,304,013 963,386,657

Legal expenses 30 110,747,428 88,016,667

Postage, stamp, telecommunication, etc. 31 79,503,863 87,789,124

Stationery, printing, advertisements, etc. 32 231,584,903 202,304,048

Managing Director's salary and fees 33 10,131,935 11,528,936

Directors' fees 34 4,501,129 5,200,364

Auditors' fees 35 2,800,850 2,558,659

Charges on loan losses 36 - -

Depreciation and repair of Bank's assets 37 422,261,737 375,487,188

Other expenses 38 1,385,429,678 1,353,717,503

Total operating expenses (B) 7,605,363,847 7,056,036,276

Profit / (loss) before provision (C=A-B) 5,810,434,290 5,589,216,209

Provision for loans & advances 39 1,781,500,000 3,255,500,000

Provision for diminution in value of investments 39 41,967,108 (141,676,723)

Provision for impairment of client margin loan 39 (27,964,899) 106,528,754

Other provisions 39 (13,902,208) 372,364,941

Total provision (D) 1,781,600,001 3,592,716,972

Total profit / (loss) before taxes (C-D) 4,028,834,289 1,996,499,236

Provision for taxation:

Current tax 40 1,775,174,401 781,212,608

Deferred tax 26,022 (241,630)

1,775,200,423 780,970,978

Net profit after taxation 2,253,633,866 1,215,528,259

Retained earnings brought forward from previous year 20.1 332,714,576 263,263,221

2,586,348,442 1,478,791,480

233PRIME BANK

Consolidated Profit and Loss Accountfor the year ended 31 December 2018

Particulars NotesAmount in Taka

2018 2017

Appropriations

Statutory reserve 787,560,407 361,794,935

Non controlling interest 3.44 1.33

General reserve - -

787,560,411 361,794,936

Retained surplus 20 1,798,788,031 1,116,996,544

Earnings per share (EPS) 45 1.99 1.07

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

See annexed auditors' report to the Shareholders of the date

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & Co

Chartered Accountants Chartered Accountants

Dated, 03 April 2019

234 PRIME BANK

ANNUAL REPORT 2018

Consolidated Cash Flow Statementfor the year ended 31 December 2018

Particulars NotesAmount in Taka

2018 2017A) Cash flows from operating activities

Interest receipts in cash 20,893,501,871 17,266,709,150 Interest payments (10,014,939,036) (10,329,512,430)Dividend receipts 88,098,460 135,923,182 Fees and commission receipts in cash 2,379,034,115 2,453,506,591 Recoveries of loans previously written off 203,780,138 409,904,161 Cash payments to employees (4,227,915,674) (4,093,129,740)Cash payments to suppliers (704,234,102) (745,612,408)Income taxes paid (491,561,431) (587,515,461)Receipts from other operating activities 41 1,139,444,273 2,742,217,905 Payments for other operating activities 42 (2,122,945,953) (2,108,218,281)Cash generated from operating activities before changes in operating assets and liabilities 7,142,262,661 5,144,272,670

Increase / (decrease) in operating assets and liabilitiesPurchase of trading securities (Treasury bills) (2,698,687,081) 16,912,134,608 Loans and advances to customers (10,235,424,998) (29,444,601,255)Other assets 43 45,363,165 6,883,801,999 Deposits from other banks / borrowings 6,933,521,555 8,313,001,382 Deposits from customers (2,671,173,267) 315,343,333 Other liabilities account of customers (1,166,695,868) (955,792,457)Other liabilities 44 (640,075,960) 315,079,735

(10,433,172,454) 2,338,967,345 Net cash from operating activities (3,290,909,793) 7,483,240,015

B) Cash flows from investing activities

Payments for purchases of securities (116,933,132) 213,301,771 Purchase of property, plant and equipment (872,160,159) (285,131,076)Payment against lease obligation - - Proceeds from sale of property, plant and equipment 2,428,754 3,748,894 Net cash used in investing activities (986,664,537) (68,080,411)

C) Cash flows from financing activitiesReceipts from issue of sub-ordinated bond 7,000,000,000 - Payments for redemption of sub-ordinated bond (500,000,000) (1,250,000,000)Dividend paid (788,631,461) (1,705,034,284)Net cash used in financing activities 5,711,368,539 (2,955,034,284)

D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 1,433,794,209 4,460,125,319 E) Effects of exchange rate changes on cash and cash equivalents 9,174,203 41,104,854 F) Cash and cash equivalents at beginning of the year 29,860,716,759 25,359,486,586

G) Cash and cash equivalents at end of the year (D+E+F) 31,303,685,171 29,860,716,759

Cash and cash equivalents at end of the yearCash in hand (including foreign currencies) 3,132,734,166 3,140,588,297 Balance with Bangladesh Bank and its agent bank (s)(including foreign currencies) 14,539,287,480 14,973,037,651 Balance with other banks and financial institutions 13,627,966,225 10,244,715,711 Money at call and short notice - 1,500,000,000 Prize bonds (note-6a) 3,697,300 2,375,100

31,303,685,171 29,860,716,759

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

Dated , 03 April 2019

235PRIME BANK

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236 PRIME BANK

ANNUAL REPORT 2018

Balance Sheetas at 31 December 2018

Particulars NotesAmount in Taka

2018 2017PROPERTY AND ASSETSCash 3aCash in hand (including foreign currencies) 3,100,264,070 3,031,607,478 \Balance with Bangladesh Bank and its agent bank (s)(including foreign currencies) 14,539,287,480 14,973,037,651

17,639,551,549 18,004,645,129 Balance with other banks and financial institutions 4aIn Bangladesh 10,174,200,785 7,380,647,955 Outside Bangladesh 3,230,634,401 2,701,942,497

13,404,835,186 10,082,590,452 Money at call on short notice 5 - 1,500,000,000 Investments 6aGovernment 24,646,806,239 23,657,686,975 Others 1,399,611,720 149,457,283

26,046,417,958 23,807,144,258 Loans, advances and lease / investments Loans, cash credits, overdrafts, etc./ investments 7a 196,456,187,502 183,593,663,315 Bills purchased and discounted 8a 9,353,331,214 14,729,065,476

205,809,518,716 198,322,728,791 Fixed assets including premises, furniture and fixtures 9a 6,943,348,521 6,434,047,671 Other assets 10a 23,836,555,730 22,903,009,700 Non - banking assets 11 220,500,640 220,500,640

Total assets 293,900,728,300 281,274,666,641

LIABILITIES AND CAPITALLiabilitiesBorrowings from other banks, financial institutions and agents 12a 33,944,516,693 22,087,479,113 Deposits and other accounts 13a.1.cCurrent / Al-wadeeah current deposits 32,742,551,758 33,196,233,861 Bills payable 3,045,875,590 4,212,571,458 Savings bank / Mudaraba savings deposits 41,478,074,475 38,397,699,341 Term deposits / Mudaraba term deposits 120,251,223,734 123,207,471,241 Bearer certificate of deposit - - Other deposits - -

197,517,725,557 199,013,975,901

Other liabilities 14a 36,257,586,840 35,465,414,699

Total liabilities 267,719,829,090 256,566,869,714

Capital / Shareholders' equity

Paid up capital 15 .2 11,322,834,770 10,293,486,160

Share premium 15.8 1,211,881,786 2,241,230,396 Statutory reserve 16 10,353,413,584 9,565,853,177 Revaluation gain / (loss) on investments 17a 22,087,009 17,749,598 Revaluation reserve 18 1,496,759,104 1,496,759,104 Foreign currency translation gain 19a 14,920,954 13,414,088 Other reserve - - Surplus in profit and loss account / Retained earnings 20a 1,759,002,003 1,079,304,405

Total Shareholders' equity 26,180,899,209 24,707,796,928

Total liabilities and Shareholders' equity 293,900,728,300 281,274,666,641

237PRIME BANK

Balance Sheetas at 31 December 2018

Particulars NotesAmount in Taka

2018 2017

OFF - BALANCE SHEET ITEMS

Contingent liabilities 21a

Acceptances and endorsements 21a.1 52,944,055,583 49,721,797,256

Letters of guarantee 21a.2 57,826,844,429 72,966,435,302

Irrevocable letters of credit 21a.3 38,072,832,383 34,112,938,262

Bills for collection 21a.4 11,613,890,781 10,766,851,918

Other contingent liabilities - -

160,457,623,176 167,568,022,737

Other commitments

Documentary credits and short term trade -related transactions - -

Forward assets purchased and forward deposits placed 2,095,175,884 240,823,450

Undrawn note issuance and revolving underwriting facilities - -

Undrawn formal standby facilities , credit lines and other commitments - -

Liabilities against forward purchase and sale - -

2,095,175,884 240,823,450

Total Off-Balance Sheet items including contingent liabilities 162,552,799,060 167,808,846,187

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

See annexed auditors' report to the Shareholders of the date.

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & Co

Chartered Accountants Chartered Accountants

Dated , 03 April 2019

238 PRIME BANK

ANNUAL REPORT 2018

Profit and Loss Accountfor the year ended 31 December 2018

Particulars NotesAmount in Taka

2018 2017

Interest income / profit on investments 23a 18,390,385,430 14,769,140,556

Interest / profit paid on deposits, borrowings, etc. 24a (10,740,853,932) (9,875,345,368)Net interest / net profit on investments 7,649,531,498 4,893,795,187 Investment income 25a 2,154,009,477 4,245,579,605 Commission, exchange and brokerage 26a 2,208,574,964 2,244,846,406 Other operating income 27a 887,322,424 764,028,440 Total operating income (A) 12,899,438,362 12,148,249,639

Salaries and allowances 28a 4,158,596,820 3,823,661,492 Rent, taxes, insurance, electricity, etc. 29a 961,285,687 906,160,291 Legal expenses 30a 105,967,130 83,038,972 Postage, stamp, telecommunication, etc. 31a 70,375,029 77,943,186 Stationery, printing, advertisements, etc. 32a 226,156,608 197,559,994 Managing Director's salary and fees 33 10,131,935 11,528,936 Directors' fees 34a 3,663,929 4,495,414 Auditors' fees 35a 1,380,000 1,380,000 Charges on loan losses 36 - - Depreciation and repair of Bank's assets 37a 406,514,271 365,042,696 Other expenses 38a 1,235,964,917 1,304,063,983 Total operating expenses (B) 7,180,036,326 6,774,874,964 Profit / (loss) before provision (C=A-B) 5,719,402,036 5,373,374,674 Provision for loans & advances 39a 1,781,500,000 3,255,500,000 Provision for diminution in value of investments 39a 18,700,000 (60,516,500)Other provisions 39a (18,600,000) 369,416,500 Total provision (D) 1,781,600,000 3,564,400,000 Total profit / (loss) before taxes (C-D) 3,937,802,036 1,808,974,674 Provision for taxation Current tax 40a 1,750,000,000 750,000,000 Deferred tax - -

1,750,000,000 750,000,000 Net profit after taxation 2,187,802,036 1,058,974,674 Retained earnings brought forward from previous years 20.1a 358,760,374 382,124,666

2,546,562,410 1,441,099,340

Appropriations Statutory reserve 787,560,407 361,794,935 General reserve - -

787,560,407 361,794,935 Retained surplus 20a 1,759,002,003 1,079,304,405

Earnings per share (EPS) 45a 1.93 0.94

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

See annexed auditors' report to the Shareholders of date

Aziz Halim Khair Choudhury Hoda Vasi Chowdhury & CoChartered Accountants Chartered Accountants

Dated , 03 April 2019

239PRIME BANK

Cash Flow Statementfor the year ended 31 December 2018

Particulars NotesAmount in Taka

2018 2017A) Cash flows from operating activities

Interest receipts in cash 20,527,429,925 16,885,847,491 Interest payments (9,781,570,590) (10,022,462,361)Dividend receipts 88,098,460 80,601,232 Fees and commission receipts in cash 2,208,574,964 2,244,846,406 Recoveries of loans previously written off 203,780,138 409,904,161 Cash payments to employees (4,048,414,183) (3,950,744,104)Cash payments to suppliers (700,210,243) (723,477,625)Income taxes paid (491,561,431) (587,515,461)Receipts from other operating activities 41a 926,247,149 2,583,008,785 Payments for other operating activities 42a (1,888,295,683) (1,984,631,152)Cash generated from operating activities before changes in operating assets and liabilities 7,044,078,506 4,935,377,372

Increase / (decrease) in operating assets and liabilitiesPurchase of trading securities (Treasury bills) (2,698,687,081) 16,912,134,608 Loans and advances to customers (9,900,768,555) (29,772,028,217)Other assets 43a 92,178,274 6,944,608,143 Deposits from other banks / borrowings 6,739,373,030 8,766,832,663 Deposits from customers (2,671,173,267) 315,343,333 Other liabilities account of customers (1,166,695,868) (955,792,457)Other liabilities 44a (678,988,274) 222,731,088

(10,284,761,741) 2,433,829,160 Net cash from operating activities (3,240,683,235) 7,369,206,532

B) Cash flows from investing activitiesProceeds from sale of securities (248,072,215) 263,688,699 Purchase of property, plant and equipment (841,204,209) (285,131,076)Proceeds from sale of property, plant and equipment 2,428,754 3,748,894 Net cash used in investing activities (1,086,847,670) (17,693,483)

C) Cash flows from financing activitiesReceipts from issue of sub-ordinated bond 7,000,000,000 - Payments for redemption of sub-ordinated bond (500,000,000) (1,250,000,000)Dividend paid (720,544,031) (1,646,957,786)Net cash used in financing activities 5,779,455,969 (2,896,957,786)

D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 1,451,925,064 4,454,555,264 E) Effects of exchange rate changes on cash and cash equivalents 6,548,290 42,470,948 F) Cash and cash equivalents at beginning of the year 29,589,610,681 25,092,584,469

G) Cash and cash equivalents at end of the year (D+E+F) 31,048,084,036 29,589,610,681

Cash and cash equivalents at end of the yearCash in hand (including foreign currencies) 3,100,264,070 3,031,607,478 Balance with Bangladesh Bank and its agent bank (s)(including foreign currencies) 14,539,287,480 14,973,037,651 Balance with other banks and financial institutions 13,404,835,186 10,082,590,452 Money at call and short notice - 1,500,000,000 Prize bonds (note-6a) 3,697,300 2,375,100

31,048,084,036 29,589,610,681

These financial statements should be read in conjunction with the annexed notes 1 to 51.

Chairman Director Director Managing Director

Dated , 03 April 2019

240 PRIME BANK

ANNUAL REPORT 2018

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241PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

1 The Bank and its activities

1.1 Prime Bank Limited

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. At present the Bank has 146 (One Hundred Forty Six) branches including 18 (Eighteen) SME Centres/ Branches all over Bangladesh and 2 (Two) booths located at Dhaka Club, Dhaka and at Chittagong Port, Chittagong. Out of the above 146 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), 5 (Five) subsidiary Companies (3 Foreign subsidiaries & 2 Local subsidiaries). The Bank went for Initial Public Offering (IPO) in 1999 and its shares were listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly traded company for its general classes of share.

1.2 Principal activities

The principal activities of the Bank are to provide all kinds of commercial banking services to customers through its branches and SME centres/ branches in Bangladesh. The Bank also provides off-shore banking services through its 3 (Three) Off-shore Banking Units (OBU).

1.3 Off-shore Banking Units

The Bank commenced its off-shore banking operation after obtaining permission from Bangladesh Bank vide letter no. BRPD(P)744(84)/2001-868 dated March 19, 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. Apart from the reporting of OBU with solo financial statements a separate financial statements of Off -shore Banking Units are shown in Annexure-K.

1.4 The Bank has 5 (Five) Subsidiaries with following detail as presented in note no. 1.4.1 to 1.4.5:

1.4.1 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 April 28, 2010 which has commenced its business on the same date. Total 299,999,994 shares (out of 300,000,000 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 it 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 Limited, vide letter no. SEC/Reg/MB/SUB/2010/03/208, dated June 02, 2010 with effect from June 01, 2010. Financial Statements of the company are shown in Annexure-L.

1.4.2 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 became member of Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited for brokerage transaction vide Bangladesh Securities & Exchange Commission certificate no. 3.1/DSE-219/2010/429, dated September 16, 2010 and 3.2/CSE-141/2010/239, dated August 31, 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% share of Prime Bank Securities Limited respectively. Financial Statements of the company are shown in Annexure-M.

1.4.3 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) with 1 (One) branch located at 2A Desker Road, (2nd floor), Singapore 209549. In 2011, the Company has also opened another Branch located at Jurong East Branch, Block: 134 #01-305 Jurong Gateway Road, Singapore 600134. 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.

242 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

1.4.4 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 November 19, 2009. The company is a wholly owned subsidiary of Prime Bank Limited. The company commenced its operation on August 02, 2010 with 3 (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.

1.4.5 PBL Finance (Hong Kong) LimitedPBL 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 complianceThe financial statements of the Bank and its subsidiaries (the "Group") have been made for the year ended on December 31, 2018 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 (as Amended up to 2013), BRPD Circular # 14 dated June 25, 2003 and DFIM Circular # 11, dated December 23, 2009, other Bangladesh Bank Circulars, International Accounting Standards ("IAS") and International Financial Reporting Standards ("IFRS") 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 & rules applicable in Bangladesh. In cases where the requirements of Bangladesh Bank differ with those of IAS/IFRS, the requirements 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 BRPD 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.

The Financial Reporting Act 2015 (FRA) was enacted in 2015. Under the FRA, the Financial Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as banks. The Bank Companies Act 1991 has been amended to require banks to prepare their financial statements under such financial reporting standards. The FRC has been formed but yet to issue any financial reporting standards as per the provisions of the FRA and hence International Financial Reporting Standards (IFRS) as issued by the Institute of Chartered Accountants of Bangladesh (ICAB) are still applicable.

Accordingly, the financial statements of the Bank continue to be prepared in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Bank Company Act 1991, the rules and regulations issued by Bangladesh Bank (BB), the Companies Act 1994. In case any requirement of the Bank Company Act 1991, and provisions and circulars issued by Bangladesh Bank differ with those of IFRS, the requirements of the Bank Company Act 1991, and provisions and circulars issued by Bangladesh Bank shall prevail.

2.1.2 Basis of consolidationThe consolidated financial statements include the financial statements of Prime Bank Limited and its subsidiaries, i.e. Prime Bank Investment Limited, Prime Bank Securities Limited, Prime Exchange Co. (Pte) Limited, Singapore, PBL Exchange (UK) Limited and PBL Finance (Hong Kong) Limited.

The consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS)-27: "Separate Financial Statements" and International Financial Reporting Standard (IFRS)- 10: "Consolidated Financial Statements". The consolidated financial statements are prepared to a common financiall year ended on December 31, 2018.

243PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

SubsidiarySubsidiary 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 ceases. Subsidiary companies are consolidated using the purchase method of accounting. The overseas subsidiary companies i.e. Prime Exchange Co. (Pte) Limited, Singapore, Prime Exchange (UK) Limited and PBL Finance (Hong Kong) Limited has a common financial year ending December 31, 2018. 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 61.14270 105.98250 10.71657

For income & expenses Average price 61.48260 108.86335 10.65075

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 preparation of the financial statements management is 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 a going concern basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.The most significant areas where estimates and judgments have been applied are to calculate provision for loans, advances and investments as per Bangladesh Bank guidelines.

2.1.4 Foreign currency transactiona) Foreign currencyItems 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 BDT which is the Bank's functional and presentation currency.

b) Foreign currencies translationForeign currency transactions are converted into equivalent BDT using the prevailing exchange rates on the dates of respective transactions as per IAS-21, "The Effects of Changes in Foreign Exchange Rates". Foreign currency balances held in US Dollar are converted into BDT 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 equivalent BDT. Assets and liabilities & income and expenses of Off-shore Banking Units have been converted into BDT currency @ US$1 = BDT 83.90 (closing rate as at 31st December 2018) and BDT 83.4680 (average rate at year-end).

c) CommitmentsCommitments for outstanding forward foreign exchange contracts disclosed in these financial statements are translated at rates mentioned in contracts. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in BDT terms at the rates of exchange prevailing on the balance sheet date.

d) Translation gains and lossesThe 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.

e) Foreign operations

The results and financial position of the Group's 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 prevailing 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.

244 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

iv) As per IAS 21, 'Foreign Currency Transactions' i.e. foreign currency denominated both monetary and non-monetary items of the OBUs are translated at historical rate because the OBUs are considered as an integral part of the Bank's operation not a foreign operation due to specific regulations governing the OBU and its unique nature.

f) Consolidation of Financial Statements of foreign operations.In 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 flowsStatement of cash flows have been prepared in accordance with the BRPD Circular No. 14, dated June 25, 2003 issued by the Banking Regulation & Policy Department of Bangladesh Bank.

2.1.6 Liquidity statementThe liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term as per the following basis, details are shown in [Annexure-I & 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 residual term;iii) Loans and advances / investments are on the basis of their repayment/maturity schedule;iv) Fixed assets are on the basis of their useful life;v) 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;viii) Provisions and other liabilities are on the basis of their payment / adjustments schedule.

2.1.7 Reporting periodThese financial statements cover one calendar year from 1st January to 31st December 2018.

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, 25a, 26a.1).

2.2 Assets and basis of their valuation2.2.1 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 / investmentsa) 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 the following instructions contained in

Bangladesh Bank BRPD Circular no. 14, dated September 23, 2012, BRPD Circular no. 19, dated December 27, 2012, BRPD Circular no. 05, dated May 29, 2013, BRPD Circular no. 16, dated November 18, 2014, BRPD Circular no. 12, dated August 20, 2017, BRPD Circular no. 15, dated September 27, 2017 and BRPD Circular no. 1 dated February 2018. The rates of provision for loans and advances / investments are given below:

Particulars RateGeneral provision on unclassified general loans and advances / investments 1%General provision on unclassified small and medium enterprise financing 0.25%General provision on interest receivable on loans / investments 1%General provision on unclassified loans / investments for housing finance 1%General provision on loans for professionals and loans to BHs/MBs against share etc. 2%General provision on unclassified consumer financing other than housing finance and professionals 5%General provision on short term Agriculture/Micro Credit 1%General provision on credit card 2%General provision on Special Mention Account (SMA) except Short Term Agriculture Loans 0.25%-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%

245PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

e) Loans and advances/investments are written-off to the extent that (i) there is no realistic prospect of recovery, and (ii) 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.

2.2.3 InvestmentsAll 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 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 short-trading 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

Investment in listed securitiesThese securities are bought and held primarily for the purpose of selling them in future, or held 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 where market price is below the cost price of investments as per Bangladesh Bank guideline (note-14a).

Investment in unquoted securitiesInvestment 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 subsidiaryInvestment in subsidiaries is accounted for under the cost method of accounting in the Bank's financial statements in accordance with the IFRS-10. Accordingly, investments in subsidiaries are stated in the Bank's balance sheet at cost, less impairment losses (if any).

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 IAS-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.

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c) Revaluation of Land and Building: As per International Accounting Standard (IAS-16) revaluation should be made with sufficient regulatory compliance to ensure that the carrying amount does not differ materially from that which would be determined using the fair value at the end of reporting period. The fair value of Land and Buildings is usually determined from market based evidence by an appraisal that is normally undertaken by professionally qualified Valuers. Therefore, any upward increases of the assets have positive impact on the capital adequacy of the Bank (50% of the asset revaluation is considered as Tier-2 Capital subject to deduction as per roadmap for implementation of BASEL-III). With a view to qualify for higher capital adequacy, the bank revalued its Land and Buildings upon complying with all regulatory requirements.

d) 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 RateLand Nil Buildings 2.50%Furniture and fixtures 10%Office equipments 20%

Vehicles 20%Category of fixed assets (ATM Assets) Rate

Furniture and fixtures 10%

Office equipment 20%

e) 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.

f) 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.

g) 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 IAS-23.

h) Leasehold properties are recorded at present value of minimum lease payments or fair market value, whichever is lower as per the provisions of IAS-17. The carrying value of leasehold properties is amortized over the remaining lease term or useful life of leasehold property, whichever is lower.

2.2.5 Intangible assetsa) 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.

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.

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.

2.2.6 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 asset's recoverable amount. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered as impaired and is written down to its recoverable amount by debiting to profit & loss account.

247PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

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 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.

2.2.8 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.

2.2.9 Receivables

Receivables are recognised when there is a contractual right to receive cash or another financial asset from another entity.

2.2.10 InventoriesInventories measured at the lower of cost and net realizable value.

2.2.11 LeasingLeases 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 lessorAmount due from lessees under finance leases are recorded as receivables at the amount of the Bank's net investment in the leases (note-7a.2). Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the bank's 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). Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.

2.2.12 Non-banking assets:Non-banking assets are acquired on account of the failure of a borrower to repay the loan on time after receiving the decree from the Court regarding the right and title of the mortgage property. The Bank has been awarded ownership of the mortgage properties according to the verdict of the Honorable Court in accordance with the section 33 (7) of “Artharin Adalat-2003”. The value of Non-Banking Assets has been determined and reported in the financial statements on the basis of valuation report of an Independent valuer. Details of which is presented in (note-11).

2.2.13 Reconciliation of inter-bank and inter-branch accountAccounts 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 CapitalOrdinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.

2.3.1 Authorised Capital

Authorised capital is the maximum amount of share capital that the Bank is authorised by its Memorandum and Articles of Association. Details are shown in (note 15.1).

2.3.2 Paid up Capital

Paid up capital represents total amount of shareholders' capital that has been paid in full by the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at shareholders’ meetings. In the event of a winding-up of the Bank, ordinary shareholders are ranked after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation. Details are shown in (note 15.2).

2.4 Statutory reserve

As per Bank Companies Act, the Bank requires to transfer 20% of its current year's profit before tax to statutory reserve until such reserve equals to its paid up capital. The Bank does comply with this requirement of law every year.

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Notes to the Financial Statementsas at and for the year ended 31 December 2018

2.5 Revaluation reserveWhen an asset's carrying amount is increased as a result of revaluation, the increase amount should be credited directly to equity under the head of revaluation surplus / reserve as per BAS-16: "Property, Plant and Equipment". The Bank revalued its land and buildings during the year 2008 & 2013 which are absolutely owned by the Bank and the increased amount was transferred to revaluation reserve account accordingly. The tax effects on revaluation gain are measured and recognised in the financial statements as per BAS-12: Income Taxes.

2.5.1 Non controlling interest in subsidiariesNon controlling interest in business is an accounting concept that refers to the portion of a subsidiary corporation's stock that is not owned by the parent corporation. The magnitude of the non controlling 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. non controlling 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, non controlling interest is reported on the consolidated income statement as a share of profit belonging to non controlling shareholders.

2.5.2 a) Prime Bank Sub-ordinated BondPrime Bank has issued unsecured non-convertible sub-ordinated bond on 07 February 2010 after obtaining approval from regulatory bodies. The bond has been fully redeemed during the year of 2017.

b) Prime Bank Sub-ordinated Bond-2Prime Bank has issued another subordinated bond on February 19, 2015 namely “Prime Bank Subordinated Bond-2” after obtaining approval from Bangladesh Securities & Exchange Commission and Bangladesh Bank vide their letter BSEC/CI/DS-16/2014/735 dated October 29, 2014 and BRPD (BFIS) 661/14B (P)/2014-8043 dated December 18, 2014 respectively. The bond shall bear interest with floating rate payable semi-annually on 19th February and 19th August each year. Floating rate is determined by calculating a benchmark rate i.e. peer banks’ most recent average FDR rate and 2.75% margin with a floor at 11.50% and capped at 14.00% p.a.

c) Prime Bank Sub-ordinated Bond-3Prime Bank has issued another subordinated bond on August 12, 2018 namely “Prime Bank Subordinated Bond-3” after obtaining approval from Bangladesh Securities & Exchange Commission and Bangladesh Bank vide their letter BSEC/CI/DS-16/2014/230 dated April 03, 2018 and BRPD (BFIS) 661/14B (P)/2018-3296 dated May 22, 2018 respectively. The bond shall bear interest with floating rate payable semi-annually on 12 August and 12 February each year. Floating rate is determined by calculating a benchmark rate i.e. peer banks’ most recent average FDR rate and 2.00% margin with a floor at 7.00% and capped at 10.50% p.a.

2.5.3 Share premiumShare 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 as per the provison of section 57 of the Companies Act 1994. Share premium was shown in accounts after deduction of income tax @ 3% on share premium as per finance Act-2010.

2.6 Contingent liabilities

A contingent liability is a possible obligation that arises form past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or

A present obligation that arises from past events but is not recognised because:

a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

b) the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are not recognised but disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is reliably estimated.

Contingent assets are not recognised in the financial statements as this may results in the recognition of income which may never be realised.

2.7 Deposits and other accountsDeposits 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.

249PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

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, financial institutions and agents. 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.7 to 6a.8 and 47

2.9 Basis for valuation of liabilities and provisions2.9.1 Provision for current taxation

Provision for current income tax has been made as per prescribed rate in the Finance Act, 2018 on the taxable income as per income tax law and Bangladesh Accounting Standard (BAS) -12: " Income Taxes".

2.9.2 Deferred taxationDeferred tax is accounted for in accordance with IAS 12: "Income Taxes". Deferred tax normally results in a liability being recognized within the Statement of Financial Position. IAS 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.

2.9.3 Benefits to the employeesThe benefits accrued for the employees of the Bank as on reporting date have been accounted for in accordance with the provisions of International Accounting Standard-19, "Employee Benefit". Basis of enumerating the 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 Bank's 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 July 07, 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 fundThe Bank operates a funded gratuity scheme on "Continuing Fund Basis", in respect of which provision is made regularlly according to the recommendation of Actuarial which is covering all its permanent eligible employees in accordance with Bank Service Rules. The Second Secretary (Tax Exemption), National Board of Revenue, Segun Bagicha, Dhaka has approved the Prime Bank Limited Employees' Gratuity Fund as a recognized Gratuity Fund (Letter Ref no. 08.01.0000.035.02.0016.2013/217, dated 22/07/2013) within the meaning of Para 2,3 & 4, read with the provisions of Part - C of the First Schedule of Income Tax Ordinance 1984. The recognition took effect from July 22, 2013. The Fund is operated by a Board of Trustees consisting six members (03 members from the Board of Directors and other 03 members from management) of the Bank. Actuarial valuation of gratuity scheme has been made to assess the adequacy of the liabilities provided for the scheme as per BAS-19 “Employees Benefit".

c) Welfare fundPrime Bank's employees' welfare fund is subscribed by monthly contribution of the employees. The Bank also contributes to the Fund in accordance with Bank Service Rules. 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 distributed among the employees based on their performance. The bonus amount is paid annually, normally in first quarter of every following year and the costs are accounted for in the period to which it relates.

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2.9.4 Other liabilitiesOther liabilities comprise items such as provision for loans and advances/investments, provision for taxation, interest payable, interest suspense, accrued expenses, obligation under finance lease etc. Other liabilities are recognised in the balance sheet according to the guidelines of Bangladesh Bank, Income Tax Ordinance 1984 and internal policy of the Bank.

2.9.5 Provision for liabilitiesA 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".

2.9.6 Provision for Off-balance sheet exposuresOff-balance sheet items have been disclosed under contingent liabilities and other commitments as per Bangladesh Bank guidelines. Banks are maintained provision against Off-balance sheet items as per BRPD Circular # 14, dated September 23, 2012 and BRPD Circular # 07 dated June 21, 2018.

2.9.7 Provision for nostro accountsAs 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 for the un-reconciled debit balance of nostro account more than 3 months as on the reporting date of these financials. Since there is no unreconciled entries which are outstanding more than 3 months, no provision is required to be maintained.

2.9.8 Provision for rebate to good borrowerAs per BRPD Circular No. 06 (19 March 2015) and BRPD Circular Letter No 03 (16 February 2016) issued by Bangladesh Banks are required to provide 10% rebate on the interest closed from "Good Borrowers" subject to some qualifying criteria. Accordingly, the Bank has kept provision in the financial statements.

2.9.9 Provision for climate risk fundAs per GBCSRD Circular No 04 (9 July 2015) issued by Bangladesh Bank, instructs Banks to maintain a climate fund of 10% of the CSR budget. Accordingly, bank has kept provision against climate risk fund.

2.10 Revenue recognition2.10.1 Interest income (Conventional Banking)

Interest income is recognised on accrual basis. Interest on unclassified loans and advances are calculated at the prescribed rates to be taken into income. Interest is ceased to be taken into income when such loans and advances are marked as classified as per criteria prescribed by the Bangladesh Bank. It is then kept in interest suspense 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 incomeInterest 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 incomeFees and commission income arising on services provided by the Bank are recognised when those are realized. Commission charged to customers on letters of credit and letters of guarantee is credited to income at the time of transactions being recorded in the books of accounts.

2.10.5 Dividend income on sharesDividend income on shares is recognised during the period when right to receive is established.

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 paymentsInterim dividend is recognised when they are paid to shareholders. Final dividend is recognized when it is approved by the shareholders.

251PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

The proposed dividend for the year 2018 has not been recognized as a liability in the balance sheet in accordance with the IAS-10 : Events After the Reporting Period.Dividend payable to the Bank's 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 managementRisk is inherent to the banking business and Bank adds shareholders' value by converting opportunities into profit. The Bank evaluates its opportunities in terms of risk-reward relationship. The risks that are taking by the Bank are reasonable, controlled, within its financial resources and credit competence.

In Prime Bank, risk is managed through a clear organizational structure, risk management and monitoring process that are closely aligned with the activities of the Bank’s risk management policy and process as well as in line with the guidelines provided by the country's central bank, Bangladesh Bank.

The Bank’s risk management policy and process is composed with all the structure, policies, process and strategies within the Bank so that it does not conflict with other risk management policies.The essential elements of an effective risk management framework are:1. Clearly defined roles and responsibilities to avoid conflict of interest between business lines.2. Developing a risk culture where everyone will understand the impact of risk before taking any business decision.

3. Robust risk management and governance by the board for understanding the risks taken by the Bank for safety and protection of the assets.

2.12 Core risk managementBRPD circulars no. 17 dated 07 October 2003 and BRPD circular no. 04 dated 05 March 2007 require banks to put in place an effective risk management system. The risk management system of the bank covers the following risk areas.

2.12.1 Credit riskIt 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 Bank’s 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-14a.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. 4). 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 Bank’s and Regulatory polices. Loans are classified as per Bangladesh Bank’s guidelines. Concentration of single borrower / large loan limit is shown in (note-7a.8).

2.12.2 Foreign exchange riskForeign exchange risk is the exposure of an institution to the potential impact of movements in foreign exchange rates. The risk is that adverse fluctuations in exchange rates may result in a loss in earnings. As per the guidelines of Bangladesh Bank, Prime Bank Limited has developed a detailed Foreign Exchange Risk Management policies to minimize different types of risks associated with foreign exchange transactions. The Bank has also developed different strategies to handle foreign exchange risk by setting different types of limits and risk parameters to measure and monitor foreign exchange risk exposure of the Bank.

The foreign exchange desk of treasury division is involved in foreign exchange dealing activities with different counterparts; the treasury back office is engaged in transfer of funds and passing of the transaction entries in the books of accounts, and the mid office is responsible for verification of the deals. All foreign exchange transactions are revalued at market rate as per the directive of Bangladesh Bank. All Nostro Accounts are reconciled on a monthly basis and outstanding entries beyond 30 days are reviewed by the management for its settlement.

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2.12.3 Asset liability managementBanks are exposed to the several risks such as Liquidity Risk, Interest Rate Risk, Foreign Exchange Risk, Credit Risk and Operational Risk etc. Monitoring and controlling of these risks is vital to the survival of a financial institution. Asset-Liability Management is a tool to oversee whether different balance sheet risks are properly identified, appropriate policies and procedures are well established to control and limit these risks.Asset-Liability Committee (ALCO) reviews country’s overall economic position, the Bank’s liquidity position, key performance ratios, interest rate risk, deposit and advance growth, cost of deposit & yield on advances, deposit & lending pricing strategy and different forecasted balance sheet risks of the Bank.

2.12.4 Money laundering riskMoney laundering is the generic term used to describe the process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source. If money laundering is done successfully, it allows the criminals to maintain control over their proceeds and ultimately to provide a legitimate cover for their source of income. Money laundering plays a fundamental role in facilitating the ambitions of the drug trafficker, the terrorist, the organized criminal, the insider dealer, the tax evader as well as the many others who need to avoid the attention from the authorities that sudden wealth brings from illegal activities. By engaging in this type of activity it is hoped to place the proceeds beyond the reach of any asset forfeiture laws. Prime Bank Ltd (PBL) has implemented an enterprise-wide AML (Anti-Money Laundering) and CFT (Combating the Financing of Terrorism) compliance program, which covers all the activities of the Bank and is reasonably designed to comply with applicable laws and regulations. It is the policy of PBL to take all reasonable and appropriate steps to prevent persons engaged in money laundering, fraud, or other financial crime, including the financing of terrorists or terrorist operations, from utilizing PBL products and services. PBL makes every effort to remain in full compliance with all applicable AML and CFT laws, rules and standards in the jurisdictions in which it does business.

In order to facilitate compliance with AML and CFT requirements, PBL has appointed one of its Senior Executives as the CAMLCO (Chief Anti-Money Laundering Compliance Officer) and a team of employees with experience on AML and CFT requirements under law, as well as money laundering detection and prevention, to oversee PBL AML and CFT program. PBL has developed and implemented written AML and CFT policies, procedures, internal controls and systems, which include (but are not limited) a customer identification program and procedures; procedures to collect and refresh, as appropriate, customer due diligence information; processes to assess risk; processes and systems to monitor customer transactions and activity; processes and systems to identify and report suspicious activity; and, processes to keep required records. PBL educates its all employees on AML and CFT requirements and activities and also subjects its AML and CFT program to regular independent testing. PBL cooperates fully with law enforcement and regulatory investigations and inquiries in identifying the criminals involve in Money Laundering and Terrorist Activities/Financing.

2.12.5 Internal control & compliance riskInternal control is fundamental to the successful operation and day-to-day running of a business and it assists the bank in achieving its business objectives. It encompasses all controls incorporated into the strategic, governance and management processes, covering the bank’s entire range of activities and operations, and not just those directly related to financial operations and reporting. Its scope is not confined to those aspects of a business that could broadly be defined as compliance matters, but extends also to the performance aspects of a business.Prime Bank Ltd has established a System of Internal Control, which is designed to manage all the risks of failure to a reasonable level, achieve aims and objectives/goals of the Bank and this System provides reasonable assurance of effective & efficient operations covering all controls including financial & operational controls, reliability of the financial information, compliance with applicable laws & regulations, adherence to management policies, safeguarding of Banks Assets, prevention & detection of fraud & errors, and accuracy & completeness of the accounting records.

The Board of Directors of Prime Bank Ltd regularly reviews the effectiveness of internal control process through its Audit Committee and Executive Committee and the Audit Committee plays an effective role amongst the Board of Directors, Management, Shareholders, Depositors and develops an efficient, powerful and a safe Banking System. The committee also performs a very important role for publishing Bank’s financial statements, developing an appropriate internal control system and maintains an effective communication with internal and external Auditors. It significantly contributes in controlling and monitoring various risks factors that arise from the business activities of the Bank. Board Audit Committee reviews the actions taken on internal control issues identified in the reports prepared by the Internal & External Auditors and Regulatory Authorities. It has active oversight on the internal audit’s independence, scope of work and resources and it also reviews the functions of Internal Control & Compliance Division of Head Office, particularly the scope of the annual audit plan and frequency of the internal audit activities.

253PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

2.12.6 Information and communication technologyThe rapid development of information and communication technologies (ICTs) has effectively facilitated in reorganizing business processes and streamlining the provision of its products and services in today’s dynamic business environment. Such adoption helps the bank to develop and maintain competitive advantage for ensuring bank’s profitability and survivability in the market place. The competitive advantage often brings bank numerous benefits including fast business transactions, increasing automation of business processes, improved customer service, and provision of effective decision support in a timely manner. However, the adoption of ICT applications has also brought organizations risks related to ICT such as strategic risk, financial risk, operational risk and technological risk. Risk management plays a critical role in protecting the bank’s information assets. An effective risk management process is an important component of a successful IT security program. ICT risk management is referred to as the essential process to aid enterprise achieving “the new business changes, future investment in information technology system, an increasing ICT threats and an increasing dependence on delivering information in system”.In order to minimize and control these risks successfully, The Bank has developed and implemented ICT risk management policies and strategies, strengthened ICT security infrastructure, acquired centralized real time security monitoring system, implemented centralized hardware system with high availability facility and implemented Disaster Recover Site (DRS), developed Business Continuity Plan (BCP) and human resource backup plan with segregation of duties for different ICT tasks.

2.12.7 Liquidity riskThe 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 - 13a). 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.

2.12.8 Market risk

The exposure of market risk of the Bank is restricted to foreign exchange risk, interest rate risk and equity risk.Foreign exchange riskForeign 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 Bank's 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.

Interest rate riskInterest 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 riskEquity 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, lower than the cost price at the balance sheet date (Annexure-B).

2.12.9 Reputation risk arising from money laundering incidents

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 category of Officers and Executives for developing awareness and skill for identifying suspicious activities / transactions.

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Notes to the Financial Statementsas at and for the year ended 31 December 2018

2.12.10 Operational riskOperational 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 divisions 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.

2.12.11 Audit committee disclosuresAudit Committee (AC) of the Board was formed and its roles and responsibilities were defined in line with Corporate Governance Code issued by Bangladesh Securities and Exchange Commission (BSEC) vide BSEC notification BSEC/CMRRCD/2006-158/Admin/80 dated June 03, 2018 and BRPD Circular no.11 dated October 27, 2013 issued by Bangladesh Bank. The current Audit Committee (AC) was re-constitued by the Board of Directors of the Bank in its 463rd meeting held on 11 May 2017.

Sl No. Name Status with Bank Status with Committee

i) Mr. Shamsuddin Ahmad, Ph.D. Independent Director Chairman

ii) Mr. Md. Nader Khan Director Memberiii) Dr. G M Khurshid Alam Independent Director Memberiv) Mr. M Farhad Hussain FCA Independent Director Member

During the year 2018, the Audit Committee of the Board conducted 10 (Ten) meetings in which the important issues were discussed / reviewed are presented in (note no. 48).

2.12.12 Risk management committee disclosuresThe Board of Directors constituted with the following 4 (Four) members Risk Management Committee of the Board, the third Committee of the Board besides the Executive Committee and the Audit Committee in accordance with Bank Company (Amendment) Act 2013 and it does comply with the BRPD Circular no. 11, dated October 27, 2013.

Sl No. Name Status with Bank Status with Committee

i) Dr. G M Khurshid Alam Independent Director Chairmanii) Mr. Shamsuddin Ahmad, Ph.D. Independent Director Memberiii) Mr. Mohammad Mushtaque Ahmed Tanvir Director Memberiv) Mr. M Farhad Hussain FCA Independent Director Member

The Risk Management Committee of the Board has been formed after the Central Bank’s instruction issued in October 27, 2013. The Committee conducted 4 (Four) meeting during the year where the following important issues were discussed / reviewed:i) Discussion of Sustainable Finance Activitiesii) Review of restructured Large loansiii) Review of Information Security Policy and Procedures of the Bankiv) Review of Fraud Detection and Management Processv) Review of Comprehensive Risk Management Report vi) Review of Borrower Rating and Capital Management statusvii) Review of Stress Testing of the Bankviii) Review of Green Banking Policyix) Risk Appetite Statement of the Bankx) Internal Capital Adequacy Assessment Process of the Bankxi) Review of Quarterly Risk Management Reportxii) Discussion on Annual Report of AML/CFT activities of last year

2.13 Earnings per share Basic earnings per shareBasic 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

Diluted earnings per share is not required to be calculated for the year as there was no scope for dilution during the year under review.

255PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

2.14 Events after the reporting periodWhere necessary, all the material events after the reporting period have been considered and appropriate adjustment / disclosures have been made in the financial statements.

2.15 Memorandum itemsMemorandum 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, savings certificates, wage earners bonds etc. fall under the memorandum items. However, Bills for Collection is shown under contingent liabilities as per Bangladesh Bank's format of reporting.

2.16 Related party transactionRelated 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-49).

2.17 Information about business and geographical segmentsSegmental information is presented in respect of the Group's business and of Prime Bank Limited.Business segmentsBusiness 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 segmentsGeographical 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 2018 and segmental profit and loss account for the year ended 31 December 2018 have been prepared.

2.18 Compliance report on International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS)

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 IAS and IFRS as adopted by ICAB. Details are given below:Name of the IAS IAS no Status Presentation of Financial Statements 1 Applied* Inventories 2 N/A Statement of Cash Flows 7 Applied Accounting Policies, Changes in Accounting Estimates and Errors 8 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 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 N/A Related Party Disclosures 24 Applied Accounting and Reporting by Retirement Benefit Plans 26 N/A ** Separate Financial Statements 27 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 Investment Property 40 N/A Agriculture 41 N/A

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Notes to the Financial Statementsas at and for the year ended 31 December 2018

Name of the IFRS IFRS no. Status First time adoption of Bangladesh Financial Reporting Standards 1 N/A

Share Based Payment 2 N/A

Business Combinations 3 Applied

Insurance Contract 4 N/A

Non-current Assets Held for Sale and Discontinued Operations 5 N/A

Exploration for and Evaluation of Mineral Resources 6 N/A

Financial Instruments: Disclosure 7 Applied

Operating Segments 8 Applied

Financial Instrument 9 Applied

Consolidated Financial Statements 10 Applied

Joint Arrangement 11 N/A

Disclosure of Interest in other entities 12 N/A

Fair Value Measurement 13 Applied

Regulatory defrral accounts 14 N/A 14 N/A

Revenue from contractors with customers 15 Applied 15 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 IAS/IFRS, some of the requirements specified in these IAS/IFRSs are not applied. Refer below (note-2.19) 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 Bank’s annual report as it is the employer and not the retirement benefit plan itself.

*** The objective of IAS 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 IAS 34.

New accounting standards not yet adopted:The Bank has consistently applied the accounting policies as set out in Note 2 to all periods presented in these financial statements. The various amendments to standards, including any consequential amendments to other standards, with the date of initial application of 1 January 2018 have been considered. However, these amendments have no material impact on the financial statements of the Bank. A number of standards and amendments to standards are effective for annual periods beginning after 1 January 2018 and earlier application is permitted. However, the Bank has not early applied the following new standards in preparing these financial statements.

(a) IFRS 16 Leases IFRS 16, issued in January 2016 replaces existing leases guidance and effective for reporting period beginning on or after 1 January 2019. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change. The Bank has not yet assessed any potential impact of IFRS 16 on its financial statements.

(b) IFRS 17 Insurance Contracts IFRS 17 was issued in May 2017 and applies to annual reporting periods beginning on or after 1 January 2021. IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. The Bank has not yet assessed in potential impact of IFRS 17 on its financial statements. There are no other standards that are not yet effective and that would be expected to have a material impact on the Bank in the current or future reporting periods and on foreseeable future transactions.

257PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

2.19 Departures from IAS/IFRSThe consolidated financial statements of the Group and the financial statements of the Bank as at and for the year ended 31 December 2018 have been prepared under the historical cost convention except investments and in accordance with the "First Schedule" (section 38) of the Bank Companies Act 1991, as amended by Bangladesh Bank (the Central Bank of Bangladesh) through BRPD Circular No. 14 dated 25 June 2003, other Bangladesh Bank Circulars, Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987, Dhaka and Chittagong Stock Exchange's listing regulations. In case, any requirement of provisions and circulars issued by Bangladesh Bank differs with those of other regulatory authorities, the provisions and circulars issued by Bangladesh Bank shall prevail. Material departures from the requirements of BFRS are as follows:

i) Investment in shares and SecuritiesIFRS: As per requirements of IFRS 9, classification and measurement of investment in shares and securities will depend on how these are managed (the entity’s business model) and their contractual cash flow characteristics. Based on these factors it would generally fall either under “at fair value through profit or loss account” or under “at fair value through other comprehensive income” where any change in the fair value (as measured in accordance with IFRS 13) at the year-end is taken to profit and loss account or other comprehensive income respectively.

Bangladesh Bank: As per Banking Regulation and Policy Department (BRPD) circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment; otherwise investments are recognised at cost.

ii) Revaluation gain/loss on Government securities IFRS: As per requirement of IFRS 9 where securities will fall under the category of fair value through profit or loss account, any change in the fair value of assets is recognised through the profit and loss account. Securities designated as amortised cost are measured at effective interest rate method and interest income is recognised through the profit and loss account.

T-bills and T-Bonds designated as "held to maturity" are measured at amortised cost method and interest income is recognised through the profit and loss account.

Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognised in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortisation of discount are recognised in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortised at the year end and gains or losses on amortisation are recognised in other reserve as a part of equity.

iii) Provision on loans and advancesIFRS: As per IFRS 9 an entity shall recognise an impairment allowance on loans and advances based on expected credit losses. At each reporting date, an entity shall measure the impairment allowance for loans and advances at an amount equal to the lifetime expected credit losses if the credit risk on these loans and advances has increased significantly since initial recognition whether assessed on an individual or collective basis considering all reasonable information, including that which is forward-looking. For those loans and advances for which the credit risk has not increased significantly since initial recognition, at each reporting date, an entity shall measure the impairment allowance at an amount equal to 12 month expected credit losses that may result from default events on such loans and advances that are possible within 12 months after reporting date.

Bangladesh Bank: As per BRPD circular No.15 (27 September 2017), BRPD circular No.16 (18 November 2014), BRPD circular No.14 (23 September 2012), BRPD circular No. 19 (27 December 2012), BRPD circular No. 05 (29 May 2013) and BRPD circular No.1 (20 February 2018) a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also specific provision for sub-standard loans, doubtful loans and bad losses has to be provided at 5%, 20%, 50% and 100% respectively for loans and advances depending on time past due. Again as per BRPD circular no. 10 dated 18 September 2007 and BRPD circular no. 14 dated 23 September 2012, a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by IFRS 9.

iv) Recognition of interest in suspense

IFRS: Loans and advances to customers are generally classified at amortised cost as per IFRS 9 and interest income is recognised by using the effective interest rate method to the gross carrying amount over the term of the loan. Once a loan subsequntly become credit-impaired, the entity shall apply the effective interest rate to the amortised cost of these loans and advances.Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified, interest on such loans are not allowed to be recognised as income, rather the corresponding amount needs to be credited to an interest in suspense account, which is presented as liability in the balance sheet.

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Notes to the Financial Statementsas at and for the year ended 31 December 2018

v) Other comprehensive income

IFRS: As per IAS 1 Other Comprehensive Income (OCI) is a component of financial statements or the elements of OCI are to be included in a single other comprehensive income statement.

Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income nor are the elements of Other Comprehensive Income allowed to include in a Single Comprehensive Income (OCI) Statement. As such the company does not prepare the other comprehensive income statement. However elements of OCI, if any, are shown in the statements of changes in equity.

vi) Financial instruments – presentation and disclosureIn several cases Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in IFRS 9. As such full disclosure and presentation requirements of IFRS 7 and IAS 32 cannot be made in the financial statements.

vii) Repo and Reverse Repo transactionsIFRS: As per IFRS 9 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 treated as a loan and the underlying asset continues to be recognised at amortised cost in the entitys financial statements. The difference between selling price and repurchase price will be treated as interest expense. The same rule applies to the opposite side of the transaction (reverse repo).Bangladesh Bank: As per DOS Circular letter no. 6 dated 15 July 2010 and subsequent clarification in DOS circular no.2 dated 23 January 2013, 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 or stock lending), the arrangement is accounted for as a normal sales transactions and the financial assets are derecognized in the seller’s book and recognized in the buyer’s book.However, as per DMD circular letter no.7 dated 29 July 2012, non primary dealer banks are eligible to participate in the Assured Liquidity Support (ALS) programme, whereby such banks may enter collaterallisedrepo arrangements with Bangladesh Bank. Here the selling bank accounts for the arrangement as a loan, thereby continuing to recognise the asset.

viii) Financial guaranteesIFRS: As per IFRS 9, financial guarantees are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtors fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee liabilities are recognised initially at their fair value plus transaction costs that are directly attributable to the issue of the financial liabilities. The financial guarantee liability is subsequently measured at the higher of the amount of loss allowance for expected credit losses as per impairment requirement and the amount initially recognised less, income recognised in accordance with the principles of IFRS 15. Financial guarantees are included within other liabilities.Bangladesh Bank: As per BRPD 14, financial guarantees such as letter of credit, letter of guarantee will be treated as Off-Balance Sheet items. No liability is recognized for the guarantee except the cash margin.

ix) Cash and cash equivalentIFRS: Cash and cash equivalent items should be reported as cash item as per IAS 7.Bangladesh Bank: Some highly liquid assets such as money at call and short notice, T-bills, prize bonds are not prescribed to be shown as cash and cash equivalents rather shown as face item in the balance sheet. However, in the cash flow statement, money at call and short notice and prize bonds are shown as cash and cash equivalents beside cash in hand, balance with Bangladesh Bank and other banks.

x) Non-banking asset

IFRS: No indication of Non-banking asset is found in any IFRS.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, there must exist a face item named Non-banking asset.

xi) Cash flow statementIFRS: Cash flow statement can be prepared either in direct method or in indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently.Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, cash flows is the mixture of direct and indirect method.

xii) Balance with Bangladesh Bank: (CRR)IFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per BAS 7.Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.

259PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

xiii) Presentation of intangible assetIFRS: An intangible asset must be identified and recognized, and the disclosure must be given as per BAS 38.

Bangladesh Bank: There is no requirement for regulation of intangible assets in BRPD 14.

xiv) Off-balance sheet itemsIFRS: There is no concept of off-balance sheet items in any BFRS; hence there is no requirement of disclosure of off-balance sheet items.Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.) must be disclosed separately on the face of balance sheet.

xv) Disclosure of appropriation of profit

IFRS: There is no requirement to show appropriation of profit in the face of statement of comprehensive income.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, an appropriation of profit should be disclosed in the face of profit and loss account.

xvi) Loans and advance net of provisionIFRS: Loans and advances should be presented net of provisions.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, provision on loans and advances are presented separately as liability and cannot be netted off against loans and advances.

2.20 The Bank’s compliance with related pronouncements by Bangladesh Bank:

i) Internal Control

The objective of internal control is to ensure that management has reasonable assurance that (i) operations are effective, efficient and aligned with strategy, (ii) financial reporting and management information is reliable, complete and timely accessible, (iii) the entity is in compliance with applicable laws and regulations as well as its internal policies and ethical values including sustainability, and (iv) assets of the company are safeguarded and frauds & errors are prevented or detected.

Prime Bank Limited has established an effective internal control system whose primary aim is to ensure the overall control of risks and provide reasonable assurance that the objectives set by the Bank will be met. It has designed to develop a high level risk culture among the personnel of the Bank, establish efficient and qualified operating model of the Bank, ensure reliability of internal and external information including accounting and financial information, secure the Banks operations and assets, and comply with laws, regulatory requirements and internal policies.

The Board of Directors of Prime Bank, through its Audit Committee, periodically reviews the effectiveness of Bank’s internal control system covering all the material controls, including financial, operational and compliance controls, risk management systems, the adequacy of resources, qualifications and experience of staff of the accounting and financial reporting function, training programs, budget, etc. Audit Committee of the Board reviews the actions taken on internal control issues identified by the Internal & External Auditors and Regulatory Authorities. It has active oversight on the internal audit’s independence, scope of work and resources and it also reviews the functions of Internal Control & Compliance Division of Head Office, particularly the scope of the annual audit plan and frequency of the internal audit activities.

ii) Internal AuditInternal Audit is the continuous and systematic process of examining and reporting on the activities of an organization undertaken by the specially assigned staff(s). Internal Auditor works as the Eyes & Ears of the management. It may therefore be used to bridge the gap between management & shop floor. It can assure the management that the Internal Controls are adequate and in operations, the policies and systems laid down are being adhered to and accounting records provided by the lower level are correct.

Internal Audit Mechanism is used as an important element to ensure good governance of PBL. Internal Audit Activity of PBL is effective and it provides senior management with a number of important services. These include detecting and preventing fraud, testing internal control, and monitoring compliance with own policies & procedures, applicable rules & regulations, instructions/ guidelines of regulatory authority etc.

During the year 2018, ICCD conducted inspection on many of the Branches/ Divisions of Head Office of the Bank and submitted reports presenting the findings of the audits/ inspections. Necessary control measures and corrective actions have been taken on the suggestions or observations made in these reports. The reports or key points of the Reports have also been discussed in the meetings of the Audit Committee of the Board and necessary steps have been taken according to the decision of the said Committee for correct functioning of Internal Controls & Compliance.

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Notes to the Financial Statementsas at and for the year ended 31 December 2018

iii) Fraud and ForgeriesThe increasing wave of fraud and forgery cases in the banking sector in recent time calls for concerted steps in identifying ways for reducing or preventing frauds and forgeries by analyzing the causes and effect of frauds and forgeries, and prescribing effective control strategies for salvaging frauds in the banking sector. Prime Bank does always pay due attention on anti-fraud internal controls for prevention of fraud and forgery. The Bank has already implemented some strategies like Financial Control Strategy, Personnel Control Strategy, Accounting Control Strategy, Credit Control Strategy, Cost Control Strategy, Administrative Control strategy, Process Control Strategy etc. in order to strengthening the control system further. Although it is not possible to eliminate all frauds because of the inherent limitations of Internal Control System, the Board of Directors and Management have taken all the measures to keep the operational risk in a very minimum level. Internal Control and Compliance Division (ICCD) assesses and evaluates the effectiveness of Bank's anti-fraud internal control measures, recommends for further improvement in implementation of aforesaid strategies and reports to the Bangladesh Bank on effectiveness of controls at the end of each quarter following their prescribed format.

2.21 The financial statements were approved by the Board of Directors on 03 April 2019.

Amount in Taka2.22 Shareholders' Equity 2018 2017

Paid up capital 11,322,834,770 10,293,486,160 Share premium 1,211,881,786 2,241,230,396 Statutory reserve 10,353,413,584 9,565,853,177 Revaluation gain / (loss) on investments 22,087,009 17,749,598 Revaluation reserve 1,496,759,104 1,496,759,104 Foreign currency translation gain 14,920,954 13,414,088 Surplus in profit and loss account / Retained earnings 1,759,002,003 1,079,304,405

26,180,899,209 24,707,796,928

2.23 Earning Per Share (EPS) has been calculated in accordance with IAS-33: "Earnings Per Share (EPS)". Previous year/period figures have been adjusted for the issue of Bonus Shares during the year.Calculation of EPSProfit after tax for the year (Solo) 2,187,802,036 1,058,974,674 Profit after tax for the year (Consolidated) 2,253,633,866 1,215,528,259 Weighted average number of share 1,132,283,477 1,029,348,616

Earnings per share (Solo) 1.93 1.03 Earnings per share (Consolidated) 1.99 1.18

Calculation of EPS (Diluted)Profit after tax for the period (Solo) 2,187,802,036 1,058,974,674 Profit after tax for the period (Consolidated) 2,253,633,866 1,215,528,259 Weighted average number of share 1,132,283,477 1,132,283,477

Earnings per share (Solo) 1.93 0.94 Earnings per share (Consolidated) 1.99 1.07

2.24 Calculation of Net Asset value per Share (NAVPS)Shareholdersrs' Equity (Solo) 26,180,899,209 24,707,796,928 Shareholdersrs' Equity (Consolidated) 26,298,596,289 24,812,947,765 Weighted average number of share 1,132,283,477 1,132,283,477 Net Asset value per Share (NAVPS) (Solo) 23.12 21.82 Net Asset value per Share (NAVPS) (Consolidated) 23.23 21.91

2.25 Calculation of Net Cash Flow Per Share (NOCFPS)Net Cash from Operating Activities (Solo) (3,240,683,235) 7,369,206,532 Net Cash from Operating Activities (Consolidated) (3,290,909,793) 7,483,240,015 Weighted average number of share 1,132,283,477 1,132,283,477 Net operating cash flow per share (Solo) (2.86) 6.51 Net operating cash flow per share (Consolidated) (2.91) 6.61

261PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka2018 2017

2.26 Reconcilation of statement of cash flows from operating activities

Profit before provision 5,719,402,036 5,373,374,674

Adjustment for non cash items

Depreciation on fixed asset 277,008,743 256,178,233

Amortization on software 53,198,524 20,823,123

House Furnishing 3,183,630 2,965,506

Adjustment with non-operating activities 333,390,897 279,966,863

Recovery of writeoff loan 203,780,138 409,904,161

Accounts Receivable 111,948,340 (244,807,126)

Accounts payable on deposits 959,283,342 (147,116,993)

Gain on sale of asset (1,890,136) (567,374)

Prime Bank Foundation 85,153,094 (21,442,675)

Employees Welfare fund 4,257,654 (1,072,133)

Incentive Bonus 120,314,572 (115,553,676)

Incentive paid to good borrower - (9,792,890)

1,482,847,004 (130,448,705)Changes in operating assets and liabilities

Changes in loans & advances (9,900,768,555) (29,772,028,217)

Changes in deposit and other accounts (3,837,869,135) (640,449,124)

Changes in investment (2,698,687,081) 16,912,134,608

Changes in borrowings 6,739,373,030 8,766,832,663

Changes in other assets 92,178,274 6,944,608,143

Changes in other liabilities (678,988,274) 222,731,088

(10,284,761,741) 2,433,829,161

Income Tax Paid (491,561,431) (587,515,461)

Net cash flows from operating activities (3,240,683,235) 7,369,206,532

2.27 General

a) These financial statements are presented in Taka, which is the Bank's 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.

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Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

3 Consolidated cashi Cash in hand

Prime Bank Limited (note-3a.1) 3,100,264,070 3,031,607,478 Prime Bank Investment Limited 32,496 13,263 Prime Bank Securities Limited 100,000 13,004 Prime Exchange Co. Pte. Ltd., Singapore 32,337,601 108,954,552 PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

3,132,734,166 3,140,588,297 ii Balance with Bangladesh Bank and its agent bank(s)

Prime Bank Limited (note-3a.2) 14,539,287,480 14,973,037,651 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

14,539,287,480 14,973,037,651 17,672,021,646 18,113,625,948

3a Cash of the Bank3a.1 Cash in hand

In local currency 3,035,272,918 2,969,745,031 In foreign currency 64,991,152 61,862,447

3,100,264,070 3,031,607,478 3a.2 Balance with Bangladesh Bank and its agent bank(s)

In local currency 11,860,895,553 13,327,279,601 In foreign currency 1,980,765,411 882,931,213

13,841,660,963 14,210,210,815 Sonali Bank as agent of Bangladesh Bank (Local currency) 697,626,516 762,826,836

14,539,287,480 14,973,037,651 17,639,551,549 18,004,645,129

Reconciliation statements regarding Bangladesh Bank balance are given Annexure-A-13a.3 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.01 & 02, dated June 23, 2014 and December 10, 2013 & DOS circular no.1 dated 19 January 2014 and MPD Circular no.01 dated April 03, 2018.The Cash Reserve Requirement on the Bank's time and demand liabilities at the rate of 5.5% has been calculated and maintained with Bangladesh Bank and 13% Statutory Liquidity Ratio for conventional banking and 5.50% Statutory Liquidity Ratio for Islamic banking , excluding 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 11,399,365,000 12,819,834,250 Actual reserve maintained (note-3a.2) 11,860,895,553 13,327,279,601 Surplus / (deficit) 461,530,553 507,445,351

b) Statutory Liquidity RatioRequired reserve 25,888,369,000 24,618,572,690 Actual reserve maintained- (note-3a.5) 30,425,462,235 28,335,052,502 Surplus / (deficit) 4,537,093,235 3,716,479,812

Total required reserve 37,287,734,000 37,438,406,940 Actual reserve held 42,286,357,788 41,662,332,104

Total surplus 4,998,623,788 4,223,925,164 3a.4 Maturity grouping of cash

Payable on demand - - Up to 1 month 6,240,186,549 5,184,810,879 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 11,399,365,000 12,819,834,250

17,639,551,549 18,004,645,129

263PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

3a.5 Held for Statutory Liquidity RatioCash in hand (note -3a.1) 3,100,264,070 3,031,607,478 Balance with Bangladesh Bank and its agent bank(s) (note-3a.2) 2,678,391,927 1,645,758,050 Government securities (note-6a.ii) 5,000,000,000 - Government bonds (note-6a.ii) 19,646,806,239 21,356,374,056 Bangladesh Bank bills (note-6a.ii) - 2,301,312,919 Debenture of HBFC (note-6a.ii) - -

30,425,462,235 28,335,052,502

4 Consolidated balance with other banks and financial institutionsIn Bangladesh Prime Bank Limited (note-4a.1) 10,174,200,785 7,380,647,955 Prime Bank Investment Limited 16,805,232 5,988,774 Prime Bank Securities Limited 133,701,566 98,508,380 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

10,324,707,583 7,485,145,109 Less: Inter-company transaction 24,296,336 13,678,732

10,300,411,247 7,471,466,377 Outside Bangladesh Prime Bank Limited (note-4a.2) 3,230,634,401 2,701,942,497 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore 52,263,514 - PBL Exchange (UK) Ltd. 17,400,313 32,063,881 PBL Finance (Hong Kong) Limited 27,256,749 39,242,956

3,327,554,977 2,773,249,334 13,627,966,225 10,244,715,711

4a Balance with other banks and financial institutions of the Bank

In Bangladesh (note-4a.1) 10,174,200,785 7,380,647,955 Outside Bangladesh (note-4a.2) 3,230,634,401 2,701,942,497

13,404,835,186 10,082,590,452 4a.1 In Bangladesh

Current accountAgrani Bank Ltd., Principal Branch, Dhaka 437,202 438,502 Agrani Bank Ltd., Purana Paltan Branch, Dhaka - 87,989 Agrani Bank Ltd., Bhairab Bazar, Kishoregonj - - Agrani Bank Ltd., Mirzapur Branch, Mirzapur 12,502,496 64,033,648 Agrani Bank Ltd., Takerhat Branch 4,537,425 - AB Bank Ltd. Principal Branch, Dhaka - 2,997,108 Bank Al-Falah, Motijheel Branch 640,000,000 770,000,000 The City Bank Ltd, Dhaka 269,069 272,289 Dutch-Bangla Bank Ltd., Mirzapur Branch, Tangail - - Exim Bank Ltd., Motijheel Branch, Dhaka - 1,695,541 Islami Bank BD Ltd., Local Office, Dhaka 7,252,671 7,265,821 Islami Bank BD Ltd., Jhikorgacha - 569 Janata Bank Ltd., Local Office, Dhaka 3,325,786 3,351,936 Janata Bank Ltd., Ishwardi Branch 64,984 175,548 Janata Bank Ltd., Corporate Branch, Bogra - - National Bank Ltd., Rangpur Branch 42,755 43,905 Pubali Bank Ltd., Dhaka Stadium Branch, Dhaka - 1,179,599 Rupali Bank Ltd. ,Motijheel Branch, Dhaka - 3,110,214 Sonali Bank Ltd., Rangpur Branch 74,833,784 35,012,289 Sonali Bank Ltd., Sunamganj Branch - - Sonali Bank Ltd., Local Office, Dhaka 7,014,140 7,041,308 Sonali Bank Ltd., Narayanganj 23,915 3,248,044 Sonali Bank Ltd., Fakirapool Branch, Dhaka - 490,928 Sonali Bank Ltd., Faridpur Branch, Faridpur 2,449,013 16,054,398 Sonali Bank Ltd., Narsingdi Branch 2,158,438 11,570,045 Sonali Bank Ltd., Satkhira - - Standard Chartered Bank, Bangladesh 11,386,185 37,309,911 United Commercial Bank Ltd., Principal Branch, Dhaka - 7,436,592 Off-shore Banking Units 799,683,971 243,518,761 Uttara Bank Ltd., Local Office, Dhaka - 168,541

1,565,981,835 1,216,503,484 Less: Off-shore Banking Units 799,683,971 243,518,761

766,297,864 972,984,724

264 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

Special notice deposit accountsAgrani Bank Ltd., Principal Branch, Dhaka 364,633 355,201 Agrani Bank Ltd., Takerhat Branch - 7 ICB Islamic Bank Ltd., Principal Office, Motijheel, Dhaka 13,069 13,069 ICB Islamic Bank Ltd., Sylhet 16,786 16,786 Dutch-Bangla Bank Ltd., Local Office 875,130 844,817 Janata Bank Ltd., Local Office, Dhaka 6,432,920 6,232,963 National Bank Ltd., Narayanganj Branch, Dhaka - 5 Sonali Bank Ltd., Bhairab Bazar, Kishoregonj 950 950 Social Islami Bank Ltd., Principal Branch, Dhaka - 10,158

7,703,487 7,473,954 Savings accounts

Al Arafah Islami Bank Ltd., Dhaka 74,667 74,667 Bank Al Falah Ltd., Dhaka 39,011 39,011 Social Islami Bank Ltd., Principal Branch, Dhaka 85,756 75,599

199,434 189,277 Fixed depositsNCC Bank Limited 500,000,000 - Shahjalal Islami Bank Limited 1,000,000,000 BRAC Bank Limited 1,000,000,000 1,900,000,000 Bank Al-falah 100,000,000 - The City Bank Limited 1,700,000,000 - Dhaka Bank Limited - 500,000,000 Southeast Bank Limited 500,000,000 500,000,000 IFIC Bank Limited - 1,000,000,000 EXIM Bank Limited 3,600,000,000 1,200,000,000 Commercial Bank of Ceylon - 300,000,000 IDLC Finance Limited 500,000,000 - Delta Brac Housing Finance Corporation 500,000,000 1,000,000,000

9,400,000,000 6,400,000,000 10,174,200,785 7,380,647,955

4a.2 Outside Bangladesh (NOSTRO Accounts)Current accountAB Bank Ltd., Mumbai, India 212,047,667 60,485,930 Banca Nazionale, del Lavoro, Rome, Italy - - Bank of Bhutan Phuentsholing, Bhutan 844,572 2,272,171 The Bank of Tokyo Mitsubishi Ltd., Japan 15,545,921 13,095,533 SMBC, Tokyo, Japan 16,355,245 31,559,036 Citibank N.A., Mumbai, India - - Citibank N.A., London , UK 9,317,124 6,610,183 Citibank N.A., New York, USA 1,875,244,629 861,507,600 Citibank N.A., New York, USA (Off-shore Banking) - - Commerz Bank AG, Frankfurt , Germany (EURO) 91,921,420 32,985,576 Commerz Bank AG, Frankfurt , Germany (US$) 22,015,572 29,696,789 Commonwealth Bank of Australia, Australia - 5,229,892 Habib American Bank, New York, USA 99,008,962 18,577,471 Habib Metropolitan Bank Ltd, Karachi 3,333,740 40,702,396 Habib Bank Ltd, Karachi - - Habib Allied International Bank PLC London - - HDFC Bank Limited, Kolkata, India 58,356,086 46,318,239 HSBC Bank USA, New York, USA - - ICICI Bank Ltd, Mumbai, India 14,929,683 56,163,133 Intesa Sanpaolo SPA, Milano, Italy 4,283,613 394,565 J. P. Morgan Chase Bank, New York 101,625,582 10,698,366 Korea Exchange Bank Seoul 8,169,962 3,780,822 Kookmin Bank, Seoul, South Korea 84,068 - Mashreq Bank PSC, New York, USA 102,835,022 16,827,636 Mashreq Bank PSC, Mumbai, India 58,901,096 69,152,037 National Westminister Bank, London, UK 71,731,747 65,243,763 The National Commercial Bank, Jeddah 44,234,984 10,676,322 Nepal Bangladesh Bank Ltd., Kathmandu, Nepal 1,286,480 1,694,191 NCB, Zeddah - - People's Bank, Colombo, Sri Lanka 19,326,191 20,185,925 Skandinaviska Enskilda Banken, Sweden 4,004,757 2,112,730 Sonali Bank, Kolkata, India 25,493,074 26,084,971 Standard Chartered Bank, Kolkata, India 50,855,337 74,277,724

265PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017Outside Bangladesh (NOSTRO Accounts)Current accountStandard Chartered Bank, New York, USA 61,308,210 1,013,196,068 Standard Chartered Bank, Singapore 122,362,627 86,720,335 Standard Chartered Bank, Frankfurt, Germany 7,823,551 3,346,778 Unicredito Italiano SPA, Milano, Italy 36,362,801 4,995,003 Wells Fargo Bank N. A. Newyork 79,311,246 79,472,060 Zuercher Kantonal Bank, Zurich 11,713,433 7,879,253 (Annexure -A) 3,230,634,401 2,701,942,497

4a.3 Maturity grouping of balance with other banks and financial institutionsPayable on demand 4,004,817,237 3,682,573,417 Up to 1 month 17,949 17,035 Over 1 month but not more than 3 months 9,400,000,000 6,400,000,000 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 - -

13,404,835,186 10,082,590,452 5 Money at call and short notice - 1,500,000,000

6 Consolidated investmentsGovernmentPrime Bank Limited (note-6a) 24,646,806,239 23,657,686,975 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

24,646,806,239 23,657,686,975

OthersPrime Bank Limited (note-6a) 1,399,611,720 149,457,283 Prime Bank Investment Limited 1,209,235,975 1,286,057,720 Prime Bank Securities Limited 732,616,847 786,934,185 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

3,341,464,542 2,222,449,188 27,988,270,780 25,880,136,163

6a Investments of the Banki) Investment classified as per Bangladesh Bank Circular:Held for trading (HFT) 5,981,242,329 2,301,312,919 Held to maturity (HTM) 18,661,866,610 21,353,998,956 Other securities 1,403,309,020 151,832,383

26,046,417,958 23,807,144,258 ii) Investment classified as per nature:a) Government securities:28 days treasury bills - - 91 days treasury bills 5,000,000,000 - 182 days treasury bills - - 364 days treasury bills - - 5 years treasury bills - -

5,000,000,000 - 30 days Bangladesh Bank bills - 2,301,312,919 Government bonds:Prize bonds 3,697,300 2,375,100 Government bonds - (note-6a.2) 19,643,108,939 21,353,998,956

19,646,806,239 21,356,374,056 24,646,806,239 23,657,686,975

b) Other investments:Alarafah Islami Bank Subordinated Bond interest rate @ 9.37% (note-6a.3) 1,002,082,222 - National Bank Subordinated Bond interest rate @ 11.50% (note-6a.4) - - Lanka Bangla Finance Zero coupon bond interest rate @ 11.50% (note-6a.5) - - Shares (note-6a.6) 397,529,498 149,457,283

1,399,611,720 149,457,283 26,046,417,958 23,807,144,258

266 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 20176a.1 Maturity grouping of investments

On demand - - Up to 1 month 6,869,361,474 2,835,989,800 Over 1 month but not more than 3 months 350,000,000 482,388,935 Over 3 months but not more than 6 months 856,702,690 983,406,822 Over 6 months but not more than 1 year 1,281,628,165 1,557,246,079 Over 1 year but not more than 5 years 10,567,335,899 11,222,086,597 Over 5 years 6,121,389,731 6,726,026,025

26,046,417,958 23,807,144,258 6a.2 Government bonds

Name of the bondsHTM3 years T & T bonds - - 2 years Bangladesh Government Islami Investment Bonds 800,000,000 800,000,000 5 years Bangladesh Government treasury bonds (9.66%) 204,145,443 204,094,416 10 years Bangladesh Government treasury bonds(8.75%-11.72%) 10,887,446,655 13,575,624,899 15 years Bangladesh Government treasury bonds(8.69%-14.00%) 4,982,734,122 4,986,920,433 20 years Bangladesh Government treasury bonds(9.10%-10.25%) 1,787,540,389 1,787,359,208

18,661,866,610 21,353,998,956 HFT3 years T & T bonds - - 2 years Bangladesh Government treasury bonds (8.40%-8.75%) - - 5 years Bangladesh Government treasury bonds (6.24%-9.40%) 922,782,783 - 10 years Bangladesh Government treasury bonds (11.75%) 58,459,546 - 15 years Bangladesh Government treasury bonds(11.60%-12.30%) - - 20 years Bangladesh Government treasury bonds - -

981,242,329 - 19,643,108,939 21,353,998,956

6a.3 Alarafah Islami Bank Ltd. Subordinated BondOpening balance - - Add: Investment during the year 1,000,000,000 Add: Interest accrued during the year 2,082,222 - Less: Principal redemption during the year - - Less: Interest received during the year - - Redeemable value 1,002,082,222.22 -

6a.4 National Bank Ltd. Subordinated BondOpening balance - 82,600,391 Add: Interest accrued during the year - 8,871,253 Less: Principal redemption during the year - (81,920,000)Less: Interest received during the year - (9,551,644)Redeemable value - -

6a.5 Lanka Bangla Finance Zerocoupon BondOpening balance - 31,089,440 Add: Interest accrued during the year - 2,242,560 Less: Principal redemption during the year - (24,518,222)Less: Interest received during the year - (8,813,778)Redeemable value - -

6a.6 Investment in sharesQuotedActivefine 8,234,068 - KPCL 8,156,284 - UPGDCL 11,849,780 - DESCO 19,262,511 19,262,511 Dhaka Bank Ltd. - - Eastern Bank Ltd. - - Jamuna Bank Ltd. - - Mutual Trust Bank Ltd. - - National Bank Ltd. 27,970,098 27,970,098 One Bank Ltd. - - Uttara Bank Ltd. 37,009,980 37,009,980

112,482,721 84,242,590 Unquoted Central Depository Bangladesh Limited (CDBL) 15,694,430 15,694,430 Investment in SWIFT 4,184,430 4,184,430 Market Stabilization Fund 5,000,000 5,000,000 Star Ceramics Preference Share 20,167,917 40,335,833 Share Money Deposit (Golden Harvest Ice Cream Ltd) 240,000,000 -

285,046,776 65,214,693 (Annexure -B) 397,529,498 149,457,283

267PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 20176a.7 (i) Disclosure regarding outstanding Repo

Counterparty name Agreement date Reversal date Amount

- -

Total -

6a.7 (ii) Disclosure regarding outstanding Reverse Repo

Counterparty name Agreement date Reversal date Amount AB Bank Limited 27-December-2018 01-January-2019 990,968,699

Total 990,968,699

6a.8 Disclosure regarding Overall transaction of Repo and Reverse Repo

Counterparty nameMinimum

Outstandingduring the year

Maximum outstanding

during the year

Daily average outstanding

during the year

Securities sold under RepoWith Bangladesh Bank - - - With other Banks & FIS

Securities purchased under Reverse RepoFrom Bangladesh Bank - - - From other Banks & FIS 406,409,307 5,769,478,177 1,473,340,395

7 Consolidated loans, advances and lease / InvestmentsPrime Bank Limited (note-7a) 196,456,187,502 183,593,663,315 Prime Bank Investment Limited 5,555,902,000 5,559,563,333 Prime Bank Securities Limited 209,100,070 303,394,498 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

202,221,189,572 189,456,621,146 Less: Inter-company transactions 5,635,048,381 5,390,381,459

196,586,141,191 184,066,239,687 Consolidated bills purchased and discounted (note-8) 11,609,817,551 16,552,939,609

208,195,958,743 200,619,179,296

7a Loans, advances and lease / investments of the Banki) Loans, cash credits, overdrafts, etc.

Inside BangladeshSecured overdraft / Quard against TDR 34,158,050,229 31,689,318,860 Cash credit / Murabaha 25,398,766,903 27,491,571,481 Loans (General) 65,419,172,348 43,307,835,504 House building loans 2,135,880,724 2,377,824,399 Loans against trust receipt 9,898,090,701 7,549,221,685 Payment against document 10,570,751 5,473,814 Retail loan 15,647,508,179 16,502,624,225 Lease finance / Izara (note - 7a.2) 4,216,164,877 4,574,176,766 Credit card 889,193,726 943,911,975 Hire purchase 11,625,437,610 8,258,639,171 Other loans and advances 27,057,351,455 40,893,065,436

196,456,187,502 183,593,663,315 Outside Bangladesh - -

196,456,187,502 183,593,663,315 ii) Bills purchased and discounted (note-8a)

Payable Inside BangladeshInland bills purchased 5,976,457,767 10,305,266,336 Payable Outside BangladeshForeign bills purchased and discounted 3,376,873,447 4,423,799,140

9,353,331,214 14,729,065,476 205,809,518,716 198,322,728,791

268 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 20177a.1 Residual maturity grouping of loans, advances and lease / investments including bills purchased and discounted

Repayable on demand - - Up to 1 month 29,157,534,079 23,144,262,450 Over 1 month but not more than 3 months 39,103,808,556 31,295,326,603 Over 3 months but not more than 1 year 57,799,704,441 83,989,675,643 Over 1 year but not more than 5 years 52,666,655,839 45,614,227,622 Over 5 years 27,081,815,801 14,279,236,473

205,809,518,716 198,322,728,791

7a.2 Lease finance / Izara Lease rental receivable within 1 year 8,188,288 244,836,425 Lease rental receivable within 5 years 3,628,901,926 3,798,348,175 Lease rental receivable after 5 years 579,340,035 638,973,778 Total lease / Izara rental receivable 4,216,430,249 4,682,158,378 Less: Unearned interest receivable 265,371 107,981,612 Net lease / Izara finance 4,216,164,877 4,574,176,766

7a.3 Loans, advances and lease / investments under the following broad categoriesLoans 136,899,370,370 124,412,772,975 Cash credits 25,398,766,903 27,491,571,481 Overdrafts 34,158,050,229 31,689,318,860

196,456,187,502 183,593,663,315 Bills purchased and discounted (note-8) 9,353,331,214 14,729,065,476

205,809,518,716 198,322,728,791

7a.4 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 1,585,332,990 1,636,356,279 c) Loans, advances and lease / investments to customer groups:

i) Commercial lending 21,402,828,923 17,627,433,722 ii) Export financing 12,646,307,936 10,129,882,686 iii) House building loan 2,135,880,724 2,377,824,399 iv) Retail loan 15,647,508,179 16,502,624,225 v) Small and medium enterprises 21,120,427,019 22,231,588,927 vi) Special program loan - - vii) Staff loan 5,087,552 7,732,483 viii) Industrial loans / investments detail (note-7a.4 d) 116,741,211,670 109,857,118,491 ix) Other loans and advances 14,524,933,723 17,952,167,579

204,224,185,726 196,686,372,513 205,809,518,716 198,322,728,791

d) Details of Industrial loans / investmentsi) Agricultural industries 3,560,515,101 6,283,463,091 ii) Textile industries 18,031,708,413 6,011,362,136 iii) Food and allied industries 6,490,120,166 10,289,786,237 iv) Pharmaceutical industries 4,512,883,566 3,885,498,731 v) Leather, chemical, cosmetics, etc. 1,599,424,308 1,083,580,056 vi) Tobacco industries 704,309,679 847,605,401 vii) Cement and ceramic industries 4,677,228,243 3,941,484,392 viii) Service Industries 23,230,202,318 25,641,663,347 ix) Transport and communication industries 5,334,170,299 5,116,391,088 x) Other industries including bills purchase and discounted 48,600,649,576 46,756,284,011

116,741,211,670 109,857,118,491

269PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

7a.5 Loans, advances and leases / investments -geographical location-wise

Inside Bangladesh

Urban

Dhaka Division 164,990,041,043 149,538,338,568

Chittagong Division 24,240,077,235 29,925,870,752

Khulna Division 3,651,277,404 5,471,505,539

Rajshahi Division 4,586,418,614 4,779,369,324

Barisal Division 104,612,625 146,758,907

Sylhet Division 1,497,137,414 1,719,183,890

Rangpur Division 1,929,889,391 1,846,482,273

200,999,453,727 193,427,509,253

Rural

Dhaka Division 1,967,700,720 2,156,302,898

Chittagong Division 1,182,314,336 1,127,151,461

Khulna Division 76,784,961 78,185,093

Rajshahi Division 1,162,391,550 1,025,031,309

Rangpur Division 161,132,665 153,584,182

Sylhet Division 259,740,757 354,964,595

4,810,064,989 4,895,219,538

Outside Bangladesh - -

205,809,518,716 198,322,728,791

7a.6 Sector-wise loans, advances and lease / investments including bills purchased and discounted

Public sector 50,475,310 342,952,738

Co-operative sector - -

Private sector 205,759,043,407 197,979,776,053

205,809,518,716 198,322,728,791

7a.7 Details of pledged collaterals with the Bank

Collateral of movable / immovable assets 103,698,747,416 88,446,175,401

Local banks and financial institutions guarantee 20,199,488,160 6,232,329,801

Government guarantee - -

Foreign banks guarantee - 1,778,513,368

Export documents 4,082,620,864 1,073,179,498

Fixed deposit receipts 7,774,653,686 17,136,628,698

FDR of other banks 10,314,677 2,733,767,420

Government bonds - 70,873,554

Personal guarantee 17,988,201,327 8,826,197,321

Other securities 52,055,492,585 72,025,063,730

205,809,518,716 198,322,728,791

270 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

7a.8 Details of large loans, advances and lease / investmentsNumber of clients with outstanding amount and classified loans / investments exceeding 10% of total capital of the Bank. Total capital of the Bank was Taka 38,259.02 million as at 31 December 2018 (Taka 32,250.88 million in 2017).

Number of clients 46 29

Amount of outstanding advances / investments 132,469,800,000 117,967,600,000

Amount of classified advances / investments - -

Measures taken for recovery N/A N/A

Name of clients Outstanding (Tk. in million) Total TotalFunded Non-funded (Tk. in million) (Tk. in million)

Abdul Monem Group 364.80 865.80 1,230.60 3,350.00 ACI Group 2,809.10 2,204.80 5,013.90 4,861.70 Annata Apparel Group 1,396.40 1,733.90 3,130.30 3,170.60 Abul Khair Group 2,012.90 3,610.30 5,623.20 4,474.10 BSRM Group 896.70 3,470.00 4,366.70 4,405.30 BSRM Limited 517.90 250.30 768.20 947.50 BRAC 4,648.40 21.00 4,669.40 4,226.70 BSM Group - - - 1,223.40 BSA Group 81.80 488.60 570.40 150.70 BPC Group - 90.80 90.80 1,155.30 BRB Group 140.50 535.60 676.10 2,726.40 Birds Group 1,426.40 809.50 2,235.90 - City Group 1,512.70 1,344.70 2,857.40 4,685.90 Confidence Group 2,183.20 4,457.30 6,640.50 5,781.10 CPCL Group 146.50 990.50 1,137.00 - Dipon Group 1,257.70 616.50 1,874.20 1,367.10 DBL Group 982.30 191.40 1,173.70 - Energypac Group - - - 1,179.10 Envoy Group 595.70 270.80 866.50 554.70 FGS Group 1,097.70 1,930.50 3,028.20 - Globe Group - - - 2,015.70 GMS Group 1,146.50 1,646.50 2,793.00 622.90 Hameem Group 1,291.60 924.70 2,216.30 1,402.00 Index Group 1,616.50 3,759.00 5,375.50 - Kabir Group 2,824.90 1,453.10 4,278.00 4,155.10 KDS Group 2,202.60 1,548.90 3,751.50 3,775.40 Labib Group 1,844.20 1,018.60 2,862.80 2,988.90 Meghna Group - 4,722.80 4,722.80 4,800.60 Molla Group 2,085.00 1,327.20 3,412.20 3,310.00 Monico Group 144.70 982.70 1,127.40 - Nasir Group 2,538.90 706.30 3,245.20 4,283.60 Noman Group 2,441.20 850.90 3,292.10 3,075.60 NZ Group 1,511.20 622.80 2,134.00 - NDE Group 905.30 1,778.70 2,684.00 3,011.20 Prime Bank Investment Ltd & Prime Bank Securities Ltd.

3,420.10 100.00 3,520.10 3,711.90

Pran-RFL Group 2,087.20 1,636.50 3,723.70 4,018.20 Pakiza Group 2,293.40 80.40 2,373.80 2,307.40 Reedisha Group 704.60 944.00 1,648.60 1,404.00 RB Group 1,471.70 1,056.00 2,527.70 2,053.40 Square Group 224.40 700.60 925.00 1,180.70 Seacom Group 555.20 1,364.80 1,920.00 - Standard Group 5,394.20 2,270.50 7,664.70 3,576.80 Summit Group 1,331.10 4,869.40 6,200.50 10,608.70 TK Group 969.60 2,370.40 3,340.00 2,493.00 Transcom Group 1,612.60 1,325.80 2,938.40 1,612.90 Toma Group 1,399.70 536.60 1,936.30 3,462.10 Uttara Group 25.80 2,258.50 2,284.30 2,743.50 Youth Group 1,160.20 559.70 1,719.90 - Viyellatex Group 889.90 1,009.10 1,899.00 1,094.40

66,163.00 66,306.80 132,469.80 117,967.60

271PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

7a.9 Large loan restructuringi) The outstanding liability against the restructured Loan (General) of Jamuna Denims Limited stands at BDT 170,54,61,356.43

as on 31.12.2018. Earlier, the said liability was restructured on 19.11.2015 with the approval of Bangladesh Bank vide their letter dated 02.09.2015 for a period of 12 years (including 12 months’ moratorium period) under the purview of BRPD Circular No. 04 dated 29.01.2015 on “Large Loan Restructuring”.

ii) The outstanding liabilities against the restructured Loan (General) of S. A. Oil Refinery Limited and Samannaz Super Oil Limited amounting to BDT 75,92,08,244.16 have been written-off on 30.11.2018. Earlier, the said liabilities were restructured on 15.02.2016 with the approval of Bangladesh Bank vide their letter dated 27.09.2015 for a period of 6 years (including 12 months’ moratorium period) under the purview of BRPD Circular No. 04 dated 29.01.2015 on “Large Loan Restructuring”.

7a.10 Particulars of loans, advances and lease / investmentsi) Loans/investments considered good in respect of which the Bank is

fully secured 128,320,244,922 120,031,688,735 ii) Loans/investments considered good against which the Bank holds no

security other than the debtors' personal guarantee 20,717,880,162 18,886,692,414 iii) Loans/investments considered good secured by the personal undertaking

of one or more parties in addition to the personal guarantee of the debtors 56,771,393,633 59,404,347,642 iv) Loans/investments adversely classified; provision not maintained

there against - - 205,809,518,716 198,322,728,791

v) Loans / investments due by directors or officers of the banking companyor any of them either separately or jointly with any other persons(note-7a.4b+7a.4c.vii)

1,590,420,542 1,644,088,762

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. 1,590,420,542 1,644,088,762

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 - - x) Classified loans and advances / investments

a) Classified loans and advances / investments on which interesthas not been charged (note-7a.11) 12,685,766,955 10,799,049,005

b) Provision on classified loans and advances / investments 4,567,284,783 4,269,942,337

(for details see note-14a.3 & 14a.5)c) Provision kept against loans / investments classified as bad debts 3,489,303,892 4,116,989,852 d) Interest credited to Interest Suspense Account (note-14a.6) 4,026,761,377 4,693,505,469

xi) Cumulative amount of written off loans / investmentsOpening Balance 18,236,775,825 15,428,923,708 Amount written off during the year 3,941,444,000 3,378,479,304

22,178,219,825 18,807,403,012 Amount realised against loans / investments previously written off 267,057,851 570,627,187

21,911,161,974 18,236,775,825

The amount of written off / classified loans / investments for which law suits have been filed (note-7a.14) 31,968,454,595 27,933,517,037

272 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

7a.11 Classification of loans, advances and lease / investments

UnclassifiedStandard including staff loan 184,598,901,214 183,760,782,299 Special mention account (SMA) 8,524,850,547 3,762,897,487

193,123,751,761 187,523,679,786 ClassifiedSub-standard 1,372,812,160 1,263,564,872 Doubtful 2,603,299,522 441,392,332 Bad / Loss 8,709,655,272 9,094,091,802

12,685,766,955 10,799,049,005 205,809,518,716 198,322,728,791

7a.12 Particulars of required provision for loans, advances and lease / investmentsBase Rate

Status for provision (%)

General ProvisionLoans/investments(Including SMA)

193,123,751,761 *Various 3,700,870,137 4,635,009,488

Interest receivable on loans/investments (Less: Staff loan)

629,742,526 1 6,297,425 6,978,955

3,707,167,562 4,641,988,443

*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.

Base RateStatus for provision (%)Specific provisionSub-standard 817,140,224 20 163,428,045 92,552,409 Doubtful 1,820,512,780 50 910,256,390 56,575,819 Bad / Loss 3,489,303,892 100 3,489,303,892 4,116,989,852

4,562,988,327 4,266,118,080 Required provision for loans, advances and lease / investments 8,270,155,889 8,908,106,523 Total provision maintained (note - 14, 14a3 & 14a.5) 8,293,445,807 8,915,603,361 Excess / (short) provision at 31 December 2018 23,289,918 7,496,838

7a.13 Particulars of required provision on Off-balance Sheet ExposuresBase Rate

for provision 1%Acceptances and endorsements 52,944,055,583 529,440,556 497,217,973 Letter of guarantee 57,826,844,429 578,268,444 729,664,353 Letter of credit 38,072,832,383 380,728,324 341,129,383 Bills for collection - - 107,668,519 Forward assets purchased and forward deposits placed 2,095,175,884 20,951,759 2,408,235 Required provision on Off-balance Sheet Exposures 1,509,389,083 1,678,088,462

Total provision maintained (note - 14a.4) 1,513,090,000 1,678,090,000 Excess / (short) provision at 31 December 2018 3,700,917 1,538

273PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

7a.14 Suits filed by the Bank (Branch wise details)Agrabad Branch 1,716,337,121 692,305,532 Aganagar SME Branch 1,088,682 - Adamjee EPZ Branch 4,666,098 4,082,489 Asad Gate Branch 992,814,700 193,769,474 Ashugonj Branch 1,506,854 1,506,854 Ashulia Branch 43,619,421 7,494,867 Banani Branch 1,325,720,369 29,396,548 Baridhara Branch 4,628,918 4,628,918 Baneswar Branch 30,056,919 19,606,885 Bangshal Branch 70,768,397 64,317,413 Banshkhali Branch 1,158,246 647,875 Barisal Branch 545,085 545,085 Bashaboo Branch 151,674,495 8,477,376 Barelekha Branch 690,540 616,180 Bashundhara Branch 12,463,323 12,643,147 Beani Bazar Branch - - Bhairab Bazar Branch 27,622,000 18,128,714 Biswanath Bracnh 2,659,792 904,834 Bogra Branch 522,870,322 158,028,634 Boalmari Branch 144,527 811,952 Bijoynagar Branch 4,554,562 3,081,752 Head Office, FAD,FMD,CBD & Card 154,074,816 1,856,974,074 Chaumuhani Branch 52,736,750 3,560,816 Chaudagram Branch 5,099,438 2,914,012 Chapai Nawabgonj Branch 2,827,406 -Comilla Branch 25,432,722 3,314,780 Court Road Branch 4,474,906 6,660,446 Cox's Bazar Branch 25,058,342 22,290,295 Damudya Branch 557,489 1,148,617 Dhanmondi Branch 9,517,290 6,892,292 Dagonbhuiyan Branch 3,078,598 -Dinajpur Branch 18,214,219 29,458,667 Elephant Road Branch 1,403,884,142 1,297,155,209 Fatickchari Branch 1,481,393 553,169 Faridpur Branch 114,679,187 141,488,899 Foreign Exchange Branch 48,874,585 149,220,985 Ganakbari Branch 3,600,000 4,100,000 Garib-e-Newaz Branch 14,527,992 13,747,889 Gulshan Branch 1,976,883,575 1,761,037,856 Hajigonj Branch 116,839 1,424,380 Halishahar Branch 16,415,954 20,097,408 Hathazari Branch 2,166,294 3,766,490 Hobiganj Branch 3,717,961 735,107 Hemayetpur Branch 500,000 -IBB, Amberkhana Branch 8,445,243 9,434,520 IBB, Dilkusha Branch 1,487,789,799 1,496,574,340 IBB, Mirpur Branch 377,319,559 447,801,558 IBB, O.R. Nizam Road Branch 484,514,975 481,498,474 IBB, Pahartali Branch 96,490,039 100,594,841 Ibrahimpur Branch 1,169,950 2,852,450 Ishwardi Branch 18,932,725 19,276,422 Islampur Branch - 738,175 Jamalpur Branch 7,051,256 2,434,493 Jatrabari Branch 462,355 6,807,034 Jessore Branch 518,194,472 1,474,495,409 Joypara Branch 1,399,000 1,399,000 Joydevpur Chowrasta Branch - - Joypurhat Branch 12,287,551 9,489,398

274 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

Suits filed by the Bank (Branch wise details)Jikorgacha Branch 760,282 1,463,573 Jubilee Road Branch 3,415,115,501 3,220,024,882 Kadomtoli Branch 1,639,593 1,639,593 Kawran Bazar Branch 233,428,706 89,514,577 Khatunganj Branch 1,796,533,826 1,773,622,169 Khulna Branch 1,296,416,094 1,297,403,290 Khajanagar SME Branch 497,250 -Kishoreganj 4,514,158 4,514,158 Kustia Branch 63,144,139 123,452,204 Laldighi East Branch 1,339,297,606 1,342,446,934 Madhabdi Branch 87,253,576 48,788,555 Madhabpur Branch 4,508,531 1,057,930 Mirpur-1 Branch 119,690,010 141,907,012 Motijheel Branch 5,528,368,125 4,832,966,325 Modhukhali Branch 195,443 -Mohakhali Branch 487,970,876 484,640,847 Mouchak Branch 819,264,039 21,915,354 Modhunaghat Branch 425,000 2,030,545 Moulvibazar Branch, Dhaka 110,060,588 84,005,965 Muradpur Branch 4,195,460 2,197,743 Mymensingh Branch 60,810,381 99,296,368 Nabiganj Branch 37,031,429 39,831,964 Natore Branch 49,790,106 6,835,670 Naogaon Branch 36,576,050 33,365,892 Narayanganj Branch 44,657,833 44,657,833 New Eskaton Branch 113,102,974 1,359,559 Oxygen More Branch 4,611,696 3,089,696 Off-shore Banking Unit, CEPZ 905,255,530 905,255,530 Pabna Branch 24,848,846 10,742,582 Pallabi Branch 51,699,039 15,548,584 Panthapath Branch 1,057,484,729 1,058,406,742 Pragati Sarani Branch 21,733,216 14,061,665 Prabortak More Branch 30,599,697 25,613,821 Rajshahi Branch 789,557,450 217,126,312 Rangpur Branch 9,289,604 3,431,513 Retail Banking Division 255,835,320 240,292,691 Ring Road Branch 216,898,203 226,611,409 Satkhira Branch 1,377,625 840,146 Sat Masjid Road Branch 170,811,800 165,937,724 Savar Branch 335,087,706 236,229,343 SBC Tower Branch 230,637,073 171,847,201 Sherpur Branch 176,797 -Shibpur Branch 18,432,371 2,588,636 Simrail Branch 10,197,144 10,070,627 Sirajdikhan Branch 6,154,700 6,469,700 SME Banking, Dhaka 117,824,556 115,291,681 Sunamganj Branch 1,760,503 - Sremangal Branch 38,524,232 39,135,560 Sylhet Branch 4,571,214 4,571,214 Subidbazar Branch, Sylhet 54,513,305 61,693,478 Tangail Branch 2,820,796 3,146,348 Takerhat SME Branch 533,465 - Tajpur Branch 8,117,901 709,840 Tongi Branch 9,022,266 9,022,266 Uposhahar Branch, Sylhet 253,000 253,000 Uttara Branch 27,491,957 31,825,048 Vatiari Branch 83,340,683 49,775,104 Wari Bracnh 6,177,400 4,058,600

31,968,454,595 27,933,517,037

275PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

8 Consolidated bills purchased and discounted Prime Bank Limited (note-8a) 9,353,331,214 14,729,065,476 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited 2,256,486,337 1,823,874,133

11,609,817,551 16,552,939,609

8a Bills purchased and discounted Payable in Bangladesh 5,976,457,767 10,305,266,336 Payable outside Bangladesh 3,376,873,447 4,423,799,140

9,353,331,214 14,729,065,476

8a.1 Maturity grouping of bills purchased and discounted Payable within one month - 3,425,855,329 Over one month but less than three months - 6,799,206,546 Over three months but less than six months - 3,966,558,122 Six months or more - 537,445,480

- 14,729,065,476

9 Consolidated fixed assets including premises, furniture and fixtures Prime Bank Limited (note-9a) 6,943,348,521 6,434,047,671 Prime Bank Investment Limited 34,308,053 30,507,630 Prime Bank Securities Limited 10,584,742 9,902,298 Prime Exchange Co. Pte. Ltd., Singapore 1,954,177 3,702,920 PBL Exchange (UK) Ltd. 6,103,108 8,707,332 PBL Finance (Hong Kong) Limited 205,415 173,360

6,996,504,016 6,487,041,211

9a Fixed assets including premises, furniture and fixtures of the BankProperty, Plant & Equipment

Land 3,719,444,788 3,719,444,788 Building 1,861,157,701 1,725,237,651

Furniture and fixtures 1,090,342,100 986,584,385

Office equipment and machinery 2,343,057,650 2,004,869,646

Vehicles 443,738,007 424,505,118

Library books 1,820,037 1,820,037 9,459,560,283 8,862,461,626

Less:Accumulated depreciation

2,800,589,304 2,538,930,494

6,658,970,979 6,323,531,132

Intangibles assetsSoftware-core banking 565,524,078 353,144,552

Software-ATM 57,892,614 43,212,614

Cost of intangibles assets 623,416,692 396,357,165

Less: Accumulated amortization 339,039,150 285,840,626 284,377,542 110,516,539

Net book value at the end of the year (See annexure-C for detail) 6,943,348,521 6,434,047,671

The fixed assets recognised and measurements policy are described in note 2.2.4

276 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

10 Consolidated other assets

Prime Bank Limited (note-10a) 23,836,555,730 22,903,009,700 Less: Investment in Prime Bank Investment Limited (note-10a.5) (2,999,999,940) (2,999,999,940)Less: Investment in Prime Bank Securities Limited (note-10a.5) (712,500,000) (712,500,000)Less: PBIL investment in Prime Bank Securities Ltd.(below) (37,500,000) (37,500,000)Less: Investment in PBL Exchange (UK) Ltd. (note-10a.5) (56,352,624) (56,352,624)Less: Investment in Prime Exchange Co. Pte. Ltd., Singapore (note-10a.5) (10,993,235) (10,993,235)Less: Investment in PBL Finance (Hong Kong) Limited (note-10a.5) (34,365,722) (34,365,722)Less: Dividend of Prime Bank Investment Limited (note-10a) - - Less: Interest receivable from PBL Finance (Hong Kong) Limited - - Less: Due from Investment in PBL Finance (Hong Kong) Limited - -

19,984,844,209 19,051,298,179

Prime Bank Investment Limited (investment in PBSL) 37,500,000 37,500,000 Prime Bank Investment Limited 97,132,285 101,594,607 Prime Bank Securities Limited 141,520,263 96,018,372 Prime Exchange Co. Pte. Ltd., Singapore 5,145,002 5,204,094 PBL Exchange (UK) Ltd. 6,829,618 7,347,628 PBL Finance (Hong Kong) Limited 37,131,779 30,779,137

325,258,948 278,443,839 20,310,103,156 19,329,742,018

10a Other assets of the BankStationery and stamps 50,406,794 38,027,828 Exchange adjustment account 13,996,548 - Investment in subsidiary (note-10a.5) 3,814,211,521 3,814,211,521 Off-shore Banking Units 8,886,688,000 9,360,494,044 Due from Off-shore Banking Units 292,652,897 248,339,125 Prepaid expenses 44,754,439 20,129,129 Interest / profit receivable on loan (note-10a.1) 884,460,124 963,842,394 Interest receivable on Govt. securities 582,323,336 614,889,406 Advance deposits and advance rent 284,080,601 355,000,715 Prepaid expenses against house furnishing 11,344,418 8,460,103 Balance with PBSL 71,760,010 - Branch adjustments account 18,517,480 18,516,520 Suspense account (note-10a.2) 244,727,208 283,396,487 Encashment of PSP / BSP 997,709,958 457,207,387 Advance income tax paid (note-10a.6) 16,673,978,174 16,182,416,743 Credit card 96,028,502 92,911,810 Sundry assets (note-10a.3) 48,256,616 53,999,656

33,015,896,627 32,511,842,870 Less: Off-shore Banking Units 9,179,340,897 9,608,833,170

23,836,555,730 22,903,009,700

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 assetsProtested Bills 17,978,649 17,827,354 Islamic Transit Account 5,894,000 2,876,066 Others 24,383,967 33,296,235

48,256,616 53,999,656 10a.4 Particulars of required provision for other assets

RatePurchase of credit card bills 71,000,000 100% 71,000,000 71,000,000 Protested bills 17,978,649 100% 17,978,649 17,827,354 Legal Expenses 2,139,894 100% 2,139,894 1,170,272 Others 166,253,245 100% 166,253,245 114,085,282 Required provision for other assets 257,371,788 204,082,908 Total provision maintained (note - 14a.8) 257,383,148 204,083,148 Excess / (short) provision at 31 December 11,359 239

277PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

10a.5 Investment in subsidiariesPrime Bank Investment Limited 2,999,999,940 2,999,999,940 Prime Bank Securities Limited 712,500,000 712,500,000 Prime Exchange Co. Pte. Ltd., Singapore 10,993,235 10,993,235 PBL Exchange (UK) Ltd. 56,352,624 56,352,624 PBL Finance (Hong Kong) Limited 34,365,722 34,365,722

3,814,211,521 3,814,211,521

As per the provision of the Exchange Demutualization Act-2013 and in accordance with the Bangladesh Security Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange Ltd. (DSE) alloted total 72,15,106 ordinary shares at a face value of Tk 10.00 each and Chittagong Stock Exchange Ltd. (CSE) alloted total 42,87,330 ordinary Shares at face value of Tk 10.00 each against the Membership of DSE and CSE respectively. Out of the above DSE transferred 2,886,042 shares and CSE transferred 1,714,932 shares directly to the credit of the Beneficiary Owner's account of the company. The remaining shares were credited to blocked accounts as per provisions of the Exchange Demutualization Act, 2013. As there is no active market for shares of DSE and CSE, we have shown the value at original cost as investment. However, during the year 31 December 2018 DSE sold 25% of DSE's shares to strategic investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) Consortium which equivalents to 18,03,777 no. of shares. As such current holding of Prime Bank Securities Ltd. in DSE's shares came down to 54,11,330 no. of shares.

10a.6 Advance income tax paidOpening Balance 16,182,416,743 15,594,901,282 Add: Paid during the year 491,561,431 587,515,461

16,673,978,174 16,182,416,743 11 Non-Banking Assets

Name of Parties Possession dateM/s Rima Flour Mills 18.03.2014 124,438,400 124,438,400 M/s Ripon Motors 18.03.2014 51,902,240 51,902,240 M/s Megna Bangla Trade 28.04.2014 18,399,360 18,399,360 M/s Ampang Food Industries 28.04.2014 25,760,640 25,760,640

220,500,640 220,500,640

The Bank has been awarded ownership of the mortgage properties of the above mentioned parties according to the verdict of the Honorable Court in accordance with the section 33(7) of “Artharin Adalat-2003”. An amount of Tk.220,500,640/- is reported in the financial statements as Non -Banking assets. The value of Non-Banking Assets has been determined on the basis of valuation report of an Independent valuer.

12 Consolidated borrowings from other banks, financial institutions and agentsPrime Bank Limited (note-12a) 33,944,516,693 22,087,479,113 Prime Bank Investment Limited 3,026,635,625 3,228,886,961 Prime Bank Securities Limited 393,452,756 433,499,527 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited 2,214,960,000 1,778,513,368

39,579,565,074 27,528,378,969 Less: Inter-company transactions 5,635,048,381 5,390,381,459

33,944,516,693 22,137,997,510

12a Borrowings from other banks, financial institutions and agents of the BankIn Bangladesh (note-12a.1) 18,612,725,751 8,728,345,506 Outside Bangladesh (note-12a.2) 15,331,790,942 13,359,133,607

33,944,516,693 22,087,479,113

12a.1 In BangladeshPriem Bank Subordinated Bond 9,000,000,000 2,500,000,000 Financial Sector Support Program 1,079,099,944 762,068,738 EDF borrowings from Bangladesh Bank 8,439,710,789 5,397,210,402 Refinance against SME loan from Bangladesh Bank 93,915,018 69,066,366

18,612,725,751 8,728,345,506

278 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

12a.2 Outside BangladeshEmirates NBD, Dubai, UAE - 573,524,500 Emirates Islami Bank - 1,930,032,752 Abudhabi Commercial Bank 1,468,250,000 Bank MUSCAT - 855,696,900 Bank of Montreal, CANADA 1,187,185,000 - ICD, GULF 367,805,022 - HDFC Bank, Mumbai 776,075,000 First Gulf Bank, UAE - - First Abu Dhabi Bank 1,119,393,800 643,406,000 FMO, Netherlands 699,166,666 1,378,333,333 Noor Bank Limited 570,520,000 827,000,000 SCB, Singapore 3,408,830,455 691,195,022 SCB, Hong Kong - 1,293,924,200 National Bank of Rash-Al Khaima 167,800,000 481,065,900 Commercial Bank of Qatar 1,037,004,000 - International Finance Corporation 4,529,761,000 4,684,955,000

15,331,790,942 13,359,133,607

12a.3 Security against borrowings from other banks, financial institutions and agentsSecured (Treasury bills) - - Unsecured 33,944,516,693 22,087,479,113

33,944,516,693 22,087,479,113

12a.4 Maturity grouping of borrowings from other banks, financial institutions and agentsPayable on demand - - Up to 1 month 12,086,159,157 6,159,279,140 Over 1 month but within 3 months 3,791,928,339 4,940,887,452 Over 3 months but within 1 year 9,454,562,558 8,918,246,155 Over 1 year but within 5 years 5,700,000,000 2,069,066,366 Over 5 years 2,911,866,639 -

33,944,516,693 22,087,479,113

13 Consolidated deposits and other accountsCurrent deposits and other accountsPrime Bank Limited (note-13a.1.c) 32,742,551,758 33,196,233,861 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

32,742,551,758 33,196,233,861 Less: Inter-company transactions 22,060,841 13,533,538

32,720,490,917 33,182,700,323

Bills payable Prime Bank Limited (note-13a.1.c) 3,045,875,590 4,212,571,458 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

3,045,875,590 4,212,571,458 Savings bank / Mudaraba savings depositsPrime Bank Limited (note-13a.1.c) 41,478,074,475 38,397,699,341 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

41,478,074,475 38,397,699,341 Term / Fixed depositsPrime Bank Limited (note-13a.1.c) 120,251,223,734 123,207,471,241 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

120,251,223,734 123,207,471,241 Less: Inter-company transactions 2,235,495 145,194

120,248,988,239 123,207,326,047 197,493,429,221 199,000,297,168

279PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

13a Deposits and other accounts of the BankDeposits from banks (note -13a.1.a) 3,554,678,702 2,172,343,252 Deposits from customers (note-13a.1.b) 193,963,046,856 196,841,632,649

197,517,725,557 199,013,975,901

13a.1 a) Deposits from BanksCurrent deposits and other accounts 5,178,979 18,742,909 Savings bank / Mudaraba savings deposits 762,515,592 711,519,437 Special notice deposits 285,077,673 940,174,448 Fixed deposits 2,501,906,458 501,906,458

3,554,678,702 2,172,343,252 b) Customer Deposits

i) Current deposits and other accountsCurrent / Al-wadeeah current deposits 14,344,791,527 15,235,757,391 Foreign currency deposits 6,348,181,790 6,458,348,587 Security deposits 7,945,616 8,362,116 Sundry deposits (note - 13a.2) 12,836,137,818 11,718,541,620

33,537,056,750 33,421,009,713 Less: Off-shore Banking Units 799,683,971 243,518,761

32,737,372,779 33,177,490,952 ii) Bills payable Pay orders issued 3,033,276,813 4,193,952,419 Pay slips issued 2,484,749 2,484,749 Demand draft payable 9,783,228 15,806,529 Foreign demand draft 313,592 313,592 T. T. payable - - Bill Pay ATM 17,208 14,169

3,045,875,590 4,212,571,458

iii) Savings bank / Mudaraba savings deposits 40,715,558,882 37,686,179,903

iv) Term / Fixed depositsFixed deposits / Mudaraba fixed deposits 71,458,093,658 62,175,439,920 Special notice deposits 12,652,594,309 12,567,863,806 Non resident Taka deposits 1,698,132,023 1,516,641,540 Scheme deposits 31,655,419,613 45,505,445,071

117,464,239,603 121,765,390,336 193,963,046,856 196,841,632,649

197,517,725,557 199,013,975,901

c) Deposits and other accountsCurrent deposits and other accountsDeposits from banks (note -13a.1.a) 5,178,979 18,742,909 Deposits from customers (note-13a.1.b.i) 32,737,372,779 33,177,490,952

32,742,551,758 33,196,233,861 Bills payableDeposits from banks (note -13a.1.a) - - Deposits from customers (note-13a.1.b.ii) 3,045,875,590 4,212,571,458

3,045,875,590 4,212,571,458 Savings bank / mudaraba savings depositsDeposits from banks (note -13a.1.a) 762,515,592 711,519,437 Deposits from customers (note-13a.1.b.iii) 40,715,558,882 37,686,179,903

41,478,074,475 38,397,699,341 Term / Fixed depositsDeposits from banks (note -13a.1.a) 2,786,984,131 1,442,080,906 Deposits from customers (note-13a.1.b.iv) 117,464,239,603 121,765,390,336

120,251,223,734 123,207,471,241 197,517,725,557 199,013,975,901

280 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

13a.2 Sundry depositsF.C. held against back to back L/C 5,311,288,453 5,258,292,710 Sundry creditors 767,157,404 728,433,241 Risk fund and service charges (CCS and lease finance) 55,094,400 56,200,155 Sale proceeds of PSP / BSP 362,071,050 217,085,000 Margin on letters of guarantee 884,411,352 956,397,206 Margin on letters of credit 1,887,199,994 1,891,208,659 Margin on FDBP / IDBP, export bills, etc 118,163,254 167,063,116 Lease deposits 57,823,429 64,845,357 Interest / profit payable on deposits 1,825,658,414 866,375,072 Withholding VAT/Tax /Excise duty payable to Government Authority 562,791,382 546,056,541 Others 1,004,478,687 966,584,562

12,836,137,818 11,718,541,620 13a.3 Payable on demand and time deposits

a) Demand depositsCurrent deposits 14,349,970,506 15,254,500,299 Savings deposits (9%) 3,733,026,703 3,455,792,941 Foreign currency deposits (Non interest bearing) 5,548,497,819 6,214,829,826 Security deposits 7,945,616 8,362,116 Sundry deposits 12,836,137,818 11,718,541,620 Bills payable 3,045,875,590 4,212,571,458

39,521,454,051 40,864,598,260

b) Time depositsSavings deposits (91%) 37,745,047,772 34,941,906,400 Fixed deposits 73,960,000,116 62,677,346,377 Special notice deposits 12,937,671,982 13,508,038,254 Deposits under schemes 31,655,419,613 45,505,445,071 Non resident Taka deposits 1,698,132,023 1,516,641,540

157,996,271,506 158,149,377,641 197,517,725,557 199,013,975,901

13a.4 Sector-wise break-up of deposits and other accountsGovernment 2,609,413,915 1,690,935,354 Deposit money banks 3,554,678,702 2,172,343,252 Other public 2,454,425,525 3,261,805,417 Foreign currency 5,548,497,819 6,214,829,826 Private 183,350,709,597 185,674,062,052

197,517,725,557 199,013,975,901

13a.5 Unclaimed deposits and valuablesCurrent deposits 1,067 - Savings deposits 4,942 42,537 Demand Draft - - SND 18 - Pay order 7,681,828 - Sundry Deposit 815,778 87,274

8,503,633 129,811 13a.6 Maturity analysis of deposits

a) Maturity analysis of deposits from BanksPayable on demand - - Up to 1 month 5,178,979 18,742,909 Over 1 month but within 3 months 788,172,583 796,135,138 Over 3 months but within 1 year 2,501,906,458 501,906,458 Over 1 year but within 5 years 259,420,683 855,558,748 Over 5 years but within 10 years - - Over 10 years - -

3,554,678,702 2,172,343,252

281PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

b) Maturity analysis of customer deposits excluding bills payablePayable on demand - - Up to 1 month 28,481,210,911 24,021,106,165 Over 1 month but within 3 months 42,690,754,047 38,703,976,533 Over 3 months but within 1 year 49,540,944,626 66,433,874,081 Over 1 year but within 5 years 60,631,173,763 32,883,887,194 Over 5 years but within 10 years 9,564,584,284 30,586,087,406 Over 10 years 8,503,633 129,811

190,917,171,265 192,629,061,191 c) Maturity analysis of bills payablePayable on demand 3,045,875,590 4,212,571,458 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 - -

3,045,875,590 4,212,571,458 197,517,725,557 199,013,975,901

14 Consolidated other liabilitiesPrime Bank Limited (note-14a) 36,257,586,840 35,465,414,699 Prime Bank Investment Limited 724,298,400 697,688,931 Prime Bank Securities Limited 238,146,149 169,586,547 Prime Exchange Co. Pte. Ltd., Singapore 40,958,922 57,330,044 PBL Exchange (UK) Ltd. 7,767,563 28,492,648 PBL Finance (Hong Kong) Limited 6,025,124 25,185,674

37,274,782,999 36,443,698,544 Less: Inter-company transactions - -

37,274,782,999 36,443,698,544

14a Other liabilities of the BankExchange adjustment account - 29,385 Expenditure and other payables 147,779,820 142,722,657 Provision for bonus 227,293,459 106,978,887 Provision for income tax (note - 14a.1) 20,085,551,971 18,335,551,971 Deferred tax liability (note-14a.2) 930,373,650 930,373,650 Unearned commission on bank guarantee 7,820,643 32,536,560 Unearned profit (Markup) 291,233,755 156,808,065 Provision for off-balance sheet exposures (note-14a.4) 1,513,090,000 1,678,090,000 Provision for Off-shore Banking Units (note-14a.5) 743,550,000 716,350,000 Fund for employee welfare fund (EWF) 7,875,604 3,617,950 Fund for Prime Bank Foundation (PBF) 157,512,081 72,358,987 Provision for loans and advances / investments (note - 14a.3) 7,540,378,507 8,189,736,061 Provision for Interest receivable on loans and advances / investments 9,517,300 9,517,300 Provision for diminution in value of investments 35,628,249 16,928,249 Interest suspense account (note - 14a.6) 4,026,761,377 4,693,505,469 Provision for Impairement loss for investment in subsidiaries 180,094,092 93,994,092 Provision for climate risk fund 10,000,000 8,000,000 Provision of rebate for good borrower 15,207,111 10,207,111 Other liabilities 70,536,074 64,025,157 Other provision (note - 14a.7) 257,383,148 204,083,148

36,257,586,840 35,465,414,699

282 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

14a.1 Provision for income tax Opening Balance 18,335,551,971 17,585,551,971 Add: Addition during the year 1,750,000,000 750,000,000

20,085,551,971 18,335,551,971 * Corporate tax position of the bank is shown in annexure-D

14a.2 Deferred tax liabilityBalance as on 1 January 930,373,650 932,054,703 Add/(Less): Provision for revaluation of land and building - (1,681,053)Add: Addition / Adjustment during the year (note-40a) - - Balance as on 31 December 930,373,650 930,373,650

14a.3 Provision for loans, advances and lease / investmentsMovement in specific provision on classified loans / investments:Provision held as on 1 January 3,773,742,337 3,400,363,411 Less: Fully provided debts written off during the year (2,607,437,692) (2,112,525,235)Add: Recoveries of amounts previously written off 203,780,138 409,904,161 Add: Specific provision made during the year for other accounts - - Add: Transferred from General Provision - - Less: Provision no longer required - - Add: Net charge to profit and loss account (note-39a) 2,690,300,000 2,076,000,000 Provision held as on 31 December 4,060,384,783 3,773,742,337 Movement in general provision on unclassified loans / investmentsProvision held as on 1 January 4,415,993,724 3,359,993,724 Add: Amount transferred to classified provision - - Add: General provision made during the year (note-39a) (936,000,000) 1,056,000,000 Provision held as on 31 December 3,479,993,724 4,415,993,724

7,540,378,507 8,189,736,061 14a.4 Provision for off-balance sheet exposures

Provision held as on 1 January 1,678,090,000 1,385,640,000 Add: Amount transferred from classified provision - - Add: Provision made during the year (note-39a) (165,000,000) 292,450,000 Provision held as on 31 December 1,513,090,000 1,678,090,000

14a.5 Provision for Off-shore Banking UnitsMovement in specific provision on classified loans / investments:Provision held as on 1 January 496,200,000 423,700,000 Add: Transferred from Unclassified Provision of OBU - - Add: Net charge to profit and loss account (note-39a) 10,700,000 72,500,000 Provision held as on 31 December 506,900,000 496,200,000 Movement in general provision on unclassified loans / investments

Provision held as on 1 January 220,150,000 169,150,000 Add: Amount transferred to classified provision of OBU - - Add: General provision made during the year (note-39a) 16,500,000 51,000,000 Provision held as on 31 December 236,650,000 220,150,000

743,550,000 716,350,000 14a.6 Interest suspense account

Balance as on 1 January 4,693,505,469 4,488,241,878 Add: Amount transferred to "interest suspense" account during the year 1,671,697,733 1,875,009,156 Less: Amount recovered from "interest suspense" account during the year (994,628,843) (246,136,963)Less: Amount written-off during the year (1,343,812,981) (1,423,608,602)Balance as on 31 December 4,026,761,377 4,693,505,469

14a.7 Other provision for classified assets Balance as on 1 January 204,083,148 120,116,648 Add: Addition during the year (note-39a) 53,300,000 83,966,500 Less: Adjustment during the year - - Balance as on 31 December 257,383,148 204,083,148

283PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

15 Share capital15.1 Authorized capital

2,500,000,000 ordinary shares of Taka 10 each 25,000,000,000 25,000,000,000

15.2 Issued, subscribed and fully paid up capital30,000,000 ordinary shares of Taka 10 each issued for cash 300,000,000 300,000,000 986,756,137 ordinary shares of Taka 10 each issued as bonus shares 9,867,561,370 8,838,212,760 115,527,340 ordinary shares of Taka 10 each issued as right shares 1,155,273,400 1,155,273,400

11,322,834,770 10,293,486,160

15.3 History of paid-up capitalGiven below the history of raising of share capital of Prime Bank Limited:

Accounting year Declaration No of share Value in capital Cumulative

1995 Opening capital 10,000,000 100,000,000 100,000,000 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 2012 10% Bonus share 93,577,147 935,771,470 10,293,486,160 2017 10% Bonus share 102,934,861 1,029,348,610 11,322,834,770

1,132,283,477 11,322,834,770

15.4 Percentage of shareholdings at the closing date

Particulars 2018 2017 2018 2017Taka Taka % %

Sponsors 4,152,053,350 3,915,393,490 36.67% 38.04%Financial Institutions 3,076,157,170 2,503,815,050 27.17% 24.32%Foreign Investors 348,688,820 385,416,330 3.08% 3.75%Non-resident Bangladeshi 26,774,640 27,819,790 0.24% 0.27%General Public 3,719,160,790 3,461,041,500 32.84% 33.62%

11,322,834,770 10,293,486,160 100.00% 100.00%15.5 Shareholding range on the basis of shareholdings as at 31 December 2018

Shareholding rangeNumber of share

holdersTaka

Shares PercentageLess than 500 5,177 959,141 0.08%500 - 5,000 6,352 11,986,539 1.06%5,001 - 10,000 1,168 8,588,987 0.76%10,001 - 20,000 857 12,283,372 1.08%20,001 - 30,000 318 7,857,888 0.69%30,001 - 40,000 158 5,522,982 0.49%40,001 - 50,000 102 4,765,815 0.42%50,001 - 100,000 253 17,868,784 1.58%100,001 - 1,000,000 354 106,916,630 9.44%Over 1,000,000 156 955,533,339 84.39%

14,895 1,132,283,477 100.00%

284 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

15.6 Name of the Directors and their shareholdings as at 31 December 2018

SlName of the directors

Status Opening position Closing position % of shares as at 31.12.2018

1 Mr. Azam J Chowdhury Chairman 20,601,158 22,661,273 2.00

(Representative of East Coast Shipping Lines Ltd.)

(Share holding of East Cost Shipping

Lines Ltd.)

2 Mr. Mafiz Ahmed Bhuiyan Vice Chairman 20,591,099 22,650,208 2.00

3 Mr. Imran Khan Vice Chairman 20,588,337 22,647,170 2.00 4 Mr. Md. Nader Khan Director 38,019,361 41,821,296 3.69 5 Quazi Sirazul Islam Director 20,616,158 22,677,773 2.00 6 Mrs. Marina Yasmin Chowdhury Director 24,225,000 27,288,000 2.41

7 Mr. Md. Shahadat Hossain Director 20,611,583 22,672,741 2.00

8 Mr. Shirajul Islam Mollah Director 20,644,922 22,709,414 2.01

9 Mrs. Nasim Anwar Hossain Director 23,365,749 25,702,323 2.27

10 Mrs. Salma Huq Director 32,254,341 35,479,775 3.13 11 Mr. Nafis Sikder Director 25,826,178 28,408,795 2.51 12 Mr. Waheed Murad Jamil Director 20,587,749 22,646,523 2.00

(Representative of Mawsons Limited.)

(Share holding of Mawsons Limited)

13 Mr. Tarique Ekramul Haque Director 20,600,391 22,660,429 2.00

14 Mr. Mohammad Mushtaque Ahmed Tanvir

Director 20,760,250 22,836,275 2.02

(Representative of Uniglory Cycle Industries Ltd.)

(Share holding of Uniglory Cycle

Industries Ltd.)

15 Mr. Shamsuddin Ahmad, Ph.D Independent Director

- - -

16 Dr. G. M. Khurshid Alam Independent Director

- - -

17 Mr. M. Farhad Hussain, FCA Independent Director

- - -

18 Dr.M.Shamim Z. Bosunia Independent Director

19 Mr. Rahel Ahmed Managing Director

- - -

329,292,276 362,861,995

Directors of the Bank complies with the requirements at SEC notification no-SEC/CMRRCD/2009-193/119/Admin/34 dated 21/11/2011 regarding holding of shares which states that "each Director other than Independent Directors of any listed company shall hold minimum 2% (Two percent) share of the Paid-up Capital otherwise there shall be a casual vacancy of Directors".

285PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

15.7 Capital to risk weighted assets 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, BRPD Circular no. 07 dated March 31, 2014, BRPD Circular no.18 dated 21 December 2014 and BRPD Circular Letter no. 05 dated May 31, 2016, required capital of the Bank (Consolidated) at the close of business on 31 December 2018 was Taka 27,440,402,113 as against available Tier-I capital of Taka 24,375,723,704 and Tier-II capital of Taka 13,926,265,060 making a total capital of Taka 38,301,988,764 thereby showing a surplus capital / equity of Taka 10,861,586,650 at that date. Details are shown below:

Tier-1 Capital Common Equity Tier-1 (CET-1) CapitalPaid-up capital (note-15.2) 11,322,834,770 10,293,486,160 Share premium (note-15.8) 1,211,881,786 2,241,230,396 Non-controlling interest(note-15.9) 63 61 Statutory reserve (note-16) 10,353,413,584 9,565,853,177 General reserve 28,002,888 28,002,888 Surplus in consolidated profit and loss account / Retained earnings (note- 20) 1,798,788,031 1,116,996,544

24,714,921,122 23,245,569,226 Additional Tier-1 (AT-1) CapitalNon-cumulative irredeemable preference shares - -

- - Less: Regulatory Adjustments for CET-1 CapitalGoodwill and all other intangible assets 285,218,428 110,516,539 Reciprocal Crossholdings 53,978,990 25,271,120

339,197,418 135,787,659 Total Tier-1 Capital 24,375,723,704 23,109,781,567

Tier-2 CapitalGeneral provision maintained against unclassified loan/investments (note-14a.3) 3,479,993,724 4,415,993,724 General provision on off-balance sheet exposures (note-14a.4) 1,513,090,000 1,678,090,000 General provision on off-shore Banking Units (note-14a.5) 236,650,000 220,150,000 Revaluation gain / loss on investments-50% of total 230,897,400 230,897,400 Revaluation reserve-50% of total 751,759,278 751,759,278

Prime Bank Sub-ordinated Bond 8,500,000,000 2,500,000,000

14,712,390,402 9,796,890,402 Less: Regulatory AdjustmentsRevaluation Reserves for fixed assets, securities and equity securities 786,125,342 589,594,007

Total Tier-2 Capital 13,926,265,060 9,207,296,395 A) Total Regulatory capital 38,301,988,764 32,317,077,962

Total assets including off-balance sheet exposures 457,564,124,265 450,203,787,174 B) Total risk weighted assets 231,077,070,428 235,119,393,387 C) Required capital based on risk weighted assets (11.875% on B) 27,440,402,113 23,511,939,339 D) Surplus (A-C) 10,861,586,650 8,805,138,624

Capital to risk weighted assets ratio 16.58% 13.74%

Common Equity Tier-I (Against Standard of minimum 6.00%) 10.55% 9.83%Total Capital to Risk Weighted Asset Ratio (Against Standard of minimum 10% with Capital conservation buffer of 1.875%)

16.58% 13.74%

Leverage Ratio

Particulars Required Held Required HeldLeverage ratio 3.00% 6.51% 3.00% 6.31%

286 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

Capital to risk weighted assets ratio (Solo)

Tier-1 Capital

Common Equity Tier-1 (CET-1) Capital

Paid-up capital (note-15.2) 11,322,834,770 10,293,486,160

Share premium (note-15.8) 1,211,881,786 2,241,230,396

Statutory reserve (note-16) 10,353,413,584 9,565,853,177

Surplus in consolidated profit and loss account / Retained earnings (note-20a) 1,759,002,003 1,079,304,405

24,647,132,143 23,179,874,138

Additional Tier-1 (AT-1) Capital

Non-cumulative irredeemable preference shares - -

- -

Less: Regulatory Adjustments for CET-1 Capital

Goodwill and all other intangible assets 284,377,542 110,516,539

Reciprocal Crossholdings 27,970,098 21,707,400

312,347,640 132,223,939

Total Tier-1 Capital 24,334,784,503 23,047,650,199

Tier-2 Capital

General provision maintained against unclassified loan / investments (note-14a.3) 3,479,993,724 4,415,993,724

General provision on off-balance sheet exposures (note-14a.4) 1,513,090,000 1,678,090,000

General provision on off-shore Banking Units (note-14a.5) 236,650,000 220,150,000

Revaluation gain / loss on investments-50% of total 220,734,813 220,734,813

Revaluation reserve-50% of total 751,759,278 751,759,278

Prime Bank Sub-ordinated Bond 8,500,000,000 2,500,000,000

14,702,227,815 9,786,727,815

Less: Regulatory Adjustments

Revaluation Reserves for fixed assets, securities and equity securities 777,995,273 583,496,455

Total Tier-2 Capital 13,924,232,542 9,203,231,360

A) Total Regulatory capital 38,259,017,045 32,250,881,559

Total assets including off-balance sheet exposures 456,453,527,360 449,083,512,828

B) Total risk weighted assets 224,516,533,725 230,211,415,637

C) Required capital based on risk weighted assets (11.875% on B) 26,661,338,380 23,021,141,564

D) Surplus (A-C) 11,597,678,665 9,229,739,995

Capital to risk weighted assets ratio 17.04% 14.01%

Common Equity Tier-I (Against Standard of minimum 6.00%) 10.84% 10.01%

Total Capital to Risk Weighted Asset Ratio (Against Standard of minimum 10% with Capital conservation buffer of 1.875%) 17.04% 14.01%

Leverage Ratio

Particulars Required Held Required Held

Leverage ratio 3.00% 6.52% 3.00% 6.61%

287PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

15.8 Share premium

11,552,734 ordinary shares of Taka 200 each per share 2,310,546,800 2,310,546,800 Less: Income tax deduction at source @ 3% on total premium 69,316,404 69,316,404

2,241,230,396 2,241,230,396 Less: Transferred to Paid-up Capital 1,029,348,610 -

1,211,881,786 2,241,230,396

15.9 Non controlling interest

Share capital 60 60 Retained earnings 3 1.33

63 61 16 Statutory reserve

Balance on 1 January 9,565,853,177 9,204,058,242 Addition during the year ( 20% of pre-tax profit) 787,560,407 361,794,935 Balance at 31 December 2018 10,353,413,584 9,565,853,177

17 Consolidated revaluation gain / loss on investments

Prime Bank Limited (note-17a) 22,087,009 17,749,598 Gain on revaluation of Investment at Prime Exchange Co. Pte. Ltd., Singapore 38,209,946 38,757,000

Gain on revaluation of Investment at Prime Exchange (UK) Ltd. (3,361,374) (480,524)Gain on revaluation of Investment at PBL Finance (Hong Kong) Limited 14,863,043 (740,786)

71,798,624 55,285,288

17a Revaluation gain / loss on investments of the Bank

Opening balance on 1 January 17,749,598 15,278,978 Add: Amortized/Revaluation Gain 57,349,488 39,631,941 Less: Adjustment of amortization/revaluation gain against sale/maturity (52,987,310) (37,076,239)Add: Adjustment of revaluation gain/(loss) of OBU fixed assets (24,768) (85,082)Less: Adjustment of Revaluation loss - -

22,087,009 17,749,598

18 Revaluation reserveBalance on 1 January 1,767,012,161 1,778,219,183 Adjustment during the year - (11,207,022)Balance at 31 December 2018 1,767,012,161 1,767,012,161 Less: Provision for deferred tax (270,253,057) (270,253,057)

1,496,759,104 1,496,759,104

The Bank revalued the assets of Land and Buildings details described in note 2.5

19 Consolidated foreign currency translation gain/ (loss)

Prime Bank Limited (note-19a) 14,920,954 13,414,088 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore (8,551) 660,837 PBL Exchange (UK) Ltd. (107,404) 93,100 PBL Finance (Hong Kong) Limited 312,440 1,166,122

15,117,438 15,334,146

19a Foreign currency translation gain/ (loss)Balance on 1 January 13,414,088 6,637,162 Addition during the year 1,506,866 6,776,926 Balance at 31 December 2018 14,920,954 13,414,088

288 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

20 Consolidated retained earnings / movement of profit and loss accountPrime Bank Limited (note-20a) 1,760,508,869 1,086,081,331 Prime Bank Investment Limited 171,979,126 66,646,548 Prime Bank Securities Limited (153,975,418) (58,315,338)Prime Exchange Co. Pte. Ltd., Singapore 12,441,761 13,487,817 PBL Exchange (UK) Ltd. (30,425,774) (36,245,907)PBL Finance (Hong Kong) Limited 108,050,252 112,115,577

1,868,578,815 1,183,770,029 Less: Minority Interest (3.44) (1.33)Less: Transfer to statutory reserve - - Less: Profit Remitted by Prime Exchange Co. Pte. Ltd., Singapore (10,903,571) (2,706,530)Less: Profit Remitted by PBL Finance (Hong Kong) Limited (57,183,859) (55,369,969)Less: Foreign currency translation gains (1,703,351) (8,696,984)

1,798,788,031 1,116,996,544

20a Retained earnings / movement of profit and loss account of the BankBalance on 1 January 1,079,304,405 2,017,875,429 Revaluation reserve - 11,207,022 Addition during the year 2,187,802,036 1,058,974,674 Transfer to statutory reserve (787,560,407) (361,794,935)Cash dividend (720,544,031) (1,646,957,786)Issue of bonus shares - - Balance at 31 December 2018 1,759,002,003 1,079,304,405 Add: Foreign currency translation gain/ (loss) 1,506,866 6,776,926

1,760,508,869 1,086,081,331

20.1 Consolidated retained earnings brought forward from previous yearPrime Bank Limited (note-20.1 a) 358,760,374 382,124,666 Prime Bank Investment Ltd. 66,646,548 (22,307,687)Prime Bank Securities Ltd. (58,315,338) (58,968,820)Prime Exchange Co. Pte. Ltd., Singapore (122,277) (225,043)PBL Exchange (UK) Ltd. (36,245,907) (32,358,465)PBL Finance (Hong Kong) Limited (438,251) (1,715,278)

330,285,148 266,549,373 Foreign currency translation gain on 1 January 2,429,428 (3,286,152)

332,714,576 263,263,221

20.1.a Retained earnings brought forward from previous year of the BankBalance on 1 January 1,079,304,405 2,017,875,429 Transferred from revaluation reserve - 11,207,022 Bonus shares issued - - Cash dividend paid (720,544,031) (1,646,957,786)Balance at 31 December 2018 358,760,374 382,124,666 Foreign currency translation gain on 1 January - -

358,760,374 382,124,666

21 Consolidated contingent liabilities

21.1 Acceptances and endorsementsPrime Bank Limited (note-21a.1) 52,944,055,583 49,721,797,256 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

52,944,055,583 49,721,797,256

289PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

21.2 Letters of guaranteePrime Bank Limited (note-21a.2) 57,826,844,429 72,966,435,302 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

57,826,844,429 72,966,435,30221.3 Irrevocable Letters of Credit

Prime Bank Limited (note-21a.3) 38,072,832,383 34,112,938,262 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

38,072,832,383 34,112,938,26221.4 Bills for collection

Prime Bank Limited (note-21a.4) 11,613,890,781 10,766,851,918 Prime Bank Investment Limited - - Prime Bank Securities Limited - - Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

11,613,890,781 10,766,851,918 160,457,623,176 167,568,022,737

21a Contingent liabilities of the Bank21a.1 Acceptances and endorsements

Back to back bills (Foreign) 46,572,419,905 45,317,201,322 Back to back bills (Local) 5,444,080,575 3,919,321,492 Back to back bills (EPZ) 927,555,103 485,274,442

52,944,055,583 49,721,797,256 Less: Margin (5,311,288,453) (5,258,292,710)

47,632,767,130 44,463,504,546

21a.2 Letters of guaranteeLetters of guarantee (Local) 20,135,357,878 18,760,045,926 Letters of guarantee (Foreign) 37,691,486,551 54,206,389,376 Foreign counter guarantees - -

57,826,844,429 72,966,435,302 Less: Margin (884,411,352) (956,397,206)

56,942,433,077 72,010,038,095 Money for which the Bank is contingently liable in respect of guarantees given favoring:

Directors or officers - - Government 991,787 - Banks and other financial institutions 531,591,860 433,397,375 Others 57,294,260,782 72,533,037,927

57,826,844,429 72,966,435,302 Less: Margin (884,411,352) (956,397,206)

56,942,433,077 72,010,038,09521a.3 Irrevocable Letters of Credit

Letters of credit (Sight) 9,246,043,120 10,929,931,499 Letters of credit (Deferred) 21,554,689,067 16,474,904,713 Back to back L/C 7,272,100,196 6,708,102,050

38,072,832,383 34,112,938,262 Less: Margin (1,887,199,994) (1,891,208,659)

36,185,632,390 32,221,729,603 21a.4 Bills for collection

Outward bills for collection 11,613,890,781 10,766,851,918 11,613,890,781 10,766,851,918

Less: Margin (118,163,254) (167,063,116) 11,495,727,527 10,599,788,801

160,457,623,176 167,568,022,737

290 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

22 Income statementIncome:Interest, discount and similar income (note-22.1) 20,456,296,447 18,934,118,929 Dividend income (note-25a) 88,098,460 80,601,232 Fees, commission and brokerage (note-22.2) 1,096,753,337 1,189,898,112 Gains less losses arising from dealing in securities - - Gains less losses arising from investment securities - - Gains less losses arising from dealing in foreign currencies (note-26a.1) 1,111,821,627 1,054,948,294 Income from non-banking assets - - Other operating income (note-27a) 887,322,424 764,028,440 Profit less losses on interest rate changes - -

23,640,292,294 22,023,595,007 Expenses:Interest / profit paid on deposits, borrowings, etc. (note-24a) 10,740,853,932 9,875,345,368 Losses on loans, advances and lease/ investments - - Administrative expenses (note-22.3) 5,613,864,142 5,193,809,625 Other operating expenses (note-38a) 1,235,964,917 1,304,063,983 Depreciation on banking assets (note-37a) 330,207,267 277,001,356

17,920,890,258 16,650,220,333 5,719,402,036 5,373,374,674

22.1 Interest, discount and similar incomeInterest income / Profit on investments (note-23a) 18,390,385,430 14,769,140,556 Interest income on treasury bills / reverse repo / bonds (note-25a) 2,011,547,238 2,312,012,468 Gain on Discounted bond / bills (note-25a) 106,804,316 363,253,515 Gain on sale of shares (note-25a) - 45,767,648 Gain on Govt. security trading (note-25a) 19,149,000 1,558,585,966 Interest on debentures (note-25a) 13,548,918 23,452,633

20,541,434,901 19,072,212,786 Less: Loss on revaluation of security trading (note-25a) 85,138,454 138,093,857

20,456,296,447 18,934,118,929

22.2 Fees, commission and brokerageCommission (note-26a) 1,096,753,337 1,189,898,112 Settlement fee-PBIL (note-26a) - -

1,096,753,337 1,189,898,112

22.3 Administrative expensesSalary and allowances (note-28a) 4,158,596,820 3,823,661,492 Rent, taxes, insurance, electricity, etc. (note-29a) 961,285,687 906,160,291 Legal expenses (note-30a) 105,967,130 83,038,972 Postage, stamp, telecommunication, etc. (note-31a) 70,375,029 77,943,186 Stationery, printing, advertisement, etc. (note-32a) 226,156,608 197,559,994 Managing Director's salary and fees (note-33) 10,131,935 11,528,936 Directors' fees (note-34a) 3,663,929 4,495,414 Auditors' fees (note-35a) 1,380,000 1,380,000 Repair of Bank's assets (note-37a) 76,307,004 88,041,340

5,613,864,142 5,193,809,625

23 Consolidated interest income / profit on investment Prime Bank Limited (note-23a) 18,390,385,430 14,769,140,556 Prime Bank Investment Limited 204,509,907 228,663,893 Prime Bank Securities Limited 35,658,560 38,781,210 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited 125,903,479 113,416,557

18,756,457,376 15,150,002,215 Less: Inter-company transactions 232,138,451 296,647,983

18,524,318,925 14,853,354,233

291PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

23a Interest income / profit on investment of the BankLoans (General) / Musharaka 4,354,242,269 2,332,224,449 Loans against trust receipts 862,165,886 545,264,437 Packing credit 30,445,555 30,587,404 House building loan 224,070,370 241,614,388 Lease finance / Izara 403,970,698 371,923,591 Hire purchase 949,356,732 709,280,624 Payment against documents 1,882,601 486,990 Cash credit / Bai-Muajjal 2,414,728,893 2,226,030,916 Secured overdraft 2,353,597,073 1,905,603,343 Consumer credit scheme 1,848,861,555 1,835,855,104 Staff loan 104,080,421 109,528,687 Agricultural Loan 340,099,740 338,435,076 Forced loan 70,841,967 10,906,250 Documentary bills purchased 677,248,968 662,156,052 Interest income from credit card 193,734,429 191,397,526 Other loans and advances / Investments 2,365,197,395 2,167,776,750 Total interest / profit on loans and advances / investments 17,194,524,552 13,679,071,587 Interest / profit on balance with other banks and financial institutions 750,383,658 725,912,786 Interest on call loans 85,698,819 43,802,000 Interest / profit received from foreign banks 359,778,401 320,354,183

18,390,385,430 14,769,140,556

24 Consolidated interest / profit paid on deposits, borrowings, etc.Prime Bank Limited (note-24a) 10,740,853,932 9,875,345,368 Prime Bank Investment Limited 145,820,201 224,300,298 Prime Bank Securities Limited 19,614,470 27,658,506 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited 67,933,775 55,091,265

10,974,222,378 10,182,395,437 Less: Inter-company transactions 232,317,442 297,102,308

10,741,904,936 9,885,293,129

24a Interest / profit paid on deposits, borrowings, etc. of the Banki) Interest / profit paid on deposits:

Savings bank / Mudaraba savings deposits 985,917,450 830,159,718 Special notice deposits 294,835,127 339,861,568 Term deposits / Mudaraba term deposits 4,550,173,262 2,428,032,520 Deposits under scheme 3,448,613,099 5,181,353,430 Foreign currency deposits (note-24a.1) 35,836,332 45,121,211 Others 35,606,726 33,804,682

9,350,981,996 8,858,333,129 ii) Interest / Profit paid for borrowings:

Call deposits 7,437,222 4,422,333 Bangladesh Bank-refinance 6,455,038 (26,055,023)Local bank accounts 199,811,797 268,018,126 Foreign bank accounts 675,836,098 470,951,256 PBL bond 500,331,781 299,675,546

1,389,871,936 1,017,012,239 10,740,853,932 9,875,345,368

24a.1 Foreign currency depositsInterest / profit paid on F.C 28,366,790 37,368,651 Interest / profit paid on N.F.C.D 7,469,542 7,752,559 Interest / profit paid on R. F.C.D - -

35,836,332 45,121,211

292 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 201725 Consolidated investment income

Prime Bank Limited (note-25a) 2,154,009,477 4,245,579,605 Prime Bank Investment Limited 133,478,474 130,852,413 Prime Bank Securities Limited 24,740,918 20,070,001 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

2,312,228,869 4,396,502,019 Less: Inter-company transactions - -

2,312,228,869 4,396,502,019

25a Investment income of the bankInterest on treasury bills / Reverse repo / bonds 2,011,547,238 2,312,012,468 Interest on debentures / bonds 13,548,918 23,452,633 Gain on discounted bond / bills 106,804,316 363,253,515 Gain on sale of shares - 45,767,648 Gain on Govt. security trading 19,149,000 1,558,585,966 Dividend on shares 88,098,460 80,601,232

2,239,147,930 4,383,673,462 Less: Loss on sale/revaluation of security trading 85,138,454 138,093,857

2,154,009,477 4,245,579,605

26 Consolidated commission, exchange and brokerage Prime Bank Limited (note-26a) 2,208,574,964 2,244,846,406 Prime Bank Investment Limited 40,974,108 60,231,933 Prime Bank Securities Limited 18,031,770 35,429,471 Prime Exchange Co. Pte. Ltd., Singapore 51,488,074 63,746,807 PBL Exchange (UK) Ltd. 59,965,199 49,251,974 PBL Finance (Hong Kong) Limited - -

2,379,034,115 2,453,506,591

26a Commission, exchange and brokerage of the BankCommission on L/Cs 296,691,261 291,934,820 Commission on L/Cs-back to back 379,315,318 404,973,354 Commission on L/Gs 311,633,745 390,140,349 Commission on remittance 72,645,024 81,128,241 Underwriting Commission regarding Treasury bill/ Bond 3,865,587 6,187,413 Commission from sale of BSP /PSP/Others 32,602,402 15,533,935

1,096,753,337 1,189,898,112 Exchange gain (note - 26a.1) - including gain from FC dealings 1,111,821,627 1,054,948,294 Settlement fees / Brokerage - -

2,208,574,964 2,244,846,406

26a.1 Exchange gainExchange gain 1,125,880,475 1,060,424,884 Exchange gain-credit card - - Less: Exchange loss (14,058,848) (5,476,591)

1,111,821,627 1,054,948,294

27 Consolidated other operating incomePrime Bank Limited (note-27a) 887,322,424 764,028,440 Prime Bank Investment Limited 9,995,441 11,451,309 Prime Bank Securities Limited 361,559 205,468 Prime Exchange Co. Pte. Ltd., Singapore 304,944 574,238 PBL Exchange (UK) Ltd. 738,094 - PBL Finance (Hong Kong) Limited 43,577,694 51,377,641

942,300,155 827,637,096 Less: Inter-company transactions 178,991 454,325

942,121,164 827,182,771

293PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 201727a Other operating income of the Bank

Locker rent 13,211,290 9,038,754 Service and other charges 265,614,811 159,395,958 Retail Income 246,950,893 207,702,689 Income from ATM service 84,922,844 81,769,391 Credit card income (note-27a.2) 70,583,165 74,957,222 Postage / telex / SWIFT/ fax 28,175,709 49,819,209 Rebate from foreign Bank outside Bangladesh 74,970,816 61,313,177 Profit on sale of fixed assets 1,890,136 567,374 Miscellaneous earnings (note-27a.1) 101,002,762 119,464,667

887,322,424 764,028,440 27a.1 Miscellaneous earnings include syndication fee, commission from foreign remittance house / bank, notice fee and sale

proceeds of various items, etc.

27a.2 Credit card incomeAnnual fees 15,373,960 22,069,890 Inter-change fees 27,238,099 26,595,506 Others 27,971,106 26,291,826

70,583,165 74,957,222

28 Consolidated salaries and allowancesPrime Bank Limited (note-28a) 4,158,596,820 3,823,661,492 Prime Bank Investment Limited 59,085,758 49,861,605 Prime Bank Securities Limited 35,565,224 19,882,869 Prime Exchange Co. Pte. Ltd., Singapore 25,407,603 26,676,133 PBL Exchange (UK) Ltd. 22,911,272 19,954,135 PBL Finance (Hong Kong) Limited 26,531,634 26,010,894

4,328,098,311 3,966,047,129

28a Salaries and allowances of the BankBasic pay 1,865,562,360 1,745,093,391 Allowances 1,252,394,654 1,180,091,308 Bonus 553,557,883 424,296,530 Bank's contribution to provident fund 177,197,328 167,193,128 Retirement benefits/ Leave encashment 36,632,252 24,868,055 Gratuity 273,252,343 282,119,080

4,158,596,820 3,823,661,492

29 Consolidated rent, taxes, insurance, electricity, etc. Prime Bank Limited (note-29a) 961,285,687 906,160,291 Prime Bank Investment Limited 24,887,863 16,517,556 Prime Bank Securities Limited 10,352,950 8,664,115 Prime Exchange Co. Pte. Ltd., Singapore 12,980,926 12,861,296 PBL Exchange (UK) Ltd. 11,604,398 10,427,747 PBL Finance (Hong Kong) Limited 9,192,189 8,755,653

1,030,304,013 963,386,657

29a Rent, taxes, insurance, electricity, etc. of the BankRent, rates and taxes 661,251,081 616,511,195 Lease rent 136,204 100,229 Insurance 146,869,324 147,851,952 Power and electricity 153,029,078 141,696,916

961,285,687 906,160,291

30 Consolidated legal expenses Prime Bank Limited (note-30a) 105,967,130 83,038,972 Prime Bank Investment Limited 876,950 678,500 Prime Bank Securities Limited 466,100 681,206 Prime Exchange Co. Pte. Ltd., Singapore 931,032 997,647 PBL Exchange (UK) Ltd. 2,484,915 2,537,403 PBL Finance (Hong Kong) Limited 21,301 82,939

110,747,428 88,016,667

294 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

30a Legal expenses of the BankLegal expenses 53,910,650 77,411,730 Other professional charges 52,056,480 5,627,242

105,967,130 83,038,972

31 Consolidated postage, stamp, telecommunication, etc. Prime Bank Limited (note-31a) 70,375,029 77,943,186 Prime Bank Investment Limited 1,633,225 1,167,069 Prime Bank Securities Limited 4,912 782,939 Prime Exchange Co. Pte. Ltd., Singapore 1,527,366 1,417,168 PBL Exchange (UK) Ltd. 882,991 633,103 PBL Finance (Hong Kong) Limited 5,080,341 5,845,658

79,503,863 87,789,124

31a Postage, stamp, telecommunication, etc. of the BankPostage & Courier 290,516 226,773 Telegram, telex, fax and internet 1,725,274 3,279,800 Data communication 32,198,709 33,840,555 Telephone - office 35,855,655 40,161,267 Telephone - residence 304,874 434,792

70,375,029 77,943,186

32 Consolidated stationery, printing and advertisements, etc.Prime Bank Limited (note-32a) 226,156,608 197,559,994 Prime Bank Investment Limited 1,943,607 1,388,901 Prime Bank Securities Limited 718,191 320,813 Prime Exchange Co. Pte. Ltd., Singapore 1,861,453 2,091,687 PBL Exchange (UK) Ltd. 550,087 604,406 PBL Finance (Hong Kong) Limited 354,957 338,247

231,584,903 202,304,048 32a Stationery, printing and advertisements, etc. of the Bank

Office and security stationery 53,943,014 54,069,356 Computer consumable stationery 100,839,578 72,559,959 Publicity and advertisement 71,374,016 70,930,679

226,156,608 197,559,994

33 Managing Director's salary and feesBasic salary 6,029,032 7,199,033 Bonus 1,100,000 1,210,000 House rent allowance 1,200,000 1,200,000 Bank's contribution to provident fund 602,903 719,903 Utility allowance 360,000 360,000 House maintenance allowance 480,000 480,000 Others 360,000 360,000

10,131,935 11,528,936

34 Consolidated Directors' feesPrime Bank Limited (note-34a) 3,663,929 4,495,414 Prime Bank Investment Limited 496,800 504,850 Prime Bank Securities Limited 340,400 200,100 Prime Exchange Co. Pte. Ltd., Singapore - - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

4,501,129 5,200,364

34a Directors' fees of the BankMeeting fees 1,936,000 2,656,000 Other benefits 1,727,929 1,839,414

3,663,929 4,495,414

295PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

As per BRPD circular letter no. 11 dated 04 October 2015 Taka 8,000/- has been paid as Honorarium to the Directors, for attending per Board Meeting, Board Audit Committee Meeting and Risk Management Committee Meeting held during the year 2018.

35 Consolidated Auditors' feesPrime Bank Limited (note-35a) 1,380,000 1,380,000 Prime Bank Investment Limited 201,250 115,000 Prime Bank Securities Limited 172,500 115,000 Prime Exchange Co. Pte. Ltd., Singapore 245,930 232,132 PBL Exchange (UK) Ltd. 502,949 478,077 PBL Finance (Hong Kong) Limited 298,221 238,450

2,800,850 2,558,659

35a Auditors' fees of the BankExternal Audit fee 1,380,000 1,380,000

1,380,000 1,380,000

36 Charges on loan losses Loan -written off - - Interest waived - -

- -

37 Consolidated depreciation and repair of Bank's assetsPrime Bank Limited (note-37a) 406,514,271 365,042,696 Prime Bank Investment Limited 7,663,210 3,793,896 Prime Bank Securities Limited 2,553,230 1,253,339 Prime Exchange Co. Pte. Ltd., Singapore 2,570,717 2,238,221 PBL Exchange (UK) Ltd. 2,846,559 2,814,601 PBL Finance (Hong Kong) Limited 113,750 344,436

422,261,737 375,487,188

37a Depreciation and repair of Bank's assetsDepreciation - (see annexure-C for detail)

Fixed assets 277,008,743 256,178,233 Leased assets -

277,008,743 256,178,233 Amortization-(see annexure-C for detail)Software-core banking 49,878,083 17,823,268 Software-ATM 3,320,441 2,999,856

53,198,524 20,823,123 RepairsBuilding 13,000,362 16,306,568 Furniture and fixtures 12,453,873 18,447,887 Office equipment 36,999,278 38,397,331 Bank's vehicles 11,172,735 10,229,300 Maintenance 2,680,757 4,660,253

76,307,004 88,041,340 406,514,271 365,042,696

38 Consolidated other expensesPrime Bank Limited (note-38a) 1,235,964,917 1,304,063,983 Prime Bank Investment Limited 31,676,438 21,662,760 Prime Bank Securities Limited 97,704,116 9,586,399 Prime Exchange Co. Pte. Ltd., Singapore 4,761,651 6,956,312 PBL Exchange (UK) Ltd. 13,390,192 9,698,779 PBL Finance (Hong Kong) Limited 1,932,365 1,749,271

1,385,429,678 1,353,717,503

296 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 201738a Other expenses of the Bank

Security and cleaning 181,040,250 190,730,775 Entertainment 29,185,987 39,679,632 Car expenses 184,346,159 187,506,794 ATM expenses (note-38a.1) 188,506,382 151,802,042 Retail expenses (note-38a.2) 11,765,091 49,001,212 Books, magazines and newspapers, etc. 1,703,388 1,797,923 Liveries and uniforms 1,470,846 2,077,762 Medical expenses 110,718 107,511 Bank charges and commission paid 9,967,835 9,238,599 Loss on sale of fixed assets 1,157,475 75,138,098 House furnishing expenses 3,183,630 2,965,506 Subscription to institutions 20,516,835 11,266,286 Donations 84,797,444 140,540,489 Sponsorship 27,775,451 27,356,812 Prime Bank Cricket Club 46,288,395 65,049,148 Traveling expenses 29,074,473 49,671,722 Corporate action fees 3,576,528 1,450 Local conveyance, labor, etc. 22,057,885 20,640,566 Business development 42,977,446 47,801,448 Training and internship 13,362,160 20,670,880 Remittance charges 9,525,412 10,092,716 Cash reward to branches 14,348,747 2,547,000 Laundry, cleaning and photographs, etc. 6,660,918 6,266,013 Credit card expenses 45,911,946 39,193,078 Consolidated salary (staff) 33,252,822 32,745,626 Annual General Meeting 2,747,900 3,179,500 Exgratia 16,536,777 16,638,380 Welfare fund 7,875,604 3,617,950 Prime Bank Foundation 157,512,081 72,358,987 Miscellaneous expenses 38,728,332 24,380,079

1,235,964,917 1,304,063,983

38a.1 ATM expenses

NPSB-Issuing Commission 4,165,090 4,236,325 ATM Cash Management Service 17,604,696 15,742,196 VISA/Master Card Service 26,371,223 19,396,708 Salary & Allowances 54,172,124 51,802,313 Rent Rates & Taxes 22,430,568 23,660,328 Insurance & Utility Expenses 9,130,078 9,347,535 Internet/Link Charge 2,530,547 3,048,040 Rep Renovation & Maintenance 37,645,021 22,643,999 Soft. Maintenance Fee - 30,000 Computer/Printing Expense 547,500 221,352 Office Stationery and others 13,909,534 1,673,246

188,506,382 151,802,042

38a.2 Retail expenses

DSE Salary 7,065,454 27,606,727 Service charge 4,699,637 21,394,485

11,765,091 49,001,212

297PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

39 Consolidated provision for loans, investments, off balance sheet exposure & other assetsProvision for bad and doubtful loans and advances/investments-PBL (note-39a) 2,690,300,000 2,076,000,000 Provision for unclassified loans and advances/investments-PBL (note-39a) (936,000,000) 1,056,000,000 Provision for bad and doubtful loans and advances (OBU) (note-39a) 10,700,000 72,500,000 Provision for unclassified loans and advances/investments (OBU) (note-39a) 16,500,000 51,000,000 Provision for off-balance sheet exposure-PBL (note-39a) (165,000,000) 292,450,000 Provision for diminution in value of investments-PBL (note-39a) 18,700,000 (60,516,500)Provision for diminution in value of investments-PBIL 23,267,108 (83,335,464)Provision for impairment of client margin loan-PBIL (27,964,899) 95,843,663 Provision for impairement loss for investment (PBSL)-PBIL 4,697,792 2,948,441 Provision for diminution in value of investments-PBSL - 2,175,241 Provision for impairment of client margin loan-PBSL - 10,685,091 Provision for impairment loss for investment in subsidiaries (note-39a) 86,100,000 (15,000,000)Provision for climate risk fund (note-39a) 2,000,000 3,000,000 Provision for Good Borrower rebate (note-39a) 5,000,000 5,000,000 Provision for other assets (note-39a) 53,300,000 83,966,500

1,781,600,001 3,592,716,972

As per BSEC instruction circular reference # BSEC/Mukhopatro (3rd Khondo)/2011/06 dated July 02, 2018 and BSEC/CMRRCD/2009-193/212 dated December 10, 2018 , provision has been made by Prime Bank Securities Limited and Prime Bank Investment Limited against diminution in value of investments and impairment of client margin loan.

39a Provision for loans, investments, off balance sheet exposure & other assets of the BankProvision for bad and doubtful loans and advances / investments 2,690,300,000 2,076,000,000 Provision for unclassified loans and advances / investments (936,000,000) 1,056,000,000 Provision for bad and doubtful loans and advances (OBU) 10,700,000 72,500,000 Provision for unclassified loans and advances / investments (OBU) 16,500,000 51,000,000 Provision for off-balance sheet exposure (165,000,000) 292,450,000 Provision for diminution in value of investments 18,700,000 (60,516,500)Provision for impairment loss for investment in subsidiaries 86,100,000 (15,000,000)Provision for climate risk fund 2,000,000 3,000,000 Provision for Good Borrower rebate 5,000,000 5,000,000 Provision for other assets 53,300,000 83,966,500

1,781,600,000 3,564,400,000 40 Consolidated tax expenses

Current taxPrime Bank Limited (note-40a) 1,750,000,000 750,000,000 Prime Bank Investment Limited 9,876,612 7,035,706 Prime Bank Securities Limited 6,357,815 11,831,212 Prime Exchange Co. Pte. Ltd., Singapore - 729,998 PBL Exchange (UK) Ltd. 1,471,288 857,793 PBL Finance (Hong Kong) Limited 7,468,686 10,757,898

1,775,174,401 781,212,608 Deferred taxPrime Bank Limited (note-40a) - - Prime Bank Investment Limited (536,563) (237,468)Prime Bank Securities Limited 602,979 (4,162)Prime Exchange Co. Pte. Ltd., Singapore (40,394) - PBL Exchange (UK) Ltd. - - PBL Finance (Hong Kong) Limited - -

26,022 (241,630) 1,775,200,423 780,970,978

40a Tax expenses of the BankCurrent tax 1,750,000,000 750,000,000 Deferred tax - -

1,750,000,000 750,000,000

41 Consolidated receipts from other operating activitiesPrime Bank Limited (note-41a) 926,247,149 2,583,008,785 Prime Bank Investment Limited 143,473,915 99,224,798 Prime Bank Securities Limited 25,102,477 8,032,443 Prime Exchange Co. Pte. Ltd., Singapore 304,944 574,238 PBL Exchange (UK) Ltd. 738,094 - PBL Finance (Hong Kong) Limited 43,577,694 51,377,641

1,139,444,273 2,742,217,905

298 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

41a Receipts from other operating activities of the BankLocker rent 13,211,290 9,038,754 Service and other charges 265,614,811 175,479,365 Retail Income 246,950,893 207,702,689 Income from ATM services 84,922,844 81,769,391 Credit card income 70,583,165 48,908,262 Postage / Telex / Fax / SWIFT charge recoveries 28,175,709 49,819,209 Rebate from foreign Bank outside Bangladesh 74,970,816 61,313,177 Gain from sale of treasury bond / shares 40,814,862 1,829,513,273 Miscellaneous earnings 101,002,762 119,464,666

926,247,149 2,583,008,785 42 Consolidated payments for other operating activities

Prime Bank Limited (note-42a) 1,888,295,683 1,984,631,152 Prime Bank Investment Limited 59,772,526 40,645,735 Prime Bank Securities Limited 109,040,978 20,029,759 Prime Exchange Co. Pte. Ltd., Singapore 20,446,904 22,464,555 PBL Exchange (UK) Ltd. 28,865,444 23,775,109 PBL Finance (Hong Kong) Limited 16,524,418 16,671,971

2,122,945,953 2,108,218,281 42a Payments for other operating activities of the Bank

Rent, rates and taxes 961,285,687 906,160,291 Legal expenses 105,967,130 83,038,972 Postage and communication charges, etc. 70,375,029 77,943,186 Directors' fees 3,663,929 4,495,414 Other expenses 747,003,908 912,993,289

1,888,295,683 1,984,631,152 43 (Increase) / decrease of consolidated other assets

Prime Bank Limited (note-43a) 92,178,274 6,944,608,143 Inter-company capital - - Prime Bank Investment Limited 4,462,322 (26,559,787)Prime Bank Securities Limited (45,501,891) (9,949,810)Prime Exchange Co. Pte. Ltd., Singapore 59,092 501,529 PBL Exchange (UK) Ltd. 518,010 (797,181)PBL Finance (Hong Kong) Limited (6,352,642) (24,000,895)

45,363,165 6,883,801,999 43a (Increase)/ decrease of other assets of the Bank

T & T bonds 20,645,191,161 21,353,998,956 Stationery and stamps 50,406,794 38,027,828 Advance deposits and advance rent 284,080,601 355,000,715 Branch adjustment account 18,517,480 18,516,520 Suspense account 244,727,208 283,396,487 Encashment of PSP / BSP 997,709,958 457,207,387 Credit card 96,028,502 92,911,810 Sundry assets 4,069,789,153 3,899,569,427

26,406,450,857 26,498,629,131 92,178,274 6,944,608,143

44 Increase / (decrease) of consolidated other liabilitiesPrime Bank Limited (note-44a) (678,988,274) 222,731,088 Prime Bank Investment Limited 26,609,469 13,628,159 Prime Bank Securities Limited 68,559,602 20,999,791 Prime Exchange Co. Pte. Ltd., Singapore (16,371,122) 41,575,504 PBL Exchange (UK) Ltd. (20,725,084) 12,972,568 PBL Finance (Hong Kong) Limited (19,160,550) 3,172,624

(640,075,960) 315,079,735

44a Increase / (decrease) of other liabilities of the BankExpenditure and other payables 147,779,820 142,722,657 Provision for bonus 8,593,459 1,178,887 Unearned commission on bank guarantee 7,820,643 32,536,560 Interest suspense account 4,026,761,377 4,693,505,469

4,190,955,299 4,869,943,573 (678,988,274) 222,731,088

299PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

Amount in Taka

2018 2017

45 Consolidated earnings per share (CEPS)

Net profit after tax (Numerator) 2,253,633,866 1,215,528,259

Number of Ordinary shares outstanding (Denominator) 1,132,283,477 1,132,283,477

Consolidated earnings per share (CEPS) 1.99 1.07

Earnings per share has been calculated in accordance with IAS - 33: "Earnings Per Share (EPS)". Previous year's figures have been adjusted for the issue of bonus shares during the year.

45a Earnings per share (EPS) of the Bank

Net profit after tax (Numerator) 2,187,802,036 1,058,974,674

Number of Ordinary shares outstanding (Denominator) 1,132,283,477 1,132,283,477

Earnings per share (EPS) 1.93 0.94

Earnings per share has been calculated in accordance with IAS - 33: "Earnings Per Share (EPS)". Previous year's figures have been adjusted for the issue of bonus shares during the year.

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 3,212.

47 Assets pledged as security for liabilities of the Bank

Treasury bills & bonds to Bangladesh Bank for Repo - -

48 Disclosure on Audit Committee of the Bank

a) Particulars of Audit Committee

Audit Committee (AC) of the Board was formed and its roles and responsibilities were defined in line with Corporate Governance Code issued by Bangladesh Securities and Exchange Commission (BSEC) vide BSEC notification BSEC/CMRRCD/2006-158/Admin/80 dated June 03, 2018 and BRPD Circular no.11 dated October 27, 2013 issued by Bangladesh Bank. The current Audit Committee (AC) was re-constitued by the Board of Directors of the Bank in its 463rd meeting held on 11 May 2017 Composition and Qualification of the Audit Committee mention as stated below:

Name Status with bankStatus with committee

Educational Qualification

Mr. Shamsuddin Ahmad, Ph.D Independent Director

Chairman Ph.D (Economic Development), University of Hawaii, USA

Mr. Md. Nader Khan Director Member B.Sc

Dr. G. M. Khurshid Alam Independent Director

Member Ph.D (Economic), Boston University, USA

Mr. M Farhad Hussain FCA Independent Director

Member GEC "A" level from Greenmore College, Birmingham, UK. Accountancy Foundation Course, Institute of Chartered Accountants of England and Wales.

300 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

b) Meetings held by the Audit Committee during the year by date:

Sl No Meeting No Held on

1 134th February 27, 2018

2 135th March 27, 2018

3 136th April 9, 2018

4 137th May 10, 2018

5 138th June 3, 2018

6 139th July 25, 2018

7 140th September 19, 2018

8 141st October 25, 2018

9 142nd November 27, 2018

10 143rd December 20, 2018

c) Activities of the Committee during the year 2018:

Financial Reporting:

• Reviewed Draft Annual Financial statements for the year ended December 31, 2017.

• Reviewed Un-audited quarterly (Q1) financial statements of the Bank as on March 31, 2018.

• Reviewed Un-audited quarterly (Q2) financial statements of the Bank as on 30 June, 2018.

• Reviewed Un-audited quarterly (Q3) financial statements of the Bank as on 30 Sep, 2018.

Internal Control:

• Reviewed self-assessment report on Anti Fraud Internal Controls (SAAFIC) for the half year ended on December 31, 2017.

• Reviewed self-assessment report on Anti Fraud Internal Controls (SAAFIC) for the half year ended on June 30, 2018.

• Reviewed/Evaluated overall effectiveness of the Internal Control Systems and Policies & procedures of the Bank and recommended it to the Board for endorsement.

• Reviewed of internal Control & Compliance Manual of Prime Bank Limited

Internal Audit:

• Reviewed and approved Audit Plan for the year 2018

• Reviewed major Audit findings and observations on Information Security Division conducted by IT Audit

• Reviewed Draft Internal Audit Manual

• Reviewed & recommended Draft Internal Audit Charter to the Board for approval

• Reviewed Summary Report of the Audit Findings for the year-2017

• Approved the Annual Audit Plan – 2019

• Approved 03 years (2018-2020) Departmental Strategic Planning of the Internal Audit & Inspection division and recommended to the Board

• Reviewed revision of Internal Audit Charter of the Audit & Inspection Division

External Audit& Auditors:

• Met with the External Auditors in the 136th AC meeting held on 09.04.2018: Representatives of the Audit Firms namely M/S. Hoda Vasi Chowdhury & Co and Aziz Halim Khair Choudhury on invitation joined the meeting for sharing their observations/ findings upon completion of the Auditing on the bank’s operational activities and financials for the year 2017.

• Scrutinized applications of the aspiring External Auditors of the Bank for the year 2018 and recommending to the Board for consideration at the AGM for final appointment.

• Inspections (Internal& BB):

• Reviewed Inspection Report on the documentation status of different customers of the Bank (branch-wise)

• Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on 31.12.2017.

• Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on 31.03.2018.

301PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

• Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on 30.06.2018.

• Reviewed Compliance status of Internal Audit observations and Bangladesh Bank Inspection as on 30.09.2018.

Periodical Reporting:

• Reviewed quarterly status report on Complaints received by Service Quality and Central Complaint Management Cell

Compliance Functions:

• Reviewed Compliance Policy of the Bank

• Reviewed Compliance of the Minutes of the respective Audit Committee Meetings

• Reviewed outstanding compliance status of the Board and EC decisions

Other functions:

• Suggested training for the officials through setting up an ideal Training Academy to suit the purpose and requirement of the Bank

• Annual Integrated Report on the Health of Prime Bank Limited for the year 2017

• Reviewed status of Deferral(s) given to customers for execution of documentation and other purposes (up to December 31,2017)

• Reviewed status of Deferral(s) given to customers for execution of documentation and other purposes (up to March 31,2018)

• Reviewed status of Deferral(s) given to customers for execution of documentation and other purposes (up to June 30,2018)

• Reviewed status of Deferral(s) given to customers for execution of documentation and other purposes (up to Sep 30,2018)

• Suggested recirculation of the ‘Whistleblower Protection Policy’ of the Bank.

49 Related Party Disclosures of the Bank

i) Names of the Directors together with a list of entities in which they have Interest Annexure-E

ii) Significant contracts where Bank is a party and wherein Directors have interest during the year 2018

(Figure in Taka)

Name of DirectorsRelationship with

the BankNature of transaction

Approve limit

Outstanding amount

Azam J Chowdhury Chairman Credit Card 1,000,000 10,949

Mr. Imran Khan Vice Chairman Credit Card 1,000,000 221,419

Mr.Md.Nader Khan Director Credit Card 500,000 75,692

Mrs. Marina Yasmin Chowdhury Director Credit Card 1,000,000 43,520

Mrs. Nasim Anwar Hossain Director Credit Card 500,000 122,208

Mrs. Salma Huq Director Credit Card 500,000 59,382

Mr.Nafis Sikder Director Credit Card 500,000 29,783

Mr. Tarique Ekramul Haque Director Credit Card 500,000 216,996

Quazi Sirazul Islam Director Credit Card 500,000 865

Mr. Waheed Murad Jamil Director Credit Card 500,000 164,506

Dr. G. M. Khurshid Alam Independent Director Credit Card 500,000 309,356

iii) Shares issued to Directors and Executives without consideration or exercisable at a discount Nil

302 PRIME BANK

ANNUAL REPORT 2018

Notes to the Financial Statementsas at and for the year ended 31 December 2018

iv) Related party transactions

Nature of party/ contract Relationship Amount

Lease agreement Common Director 2,475,168

Lease agreement Common Director 322,920

Lease agreement Common Director 2,054,688

Lease agreement Common Director 60,000

Lease agreement Common Director 738,300

Lease agreement Common Director 4,788,540

Lease agreement Common Director 2,760,000

v) Lending policies in respect of related party

a) Amount of transaction regarding loans and advances, deposits, guarantees and commitment as on 31.12.2018

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

vi) Disclosure of transaction regarding Directors and their related concerns 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 & Independent Director

Nature of contract Branch NameName of Director and related

byRemarks

Lease agreement Jubilee Road Branch

Mr. Md. Nader Khan Director & owner of the premises

Lease period: 01.08.2015 to 31.07.2021

Lease agreement ATM BoothJubilee Road Branch

Mr. Md. Nader Khan Director & owner of the premises

Lease period: 12.10.2011 to 11.10.2021

Lease agreement Store Room (Regional)Mr. Md. Nader Khan Director &

owner of the premises Lease period: 13.12.2014

to 12.12.2020

Lease agreement ATM BoothMr. Md. Nader Khan Director &

owner of the premises Lease period: 28.11.2017

to 27.11.2027

Lease agreement Kulaura BranchMrs. Marina Yasmin Chowdhury

Director & owner of the premises Lease period: 01.09.2013

to 31.08.2019

Lease agreement Head OfficeQuazi Sirajul Islam

Director & owner of the premises Lease period: 10.07.2016

to 09.07.2022

Lease agreement Halishahar BranchMr. Azam J Chowdhury & Mrs.

Marina Yasmin Chowdhury Director & owner of the premises

Lease period: 01.01.2017 to 31.12.2025

b) Service receiving companies where the Directors interest subsisted during the year

Name of party Relationship Nature of transaction Amount

- - - -

viii) Investment in the Securities of Directors and their related concern Nil

303PRIME BANK

Notes to the Financial Statementsas at and for the year ended 31 December 2018

ix) Business with subsidiary

Name of party Relationship Nature of transaction Outstanding AmountPrime Bank Investment Limited Subsidiary Company OD Facilities 3,026,635,480

Prime Bank Securities Limited Subsidiary Company OD Facilities 393,452,756

Prime Bank Securities Limited Subsidiary Company Share Trading 184,242,731

PBL Finance (Hong Kong) Ltd Subsidiary Company Term Placement 2,214,960,000

50 Workers Participation Fund and Welfare Fund

SRO-336-AIN/2010 dated 5-10-2010 issued by the ‘Ministry of Labour and Employment’ declares the status of business of certain institutions and companies along with Bank & insurance companies as “Industrial Undertakings” for the purposes of Chapter-XV of the Bangladesh Labour Act, 2006 (as amended up to 2013) which deals with the workers’ participation in company’s profit by way of ‘Workers Participation Fund’ and ‘Welfare Fund’. This Act requires the “Industrial Undertakings” to maintain provision for workers’ profit participation fund @ 5% on net profit. Since this requirement contradicts with the ‘Section 11’ of the ‘Bank Companies Act 1991 (as amended up to 2013)’, Banks in Bangladesh took up the issue collectively and sought opinion from ‘Association of Bankers Bangladesh Limited (ABB)’ on the same. ABB wrote a letter to the ‘Ministry of Finance’ of Government of People’s Republic of Bangladesh on 09.03.2016 to draw attention of the honorable Finance Minister regarding relevance and applicability of Chapter XV of the Bangladesh Labour Act, 2006 (as amended up to 2013) for Bank Companies and to obtain a direction on the issue. The ‘Ministry of Finance’ revealed their opinion that WPPF should not be relevant for Bank Companies and therefore, it should not be applied there. They also sought for an opinion on this issue from Bangladesh Bank. Subsequently, Bangladesh Bank agreed on all the logics and legal opinion collected by the ABB and expressed their consensus with them on 29.11.2016. In this backdrop, the ‘Ministry of Finance’ has given their instruction, vide letter no. 53.00.0000.311.22.002.17.130 dated 14.02.2017, for not applying Chapter XV of the Bangladesh Labour Act, 2006 (as amended up to 2013) in Bank Companies. Therefore, no provision in this regard has been made in the financial statements for the year ended on December 31, 2018.

51 Events after the Reporting Period

The Board of Directors in its 489th meeting recommend to payment of 12.50% (Twelve and half percent) Cash dividend for the year 2018. The total amount of dividend is Taka 1,415,354,346 (One hundred forty one crore fifty three lac fifty four thousand three hundred forty six) only.

Chairman Director Director Managing Director

304 PRIME BANK

ANNUAL REPORT 2018

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36

Mas

hreq

Ban

k PS

C, M

umba

i, In

dia

CD

US$

70

2,0

39

83.

90

58,

901,0

96

836

,179

82.

70

69,

152,

037

N

atio

nal W

estm

inis

ter B

ank,

Lon

don,

UK

CD

GBP

676

,826

10

5.98

7

1,731

,747

583

,867

11

1.74

65,

243,

763

The

Nat

iona

l Com

mer

cial

Ban

k, Je

ddah

CD

SAR

1,97

8,23

8 2

2.36

4

4,23

4,98

4 4

84,16

5 2

2.0

5 10

,676

,322

N

epal

Ban

glad

esh

Bank

Ltd

., Ka

thm

andu

, Nep

al

CD

US$

15,3

33

83.

90

1,28

6,48

0

20,

486

82.

70

1,69

4,19

1 Pe

ople

’s Ba

nk, C

olom

bo, S

ri La

nka

C

DU

S$ 2

30,3

48

83.

90

19,3

26,19

1 2

44,0

86

82.

70

20,

185,

925

Skan

dina

visk

a En

skild

a, B

anke

n, S

wed

en

CD

SEK

434

,577

9

.22

4,0

04,7

57

20

9,86

7 10

.07

2,11

2,73

0

Sona

li Ba

nk, K

olka

ta, I

ndia

CD

US$

30

3,85

1 8

3.90

2

5,49

3,07

4 3

15,4

17

82.

70

26,

084,

971

Stan

dard

Cha

rter

ed B

ank,

Kol

kata

, Ind

ia

C

DU

S$ 6

06,

142

83.

90

50,

855,

337

898

,159

82.

70

74,

277,7

24

Stan

dard

Cha

rter

ed B

ank,

New

Yor

k, U

SAC

DU

S$ 7

30,7

30

83.

90

61,3

08,2

10

12,2

51,4

64

82.

70

1,0

13,19

6,0

68

Stan

dard

Cha

rter

ed B

ank,

Sin

gapo

reC

DSG

$ 2

,00

1,263

6

1.14

122,

362,

627

1,40

2,73

1 6

1.82

86,

720,

335

Stan

dard

Cha

rter

ed B

ank,

Fra

nkfu

rt, G

erm

any

CD

EURO

82,

150

9

5.23

7

,823

,551

3

3,73

5 9

9.21

3

,346

,778

U

nicr

edito

Ital

iano

SPA

, Mila

no, I

taly

CD

EURO

381

,822

9

5.23

3

6,36

2,80

1 5

0,34

9 9

9.21

4

,995

,00

3 W

ells

Far

go B

ank

N. A

., N

ew Y

ork

CD

US$

945

,307

8

3.90

7

9,31

1,246

9

60,9

68

82.

70

79,

472,

060

Zu

erch

er K

anto

nal B

ank,

Zur

ich

CD

CH

F 13

9,0

53

84.

24

11,7

13,4

33

92,

836

84.

87

7,8

79,2

53

Tota

l 3

,230

,634

,40

1 2

,70

1,942

,497

305PRIME BANK

Reconciliation Statement of Balance with Bangladesh BankAs at 31 December 2018

Annexure-A-1

1) Balance with Bangladesh Bank-Taka account of the Bank

Detail Total

Balance as per Bank ledger 11,860,895,553

Unresponded debit entries in

Bangladesh Bank statement 55,843,735

Prime Bank’s ledger 7,221,539 63,065,274

11,797,830,279

Unresponded credit entries in

Bangladesh Bank statement 10,335,993

Prime Bank’s ledger 56,100 10,392,093

Balance as per Bangladesh Bank statement 11,808,222,372

2) Balance with Bangladesh Bank-Foreign currency of the Bank

Balance as per Bank ledger 1,980,765,411

Unresponded debit entries in

Bangladesh Bank statement 280,035,332

Prime Bank’s ledger 20,915,221 300,950,553

1,679,814,857

Unresponded credit entries in

Bangladesh Bank statement 562,620,666

Prime Bank’s ledger 574,640,692 1,137,261,358

Balance as per Bangladesh Bank statement 2,817,076,215

306 PRIME BANK

ANNUAL REPORT 2018

Investment in Shares of the BankAs at 31 December 2018

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 31.12.18

Total market value as at

31.12.18

Quoted:

1 DESCO 10 329,700 19,262,511 58.42 40.40 13,319,880

2 National Bank Ltd. 10 1,870,176 27,970,098 14.96 9.30 17,392,637

3 Uttara Bank Ltd. 10 968,000 37,009,980 38.23 28.50 27,588,000

4 Activefine 10 271,882 8,234,068 30.29 28.20 7,667,072

5 KPCL 10 79,112 8,156,284 103.10 59.30 4,691,342

6 UPGDCL 10 40,128 11,849,780 295.30 290.70 11,665,210

Sub Total 112,482,721 82,324,140

Unquoted:

1 Central DepositoryBangladesh Ltd.

10 5,711,804 15,694,430 2.75 - 15,694,430

2 Investment in SWIFT 4,184,430 - - 4,184,430

3 Market Stabilization Fund 5,000,000 5,000,000

4 Star Ceramics Preference Share 20,167,917 20,167,917

5 Sharemoney Deposit 240,000,000 240,000,000

Sub Total 285,046,776 285,046,776

Total 397,529,498 367,370,917

307PRIME BANK

Sche

dule

of F

ixed

Ass

ets

of th

e Ba

nkas

at 3

1 Dec

embe

r 20

18A

nnex

ure-

C

Part

icul

ars

CO

STD

EPRE

CIA

TIO

N

Net

boo

k va

lue

as a

t 31.1

2.18

Ope

ning

bal

ance

as

on

01.0

1.18

Add

ition

s du

ring

the

year

Dis

posa

ls/

adju

stm

ents

du

ring

the

year

Tota

l bal

ance

as

at 3

1.12.

18

Ope

ning

ba

lanc

e as

on

01.0

1.18

Cha

rge

for

the

year

Dis

posa

ls/

adju

stm

ents

du

ring

the

year

Tota

l bal

ance

as

at 3

1.12.

18

Taka

Taka

Taka

Taka

Taka

Tak

a Ta

kaTa

ka T

aka

Land

3

,719

,444

,788

-

- 3

,719

,444

,788

-

- -

- 3

,719

,444

,788

Build

ing

1,72

5,23

7,651

13

5,92

0,0

50

- 1,

861,1

57,7

01

153,

802,

458

34,

425,

301

- 18

8,22

7,759

1,

672,

929,

942

Furn

iture

and

fixt

ures

986

,584

,385

10

6,23

0,94

0

2,4

73,2

25

1,0

90,3

42,10

0

536

,428

,586

5

5,27

8,23

8 1,

772,

780

5

89,9

34,0

44

50

0,40

8,0

56

Offi

ce e

quip

men

t and

mac

hine

ry 2

,004

,869

,646

3

47,7

99,0

52

9,6

11,0

49

2,3

43,0

57,6

50

1,48

0,78

5,29

3 17

0,77

0,46

1 8

,615

,40

2 1,

642,

940,

352

70

0,11

7,29

8

Vehi

cles

424

,50

5,11

8 2

4,19

4,64

1 4

,961

,752

4

43,7

38,0

07

366

,322

,737

16

,30

6,12

6 4

,961

,751

3

77,6

67,11

2 6

6,07

0,89

5

Libr

ary

book

s 1,

820,

037

-

- 1,

820,

037

1,

591,4

19

228

,618

-

1,82

0,0

37

-

Sub-

tota

l 8

,862

,461

,626

6

14,14

4,68

2 17

,046

,026

9

,459

,560

,283

2,

538,

930,

494

277

,00

8,74

3 15

,349

,933

2

,80

0,58

9,30

4 6

,658

,970

,979

Soft

war

e-A

mor

tizat

ion

Soft

war

e-C

ore

Bank

ing

353

,144,

552

212

,379

,527

-

565

,524

,078

2

44,6

41,6

10

49,

878,

083

- 2

94,5

19,6

93

271

,004

,385

Soft

war

e-AT

M 4

3,21

2,61

4 14

,680

,00

0

- 5

7,892

,614

4

1,199

,017

3

,320

,441

-

44,

519,

457

13,3

73,15

6

Sub-

tota

l 3

96,3

57,16

5 2

27,0

59,5

27

- 6

23,4

16,6

92

285

,840

,626

5

3,19

8,52

4 -

339

,039

,150

2

84,3

77,5

42

As

at 3

1 Dec

embe

r 20

18 9

,258

,818

,792

8

41,2

04,

209

17,0

46,0

26

10,0

82,9

76,9

75

2,8

24,7

71,12

0

330

,207

,267

15

,349

,933

3

,139,

628,

455

6,9

43,3

48,5

21

As

at 3

1 Dec

embe

r 20

17 9

,168,

744,

172

285

,131,0

76

195,

056

,456

9

,258

,818

,792

2

,579

,061

,763

2

77,0

01,3

56

31,

291,9

99

2,8

24,7

71,12

0

6,4

34,0

47,6

71

308 PRIME BANK

ANNUAL REPORT 2018

Stat

emen

t of T

ax P

ositi

on o

f the

Ban

kas

at 3

1 Dec

embe

r 20

18A

nnex

ure-

D

Acc

ount

ing

year

Ass

essm

ent

year

Tax

pro

visi

on a

s pe

r acc

ount

sTa

x as

per

as

sess

men

t ord

erTa

x pa

idEx

cess

/Ex

cess

/

Pres

ent s

tatu

s(s

hort

age)

(sho

rtag

e)of

pro

visi

onof

tax

paid

Taka

Taka

Taka

Taka

Taka

1995

to 2

00

0 -

411

,652

4

11,6

52

24,

947,

215

- 2

4,94

7,21

5 A

sses

smen

t yea

r 199

9-20

00

is fi

nal b

ut th

e Ta

x Au

thor

ity re

ferr

ed

it to

Hig

h C

ourt

Div

isio

n.

200

1 2

00

2-20

03

268

,743,

630

2

68,74

3,63

0

247

,455

,962

-

(21,2

87,6

68)

Com

plet

ed

200

2 2

00

3-20

04

312

,590

,120

3

12,5

90,12

0

337

,138,

495

- 2

4,54

8,37

5 C

ompl

eted

200

3 2

004

-20

05

348

,90

3,91

9 3

48,9

03,

919

342

,757

,186

- (6

,146,

733)

Com

plet

ed

2004

20

05-

200

6 4

82,2

87,8

56

482

,287

,856

4

38,4

05,

004

-

(43,

882,

852)

Com

plet

ed

200

5 2

00

6-20

07

557

,50

0,0

00

3

46,6

38,5

37

470

,158,

263

210

,861

,463

12

3,51

9,72

6 C

ompl

eted

200

6 2

007

-20

08

592

,362

,815

4

81,4

12,74

4 7

37,6

06,

389

110,

950,

071

256

,193,

645

Com

plet

ed20

07 2

008

-20

09

1,0

15,0

00,

00

0

1,07

6,93

3,94

5 1,

019

,804

,475

(6

1,933

,945

) (5

7,129

,470

)C

ompl

eted

2008

20

09-

2010

1,

012

,449

,724

-

915

,627

,471

-

- C

ompl

eted

200

9 2

010

-20

11

1,73

5,0

00,

00

0

- 1,

432,

194,

785

- -

Cas

e fil

e to

Hig

h C

ourt

2010

20

11-2

012

2

,285

,00

0,0

00

-

2,0

33,2

88,5

58

- -

App

eale

d ag

ains

t so

me

disa

llow

ance

s m

ade

by t

he D

CT

befo

re

the

App

ella

te T

ribun

al.

2011

20

12-2

013

2

,866

,50

2,25

5 -

2,19

3,41

7,798

-

(10

2,31

3,14

8)C

ase

file

to H

igh

Cou

rt

2012

20

13-2

014

2

,449

,80

0,0

00

-

1,0

00,

00

0,0

00

(2

59,8

77,5

89)

- A

ppea

led

agai

nst

som

e di

sallo

wan

ces

mad

e by

the

DC

T be

fore

th

e A

ppel

late

Trib

unal

.

2013

20

14-2

015

1,

616,

00

0,0

00

-

1,35

4,22

1,954

-

- A

ppea

led

agai

nst

som

e di

sallo

wan

ces

mad

e by

the

DC

T be

fore

th

e A

ppel

late

Trib

unal

.

2014

20

15-2

016

1,

180,

00

0,0

00

8

66,8

64,8

11

- -

App

eale

d ag

ains

t so

me

disa

llow

ance

s m

ade

by t

he D

CT

befo

re

the

App

ella

te T

ribun

al.

2015

20

16-2

017

7

13,0

00,

00

0

- 6

83,4

20,6

39

- -

App

eale

d ag

ains

t so

me

disa

llow

ance

s m

ade

by t

he D

CT

befo

re

the

App

ella

te B

ench

20

16 2

017

-20

18

150,

00

0,0

00

2

24,6

47,5

77

Retu

rn fi

led

but t

he a

sses

smen

t is

yet t

o co

mpl

eted

.

2017

20

18-2

019

7

50,0

00,

00

0

478

,121,9

77

Retu

rn fi

led

but t

he a

sses

smen

t is

yet t

o co

mpl

eted

.

2018

20

19-2

020

1,

750,

00

0,0

00

Su

bmis

sion

of T

ax re

turn

is y

et n

ot d

ue.

Tota

l 2

0,0

85,5

51,9

71

3,3

17,9

22,4

03

14,8

00,

078,

559

- 19

8,44

9,0

90

309PRIME BANK

Name of Directors and theirInterest in different entities

Annexure-ESl no. Name of Directors Status with PBL Entities where they have interest

1Mr. Azam J Chowdhury

Chairman

East Coast Shipping Lines Ltd.EC Distribution Ltd.East Coast Trading (Pvt.) Ltd.EC Securities Ltd.EC Holdings LimitedEC Aviation Limited (Corporate Interest)EC Bulk Carriers Ltd.Unicom Clean Energy LimitedClean Fuel Filling Station Limited (Corporate Interest)Omera Chemicals Limited (Corporate Interest)Radiant Alliance Limited (Corporate Interest)MJL Bangladesh Ltd. (Corporate Interest)Bangladesh Trade Syndicate Ltd.Green Delta Insurance Co. Ltd.Omera Fuels Ltd. (Corporate Interest)Nordic Woods Ltd. (Corporate Interest)ASP Omera Crew Management Ltd. (Corporate Interest)Union Capital Limited (Corporate Interest)Consolidated Tea & Plantation Limited (Corporate Interest)Baraoora (Sylhet) Tea Company Limited (Corporate Interest)The Consolidated Tea & Lands Co. (BD) Limited (Corporate Interest)Prime Finance & Investment Ltd. (Corporate Interest)

2 Mr. Mafiz Ahmed Bhuiyan Vice Chairman

International Holdings LimitedIPE Technologies LimitedShepherd World Trade LimitedShephered Consultant & Management LimitedNative Holdings LimitedCitizen Securities & Investment Limited ( Representing Shephered World Trade Limited)

3 Mr. Imran Khan Vice Chairman

Prima EnterprisePNL Holdings LimitedPolyexprint LimitedHalda Valley Tea Co. LimitedPNL Water Management Limited Pedrollo NK LimitedPedrollo Dairy & Horticulture LimitedPolyexlaminate LimitedHill Plantation Ltd.Halda Fisheries Ltd.Polytape Limited

4 Mr. Md. Nader Khan Director

Pragati Corporation Pedrollo NK LimitedPNL Water Management Limited Polyexprint LimitedPNL Holdings LimitedHalda Valley Tea Company LimitedPedrollo Dairy & Horticulture LimitedPolytape LimitedHill Plantation Ltd.Cider Education Services Ltd.Halda Fisheries Ltd.

5 Quazi Sirazul Islam Director

Amin Jewelers Limited City Hospital Limited Bangla Gold (Pvt.) LimitedDucaty Apparels Limited

6Mrs. Marina Yasmin Chowdhury

Director

Parkensine Products Ltd.East Coast Trading (Pvt.) Ltd.EC Securities Ltd.EC Bulk Carriers Ltd.East Coast Shipping Lines Ltd.EC Holdings LimitedEC Aviation Ltd.EC Distribution Ltd

7 Mr. Md. Shahadat Hossain DirectorVIP Shahadat Cold StorageVIP Shahadat Poultry & Hatchery

310 PRIME BANK

ANNUAL REPORT 2018

Sl no. Name of Directors Status with PBL Entities where they have interest

8 Mr. Md. Shirajul Islam Mollah Director

China-Bangla Ceramic Industries LimitedBengal Tiger Cement Industries Ltd.Bajnabo Testiles Mills LimitedTrustee Securities LimitedUnited Shipping Lines LimitedSR Telecom LimitedDhaka-Foshan Mould Company Limited

9 Mrs. Nasim Anwar Hossain DirectorPrime Cement Ltd.Lubricants Asia Ltd.Bengal Tiger Cement Industries Ltd.

10 Mrs. Salma Huq Director

GQ Ball Pen Industries Limited GQ Industries Ltd. (PP Woven Bag)Maladesh International (Pvt.) Ltd. (Mosquito Coil)GQ Foods LimitedGQ Enterprise Limited

11 Mr. Nafis Sikder Director

Marina Apparels Ltd.Nafa Apparels Ltd.Ayesha Clothing Co. Ltd.Ayesha Washing LimitedAyesha Fashion LimitedSafaa Sweaters LtdAswad Composite Mills Limited Cortz Apparels LimitedK.M. Apparels (Pvt.) Ltd.Hamza Clothing Ltd.Hamza Trims Ltd.Modern Needlecraft Ltd.Palmal Garments Ltd.Palmal Garments Hosiery Ltd.Palmal Logistics Dy-Chroma (BD) LimitedHamza Fashion Limited

12Mr. Waheed Murad Jamil (Representative of Mawsons Limited)

Director

Everest Homes LimitedThe Everest Trading LimitedEverest Lancers Security and Logistics LimitedNeon Consumers Products LimitedExuberant Developers LimitedPrime Islami Life Insurance limitedNowhata Green Bricks LimitedFareast Islami Securities Limited

13 Mr. Tarique Ekramul Haque Director

Bangla Trac LimitedBangla Trac Communication LimitedAcorn Infrastructure Services LimitedB-Trac Engineering LimitedPrime Islami Life Insurance LimitedPFI Securities LimitedAsian Gate LtdAcorn Limited Thane TechnologyB-Trac FMCG LimitedTiffin Box LimitedB-Trac Technoligies LimitedNBM Telecom limitedBangla ICX Limited

14

Mr. Mohammad Mushtaque Ahmed Tanvir (Representative of Uniglory Cycle Industries Ltd.)

Director

Uniglory Cycle Components Ltd.Antics Graphics LimitedUniglory Paper & Packaging LimitedUniglory Packaging Industries LimitedUniglory Button LimitedFashion Pro LimitedSatori Limited

15 Mr. Shamsuddin Ahmad, Ph.D Independent Director None

16 Dr. G. M. Khurshid Alam Independent Director None

17 Mr. M Farhad Hussain FCA Independent Director Bay Asset Management Company Limited

18 Prof. Dr. M. Shamim Z. Bosunia Independent Director Abode of Consultants (Pvt.) Limited

311PRIME BANK

Distribution of Profit UnderIslamic Banking operation

Annexure-F

Prime Bank Limited has 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 2018

Provisional profit are applied to the different types of deposit accounts at the rates 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 wise weightage are properly disclosed and make available in all of our islamic banking branches.

For the year ended 31 December 2018, 70% of total investment income has been allocated to the diffrent types of Mudaraba depositors (except no cost fund) according to the weightage. The remaining 30% of the investment income is retained by the Bank as Management fee (25%) and Investment loss Off-setting Reserve (5%).

FINANCIAL STATEMENTSOF ISLAMIC BANKING BRANCHES

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements

313PRIME BANK

Prime Bank Limited-Islamic BranchesBalance Sheet as at 31 December 2018

Annexure-G

Particulars NotesAmount in Taka

2018 2017PROPERTY AND ASSETS

Cash in hand 1

Cash in hand (including foreign currencies) 77,287,386 93,632,734

Balance with Bangladesh Bank and its agent bank (s)

(including foreign currencies) - -

77,287,386 93,632,734

Balance with other banks and financial institutions 2

In Bangladesh 229,289 229,289

Outside Bangladesh - -

229,289 229,289

Placement with banks & other financial institutions 3 - -

Investments in share & securities 4

Government - -

Others - -

- -

Investments

General investments etc 5 16,190,147,908 14,684,333,361

Bills purchased and discounted 6 71,299,314 220,116,921

16,261,447,222 14,904,450,282

Fixed assets including premises 7 16,520,812 18,952,884

Other assets 8 3,494,470,435 2,839,487,287

Non - banking assets - -

Total assets 19,849,955,144 17,856,752,477

LIABILITIES AND CAPITAL

Liabilities

Placements from other banks, financial institutions and agents 9 1,152,554,632 1,423,446,539

Deposits and other accounts 10

Mudaraba savings deposits 3,015,944,673 2,915,742,955

Mudaraba term deposits 12,993,580,813 11,045,473,448

Other mudaraba deposits - -

Al-wadeeah current deposits and other deposits accounts 2,208,976,990 1,905,030,556

Bills payable 66,193,519 283,966,377

18,284,695,994 16,150,213,335

Other liabilities 11 412,704,518 283,092,603

Total liabilities 19,849,955,144 17,856,752,477

Capital / Shareholders’ equity

Paid up capital - -

Statutory reserve - -

Revaluation gain / (loss) on investments - -

Revaluation reserve - -

Other reserve - -

Surplus in profit and loss account / Retained earnings - -

Total Shareholders’ equity - -

Total liabilities and Shareholders’ equity 19,849,955,144 17,856,752,477

314 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Limited-Islamic BranchesBalance Sheet as at 31 December 2018

Particulars NotesAmount in Taka

2018 2017

OFF- BALANCE SHEET EXPOSURE

Contingent liabilities 12

Acceptances and endorsements 12.1 8,377,052,169 4,968,005,506

Letters of guarantee 12.2 679,695,241 467,277,310

Irrevocable letters of credit 12.3 7,070,204,030 5,557,272,523

Bills for collection 12.4 936,084,936 958,404,759

Other contingent liabilities - -

17,063,036,376 11,950,960,098

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 - -

Other commitments - -

- -

Total Off-Balance Sheet exposure including contingent liabilities 17,063,036,376 11,950,960,098

315PRIME BANK

Prime Bank Limited-Islamic BranchesProfit and Loss Accountfor the year ended 31 December 2018

Annexure-G(I)

Particulars NotesAmount in Taka

2018 2017

Investment income 13 1,453,381,426 1,425,832,680

Profit paid on deposits 14 (933,597,766) (766,173,726)

Net investment income 519,783,660 659,658,954

Income from investment in shares / securities - -

Commission, exchange and brokerage 15 136,365,229 115,797,589

Other operating income 16 53,606,191 48,091,308 Total operating income (A) 709,755,080 823,547,850

Salaries and allowances 17 87,692,033 91,352,918

Rent, taxes, insurance, electricity, etc. 18 26,448,120 26,649,155

Legal expenses 19 526,645 2,313,038

Postage, stamp, telecommunication, etc. 20 3,272,853 5,534,643

Stationery, printing, advertisements, etc. 21 4,232,500 3,746,988

Chief Executive’s salary and fees - -

Directors’ fees & expenses - -

Shariah supervisory committee’s fees and expenses - -

Auditors’ fees - -

Charges on investment losses 22 - -

Depreciation and repair of Bank’s assets 23 6,923,317 5,718,746

Zakat expenses - -

Other expenses 24 13,060,033 14,113,816

Total operating expenses (B) 142,155,501 149,429,305 Profit / (loss) before provision (C=A-B) 567,599,579 674,118,545

Provision for investments 25

Specific provision - -

General provision - -

Provision for off-balance sheet exposures - -

- -

Provision for diminution in value of investments - -

Other provisions - -

Total provision (D) - -

Total profit / (loss) before taxes (C-D) 567,599,579 674,118,545

316 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Limited-Islamic BranchesCash Flow Statementfor the year ended 31 December 2018

ParticularsAmount in Taka

2018 2017A) Cash flows from operating activities

Investment income receipts in cash 1,318,653,952 1,076,381,733 Profit paid on deposits (972,028,051) (800,713,044)Dividend receipts - - Fees and commission receipts in cash 136,365,229 115,797,589 Recoveries of investments previously written off - - Cash payments to employees (87,692,033) (91,352,918)Cash payments to suppliers (4,232,500) (3,746,988)Income taxes paid - - Receipts from other operating activities 53,606,191 48,091,308 Payments for other operating activities (47,271,522) (51,292,966)Cash generated from operating activities before changesin operating assets and liabilities 397,401,265 293,164,713

Increase / (decrease) in operating assets and liabilitiesStatutory deposits - - Purchase of trading securities (Treasury bills) - - Investment to other banks - - Investment to customers (1,648,230,695) (3,941,681,086)Other assets (914,999,276) (201,165,926)Deposits from other banks/borrowings 58,751,828 1,906,636,778 Deposits from customers 1,804,838,923 110,062,658 Other liabilities account of customers - - Trading liabilities - - Other liabilities 286,419,980 1,366,896,546

(413,219,240) (759,251,029)

Net cash from operating activities (15,817,975) (466,086,316)

B) Cash flows from investing activitiesDebentures - - Proceeds from sale of securities - - Payments for purchases of securities - - Purchase of property, plant and equipment (527,374) (896,085)Payment against lease obligation - - Proceeds from sale of property, plant and equipment - -

Net cash used in investing activities (527,374) (896,085)C) Cash flows from financing activities

Dividend paid - - Net Cash from financing activities - -

D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) (16,345,348) (466,982,401)E) Effects of exchange rate changes on cash and cash equivalents - - F) Cash and cash equivalents at beginning of the year 93,862,023 560,844,424 G) Cash and cash equivalents at end of the year (D+E+F) 77,516,675 93,862,023

Cash and cash equivalents at end of the yearCash in hand (including foreign currencies) 77,287,386 93,632,734 Balance with Bangladesh Bank and its agent bank (s)(including foreign currencies) - - Balance with other banks and financial institutions 229,289 229,289 Placement with banks & other financial institutions - - Prize bonds - -

77,516,675 93,862,023

317PRIME BANK

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318 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 20171 Cash in hand

i) In local currency 75,869,476 92,739,574 ii) In foreign currency 1,417,910 893,160

Sub-total (a) 77,287,386 93,632,734

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) 77,287,386 93,632,734 Required CRR and SLR of Islamic Branches are maintained at Head Office

2 Balance with other banks and financial institutionsIn Bangladesh (note-2.1) 229,289 229,289 Outside Bangladesh (note-2.2) - -

229,289 229,289 2.1 In Bangladesh

Short-term deposit accountsICB Islamic Bank Ltd., Motijheel, Dhaka 13,069 13,069 ICB Islamic Bank Ltd, Sylhet 16,786 16,786 Social Islami Investment Bank Ltd. Dhaka 10,158 10,158

40,012 40,012 Savings accounts

Al Arafah Islami Bank Ltd. Dhaka 74,667 74,667 Bank Al Falah Ltd. Dhaka 39,011 39,011 Social Islami Investment Bank Ltd. Dhaka 75,599 75,599

189,277 189,276 Fixed deposit receiptThe City Bank Ltd - -

2.2 Outside Bangladesh (NOSTRO Accounts) - - 229,289 229,289

3 Placement with banks & other financial institutions - -

4 Investment in share & securities - -

5 Investmentsa) In BangladeshQuard against TDR 1,622,336,171 1,517,106,695 Bai-Murabaha (cc pledge) 9,460,763,620 3,352,867,944 Bai-Muajjal (cc hypo) 628,904,303 7,256,339,657 Retail investment 448,755,150 540,362,128 Izara (note-5.2) 809,625,772 778,480,535 Bai-Salam (packing credit) 141,970,000 135,516,034 Staff investment 87,314,744 92,096,935 Hire purchase 2,990,478,147 1,011,563,435

16,190,147,908 14,684,333,361 b) Outside Bangladesh - -

16,190,147,908 14,684,333,361 Payable Inside BangladeshInland bills purchased 22,876,468 29,531,644 Payable Outside Bangladesh Foreign bills purchased and discounted 48,422,847 190,585,277

71,299,314 220,116,921

16,261,447,222 14,904,450,282

Please see PBL notes 1-2

319PRIME BANK

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 20175.1 Investments under the following broad categories

Investments 4,478,143,813 2,558,019,067 Bai-Murabaha / Bai-Muajjal 10,089,667,923 10,609,207,600 Quard against TDR 1,622,336,171 1,517,106,695

16,190,147,908 14,684,333,361 Bills purchased and discounted (Note-6) 71,299,314 220,116,921

16,261,447,222 14,904,450,282 5.2 Izara

Lease rental receivable within 1 year - - Lease rental receivable within 5 years 809,625,772 779,200,531 Lease rental receivable after 5 years - - Total lease / Izara rental receivable 809,625,772 779,200,531 Less: Unearned interest receivable - 719,996 Net lease / Izara finance 809,625,772 778,480,535

5.3 Investments on the basis of significant concentration including bills purchased and discounted.a) Investments to Directors of the Bank - - b) Investments to Chief Executive and

other executives & officers 83,453,913 91,972,410 c) Investments to customer groups:

i) Commercial investment 4,632,391,570 4,422,421,319 ii) Export financing 1,671,585,592 2,055,907,773 iii) House building investment 83,364,439 292,515,323 iv) Retail investment 448,755,150 540,362,128 v) Small and medium enterprises 1,139,127,406 1,340,849,834 vi) Special program investment - - vii) Staff investment 107,441 124,525 viii) Industrial investments 7,553,930,718 5,808,276,299 ix) Other investment 648,730,991 352,020,671

16,177,993,309 14,812,477,872 16,261,447,222 14,904,450,282

d) Details of Industrial investmentsi) Agricultural industries - - ii) Textile industries 902,278,734 95,143,616 iii) Food and allied industries 452,643,010 756,265,450 iv) Pharmaceutical industries 162,836,178 137,384,650 v) Leather, chemical, cosmetics, etc. - - vi) Tobacco industries - - vii) Cement and ceramic industries 509,174,749 - viii) Service Industries 299,836,487 141,192,974 ix) Transport and communication industries 226,553,819 229,098,771 x) Other industries including bills purchase and discounted 5,000,607,741 4,449,190,838

7,553,930,718 5,808,276,299 5.4 Investments -geographical location-wise

Inside BangladeshUrbanDhaka Division 13,123,471,417 9,912,857,150 Chittagong Division 3,034,044,879 4,818,979,989 Khulna Division - - Rajshahi Division - - Barisal Division - - Sylhet Division 103,930,925 172,613,144

16,261,447,222 14,904,450,282 RuralDhaka Division - - Chittagong Division - - Sylhet Division - -

- - Outside Bangladesh - -

16,261,447,222 14,904,450,282

320 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 2017

5.5 Details of pledged collaterals

Collateral of movable / immovable assets 11,038,808,977 10,276,773,697

Local banks and financial institutions guarantee 618,460,274 -

Export documents 271,463,930 -

Fixed deposit receipts 392,231,702 401,127,511

FDR of other banks - 812,679

Personal guarantee 861,770,380 306,016,373

Other securities 3,078,711,959 3,919,720,023 16,261,447,222 14,904,450,282

5.6 Particulars of investments

i) Investments considered good in respect of which the Bank is fully secured 10,811,052,460 10,678,713,887

ii) Investments considered good against which the Bank holds no

security other than the debtors’ personal guarantee 665,156,705 321,798,507

iii) Investments considered good secured by the personal undertaking of one or more parties in addition to the personal guarantee of the debtors

4,785,238,057 3,903,937,889

iv) Investments adversely classified; provision not maintained there against - -

16,261,447,222 14,904,450,282

v) Investments due by directors or officers of the banking company

or any of them either separately or jointly with any other persons 83,561,354 92,096,935

vi) 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 investments, including temporary

investment 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. 83,561,354 92,096,935

viii) Maximum total amount of investments, including temporary 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 - -

x) Classified investments

a) Classified investments on which profit

has not been charged (note-5.7) 424,601,888 458,553,319

b) Provision on classified investments (note-5.8) 66,669,555 78,925,196

c) Provision kept against investments classified as bad debts 60,933,886 67,554,949

d) Profit Suspense Account (note-11) 121,226,422 125,812,975

xi) Cumulative amount of written off investments

Opening Balance - -

Amount written off during the year - - - -

Amount realised against investments previously written off - -

The amount of written off investments for which law suits have been filed - -

321PRIME BANK

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 2017

5.7 Classification of investments Unclassified

Standard including staff investment 15,692,656,028 14,428,964,000

Special mention account (SMA) 144,189,306 16,932,963

15,836,845,334 14,445,896,963

Classified

Sub-standard 131,220,916 157,198,564

Doubtful 598,054 8,653,052

Bad / Loss 292,782,918 292,701,704

424,601,888 458,553,319

16,261,447,222 14,904,450,282

5.8 Particulars of required provision for investments

Status General Provision Base for provision Rate (%)

Investments (Including SMA) 15,836,845,334 *Various 164,489,546 149,672,882

164,489,546 149,672,882

*General provision is kept @ 1% on general investments and 2% on small enterprise financing and 5% on consumer financing.

Specific provision

Sub-standard 28,309,783 20 5,661,957 9,252,200

Doubtful 147,425 50 73,713 2,118,047

Bad / Loss 60,933,886 100 60,933,886 67,554,949 66,669,555 78,925,196

Required provision for investments 231,159,102 228,598,079

Provision maintained by Head Office 231,159,102 228,598,079

Excess / (short) provision at 31 December 2018 - -

5.9 Particulars of required provision for Off-balance Sheet Exposures

Base for provision Rate 1%

Acceptances and endorsements 8,377,052,169 83,770,522 49,680,055

Letter of guarantee 679,695,241 6,796,952 4,672,773

Letter of credit 7,070,204,030 70,702,040 55,572,725

Bills for collection - - 9,584,048

Forward assets purchased and forward deposits placed - -

Required provision on Off-balance Sheet Exposures 161,269,514 119,509,601

Provision maintained by Head Office 161,269,514 119,509,601

Excess / (short) provision at 31 December 2018 - -

6 Bills purchased and discounted

Payable in Bangladesh 22,876,468 29,531,644

Payable outside Bangladesh 48,422,847 190,585,277

71,299,314 220,116,921

7 Fixed assets including premises, furniture and fixtures Property, Plant & Equipment

Furniture and fixtures 8,509,967 9,448,492

Office equipment and machinery 8,010,838 9,503,687

Vehicles 6 5

Library books - 700

Net book value at the end of the year 16,520,812 18,952,884

322 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 20178 Other assets

Stationery and stamps 1,230,978 885,636 Profit receivable 134,727,474 349,450,947 Advance income tax 215,278 215,278 Advance deposits and advance rent 148,416 487,916 Branch adjustments account 3,350,680,863 2,478,879,519 Suspense account 515,244 729,364 Islamic transit account 5,894,000 2,876,066 Sundry assets 1,058,183 5,962,561

3,494,470,435 2,839,487,287 9 Borrowings from other banks, financial institutions and agents

In Bangladesh 1,152,554,632 1,423,446,539 Outside Bangladesh - -

1,152,554,632 1,423,446,539 10 Deposits and other accounts

Deposits from banks (note -10.1.a) 2,286,914,378 1,957,270,642 Deposits from customers (note-10.1.b) 15,997,781,616 14,192,942,693

18,284,695,994 16,150,213,335 10.1 a) Deposits from Banks

Al-wadeeah current deposits - - Bills payable - - Mudaraba savings deposits 762,413,775 711,441,716 Mudaraba special notice deposits 14,500,603 745,828,926 Mudaraba fixed deposits 1,510,000,000 500,000,000

2,286,914,378 1,957,270,642 Sl No Name of Bank Type of Account

1 Bank Al-Falah MSB 755,151,371 704,502,594 2 Islami Bank Bangladesh Ltd MSB 7,262,404 6,939,122

Sub Total 762,413,775 711,441,716

3 Exim Bank Ltd MSND 288,387 715,824,644 4 ICB Islamic Bank Ltd MSND 102,581 99,365 5 Social Islami Bank Ltd MSND 7,209 6,983 6 Shahjalal Islami Bank Ltd MSND 1,039,484 484,169 7 Islami Bank Bangladesh Limited MSND 6,651,474 13,605,109 8 The City Bank Limited MSND 2,260,357 844,273 9 Modhumati Bank Limited MSND - 1,584,473 10 Al-Arafah Islami Bank Limited MSND 4,151,113 13,379,910

Sub Total 14,500,603 745,828,926

11 Islami Bank Bangladesh Limited MTDR - 500,000,000 12 The City Bank Limited MTDR 10,000,000 -13 Exim Bank Limited MTDR 500,000,000 -14 Shahjalal Islami Bank Ltd MTDR 1,000,000,000 -

Sub Total 1,510,000,000 500,000,000 Grand Total 2,286,914,378 1,957,270,642 b) Customer Depositsi) Al wadeeah current deposits and other accountsAl-wadeeah current deposits 582,152,523 649,322,780 Foreign currency deposits 132,313,768 51,657,619 Security deposits 123,869 123,869 Sundry deposits 1,494,386,830 1,203,926,288

2,208,976,990 1,905,030,556

323PRIME BANK

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 2017ii) Bills payable Pay orders issued 64,982,042 282,754,900 Pay slips issued 70,594 70,594 Demand draft payable 1,140,883 1,140,883

66,193,519 283,966,377 iii) Mudaraba savings deposits 2,253,530,898 2,204,301,239 iv) Mudaraba term depositsMudaraba fixed deposits 8,185,407,257 6,294,478,918 Mudaraba special notice deposits 1,484,538,984 719,473,088 Non resident Taka deposits 1,576,159 249,648 Mudaraba special scheme deposits 1,797,557,810 2,785,442,867

11,469,080,209 9,799,644,521 15,997,781,616 14,192,942,693

18,284,695,994 16,150,213,335 c) Deposits and other accountsCurrent deposits and other accountsDeposits from banks (note -10.1.a) - - Deposits from customers (note-10.1.b.i) 2,208,976,990 1,905,030,556

2,208,976,990 1,905,030,556 Bills payableDeposits from banks (note -10.1.a) - - Deposits from customers (note-10.1.b.ii) 66,193,519 283,966,377

66,193,519 283,966,377 Savings bank / mudaraba savings depositsDeposits from banks (note -10.1.a) 762,413,775 711,441,716 Deposits from customers (note-10.1.b.iii) 2,253,530,898 2,204,301,239

3,015,944,673 2,915,742,955 Term / Fixed depositsDeposits from banks (note -10.1.a) 1,524,500,603 1,245,828,926 Deposits from customers (note-10.1.b.iv) 11,469,080,209 9,799,644,521

12,993,580,813 11,045,473,448 18,284,695,994 16,150,213,335

11 Other liabilitiesExpenditure and other payables 80,424 439,934 Unearned commission on Bank gurantee 20,442 - Unearned Profit 291,233,756 156,808,065 Other liability 143,474 31,628 Interest suspense account 121,226,422 125,812,975

412,704,518 283,092,603 12 Contingent liabilities12.1 Acceptances and endorsements

Back to back bills (Foreign) 7,788,445,624 4,648,105,612 Back to back bills (Local) 563,715,780 268,106,850 Back to back bills (EPZ) 24,890,766 51,793,044

8,377,052,169 4,968,005,506 Less: Margin (653,440,335) (687,707,675)

7,723,611,835 4,280,297,831 12.2 Letters of guarantee

Letters of guarantee (Local) 677,891,391 449,438,920 Letters of guarantee (Foreign) 1,803,850 17,838,390 Foreign counter guarantees - -

679,695,241 467,277,310 Less: Margin (32,948,687) (27,069,649)

646,746,553 440,207,661

Money for which the Bank is contingently liable in respect of guarantees given favoring:Directors or officers - - Government - - Banks and other financial institutionsOthers 679,695,240 467,277,310

679,695,240 467,277,310 Less: Margin (32,948,687) (27,069,649)

646,746,553 440,207,661

324 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 201712.3 Irrevocable Letters of Credit

Letters of credit (Sight) 618,389,955 1,029,060,015

Letters of credit (Deferred) 5,559,380,705 3,185,578,448

Back to back L/C 892,433,370 1,342,634,060

Bank’s liabilities PAD - -

7,070,204,030 5,557,272,523 Less: Margin (440,676,285) (315,684,559)

6,629,527,745 5,241,587,964 12.4 Bills for collection

Outward bills for collection 936,084,936 958,404,759

Inward local bills for collection - -

Inward foreign bills for collection - -

936,084,936 958,404,759 Less: Margin (34,299) (21,008,400)

936,050,637 937,396,359 13 Investment income

i) Income from general investment

Quard against TDR 32,006,066 21,270,985

Bai-Murabaha (cc pledge) 343,292,715 354,197,127

Bai-Muajjal (cc hypo) 517,906,493 597,141,201

Retail investment loan 48,658,317 44,382,691

Izara 82,781,880 70,647,155

Bai-Salam (packing credit) 7,790,742 6,381,182

Staff loan 5,420,127 4,378,790

Hire purchase 110,597,030 93,865,863

Other investments 302,540,796 225,585,778

Inland bills purchased 2,387,260 5,822,612

Sub-total (i) 1,453,381,426 1,423,673,383 ii) Profit on deposits with other Islamic banksIn Bangladesh - 2,159,297

Out side Bangladesh - -

Sub-total (ii) - 2,159,297

Grand total (i+ii) 1,453,381,426 1,425,832,680 14 Profit paid on deposits

a) Profit paid on deposits:

Mudaraba savings deposits 62,086,761 55,086,298

Mudaraba special notice deposits 21,305,394 31,097,662

Mudaraba term deposits 489,395,236 265,115,306

Mudaraba special scheme deposits 255,809,875 322,713,736

Foreign currency deposits - -

Others 105,000,500 92,160,724

933,597,766 766,173,726 b) Interest / Profit paid for borrowings:

Bangladesh Bank/ Other Bank/ FI/Agents bank - -

Islamic Bond Fund - -

- -

933,597,766 766,173,726

325PRIME BANK

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 201715 Commission, exchange and brokerage

Commission on L/Cs-sight 46,537,218 29,806,337 Commission on acceptance 42,984,913 - Commission on L/Cs-back to back 14,303,434 47,344,629 Commission on L/Gs 7,099,807 4,888,926 Commission on remittance 4,517,432 4,068,374 Other commission 1,829,444 13,794

117,272,247 86,122,059 Exchange gain (note - 15.1) - including gain from FC dealings 19,092,982 29,675,530 Settlement fees / Brokerage - -

136,365,229 115,797,589 15.1 Exchange gain

Exchange gain 19,192,261 29,855,100 Less: Exchange loss (99,280) (179,570)

19,092,982 29,675,530 16 Other operating income

Rent recovered 1,008,125 558,813 Service and other charges 18,633,706 15,794,574 Retail Income 9,616,921 11,186,579 Income from ATM Service 2,831,583 2,689,093 Postage / telex / SWIFT/ fax recoveries 8,927,502 8,133,916 Gain on sale of assets 177 - Rebate from foreign Bank 5,816,308 5,092,358 Miscellaneous earnings (note-16.1) 6,771,870 4,635,975

53,606,191 48,091,308 16.1 Miscellaneous earnings include syndication fee, commission from foreign

remittance house / bank and sale proceeds of various items, etc.17 Salaries and allowances

Basic pay 44,220,907 46,345,302 Allowances 31,047,433 31,956,816 Bonus 8,039,819 8,471,481 Bank’s contribution to provident fund 4,383,874 4,579,319

87,692,033 91,352,918 18 Rent, taxes, insurance, electricity, etc.

Rent, rate and taxes 22,096,532 22,227,516 Lease rent 24,000 24,000 Insurance 502,257 543,132 Power and electricity 3,825,331 3,854,507

26,448,120 26,649,155 19 Legal expenses

Legal expenses 526,645 2,256,568 Other professional charges - 56,470

526,645 2,313,038 20 Postage, stamp, telecommunication, etc.

Postage 406,966 376,008 Telegram, telex, fax and e-mail 640,586 2,911,724 Data communication 1,902,724 1,958,635 Telephone - office 317,954 277,211 Telephone - residence 4,623 11,065

3,272,853 5,534,643 21 Stationery, printing and advertisements, etc.

Office and security stationery 1,334,428 1,870,621 Computer consumable stationery 2,606,546 1,577,054 Publicity and advertisement 291,526 299,313

4,232,500 3,746,988 22 Charges on loan losses

Loan -written off - - Interest waived - -

- -

326 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Limited-Islamic BranchesNotes to the Financial Statements as at and 31 December 2018

Amount in Taka

2018 2017

23 Depreciation and repair of Bank’s assets Depreciation

Fixed assets 2,959,446 3,036,433

Leased assets - -

2,959,446 3,036,433

Repairs

Building 1,839,096 363,335

Furniture and fixtures 264,761 622,235

Office equipment 1,350,438 1,045,308

Bank’s vehicles 361,201 449,835

Maintenance 148,375 201,601 3,963,871 2,682,313

6,923,317 5,718,746

24 Other expenses

Security and cleaning 5,477,188 5,605,864

Entertainment 658,652 736,686

Car expenses 3,561,907 3,813,386

Books, magazines and newspapers, etc. 39,182 44,193

Subscription - 1,505

Donation 10,000 -

Bank charges and commission paid - 32,900

Loss on sale of assets 128,423 -

Retail Expenses 116,750 617,387

Traveling expenses 58,259 596,890

Local conveyance, labor, etc. 471,619 499,849

Business development 49,461 20,507

Training and internship 190,550 203,060

Remittance charges 376,506 268,991

Laundry, cleaning and photographs, etc. 215,154 248,540

Exgratia 403,300 406,500

Miscellaneous expenses 1,303,084 1,017,558 13,060,033 14,113,816

25 Provision for investments & off -balance sheet exposure

Provision for bad and doubtful investments - -

Provision for unclassified investments - -

Provision for off-balance sheet exposure - -

Provision for other assets - - - -

327PRIME BANK

Fina

ncia

l Rep

ortin

g by

Seg

men

t of t

he G

roup

I) G

eogr

aphi

cal S

egm

ent

Ann

exur

e-H

Part

icul

ars

Insi

de B

angl

ades

hO

utsi

de B

angl

ades

h

PBL(

Conv

entio

nal

& Is

lam

ic B

anki

ng)

Off

Shor

e Ba

nkin

g U

nits

PBIL

PBSL

Prim

e Ex

chan

ge

Pte.

Ltd

. (S

inga

pore

)

PBL

Exch

ange

(U

K) L

td.

PBL

Fina

nce

(Hon

g Ko

ng)

Ltd.

Tota

l

Inco

me

12,5

65,17

1,753

3

34,2

66,6

09

243

,137,7

29

59,

178,

337

51,7

93,0

18

60,

703,

293

101,5

47,3

98

13,4

15,7

98,13

7 Le

ss: I

nter

-seg

men

tal i

ncom

e -

- -

- -

Tota

l inc

ome

12,5

65,17

1,753

3

34,2

66,6

09

243

,137,7

29

59,

178,

337

51,7

93,0

18

60,

703,

293

101,5

47,3

98

13,4

15,7

98,13

7 O

pera

ting

prof

it (P

rofit

bef

ore

unal

loca

ted

expe

nses

and

tax)

12,5

65,17

1,753

3

34,2

66,6

09

243

,137,7

29

59,

178,

337

51,7

93,0

18

60,

703,

293

101,5

47,3

98

13,4

15,7

98,13

7 A

lloca

ted

expe

nses

(7,13

6,91

5,74

8) (4

3,12

0,57

8) (1

28,4

65,10

1) (1

47,8

77,6

23)

(50,

286,

677)

(55,

173,

361)

(43,

524,

759)

(7,6

05,

363,

847)

Prov

isio

n ag

ains

t loa

ns a

nd a

dvan

ces,

oth

ers

(1,7

81,6

00,

00

0)

- (1

) -

- -

- (1

,781

,60

0,0

01)

Prof

it / (

loss

) bef

ore

tax

3,6

46,6

56,0

05

291

,146,

031

11

4,67

2,62

7 (8

8,69

9,28

6) 1,

506,

342

5,5

29,9

32

58,

022

,639

4

,028

,834

,289

In

com

e ta

x in

clud

ing

defe

rred

tax

(1,7

50,0

00,

00

0)

- (9

,340

,049

) (6

,960

,794

) 4

0,39

4 (1

,471

,288

) (7

,468

,686

) (1

,775

,20

0,42

3)N

et p

rofit

1,89

6,65

6,0

05

291

,146,

031

10

5,33

2,57

8 (9

5,66

0,08

0)

1,54

6,73

6 4

,058

,643

5

0,55

3,95

3 2

,253

,633

,866

Se

gmen

t ass

ets

259

,40

2,15

9,51

4 2

4,98

7,51

2,54

8 6

,950

,916

,041

1,

227,

623,

488

91,7

00,

294

30,

333,

039

2

,321

,080

,281

29

5,0

11,3

25,2

05

Segm

ent l

iabi

litie

s 2

59,4

02,

159,

514

24,

987,

512,

548

6,9

50,9

16,0

41

1,22

7,62

3,48

8 9

1,70

0,29

4 3

0,33

3,0

39

2,3

21,0

80,2

81

295,

011

,325

,20

5

II) B

usin

ess

Segm

ent

Part

icul

ars

Con

vent

iona

l Ban

king

incl

udin

g O

BUIs

lam

ic B

anki

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emitt

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(Out

side

BD

)**

Inve

stm

ent

(PBI

L+PB

SL)

Tota

l

Inco

me

12,4

87,5

65,2

14

70

9,75

5,08

0

214

,043

,70

9 3

02,

316,

066

13

,713

,680

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Le

ss: I

nter

seg

men

tal i

ncom

e (2

97,8

81,9

32)

- -

- (2

97,8

81,9

32)

Tota

l inc

ome

12,18

9,68

3,28

2 7

09,

755,

080

2

14,0

43,7

09

30

2,31

6,0

66

13,4

15,7

98,13

7 O

pera

ting

prof

it (P

rofit

bef

ore

unal

loca

ted

expe

nses

and

tax)

12,18

9,68

3,28

2 7

09,

755,

080

2

14,0

43,7

09

30

2,31

6,0

66

13,4

15,7

98,13

7 A

lloca

ted

expe

nses

(7,0

37,8

80,8

25)

(142

,155,

501)

(148

,984

,797

) (2

76,3

42,7

24)

(7,6

05,

363,

847)

Prov

isio

n ag

ains

t loa

ns a

nd a

dvan

ces,

Oth

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(1,7

81,6

00,

00

0)

- -

(1)

(1,7

81,6

00,

00

1)Pr

ofit

/ (lo

ss) b

efor

e ta

x 3

,370

,20

2,45

7 5

67,5

99,5

79

65,

058

,912

2

5,97

3,34

1 4

,028

,834

,288

In

com

e ta

x in

clud

ing

defe

rred

tax

(1,7

50,0

00,

00

0)

- (8

,899

,580

) (1

6,30

0,84

3) (1

,775

,20

0,42

3)N

et p

rofit

1,62

0,20

2,45

7 5

67,5

99,5

79

56,

159,

332

9,6

72,4

98

2,2

53,6

33,8

65

Segm

ent a

sset

s 2

64,5

39,7

16,9

18

19,8

49,9

55,14

4 2

,443

,113,

614

8,17

8,53

9,52

9 2

95,0

11,3

25,2

05

Segm

ent l

iabi

litie

s 2

64,5

39,7

16,9

18

19,8

49,9

55,14

4 2

,443

,113,

614

8,17

8,53

9,52

9 2

95,0

11,3

25,2

05

* Pr

ime

Exch

ange

Com

pany

Pte

. Ltd

Sin

gapo

re, P

BL E

xcha

nge

(UK)

Ltd

& P

BL F

inan

ce (H

ong

Kong

) Ltd

** P

BIL-

Prim

e Ba

nk In

vest

men

t Lim

ited

** P

BSL-

Prim

e Ba

nk S

ecur

ities

Lim

ited

328 PRIME BANK

ANNUAL REPORT 2018

Liqu

idity

Sta

tem

ent o

f the

Ban

k(A

naly

sis

of m

atur

ity o

f ass

ets

and

liabi

litie

s)A

s at

31 D

ecem

ber 2

018

Ann

exur

e-I

Part

icul

ars

Up

to 1

mon

th

1-3

mon

ths

3-1

2 m

onth

s 1-

5 ye

ars

Abo

ve 5

yea

rs

Tot

al

Ass

ets:

Cas

h in

han

d (n

ote-

3a.4

) 6

,240

,186,

549

- -

- 11

,399

,365

,00

0

17,6

39,5

51,5

49

Bala

nce

with

oth

er b

anks

and

fina

ncia

l ins

titut

ions

(not

e-4a

.3)

4,0

04,8

35,18

6 9

,40

0,0

00,

00

0

- -

- 13

,404

,835

,186

Mon

ey a

t cal

l and

sho

rt n

otic

e

- -

- -

- -

Inve

stm

ents

(not

e-6a

.1) 6

,869

,361

,474

3

50,0

00,

00

0

2,13

8,33

0,85

4 10

,567

,335

,899

6

,121,3

89,7

31

26,

046,

417,9

58

Loan

s an

d ad

vanc

es /

inve

stm

ents

(not

e-7a

.1) 2

9,15

7,534

,079

3

9,10

3,80

8,55

6 5

7,799

,704

,441

5

2,66

6,65

5,83

9 2

7,081

,815

,80

1 2

05,

809,

518,

716

Fixe

d as

sets

incl

udin

g pr

emis

es, f

urni

ture

and

fixt

ures

34,

716,

743

38,

188,

417

170,

112,

039

7

98,4

85,0

80

5,9

01,8

46,2

42

6,9

43,3

48,5

21

Oth

er a

sset

s 2

3,97

0,39

8 1,

859,

386,

753

6,0

58,3

33,4

20

408

,868

,916

15

,485

,996

,243

2

3,83

6,55

5,73

0

Non

ban

king

ass

ets

- -

- -

220

,50

0,64

0

220

,50

0,64

0

Tota

l ass

ets

(A):

46,

330,

604,

429

50,

751,3

83,7

26

66,

166,

480,

754

64,

441,3

45,7

34

66,

210,

913,

657

293

,90

0,72

8,30

0

Liab

ilitie

s:

Borr

owin

gs f

rom

Ban

glad

esh

Bank

, ot

her

bank

s, f

inan

cial

ins

titut

ions

and

ag

ents

(not

e-12

a.4)

12,0

86,15

9,15

7 3

,791

,928

,339

9

,454

,562

,558

5

,70

0,0

00,

00

0

2,9

11,8

66,6

39

33,

944,

516,

693

Dep

osits

(not

e-13

a.6)

28,

486,

389,

890

4

3,47

8,92

6,63

0

52,

042,

851,0

84

60,

890,

594,

446

9,5

73,0

87,9

17

194,

471,8

49,9

67

Oth

er a

ccou

nts

(not

e-13

a.6)

3,0

45,8

75,5

90

- -

- -

3,0

45,8

75,5

90

Prov

isio

n an

d ot

her l

iabi

litie

s 1,

778,

416,

345

1,0

05,

076,

559

4,9

63,8

03,

174

2,2

24,5

52,2

98

26,

285,

738,

464

36,

257,5

86,8

40

Tota

l lia

bilit

ies

(B):

45,

396,

840,

982

48,

275,

931,

528

66,

461,

216,

816

68,

815,

146,

744

38,

770,

693,

020

2

67,7

19,8

29,0

90

Net

liqu

idity

gap

(A-B

): 9

33,7

63,4

47

2,4

75,4

52,19

8 (2

94,7

36,0

62)

(4,3

73,8

01,0

10)

27,

440,

220,

637

26,

180,

899,

209

Cha

irman

Dire

ctor

Dire

ctor

Man

agin

g D

irect

or

329PRIME BANK

Con

solid

ated

Liq

uidi

ty S

tate

men

t(A

naly

sis

of m

atur

ity o

f ass

ets

and

liabi

litie

s)A

s at

31 D

ecem

ber 2

018

Ann

exur

e-I(1

)

Part

icul

ars

Up

to 1

mon

th

1-3

mon

ths

3-1

2 m

onth

s 1-

5 ye

ars

Abo

ve 5

yea

rs

Tot

al

Ass

ets:

Cas

h in

han

d 6

,272

,656

,646

-

- -

11,3

99,3

65,0

00

17

,672

,021

,646

Bala

nce

with

oth

er b

anks

and

fina

ncia

l ins

titut

ions

4,7

69,7

88,17

2 8

,858

,178,

053

-

- -

13,6

27,9

66,2

25

Mon

ey a

t cal

l and

sho

rt n

otic

e

- -

- -

- -

Inve

stm

ents

6,7

80,3

63,3

23

350

,00

0,0

00

2

,138,

330,

854

10,5

67,3

35,8

99

8,15

2,24

0,70

4 2

7,988

,270

,780

Loan

s an

d ad

vanc

es /

inve

stm

ents

29,

165,

189,

00

3 3

9,10

3,80

8,55

6 6

0,17

8,48

9,54

4 5

2,66

6,65

5,83

9 2

7,081

,815

,80

1 2

08,19

5,95

8,74

3

Fixe

d as

sets

incl

udin

g pr

emis

es, f

urni

ture

and

fixt

ures

34,

980,

671

38,

478,

738

171,4

05,

287

804

,925

,270

5

,946

,714

,050

6

,996

,504

,016

Oth

er a

sset

s 2

3,97

0,39

8 1,

859,

386,

753

6,0

58,3

33,4

20

408

,868

,916

11

,959

,543

,669

2

0,31

0,10

3,15

6

Non

ban

king

ass

ets

- -

- -

220

,50

0,64

0

220

,50

0,64

0

Tota

l ass

ets

(A):

47,

046

,948

,213

5

0,20

9,85

2,10

0

68,

546,

559,

105

64,

447,7

85,9

24

64,

760,

179,

864

295

,011

,325

,20

5

Liab

ilitie

s:

Borr

owin

gs f

rom

Ban

glad

esh

Bank

, ot

her

bank

s, f

inan

cial

ins

titut

ions

and

ag

ents

12,0

86,15

9,15

7 3

,791

,928

,339

9

,454

,562

,558

5

,70

0,0

00,

00

0

2,9

11,8

66,6

39

33,

944,

516,

693

Dep

osits

2

8,48

6,38

9,89

0

43,

478,

926,

630

5

2,0

22,4

92,0

97

60,

890,

594,

446

9,5

69,15

0,56

8 19

4,44

7,553

,631

Oth

er a

ccou

nts

2,4

36,7

00,

472

60

9,17

5,11

8 -

- -

3,0

45,8

75,5

90

Prov

isio

n an

d ot

her l

iabi

litie

s 1,

778,

416,

345

1,0

05,

076,

559

6,0

93,9

92,9

55

2,11

4,19

0,64

4 2

6,28

3,10

6,49

6 3

7,27

4,78

2,99

9

Tota

l lia

bilit

ies

(B):

44,

787,

665,

864

48,

885,

106,

646

67,

571,0

47,6

10

68,

704,

785,

090

3

8,76

4,12

3,70

3 2

68,7

12,7

28,9

13

Net

liqu

idity

gap

(A-B

): 2

,259

,282

,349

1,

324,

745,

454

975

,511

,495

(4

,256

,999

,166)

25,

996,

056

,161

26,

298,

596,

289

330 PRIME BANK

ANNUAL REPORT 2018

HIGHLIGHTS OF THE BANKAnnexure-J

(Taka in million)

Sl. # Particulars 2018 2017

1 Paid-up capital 11,323 10,293

2 Total capital (Consolidated) 38,302 32,317

3 Total capital (Solo Basis) 38,259 32,251

4 Capital surplus / (deficit) [Consolidated] 10,862 8,805

5 Capital surplus / (deficit) [Solo Basis] 11,598 9,230

6 Total assets 293,901 281,275

7 Total deposits 197,518 199,014

8 Total loans and advances / investments 205,810 198,323

9 Total contingent liabilities and commitments 162,553 167,809

10 Credit deposit ratio (Conventional)* 82.65% 84.43%

11 Credit deposit ratio (Islamic)* 82.71% 83.25%

12 Percentage of classified loans / investments against total loans and advances / investments 6.16% 5.45%

13 Profit after tax and provision 2,188 1,059

14 Amount of classified loans / investments during the year 12686 10799

15 Provisions kept against classified loans / investments 4,567 4,270

16 Provision surplus / (deficit) against classified loans / investments 23.29 7.50

17 Cost of Deposit 4.72% 4.46%

18 Interest earning assets 245,261 233,712

19 Non-interest earning assets 48,640 47,562

20 Return on investment (ROI) 8.64% 11.78%

21 Return on assets (ROA) [PAT/Average Assets] 0.76% 0.38%

22 Income from investment 2,154 4,246

23 Earnings per share (Taka) [Previous year’s figure restated] 1.93 0.94

24 Net income per share (Taka) [Previous year’s figure restated] 1.93 0.94

25 Price earning ratio (times) [Market price per share/EPS] 9.21 29.30

* Credit deposit ratio has been computed as per Bangladesh Bank guideline.

FINANCIAL STATEMENTSOF OFF-SHORE BANKING UNITS

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Notes to the Financial Statements

332 PRIME BANK

ANNUAL REPORT 2018

Off-Shore Banking UnitsBalance Sheet as at 31 December 2018

Annexure-K

Particulars Notes2018 2017

USD Taka Taka

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 3 9,531,394 799,683,971 243,518,761

Outside Bangladesh - - -

9,531,394 799,683,971 243,518,761

Loans and advances

Loans, cash credits, overdrafts, etc. 4 183,376,735 15,385,308,083 8,880,936,782

Bills purchased and discounted 5 100,678,403 8,446,917,982 13,935,500,218

284,055,138 23,832,226,066 22,816,437,000

Fixed assets including premises, furniture and fixtures 6 20,727 1,739,015 1,778,119

Other assets 7 4,217,682 353,863,497 303,277,819

Non - banking assets - - - Total assets 297,824,941 24,987,512,548 23,365,011,699

LIABILITIES AND CAPITAL

Liabilities

Borrowings from other banks, financial institutions and agents Deposits and other accounts 8 288,658,867 24,218,478,942 22,719,627,651

Current deposits 9 4,536,845 380,641,294 326,214,865

Bills payable - - -

Savings bank deposits - - -

Term deposits - - -

Bearer certificate of deposit - - -

4,536,845 380,641,294 326,214,865

Other liabilities 10 4,629,229 388,392,312 319,169,183 Total liabilities 297,824,941 24,987,512,548 23,365,011,699 Capital / Shareholders’ equity

Paid up capital - - -

Statutory reserve - - -

Foreign currency gain - - -

Other reserve - - -

Deficit in profit and loss account / Retained earnings - - -

Total Shareholders’ equity - - - Total liabilities and Shareholders’ equity 297,824,941 24,987,512,548 23,365,011,699

333PRIME BANK

Off-Shore Banking UnitsBalance Sheet as at 31 December 2018

Particulars Notes2018 2017

USD Taka Taka

OFF- BALANCE SHEET EXPOSURES

Contingent liabilities 11

Acceptances and endorsements 888,532 74,547,826 -

Letters of guarantee - - -

Irrevocable letters of credit 1,601,064 134,329,237 418,846,066

Bills for collection 12,231,485 1,026,221,630 865,086,893

Other contingent liabilities - - -

14,721,081 1,235,098,693 1,283,932,959 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 - - -

Other commitments - - -

- - Total Off-Balance Sheet exposures including contingent liabilities 14,721,081 1,235,098,693 1,283,932,959

334 PRIME BANK

ANNUAL REPORT 2018

Off-Shore Banking UnitsProfit and Loss Accountfor the year ended 31 December 2018

Particulars Notes2018 2017

USD Taka Taka

Interest income 12 14,072,491 1,174,602,685 965,189,886

Interest paid on deposits, borrowings, etc. 13 (10,492,514) (875,789,150) (739,076,233)

Net interest 3,579,977 298,813,534 226,113,653

Commission, exchange, brokerage, etc. 14 120,180 10,031,208 21,688,249

Other operating income 15 304,570 25,421,866 25,641,011 Total operating income (A) 4,004,728 334,266,609 273,442,913

Salaries and allowances 16 162,904 13,597,302 13,172,594

Rent, taxes, insurance, electricity, etc. 17 21,051 1,757,044 1,574,207

Legal expenses 3,856 321,913 590,684

Postage, stamp, telecommunication, etc. 18 3,977 331,936 269,444

Stationery, printing, advertisements, etc. 19 6,220 519,135 553,996

Auditors’ fees - - -

Depreciation and repair of Bank’s assets 20 2,705 225,822 339,516

Other expenses 21 315,899 26,367,427 15,380,272

Total operating expenses (B) 516,612 43,120,578 31,880,713

Profit / (loss) before provision (C=A-B) 3,488,116 291,146,031 241,562,200

Provision for loans and advances / investments

Specific provision - - -

General provision - - -

- -

Provision for diminution in value of investments - - -

Other provision - - -

Total provision (D) - - - Total profit / (loss) before taxes (C-D) 3,488,116 291,146,031 241,562,200

Provision for taxation

Current tax - - -

Deferred tax - - -

- - -

Net profit / (loss) after taxation 3,488,116 291,146,031 241,562,200

335PRIME BANK

Off-Shore Banking UnitsCash Flow Statementfor the year ended 31 December 2018

Particulars2018 2017

USD Taka Taka

A) Cash flows from operating activities

Interest receipts in cash 14,072,491 1,174,602,685 965,189,886

Interest payments (10,492,514) (875,789,150) (739,076,233)

Fees and commission receipts in cash 120,180 10,031,208 21,688,249

Cash payments to employees (162,904) (13,597,302) (13,172,594)

Cash payments to suppliers (38,188) (3,187,497) (3,282,001)

Receipts from other operating activities 304,570 25,421,866 25,641,011

Payments for other operating activities (313,128) (26,136,178) (15,199,742)

Cash generated from operating activities before changes in operating assets and liabilities 3,490,507 291,345,632 241,788,577

Increase / (decrease) in operating assets and liabilities

Loans and advances to other banks - - -

Loans and advances to customers (8,161,099) (684,716,220) (4,048,825,225)

Other assets (550,477) (46,185,033) (81,467,600)

Deposits from other banks / borrowings - - -

Deposits from customers (394,601) (33,107,060) 53,830,893

Other liabilities (1,731,359) (145,260,981) (280,543,055)

(10,837,536) (909,269,293) (4,357,004,988)Net cash from operating activities (7,347,029) (617,923,661) (4,115,216,411)

B) Cash flows from investing activities

Purchase / sale of property, plant and equipment (1,618) (135,728) (119,437)

Proceeds from sale of property, plant and equipment - - -

Net cash used in investing activities (1,618) (135,728) (119,437)C) Cash flows from financing activities

Borrowing from Prime Bank Limited, Other Bank and Bangladesh Bank 13,935,437 1,169,183,175 3,754,012,743 Net cash use in financing activities 13,935,437 1,169,183,175 3,754,012,743

D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 6,586,790 551,123,786 (361,323,105)

E) Effects of exchange rate changes on cash and cash equivalents - 5,041,424 35,694,022

F) Cash and cash equivalents at beginning of the year 2,944,604 243,518,761 569,147,844

G) Cash and cash equivalents at end of the year (D+E+F) 9,531,394 799,683,971 243,518,761

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 9,531,394 799,683,971 243,518,761

9,531,394 799,683,971 243,518,761

336 PRIME BANK

ANNUAL REPORT 2018

Off-Shore Banking UnitsNotes to the Financial Statementsfor the year ended 31 December 2018

1.1 Status of the units

Off-shore Banking Units of Prime Bank Limited, governed under the rules and guidelines of Bangladesh Bank. The Bank obtained the Off-shore Banking Unit permission vide letter no. BRPD (P) 744 (84)/2001-868 dated 19 March 2001. The Bank commenced the operation of its Off-shore Banking Unit from March 15, 2007. Presently the Bank has 3 (Three) units in Dhaka, Adamjee EPZ and Chittagong.

1.1.1 Principal activities

The principal activities of the units are to provide all kinds of commercial banking services to its customers through its Off-shore Banking Units in Bangladesh.

1.2 Significant accounting policies and basis of preparation of financial statements

1.2.1 Basis of accounting

The Off-shore Banking Units maintain its accounting records in USD from which accounts are prepared according to the Bank Companies Act 1991 (Amendment 2013), Bangladesh Accounting Standards and other applicable directives issued by Bangladesh Bank.

1.2.2 Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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 periods affected.

1.2.3 Foreign currency transaction

a) 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.

b) Commitments

Commitments for outstanding forward foreign exchange contracts disclosed in these financial statements are translated at contracted rates. Contingent liabilities / commitments for letter of credit and letter of guarantee denominated in foreign currencies are expressed in Taka terms at the rates of exchange ruling on the balance date.

c) 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.

1.2.4 Cash flow statement

Cash flow statement has been prepared in accordance with the Bangladesh Accounting Standard-7 “Cash Flow Statement” 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.

1.2.5 Reporting period

These financial statements cover from January 01 to December 31, 2018.

1.3 Assets and basis of their valuation

1.3.1 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 unit management for its short-term commitments.

1.3.2 Loans and advances / investments

a) Loans and advances of Off-shore Banking Units are stated in the balance sheet on gross basis.

b) Interest is calculated on a daily product basis but charged and accounted for on accrual basis. Interest is not charged on bad and loss loans as per guidelines of Bangladesh Bank. Records of such interest amounts are kept in separate memorandum accounts.

337PRIME BANK

Off-Shore Banking UnitsNotes to the Financial Statementsfor the year ended 31 December 2018

1.3.3 Fixed assets and depreciation

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 assets to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes.

b) Depreciation is charged for the year at the following rates on reducing balance method on all fixed assets.

Category of fixed assets Rate

Furniture and fixtures 10%

Office equipment 20%

c) 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.

1.4 Basis for valuation of liabilities and provisions

1.4.1 Benefits to the employees

The retirement benefits accrued for the employees of the units 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 staffs of the OBU under the Provident Fund Rules of the Bank. 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 Units are contributing 10% of their basic salary as subscription to the Fund. The units also contribute 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 a funded gratuity scheme on “Continuing Fund Basis”, in respect of which provision is made annually according to the recommendation of Actuarial which is covering all its permanent eligible employees in accordance with Bank Service Rules. The Second Secretary (Tax Exemption), National Board of Revenue, Segun Bagicha, Dhaka has approved the Prime Bank Limited Employees’ Gratuity Fund as a recognized Gratuity Fund (Letter Ref no. 08.01.0000.035.02.0016.2013/217, dated 22/07/2013) within the meaning of Para 2,3 & 4, read with the provisions of Part - C of the First Schedule of Income Tax Ordinance 1984. The recognition took effect from July 22, 2013. The Fund is operated by a Board of Trustees consisting six members (03 members from the Board of Directors and other 03 members from management) of the Bank. Actuarial valuation of gratuity scheme has been made to assess the adequacy of the liabilities provided for the scheme as per BAS-19 “Employees Benefit”.

c) Welfare fund

Prime Bank’s 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 coverage in the event of accidental death or permanent disabilities of the employees. Disbursement from the fund is done as per rules for employees’ welfare fund. Welfare fund for Off-shore Banking Units are maintained with Head Office, Prime Bank Limited.

d) Incentive bonus

Prime Bank started a incentive bonus scheme for its employees. 10% of net profit after tax is given by the Board of directors in every year for its employees. These bonus amount distributed among the employees as per performance. The bonus amount are paid annually, normally first quarter of every following year and the cost are accounted for the period to which it relates. Provision for incentive bonus for Off-shore Banking Units is kept with Head Office, Prime Bank Limited.

338 PRIME BANK

ANNUAL REPORT 2018

Off-Shore Banking UnitsNotes to the Financial Statementsfor the year ended 31 December 2018

1.4.2 Provision for liabilities

A provision is recognized in the balance sheet when the unit 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 the BAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.

1.5 Revenue recognition

1.5.1 Interest income

In terms of the provisions of the BAS-18 “Revenue”, the interest income is recognized on accrual basis.

1.5.2 Fees and commission income

Fees and commission income arises on services provided by the units 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.

1.5.3 Interest paid and other expenses

In terms of the provisions of the BAS - 1 “Presentation of Financial Statements” interest and other expenses are recognized on accrual basis.

2 General

a) These financial statements are presented in Taka, which is the Bank’s functional currency. Figures appearing in these financial statements have been rounded off to the nearest Taka.

b) Assets and liabilities & income and expenses have been converted into Taka currency @ USs1 = Taka 83.90 (closing rate as at 31st December 2018) and Taka 83.4680 (average rate which represents the year end).

339PRIME BANK

Off-Shore Banking UnitsNotes to the Financial Statementsfor the year ended 31 December 2018

2018 2017

USD Taka Taka

3 Balance with other banks and financial institutions

In Bangladesh (note-3.1) 39,531,394 3,316,683,971 2,724,518,761

Outside Bangladesh (note-3.2) - - -

39,531,394 3,316,683,971 2,724,518,761

Less: Inter company transaction 30,000,000 2,517,000,000 2,481,000,000

9,531,394 799,683,971 243,518,761 3.1 In Bangladesh

Prime Bank Limited 39,531,394 3,316,683,971 2,724,518,761

Other Banks and Financial Institutions -

39,531,394 3,316,683,971 2,724,518,761

3.2 Outside Bangladesh (Nostro accounts)

Current account

Citibank N.A., New York, USA - - -

4 Loans and advances

i) Loans, cash credits, overdrafts, etc.

Loan (General) 126,003,525 10,571,695,779 4,663,068,686

Hire purchase 11,837,345 993,153,212 558,090,162

Lease finance 4,602,563 386,155,047 528,876,064

Over Draft 1,848,598 155,097,333 235,394,069

T.R Loan 12,684,705 1,064,246,713 1,116,994,433

Others 26,400,000 2,214,960,000 1,778,513,368

183,376,735 15,385,308,083 8,880,936,782

ii) Bills purchased and discounted (note-5)

Payable Inside Bangladesh

Inland bills purchased 62,392,953 5,234,768,752 9,932,247,248

Payable Outside Bangladesh

Foreign bills purchased and discounted 38,285,450 3,212,149,231 4,003,252,970

100,678,403 8,446,917,982 13,935,500,218

284,055,138 23,832,226,066 22,816,437,000

5 Bills purchased and discounted

Payable in Bangladesh 62,392,953 5,234,768,752 9,932,247,248

Payable outside Bangladesh 38,285,450 3,212,149,231 4,003,252,970

100,678,403 8,446,917,982 13,935,500,218

6 Fixed assets including premises, furniture and fixtures cost

Furniture and fixtures 14,326 1,201,920 1,314,608

Office equipment and machinery 6,402 537,094 463,511

Vehicle - - -

20,727 1,739,015 1,778,119

340 PRIME BANK

ANNUAL REPORT 2018

Off-Shore Banking UnitsNotes to the Financial Statementsfor the year ended 31 December 2018

2018 2017

USD Taka Taka

7 Other assets

Advance deposits and advance rent 1,339 112,345 110,738

Stationery A/c & Stamp in hand 269 22,601 12,347

Prepaid expenses 377,800 31,697,420 -

Suspense 202 16,923 45,705,987

Interest receivable on deposits and other securities - - 11,459,201

Interest receivable on loans and advances 3,838,072 322,014,208 245,989,546

4,217,682 353,863,497 303,277,819

8 Borrowings from other banks, financial institutions and agents

Bangladesh Bank - - -

Prime Bank Limited 105,920,000 8,886,688,000 9,360,494,044

Other Bank & Financial Institutes 212,738,867 17,848,790,942 15,840,133,607

318,658,867 26,735,478,942 25,200,627,651

Less: Inter company transaction 30,000,000 2,517,000,000 2,481,000,000

288,658,867 24,218,478,942 22,719,627,651

9 Deposits and other accounts

Bank deposits - - -

Customer deposits and other accounts (note-9.1) 4,536,845 380,641,294 326,214,865

4,536,845 380,641,294 326,214,865

9.1 Customer deposits and other accounts

Current deposits 2,205,403 185,033,287 202,121,107

Foreign currency deposits 188,575 15,821,420 16,181,453

Fixed Deposit 46,953 3,939,347 3,844,384

Security deposits receipts - - -

Sundry deposits (note-9.1.1) 2,095,915 175,847,240 104,067,920

4,536,845 380,641,294 326,214,865

9.1.1 Sundry deposits

Sundry Creditors 585,268 49,103,958 7,324,407

Margin on L/G 48,000 4,027,200 3,969,600

Margin on L/C 162,939 13,670,557 36,743,510

Margin on Export Bill 1,802 151,179 341,493

Interest/Profit Payable on Deposit 987,099 82,817,596 41,546,031

Withholding VAT/TAX Payable to Govt. Authority 31,189 2,616,735 11,770,249

Others 279,619 23,460,015 2,372,629

2,095,915 175,847,240 104,067,920

10 Other liabilities

Provision for Expenses/adjusting A/C credit 925,612 77,658,847 53,037,500

Interest Suspense A/c 215,501 18,080,568 17,792,558

Due to Head Office 3,488,116 292,652,897 248,339,125

4,629,229 388,392,312 319,169,183

341PRIME BANK

Off-Shore Banking UnitsNotes to the Financial Statementsfor the year ended 31 December 2018

2018 2017

USD Taka Taka

11 Contingent liabilities

11.1 Acceptance & endorsement

Back to Back bills 888,532 74,547,826 -

888,532 74,547,826 -

Less: Margin - - -

888,532 74,547,826 -

11.2 Letters of guarantee

Letters of guarantee (Local) - - -

Letters of guarantee (Foreign) - - -

Foreign counter guarantees - - -

- - -

Less: Margin - - -

- - -

11.3 Irrevocable Letters of credits

Letters of credits 1,601,064 134,329,237 418,846,066

Back to Back letter of credit - - -

1,601,064 134,329,237 418,846,066

Less: Margin - - -

1,601,064 134,329,237 418,846,066 11.4 Bills for collection

Outward local bills for collection - - - Outward foreign bills for collection 12,231,485 1,026,221,630 865,086,893 Inward local bills for collection - - - Inward foreign bills for collection - - -

12,231,485 1,026,221,630 865,086,893 Less: Margin - - -

12,231,485 1,026,221,630 865,086,893 12 Interest income

Loan (general) 4,833,532 403,445,283 170,567,743 SOD 56,466 4,713,092 1,339,810 LTR loan 185,281 15,465,032 26,725,523 Lease finance 249,807 20,850,930 26,139,174 Hire purchase 666,959 55,669,745 10,298,852 Payment against documents - - - Documentary bills purchased 7,263,087 606,235,355 613,739,585 Others 813,858 67,931,110 55,285,077 Interest on loans and advances 14,068,991 1,174,310,547 904,095,764

Interest on balance with other banks and financial institutions 1,657,439 138,343,122 60,610,355 Interest received from FC account - - 483,767

1,657,439 138,343,122 61,094,122 15,726,430 1,312,653,668 965,189,886

Less: Inter Bank transaction 1,653,939 138,050,984 - Total Interest income 14,072,491 1,174,602,685 965,189,886

342 PRIME BANK

ANNUAL REPORT 2018

Off-Shore Banking UnitsNotes to the Financial Statementsfor the year ended 31 December 2018

2018 2017

USD Taka Taka13 Interest on deposits, borrowings, etc.

a) Interest paid on deposits 1,692 141,255 106,851b) Interest paid on local bank accounts 2,393,873 199,811,797 268,018,126 c) Interest paid on foreign bank accounts 9,750,888 813,887,082 470,951,256 d) Interest paid on Bangladesh Bank - - -

12,146,453 1,013,840,134 739,076,233 Less: Inter Bank transaction 1,653,939 138,050,984 -

10,492,514 875,789,150 739,076,233 14 Commission, exchange and brokerage

Commission on L/Cs 71,879 5,999,603 9,784,590 Commission on L/Gs - - - Commission on export bills - - 4,995,047 Commission on bills purchased - - - Commission on accepted bills 11,789 983,990 2,697,614 Commission on OBC, IBC, etc. - - - Commission on PO, DD, TT, TC, etc. 29,808 2,488,014 594,877 Commission for services rendered to issue of shares - - - Other commission 550 45,907 2,844,555

114,026 9,517,515 20,916,685 Exchange gain including gain from FC dealings 6,154 513,694 771,565

Brokerage - - -

120,180 10,031,208 21,688,249

15 Other operating income

Postage charge recovery 5,712 476,792 519,147

Service & other charge 213,380 17,810,370 -

SWIFT charge recovery 11,569 965,641 1,042,530

Miscellaneous earnings 73,909 6,169,063 24,079,334

304,570 25,421,866 25,641,011

16 Salaries and allowances

Basic pay 85,700 7,153,236 6,834,651

Allowances 58,872 4,913,891 4,463,852

Bonus 10,003 834,938 1,216,909

Unit’s contribution to provident fund 8,329 695,237 657,183

Retirement benefits and gratuity - - -

162,904 13,597,302 13,172,594

17 Rent, taxes, insurance, electricity, etc.

Rent, rate and taxes 12,082 1,008,463 899,703

Insurance 1,227 102,429 105,229

Power and electricity 7,741 646,152 569,276

21,051 1,757,044 1,574,207

18 Postage, stamp, telecommunication, etc.

Postage 3,463 289,086 213,273

Telegram, telex, fax and e-mail - - -

Telephone - office 513 42,849 56,171

Telephone - residence - - -

3,977 331,936 269,444

343PRIME BANK

Off-Shore Banking UnitsNotes to the Financial Statementsfor the year ended 31 December 2018

2018 2017

USD Taka Taka

19 Stationery, printing and advertisements, etc.

Office and security stationery 4,487 374,481 380,093

Computer consumable stationery 1,591 132,823 165,287

Publicity and advertisement 142 11,832 8,617

6,220 519,135 553,996

20 Depreciation and repair of Bank’s assets

Depreciation

Fixed assets 2,391 199,601 226,377

Leased assets - - -

2,391 199,601 226,377

Repairs

Furniture and fixtures 14 1,200 1,496

Office equipment 300 25,020 104,669

Vehicle - - -

Maintenance - - 6,974

314 26,221 113,139

2,705 225,822 339,516

21 Other expenses

Security and cleaning 17,183 1,434,241 1,348,979

Entertainment 1,072 89,488 60,568

Bank charge & Commission 33,038 2,757,622 2,033,903

Car expenses 13,432 1,121,115 1,301,457

Books, magazines and newspapers, etc. - - 5,758

Travel expenses 213 17,799 42,518

Local conveyance, labor, etc. 720 60,084 73,890

Training & internship - - -

Other Professional Charges - - -

Exgratia 282 23,517 17,000

Laundry and Cleaning 497 41,474 24,465

Miscellaneous expenses 249,462 20,822,086 10,471,733

315,899 26,367,427 15,380,272

FINANCIAL STATEMENTSOF PRIME BANK INVESTMENT LIMITED

Auditors’ Report to the Shareholders

Statement of Financial Position

Statement of Profit or Loss & Other Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

345PRIME BANK

INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS of PRIME BANK INVESTMENT LIMITEDOpinion

We have audited the accompanying financial statements of Prime Bank Investment Limited which comprise the Statement of Financial Position as at 31 December 2018 and Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended and a summary of significant accounting policies and other explanatory information disclosed in Note 1 to 45 to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2018, and their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note # 04 to the financial statements.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and Bangladesh Securities and Exchange Commission (BSEC), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye-Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended on 31 December 2018. There are no key audit matters to communicate in our report.

Other Matter

The financial statements of Company for the year ended 31 December 2017 were audited by ACNABIN Chartered Accountants, who expressed an unmodified opinion on those statements on 15 March 2018.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Company is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards (IFRSs), as explained in note # 04 to the financial statements, 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.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of financial statements

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

346 PRIME BANK

ANNUAL REPORT 2018

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other Legal and Regulatory Requirements

We also report that:

a. we have obtained all the material 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 Company so far as it appeared from our examination of those books; and

c. the Company’s statement of financial position and statement of profit or loss and other comprehensive income together with the Note 1 to 45 dealt with by the report are in agreement with the books of account.

Dated, Dhaka04 March 2019

ACNABINChartered Accountants

347PRIME BANK

Statement of Financial PositionAs at 31 December 2018

Particulars NotesAmount in Taka

31.12.18 31.12.17

ASSETS

Non-Current AssetsProperty, plant and equipment 5 34,308,053 30,507,630 Investment in Prime Bank Securities Ltd 6 37,500,000 37,500,000 Investment in bond 30,000,000 - Deferred tax asset 7 1,880,175 1,343,612

Total non-current assets 103,688,228 69,351,242

Current AssetsAdvances, deposits and prepayments 8 5,639,014,044 5,639,941,099 Investment in shares 9 1,179,235,975 1,286,057,720 Preliminary and pre-operational expenses 10 522,911 1,045,826 Advance corporate income tax 11 11,617,155 18,827,403 Cash and bank balances 12 16,837,728 6,002,037

Total current assets 6,847,227,812 6,951,874,085

Total Assets 6,950,916,040 7,021,225,328

EQUITY AND LIABILITIES

Capital and ReserveShare capital 13 3,000,000,000 3,000,000,000 General reserve 28,002,888 28,002,888 Retained earnings 171,979,126 66,646,548

Total equity 3,199,982,014 3,094,649,436

Current LiabilitiesLoan facilities 14 3,026,635,625 3,228,886,961 Liability for withholding taxes 15 1,415,528 3,151,784 Client’s dividend suspense A/C 16 371,242 231,494 Security deposit receipt 17 125,761 294,250 Provision for expenses 18 12,022,896 14,262,991 Provision for investment and margin loan 19 550,000,000 550,000,000 Corporate income tax payable 20 9,887,613 16,885,515 Accounts payable 21 1,476,171 1,198,941 Dividend payable 22 10 10 Other payables 23 148,999,179 111,663,946

Total current liabilities 3,750,934,025 3,926,575,892

Total Equity and Liabilities 6,950,916,040 7,021,225,328

The notes 1 to 45 are an integral part of these financial statements.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka04 March 2019

ACNABINChartered Accountants

348 PRIME BANK

ANNUAL REPORT 2018

Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 31 December 2018

Particulars NotesAmount in Taka

31.12.18 31.12.17INCOME Interest income 24 204,509,907 228,663,893 Settlement fee 29,484,108 60,181,933 Management fee 25 8,295,189 10,161,484 BO A/C Maintenance fee 1,411,650 - Gain on sale of shares 82,370,261 87,773,489 Dividend on shares 26 51,108,213 43,078,924 Underwriting commission 27 40,000 50,000 Issue management fee & Corporate Advisory Fee 28 11,450,000 800,000 Bank interest on STD accounts 29 240,602 454,325 Documentation fees 48,000 35,500

388,957,930 431,199,548

EXPENDITURE Interest expenses 30 145,820,201 224,300,298 Settlement and other fees 3,153,155 5,752,173 Salary and allowances 31 59,085,758 49,861,605 Rent, Taxes, Insurance and Electricity 32 24,887,863 16,517,556 Legal & Professional expenses 33 876,950 678,500 Postage, Stamp and Telecommunication 34 1,633,225 1,167,069 Stationery & Printing 35 1,943,607 1,388,901 Directors remuneration 496,800 504,850 Auditor’s fee 201,250 115,000 Depreciation and Repair of assets 36 7,663,210 3,793,896 Entertainment, Travelling & Conveyance 37 4,845,922 1,956,278 Security expense 2,991,220 2,251,970 Development and Marketing Expenses 17,681,595 9,838,256 Other expenses 38 3,004,545 1,864,083

274,285,302 319,990,435

Profit before provision and tax 114,672,628 111,209,113

Add/(Reverse): Provision for diminution in value of investments 19.1 23,267,108 (83,335,464)Provision for impairment of client margin loan 19.2 (27,964,899) 95,843,663 Provision for impairment of Investment in PBSL 19 4,697,792 2,948,441

Profit before tax 114,672,627 95,752,473

Less: Tax expenses 39 (9,340,049) (6,798,238)

Current Tax expense 9,876,612 7,035,706 Deferred Tax expense/(income) (536,563) (237,468)

Profit after tax 105,332,578 88,954,235 Earnings per share 40 0.35 0.30

The notes 1 to 45 are an integral part of these financial statements.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka04 March 2019

ACNABINChartered Accountants

349PRIME BANK

Statement of Changes in EquityFor the year ended 31 December 2018

Particulars Paid up capital Taka General Reserve Retained

earnings Total

Balance as at 01 January 2018 3,000,000,000 28,002,888 66,646,548 3,094,649,436

Retained Profit for the year - - 105,332,578 105,332,578

Balance as at 31 December 2018 3,000,000,000 28,002,888 171,979,126 3,199,982,014

Balance as at 31 December 2017 3,000,000,000 28,002,888 66,646,548 3,094,649,436

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka04 March 2019

350 PRIME BANK

ANNUAL REPORT 2018

Statement of Cash FlowsFor the year ended 31 December 2018

Amount in Taka2018 2017

Cash Flows from Operating Activities:

Cash generated from operations (4,947,198) (35,739,861)

Advance Income Tax (95,000) (65,000)

Advance to branches 75,211 (100,573)

Payment for withholding taxes (12,711,070) (5,154,940)

Payment for Security Deposit (1,421,630) -

Advance deposit (2,386,228) (195,092)

Net cash used operating activities (21,485,914) (41,255,466)

Cash Flows from Investing Activities:

Purchase of property, plant and equipment (10,378,005) (25,992,841)

Dividend received 35,763,463 34,795,542

Investment in Bond (30,000,000) -

Sale of shares during the year 544,994,175 935,569,612

Purchase of shares during the year (321,845,472) (878,779,266)

Margin Loan recovered/(provided) 14,664,862 12,791,744

Net cash from investing activities 233,199,024 78,384,791

Cash Flows from Financing Activities:

Proceeds/(Repayments) of loan facilities (200,877,418) (76,972,036)

Net cash used in financing activities (200,877,418) (76,972,036)

Net Cash Inflow/(Outflow) for the Year 10,835,691 (39,842,711)

Opening cash and bank balances 6,002,037 45,844,747

Closing cash and bank balances 16,837,728 6,002,037

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka04 March 2019

351PRIME BANK

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

1. Reporting Entity

1.1 Prime Bank Investment Limited is a subsidiary company of Prime Bank Limited, incorporated as a public limited company on 28 April 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. The functions of investment banking were separated from Prime Bank Limited by forming a subsidiary company in terms of Bangladesh Bank’s BRPD circular no. 12 dated 14 October 2009. Bangladesh Securities and Exchange Commission (SEC) thereafter issued a full fledged merchant banking license in favour of Prime Bank Investment Limited, vide letter no. SEC/Reg/MB/SUB/2010/03/208 dated 02 June 2010 with effect from 01 June 2010.

1.2 Principal Activities

The main objectives of the Company for which it was established are to carry out the business of full-fledged merchant banking activities like issue management, portfolio management, underwriting, corporate advisory services etc.

2. Basis of Preparation

2.1 Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the Companies Act 1994, Securities and Exchange Rules 1987 and other applicable laws in Bangladesh.

2.2 Basis of presentation of financial statements

The financial statements are prepared on a going concern basis under historical cost convention in accordance with generally accepted accounting practice under IFRS. Wherever appropriate, such principles are explained in succeeding notes:

(i) Statement of Financial Position (ii) Statement of Profit or Loss and Other Comprehensive Income(iii) Statement of Cash Flows(iv) Statement of Changes in Equity(v) Notes to the Financial Statements

3. Reporting period

The financial year of the Company covers twelve (12) months from 01 January 2018 to 31 December 2018.

4. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods.

4.1 Property, plant and equipment

4.1.1 Recognition and measurement

Items of property, plant and equipment (PPE) are initially measured at cost. After initial recognition, an item of PPE is carried at cost less accumulated depreciation and impairment losses.

4.1.2 Depreciation

Depreciation is recognised in the statement of profit or loss and other comprehensive income on monthly basis at straight-line method over the estimated useful lives of each item of property, plant and equipment.

Items of property, plant and equipment are depreciated when these come into use or are capitalised.

Rate of depreciation on various items of property, plant and equipment considering the useful lives of assets are as follows:

Asset category Rate of DepreciationFurniture and fixtures 10Office and electrical equipment 20Books 20Vehicles 20

4.2 Preliminary and pre-operating expenses

4.2.1 Recognition and measurement

These are recognised as an asset if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and cost of the asset can be measured reliably.

4.2.2 Amortisation of preliminary and pre-operating expenses

352 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

These are amortised over 10 years from the year of their first utilisation at the rate of Taka 522,915 per year starting from the year ended 31 December 2010.

4.3 Advance, deposits and prepayments

Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments or charges to other account heads such as property, plant and equipment, inventory, etc.

Deposits are measured at payment value.

Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to Statement of Comprehensive Income.

4.4 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and bank balances, which were held and available for use of the Company without any restriction.

4.5 Statement of cash flows

Statement of cash flows has been prepared in accordance with the International Accounting Standard-7 “Statement of Cash Flows” under direct method.

4.6 Investments

All investments in securities were initially recognised at fair value, being fair value of the consideration given, including acquisition charges associated with the investments. Transaction costs have been treated as expenses in accordance with IFRS 9, without considering the same. The valuation methods of investments used are:

4.6.1 Investment in listed securities

These are acquired and held primarily for the purpose of selling them in future or held for dividend income and are reported at cost. Unrealised gains are not recognised in the statement of profit or loss and other comprehensive income. Provision for diminution in value of investment is provided in the financial statements on those securities whose market price is below the cost of investment by netting off with those whose value is more than cost.

4.6.2 Investment in Prime Bank Securities Limited

Investment in Prime Bank Securities Limited is stated at cost in the Company’s financial statements as the fair market value of the investment is not available. Provision for impairment in value of investment is provided in the financial statements as the investment is having a negative equity (i.e. total equity is less than total paid up share capital).

4.7 Intangible assets

(a)  An intangible asset is recognised 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 Company other than those applied for the operating system of computers. Intangible assets are carried at their cost less accumulated amortisation and impairment loss, if any.Initial cost comprises license fees paid at the time of its acquisition and other directly attributable expenditures that are incurred in customising the software for its intended use.

(c) Expenditure incurred for software is capitalised only when it enhances and extends the economic benefits of software beyond its original specification and life and such cost is recognised as capital improvement and added to the original cost of software.

(d) Software is amortised using the straight-line method over the estimated useful life of 10 (ten) years commencing from the date when it becomes available for use.

4.8 Receivables

Receivables are recognised when there is a contractual right to receive cash or another financial asset from another entity and it is probable that economic benefits will flow to the entity.

4.9 Share capitalOrdinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.

353PRIME BANK

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

4.10 Borrowing funds

Borrowing funds include borrowings from Prime Bank Limited and Bank Asia Limited, which is stated in the statement of financial position at amounts payable.

4.11 Provision for current taxation

Provision for current income tax has been made @ 37.5% on business income as per Income Tax Ordinance- 1984, and the last year’s assessment has also been made at the same rate. Rates of tax on other categories of income applicable for the company are stated in note 39. It is to be noted that the company has duly paid the assessed tax by Deputy Commissioner of Taxes, LTU, Dhaka for the financial year 2010,2011, 2012, 2013 & 2014 and submitted tax return for the financial year 2015, 2016 & 2017.

4.12 Provision for Deferred Taxation

Deferred tax liabilities are amount of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible temporary differences. Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences arising between the carrying values of asset, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the date of statement of financial position. The impact on the account of changes in the deferred tax assets and liabilities has also been recognised in the statement of comprehensive income as per IAS-12 “Income Taxes”.

4.13 Benefits to the EmployeesThe retirement benefits accrued for the employees of the Company as on reporting date have been accounted for in accordance with the provisions of International Accounting Standard-19, “Employee Benefits”. Bases of enumerating the retirement benefit schemes operated by the Company are outlined below:(a) Provident Fund

Provident fund benefits are given to the permanent employees of the Company in accordance with the Company’s service rules. All confirmed employees of the Company are contributing 10% of their basic salary as contribution to the Fund. The Company also contributes equal amount of the employees’ contribution. Interest earned from the investments is credited to the members’ account on yearly basis. The fund is administered by Prime Bank Limited.

(b) Gratuity Fund

The Company operates an unfunded gratuity scheme, provision in respect of which is made annually covering all its permanent eligible employees. Actuarial valuation of gratuity scheme had been made to assess the adequacy of the liabilities provided for the scheme as per BAS-19 “Employee Benefits”. The fund is administered by Prime Bank Limited.

(c) Welfare Fund

Prime Bank Investment Employees’ Welfare Fund is subscribed by monthly contribution of the employees. The Company also contributes to the fund from time to time. The fund has been established to provide financial assistance in the event of death or permanent disabilities of the employees. Disbursement of loan from the fund is regulated as per rules of said fund. The fund is administered by Prime Bank Limited.

(d) Incentive Bonus

Prime Bank Investment Limited started an incentive bonus scheme for its employees. Maximum 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 and is paid annually, normally first quarter of every following year and the costs are accounted for in the period in which it relates.

4.14 Provision for Liabilities

A provision is recognised in the statement of financial position when the Company 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 the IAS-37 “Provisions, Contingent Liabilities and Contingent Assets”.

354 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

4.15 Revenue Recognition

The PBIL has applied IFRS 15 in the current year’s financial statements where it is applicable and comparative information has not been restated. Under IFRS 15, revenue is measured based on the consideration specified in a contract with a customer. The company recognised revenue when it satisfies a performance obligation by transferring control over service to the customer.

4.15.1 Investment income

Interest income on investments is recognised on an accrual basis. Capital gains on investments in shares are also included in investment income. Capital gains are recognised when these are realised.

4.15.2 Fees and commission income

Fees and commission income arising on services provided by the PBIL are recognised when it expects to be entitled in exchange for arranging for other parties to provide services to the clients and customers as per IFRS 15.

4.16 Interest incomeInterest income is accrued on a time proportion basis that reflects an effective yield on the gross outstanding loans.

4.17 Dividend income on shares

Dividends are recognized in profit or loss as per IFRS 9 only when: - the entity’s right to receive payment of the dividend is established; - it is probable that the economic benefits associated with the dividend will flow to the entity; and - the amount of the dividend can be measured reliably.

4.18 Earnings per share

Basic earnings per share have been calculated in accordance with IAS-33 “Earnings per Share” which have been shown on the face of statement of comprehensive income. This has been calculated by dividing the basic earnings by the number of ordinary shares outstanding during the year.

4.19 Events after the reporting period

Where necessary, all the material events after the reporting period date have been considered and appropriate adjustment/disclosures have been made in the financial statements.

4.20 Managements’ responsibility on financial statements

The management of the company is responsible for the preparation and presentation of these financial statements.

4.21 Related party transactions

Related party transaction is a transfer of resources, services or obligation between related parties, regardless of whether a price is charged. Details of related party transactions are given in note 45.

4.22 Compliance report on International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS)

While preparing the financial statements, Prime Bank Investment Limited applied most of IAS and IFRS as adopted by The Institute of Chartered Accountants of Bangladesh. Details are given below:

Name of IAS No. StatusPresentation of Financial Statements 1 AppliedInventories 2 N/AStatement of Cash Flows 7 AppliedAccounting Policies, Changes in Accounting Estimates and Errors 8 AppliedEvents after the Reporting Period 10 AppliedIncome Taxes 12 AppliedProperty, Plant and Equipment 16 AppliedLeases 17 AppliedEmployee Benefits 19 AppliedAccounting of Government Grants and Disclosure of Government Assistance 20 N/AThe Effects of Changes in Foreign Exchange Rates 21 N/ABorrowing Costs 23 AppliedRelated Party Disclosures 24 AppliedSeparate Financial Statements 27 N/AInvestment in Associates and Joint Ventures 28 N/AFinancial Reporting in Hyperinflationary Economies 29 N/AFinancial Instruments: Presentation 32 AppliedEarnings per Share 33 Applied

355PRIME BANK

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Name of the IFRS No. StatusInterim Financial Reporting 34 AppliedImpairment of Assets 36 AppliedProvisions, Contingent Liabilities and Contingent Assets 37 AppliedIntangible Assets 38 AppliedInvestment Property 40 N/AFirst-time Adoption of International Financial Reporting Standards 1 N/AShare-based Payment 2 N/ABusiness Combinations 3 N/AInsurance Contracts 4 N/ANon-current Assets Held for Sale and Discontinued Operations 5 N/AExploration for and Evaluation of Mineral Resources 6 N/AFinancial Instruments: Disclosures 7 AppliedOperating Segments 8 N/AFinancial Instruments 9 AppliedFinancial Statements 10 N/AJoint Arrangements 11 N/ADisclosure of Interests in Other Entities 12 N/AFair Value Measurement 13 AppliedRegulatory Deferral Accounts 14 N/ARevenue from contracts with customers 15 Applied

4.23 Departures from IFRS

The Financial Reporting Act 2015 (FRA) was enacted in 2015 and the Financial Reporting Council (FRC) under the FRA is formed in 2017 which, among other things, will issue financial reporting standards for public profit entities including Merchant banks. The FRC has been formed, but no financial reporting standards have yet been issued as per the provisions of the FRA. Hence, the financial statements of the Company as at and for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) and the requirements of The Bangladesh Securities and Exchange Commission provisions, circulars, rules and regulations issued by Bangladesh Securities and Exchange Commission (BSEC) and The Companies Act 1994. In case any requirement of Bangladesh Securities and Exchange Commission provisions, circulars, rules and regulations differ with those of IFRS, the requirements of BSEC provisions, circulars rules and regulations shall prevail, and such departures from IFRS have been followed accordingly. In addition, there has been a departure from the provisions of IFRS 9 with regard to interest income. Material departures from the requirements of IFRS are as follows: i) Provision for impairment of client margin loan IFRS: In accordance with IFRS 9, an entity should recognize a loss allowance for expected credit losses on a financial asset and shall not reduce the carrying amount of the financial asset in the statement of financial position. The objective of the impairment requirements is to recognize lifetime expected credit losses for all financial instruments for which there have been significant increases in credit risk since initial recognition whether assessed on an individual or collective basis considering all reasonable and supportable information, including that which is forward-looking. An entity shall directly reduce the gross carrying amount of a financial asset when the entity has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

BSEC: As per BSEC instruction circular reference #BSEC/Mukhopatro(3rd Khondo)/2011/06 dated July 02, 2018, provision has been made for impairment of margin loan arising out of year-end (31.12.2018) revaluation of shares purchased through margin loan complying the relevant instruction. Prime Bank Investment Limited has opted the option to maintain minimum 20% of total impairment of margin loan arising from diminution in value of investments as provision as on 31.12.2018 in accordance with the aforesaid circular.

ii) Recognition of interest income from margin loan

IFRS: In accordance with IFRS 9, interest revenue should be calculated by using the effective interest method by applying the effective interest rate to the gross carrying amount of the financial asset. Interest income should be recognized when the financial asset is no longer credit-impaired and the improvement can be related objectively.

Departure: In accordance with IFRS 9, the Company recognized interest from margin loan when the loan is no longer credit-impaired (negative equity). However, some margin loan interest was recognized as income from credit-impaired (negative equity) portfolios considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already been occurred, foreign strategic investment has been done in DSE, stability in political environment and other favorable macroeconomic indicators in Bangladesh.

356 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka31.12.18 31.12.17

5. Property, Plant and Equipment Cost Opening balance 63,444,863 37,452,022 Add: Additions during the year 24,720,272 25,992,841 Less : Disposals/Adjustments (14,342,266) -

Closing balance (A) 73,822,869 63,444,863

Accumulated Depreciation:Opening balance 32,937,233 30,022,519 Add: Charge for the year 6,577,583 2,914,714

Closing balance (B) 39,514,816 32,937,233

Written down value (A-B) 34,308,053 30,507,631

Category-wise details of PPE are shown in Annex-A.

6. Investment in Prime Bank Securities Limited 37,500,000 37,500,000

An amount of Taka 37,500,000 was invested by the company in 3,750,000 ordinary shares of Taka 10 each of Prime Bank Securities Limited (PBSL), a subsidiary company of Prime Bank Limited PBSL holds two memberships of Dhaka Stock Exchange Limited, membership no. 219 and Chittagong Stock Exchange Limited, membership no. 141.

7. Deferred Tax AssetsDeferred tax liabilities recognized in accordance with the provisions of IAS 12: Income Taxes, is arrived as follows:

Balance as at 1 January 2018 1,343,612 1,106,144 (Addition)/Reversal during the year 536,563 237,468

Deferred tax asset as at 31 Dec 2018 1,880,175 1,343,612

As per section 38(b) of ITO 1984, (b) if the loss cannot be wholly so set off, the amount of the loss not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years. This carry forward of loss will create a temporary tax difference in deferred tax calculation. But para 35 of IAS 12 suggest that the entity recognizes a deferred tax asset arising from unused tax losses or tax credits only to the extent that the entity has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilized by the entity. Being there is no such indication regarding sufficient taxable profit availability; no deferred tax asset was recognized on the business loss.

8. Advances, Deposits and Prepayments Clients’ margin loan (9.01) 5,555,902,000 5,559,563,333 Advance office rent 6,486,258 10,446,853 Advance deposit 2,613,020 226,792 Advance to branches 30,508 105,719 Receivable from brokers (own) 4,223,691 38,180,418 Receivable from brokers (clients) 47,671,418 19,565,746 Dividend Receivable 6,072,382 - Receivable income including interest on AIBL Bond 6,061,611 - Security Deposit 10,000 - Utility receivable from brokers 6,579,718 6,854,580 Car loan 3,236,121 4,281,969 CCS Staff Loan 127,315 190,688

5,639,014,044 5,639,416,099

8.1 Client margin loan Gross client margin loan 5,620,207,138 5,632,902,945 Less: Suspense account 64,305,138 73,339,612

5,555,902,000 5,559,563,333

357PRIME BANK

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka9. Investment in Shares 31.12.2018 31.12.2017

Cost Price Market Price Cost Price Market Price

AB Bank 1st MF - - 4,622,924 4,620,000 Aamra Network Ltd - - 535,533 1,338,490 Active Fine Chemicals Ltd 5,036,243 4,500,720 - - ADN Telecom Limited 574,040 574,040 - - Aftab Automobiles Ltd 2,088,628 1,377,000 2,088,628 1,926,000 Apex Tannery Ltd - - 5,457,613 5,349,600 Bangladesh Building System Ltd 14,858,716 9,902,200 13,801,633 11,135,300 Bangladesh Shipping Corporation 9,525,499 6,825,000 9,525,499 8,172,500 Bangladesh Submarine Cable Co. Ltd 12,052,160 9,350,000 12,654,769 10,825,500 Bashundhara Paper Mills Limited 864,560 905,627 3,458,000 3,458,000 Bata Shoe company (BD) Ltd 12,613,867 11,951,062 15,129,570 15,045,912 BBS Cables Ltd 18,214,168 16,611,750 14,407,549 12,155,500 BD Finance & Inv. Co. Ltd 2,875,807 2,852,500 - - BEXIMCO Pharmaceuticals Ltd 26,011,850 18,984,000 26,011,850 24,912,000 Confidence Cement Ltd 2,683,619 2,691,000 2,471,439 3,050,000 DESCO Limited 72,807,178 39,198,108 72,807,178 44,049,359 Doreen Power General & System Ltd - - 4,976,098 4,510,900 Dhaka Bank Ltd. 2,180,766 2,130,000 - - Eastern Bank Ltd. 9,352,782 6,912,180 5,117,665 5,110,000 Esquare Knit Composite Ltd 1,885,145 1,885,145 - - Evince Textiles Limited - - 1,631,213 1,394,000 Fareast Islami Life Insurance Limited 24,544,975 15,089,000 31,664,302 22,022,000 Genex Infosys Limited 107,601 107,601 Grameen Phone Ltd. 10,644,919 9,182,500 10,986,837 11,063,800 Grameen Mutual Fund Two 0 0 4,688,322 4,913,500 Green Delta MF 12,900,556 9,588,750 12,900,556 11,762,200 Heidelberg Cement BD Ltd. 22,718,536 14,726,800 22,718,536 18,695,600 IDLC Ltd 22,801,199 20,580,877 7,706,069 8,530,000 Information Technology Consultants Ltd - - 15,791,919 11,977,452 Intraco Refueling Station Limited 2,611 7,148 - - Investment Corporation of Bangladesh 3,340,302 2,440,258 3,340,302 3,200,080 IFIL Islamic MF-1 39,213,709 28,019,400 39,213,709 30,903,750 Indo-Bangla Pharmaceuticals Limited 2,744 9,159 - - IPDC Finance Limited - - 9,235,855 9,769,500 Kattali Textile 111,424 305,541 - - KDS Accessories Ltd - - 7,302,564 6,293,700 KPCL 14,469,283 7,560,157 8,419,796 7,020,000 LankaBangla Finance Ltd 22,259,231 13,740,000 8,410,003 10,755,000 Linde Bangladesh Ltd 30,318,185 27,232,442 30,318,185 29,193,523 M.L. Dyeing Limited (MLDL) 36,114 125,572 - - Mercantile Bank Limited 6,457,672 5,103,000 - - Nahee Aluminum Composite Panel Ltd - - 62,246 502,577 Oimex Electrode Limited - - 64,800 464,746 Olympic Industries Ltd. 27,358,182 20,171,460 27,358,182 26,898,390 Popular Life 1st MF - - 3,859,781 3,720,000 Popular Life Insurance Co. Limited - - 40,064,780 26,452,197 Power Grid Company Limited 41,126,436 26,693,424 41,126,436 29,029,099 Pragati Insurance Limited 40,654,940 11,657,682 40,654,940 11,858,642 Prime Bank 1st ICB AMCL MF 401,456,697 210,276,100 401,456,697 250,974,700 RAK Ceramics Ltd 20,202,354 13,338,000 30,747,747 28,344,680 Runner Automobiles Ltd. 1,085,869 1,085,869 - - S.S. Steel Limited 137,920 137,920 - - Shahjibazar Power Co. Ltd. 9,080,092 6,930,869 9,466,291 8,591,400 Silva Pharmaceuticals Ltd 93,450 276,739 - - SK Trims & Industries Limited 51,933 256,789 - - Square Pharma 145,074,382 149,060,084 129,798,517 150,900,000 The ACME Laboratories Limited 2,768,478 2,577,000 - - The City Bank Ltd. 21,172,032 14,971,650 8,024,825 7,980,000 Titas Gas Co. Ltd. 58,126,253 24,516,346 58,126,253 29,769,849 VFS Thread Dyeing Limited 39,195 244,078 - - Unique Hotel & Resorts Limited 1,386,016 1,325,280 - - Uttara Bank Ltd. 5,867,657 5,700,000 - - United Power Generation & Distribution - - 87,852,111 95,258,600

1,179,235,975 779,687,824 1,286,057,720 1,013,898,045

Investment in shares has been recorded at cost and adequate provision has been maintained as per BSEC circular reference #BSEC/MUKHOPATRO(3rd Khando)/2011/06 dated 02 December 2018 and BSEC/CMRRCD/2009-193/212 dated December 10, 2018 irrespective of compliance of IFRS-9.

358 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka31.12.18 31.12.17

10 Preliminary and Pre-Operational Expenses Opening Balance 1,045,826 1,568,741 Less : Amortised during the year 522,915 522,915 Closing Balance 522,911 1,045,826

11 Advance Corporate Income Tax Opening balance 18,827,403 10,428,589 Addition during the year: Income tax withheld from Advance Income Tax Dividend of Aman Feed Limited - 8,000 Dividend of Aamra Network 2,740 - Dividend of Aftab Automobiles Ltd 9,600 - Dividend of Apex Tannery Ltd 16,000 - Dividend of Bata Shoe Co. Ltd 86,028 35,700 Dividend of BBS Cables 10,000 - Dividend of BDBS 26,500 - Dividend of Beximco Pharmaceuticals 60,000 - Dividend of BSC 35,000 - Dividend of BSCCL 10,000 24,000 Dividend of City General Insurance - 60,000 Dividend of Confidence Cement 30,000 62,000 Dividend of DBBL 600 - Dividend of DESCO 194,048 194,048 Dividend of Eastern Bank Ltd 70,000 400,000 Dividend of Doreen Power 7,160 - Dividend of GrameenPhone 84,500 - Dividend of Green Delta MF 225,130 122,850 Dividend of Fareast Islami Life Ins co. Ltd. - 76,995 Dividend of Heidelberg Cement 132,000 180,000 Dividend of ICB 11,228 - Dividend of IDLC 153,000 52,694 Dividend of IFIL Islamic MF-1 736,690 741,690 Dividend of ITCL 30,600 - Dividend of Jamuna Oil Ltd - 200,000 Dividend of KPCL 132,000 39,200 Dividend of Lanka Bangla Finance 66,750 60,000 Dividend of Linde Bangladesh Ltd 63,627 124,000 Dividend of Nahee Aluminum 1,141 - Dividend of Meghna Cement Mills Ltd - 6,300 Dividend of Mercantile Bank Ltd 91,800 - Dividend of Olympic Industries 41,985 - Dividend of Popular Life Insurance Co. Ltd. - 295,963 Dividend of Power Grid Company 166,834 133,372 Dividend of PBL 1st ICB AMCL MF 4,738,170 4,748,170 Dividend of Pragati Insurance Limited 103,465 75,798 Dividend of RAK Ceramics Ltd 94,640 60,000 Dividend of Social Islami Bank Ltd - 223,190 Dividend of SPCL 20,800 42,000 Dividend of Toshrifa 17,294 - Dividend of The City Bank Ltd 119,700 48,000 Dividend of Titas Gas 296,351 269,410 Dividend of UPGD 1,036,800 - Dividend of Square Pharma 350,186 Corporate advisory fee for Shamajik Healthcare Complex One Project. 100,000 -

Underwriting commission of IDLC Finance Ltd - 5,000 Registrar to the issue & underwriting commission from Aman Cotton Fibrous 54,000 -

Corporate advisory fee of PBL Subordinated Bond 3 100,000 -

Corporate advisory fee of Regent Spinning 25,000 - AIT for cars 95,000 65,000 Interest on bank deposit 17,899 45,433

9,664,266 8,398,814 Less: Adjustment of Advance tax payment for years 2016 & 2017 (16,874,515) -

Closing balance 11,617,155 18,827,403

359PRIME BANK

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka31.12.18 31.12.17

12 Cash and Bank BalancesCash in hand 32,496 13,263 Bank balances with Prime Bank Limited,Prime Bank Invest Limited Client Withdraw (A/C # 54501) 2,060,733 1,554,486 Prime Bank Invest Limited Broker Payment (A/C # 54500) 8,446,001 544,876 Prime Bank Invst Limited Client Deposit (A/C # 54503) 1,132,086 1,751,480 Prime Bank Invst Limited Broker Deposit (A/C # 54502) 814,458 819,474 Prime Bank Invst Limited Own(A/C # 54544) 2,492,406 1,283,451 PBIL Public Issue Application A/C 1,770,432 35,006 Credit Balance of OD facilities from Bank Asia Limited 89,117 -

16,837,728 6,002,037 13 Share Capital

This represents amount received from Prime Bank Limited as well as sponsor-directors which was subsequently transferred to the Company’s bank account. As at 31 December 2010, a total of 300,000,000 ordinary shares of Tk. 10 each were issued subscribed and fully paid up. Details are as follows: Authorized capital: 1,000,000,000 ordinary shares of Tk. 10 each 10,000,000,000 10,000,000,000

Issued, subscribed and paid up capital:

No. of shares Percentage (%) Taka

Prime Bank Limited 299,999,994 99.99 2,999,999,940 Individuals 6 0.01 60

300,000,000 100 3,000,000,000

14 Loan Facilities Balance of OD facilities from Prime Bank Limited 3,026,635,625 3,178,368,564 Balance of OD facilities from Bank Asia Limited - 50,518,397

3,026,635,625 3,228,886,961

PBIL is enjoying OD (General) limit of Tk. 325.00 Crore from Prime Bank Limited, Motijheel Branch bearing interest @ 4.5% per annum on quarterly basis .PBIL has discontinued the OD (General) limit of Tk. 15.00 Crore from Bank Asia Limited, Paltan Branch vide reference no. BA/PAL/CR/2018/2195 dated July 31, 2018.

15 Liability for Withholding Taxes Opening balance 3,151,784 52,202 Add: Additions during the year 10,969,775 8,155,898 Less: Payment during the year (12,706,032) (5,056,316)

Closing balance 1,415,528 3,151,784

16 Client’s dividend suspense A/C Opening balance 231,494 192,107 Add: Additions during the year 139,748 39,387 Less: Payment during the year - -

Closing balance 371,242 231,494

In order to comply with BSEC (Merchant Banker & Portfolio Manager Rules) 1996 under section- 28 (3) & 36 (11), PBIL maintained Client’s dividend suspense A/C until claimed from any MSDA & NMSDA clients till 12 years after which PBIL will book any outstanding amount as its income.

17 Security Deposit Receipt Opening balance 294,250 44,100 Add: Additions during the year 1,253,141 250,150 Less: Payment the year (1,421,630) -

Closing balance 125,761 294,250

360 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

31.12.18 31.12.1718 Provision for Expenses

CDBL charges 142,086 546,090 Auditor’s fee 201,250 115,000 Office Rent 66,167 982,253 Electric bill 288,516 341,669 Wasa bill,Dilkusha,Oct-Dec’17 50,166 52,347 Service & maintenance, Datacraft,Jan-Dec’17 - 36,000 Chauffeur Expenses,Dec’18 17,500 - TVC Broadcasting, Dec’18 687,240 - Commission share with Infinity Finance(Arif),Q4-2018 2,850 - Ad on Financial Express - 23,000 Alpine Water bill 76 19,480 Printing & Stationary - 4,600 Sponsorship - 10,000 Plant Maintenance - 29,625 Security Expense 54,000 332,100 Business Development - 1,678,534 Telephone Bill Dec’18 8,600 25,067 Link charge to IT Nov & Dec’17 462 66,800 Internet Bill 425 425 Incentive Bonus 10,503,558 10,000,000

12,022,896 14,262,991 19 Provision for investment and clients’ margin loan

Provision for diminution in value of investments (19.1) 112,693,920 89,426,813 Provision for impairment of client margin loan (19.2) 429,659,847 457,624,746 Provision for impairment of Investment in PBSL (19.3) 7,646,233 2,948,441

550,000,000 550,000,000 19.01 Provision for diminution in value of investments

Investments have been recorded at cost and adequate provision for probable future losses has been made. Market value of securities has been determined on the basis of the value of securities at the last trading date’s closing price of the year i.e. 27 December 2018. Opening balance 89,426,813 172,762,277 Add: Provision made for the year 23,267,108 - Less: Reversal of provision during the year - (83,335,464)

Closing Balance 112,693,920 89,426,813

As per BSEC instruction circular reference # BSEC/Mukhopatro(3rd Khondo)/2011/06 dated July 02, 2018 and BSEC/CMRRCD/2009-193/212 dated December 10, 2018, Prime Bank Investment Limited has the option to maintain minimum 20% of total unrealized loss arising from diminution in value of investments as provision as at 31.12.2018 i.e. Tk. 75,129,280/-. We have maintained provision amounting to Tk. 112,693,920/- as on 31.12.2018. The instruction prohibits payment of cash dividend if the company makes less than 100% provision on such unrealized loss.

19.02 Provision for impairment of client margin loan

As per BSEC instruction circular reference #BSEC/Mukhopatro(3rd Khondo)/2011/06 dated July 02, 2018, provision has been made for impairment of margin loan arising out of year-end (31.12.2018) revaluation of shares purchased through margin loan complying the relevant instruction. Prime Bank Investment Limited has the option to maintain minimum 20% of total impairment of margin loan arising from diminution in value of investments as provision as at 31.12.2018, i.e. Tk. 288,366,430/-. We have maintained provision amounting to Tk. 429,659,847/- as on 31.12.2018. The instruction prohibits payment of cash dividend if the company makes less than 100% provision on such impairment of margin loan. Opening balance 457,624,746 361,781,083 Add: Provision made for the year - 95,843,663 Less: Reversal of provision during the year (27,964,899) -

429,659,847 457,624,746 19.03 Provision for impairment of Investment in PBSL

Opening balance 2,948,441 - Add: Provision made for the year* 4,697,792 2,948,441 Less: Reversal of provision during the year -

7,646,233 2,948,441

361PRIME BANK

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

31.12.18 31.12.1720 Corporate Income Tax Payable

Balance as of 1 January 2018 16,885,515 9,849,809 Add: Tax expenses for the year 2018 9,876,612 7,035,706 Less: Adjusted for the year 2016 & 2017 (16,874,515) -

9,887,613 16,885,515 21 Accounts Payable

Payable to A.M. Printers 11,645 3,825 Payable to ANYADIN 14,400 - Payable to BEXIMCO - 5,750 Payable to BTCL 15,158 11,046 Payable to CDBL 490,841 908,636 Payable to Commissioner of Taxes,Taxes Zone-14,Dhaka - 13,181 Payable to Commissioner of Taxes,Taxes Zone-5,Dhaka 8,143 - Payable to COLORS 19,200 - Payable to Cooper’s - 80,000 Payable to DSE - 6,000 Payable to Exclusive Communication 42,478 - Payable to Global Brand Private Ltd 6,534 - Payable to Grameen Phone 10,000 32,947 Payable to ICAB 150,000 - Payable to ICT Plus Technologies 13,519 - Payable to K.I. Trading - 5,130 Payable to Kinsman Printers 4,410 - Payable to Mahbubul Haque Shakil Shangshad 24,000 - Payable to Marshal Security Ltd 151,487 - Payable to National Garden Center 1,330 - Payable to NKN Security & Employees Service Ltd 89,140 Payable to Ornate Security Service Ltd - 26,730 Payable to Pink Creative Ltd 256,046 - Payable to Ratasa Company Ltd 108,461 - Payable to The Financial Express 25,044 - Payable to Tremendous Media 18,000 9,000 Payable to Watermark 16,335 96,696

1,476,171 1,198,941

22 Dividend Payable Opening balance 10 10 Add: Dividend payable during the year - - Less: Payment during the year - -

Closing balance 10 10

23 Other PayablesPayable to Brokers 20,282,836 1,335,917 Payable to Clients (Receivables) 47,671,418 19,565,746 Payable to Clients (Withdrawals) 8,467,608 1,468,706 Payable to Clients (Credit Balance) 72,577,316 88,768,577

148,999,179 111,138,946 24 Interest Income

IFRS 9 requires that interest revenue shall be calculated by using the effective interest method. This shall be calculated by applying the effective interest rate to the gross carrying amount of a financial asset. Due to the downward trend of the capital market over the years, there is significant uncertainty about the inflow of economic benefits from interest on margin loan against most of the loanees with negative equity. However, departing from IFRS 9, in some negative equity portfolios, the company recognised interest as income amounting to Tk. 44,990,888 considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already been occurred, foreign strategic investment has been done in DSE, stability in political environment and other favorable macroeconomic indicators in Bangladesh. Subsequently, the majority of the said negative equity portfolios has become positive (recoverable). However, the company has adequate provision (Note 19.02) against the negative equity.

362 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

2018 2017

25 Management FeeIFRS 9 requires that management fees income arising on services provided by the PBIL are recognised when it expects to be entitled in exchange for arranging for other parties to provide services to the clients and customers as per IFRS 15. Due to the downward trend of the capital market over the years, there is significant uncertainty about the inflow of economic benefits from management fee against most of the loanees with negative equity. Hence we did not recognize management fee from margin loan as income in such cases where it is probable that such income will not flow to the company. However, departing from IFRS 9, in some negative equity portfolios, the company recognised management fee as income amounting to Tk. 724,328 considering the considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already been occurred, foreign strategic investment has been done in DSE, stability in political environment and other favorable macroeconomic indicators in Bangladesh. Subsequently, the majority of the said negative equity portfolios has become positive (recoverable). However, the company has adequate provision (Note 19.02) against the negative equity.

26 Dividend on SharesAman Feed Ltd - 40,000 Aamra Networks 13,700 - Aftab Automobiles* 84,000 - Apex Tannery* 80,000 - Bangladesh Shipping Corporation* 280,000 - Bashundhara Paper Mills Limited 21,614 - BSCCL 50,000 120,000 Bata Shoe Co (BD) Ltd* 450,804 414,756 BBS Cables* 200,000 - BDBS* 132,500 - Beximco Parma* 600,651 - City General Insurance Co Ltd - 300,000 Confidence Cement Ltd 150,000 310,000 DBBL 3,000 - DESCO 970,241 970,241 Eastern Bank Ltd 350,000 2,000,000 Fareast Islami Life Ins co. Ltd. 596,875 384,975 Green Delta MF 1,150,650 639,250 GP* 422,500 - Heidelberg Cement 660,000 900,000 ICB* 116,550 - IDLC Finance Ltd. 765,000 263,472 IFIL Islamic MF-1 3,708,450 3,708,450 Intraco Refueling Station Limited 2,667 - ITCL* 153,000 - Doreen Power* 35,800 - Jamuna Oil Ltd - 1,000,000 Khulna Power Company Limited* 1,007,700 196,000 Lanka Bangla Finance 333,750 300,000 Linde BD Ltd 318,136 620,000 Meghna Cement Mills Ltd - 31,500 Mercantile Bank Ltd 459,000 - Nahee Aluminum 5,712 - Olympic Industries* 867,690 - PBL 1st ICB AMCL MF 23,740,850 23,740,850 Power Grid Company 834,170 666,860 Pragati Insurance Ltd 517,323 379,008 Popular Life Insurance Co Ltd - 1,479,816 RAK Ceramics Ltd 473,200 300,000 Social Islami Bank Ltd - 1,115,950 Shahjibazar Power Co. Ltd. 104,000 210,000 SK Trims & Industries Limited 1,008 - Square Pharma* 2,303,906 1,400,743 Toshrifa* 86,471 - The ACME Laboratories Limited 105,000 - The City Bank Ltd 598,500 240,000 Titas Gas Transmission & Dist. Co. Ltd.* 3,165,572 1,347,052 VFS Thread Dyeing Limited 4,223 - United Power Generation & Distribution Company Ltd. 5,184,000 -

51,108,213 43,078,924

*Due to oversight, the company did not recognize dividend income of Tk. 4,361,101 in the prior year which was recognized subsequently in the current year. The financial statements were not restated as per IAS 8 due to immateriality

363PRIME BANK

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

2018 201727 Underwriting Commission

IDLC Finance Ltd - 50,000 Aman Cotton Fibrous Ltd 40,000 -

40,000 50,000 28 Issue Management & Corporate Advisory Fee

Corporate advisory fee-Regent Spinning Mills Ltd 150,000 100,000 Issue Mgt & Lead Arranger’s Fee-Al-Arafah Islami Bank Ltd 8,500,000 - Issue Mgt & Corporate Advisory Fee-Everway Yarn Dyeing Ltd - 100,000 Corporate Advisory Fee - Genvio Pharma Ltd - 50,000 Issue Mgt & Corporate Advisory Fee-Flagship Dhaka CETP (BD) Ltd 450,000 300,000 Corporate advisory fee-Baraka Potenga 100,000 - Corporate Advisory Fee-from PBL for PBL Bond-3 1,000,000 - Registrar to the issue fee of Aman Cotton Fibrous Ltd 500,000 - Corporate advisory fee for Health Complex One Project 750,000 250,000

11,450,000 800,000 29 Bank Interest on STD Accounts

Prime Bank LimitedClients’ deposit 59,791 105,379 Broker’s deposit 25,351 153,411 Own Investment 69,877 89,378 Public Issue Application A/C 23,973 106,158 Interest on AIBL 2nd Mudaraba Subordinated Bond 61,611 -

240,602 454,326 30 Interest expenses

Interest on loan from Prime Bank Limited 144,590,206 213,898,212 Interest on loan from Bank Asia Limited 1,229,995 10,266,121 Interest on loan from ICB - 135,965

145,820,201 224,300,298 31 Salary and Allowances

Basic pay 26,502,299 19,057,974 Allowances includes House rent, Medical, Conveyance 17,652,932 14,633,703 Bonus 13,595,821 13,290,643 Bank’s contribution to provident fund 1,131,706 1,267,301 Gratuity - 1,371,984 Leave Encashment 63,000 240,000 Chauffeur Expenses 140,000 -

59,085,758 49,861,605 32 Rent, Taxes, Insurance and Electricity

Rent, rate and taxes 20,901,661 13,804,355 Insurance 217,482 140,516 Electricity, water & service maintenance bill 3,768,720 2,572,685

24,887,863 16,517,556 33 Legal & professional expenses

Professional charges 681,950 563,500 Legal fees 195,000 115,000

876,950 678,500 34 Postage, Stamp and Telecommunication

Postage & Newspaper 188,013 82,933 Internet Bill & TV Dish bill 786,371 211,432 Link Charge 166,964 456,794 Telephone-office 491,878 415,910

1,633,225 1,167,069

364 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

2018 201735 Stationery, Printing and Advertisement

Office and printing stationery & Photocopy 1,943,607 1,388,901

1,943,607 1,388,901 36 Depreciation, Amortization and Repair of assets

Depreciation/amortization 6,577,583 2,914,704 Amortization of preliminary expenses 522,915 522,915 Networking & Cabling 101,504 - Repair and maintenance 461,208 356,277

7,663,210 3,793,896

37 Entertainment, Traveling & ConveyanceEntertainment 1,960,577 1,665,765 Traveling Expenses 2,649,399 78,693 Conveyance 235,946 211,820

4,845,922 1,956,278 38 Other Expenses

Bank charges 200,566 132,068 Annual renewal fee 170,000 168,600 Car expenses 819,950 417,726 Cleaning Expense 182,499 151,940 Exgratia 351,300 229,300 Subscription 62,775 145,499 Labor Charge 246,050 46,100 Miscellaneous 109,396 25,347 Plant Maintenance 67,850 125,825 Training and internship 790,313 410,128 NITA A/C Commission Expense 3,845 - Souvenir/Calendar/Diary - 11,550

3,004,545 1,864,083 39 Tax Expenses

Current tax expensesHead of Income

(Tk.)

Applicable tax rate (%)

Tax Liability 31.12.18 (Tk.)

Tax Liability 31.12.17 (Tk.)

Capital gains on sale of shares 82,370,261 - Less: Capital gain of UPGDL as per SRO No:211/law/Income tax/2013 dated July 01, 2013 of Internal Asset Department of Finance Ministry

(73,625,798)

Less: Carry forward capital loss - 8,744,463 10% 874,446 2,359,285

Dividend on shares 51,108,213 Receivable Dividend (6,072,382)Less: Exemption (25,000)

45,010,831 20% 9,002,166 8,610,785 Business income - 37.5% - -

9,876,612 10,970,070 Adjustment for the AY 2014-2015 - (3,934,364)Current Tax Expenses 9,876,612 7,035,706 Deferred tax expense/(Income) (536,563) (237,468)

9,340,049 6,798,238 40 Earnings per share

Net profit after tax 105,332,578 88,954,235 Weighted average outstanding number of shares 300,000,000 300,000,000

0.35 0.30

365PRIME BANK

Prime Bank Investment LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

41 Payments to Director and OfficersDisclosure as per requirement of schedule XI, Part II, Para 4 of Company Act 1994

Payment to Directors 2018 2017Basic Salary 5,841,756 4,879,215 House Rent 1,797,468 1,501,302 Medical 1,348,092 1,125,971 Bonus/ incentives 3,699,779 4,291,095 Board meeting attendance fees 496,800 504,850 Total 13,183,895 12,302,433

42 Employee position for Prime Bank Investment Limited Disclosure as per requirement of schedule XI part II of Company Act 1994

Officer/Staff Worker2018 2017

Total Employees Total Employees

28 - 28 27

43 Aging analysis of Debtors:

Particulars 1-3 Months 4-6 Months Above 6 months

Receivable from brokers (own) 4,223,691 N/A N/A

Receivable from brokers (clients) 47,671,418 N/A N/A

Other Receivable 458,438 480,964 5,550,688

44 Others

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

44.2 These notes form an integral part of the annexed financial statements and accordingly are to be read in conjunction therewith.

44.3Wherever considered necessary, previous year’s figures have been rearranged to conform to current year’s presentation and for the purpose of comparison.

366 PRIME BANK

ANNUAL REPORT 2018

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FINANCIAL STATEMENTSOF PRIME BANK SECURITIES LIMITED

Auditors’ Report to the Shareholders

Statement of Financial Position

Statement of Profit or Loss & Other Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

369PRIME BANK

INDEPENDENT AUDITOR’S REPORTTo The Shareholders of Prime Bank Securities LimitedOpinion

We have audited the accompanying financial statements of Prime Bank Securities Limited which comprise the Statement of Financial Position as at 31 December 2018 and Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended and a summary of significant accounting policies and other explanatory information disclosed in Note 1 to 33 to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2018, and their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note # 1.3 to the financial statements.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and Bangladesh Securities and Exchange Commission (BSEC), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye-Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended on 31 December 2018. There are no key audit matters to communicate in our report.

Emphasis of Matter

Without qualifying our opinion, we draw attention to note # 5 to the financial statements, where the Company explain the valuation procedure of investment in shares of DSE and CSE.

Other Matter

The financial statements of Company for the year ended 31 December 2017 were audited by ACNABIN Chartered Accountants, who expressed an unmodified opinion on those statements on 21 March 2018.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Company is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards (IFRSs), as explained in note # 1.3 to the financial statements, and for such internal control as management determines it is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of financial statements

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

370 PRIME BANK

ANNUAL REPORT 2018

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company ’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other Legal and Regulatory Requirements

We also report that:

a. we have obtained all the material 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 Company so far as it appeared from our examination of those books; and

c. the Company’s statement of financial position and statement of profit or loss and other comprehensive income together with the Note 1 to 33 dealt with by the report are in agreement with the books of account.

Dated, Dhaka04 March 2019

ACNABIN Chartered Accountants

371PRIME BANK

Prime Bank Securities LimitedStatement of Financial PositionAs at 31 December 2018

Particulars NotesAmount in Taka

31.12.18 31.12.17

ASSETS

Non-Current Assets

Property, Plant & Equipment 3.00 10,425,864 9,799,540

Intangible assets 4.00 158,878 102,758

Deferred tax 16.02 177,507 780,486

Long Proprietary Securities Positions 5.01 271,524,965 398,400,000

Total Non-Current Assets (A) 282,287,214 409,082,784

Current Assets

Long Proprietary Securities Positions 5.02 265,600,000 265,600,000

Advances, deposits and prepayments 6.00 12,331,380 4,019,080

Advance income tax 7.00 74,730,135 64,342,135

Investment in securities 8.00 195,491,882 122,934,185

Accounts receivable 9.00 54,281,240 26,876,671

Loan to customers 10.00 209,100,070 303,394,498

Cash and cash equivalents 11.00 133,801,566 98,521,384

Total Current Assets (B) 945,336,273 885,687,953

Total Assets (A+B) 1,227,623,487 1,294,770,736

EQUITY & LIABILITIES

Capital & Reserves

Share capital 12.00 750,000,000 750,000,000

Retained earnings 13.00 (153,975,417) (58,315,338)

Shareholders equity (C) 596,024,583 691,684,662

Non-Current Liabilities

Loan from Bank 14.00 393,452,756 433,499,527

Total Non-Current Liabilities (D) 393,452,756 433,499,527

Current Liabilities

Accounts payable 15.00 167,930,364 97,903,151

Provision for taxation 16.00 41,787,639 35,429,824

Provision for diminution in value of investment 17.00 8,348,609 8,348,609

Provision for impairment of margin loan 18.00 14,682,620 25,885,007

Provision for expenses 19.00 5,396,917 2,019,956

Total Current Liabilities (E) 238,146,149 169,586,547

Total Equity & Liabilities (C+D+E) 1,227,623,487 1,294,770,736

These financial statements should be read in conjunction with annexed notes 1 to 33.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka04 March 2019

ACNABINChartered Accountants

372 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedStatement of Profit or loss and Other Comprehensive incomeFor the year ended on 31 December 2018

Particulars NotesAmount in Taka

2018 2017

Operating Income

Revenue from brokerage commission 20.00 18,031,770 35,429,471

Interest income 21.00 35,658,560 38,781,210

Other income 22.00 361,559 205,468

Capital Gain 23.00 10,191,253 7,826,975

Dividend Income 24.00 14,549,665 12,243,026

Total operating income (A) 78,792,808 94,486,150

Operating expenses 25.00 54,779,944 35,965,346

Financial expenses 26.00 20,236,100 27,995,991

Direct expenses 27.00 3,480,332 5,183,949

Total operating expenses (B) 78,496,376 69,145,286

Operating profit before provision C=(A-B) 296,432 25,340,864

Less: Loss on Sell of DSE Share to Strategic Investor 28.00 88,995,718 -

Provision for diminution in value of investment in shares 17.00 - 2,175,241

Provision for impairment of margin loan 18.00 - 10,685,091

Total provision and loss on sell of DSE share to strategic investor (D) 88,995,718 12,860,332

Operating profit before taxation E=(C-D) (88,699,286) 12,480,532

Current tax 16.01 6,357,815 11,831,212

Deferred tax 16.02 602,979 (4,162)

Total provision for tax (F) 6,960,793 11,827,050

Net profit after tax [G=E-F] (95,660,080) 653,482

Earnings per share 28.00 (1.2755) 0.0087

These financial statements should be read in conjunction with annexed notes 1 to 33.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka04 March 2019

ACNABIN Chartered Accountants

373PRIME BANK

Prime Bank Securities LimitedStatement of Changes in EquityFor the period ended on 31 December 2018

Particulars Share capitalRetained earnings

Total

Balance as at January 01, 2017 750,000,000 (58,968,820) 691,031,180

Profit for the year 2017 - 653,482 653,482

Balance as at December 31 2017 750,000,000 (58,315,338) 691,684,662

Balance as at January 01, 2018 750,000,000 (58,315,337) 691,684,663

Profit for the year 2018 - (95,660,080) (95,660,080)

Balance as at December 31 2018 750,000,000 (153,975,417) 596,024,583

These financial statements should be read in conjunction with annexed notes 1 to 33.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka04 March 2019

374 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedStatement of Cash Flowsfor the year ended 31 December 2018

Particulars NoteAmount in Taka

31.12.18 31.12.17

A Cash flow from operating activities

Cash inflows from Brokerage Commission & charges 18,393,329 40,781,118

Cash inflows from Investment Income 13,487,458 58,851,210

Cash Outflows to Suppliers & Employees 12,865,159 (45,515,088)

Commission & charges Paid (3,480,332) (5,183,949)

Income taxes paid (10,388,000) (11,304,045)

Financial expenses Paid (20,236,100) (27,995,991)

Net cashflow from operating activities 10,641,515 9,633,255

B Cash flow from investing activities

Acquisition of Property plant and equipment (3,150,103) (10,775,352)

Acquisiton of Intangible assets (85,575) (52,250)

Disposal of Property plant and equipment 650,000 3,329,150

Investments in securities (72,557,697) (44,820,992)

Long Proprietary Securities Positions 37,879,317 -

Net cash flows from investing activities (37,264,058) (52,319,444)

C Cash flows from financing activities

Issue of share capital - -

Dividend paid - -

Borrowing/ (Paid) Loan from Bank (40,046,771) (17,428,124)

Loans to customers 101,949,496 51,234,562

Net cash from financing activities 61,902,725 33,806,438

D Net cash increase / (decrease) (A+B+C) 35,280,182 (8,879,751)

E Cash and cash equivalents at the beginning of the year 98,521,384 107,401,135

F Cash and cash equivalents at the end of the year (D+E) 133,801,566 98,521,384

Cash in hand 100,000 13,004

Cash at Bank 133,701,566 98,508,380

133,801,566 98,521,384

These financial statements should be read in conjunction with annexed notes 1 to 33.

Chief Financial Officer Managing Director & CEO Director Chairman

Dated, Dhaka04 March 2019

375PRIME BANK

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

1.1 Status of the Company

Prime Bank Securities Limited (“the Company”) was incorporated as a private limited company in Bangladesh under The Companies Act, 1994 vide certificate of incorporation no. C-84302 /10. It commenced its broker business with one extension office from May 18, 2011 under license issued by Bangladesh Securities and Exchange Commission. Presently the company has 2 (two) offices including Head Office at Dhaka, Bangladesh.

The registered office of the company is located at people’s Insurance Bhaban (11th floor) 36, Dilkusha Commercial Area, Dhaka-1000.

1.2 Nature of Business

Principal objectives of the Company are to act as a member of Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. to carry on the 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.

1.3 Significant accounting policies and basis of preparation of financial statements

1.3.1 Basis of accounting

1.3.2 Statement of compliance

These financial statements have been prepared under the historical cost convention on a going concern basis and in accordance with Bangladesh Financial Reporting Standards (IFRS), The Companies Act-1994, Securities and Exchange Rules-1987 and other laws and rules applicable in Bangladesh.

1.3.3 Components of Financial Statements

The financial statements referred to here comprises:

a) Statement of Financial Position

b) Statement of Profit or Loss and Other Comprehensive Income

c) Statement of Changes in Equity

d) Statement of Cash Flows and

e) Notes to the Financial Statements

1.3.4 Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. It also requires disclosures of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing concern basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

1.3.5 Statement of cash flows

Statement of cash flows is prepared in accordance with the International Accounting Standard-7 “ Statement of Cash Flows” and the cash flows from operating activities have been presented under indirect method.

1.3.6 Reporting period

These financial statements cover one calendar year from 1 January 2018 to 31 December 2018

1.3.7 Share capital

Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.

1.3.8 Property, plant and equipment

All fixed assets are stated at cost less accumulated depreciation as per IAS-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.

376 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

The Company recognizes 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.

Depreciation is charged on the basis of straight line method on all fixed assets at the following rate:

Category of assets Rate(%)

Furniture and fixtures 20

Office equipment 25

Air conditioners 25

Computer and hardware 25

Vehicle 20

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.

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.

1.3.9 Intangible assets and amortization of intangible assets

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.

Software represents the value of computer application software licensed for use of the Company other than those applied for the operating system of computers. Intangible assets are carried at their cost, less accumulated amortization and impairment loss, if any.

Initial cost comprises license fees paid at the time of its acquisition and other directly attributable expenditures that are incurred in customizing the software for its intended use.

Expenditure incurred for software is capitalized only when it enhances and extends the economic benefits of software beyond its original specification and life and such cost is recognized as capital improvement and added to the original cost of software.

Software is amortized using the straight-line method over the estimated useful life of 5 (five) years commencing from the date of the acquisition available for use over the best estimates of its useful economic life.

1.3.10 Advance, deposits and prepayments

- Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments or charges to other account heads such as property, plant and equipment, inventory, etc.

- Deposits are measured at payment value.

- Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to Statement of Comprehensive Income.

1.3.11 Advance Income tax

The amount of advance income tax are mainly deduction at sources by DSE & CSE on daily transaction of broker & dealer operation. Tax deduction on interest income and dividend income are also included here.

1.3.12 Investments in securities

Investment in marketable and non-marketable ordinary shares has been shown at cost. Full provision for diminution in value of shares (Quoted) as on closing of the year on an aggregate portfolio basis has been made in the account.

377PRIME BANK

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

1.3.13 Account receivables

Receivables are recognized when there is a contractual right to receive cash or another financial asset from another entity.

1.3.14 Loans to customers

Loans to customers are stated in the balance sheet on gross basis. Interest is calculated on a daily product basis but charged and accounted for on accrual basis. Interest on customer loans is realized quarterly.

1.3.15 Preliminary and pre-operating expenses

These are recognized as an asset if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and cost of the asset can be measured reliably. These are amortized over 3 years from the year of their first utilization at the rate of Tk. 631,372, Tk. 614,122 and Tk. 614,121 for the year 2011, 2012 and 2013 respectively.

1.3.16 Cash and cash equivalents

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with Banks and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used by the Company management for its short-term commitments.

1.3.17 Provision for taxation

Provision for current income tax has been made in compliance with relevant provisions of Income Tax law.

1.3.18 Deferred taxation

Deferred tax liabilities are the amount of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the balance sheet date. The impact on the account of changes in the deferred tax assets and liabilities has also been recognized in the profit and loss account as per IAS-12 “Income Taxes”.

1.3.19 Incentive bonus

Prime Bank Securities Ltd. started a incentive bonus scheme for its employees based on profitability. This bonus amount is being distributed among the employees based on their performance. The cost are accounted for the period to which it relates.

1.3.20 Provision for liabilities

A provision is recognized in the balance sheet when the Company 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 the IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.

1.3.21 Brokerage commission

Brokerage commission is recognized as income when selling or buying order executed

1.3.22 Interest income on marginal loan

Interest income on margin loan is recognized on accrual basis. Such income is calculated on daily margin loan balance of the respective customers. Income is recognized on monthly but realized quarterly except negative equity clients where interest is recognized based on effective interest rate which is estimated recoverable amount as per IFRS 9.

1.3.23 Capital gain on sale of share

Capital gain on investments in shares is recognized when it is realized.

1.3.24 Fees income

Fees income arises on services provided by the Company are recognized on accrual basis.

1.3.25 Dividend income on shares

Dividend income on shares is recognized when the shareholder’s right to receive payment is established.

378 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

1.3.26 Interest paid and other expenses

In terms of the provisions of IAS-1 “Presentation of Financial Statements” interest and other expenses are recognized on accrual basis.

1.3.27 Earnings per share

Basic earnings per share has been calculated in accordance with IAS 33 “Earnings per Share” which has been shown on the face of the profit and loss account. This has been calculated by dividing the profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

1.3.28 Events after the reporting period

Where necessary, all the material events after the reporting period date have been considered and appropriate adjustment/disclosures have been made in the financial statements.

1.3.29 Management’s responsibility on financial statements

The management’s of the company is responsible for the preparation and presentation of these financial statements.

1.3.30 Departures from IFRS

The Financial Reporting Council (FRC) has been formed in 2017, but no financial reporting standards have yet been issued as per the provisions of the Financial Reporting Act (FRA) 2015. Hence, the financial statements of the Company as at and for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) and as per the requirements of the provisions, circulars, rules and regulations issued by the Bangladesh Securities and Exchange Commission (BSEC) and The Income Tax Ordinance 1984. In case any requirements of the BSEC provisions, circulars, rules and regulations differ from those of IFRS, the requirements of BSEC provisions, circulars rules and regulations shall prevail, and such departures from IFRS have been followed accordingly. In addition, there has been a departure from the provisions of IFRS 9 with regard to interest income. Material departures from the requirements of IFRS are as follows:

i) Provision for impairment of client margin loan

IFRS: In accordance with IFRS 9, an entity should recognize a loss allowance for expected credit losses on a financial asset and shall not reduce the carrying amount of the financial asset in the statement of financial position. The objective of the impairment requirements is to recognize lifetime expected credit losses for all financial instruments for which there have been significant increases in credit risk since initial recognition, whether assessed on an individual or collective basis considering all reasonable and supportable information, including that which is forward-looking. An entity shall directly reduce the gross carrying amount of a financial asset when the entity has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

BSEC: As per BSEC press release #BSEC/Mukhopatro(3rd Khondo)/2011/06 dated July 02, 2018, provision has been made for impairment of margin loan arising out of year-end (31.12.2018) revaluation of shares purchased through margin loan complying with the relevant instruction. Prime Bank Securities Limited has opted for the option to maintain minimum 20% of total impairment of margin loan arising from diminution in value of investments as provision as on 31.12.2018 in accordance with the aforesaid press release.

ii) Recognition of interest income from margin loan

IFRS: In accordance with IFRS 9, interest revenue should be calculated by using the effective interest method by applying the effective interest rate to the gross carrying amount of the financial asset. Interest income should be recognized when the financial asset is no longer credit-impaired and the improvement can be related objectively.

Departure: The Company recognized interest from margin loan when the loan is no longer credit-impaired (negative equity). However, some margin loan interest was recognized as income from credit-impaired (negative equity) portfolios considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already occurred, foreign strategic investor has already invested in the shares in DSE, political environment has been stabilized and other favorable macroeconomic indicators have been acclaimed under the present Government in Bangladesh.

379PRIME BANK

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

iii) Valuation of shares of DSE and CSE

IFRS: As per para-5.2.2 of IFRS-9, an entity shall apply the impairment requirements to financial assets that are measured at amortized cost in accordance with paragraph 4.1.2 of IFRS-9 and to financial assets that are measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A of IFRS-9.

Depurture: There is no active market for shares in DSE and CSE and the sale price to Strategic Investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE), has been determined through negotiation. The sale had to be made within the time limit as given in the Exchange Demutualization Act-2013 and approved by the Bangladesh Securities and Exchange Commission (BSEC). This was not a transaction in active market. And we strongly believe that with the involvement of the strategic partners and the development of capital market under the guidance of the BSEC, the share price of the exchanges will increase significantly.

2.00 General

a) These financial statements are presented in Taka, which is the Company’s 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 Company.

c) Figures of previous year have been rearranged whenever necessary to conform to current years presentation.

380 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

31.12.18 31.12.17 3.00 Property, Plant & Equipment less depreciation

Office equipment 2,280,460 1,523,534 Vehicle 3,033,000 3,371,700 Computer & hardware 6,654,264 5,728,004 Furniture & fixtures 8,422,409 6,955,492

20,390,133 17,578,730 Depreciation - Opening balance 7,779,190 9,914,339 Less : Sale/Disposal of Fixed Assists 338,696 3,320,098

7,440,494 6,594,241 Add: Charged during the year 2,523,775 1,184,949 Closing balance 9,964,269 7,779,190

10,425,864 9,799,540 4.00 Intangible assets

Back office software-Broker 1,163,250 1,163,250 Back office software-Dealer 150,000 150,000 Web development 200,000 200,000 Anti virus software 152,450 66,875 IPO Module 69,000 69,000

1,734,700 1,649,125 Amortization - Opening balance 1,546,367 1,481,427 Add: Amortization during the year 29,455 64,940

Closing balance 1,575,822 1,546,367 158,878 102,758

Details shown in Annexure-A 5.00 Long proprietary securities positions at market value*

Shares in DSE 380,624,965 507,500,000 Shares in CSE 156,500,000 156,500,000

537,124,965 664,000,000

This represents total share value of investment in DSE (currently held 75% by the Company including 35% blocked shares) and in (CSE currently held 100% by the Company including 60% blocked shares). The share investment value has been shown at cost as disclosed in note #1.3.30 to the financial statements.

The total amount Tk. 664,000,000 is our original investment at cost for DSE and CSE memberships in exchange of which shares at face value of Tk. 10 each was allotted in favour of the Company in November 2013 for DSE and in October 2013 for CSE. As per the provision of the Exchange Demutualization Act-2013 and in accordance with the Bangladesh Securities and Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange Ltd. (DSE) allotted total 72,15,106 ordinary Shares (including 25% shares for sale to strategic partner and 35% block shares) at face value of Tk.10.00 each and Chittagong Stock Exchange Ltd. (CSE) allotted total 42,87,330 ordinary Shares (including 25% shares for sale to strategic partner and 35% block shares) at face value of Tk.10.00 each against the membership of DSE and CSE respectively.

The Company has also received a Trading Right Entitlement Certificate (TREC) from Dhaka Stock Exchange Limited (DSE) and also from Chittagong Stock Exchange Limited (CSE) against their DSE and CSE memberships, as stated in Note# 5.01 below. Such TRECs allow the Company to operate as broker and dealer in the DSE and CSE platforms. This is in addition to the Company’s right to receive dividend, etc. as shareholders of DSE and CSE. Though these two TRECs are intangible assets, no value has been assigned to and recorded against, the same. This is because TREC is not a commonly tradable instrument and fair market value cannot be measured reliably.

In accordance with the provision of the Exchange Demutualization Act-2013 and Bangladesh Security Exchange Commission (BSEC) approved Demutualization Scheme, DSE has sold 25% of it’s share to Strategic Investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) Consortium @ Tk. 21 per share. Subsequently, Prime Bank Securities has received Tk. 37,879,317 from DSE against the sale proceeds. The approximate cost price of each share is Tk. 70.34 excluding the value of TREC License. As such, by considering a conservative approach, we have realized the loss against sale of 25% shares of DSE in our books of accounts.

381PRIME BANK

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

31.12.18 31.12.17

5.01 Long Proprietary securities positions at market value (Blocked Share)Shares in DSE (35% Blocked Share) 177,624,965 304,500,000 Shares in CSE (60% Blocked Share) 93,900,000 93,900,000

271,524,965 398,400,000

The 35% DSE shares (i.e. 25,25,287 shares) and 60% CSE shares (i.e. 25,72,398 shares) were kept in blocked accounts as per the provisions of the Exchange Demutualization Act, 2013. As such the value of these shares have been classified as Long Proprietary Securities Position (Blocked Share) and considered under non-current assets in the books of accounts on a relevant historical basis.By considering a conservative approach, we have realized the loss against sale of 25% shares of DSE in our books of accounts.

The spirit of stock exchange demutualization and involving the strategic investor is to strengthen the capital market and to become an international grade stock exchange. As such, The strategic Investor’s will get some additional benefits as per their investment as Strategic Investor in DSE, i.e. a) Get Directorship in the Board of Dhaka Stock Exchanges, b) Run the management of Stock Exchanges, c) Co-operation & Investment on Technological advancement of DSE, d) Co-operation on market cultivation and product development (Like Commodity Market and Derivative Market). Overall the sale has been incurred to achieve higher-quality growth of the market and the economy. The sale is expected to eventually contribute to take forward the business of DSE and Bangladesh capital market into a growth path and assist DSE in its transformational journey to becoming an international grade stock exchange. So, the selling price @Tk. 21 cannot be considered as a fair market price. Thus the investment has been shown in cost.

There is no active market for shares in DSE and CSE and the sale price to Strategic Investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE), has been determined through negotiation. The sale had to be made within the time limit as given in the Exchange Demutualization Act-2013 and approved by the Bangladesh Securities and Exchange Commission (BSEC). This was not a transaction in active market. And we strongly believe that with the involvement of the strategic partners and the development of capital market under the guidance of the BSEC, the share price of the exchanges will increase significantly.

5.02 Long Proprietary securities positions at market value (Free Share)

Shares in DSE (40% Free Share) 203,000,000 203,000,000

Shares in CSE (40% Free Share) 62,600,000 62,600,000

265,600,000 265,600,000

This represents total share value of investments in DSE (currently held 40% by the Company) and in CSE (currently held 40% by the Company). The share investment value has been shown at cost as disclosed in note # 1.3.30 to the financial statements.

The total amount Tk. 664,000,000 is our original investment at cost for DSE and CSE memberships in exchange of which shares at face value of Tk. 10 each was allotted (including 60% blocked shares) in favour of the Company in November 2013 for DSE and in October 2013 for CSE. As per the provision of the Exchange Demutualization Act-2013 and in accordance with the Bangladesh Securities and Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange Ltd. (DSE) allotted total 72,15,106 ordinary Shares (including 25% shares for sale to strategic partner from 60% blocked shares and remaining 35% blocked shares) at face value of Tk.10.00 each and Chittagong Stock Exchange Ltd. (CSE) allotted total 42,87,330 ordinary Shares (including 25% shares for sale to strategic partner from 60% blocked shares and remaining 35% blocked shares) at face value of Tk.10.00 each against the membership of DSE and CSE respectively.

Out of the above DSE transferred 2,886,042 shares and CSE transferred 1,714,932 shares, directly credited to the Beneficiary Owner’s account of the Company which is 40% of the total holding of the shares (i.e., excluding 60% blocked shares).

Meanwhile, PBSL has intended to sell 40% of it’s current holding and take initiative accordingly and explored in the market for potential buyers. But, we could not execute the sale as we have not yet got our expected price from the potential buyers. Besides, we are also expecting a positive market movement in 2019 as per our investment outlook 2019. In view of that, we are expecting that price will increase within next year and we can then be able to sell it by September 2019.

6.00 Advances, deposits and prepayments

Security deposit with CDBL 200,000 200,000

Security deposit with CSE 25,000 25,000

Security deposit with T&T 6,300 6,300

Advance Against IPO 2,809,535 553,280

382 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

31.12.18 31.12.17

Advance Rent 1,606,500 3,034,500 Loan to Employee 6,884,045 - Advance to LEAD Soft Bangladesh Limited 200,000 200,000 Advance against Salary 600,000 -

12,331,380 4,019,080

7.00 Advance income taxDhaka Stock Exchange-Broker 7.01 55,423,301 51,515,661 Chittagong Stock Exchange-Broker 7.02 217,988 198,537 Dhaka Stock Exchange-Dealer 7.03 771,873 454,538 Income from dividend 7.04 3,045,996 2,412,176 Income from interest on deposit-Broker 7.05 1,257,664 973,885 Income from interest on deposit-Dealer 7.06 90,347 41,896 Direct Income Tax 7.07 8,537,194 4,823,463 Chittagong Stock Exchange-Dealer 7.08 27,749 6,977 Income from Dividend -DSE & CSE 7.09 5,358,023 3,915,002

74,730,135 64,342,135

7.01 Dhaka Stock Exchange-Broker

Opening Balance 51,515,661 43,127,417 Add: AIT for the year 3,907,640 8,388,244

55,423,301 51,515,661 7.02 Chittagong Stock Exchange-Broker

Opening Balance 198,537 193,399 Add: AIT for the year 19,451 5,138

217,988 198,537 7.03 Dhaka Stock Exchange-Dealer

Opening Balance 454,538 338,753 Add: AIT for the year 317,335 115,785

771,873 454,538 7.04 Income from dividend

Opening Balance 2,412,176 1,947,197 Add: AIT for the year 633,820 464,979

3,045,996 2,412,176 7.05 Income from interest on deposit-Broker

Opening Balance 973,885 643,757 Add: AIT for the year 283,779 330,128

1,257,664 973,885 7.06 Income from interest on deposit-Dealer

Opening Balance 41,896 5,617 Add: AIT for the year 48,451 36,279

90,347 41,896 7.07 Direct Income Tax

Opening Balance 4,823,463 4,823,463 Add: AIT for the year 3,713,731 -

8,537,194 4,823,463 7.08 Chittagong Stock Exchange-Dealer

Opening Balance 6,977 986 Add: AIT for the year 20,772 5,991

27,749 6,977 7.09 Income from Dividend -DSE & CSE

Opening Balance 3,915,002 1,957,501 Add: AIT for the year 1,443,021 1,957,501

5,358,023 3,915,002

74,730,135 64,342,135 195,491,882 122,934,185

383PRIME BANK

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

31.12.18 31.12.17

8.00 Investment in securities

All investments in marketable securities are valued on an aggregate portfolio basis at cost price, at the balance sheet date. As on 31 December, 2018 there unrealized loss Tk. 29,212,803.68. Sufficient provision has maintained as per SEC guidelines against this unrealized loss. Please see note 17.00 for details.

Cost Price Market PriceDetails of Marketable Securities are given below,Business Segments Bank 15,407,867 15,244,032 Cement 911,674 840,551 Engineering 13,632,884 12,598,044 Financial Institutions 26,956,691 22,036,931 Food & Allied 240,946 216,200 Fuel & Power 75,701,364 64,842,937 IT & Miscelleneous 305,640 231,942 Mutual Fund 32,342,572 22,270,869 Pharmaceuticals & Chemicals 22,420,921 21,068,838 Paper & Printing 7,117,103 5,594,320 IPO Investment 454,220 1,334,415

195,491,882 166,279,078

31.012.2018 31.12.2017 9.00 Accounts receivable

Receivable from Dhaka Stock Exchange Ltd. 42,992,205 22,449,801 Receivable from Dhaka Stock Exchange Ltd. (Dealer Account) 4,187,463 4,382,849 Receivable from Prime Bank Investment Ltd. 3,036,379 44,021 Receivable from Dividend_Dealer 1,921,528 - Receivable from Dividend _CSE 2,143,665 -

54,281,240 26,876,671 Aging Schedule of Accounts Receivable

Name of Clients 0- 30 Days 30- 60 Days 60-90 Days Above 90 Days Dhaka Stock Exchange Ltd. 42,992,205 - - - Dhaka Stock Exchange Ltd. (Dealer A/c) 4,187,463 - - - Prime Bank Investment Ltd. 3,036,379 - - - Receivable from Dividend_Dealer 1,921,528 - - - Receivable from Dividend _CSE 2,143,665 - - -

54,281,240 - - - 10.00 Loan to Customer

Opening balance 303,394,498 354,629,060 Add: Accrued Interest 18,857,455 - Add: Addition during the year - -

322,251,953 354,629,060 Less: Adjustment during the year 101,949,496 51,234,562 Less: Written off during the year 11,202,387 - Closing balance 209,100,070 303,394,498

11.00 Cash and cash equivalentsCash in Hand 100,000 13,004 Cash at Bank:One Bank Limited (SND)-DSE Broker 125,700,854 79,053,159 One Bank Limited (SND)-DSE Dealer 420,502 11,765,262 Prime Bank Limited (CD)-Operation 978,865 1,332,065 Prime Bank Limited (CD)-CSE Dealer 205,364 1,775,714 Prime Bank Limited (CD)-CSE Broker 5,930,918 4,471,992 Prime Bank Limited (SND)-IPO A/C 37,119 110,188 Prime Bank Limited (SND)-Principal 427,944 -

133,701,566 98,508,380 133,801,566 98,521,384

384 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

31.12.18 31.12.17

12.00 Share capitalAuthorized capital150,000,000 ordinary shares of Tk.10 each 1,500,000,000 1,500,000,000 Issued, subscribed and paid-up capital75,000,000 ordinary shares of Taka 10 each issued and fully paid each 750,000,000 750,000,000 Shareholding position of the company is as under Number of shares TakaPrime Bank Limited 71,250,000 712,500,000 Prime Bank Investment Limited 3,750,000 37,500,000

75,000,000 750,000,000 13.00 Retained earnings

Opening balance (58,315,338) (58,968,820)Add: Net profit during the year (95,660,080) 653,482

(153,975,417) (58,315,338)Less: Dividend - - Closing balance (153,975,417) (58,315,338)

14.00 Loan from Bank 393,452,756 433,499,527

This amount represents a renewable OD (Gen) facility from Prime Bank Limited, the parent company of Prime Bank Securities Limited. The loan has renewed vide sanction advise no. Prime/HO/CAD/CnIB/2018/69, Dated: January 02, 2018 for a period of 12 Months. The facility was initially provided on September 2011 with a limit of Tk.24 crore. The amount of facility was increased to the current limit of Tk 550,000,000 on 18 March 2013. The bank has extended the loan facility to PBSL to repay the loan after 24 months of being called, if required, on its 474th Board Meeting dated 25 February 2018. As per BAS 1, Para 73 & 75, the loan has been shown as Non-current liability instead of Current Liability on a historical basis.

15.00 Accounts PayableSecurity Deposits 237,496 165,680 Payable to DSE 679,249 183,902 Payable to DSE DLR 2,384 2,534 Payable to CDBL 62,567 21,848 Payable to Customer (Credit Balance) 115,790,428 37,290,483 Payable in transit (General) 46,340,504 16,578,351 Cheque in transit (PBIL) 3,790,561 20,306,902 Cheque in transit (026) 686,002 23,103,137 VAT Payable 178,430 111,753 Tax Payable 162,743 138,561

167,930,364 97,903,151 16.00 Provision for taxation

16.01 Current taxOpening balance 35,429,824 23,598,612 Add: Provision for the during year 6,357,815 11,831,212 Less: Settlement during the period - - Closing balance 41,787,639 35,429,824

16.02 Deferred taxOpening balance (780,486) (776,323)Add: Provision for the during year - (4,162)Less: Adjustment during the year 602,979 - Closing balance (177,507) (780,486)

41,610,132 34,649,339

The provision for income tax has been calculated based on the profit before provision considering admissible & inadmissble expenses as per provision of the Income Tax Ordinance 1984.

17.00 Provision for diminution in value of investment in sharesOpening balance 8,348,609 6,173,367 Add: Addition during the year - 2,175,241

8,348,609 8,348,609

* As per BSEC instruction circular reference SEC/CMRRCD/2009-193/196 dated 28 December 2016 and SEC/CMRRCD/2009-193/203 dated 28 December 2017 and subsequent press release no. BSEC/Mukhopatro(3rd Khondo)/2011/60; Date: 19 December, 2018 Prime Bank Securities Ltd has the option to maintain provision @ 20% of total unrealized loss arising from diminution in value of investments as at 31/12/2018. i.e. Tk. 3,828,727. But, we have maintained provision amounting to Tk. 8,348,609.00 which is 29% of total unrealized loss as of 31/12/2018.See Details in note 8.

385PRIME BANK

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

31.12.18 31.12.1718.00 Provision for impairment of margin loan

Opening balance 25,885,007 15,931,966 Add: Addition during the year - 10,685,091 Less : Written Off during the year (11,202,387) (732,049)

14,682,620 25,885,007

* As per BSEC instruction circular reference SEC/CMRRCD/2009-193/196 dated 28 December 2016 and SEC/CMRRCD/2009-193/203 dated 28 December 2017, subsequent press release no. BSEC/Mukhopatro(3rd Khondo)/2011/61; Date: 26 December, 2018, Prime Bank Securities Ltd has the option to maintain provision @ 20% of total negative equity arising from margin loan as at 31/12/2018. i.e. Tk. 81,65,495.40 But, we have maintained provision amounting to Tk. 14,682,620 which is around 36% of total negative equity balance as of 31/12/2018.

19.00 Provision for expenses

Water bill 4,450 4,000 Telephone bill 35,000 35,000 Electricity bill 165,000 130,000 Wasa bill 40,000 28,000 Audit fee 172,500 115,000 Software maintenance 120,000 120,000 Internet bill - 20,000 Fuel Expenses-Generator - 2,000 Incentive bonus - 1,517,556 WAN Connectivity - 48,400 Professional fees 74,750 - Gratuity Fund 4,100,000 - Howla & Commission 578,887 Driver Allowance 4,355 - Internship Allowance 5,400 - Business Associate Commission 96,574 -

5,396,917 2,019,956 20.00 Revenue from brokerage commission

Commission from Merchant BankDhaka Stock Exchange 6,662,783 17,516,727 Chittagong Stock Exchange 1,575 2,063

6,664,358 17,518,790 Commission from PBSLDhaka Stock Exchange 11,260,104 17,874,066 Chittagong Stock Exchange 107,308 36,615

11,367,412 17,910,681

18,031,770 35,429,471 21.00 Interest income

Interest income from margin loan 32,354,840 35,117,057 Interest on deposits 3,293,316 3,664,153 Interest on EHBL Loan 10,404 -

35,658,560 38,781,210

IFRS 9 requires that interest revenue shall be calculated by using the effective interest method. This shall be calculated by applying the effective interest rate to the gross carrying amount of a financial asset. Due to the downward trend of the capital market over the years, there is significant uncertainty about the inflow of economic benefits from interest on margin loan against most of the loanees with negative equity. However, departing from IFRS 9, in some negative equity portfolios, the company recognised interest as income amounting to Tk. 18,857,455 considering the fundamental strength of the holding scripts and future capital market prospects of Bangladesh as the demutualization of stock exchanges has already been occurred, foreign strategic investment has been done in DSE, stability in political environment and other favorable macroeconomic indicators in Bangladesh. Subsequently, the majority of the said negative equity portfolios has become positive (recoverable). However, the company has adequate provision (Note 18) against the negative equity.

386 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

2018 201722.00 Other operating income

BO Opening charge 76,000 25,000 CDBL income 56,109 11,897 BO Account Maintenance Fee 120,350 69,500 Margin A/C Annul Maintenance Fee 97,500 93,500 Account Closing Charge 8,455 3,536 IPO Income 2,345 2,035 Cheque Dishonor Charge 800 -

361,559 205,468 23.00 Capital Gain

Gain from Investment in Share 9,541,257 7,570,227 Gain on Sale of Fixed Assets 649,996 256,748

10,191,253 7,826,975 24.00 Dividend Income

Dividend Income from DSE 7,215,106 7,215,106 Dividend Income from CSE 2,143,665 2,572,398 Dividend Income from Investment in Share 5,190,894 2,455,522

14,549,665 12,243,026 25.00 Operating expenses

Salary & allowances 25.01 32,753,172 17,747,130 Festival Bonus 2,812,052 1,731,742 Incentive Bonus - 1,351,381 Office rent 7,813,302 7,470,725 Utility bills 25.02 2,539,648 1,967,694 Conveyance Bill 90,411 76,765 Postage & Courier 4,912 8,635 Board Meeting Attendance Fees 340,400 200,100 Business Development Expenses 564,847 150,927 Advertisement 46,000 39,150 Audit Fee 172,500 115,000 Legal Fee 80,850 - Fees and renewal 25.03 335,146 429,404 Professional fee 385,250 681,206 Training expenses 132,000 78,210 Security & Cleaning 986,208 666,169 Newspaper & magazine 23,308 26,037 Internship Allowance 160,500 - Entertainment 619,516 462,689 Vehicle expenses 1,260,589 920,128 Travelling Alloawnce 106,208 - Computer Consumables 260,205 144,834 Cleaning Material 112,291 67,124 Office Supply 181,413 90,672 Stationery 187,400 114,289 Printing 224,586 22,540 Car Parking Expenses 34,000 - Depreciation and amortization 25.04 2,553,230 1,249,889 Repair & maintenance - 3,450 Donation - 40,000 Bidding Fee - 5,000 Misc Expenses - 10,000 Office Shifting Cost - 94,456

54,779,944 35,965,346

387PRIME BANK

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

2018 2017 25.01 Salary & allowances

Basic salary 15,249,000 9,470,046 House rent 6,185,988 3,987,075 Conveyance allowance 744,270 349,226 Medical allowance 2,182,129 1,248,987 Leave fare assistance 1,433,439 816,773 Provident fund 1,246,893 927,639 Car Alloawnce 1,560,158 947,384 Cessation Adjustment Allowance 1,388 - Gratuity Fund 4,100,000 - Earned Leave Encashment 49,907 -

32,753,172 17,747,130 25.02 Utility bills

Electricity bill 1,376,424 1,028,679 Telephone bill 345,179 273,904 Wasa bill 148,971 125,872 Water bill (Drinking) 54,257 38,626 Fuel-Generator 3,517 213 Internet bill 145,978 118,000 WAN Connectivity 465,322 382,400

2,539,648 1,967,694 25.03 Fees & renewal

Dhaka Stock Exchange Ltd 1,700 20,700 Chittagong Stock Exchange Ltd - 122,000 Bangladesh Securities Exchange Commission 43,500 - Register of Joint Stock Companies & Firms 24,046 20,414 Central Depository Bangladesh Limited 4,600 4,600 Trade Licence Fees 17,000 24,490 TREC Renewal - Dhaka Stock Exchange Ltd 50,000 50,000 TREC Renewal - Chittagong Stock Exchange Ltd 50,000 50,000 Trade Certificates Renewal 75,000 115,000 DBA Membership Subscription 12,500 - IPO Bidding & Subscription Fee 15,000 - Entrance Fee 4,800 1,200 IPO Subscription Fee (DLR) 30,000 11,000 TWS Shifting Charge 7,000 5,000 New Branch Application Fee - 2,500 Office Relocation Fee - 2,500

335,146 429,404 25.04 Depreciation & amortization

Furniture & fixture 1,489,619 964,426 Computer & hardware 267,867 111,422 Office equipment 159,689 25,016 Vehicles 606,600 84,085

2,523,775 1,184,949 Software 29,455 64,940

2,553,230 1,249,889 26.00 Financial Expenses

Bank charge & commission 161,630 107,485 BG charge & commission 460,000 230,000 Interest on Bank loan 19,614,470 27,658,506

20,236,100 27,995,991 27.00 Direct expenses

Howla & Commission 578,957 211,364 Laga 2,113,452 4,255,143 CDBL charge 621,931 700,055 Investor protection fund 6,850 17,387 Business Associate Commission 159,142 -

3,480,332 5,183,949

388 PRIME BANK

ANNUAL REPORT 2018

Prime Bank Securities LimitedNotes to the Financial StatementsFor the year ended 31 December 2018

Amount in Taka

2018 2017

28.00 Loss on Sale of DSE Share to Strategic Investor 88,995,718 -

In accordance with the provision of the Exchange Demutualization Act-2013 and Bangladesh Security Exchange Commission (BSEC) approved Demutualization Scheme, DSE has sold 25% of it’s share to Strategic Investor, Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) Consortium @ Tk. 21 per share. Subsequently, Prime Bank Securities has received Tk. 37,879,317 from DSE against sale proceeds. But, the cost price of each share of DSE cannot be measured reliably, as no value has been assigned to, and recorded against, the TREC License as mentioned in note # 5. However, the approximate cost price of each share is Tk. 70.34 excluding the value of TREC License. As such, by considering a conservative approach, we have realized the loss against sell of 25% share of DSE in our books of accounts.

29.00 Earnings per share

Net profit after tax (95,660,080) 653,482 Weighted average outstanding number of shares 75,000,000 75,000,000 Earnings per share (1.275) 0.009

30.00 Bank guarantee

Prime Bank Limited has issued Prime Bank Securities Limited a Bank Guarantee no. Prime/BG(L)/MTJ/04/2018 dated 11.01.2018 for maintaining additional member’s margin as specified in sub-regulation (3) of regulation (4) of Dhaka Stock Exchange (TREC HOLDER’S MARGIN) Regulataions 2013 worth of Tk. 100,000,000 (Taka Ten Crore) from dated 12.01.2018 to 31.12.2018 under sanctioned advice no. Prime/HO/CAD/CnIB/2018/69, Dated: January 02, 2018.

31.00 Disclosure on Payments/Perquisites to Directors and Key Management Personnel (As per requirement of Companies Act 1994, Schedule-XI, part-II)

31.01 Paid to DirectorsBoard Meeting Attendance Fees 340,400 200,100

340,400 200,100 31.02 Paid to Key Management Personnel

Short Term Employee Benefits 13,029,247 6,021,250 Post Employment Benefits 457,721 313,048

13,486,968 6,334,298

Key management Personnel are those Persons having authority and responsibility for Planning, Directions and Controlling the activities of the Company.

i) No Compensation/ Other allowance/ commission was allowed to Directors including Managing Director, Managing Agent or manager of the company except as stated above.

ii) There is no amount payable to Directors including including Managing Director, Managing Agent or manager of the Company for any sort of commission on purchases, profit or guarantee.

iii) BOD Meeting attendance fee for attending each Board Meeting was Tk 5,000 for each director. The remuneration was enhanced to Tk. 8,000 for each director in it’s 33rd Board of Directors Meeting held on July 20, 2017.

32.00 Disclosure regarding Information of Employees (As per requirement of Companies Act 1994, Schedule-XI, part-II)The number of employees and expenses incurred for employees during the year as follows. ParticularsNumber of employees:

(i) Below Tk. 36,000 p.a. - - (ii) Tk. 36,000 p.a. and above 36 24

Salary & Allowance Paid/ Payable to Employees:(i) Below Tk. 36,000 p.a. - - (ii) Tk. 36,000 p.a. and above 35,565,224 19,882,869

35,565,224 19,882,869

389PRIME BANK

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390 PRIME BANK

ANNUAL REPORT 2018

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8

FINANCIAL STATEMENTSOF PRIME EXCHANGE CO. PTE. LTD., SINGAPORE

Independent Auditors’ Report to the Member

of Prime Exchange Co. Pte. Ltd.

Statement of Profit or Loss & Other Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

392 PRIME BANK

ANNUAL REPORT 2018

INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OFPrime Exchange Co. Pte. Ltd.(Incorporated in the Republic of Singapore)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Prime Exchange Co. Pte. Ltd. (the “Company”), which comprise the statement of financial position as at 31 December 2018, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act”) and Financial Reporting Standards in Singapore (FRSs) so as to give a true and fair view of the financial position of the Company as at 31 December 2018 and of the financial performance, changes in equity and cash flows of the Company for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises the Directors’ Statement set out on pages 1 and 2.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Directors for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Act and FRSs, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The directors’ responsibilities include overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

393PRIME BANK

INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OFPrime Exchange Co. Pte. Ltd.(Incorporated in the Republic of Singapore)

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

C. C. YANG & CO.

PUBLIC ACCOUNTANTS AND

CHARTERED ACCOUNTANTS

SINGAPORE

04 March 2019

394 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPOREStatement of Profit or Loss and other Comprehensive IncomeFOR THE YEAR ENDED 31 DECEMBER 2018

Note$

2018 2017

Revenue 3 330,401 348,459

Other Items of Income

Other Income 4 4,960 9,895

Foreign Currency Gains 507,040 749,997

Other Items of Expense

Employee Benefits Expense 5 (412,472) (459,671)

Depreciation 8 (32,407) (29,643)

Other Expenses 6 (373,022) (432,067)

Profit Before Tax from Continuing Operations 24,500 186,970

Income Tax Expense 7 657 (12,579)

Profit from Continuing Operations,

Net of Tax 25,157 174,391

Other Comprehensive Income

Other Comprehensive Income, Net of Tax - -

Total Comprehensive Income $ 25,157 $ 174,391

The accompanying notes form an integral part of these financial statements

(Expressed in Singapore Dollars)

395PRIME BANK

(Expressed in Singapore Dollars)

PRIME EXCHANGE CO. PTE. LTD., SINGAPOREStatement of Financial PositionAs At 31 December 2018

Note$

2018 2017

ASSETS

Non-Current Assets

Property, Plant and Equipment 8 31,961 59,896

Total Non-Current Assets 31,961 59,896

Current Assets

Deposits 73,190 73,287

Prepayments 10,957 10,891

Cash and Bank Balances 9, 10 1,383,667 1,762,377

Total Current Assets 1,467,814 1,846,555

Total Assets $ 1,499,775 $ 1,906,451

EQUITY AND LIABILITIES

Equity

Share Capital 11 804,727 804,727

Retained Earnings 25,157 174,391

Total Equity 829,884 979,118

Non-Current Liabilities

Deferred Tax Liabilities 12 3,632 4,677

Total Non-Current Liabilities 3,632 4,677

Current Liabilities

Income Tax Payable 3,105 11,715

Trade and Other Payables 13 663,154 910,941

Total Current Liabilities 666,259 922,656

Total Liabilities 669,891 927,333

Total Equity and Liabilities $ 1,499,775 $ 1,906,451

The accompanying notes form an integral part of these financial statements

396 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPOREStatement of Changes in Equity For The Year Ended 31 December 2018

Note

$

Total Equity ShareCapital

Retained Earnings

Balance at 1/1/2018 979,118 804,727 174,391

Distributions to Owner

Dividends 14 (174,391) - (174,391)

Total Distributions to Owner (174,391) - (174,391)

Total Comprehensive

Income for the Year - 2018 25,157 - 25,157

Balance at 31/12/2018 $ 829,884 $ 804,727 $ 25,157

Balance at 1/1/2017 850,474 804,727 45,747

Distributions to Owner

Dividends 14 (45,747) - (45,747)

Total Distributions to Owner (45,747) - (45,747)

Total Comprehensive

Income for the Year - 2017 174,391 - 174,391

Balance at 31/12/2017 $ 979,118 $ 804,727 $ 174,391

The accompanying notes form an integral part of these financial statements

(Expressed in Singapore Dollars)

397PRIME BANK

PRIME EXCHANGE CO. PTE. LTD., SINGAPOREStatement of Cash FlowsFor The Year Ended 31 December 2018

Note$

2018 2017

Operating Activities

Profit Before Tax from Continuing Operations 24,500 186,970

Total Adjustment 32,407 29,643

Depreciation 32,407 29,643

Operating Cash Flows Before Changes In

Working Capital 56,907 216,613

Decrease in Other Receivables 97 21,453

Increase in Prepayments (66) (446)

Increase (Decrease) in Trade and Other Payables (247,787) 626,185

Cash Flows From (Used In) Operations (190,849) 863,805

Income Tax Paid (8,998) (1,871)

Net Cash Flows From (Used In) Operating

Activities (199,847) 861,934

Investing Activities

Purchase of Property, Plant and Equipment (4,472) (33,595)

Net Cash Flows Used In Investing Activities (4,472) (33,595)

Financing Activities

Dividends Paid on Ordinary Shares (174,391) (45,747)

Net Cash Flows Used In Financing Activities (174,391) (45,747)

Net Increase (Decrease) in Cash and Cash

Equivalents (378,710) 782,592

Cash and Cash Equivalents, Statement of

Cash Flows, Beginning Balance 1,762,377 979,785

Cash and Cash Equivalents, Statement of

Cash Flows, Ending Balance 10 $ 1,383,667 $ 1,762,377

The accompanying notes form an integral part of these financial statements

(Expressed in Singapore Dollars)

398 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. CORPORATE INFORMATION

Prime Exchange Co. Pte. Ltd. is a limited liability company incorporated and domiciled in the Republic of Singapore whose registered office and principal place of business is located at 2A Desker Road Singapore 209549 and another two branches at Block 134 #01-305 Jurong Gateway Road Singapore 600134 and 55 Benoi Road #01-14 Joo Koon Bus Interchange Singapore 629907.

The Company is a wholly-owned subsidiary of Prime Bank Limited, incorporated in Bangladesh, which is also the Company’s ultimate holding company.

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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

Functional currency

The management has determined the currency of the primary economic environment in which the Company operates i.e. functional currency, to be the Singapore dollars. Revenue and major costs of providing services including major operating expenses are primarily influenced by fluctuations in Singapore dollars.

The financial statements are presented in Singapore dollars.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Company has adopted all the new and revised standards that are relevant to its operations and effective for annual financial periods beginning on or after 1 January 2018. The adoption of these standards did not have any effect on the financial performance or position of the Company except as discussed below.

FRS 109 Financial Instruments

FRS 109 replaces FRS 39 Financial instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting.

The Company applied FRS 109 retrospectively, with an initial application date of 1 January 2018. The Company has not restated comparative information which continues to be reported under FRS 39 and the disclosure requirements of FRS 107 Financial Instruments: Disclosures relating to items within the scope of FRS 39.The adoption did not have any significant impact to the Company’s opening retained earnings and net assets.

Classification and measurement

Under FRS 109, debt instruments are subsequently measured either at fair value through profit or loss (FVPL), amortised cost or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the Company’s business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding.

The assessment of the Company’s business model was made as of the date of initial application, 1 January 2018. The assessment of whether contractual cash flows on debt instruments solely comprised principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.

399PRIME BANK

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

The classification and measurement requirements of FRS 109 did not have a significant impact to the Company. The following are the changes in the classification and measurement of the Company’s financial assets:

• Other receivables classified as loans and receivables as at 31 December 2017 are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. These were classified and measured as debt instruments at amortised cost beginning 1 January 2018.

The Company has not designated any financial liabilities at FVPL. These are no changes in classification and measurement for the Company’s financial liabilities.

Impairment

The adoption of FRS 109 has fundamentally changed the Company’s accounting for impairment losses for financial assets by replacing FRS 39’s incurred loss approach with a forward-looking expected credit loss (ECL) approach. FRS 109 requires the Company to recognise an allowance for ECLs for all debt instruments not held at FVPL. Upon adoption of FRS 109, no further impairment loss was provided for the previous financial year.

FRS 115 Revenue from Contracts with Customers

FRS 115 supersedes FRS 11 Construction Contracts, FRS 18 Revenue and related interpretations and it applies, with limited exceptions, to all revenue arising from contracts with customers. FRS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflect the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

FRS 115 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

The Company adopted FRS 115 using the modified retrospective method of adoption with the date of initial application of 1 January 2018. Under this method, the standard can be applied either to all contracts at the date of initial application or only to contracts that are not completed at this date. The Company elected to apply the standard to all contracts as at 1 January 2018.

The cumulative effect of initially applying FRS 115 is recognised at the date of initial application as an adjustment to the opening balance of retained earnings. Therefore, the comparative information was not restated and continues to be reported under FRS 11, FRS 18 and related interpretations. The adoption did not have any significant impact to the Company’s opening retained earnings and net assets.

2.3 Standards issued but not yet effective

The Company has not adopted the following standards and interpretations that have been issued but are only effective for annual financial periods beginning on or after the respective dates.

Effective 1 January 2019

Amendments to FRS 19 Plan Amendment, Curtailment or Settlement

Amendments to FRS 109 Prepayment Features With Negative Compensation

FRS 116 Leases

INT FRS 123 Uncertainty Over Income Tax Treatments

Improvements to FRSs (March 2018)

Amendments to FRS 12 Income Taxes

400 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

Except for FRS 116, the directors expect that the adoption of the other standards above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of FRS 116 is described below.

FRS 116 Leases

FRS 116 supersedes FRS 17 Leases and introduces a new single lease accounting model which eliminates the current distinction between operating and finance leases for lessees. FRS 116 requires lessees to recognise right-of-use assets and lease liabilities for all leases with a term of more than 12 months, except where the underlying asset is of low value. The right-of-use asset is depreciated and interest expense is recognised on the lease liability. The accounting requirements for lessors have not been changed substantially, and continue to be based on classification as operating and finance leases. Disclosure requirements have been enhanced for both lessors and lessees. The directors are currently assessing the impact of FRS 116 on the financial statements.

2.4 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost includes the cost of replacing part of the property, plant and equipment. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Other subsequent expenditure is recognised as repair and maintenance expense in the profit or loss during the financial year in which it is incurred.

Depreciation is computed on the straight-line method to write off the cost of property, plant and equipment over the estimated useful lives. The estimated useful lives of property, plant and equipment are as follows:

Furniture & fittings 3 years

Office equipment 3 years

Renovation 3 years

Fully depreciated assets are retained in the accounts until they are no longer in use and no further charge for depreciation is made in respect of these assets.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at the end of each reporting year to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in the profit or loss in the financial year the asset is de-recognised.

2.5 Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Company makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Impairment losses of continuing operations are recognised in the profit or loss, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

401PRIME BANK

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

2.6 Financial instruments

These accounting policies are applied on and after the initial application date of FRS 109, 1 January 2018:

(a) Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when the Company becomes a party to the contractual provisions of the instruments.

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Trade receivables are measured at the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third party, if the trade receivables do not contain a significant financing component at initial recognition.

Subsequent measurement

Investments in debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the contractual cash flow characteristics of the asset. The three measurement categories for classification of debt instruments are amortised cost, FVOCI and FVPL. The Company only has debt instruments at amortised cost.

Financial assets that are held for the collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Financial assets are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the assets are de-recognised or impaired, and through the amortisation process.

De-recognition

A financial asset is de-recognised where the contractual right to receive cash flows from the asset has expired. On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income for debt instruments is recognised in profit or loss.

(b) Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at FVPL, directly attributable transaction costs.

Subsequent measurement

After initial recognition, financial liabilities that are not carried at FVPL are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised, and through the amortisation process.

De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expired. On de-recognition, the difference between the carrying amounts and the consideration paid is recognised in profit or loss.

These accounting policies are applied before the initial application date of FRS 109, 1 January 2018:

402 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

(a) Financial assets

Financial assets are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial assets at initial recognition.

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Such assets are initially recognised at fair value, plus directly attributable transaction costs and subsequently carried at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in the profit or loss when the loans and receivables are de-recognised or impaired, and through the amortisation process.

A financial asset is de-recognised when the contractual right to receive cash flows from the asset has expired. On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised directly in other comprehensive income is recognised in the profit or loss.

The Company classifies the following financial assets as loans and receivables:

• Cash and bank balances

• Other receivables

(b) Financial liabilities

Financial liabilities are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at FVPL, directly attributable transaction costs.

Subsequent to initial recognition, derivatives are measured at fair value. Other financial liabilities (except for financial guarantee) are measured at amortised cost using the effective interest method.

For financial liabilities other than derivatives, gains and losses are recognised in the profit or loss when the liabilities are de-recognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in the profit or loss. Net gains or losses on derivatives include exchange differences.

A financial liability is de-recognised when the obligation under the liability is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.

(c) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position, when and only when, there is a currently enforceable legal right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

2.7 Impairment of financial assets

These accounting policies are applied on and after the initial application date of FRS 109, 1 January 2018:

The Company recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at FVPL and financial guarantee contracts. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is recognised for credit losses expected over the remaining life of the exposure, irrespective of timing of the default (a lifetime ECL).

For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment which could affect debtors’ ability to pay.

403PRIME BANK

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements31 December 2018

The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

These accounting policies are applied before the initial application date of FRS 109, 1 January 2018:

The Company assesses at the end of each reporting year whether there is any objective evidence that a financial asset or group of financial assets is impaired and recognises an allowance for impairment when such evidence exists.

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the financial asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the profit or loss.

2.8 Cash and cash equivalents

Cash and cash equivalents comprise cash and bank balances that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

2.9 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting year and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.10 Employee benefits

Defined contribution plan

As required by law, the Company makes contributions to the Central Provident Fund (CPF) scheme in Singapore, a defined contribution pension scheme. CPF contributions are recognised as compensation expenses in the same period as the employment that gives rise to these contributions.

2.11 Leases

As lessee

Operating leases

Leases where substantially all the risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over the lease term.

The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

2.12 Revenue recognition

These accounting policies are applied on and after the initial application date of FRS 115, 1 January 2018:

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

404 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

Revenue is recognised when the Company satisfies a performance obligation by transferring a promised good or service to the customer, which is when the customer obtains control of the good or service. A performance obligation may be satisfied at a point in time or over time. The amount of revenue recognised is the amount allocated to the satisfied performance obligation.

Commission income

Commission income is recognised when the entity satisfies the performance obligation at a point of time when the significant acts have been completed as the services are provided.

These accounting policies are applied before the initial application date of FRS 109, 1 January 2018:

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured regardless of when the payment is made. Revenue is measured at the fair value consideration received or receivable, taking into account contractually defined terms of payments and excluding taxes or duty.

Commission income

Commission income is recognised upon completion and delivery of the service to the customers.

2.13 Government grants

Government grants are recognised when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Where the grant relates to an expense item, the fair value is recognised as income in the profit or loss over the periods necessary to match them on a systematic basis to the costs for which the grants are intended to compensate.

2.14 Income taxes

(i) Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Income Tax Authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting year.

Current taxes are recognised in the profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(ii) Deferred tax

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting year between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax asset is reviewed at the end of each reporting year and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at the end of each reporting year and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of each reporting year.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

405PRIME BANK

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

(iii) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

2.15 Foreign currency transactions

Transactions in foreign currencies are measured and recorded in Singapore dollars on initial recognition at exchange rates approximating those ruling at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting year. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in foreign currency are translated using the exchange rates at the date when the fair value was measured.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting year are recognised in the profit or loss.

2.16 Share capital

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.

2.17 Dividend

Interim dividend is recorded in the financial year in which it is declared payable. Final dividend is recorded in the financial year in which the dividend is approved by the shareholders.

2.18 Significant accounting judgements and estimates

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting year. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting year are discussed below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Useful lives of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment estimated useful lives. Management estimates the useful lives of these property, plant and equipment to be 3 years. Changes in the expected level of usage and technological developments could impact the economic useful lives of these assets, therefore, future depreciation charges could be revised. The carrying amounts of the Company’s property, plant and equipment at the end of the reporting year are disclosed in Note 8 to the financial statements.

Income taxes

Significant judgement is involved in determining the Company’s provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of the Company’s income tax payable and deferred tax liabilities at 31 December 2018 were $3,105 (2017 – $11,715) and $3,632 (2017 – $4,677) respectively.

406 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

3. REVENUE

$

2018 2017

Commission income $ 330,401 $ 348,459

The above revenue from commission income is recognised at a point in time. The contract is for a duration of less than 12 months.

4. OTHER INCOME

$

2018 2017

Government grants $ 4,960 $ 9,895

5. EMPLOYEE BENEFITS EXPENSE

$

2018 2017

Salaries, bonuses and other

related costs 391,773 438,398

Employer’s contributions

to Central Provident Fund 20,699 21,273

$ 412,472 $ 459,671

The above includes remuneration of key management personnel as shown in Note 16(b) to the financial statements.

6. OTHER EXPENSES

The following items have been included in arriving at other expenses:

$

2018 2017

Advertisement 21,335 27,202

Bank and nets charges 34,378 65,942

Casual labour 7,190 14,429

Entertainment 7,659 8,471

General expenses 4,285 8,761

Insurance 31,335 29,112

Licence fees 6,000 6,250

Printing and stationery 8,941 8,841

Professional and legal fees 10,213 11,191

Rental of premises 162,860 175,110

Repair & maintenance 9,405 8,925

Telephone charges 23,897 23,081

Transportation 9,300 9,197

Travelling 5,326 5,874

Utilities 16,937 17,398

407PRIME BANK

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

$

2018 2017

7. INCOME TAX EXPENSE

Based on results for the year

Current tax 3,118 11,728

Deferred tax (Note 12) (2,619) (428)499 11,300

Under (Over) provision in

respect of prior years

Current tax (2,730) (13)

Deferred tax (Note 12) 1,574 1,292$ (657) $ 12,579

The reconciliation between the tax expense (benefit) and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2018 and 2017 is as follows:

Profit before income tax $ 24,500 $ 186,970

Tax expense calculated at tax

rate of 17% (2017 – 17%) 4,165 31,785

Expenses not deductible

for tax purposes 2,147 778

Income not subject to tax (285) (1,156)

Productivity and innovation credit - (1,665)

Singapore statutory stepped

income exemption (4,748) (15,510)

Corporate income tax rebate (780) (2,932)

Under (Over) provision in

respect of prior years

Current tax (2,730) (13)

Deferred tax (Note 12) 1,574 1,292

$ (657) $ 12,579

408 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

8. PROPERTY, PLANT AND EQUIPMENT

$

Furniture& fittings

Office equipment

Renovation Total

2018

Cost:

At 1.1.2018 10,781 161,741 265,082 437,604

Additions 949 3,523 - 4,472

At 31.12.2018 11,730 165,264 265,082 442,076

Accumulated

depreciation:

At 1.1.2018 10,591 145,650 221,467 377,708

Depreciation

for the year 287 9,293 22,827 32,407

At 31.12.2018 10,878 154,943 244,294 410,115

Net book value:

At 31.12.2018 $ 852 $ 10,321 $ 20,788 $ 31,961

2017

Cost:

At 1.1.2017 10,781 155,626 237,602 404,009

Additions - 6,115 27,480 33,595

At 31.12.2017 10,781 161,741 265,082 437,604

Accumulated

depreciation:

At 1.1.2017 9,953 137,182 200,930 348,065

Depreciation

for the year 638 8,468 20,537 29,643

At 31.12.2017 10,591 145,650 221,467 377,708

Net book value:

At 31.12.2017 $ 190 $ 16,091 $ 43,615 $ 59,896

409PRIME BANK

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

9. CASH AND BANK BALANCES

The cash and bank balances include an amount of $647,144 (2017 – $880,412) (Note 13) received from customers for outward remittance at year end date. The amount was subsequently remitted on 4 January 2019 (2017 – 4 January 2018).

10. CASH AND CASH EQUIVALENTS

Cash and cash equivalents are denominated in the following currencies:

$

2018 2017

Singapore Dollars 1,167,225 1,426,216

Taka 178,851 177,001

Indian Rupees 21,265 143,375

Philippine Peso 16,326 15,785

$ 1,383,667 $ 1,762,377

11. SHARE CAPITAL

$

2018 2017

Issued and fully paid

804,727 (2017 – 804,727) ordinary shares $ 804,727 $ 804,727

The holder of ordinary shares is entitled to receive dividends as and when declared by the Company. All ordinary shares of no par value carry one vote per share without restriction.

12 DEFERRED TAX LIABILITIES

$

2018 2017

Deferred tax liabilities $ 3,632 $ 4,677

The movements in deferred tax liabilities during the year are as follows:

$

AcceleratedTax

DepreciationTotal

Balance at 1.1.2017 3,813 3,813

Charged (Credited) to profit or – 2017

- Current year (Note 7) (428) (428)

- Under provision in prior year (Note 7) 1,292 1,292

Balance at 31.12.2017 4,677 4,677

Charged (Credited) to profit or loss – 2018

- Current year (Note 7) (2,619) (2,619)

- Under provision in prior year (Note 7) 1,574 1,574

Balance at 31.12.2018 $ 3,632 $ 3,632

410 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

13. TRADE AND OTHER PAYABLES

$

2018 2017

Accruals 15,405 30,529

Funds received from customers (Note 10) 647,144 880,412

Advance receipt 605 -

$ 663,154 $ 910,941

14. DIVIDENDS

$

2018 2017

Exempt one-tier final dividend

of $0.21671 (2017 – $0.05685)

per ordinary share in respect of

year ended 31 December 2017

(2017 – 31 December 2016) $ 174,391 $ 45,747

15. OPERATING LEASE COMMITMENTS

At the end of the reporting year, the Company was committed to making the following payments in respect of rental commitments under non-cancellable operating leases:

$

2018 2017

Leases which expire:

Within one year 149,210 159,500

Later than one year

but within five years 310,000 457,250

$ 459,210 $ 616,750

16. RELATED PARTY TRANSACTIONS

An entity or individual is considered a related party for the purpose of these financial statements if it has the ability (directly or indirectly) to control or exercise significant influence over the operating and financial decisions of the Company or vice versa, or where it is subject to common control or common significant influence.

The Company has the following significant related party transactions entered with its related parties and the effect of these transactions at terms agreed between the parties are reflected in these financial statements:

(a) Transactions with related parties

$

2018 2017

Related party

Professional fee 5,618 5,350

Other expenses 495 794

411PRIME BANK

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

(b) Compensation of key management personnel

$

2018 2017

Key Executive Officer

Salary, bonus and other

related costs $ 111,522 $ 119,065

17. CATEGORIES OF FINANCIAL INSTRUMENTS

The categories of financial instruments as at the end of the reporting year are as follows:

$

2018 2017

Financial assets

Financial assets at amortised cost 1,456,857 -

Loans and receivables (including cash and bank balances) - 1,835,664

$ 1,456,857 $ 1,835,664

Financial liabilities

Financial liabilities at amortised cost $ 663,154 $ 910,941

18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to financial risks arising from its operations and the use of financial instruments. The Company’s financial instruments comprise financial assets and liabilities. Financial assets and liabilities mainly relate to receivables and payables which arise directly from its operations.

The main purpose for holding or issuing financial instruments is to raise and manage the finances for the Company’s operating, investing and financing activities. There is exposure to the financial risks on the financial instruments such as credit risk, liquidity risk and market risk comprising interest rate risk, foreign currency risk and other price risk exposures. The management has certain practices for the management of financial risks. However, these are not documented in formal written documents. The following guidelines are followed: All financial risk management activities are carried out and monitored by senior management staff. All financial risk management activities are carried out following good market practices.

The Company does not hold or issue derivative financial instruments for trading purposes or to hedge against fluctuations in interest and foreign exchange rates.

The following sections provide details regarding the Company’s exposure to the above mentioned financial risks and the objectives, policies and processes for the management of these risks. There has been no change to the Company’s exposure to these financial risks or the manner in which it manages and measures the risks.

Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Company’s exposure to credit risk arises primarily from other receivables. For other financial assets (including cash and cash equivalents), the Company minimises credit risk by dealing exclusively with high credit rating counterparties.

The Company has no significant concentration of credit risk. The Company has policies in place to ensure that transactions are entered into only with counterparties that are of acceptable credit quality. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant.

The maximum exposure to credit risk is represented by the net carrying amount of financial assets recorded in the financial statements.

Other receivables that are neither past due nor impaired are with creditworthy debtors with good payment record with the Company. Cash and cash equivalents that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

412 PRIME BANK

ANNUAL REPORT 2018

PRIME EXCHANGE CO. PTE. LTD., SINGAPORENotes to the Financial Statements 31 December 2018

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities.

The Company maintains sufficient cash and cash equivalents, and internally generated cash flows to finance their activities.

As at the end of the reporting year, the expected contractual undiscounted cash outflows of financial liabilities are due in less than a year.

Interest rate risk

The Company has no exposure to movements in market interest rates.

Foreign currency risk

The Company’s remittance activities are transacted in Taka (BDT), Indian Rupees (INR), United States dollars (USD) and Philippine Peso (PESO). Exchange rate movements in Taka, the Indian Rupees, the United States dollars, Philippine Peso and the Singapore dollars, the Company’s functional currency, exposed the Company to foreign currency risk.

The Company does not use derivative financial instruments to hedge against the volatility associated with foreign currency transactions as the Company’s exposure to foreign currency risk is minimal.

Sensitivity analysis for foreign currency risk

$

2018 2017

Increase (Decrease) in

profit net of tax

Increase (Decrease) in

profit net of tax

BDT/SGD - strengthened Nil % (2017 – 9%) - 13,222- weakened Nil% (2017 – 9%) - (13,222)

INR/SGD - strengthened 6% (2017 – 1%) 1,090 1,190- weakened 6% (2017 – 1%) (1,090) (1,190)

PESO/SGD strengthened 5% (2017 – 7%) 625 917weakened 5% (2017 – 7%) (625) (917)

Equity price risk

The Company has no exposure to equity price risk.

Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The total capital of the Company as at the end of the reporting year is the “Total equity” as presented on the statement of financial position.

The Company is not subject to any externally imposed capital requirements.

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction, other than in a forced or liquidation sale.

Financial instruments whose carrying amounts approximate fair values

Management has determined that the carrying amounts of cash and bank balances, deposits and trade and other payables, based on their notional amounts, reasonably approximate their fair values because these are mostly short term in nature.

20. AUTHORISATION OF FINANCIAL STATEMENTS

The financial statements for the year ended 31 December 2018 were authorised for issue in accordance with a resolution of the directors on 4 March 2019.

FINANCIAL STATEMENTSOF PBL EXCHANGE (UK) LTD.

Independent Auditors’ Report to the Members

of PBL Exchange (UK) Ltd.

Profit and Loss Account

Balance Sheet

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

414 PRIME BANK

ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITEDIndependent Auditor’s ReportTo the Members of PBL Exchange (UK) Limited

Opinion

We have audited the financial statements of PBL EXCHANGE (UK) LIMITED (the ‘company’) for the Period ended 31 December 2018 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company’s affairs as at 31 December 2018 and of its profit for the Period then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concernWe have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other informationThe directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors’ report for the financial Period for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

415PRIME BANK

PBL EXCHANGE (UK) LIMITEDIndependent Auditor’s ReportTo the Members of PBL Exchange (UK) Limited

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors’ Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit; or

• the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies’ exemption in preparing the Directors’ Report.

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Seema Siddiqui (Senior Statutory Auditor)

for and on behalf of Reddy Siddiqui LLP 18 February 2019

Chartered Accountants

Statutory Auditor 183-189 The Vale

Acton

London

W3 7RW

416 PRIME BANK

ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITEDProfit and Loss AccountFor the year ended 31 December 2018

£2018 2017

Turnover 550,830 473,691

Administrative expenses (506,805) (453,452)

Other operating income 6,780 _

Operating profit 50,805 20,239

Interest payable and similar expenses (8) (6)Profit before taxation 50,797 20,233

Tax on profit (13,515) (8,250)

Profit for the financial Period 37,282 11,983

417PRIME BANK

PBL EXCHANGE (UK) LIMITEDStatement of Comprehensive IncomeFor the year ended 31 December 2018

£

2018 2017

Profit for the year 37,282 11,983

Other comprehensive income - -

Total comprehensive income for the Period 37,282 11,983

418 PRIME BANK

ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITEDBalance SheetAs at 31 December 2018

Notes£

2018 2017

Fixed assets

Tangible assets 4 57,586 77,922

Current assets

Debtors - deferred tax 46,322 59,838

Debtors - other 5 18,119 5,916

Cash at bank and in hand 164,181 286,940

228,622 352,694

Creditors: amounts falling due within one year 6 (73,291) (254,981)

Net current assets 155,331 97,713

Total assets less current liabilities 212,917 175,635

Capital and reserves

Called up share capital 7 500,000 500,000

Profit and loss reserves (287,083) (324,365)

Total equity 212,917 175,635

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 18 February 2019 and are signed on its behalf by:

Gazi Mohammed Khurshid Alam Rahel AhmedDirector Director Company Registration No. 07081093

419PRIME BANK

PBL EXCHANGE (UK) LIMITEDStatement of Changes in EquityFor the year ended 31 December 2018

£

Share capitalProfit and

loss reservesTotal

Balance at 1 January 2017 500,000 (336,348) 163,652

Year ended 31 December 2017:

Profit and total comprehensive income for the period - 11,983 11,983

Balance at 31 December 2017 500,000 (324,365) 175,635

Year ended 31 December 2018:

Profit and total comprehensive income for the period - 37,282 37,282

Balance at 31 December 2018 500,000 (287,083) 212,917

420 PRIME BANK

ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITEDStatement of Cash FlowsFor the year ended 31 December 2018

Notes£

2018 2017

Cash flows from operating activities

Cash (absorbed by)/generated from operations 9 (121,743) 131,115

Interest paid (8) (6)

Income taxes refunded/(paid) 1 -

Net cash (outflow)/inflow from operating activities (121,750) (131,109)

Investing activities

Purchase of tangible fixed assets (1,009) (1,060)

Net cash used in investing activities (1,009) (1,060)

Net cash used in financing activities - -

Net (decrease)/increase in cash and cash equivalents (122,759) 130,049

Cash and cash equivalents at beginning of Period 286,940 156,891

Cash and cash equivalents at end of Period 164,181 286,940

421PRIME BANK

PBL EXCHANGE (UK) LIMITEDNotes to the Financial StatementsFor the year ended 31 December 2018

1 Accounting policies

Company information

PBL EXCHANGE (UK) LIMITED is a private company limited by shares incorporated in England and Wales. The registered office is 16 Brick Lane, London, UK, E1 6RF.

1.1 Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2 Turnover

Turnover represents amounts received as commission from customers.

Turnover is recognised at the fair value of the consideration received or receivable in the form of consumers’ money transfer transaction fees. The transaction fees are based on the principal amount of the money transfer transaction and the locations from and to which funds are transferred. Transaction fees are set by the Company and recorded as revenue at the time of sale. The Company does not charge VAT on transactions owing to money transfer services being an exempt supply.

The Company also generates revenue based on the difference between the exchange rate set by the Company to the customer and the rate at which the Company or its agents are able to acquire the currency. This foreign exchange revenue is recognised at the same time at which the related money transfer transaction fee revenue is recognised.

1.3 Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Land and buildings Leasehold 10 years over the life of the lease

Fixtures, fittings & equipment 25% straight line

Computer equipment 25% srtaight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.4 Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

422 PRIME BANK

ANNUAL REPORT 2018

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.5 Cash at bank and in hand

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.6 Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company’s balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

PBL EXCHANGE (UK) LIMITEDNotes to the Financial StatementsFor the year ended 31 December 2018

423PRIME BANK

PBL EXCHANGE (UK) LIMITEDNotes to the Financial StatementsFor the year ended 31 December 2018

1.7 Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.8 Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

1.9 Taxation

The tax recoverable represents the sum of deferred tax calculated based on accumulated losses brought forward. The deferred tax asset balance was £46,322 as at 31.12.2018 (2017 was £59,838).

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.10 Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.11 Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.12 Leases

Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

1.13 Foreign Currency Transactions

Transactions in foreign currency are measured and recorded in Sterling by use of the exchange rate in effect at the date of transaction. At each statement of financial position date, recorded monetary balances that are denominated in a foreign currency are adjusted to reflect the rate at the statement of financial position date. All realized and unrealized exchange adjustment gains and losses are taken to the statement of movements on profit and loss account.

424 PRIME BANK

ANNUAL REPORT 2018

PBL EXCHANGE (UK) LIMITEDNotes to the Financial StatementsFor the year ended 31 December 2018

2 Auditor’s remuneration

£

2018 2017

Fees payable to the company's auditor and associates:

For audit services

Audit of the financial statements of the company 4,620 4,598

For other services

All other non-audit services 4,620 4,598

3 Employees

The average monthly number of persons (including directors) employed by the company during the Period was 14 (2017 - 14).

4 Tangible fixed assets

£

Land and buildings Leasehold

Fixtures, fittings & equipment

Computer equipment

Total

Cost

At 1 January 2018 173,332 7,621 9,033 189,986

Additions - - 1,009 1,009

At 31 December 2018 173,332 7,621 10,042 190,995

Depreciation and impairment

At 1 January 2018 96,759 7,480 7,825 112,064

Depreciation charged in the Period 21,017 64 264 21,345

At 31 December 2018 117,776 7,544 8,089 133,409

Carrying amount

At 31 December 2018 55,556 77 1,953 57,586

At 31 December 2017 76,573 141 1,208 77,922

5 Debtors

£

2018 2017

Amounts falling due within one year:

Other debtors 18,119 5,916

Amounts falling due after more than one year:

Deferred tax asset 46,322 59,838

Total debtors 64,441 65,754

6 Creditors: amounts falling due within one year

£

2018 2017

Trade creditors 71,863 245,301

Other taxation and social security 340 2,554

Other creditors 1,088 7,126

73,291 254,981

425PRIME BANK

PBL EXCHANGE (UK) LIMITEDNotes to the Financial StatementsFor the year ended 31 December 2018

7. Called up share capital

£

2018 2017

Ordinary share capital

Issued and fully paid500,000 Ordinary of £1 each

500,000 500,000

500,000 500,000

8. Operating lease commitments

Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable rent operating leases, as follows:

£

2018 2017

58,848 58,848

9 Cash generated from operations

£

2018 2017

Profit for the year after tax 37,282 11,983

Adjustments for:Taxation charged/(credited) 13,515 8,250

Finance costs 8 6

Depreciation and impairment of tangible fixed assets 21,345 23,134

Movements in working capital:(Increase) in debtors (12,203) (5,916)

Increase/(decrease) in creditors (181,690) 93,658

Cash (absorbed by)/generated from operations (121,743) 131,115

FINANCIAL STATEMENTSOF PBL FINANCE (HONG KONG) LTD.

Independent Auditors’ Report to the Members

of PBL Finance (Hong Kong) Ltd.

Statement of Income and Retained Earnings

Statement of Financial Position

Statement of Cash Flows

Notes to the Financial Statements

427PRIME BANK

INDEPENDENT AUDITOR’S REPORTTo The Members of PBL Finance (Hong Kong) Limited(incorporated in Hong Kong with limited liability)

Opinion

We have audited the financial statements of PBL Finance (Hong Kong) Limited (“the Company”) set out on pages 6 to 17, which comprise the statement of financial position as at 31st December, 2018, and the statement of income and retained earnings and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31st December, 2018, and of its financial performance and its cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standard for Private Entities (“HKFRS for Private Entities”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

Basis for Opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information Other than the Financial Statements and Auditor’s Report Thereon

The directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Directors and Those Charged with Governance for the Financial Statements

The directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRS for Private Entities issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Our report is made solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also :-

-- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

428 PRIME BANK

ANNUAL REPORT 2018

INDEPENDENT AUDITOR’S REPORTTo The Members of PBL Finance (Hong Kong) Limited(incorporated in Hong Kong with limited liability)

-- Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.

-- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

-- Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

-- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

T. O. Yip & Co. LimitedCertified Public Accountants (Practising)Hong Kong

Samuel Ming Sum YipPractising Certificate Number : P05704

26th February 2019

429PRIME BANK

PBL FINANCE (HONG KONG) LIMITEDStatement of Income and Retained Earningsfor the year ended 31st December, 2018

NotesHK$

2018 2017

Interest income 11,821,096 10,939,730

Interest expenses 4 (6,378,312) (5,313,894)

Net interest income 5,442,784 5,625,836

Other operating income 5 4,091,516 4,955,692

Total operating income 9,534,300 10,581,528

Staff costs (2,491,059) (2,508,912)

Depreciation 11 (9,550) (31,165)

Other operating expenses (1,585,937) (1,642,799)

Total operating expenses (4,086,546) (4,182,876)

Profit before taxation 8 5,447,754 6,398,652

Income tax expense 9 (701,236) (1,037,666)

Profit for the year 4,746,518 5,360,986

Retained earnings at start of the year 5,360,986 5,286,239

Dividends 10 (5,360,986) (5,286,239)

Retained earnings at end of the year 4,746,518 5,360,986

The notes on pages 9 to 17 form part of these financial statements.

430 PRIME BANK

ANNUAL REPORT 2018

PBL FINANCE (HONG KONG) LIMITEDStatement of Financial PositionAs At 31St December, 2018

NotesHK$

2018 2017

Non-current assets

Property, plant and equipment 11 19,168 16,378

Current assets

Discounted bills receivable 210,560,500 172,308,731

Deposits, prepayments and other receivables 3,303,464 2,907,829

Income tax refundable 161,430 -

Cash and bank balances 2,543,421 3,707,440

216,568,815 178,924,000

Current liabilities

Accrued liabilities and other payables 562,225 2,371,236

Amount due to ultimate holding company 12 207,779,240 167,700,000

Income tax payable - 8,156

208,341,465 170,079,392

Net current assets 8,227,350 8,844,608

8,246,518 8,860,986

Equity

Share capital 13 3,500,000 3,500,000

Retained earnings 4,746,518 5,360,986

8,246,518 8,860,986

The financial statements on pages 6 to 17 were approved and authorised for issue by the Board of Directors on 26 February 2019 and are signed on its behalf by :-

Rahel AhmedDirector

Shamsuddin AhmadDirector

26 February 2019The notes on pages 9 to 17 form part of these financial statements.

431PRIME BANK

PBL FINANCE (HONG KONG) LIMITEDNotes to Statement of Cash FlowsFor The Year Ended 31St December, 2018

NotesHK$

2018 2017

Operating activities

Profit before taxation 5,447,754 6,398,652

Adjustments for :

Depreciation 11 9,550 31,165

Loss on disposal of property, plant and equipment 1,088 -

Operating profit before changes in working capital 5,458,392 6,429,817

(Increase)/Decrease in discounted bills receivable (38,251,769) 32,039,499

Increase in deposits, prepayments and other receivables (395,635) (2,609,714)

(Decrease)/Increase in accrued liabilities and other payables (1,809,011) 202,437

Increase/(Decrease) in amount due to ultimate holding company 40,079,240 (40,598,653)

Cash generated from/(used in) operations 5,081,217 (4,536,614)

Tax paid (870,822) (659,810)

Net cash generated from/(used in) operating activities 4,210,395 (5,196,424)

Investing activities

Purchase of property, plant and equipment 11 (13,428) (9,280)

Net cash used in investing activities (13,428) (9,280)

Financing activities

Dividend paid to equity shareholders of the Company 10 (5,360,986) (5,286,239)

Net cash used in financing activities (5,360,986) (5,286,239)

Net decrease in cash and cash equivalents (1,164,019) (10,491,943)

Cash and cash equivalents at start of year 3,707,440 14,199,383

Cash and cash equivalents at end of year 2,543,421 3,707,440

Analysis of cash and cash equivalents

Cash and bank balances 2,543,421 3,707,440

The notes on pages 9 to 17 form part of these financial statements.

432 PRIME BANK

ANNUAL REPORT 2018

PBL FINANCE (HONG KONG) LIMITEDAccounting Policies and Explanatory Notes to the Financial StatementsFor The Year Ended 31St December, 2018

1. GENERAL INFORMATION

PBL Finance (Hong Kong) Limited (“the Company”) is a limited company incorporated in Hong Kong. The address of its registered office and principal place of business is Suite 1407, 14th Floor, Admiralty Centre, Tower-One, 18 Harcourt Road, Hong Kong. The principal activities of the Company are money lending in Hong Kong and provides the following services :-

- Advising of documentary credits;

- Endorsing confirmation to the credit upon request of issuing bank;

- Negotiating/discounting of documents; and

- Remittance business.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

These financial statements have been prepared in accordance with the Hong Kong Financial Reporting Standard for Private Entities (HKFRS for Private Entities) issued by the Hong Kong Institute of Certified Public Accountants and the requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention.

(a) Property, plant and equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to allocate the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The following annual rates are used for the depreciation of property, plant and equipment :-

Office equipment 33 1/3%

Furniture and fixtures 33 1/3%

Leasehold improvement Over the leased term

If there is an indication that there has been a significant change in the depreciation rate, useful life or residual value of an asset, the depreciation of that asset is revised prospectively to reflect the new expectations.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

(b) Trade and other receivables

Trade and other receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.

433PRIME BANK

PBL FINANCE (HONG KONG) LIMITEDAccounting Policies and Explanatory Notes to the Financial StatementsFor The Year Ended 31St December, 2018

(c) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, demand deposits and other short-term highly liquid investments with original maturities of three months or less. Bank overdraft is shown within borrowings in current liabilities on the statement of financial position.

(d) Trade and other payables

Trade and other payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

(e) Borrowings

Borrowings are recognised initially at the transaction price and are subsequently stated at amortised cost. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Interest expense is recognised on the basis of the effective interest method and is included in finance costs.

(f) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is shown net of discounts, rebates, returns, sales-related taxes.

Revenue is recognised in statement of income and retained earnings provided it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably, as follows :-

(i) from the rendering of confirming and advising, checking, telex, postage and other services, when the services are rendered; and

(ii) interest income; on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.

(g) Borrowing costs

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

(h) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income and retained earnings because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases using in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

(i) Foreign currency translation -- transaction and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in statement of income and retained earnings.

434 PRIME BANK

ANNUAL REPORT 2018

PBL FINANCE (HONG KONG) LIMITEDAccounting Policies and Explanatory Notes to the Financial StatementsFor The Year Ended 31St December, 2018

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in statement of income and retained earnings within “finance costs”. All other foreign exchange gains and losses are presented in statement of income within “other operating expenses”.

(j) Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the period in which the dividends are approved by the Company’s shareholders.

(k) Related parties

A related party is a person or entity that is related to the Company if :-

(a) A person or a close member of that person’s family is related to the Company if that person :-

(i) has control or joint control of the Company;

(ii) has significant influence over the Company; or

(iii) is a member of the key management personnel of the Company or of a parent of the Company.

(b) An entity is related to the Company if any of the following conditions applies :-

(i) the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) both entities are joint ventures of the same third entity.

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company.

(vi) the entity is controlled or jointly controlled by a person identified in (a).

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity.

(l) Impairment of non-financial assets

At each reporting date, property, plant and equipment is reviewed to determine whether there is any indication that such has suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset (or group of related assets) is estimated and compared with its carrying amount. If an estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.

If an impairment loss subsequently reverses, the carrying amount of the asset (or group of related assets) is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset (group of related assets) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

(m) Operating leases

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

3. KEY SOURCES OF ESTIMATION UNCERTAINTY

Property, plant and equipment and depreciation

The Company determines the estimated useful lives and related depreciation charges for the Company’s property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. The Company will revise the depreciation charge where useful lives are different to those previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.

435PRIME BANK

PBL FINANCE (HONG KONG) LIMITEDAccounting Policies and Explanatory Notes to the Financial StatementsFor The Year Ended 31St December, 2018

HK$

2018 2017

4. INTEREST EXPENSES

Bank charges and interest 31,821 38,687

Interest on amount due to ultimate holding company 6,346,491 5,275,207

6,378,312 5,313,894

5. OTHER OPERATING INCOME

Advising commission income 302,996 353,055

Handling and checking fee 409,383 542,453

Other charges and commission fee 1,297,499 3,352,650

Exchange gain/(loss) 45,141 (4,891)

Other income 2,036,497 712,425

4,091,516 4,955,692

6. DIRECTORS’ REMUNERATION

Remuneration of the directors disclosed pursuant to the Section 383 of the Hong Kong Companies Ordinance (Cap. 622) and Companies (Disclosure of Information about Benefits of Directors) Regulation (Cap. 622G) is as follows :-

Fees - -

Other emoluments - -

7. EMPLOYEE BENEFIT OBLIGATIONS

The Company operates a Mandatory Provident Fund Scheme (“the MPF scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong Employment Ordinance and not previously covered by the defined benefit retirement plan. The MPF scheme is a defined contribution retirement plan administered by independent trustees. Under the MPF scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees’ relevant income, subject to a cap of monthly relevant income of HK$30,000. Contributions to the plan vest immediately.

8. PROFIT BEFORE TAXATION

The following items have been recognised as expenses in determining profit before tax :-

Auditors’ remuneration 28,000 23,000

Depreciation 9,550 31,165

9. INCOME TAX EXPENSE

Taxation in the statement of income and retained earnings represents :-

Current tax – Hong Kong Profits Tax

Provision for the year 701,236 1,037,666

The provision for Hong Kong Profits Tax is calculated at 8.25% for the first HK$2 million of estimated assessable profit and 16.5% for the remaining estimated assessable profit (2017 : 16.5% of the estimated assessable profit) for the year.

No deferred tax has been provided as the effect of all temporary difference is immaterial.

436 PRIME BANK

ANNUAL REPORT 2018

PBL FINANCE (HONG KONG) LIMITEDAccounting Policies and Explanatory Notes to the Financial StatementsFor The Year Ended 31St December, 2018

HK$

2018 2017

10. DIVIDENDS

Dividends payable to equity shareholders of the Company attributable to the year :-

Interim dividend declared and paid of HK$ 1.53171 per ordinary share (2017: HK$ 1.510354 per ordinary share)

5,360,986 5,286,239

11. PROPERTY, PLANT AND EQUIPMENT

Officeequipment

HK$

FurnitureHK$

Leaseholdimprovement

HK$

TotalHK$

Cost

At 31st December, 2017 261,339 81,701 238,742 581,782

Additions 13,428 - - 13,428

Written off (5,598) - - (5,598)

At 31st December, 2018 269,169 81,701 238,742 589,612

Accumulated depreciation and impairment

At 31st December, 2017 252,683 73,979 238,742 565,404

Charge for the year 5,314 4,236 - 9,550

Written back (4,510) - - (4,510)

At 31st December, 2018 253,487 78,215 238,742 570,444

Carrying amount

At 31st December, 2018 15,682 3,486 - 19,168

At 31st December, 2017 8,656 7,722 - 16,378

12. AMOUNT DUE TO ULTIMATE HOLDING COMPANY

The amount due to ultimate holding company (Note 16) is unsecured, interest-bearing at agreed rates and repayable within agreed maturity.

13. SHARE CAPITAL

Issued and fully paid :-

3,500,000 ordinary shares 3,500,000 3,500,000

437PRIME BANK

PBL FINANCE (HONG KONG) LIMITEDAccounting Policies and Explanatory Notes to the Financial StatementsFor The Year Ended 31St December, 2018

HK$

2018 2017

14. OPERATING LEASE COMMITMENTS

The Company rents an office under an operating lease for a fixed period of two years, with fixed rental over the same period.

Minimum lease payments under operating leases recognised as an expense during the year

818,064 795,040

At the year-end, the Company had outstanding commitments under non-cancellable operating leases that fall due as follows :-

Within one year 303,475 818,064

In the second to fifth years, inclusive - 303,475

303,475 1,121,539

15. RELATED PARTY TRANSACTIONS

In addition to the transactions, balances and guarantees disclosed elsewhere in these financial statements, the Company has the following material related party transactions during the year :-

Transactions and balances with ultimate holding company :-

Discounted bills receivable 169,790,395 106,786,146

Bank balance 526,002 827,270

Interest expenses 6,346,491 5,275,207

16. PARENT AND ULTIMATE HOLDING COMPANY

At 31st December, 2018, the directors consider the immediate parent and ultimate controlling party of the Company to be Prime Bank Limited, which is incorporated in Bangladesh. This entity produces financial statements available for public use.

FINANCIAL STATEMENTSOF PRIME BANK FOUNDATION

Independent Auditors’ Report to the Members of the Foundation

Statement of Financial Position (Balance Sheet)

Statement of Profit or Loss and other Comprehensive Income

(Income and Expenditure Statement)

Receipts and Payments Statement

439PRIME BANK

Prime Bank FoundationIndependent Auditors’ Report to the Members of the FoundationFor the year ended 31 December 2018

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Prime Bank Foundation (the Foundation), which comprise the statement of financial position (balance sheet) as at 31 December 2018, and the related statement of profit or loss and other comprehensive income (income and expenditure statement) and receipts and payments statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

In our opinion, the financial statements give a true and fair view of the financial position of the Foundation as at 31 December 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act 1994 and other applicable laws and regulations.

Basis of Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Foundation accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matter described below to be the key audit matter to be communicated in our report.

Key Audit Matter How our audit addressed the key audit matter

Information technology (IT) systems and controls over financial reporting

A significant part of the financial reporting process is heavily reliant on IT systems with automated processes and controls over the capture, storage and extraction of information. A fundamental component of these processes and controls is ensuring appropriate user access and change management protocols exist, and are being adhered to. These protocols are important because they ensure that access and changes to IT systems and related data are made and authorised in an appropriate manner. As our audit sought to place a high level of reliance on IT systems and application controls related to financial reporting, a high proportion of overall audit effort was in this area.

We focused our audit on those IT systems and controls that are significant for the financial reporting process. As Audit procedures over IT systems and controls require specific expertise, we involved IT specialists in our audit.

We assessed and tested the design and operating effectiveness of the IT controls, including those over user access and changed management as well as data reliability. In a limited number of cases we adjusted our planned audit approach as follows:

i) we extended our testing of identify whether there had been unauthorised or inappropriate access or changes made to critical IT systems and related data; ii) whether automated procedures were supported by systems with identified deficiencies, we extended our procedures to identify and test alternative controls; and iii) whether required, we performed a greater level of testing to validate the integrity and reliability of associated data and reporting.

Responsibilities of Management and Those Charged with Governance for the Financial Statements and Internal Controls

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, 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.

In preparing the financial statements, management is responsible for assessing the Foundation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Foundation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Foundation’s financial reporting process.

440 PRIME BANK

ANNUAL REPORT 2018

Prime Bank FoundationIndependent Auditors’ Report to the Members of the FoundationFor the year ended 31 December 2018

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting

• From error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Foundation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Foundation to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements

In accordance with the Companies Act 1994, we also report the following:

(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 Foundation so far as it appeared from our examination of those books; and

(c) the statement of financial position (balance sheet) and statement of profit or loss and other comprehensive income (income and expenditure statement) dealt with by this report are in agreement with the books of account and returns.

Dhaka, Bangladesh S. F. AHMED & CO

Dated, 07 March 2019 Chartered Accountants

441PRIME BANK

Prime Bank FoundationStatement of Financial Position (Balance Sheet)As at 31 December 2018

Particulars2018 2017

BDT BDT

Sources of funds

Fund account 1,760,333,576 1,687,884,889

Retained earnings/(losses) (348,716,782) (314,693,893)

1,411,616,794 1,373,190,996

Applications of funds

Non-current assetsProperty, plant and equipment 919,242,663 485,512,929

Current assets

Investment in fixed deposit 422,924,259 465,417,814

Interest receivable 28,804,878 14,533,231

Advance income tax 36,453,195 33,371,994

Stock - Prime Bank Eye Hospital 909,099 1,031,908

Advances, deposits and prepayments 3,884,939 378,750,584

Cash and bank balances 8,375,997 2,019,693

501,352,366 895,125,223

Less: Current liabilities

Provision for expenses 3,120,994 3,582,558

Other payable 2,648,035 1,496,492

Security money 3,209,206 2,368,106

Net current assets 492,374,131 887,678,066

Net assets 1,411,616,794 1,373,190,996

For and on behalf of Prime Bank Foundation

Member Secretary Member Chairman

See annexed report of the date

Dhaka, BangladeshDated, 07 March 2019

S. F. AHMED & COChartered Accountants

442 PRIME BANK

ANNUAL REPORT 2018

Prime Bank FoundationStatement of Profit or Loss and other Comprehensive Income(Income and Expenditure Statement)For the year ended 31 December 2018

Particulars2018 2017

BDT BDTIncomeInterest on fixed deposit 41,686,880 32,719,037 Income from Prime Bank Eye Hospital 27,552,651 27,415,320 Income from Prime Bank English Medium School (PBEMS), Uttara 29,843,685 24,269,553 Income from Prime Bank College of Nursing (PBCN) 12,542,930 7,186,093 Income from PBEMS, Mirpur 5,302,015 4,037,983 Interest on short-term deposit 51,089 121,439 Other income 429,512 1,731,345 Profit on sale of vehicle 125,125 -

117,533,887 97,480,770 ExpenditureSalary and allowances 56,213,337 52,235,650 Awardees stipend 35,574,400 39,348,000 Depreciation 6,275,534 8,827,035 Office rent 11,217,412 11,080,312 Repair and office maintenance 4,844,633 5,346,965 OT expenses 7,455,443 8,882,028 Car maintenance 2,155,779 2,346,330 Security service 2,178,486 2,115,143 Utility 2,816,191 2,496,551 Legal and professional fees 111,800 233,800 Advertisement 1,864,785 1,498,806 Seminar, training and workshop 284,912 312,277 Printing and stationery 1,326,782 1,288,970 Award giving ceremony 919,139 2,436,283 Gratuity 1,842,000 2,970,200 Telephone and internet 519,206 740,335 Expenses - Medicine shop 1,644,814 1,628,542 Expenses - Eye camp 420,545 525,732 Expenses - Optic shop 1,110,681 998,123 Travelling and conveyance 293,127 312,152 Education affairs expenses 1,717,363 1,196,056 Books and teaching materials 1,812,459 1,418,382 Entertainment 470,955 450,895 Feasibility study 7,710,175 - Excise duty 340,950 228,450 Audit fee 115,000 115,000 Honorarium 137,500 45,000 Newspaper 59,363 48,405 Communication expense 62,593 87,671 Pathology 36,783 23,765 Bank charges 24,629 34,977

151,556,776 149,271,835 Deficit for the year (34,022,889) (51,791,065)

For and on behalf of Prime Bank Foundation

Member Secretary Member Chairman

See annexed report of the date

Dhaka, Bangladesh S. F. AHMED & CO

Dated, 07 March 2019 Chartered Accountants

443PRIME BANK

Prime Bank FoundationReceipts and Payments StatementFor the year ended 31 December 2018

Particulars2018 2017

BDT BDT

Opening cash and bank balances

Cash in hand 321,126 84,624

Bank balances 1,698,566 3,787,846

Fixed deposit 465,417,814 530,462,798

467,437,506 534,335,268

Receipts

Contribution from Prime Bank Limited 72,358,987 93,801,662

Collection from Prime Bank Eye Hospital 27,489,941 26,716,440

Interest on fixed deposit 27,415,234 35,561,910

Sales proceed of non-current assets 125,125 -

Collection from PBEMS 34,411,113 14,946,009

Collection from PCND 14,031,264 48,483

Interest on short-term deposit 51,089 121,439

Security money 953,200 556,000

Prime sight fund 28,000 23,000

VAT Students - 122,543

Suspense Account 90

Award giving ceremony from bank - 1,500,000

Other Income 132,949 -

176,996,902 173,397,575

644,434,408 707,732,843

Payments

Salary and allowances 55,209,210 50,259,817

Awardees stipend 35,512,700 39,348,000

Office rent 11,089,214 9,438,586

Advances 70,436,794 106,377,801

Stock 18,000 -

Repair and office maintenance 2,733,625 3,445,723

Car maintenance 1,891,594 2,049,997

Advertisement 1,470,352 1,187,500

Security service 1,695,638 2,014,140

Advance income tax 2,776,200 3,595,657

Income tax (salaries) 105,295 -

Income tax (vendors) 128,227 -

Books and teaching materials 1,643,399 1,336,079

Printing and stationery 1,156,168 1,231,757

Gratuity 2,970,200 -

Telephone 472,887 700,237

Award giving ceremony 531,839 1,001,772

Optic shop 68,400 538,270

444 PRIME BANK

ANNUAL REPORT 2018

Prime Bank FoundationReceipts and Payments StatementFor the year ended 31 December 2018

Particulars2018 2017

BDT BDT

Eye camp 344,609 171,286

OT expenses 2,949,701 3,698,008

Provision for expenses - 7,781,463

Furniture & fixtures 404,862 252,621

Other payables - 3,428,697

Travelling and conveyance 268,327 293,152

Entertainment 395,554 433,684

Seminar, training and workshops 61,718 145,333

Education affairs expenses 342,775 162,269

Office equipment 239,077 100,673

Utility 285,692 272,702

Legal and professional fees 111,800 167,550

Medical equipment - 300,840

Audit fee 115,000 90,000

Security money 15,000 29,880

Computer 66,982 10,800

Accounts payable 9,018,884 -

Library and books - 19,131

Bank charges 24,629 34,895

Excise duty 340,950 228,450

VAT (vendors) 181,585 -

Secured Loans (UFL) 163,350 -

Feasibility Study 7,710,175 -

Honorarium 25,000 -

Communication expenses 62,593 76,397

Newspaper 59,363 48,405

Pathology 36,783 23,765

213,134,151 240,295,337

Closing cash and bank balances

Cash in hand 227,897 321,126

Bank balances 8,148,100 1,698,566

Fixed deposit 422,924,260 465,417,814

431,300,257 467,437,506

644,434,408 707,732,843

For and on behalf of Prime Bank Foundation

Member Secretary Member Chairman

Dhaka, Bangladesh

Dated, 07 March 2019

SUPPLEMENTARY INFORMATION

Human Resource Accounting

Glimpses of 23rd Annual General Meeting

Branch Network

Notable Activities During 2018

Redressal of Investors Complaints

Minutes of 23rd Annual General Meeting

Notice of the 24th Annual General Meeting

List of Acronyms

Proxy Form

446 PRIME BANK

ANNUAL REPORT 2018

Human resource accounting is accounting for people as an organizational resource. It involves measuring the costs incurred by business firms and other organizations to recruit, select, hire, train and develop human assets. It also involves measuring the economic value of people to the organization.

Concept of Human Resource Accounting

Thus, human resource accounting is primarily involved in measuring the various aspects related to human assets. Its basic purpose is to facilitate the effective management of human resources by providing information to acquiring, develop, retain, utilize, and evaluate human resources.

Objectives of human resource accounting are as follows

To provide cost value date for managerial decisions regarding acquiring, developing, allocating and maintaining human resource so as to attain cost effective organizational objectives.

1. To provide information for effectiveness of human resource utilization.

2. To provide information for determining the status of human asset whether it is conserved properly; it is appreciating or depleting.

3. To assist in the development of effective human resource Management practices by classifying the financial consequences of these practices.

Methods of Valuation of Human Assets

There are a number of methods suggested for the valuation of human assets. Many of these methods are based on the valuation of physical and financial assets while others take into account human consideration. Major methods of valuation of human assets are historical cost, replacement cost, standard cost, present value of future earnings, and expected realizable value.

Historical Cost

Historical cost is based on actual cost incurred on human resources. Such a cost may be of two types – acquisition cost and learning cost. Acquisition cost is the expense incurred on training and development. This method is very simple in its application but it does not reflect the true value of human assets. For example, an experienced employee may not require much training and, therefore, his value may appear to below though his real value is much more than what is suggested by historical cost method.

Replacement Cost

As against historical cost method which takes into account the actual cost incurred on employees, replacement cost takes into account the national cost that may be required to acquire a new employee to replace the present one. In calculating the replacement cost, different types of expenses are taken into account which may be in the form of acquisition and learning cost. Replacement cost is generally much higher than the historical cost. For example, XYZ has estimated that the

replacement cost of an executive in middle management level is about 1.5 to 2 times the current salary paid in that position. Replacement cost is much better indicator of value of human assets though it may present certain operational problems.

Standard Cost

Instead of using historical or replacement cost, many companies use standard cost for the valuation of human assets just as used for physical and financial assets. For using standard cost, employees of an organization are categorized into different groups based on their hierarchical positions.

Present value of future earnings

In this method, the future earnings of various groups of employees are estimated up to the age of their retirement and are discounted at a predetermined rate to obtain the present value of such earnings. This method is similar to the present value of future earnings used in the case of financial assets. However, this method does not give correct value of human assets as it does not measure their contributions to achieving organizational effectiveness.

Acquisition Cost Method

Under this method the costs of acquisition, namely, the costs incurred in recruitment, hiring and induction of employees are taken into account. The process involves capitalization of historic costs. The cost so capitalized has to be written off over a period of time for which the employee remains with the firm. If for some reason the employee leaves the organization prematurely, the unamortized cost remaining in the books has to be written off against the profit and loss account of the particular year.

Replacement Cost Method

While in the case of acquisition cost past costs are considered, under this approach one takes in to account how much it costs to replace a firm’s existing resources and thus represents a current value approach. So this is a method resource and thus represents a current market conditions. This exercise may be redundant unless the management desires to replace its present resources. It is also difficult exercise as in many cases the replacement may not be exactly similar.

Present Value of Future Earnings Method

This is also known as capitalization of salary method. Under this method the future earnings of an employee or grades of employees are estimated up to the age of retirement and are discounted at a rate appropriate to the person or the group in order to obtain the present value.

Expected realizable value

The above methods discussed so far are based on cost consideration. Therefore, these methods may provide information for record purpose but do not reflect the true value of human assets. As against these methods,

HUMAN RESOURCE ACCOUNTING

447PRIME BANK

Expected realizable value is based on the assumption that there is no direct relationship between cost incurred on an individual and his value to organization can be defined as the present worth of the set of future services that he is expected to provide during the period he remains in the organization.

Economic Value Method

The economist’s concept of the value of an asset is equal to the present worth of its estimated future economic benefits. This approach has a strong theoretical appeal. But this method involves the following steps:

Competitive Bidding Method

This is also known as the opportunity cost method. Opportunity cost is defined as the measurable value of benefits that could be obtained by choosing an alternative course of action. In the case of HRA. Opportunity costs are determined by a process of competitive bidding in which various divisions and departments bid for the services of various officers. The amount of bid is added to the capital employed of the successful bidder for determining the return on investment.

Financial reporting standards

IFRS do not currently contain any standards regarding HRA. It could be argued that they are moving closer to providing more flexible approaches to accounting measurements and reporting. For example, the international standards IAS 38 Intangible Assets and IFRS 3 on Business Combinations allows for the recognition of the intangible asset goodwill, which indicates a willingness to allow for valuation of assets that are not traditional tangible assets, such as human resources.

Practice in Prime Bank

In Prime Bank, as there are no specific accounting standards, we are following conventional accounting practice and not capitalizing any HR cost, rather amortize it over service life of employees. However, we are taking benefits of HR accounting concepts and using HR accounting information (such as per employee cost to the company, expected service life of employees, per employee productivity and its growth over periods and many more) in making important management decisions that will benefit the long-run strategic goals and profitability of the Company.

Problems in Human Resource Accounting

There are certain operational problems in human accounting because it attempts to measure intangibles. Therefore, subjective factors may play crucial role.

Thus, the major operational problems involved in human resource accounting are of the following types:

1. There is no well-set standard accounting practice for measuring the Value of human resources. In the case of financial accounting, there are certain specified standards which every organization follows. However, in the case of human resource accounting, there are no such standards. Therefore, various organizations that adopt human asset valuation use their own models. With the result, value of human assets of two organizations may not be comparable.

2. The valuation of human assets is based on the assumption that the Employees may remain with the organization for certain specified period. However, this assumption may not

hold true in today’s context because of increased human resource mobility.

3. There is also a possibility that trade unions may oppose the use of human resource accounting. They may want parity of wages/ salaries and value of employees.

BDT in million

Particulars 2018 2017 2016 2015 2014

Operating cost per employee 2.26 1.95 2.12 2.10 2.01

Training cost per employee 0.004 0.01 0.01 0.005 0.01

Operating profit per employee 1.78 1.54 1.94 2.01 2.15

Gross turn over per employee 7.38 6.31 7.67 8.97 9.58

448 PRIME BANK

ANNUAL REPORT 2018

GLIMPSES OF 23rd AGM

449PRIME BANK

Md. Shahidul Islam First Assistant Vice President & Head(CC) Baridhara BranchConcord I. K Tower(1st Floor)Plot #02, Block # CEN(A) NorthAvenue, Gulshan – 2 Dhaka-1212Cell : 01730-781181Phone : 02-9850376,9850392Fax:02-9850384

Md. Abdur Rouf First Assistant Vice President & HeadDamudya BranchHolding # 264 (1st & 2nd floor), Sadar RoadP.S: Damudya, Dist: ShariatpurCell : 01730-096615Phone : 06023- 56396Fax : 06023- 56390

Md Rabiul Islam First Assistant Vice President & Head Adamjee EPZ Branch, NarayanganjAdamjee EPZ Holding # 4Siddirganj, NarayanganjCell : 01730-076155Phone 02- 7692025-26, 7692024Fax : 02- 7692027

Saifuddin Ahmed Assistant Vice President & HeadAsad Gate Branch2/6, Sir Sayed Road, Mohammadpur (Mirpur Road), Dhaka.Cell : 01730-031819Phone: 02-9125400, 8142106, 8142134, 9136214Fax : 02- 9122640

Md. Nasimuzzaman First Assistant Vice President & Head Bashaboo BranchShapnil (2nd & 3rd Floor), 60-61 South Bashaboo, DhakaCell : 01709-655689Phone : 02- 7219201, 7219205, 7219206Fax : 02- 7219205

Md. Nazrul Islam Vice President & HeadDhanmondi BranchMamtaz Plaza (1st Floor)House # 7, Road # 4, Dhanmondi R/A, DhakaCell : 01714-133777Phone : 02- 8622304, 8621556, 9662704, 8621557Fax : 02- 9662705

Mollah Asaduzzaman Assistant Vice President & HeadAshulia BranchSharif Mansion (1st floor)Diakhali, Jamgora Bazar, P.S. Ashulia, Dist. : DhakaCell : 01713-409183Phone: 02- 7788290, 7788326, 7788325Fax : (02) 7788291

Sabina EasminAssistant Vice President & Head Bashundhara BranchPlot # 236, Block – BBashundhara R/A, DhakaCell : 01730-373920Phone : 02-8845213, 8415276, 8845215Fax : 02- 8845214

Nazneen Akhter Senior Assistant Vice President & HeadElephant Road BranchAnanta Plaza, 136,Elephant Road Dhaka-1205Cell : 01730-016896Phone : 02- 9662776-7, 8622592,9673783, 9673786Fax :02- 8622591

Faria Azad Sheme Assistant Vice President & HeadBanani BranchHouse # 62, Block – E, Kemal Ataturk Avenue Banani Dhaka-1212Cell : 01711-218967Phone: 02- 8815754, 9889868, 8854988, 8852899, 8850329, 8836890Fax: 02- 8853616

Mohammad Mazharul Islam First Assistant Vice President & HeadBhairab Bazar Branch, Kishoreganj181, Tin Potty Road, Bhairab Pawrashava, Bhairab, KishoregonjCell : 01709-648747Phone : 02-9470723, 9470771, 9470733Fax : 02- 9471755

Siddique Ahmed Assistant Vice President & HeadForeign Exchange BranchAl-Haj Mansion, 82, Motijheel CIADhaka-1000Cell : 01701-204140Phone : 02- 9551682, 9570751, 7161146Fax : 02- 9553078

Syed Delwar Hossain Senior Assistant Vice President & HeadBanasree BranchArcadia (1st Floor), Plot # 14, Block-C Banasree Main Road, Rampura, DhakaCell : 01708-466534Phone: 02- 8399548, 8399591Fax:02-8399547

Masood Mizan Senior Assistant Vice President & Head Bijoy Nagar BranchAkram Tower (1st Floor)15/5 Bijoy Nagar, DhakaCell : 01709-658447Phone : 02- 9335732 ,9335762, 9334123Fax : 02- 9332639

Mohammad Harunar Rashid First Assistant Vice President & HeadFaridpur BranchKMA Arcadia (1st floor), Holding # 60/116/A, Moirapotty, FaridpurCell : 0173 0-327673Phone : 0631- 65133Fax : (0631) 65128

Mohammad Ashraf –Us-SalehinFirst Assistant Vice President & Head Jamalpur BranchJibon Mantion, Station Road, JamalpurCell : 01755-524165Phone : 0981-65361, 0981-65360Tele-Fax : 0981- 65362

Md. Abdur RazzaqueFirst Assistant Vice President & HeadBoalmari BranchAjhar Tower, 503 Station Road, Boalmari Bazar, FaridpurCell : 01755-607991Phone : 06324-56132, 56130Fax : 06324-56139

Afsana Kishwar Assistant Vice PresidentGareb-E-Newaz Avenue BranchHolding # 1, Gareb-E-Newaz AvenueSector # 11, Uttara R/A, DhakaCell : 01730-312515Phone : 02- 8950997, 8921161,8991781Fax : 02-8931687

Md. Rabiul Islam Senior Assistant Vice President & HeadGanakbari BranchSomsher Plaza (1st floor), (Opposite Dhaka EPZ), Balibhadra Bazar Bas stand, Dhamsona, Ganakbari Savar Dhaka-1340Cell : 01709-655683Phone : 02-789863, 7789378-9, 7788100Fax : 02-7789378

Mohammad Abdus Sattar Assistant Vice President & HeadBangshal Branch Holding # 23 (old), 4(new), Mazed Sardar Road Bangshal, Dhaka-1100Cell : 01715-416860Phone : 02- 7123480, 9561501, 9556635, 7175185, 7113310Fax : 02- 7123480

Md. Azharul IslamAssistant Vice President & Head Kishoreganj BranchShamsuddin Bhuiyan Plaza,Teripotty, Kishoreganj Cell : 01730-727296Phone : 0941-62590, 0941-62592Fax: 0941-62591

BRANCH NETWORK

Dhaka Division

450 PRIME BANK

ANNUAL REPORT 2018

Md. Ramiz Uddin Miah Senior Vice President & HeadGulshan BranchPlot # 01, Block-CEN(H), Road # 109 Gulshan Avenue (Near Wonder Land), Dhaka-1212Cell : 01700-711458Phone : 02- 9890898, 9886171, 8815885, 8829975 , 8817460, 9884977, 9862937, 8817460Fax :  02- 9884977

Md. Jafar Hasan Vice President & Head Jatrabari BranchNur Tower, 76/Ga, Bibir BagichaNorth Jatrabari, Dhaka-1204Cell : 01730-338785Phone :02- 7552158, 7552178Fax :02- 7552169

AKM Amirul Islam First Assistant Vice President & Head Madhabdi BranchPlot # 17, Madhabdi Bazar Narsingdi-1604Cell : 01713-082807Phone : 02-9446682,9446683Fax : 02-9446683

Abu Zafar Md. Sheikhul Islam Executive Vice President & HeadIslamic Banking Branch, Dilkusha19, Dilkusha Commercial AreaDhaka-1000Cell : 01711-612438Phone : 02-  9567227, 9514927, 9567228, 9587494, 9577582,  9576414, 9514928, 9587506 & 9551678Fax : 02- 9567228

Mollah Farid Ahmed Vice President & Head Joydevpur Chowrasta BranchShapla Masnion (1st Floor)Joydevpur ChowrastaP.O. ChandanaDhaka-Tangail Road GazipurCell : 01713-068094Phone : 02- 9164103, 9264135Tele-Fax : 02- 9264097

Md. Aminur Rahman Akanda Senior Assistant Vice President & HeadMirpur-1 BranchRabiul Plaza (1st floor), Plot # Shee-1/Kha, Section # 1, MirpurDhaka-1216Cell : 01730-086827Phone : 02- 8034590, 8034126, 8054007Fax : (02) 8034591

Md. Emdadul HaqueAssistant Vice President & Head Hemayetpur BranchMadhu Bhaban, Hemayetpur, Saver, DhakaCell : 01730-781154Phone : 02-7742096Tele Fax : 02-7742096

Md.Monir Hossain Mian First Assistant Vice President & Head Joypara BranchAzahar Ali Mozahar Ali Shopping Complex, Latakhola, Joypara, Dohar, DhakaCell : 01730-034861Phone : 02-7768053 & 7768054,7768055Fax : 02-7768052

 Golam MostofaFirst Assistant Vice President & HeadMirzapur BrachNazmul traders Building1215 College RoadMirzapur, TangailCell : 01730-727297Phone : 09229- 56591, 09229- 56592 Fax: 09229- 56593

A.K.M. Abdul Alim Ibne Khabir Vice PresidentIslamic Banking Branch, MirpurMamoni Tower, 1244 East MonipurBegum Royeya Sarani, Mirpur, Dhaka-1216 Cell : 01713-019530Phone : 02- 9031711, 9030180Fax : 02- 9031700

Md. Abul Kalam Azad Vice President & HeadKawran Bazar Branch,54, Kawran Bazar C/A., Dhaka-1215Cell : 01787-688695Phone : 02-9124296–7, 9145397Fax : 02- 9129004

K M Nazmul Islam First Assistant Vice President & HeadModhukhali BranchModhuban Shopping Mall(1st Floor)Modhukhali ,FaridpurCell : 01730-791547Phone : 06326- 56018, 56017Fax : 06326- 56019

Md. Nazimuddin Sheikh Assistant Vice President & Head Ibrahimpur BranchSumona Sahadat Center80, Ibrahimpur, KafrulDhaka-1206Cell : 01755-582852Phone : 02- 8872503, 8872423, 8872557Fax : 02- 8872501

Mohammad Feroz Alam Senior Executive Officer & Head Kaliakoir Branch Ahmed Ali Plaza (1st Floor)College Road, Kaliakoir, Gazipur.Cell : 01709-655673Phone : 06822-51622, 06822-51620Fax: 06822-51621

Md. Amanullah Senior Vice President & HeadMohakhali Branch69,Mohakhali C/A. Dhaka-1212Cell : 01730-320022Phone : 02- 9882291, 8826483, 8817210, 9850302, 9887188 Fax :02- 9886052

Md. Salah Uddin Senior Vice President & HeadMotijheel Branch Adamjee Court Annexe Building-2119-120, Motijheel C/A, Dhaka-1000Cell : 01730-794632Phone : 02- 9567265, 7175491, 9567225, 9559876, 9515341, 7175492, 9562982Fax : 9567223

Kazi Azaharul Islam Vice President & HeadNew Eskaton Branch133, New Eskaton RoadDhaka- 1000Cell : 01708-149555Phone : 02- 9354738, 9354044, 9359683Fax : 02- 9354826

Nazrul Islam Vice President & HeadSat Masjid Road BranchHouse # 99, Road # 11/A Dhanmondi RIA, Dhaka-1209Cell : 01709-655672Phone : 02- 9122374, 58153602, 9130466, 9135982,58151936Fax: 02- 8121652

Sbubir Kumar Barua Senior Assistant Vice President & HeadMouchak BranchManhattan Tower (1st Floor)83, Siddaswari Circular Road, Malibagh, Dhaka-1217Cell : 01709-658422Phone : 02-9347757, 8352832, 9360292, 8352831, 9360162Fax : 880-2-9338883

Md. Rezaul Karim Assistant Vice President & HeadPallabi BranchSetara’s Dream, 1/11 & 1/12 PallabiMirpur, DhakaCell : 01755-534924 Phone : 02-9000559, 02-9001913, 9013629Fax : 02-9001813

Md. Adil UddinAssistant Vice President & HeadSavar BranchK.K. Plaza (1st floor), A-91, Savar Bazar Road, Savar, DhakaCell : 01709-658411Phone : 02- 7744862, 7744861Fax :02- 7744863

Md. Abdul Bari MollahVice President & HeadMoulvi Bazar Branch77/4, Moulvi Bazar, Dhaka-1100Cell : 01701-204151Phone :  02 - 7311017, 7313407,  7316696Fax : 02-7318305

 B M Touhiduzzaman Assistant Vice President & HeadPanthapath BranchFiroz Tower, 152/3-B, Green RoadPanthapath, Dhaka Cell : 01708-130725Phone : 02-9142879, 8128100, 8152852Fax : (02) 9137887

Md. Shahtab RizviAssistant Vice President & HeadSBC Tower BranchSadharan Bima Tower37/A, Dilkusha C/A, DhakaCell : 01714-014890Phone : 02- 9559943, 9571250, 9561221Fax : 02-9564189

451PRIME BANK

Md.Shariful AhsanAssistant Vice President & Head Mymensingh Branch10, Swadeshi Bazar, MymensinghCell : 01713-069631Phone : 091- 52390, 62228, 52391, 62243Tele-Fax : (091) 52391

Mohammad Mahfuzur RahmanAssistant Vice President & HeadPatuatuli BranchBishal Hafiz Market (1st & 2nd Floor)10, Wayse Ghate Road, Patuatuly, DhakaCell : 01708-130755Phone : 02--7343474, 57396161Fax : 88-02-57396161

Md. Anowar HossainFirst Assistant Vice President & Head Shibpur BranchKhan Tower, Shibpur Bazar, Narsingdi.Cell : 01755-645474Phone : 06256- 75130, 06256- 75131Fax : 06256- 75134

B M Mizanur Rahman First Assistant Vice President & HeadNarayanganj BranchModern Model Complex, 56,S.M.Maleh Road, Narayanganj-1400Cell : 01709-658421Phone : 02- 7630150, 7646894Fax : 02- 7630140

Md. Arman Uddin Bhuiyan Vice President & HeadPragati Sarani BranchFacilities Tower, Kha-199/2Maddhya Badda, DhakaCell : 01711-439003Phone : 02- 98406895,8816938, 9840685Fax : 02- 8837531

Shakil Ahmed KhanAssistant Vice President & Head Wari BranchTanin Roseate, 43 Rankin Street, Wari, DhakaCell : 01709-658412Phone : 02- 9512085,7118169, 7118311Fax :02- 9512084

Md. Moshiar Rahman Senior Executive Officer & Head Nawabgonj Branch B.K.N. PointKasimpur, Nawabgonj, Dhaka.Cell : 01709-658436Phone : 02- 7765298, 7765299Fax : 02- 7765297

Shamima Pervin Senior Assistant Vice President & HeadRing Road BranchBaitul Aman Tower (1st Floor)Holding # 840/841, Ring Road, Adabor, DhakaCell : 01711-824628Phone : 02- 8158866, 58150666Fax : 02- 8117010

Mohammod Ashaduzzaman Senior Executive Officer & HeadSirajdikhan BranchHazi Mustafa Plaza, (1st floor) Dag # 284, Bazar Road, Sirajdikhan, MunshiganjCell : 01730-317443Phone : 02- 7628320, 7628381Fax : 02-7628310

Md. Mukter Hossain Senior Executive Officer & HeadSreenagar BranchRahman Complex, Sreenagar Bazar, MunshigonjCell : 01730-781191Phone : 02-7627210, 7627202

Md. Shahadat Hossain Senior Executive Officer & HeadTangail BranchMain Building, Ward # 6Holding # 414-417, Main Road, TangailCell : 01713-082745Phone : 0921-61248, 0921-61271Fax : 0921- 61322

Md.Hashmot Ali Mollah Senior Assistant Vice President & Head Tongi BranchSena Kalyan Commercial Complex (1st floor)Plot # 09, Block-F, Tongi, Gazipur.Cell : 01701-204081Phone : 02- 9813811, 9813874Fax : 02-9813835

Sharmin Akther Vice President & Head Uttara BranchSiaam Tower (1st Floor), Plot # 15, Sector # 03, Dhaka Mymensingh Road, Uttara Model Town, DhakaCell : 01709-658441Phone : 02-58956233, 02-8950341-2, 8950016Fax : 02-58954248

K. M. Sakhawat HossainSenior Assistant Vice President & HeadShimrail BranchHaji A. Rahman Super Market and Shopping Tower, Holding No.96, Shimrail Morr, Chattogram Road Chowrastha, Siddirganj, NarayanganjCell : 01714-039543Phone : 02-7691670,02-7692913, 7692912Fax : 02-7691671

Md. Monirul Haque BhuiyanAssistant Vice President & Head Tejgaon BranchShanta Western Tower (Level-2)186, Bir Uttam Mir Shawkat Sarak, Tejgaon, DhakaCell : 01709-658414Phone : 02- 8879157-8, 8879160Fax : 02- 8879156

Sirajul Hoque Senior Assistant Vice President & Head Agrabad BranchB.M.Heights (1st floor), 318 Sheikh Mujib Road Badamtoli, Agrabad, ChattogramCell : 01709-658464Phone : 031-716724-5, 2521659, 2526396, 2526397, 727018, 710970, 2526160Fax : 031-718971

Suman Kanti Dhar First Assistant Vice President & Head Fatickchari BranchHaji Hossain Plaza, College Road, Bibirhat, Dhurang Union, Fatickchari, ChattogramCell : 01713-103661Phone : 03022- 56006Tele-Fax : 03022- 56006

AKM Shah ArefinFirst Assistant Vice President & Head Ashugonj BranchSeriya Sayed Tower, Post Office Road, Ashugonj Bazar, Ashugonj, BrahamanbariaCell : 01755-534933Phone : 08528-74596, 08528-74595Fax: 08528-74594

Abu Jafar Md. IqbalFirst Assistant Vice President & Head Cox’s Bazar BranchHajera Shopping CenterHolding # 256, Main Road, Cox’s BazarCell : 01713-129263Phone : 0341- 51085,0341- 51083Fax : 0341- 51084

Md. Mizanur Rahman Senior Executive Officer & Head Chaumuhani BranchHolding # 180-182 (1st floor); Feni Road, Chaumuhani, Begumganj; Noakhali.Cell : 01730-338459Phone : 0321- 54096Fax : 0321- 56096

Md. Tajul IslamFirst Assistant Vice President & Head Hajigonj BranchAnanda Complex, Holding#191, Hajiganj Bazar, Hajiganj, ChandpurCell : 01730-338463Phone : 08424 -75110, 08424-75111Fax : 08424- 75111

S. M. Shahidul IslamSenior Assistant Vice President & Head Halishahar BranchMobil House,Plot-2,Road-3,Block-K, Halishahar Housing Estate, Halishahar, Chattogram.Cell : 01713-255773Phone : 031- 2512039, 031- 2512064Fax : 031- 2512054

Md. Shoharab KhanFirst Assistant Vice President & HeadKeranihat BranchHazi Ulamia Market (1st Floor)Keranihat, Satkania, ChattogramCell : 01755-551601Phone : 03036-56134, 03036-56133Fax: 03036-56135

Md. Abul HasanatAssistant Vice President & HeadRace Course BranchAnandodhara Hamidum Mazid Plaza Holding # 1369/1Race Course, ComillaCell : 01755-645483Phone : 081-73964, 081-73963Fax : 081-73965

Chattogram Division

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ANNUAL REPORT 2018

Md. Nurul AminFirst Assistant Vice President & HeadHathazari BranchN. Zahur Shopping Center (1st Floor) Kachari Road, Hathazari ChattogramCell : 01711-809292Phone : 031-2601524,031- 2601525Fax : 031- 2601526

Md. Mainul Kabir Senior Assistant Vice President & HeadKhatunganj Branch142, Chand Mia LaneKhatunganj, Chattogram-4000Cell : 01711-430916Phone : 031- 623213-14,031- 623212, 627297Fax : 031- 610848

Md. YounusAssistant Vice President & HeadRaozan BranchFazal Tower (1st Floor), Jalil Nagar Raozan, ChattogramCell : 01730-031850Phone : 03026- 56214,03026- 56168Fax : 03026- 56215

Md. Nurul Afsar First Assistant Vice President & HeadIslamic Banking Branch, O. R. Nizam RoadHazrat Garibullah City Corporation Bhaban (1st Floor) 739/804 CDA Avenue, Bagmoniram, ChattogramCell : 01714-020266Phone : 031- 639855, 2861437Fax : 031- 2861434

Mohammad Ruhul Quish Senior Assistant Vice President & HeadLaldighi East Branch8, Laldighi EastChattogramCell : 01711-400380Phone : 031- 2850773, 2850774,031- 2850771Fax : 031- 2850772

Md. Shamsul AlomFirst Assistant Vice President & HeadBhatiary BranchKhaleque Tower, Bhatiary, Sitakunda, ChattogramCell : 01755-545810Phone : 08528-74596, 08528-74595Fax: 08528-74594

Mohammad Abu AliSenior Assistant Vice President & HeadIBB, PahartaliB S Plaza, Plot # 305/1390 Abdul Ali Hat, Sorai Para Alanker Morr, P. S. Pahartali, ChattogramCell : 01714-025275Phone : 031-753143, 031- 2771751 - 2, 2773541 - 2Fax : 031- 753144

Mohammad Ansarul Karim ShahedAssistant Vice President & HeadMuradpur BranchShah Alam Plaza,129, CDA Avenue, Muradpur, ChattogramCell : 01755-594840Phone : 031-652505, 031-652503Fax: 031-652504

Md. Masud Alom Assistant Vice President & Head Comilla Branch10/8 & 9/7 Chatipatti (1st Floor) Rajgonj, ComillaCell : 01713-082803Phone : 081-72611, 72612Fax : 081-72646

Shahid Uddin Ahmed Assistant Vice President & HeadJubilee Road BranchPedrollo Plaza, 5, Jubilee Road Chattogram-4000Cell : 01714-080929Phone : 031-613939, 031-614649, 031-2850319, 031-613650Fax : 031-618689

Mohammad Majharul IslamFirst Assistant Vice President & Head – CCOxygen More405 Sekander CenterChattogram Cantonment, Oxygen More, ChattogramCell : 01730-317446Phone : 031-2583181, 031-2584181, 031-2584180Fax : 031-2583180

Mohammed Nurul Momen Senior Executive Officer & Head (CC) Banshkhali BranchG.S. Plaza (1st floor), Chattogram-Banshkhali Highway Jaldi, Banshkhali, ChattogramCell : 01730-338465Phone : 0303-756222Fax: 0303-756223

Shakhawat Hossain First Assistant Vice President & Head Karnaphuli EPZ Branch, Karnaphuli EPZ, North Patenga, Chattogram-4204Cell : 01755-607994Phone : 031-2502382, 031-2502381Fax: 031-2502383

Kazi Foorkan UddinAssistant Vice President & Head Prabartak More Branch12/12 O. R. Nizam Road, Prabartak More, Panchlish ChattogramCell : 01730-303555Phone : 031- 2553593, 031- 2553591-2,Fax : 031- 2553594

Manash PalFirst Assistant Vice President & Head Dagonbhuiyan BranchR.B Plaza, 391 Falizer Ghat, Dagonbhuiyan, FeniCell : 01730-704145Phone : 03323- 79248, Direct: 03323- 79249Fax: 03323- 79250

Md. Mahbub Morshed Senior Executive Officer & Head Chauddagram BranchAbdul Gani Shopping Complex (1st floor)Chauddagram Bazar, ComillaCell : 01730-318791Phone : 08020-56364, 08020-56363Fax : 08020-56362

Mohammad Ramjan Shakh First Assistant Vice President & Head Feni BranchKazi Center, Holding # 106, S. S. K. Road, FeniCell : 01713-069623Phone : 0331- 63091, 63093,0331- 63092Tele-Fax : 0331- 63092

Mohammad Rafiqul HaqueFirst Assistant Vice President & HeadBrahmanbaria BranchK Das Bhaban, K Das SquareBrahmanbariaCell : 01755-645488Phone : 0851-61698, 0851-61699Fax: 0851-58849

Md. Nazmul Hasan Senior Executive Officer & Head Joypurhat BranchTahera Complex, 306 Main Road, JoypurhatCell : 01730-704142Phone : 0571-51156, 0571-51157Fax: 0571-51158

Rojina ParvinAssistant Vice President & HeadBaneswar BranchBaneswar, Puthia, RajshahiCell : 01755-534922Phone : 08224-56017,038911-82480Fax: 08224-56004

Md. Moyen UddinFirst Assistant Vice President & HeadPabna Branch423/1 Sonapatty Road, PabnaCell : 01730-359665Phone : 31- 66426, 0731- 66425Fax : 0731- 66399

Abu Hena Md. Mostofa KamalSenior Executive Officer & HeadMohadevpur BranchCharmatha Boker More, Bridge Road Mohadebpur, NaogaonCell : 01755-545814Phone : 07426-75041, 07426-75088Fax: 07426 - 75044

Md. Zahangir Alam First Assistant Vice President & HeadSherpur BranchAzhar Complex (1st Floor),Sherpur Bus Stand, Sherpur, Bogura.Cell : 01730-791549Phone : 05029- 77229, 05029- 77228Fax: 05029- 77225

Md. Safikul Islam First Assistant Vice President & HeadBogura Branch331/364, Rangpur Road, BorogolaBogura-5800Cell : 01730-034948Phone : 051- 78203, 67172Fax : 051- 61142

Rajshahi Division

453PRIME BANK

Shah Md. AbushalehFirst Assistant Vice President & HeadNaogaon BranchJagannath Bhaban (1st & 2nd Floor)Holding # 320, Main Road, Bridge-er-More, NaogaonCell : 01713-068095Phone : 0741-62150, 0741-62151Fax : 0741-62152

Md. Abdul HalimAssistant Vice President & HeadIshwardi BranchHolding # 1335/982 Puraton Bazar, Ishwardi PabnaCell : 01730-338461Phone : 07326-64435, 07326-64650Fax : 07326-64436

Md. Sayeed ImamFirst Assistant Vice President & HeadChapai Nawabganj BranchHolding No. 29 (1st floor) Islampur, Daudpur Road Bara Indira Moor, Chapai Nawabgonj.Cell : 01730-061491Phone : 0781-51125, 0781-51126Fax : 0781-51127

Md. Obaidul HaqueAssistant Vice President & HeadNatore Branch1052, Kanaikhali, Dhaka-Rajshahi HighwayCell : 01730-338466Phone : 0771- 67001Fax : 0771- 67002

Md. Showkat Kamal SarkerVice President & Head Rajshahi Branch 138/144, Shaheb Bazar, Rajshahi-6100 Cell : 01713-082804Phone : 0721- 773981, 774582, 774583Fax : 0721- 773980

Nasir Uddin Ahmed First Assistant Vice President & HeadBarolekha BranchHazi Abdul Ali Trade Center842, Barelekha PawrashavaBarelekha, MoulvibazarCell : 01730-311433Phone : 08622- 56519,08622- 56520Fax : 08622- 56522

Arunangshu Kumar DasFirst Assistant Vice President & HeadHabiganj BranchHolding # 3794, Commercial Area HabiganjCell : 01730-351427Phone : 0831- 62814,0831- 62813Fax : 0831- 62815

A F M Fakharuddin JaigirdarFirst Assistant Vice President & HeadDhaka Dakshin BranchBakul Mansion (1st floor). College Road, Golapganj, SylhetCell : 01755-545817Phone : 08227-56180, 08227-56187Fax : 08227-56308

Mohammad Abdul MumitSenior Executive Officer & Head Fenchugonj BranchAkul Shah Shopping City (1st Floor), Thana Road Point, Fenchugonj Bazar Fenchugonj, SylhetCell : 01755-630318Phone : 08226-56415, 08226-56414Fax : 08226-56416

Md. Taj Uddin AhmedSenior Assistant Vice President & HeadBeanibazar BranchZaman Plaza (1st Floor) P. O. &. P. S. : Beanibazar, Dist : SylhetCell : 01714-100497Phone : 08223- 56139, 08223- 56140Fax : 08223- 56141

Md. Nazrul IslamSenior Asstt. Vice President & Head IBB, AmberkhanaKasablanca Tower (1st Floor)982, Dargah Gate, Sylhet-3100Cell : 01711-824365Phone : 0821- 717332, 0821- 728944Fax : 0821 - 717337

Mohammad Zayed Parvez Senior Executive Officer & HeadBiswanath BranchAl-Burak Shopping Center (1st Floor) Biswanath Bazar, Biswanath SylhetCell : 01714-073330Phone : 08224- 56017,038911- 82480Fax : 08224- 56004

Harunur Rashid ChowdhuryVice President & HeadCourt Road BranchCourt Road, Moulvi Bazar-3200Cell : 01711-824364Phone : 0861- 53877, 0861- 53878, 64940Fax : 0861- 53878

Ibrahim AliAssistant Vice President & HeadIslampur BranchCentury Park (1st Floor), MajortilaSylhet 3100.Cell : 01755-645464Phone : 0821-761174, 0821-761157Fax : 0821-761115

Ranabir ChowdhuryFirst Assistant Vice President & HeadKadamtali BranchMotin ComplexFenchugonj Road, Kadamtali South Surma SylhetCell : 01755-534926Phone : 0821-728910, Direct : 0821-841319Fax : 0821-728630

Kamrul Hossain Senior Executive Officer & HeadKulaura BranchMarina Square232, Dakkhin Bazar, Kulaura, MoulvibazarCell : 01730-794631Phone : 08624-57082, 08624-57081Fax : 08624-57080

Wasim Ahmed Choudhury First Assistant Vice President & HeadTajpur BranchMaya View Super Market (1st Floor) P. O. : Tajpur. P. S. : OsmaninagarUpozilla : Balaganj, SylhetCell : 01714-100498Phone : 08242-56211, 08242-56210Fax : 08242-56212

Md. Abu Sufian First Assistant Vice President & HeadNabiganj BranchAnowara Biponi, Osmani Road, Nabiganj, HabiganjCell : 01713-255774Phone : 08328-56025,08328- 56029Fax :08328- 56015

Ashis Bhattacharjee Senior Assistant Vice President & HeadSylhet BranchLaldighirpar, Sylhet-3100Cell : 01708-466505Phone : 0821-721127, 0821-710208Fax : 0821-710673

Ekhlasur Rahman (FAVP) First Assistant Vice President & HeadSreemangal BranchSaptadinga Complex (1st Floor) 145, Moulvibazar Road, Sreemangal MoulvibazarCell : 01714-011578Phone : 08626-71183, 08626-71181Fax : 08626- 71182

Bishwajit Chandra Paul (FAVP)First Assistant Vice President & HeadSunamganj BranchSubakth Raja Complex414 Old Station Road, SunamganjCell : 01730-373945Phone : 0871- 62516, 0871 – 62515Fax: 0871- 62514

Mohammad HanifAssistant Vice President & HeadSubidbazar BranchCorner View (1st Floor, West side)980, Subidbazar, SylhetCell : 01714-069967Phone : 0821- 727688, 0821- 727629Tele-Fax : 0821- 2830942

Md. Rezwan Uddin Swhel Senior Assistant Vice President & HeadUpashahar BranchAlif Center (1st Floor-Front Portion) Subhanighat, Upashahar, P. S. SylhetCell : 01714-100499Phone : 0821- 723524, 0821- 811366Fax : 0821- 710094

Sylhet Division

454 PRIME BANK

ANNUAL REPORT 2018

Florence Sutopa MajumderSenior Assistant Vice President & HeadDaulatpur BranchAkankha Tower, 454, Khan-A-Sabur RoadDaulatpur, KhulnaCell : 01755-545812Phone : 041-2850877, 041-2850876Fax : 041-2850875

Md. Abdur RaafiSenior Assistant Vice President & HeadJessore Branch47, Netaji Subhas Chandra RoadJessore Town, Jessore-7400Cell : 01714-074014Phone : 0421- 68815,0421- 68814Fax : 0421- 68816

Md. Saidur Rahman Assistant Vice President & Head Khulna Branch7, Old Jessore Road, Khulna-9100Cell : 01730-320020Phone : 041-725100, 811459, 041-720071Fax : (041) 731195

Md. Wahidul IslamFirst Assistant Vice President & HeadKushtia BranchBangabandhu Super Market2,N S Road, KustiaCell : 01730-727290 Phone : 071- 72431, 071-72432Fax: 071- 72430

Mostafa Mhamud First Assistant Vice President & HeadMagura BranchMonowara Complex (1st Floor), 219 Syed Ator Ali Road, Magura Sadar, MaguraCell : 01730-791545Phone : 0488-51005, 0488-51105 Fax - 0488-51200

Md. Shayed Hasan Khan First Assistant Vice President & HeadSatkhira BranchIslam Plaza, 0801/00, Abul Kashem Road, SatkhiraCell : 01755-582853Phone : 0471-62450,0471- 63007Fax : 0471- 63001

Pijuce Kumar RoyAssistant Vice President & Head Dinajpur BranchMazeda laza (1st floor)1131/1091 Ganashtala (near Fire Service), Jail Road, DinajpurCell : 01730-061493Phone : 0531- 51289, 0531- 51291Fax : 0531- 51296

Abu Khaled Md. WaliullahExecutive Officer & Head - CCHatibandha BranchArif Plaza, Medical More Hatibandha, LalmonirhatCell : 01709-658465Phone : 5923-56101, 5923-56102Fax : 5923-56103

Md.Rejaul Karim Assistant Vice President & HeadRangpur BranchShah-Amanat Super Market (1st Floor)268 Station RoadJahaj Companier More, RangpurCell : 01714-069972Phone : 0521- 64119, 0521- 64120Fax : 0521- 64118

Md. Mahafuzul Islam First Assistant Vice President & HeadSaidpur BranchAli PlazaShahid Dr. Zikrul Haque Road Saidpur, NilphamariCell : 01709-658453Phone : 05526-71202, 05526-71201Fax- 05526-71203

Khulna Division

Rangpur Division

Barishal Division Md. Rezwan Ul kader Senior Executive Officer & Head- CCBarishal Branch37, Hemayet Uddin RoadBarishal-8200Cell : 01711-824362Phone : 0431- 64011, 0431- 64012Fax : 0431- 63712

455PRIME BANK

Fayek AhmedSenior Executive Officer & Head Aganagar SME/Agri. Branch Golden Plaza, Purbo Aganagar Keranigonj, DhakaCell : 01730-096612Phone : 02- 9571896Tele-Fax : 02- 9571896

Md. Muzibur Rahman First Assistant Vice PresidentMadunaghat SME/Agri. BranchMabia EmporiumMadunaghat BazarHathazari, ChattogramCell : 01755-534932Phone : 031-2573206Fax: 031-2573205

Md.Ekramul Hoque First Assistant Vice President & HeadSonargaon SME/Agri. BranchRozzab Ali Mention, Mograpara Chowrasta, Habibpur, Sonagaon, NarayanganjCell : 01713-255770Phone : 02-7656359 Fax : 02-76 56362

Rumal Borua (SEO)Senior Executive Officer & Head Bhujpur SME/Agri. BranchMokka Shoping Center (1st Floor)Kazirhat, East BhujpurFatickchari ChattogramCell : 01713-255771

Zahid MahamudFirst Assistant Vice President & HeadNarsingdi SME/Ag. BranchMolla Tower, 8 West Kandha Para (2nd Floor), Bazirmore, NarsingdiCell : 01730-096613Phone : 02- 9463343

Md. Joynal Abedin ChowdharySenior Executive Officer & Head Syedpur SME/Agri. BranchRadhis Shopping Complex Syedpur, JagannathpurSunamgonjCell : 01713-255776

Saiful Islam Executive Officer & Head Chatkhil SME/Agri. BranchMamtaz Shopping Center, CNB Road (North side) Chatkhil, NoakhaliCell : 01730-373921Phone : 03222- 75113Fax : 03222- 75119

Shamsul Haque First Assistant Vice President & HeadNawabpur SME Service CenterMollick Plaza (2nd floor)243-244, Nawabpur Road, DhakaCell : 01730-096610Phone : 02- 9571896Tele-Fax : 02- 9571896

Md. Amzad Hossain First Assistant Vice President & HeadTakerhat SME/Agri. BranchHaji Lalchand Bepari Super Market Takerhat, Rajoir, MadaripurCell : 01713-255772Phone : 6623-56377, 6623-56338

Khandaker Md. Mahbubur Rahman Senior Executive Officer & HeadCompanygonj SME/Agri. BranchMother Shopping Complex (1st floor), Trish, Companygonj, Muradpur, ComillaCell : 01730-096614Phone : 02-659090Fax : 02-659090

Afjal SharifFirst Assistant Vice President & HeadPosta SME Service Center90, Water Tank Road, Posta Lalbag, DhakaCell : 01730-096611Phone : 02-7343663

Md. Abdul Wahed Miah Executive Officer & Head Thakurgaon SME/Ag. BranchChowdhury Complex(1st Floor)272, College Road, Thakurgaon Cell : 01730-373940Phone : 0561- 52295Fax: 0561- 52538

Mir Ahmed First Assistant Vice President & HeadHeyoko SME/Ag. BranchChowdhury Market (1st floor)Heakobazar, BhujpurFatickchari, ChattogramCell : 01730-794626

Md. AnisuzzamanSenior Executive Officer & HeadPoradaha SME/Agri Branch. Sikder Super Market (1st floor), Poradaha Puraton Bazar, P.S. Mirpur, Dist. KushtiaCell : 01730-373919

Md. Salah Uddin Kader Senior Executive Officer & HeadRamgarh Branch, KhagrachariHolding No # 847Munshi Market (1st Floor)Ward no #09Ramgarh Branch,KhagrachariCell - 01730-086828

Md. Mehedi Hasan Senior Executive Officer & HeadJhikorgacha SME/Agri. BranchZaman Market (1st Floor)Holding No. 522, Jhikorgacha, JessoreCell : 01755-582854Phone : 04225- 71780Fax : 04225- 71788

Abu Sadath Mohammad Mostafizur Rahman Executive OfficerRaipur SME SME/Agri. BranchQueen Complex, Holding # 514/15 Main Road, Raipur, LaxmipurCell : 01730-706703Phone : 03822-56396 Fax: 03822- 56397

Bhanu Ranjan DasSenior Executive Officer & Head Sherpur SME/Agri. Branch819 Municipal RoadChakbazar, SherpurCell : 01730-373938Phone : 0931- 62176 Fax: 0931-62175

Choudhury Md. Zafar IqbalExecutive Officer & HeadMadhabpur SME/Agri. BranchMadahbpur Purbo Bazar Dhaka Sylhet HighwayMadhabpur, HabiganjCell : 01713-187920Phone : 08327- 56342Fax : 08327- 56343

SME Branches

456 PRIME BANK

ANNUAL REPORT 2018

NOTABLE ACTIVITIES DURING 2018

Prime Bank celebrates Earth Day 2018 Inauguration of Prime Bank National School Cricket Tournament

Prime Bank Celebrates 23rd Anniversary Prime Bank Wins Best SME Deal Award from ADB

Inauguration of Prime Bank Cup Golf Tournament 2018 Participatory Agreement signing with Bangladesh Bank

Donation of taka five crore to Prime Minister’s relief and welfare fund

Welcome reception to the first ever Bangladeshi Speaker to London Tower Hamlet

457PRIME BANK

NOTABLE ACTIVITIES DURING 2018

Loan disbursement among the ten taka (10 Taka) account holders.

Distributing blankets to cold-stricken people

Extending Medical Services at Biswa Ijtema MOU singing with Dhaka North City Corporation

Discussion Session on Ramadan Prize Distribution Ceremony of Prime Bank Cup Golf Tournament 2018

Receiving Financial Branding Award ‘School Banking Conference-2018’

458 PRIME BANK

ANNUAL REPORT 2018

REDRESSAL OF INVESTORS COMPLAINTS

Prime Bank Limited 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 uniformed 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 bank’s 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/Complaint

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 – 1000Phone: 9567265/261

459PRIME BANK

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460 PRIME BANK

ANNUAL REPORT 2018

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461PRIME BANK

The Twenty third Annual General Meeting of the shareholders of Prime Bank Limited was held on Thursday, 24th May 2018 at 11:00 A.M. at KIB Complex, Khamar Bari, Farm gate, Dhaka.

Mr. Azam J Chowdhury, Chairman, Board of Directors, Prime Bank Limited, presided over the meeting as per Article # 71 of the Company where following Directors were present:

1. Mrs. Nasim Anwar Hossain : Vice Chairman

2. Mrs. Salma Huq : Director

3. Mr. Shirajul Islam Mollah : Director

4. Mr. Mafiz Ahmed Bhuiyan : Director

5. Mr. Md. Shahadat Hossain : Director

6. Mr. Mohammad Mushtaque : Director Ahmed Tanvir

7. Dr. G.M. Khurshid Alam : Independent Director

8. Mr. M. Farhad Hossain, FCA : Independent Director

9. Mr. Shamsuddin Ahmed PhD : Independent & Director Chairman, Audit Committee

10. Mr. Rahel Ahmed : Managing Director

Company Secretary, Mr. Mohammed Ehsan Habib was also present at the AGM.

In addition, one hundred and eighty five (185) Shareholders /proxy / attorney recorded their attendance in the meeting.

The Meeting commenced as per schedule with the address of welcome by the Company Secretary followed by recitation from the Holy Quran.

Before proceeding to the businesses /Agenda of the AGM, Company Secretary introduced the Board Members present in the Meeting including the newly appointed Managing Director of the Bank to the shareholders.

The Chairman then taking over and receiving confirmation on the Quorum, called the 23rd Annual General Meeting to order.

The Chairman welcomed the shareholders and presented a brief on the industry scenario of 2017 and its reflections on the performance of the Bank. He mentioned that 2017 was a challenging year for various reasons like liquidity crunch, low pricing & spread, volatility of Foreign Exchange market and top of everything the increasing burden of NPL causing disproportionate allocation of profit for provisioning purposes. But overcoming all these difficulties, Prime Bank has been able to declare more dividend than last year. He emphasized that despite the odds bank has been successful in withstanding the unfavorable circumstances because of its strong fundamentals. Bank also succeeded in maintaining regulatory compliance and all these have been possible due to unflinching support of all, particularly the shareholders. He hoped shareholders could maintain their confidence on the Board and Management of the Bank and help it demonstrate better performance in future.

Finally, he informed that bank’s Annual Report 2017 has been duly sent to all esteemed shareholders, as such, they are at liberty to discuss on any issue or observation which the meeting would be obliged to respond.

Mr. Abu Sufian Titu (BO ID 1202490004426478), one of the shareholders on taking the floor expressed satisfaction at the performance of the Bank and declaration of 17% dividend for the year 2017. He hoped that Chairman’s assurance for better performance in time ahead would be translated in deeds as they have full faith and confidence on the Board and the Management of the bank. He, therefore, on behalf of the shareholders requested the Chairman to move the Agenda of the AGM for their endorsement.

The Chairman then moved the Agenda of the Meeting in the chronological order resolutions of which are summarised as under:

Agenda # 1:

“To receive, consider and adopt the Directors’ Report and Audited Financial Statements of the Bank for the year ended December 31, 2017 together with the Auditors’ Report thereon”

Mr. Md. Abu Sufian Titu (BOID NO: 1202490004426478) proposed for approval of the Agenda while Mr. Azad Ahasan (BOID NO: 1204820043854201) seconded it. Therefore, following resolution was adopted:

Resolution:

“Resolved that the Directors’ Report and Audited Financial Statements of the Bank for the year ended 31 December, 2017 together with the Report of the Auditors’ are hereby adopted.”

Agenda # 2:

“To declare dividend for the year ended December 31, 2017 as recommended by the Board of Directors”

The Chairman informed the Shareholders that the Board of Directors in its 477th Meeting held on 10.04.2018 recommended 17% dividend (10% stock and 7% cash) for the year 2017 subject to approval of the shareholders. The proposal was, therefore, placed before the shareholders for their endorsement.

Mr. S.M. Moniruzzaman (BOID NO: 1201720000010083) proposed the resolution on behalf of the Shareholders while Mr. Md. Afsar Uddin Sarkar (BOID NO: 1202640000050339) seconded it. Therefore, following resolution was adopted:

Resolution:

“Resolved that 17% dividend (10% stock and 7% cash) be and are hereby declared to be paid as dividend for the year ended 31st December 2017 to those Members whose name appear in the Register of Members on the Record Date i.e. 6th May, 2018”

About Sale and Distribution of Fractional Bonus Shares:

PRIME BANK LIMITEDRegistered Office

Adamjee Court Annex Building-2, 119-120, Motijheel C/A, Dhaka-1000

Minutes of the 23rd (twenty third) Annual General Meeting:

462 PRIME BANK

ANNUAL REPORT 2018

With the consent of the shareholders the Meeting adopted following resolution:

“Resolved that all accumulated fractional bonus share be converted into maximum whole share to sell the same through Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. The sale proceeds thereof be distributed among the shareholders in proportion of their shareholdings as on 6th May, 2018.

It was further resolved that the said shares be issued in the name of the Company Secretary as trustee holder of the fractional shares.”

Agenda # 3:

“To elect/re-elect Directors”

The Chairman informed the Meeting that following Directors would retire by operation of law and are eligible for re-election/ re-appointment:

1. Mr. Azam J Chowdhury (representing East Coast Shipping Lines Ltd)

2. Mr. Nafis Sikder

3. Mr. Imran Khan

4. Mr. Shamsuddin Ahmad Ph.D, Independent Director

5. Dr. G M Khurshid Alam, Independent Director

6. Mr. M Farhad Hussain FCA,Independent Director

Among the names noted above, 3 Independent Directors (ID) have been re-appointed by the Board and now placed for endorsement of the Shareholders.

The Chairman further informed that following Directors have been newly inducted in the Board as per article 103.2 of the Articles of Association of the Bank and the Bank Companies (amendment) Act 2018, and now placed for endorsement/ re-election by the shareholders:

1. Mr. Md. Shahadat Hossain

2. Mr. Mafiz Ahmed Bhuiyan

3. Mr. Md. Shirajul Islam Mollah

The shareholders endorsed the process of appointment/re-appointment/re-election and following resolution was adopted unanimously:

Resolution:

“Resolved that the following Independent Directors namely;

1) Mr. Shamsuddin Ahmad Ph.D,

2) Dr. G.M. Khurshid Alam,

3) Mr. M Farhad Hussain FCA

be and are reappointed for the next term.”

“Further resolved that the following Directors namely;

1. Mr. Azam J Chowdhury (representing East Coast Shipping Lines Limited)

2. Mr. Nafis Sikder

3. Mr. Imran Khan

4. Mr. Md. Shahadat Hossain

5. Mr. Mafiz Ahmed Bhuiyan

6. Mr. Md. Shirajul Islam Mollah

be and are re-elected Directors of the Bank subject to approval of the regulatory authority and compliance with the Banking Companies Act 1991, the Companies Act 1994, and BSEC Guidelines on Corporate Governance”

Agenda # 4:

“To appoint Auditors for the term until the next Annual General Meeting and to fix their remuneration”

The Chairman informed the Meeting that following Auditing Firms were jointly appointed in the 22nd Annual General Meeting of the Bank held on 8th May 2017:

1) M/S Hoda Vasi Chowdhury & Co. and

2) M/S. Aziz Halim Khair Choudhury, Chartered Accountants

as External Auditors of the Bank and they have audited Bank’s Accounts for the year ended 31 December 2017. Now they have applied for re-appointment until next AGM.

The Chairman also informed that as per BRPD Circular letter No. 12 dated July 11, 2001 and BSEC order no. SEC/CMRRCD/2009-193/104/Admin dated July 27, 2011; both the firms are eligible for re-appointment. In addition, both the Audit Committee and the Board has recommended the proposal for re-appointment. He, thereafter, placed the agenda for endorsement of the shareholders.

Mr. Bishwajit Ghosh (BO ID NO: 1202050002386324) proposed the resolution for approval while Mr. Md. Abdul Kader Sharker (BOID NO: 1203710020402932) seconded it, as such, following resolution was adopted:

Resolved that:

1) M/S Hoda Vasi Chowdhury & Co., Chartered Accountants and

2) M/S. Aziz Halim Khair Choudhury, Chartered Accountants

be and are hereby re-appointed External Auditors of the Bank at an Annual fee of Tk.6.00 lac (Taka six lac) each totaling Tk.12.00 lac only (Excluding VAT) until the next Annual General Meeting of the Bank.”

As there was no further agenda for discussion, the Chairman thanked the valued Shareholders, Directors and dignitaries for their kind presence. He also thanked the Management, Media personnel, the Executives and Officers of the Bank and all those who were instrumental in successful holding of the 23rd Annual General Meeting of the Company.

Azam J Chowdhury

Chairman

463PRIME BANK

NOTICE OF THE 24th ANNUAL GENERAL MEETING

Registered Office: Adamjee Court Annex Building-2119-120 Motijheel C/A, Dhaka-1000

Notice is hereby served to all Members of Prime Bank Limited that the 24th Annual General Meeting of the Company will be held on Thursday, 16th May 2019 at 11:00 a.m. at the following Venue to transact undernoted businesses:

Venue: Krishibid Institution KIB ComplexKrishi Khamar SarakFarmgate, Dhaka-1215

AGENDA

1. To receive, consider and adopt Directors’ Report and Audited Financial Statements of the Bank for the year ended 31st December 2018 together with the Auditors’ Report thereon.

2. To declare dividend for the year ended 31st December 2018 as recommended by the Board of Directors.

3. To elect/re-elect Directors and endorse appointment of Independent Director.

4. To appoint Auditors for the term until the next Annual General Meeting and fix their remuneration.

5. To appoint Certified Professionals (Compliance Auditors) for the year 2019 for certification on corporate governance status and fix their remuneration.

April 03, 2019

Notes:

The ‘Record Date’ shall be Sunday, April 28, 2019.

Shareholders whose names appear in the Members Register of the Company and/or in the Depository on the Record Date will be eligible to attend the meeting and qualify for dividend.

The Board of Directors has recommended 12.50% cash for the year 2018.

A Member eligible to attend and vote at the Annual General Meeting may appoint a proxy on his/her behalf for which duly stamped Proxy Form must be submitted to Share Department of the Company at least 72 hours before the scheduled Meeting.

Proxy Form will be available at Bank’s official website and at the Share Department of the Bank.

Practicing Professional Accountants/Secretaries are requested to send applications by April 21, 2019 for appointment as Compliance Auditor of the Bank for the year 2019 at the AGM.

Shareholders and Proxies are requested to record their entry at the AGM venue well in time.

Directors’ Report and Audited Financial Statements of the Bank for the year ended 31st December 2018 together with the Auditors’ Report thereon shall be available on bank’s website from May 02, 2019 onwards.

Hon’ble Members are requested to update particulars of their Bank Account with e-TIN and email addresses through Depository Participants (DP) before the “Record Date”.

Members failing to update their e-TIN details before the “Record Date,” Income Tax at source will be deducted from payable Dividend @15% (Fifteen percent) instead of 10% (ten percent) as per amended Income Tax Ordinance 1984 under Section #54.

Concerned Brokerage Houses are requested to provide us with statement of margin loan account holders along with relevant details of Prime Bank Shareholders as on the ‘Record date’ to the company’s Share Department on or before May 02, 2019 in the event dividend to be credited to the respective Loan accounts in compliance with the BSEC rules.

PDF copy of Annual report 2018 will be sent through email addresses of respective shareholders available in their beneficial owner (BO) accounts with the depository as per BSEC notification No. EC/CMRRCD/2006-158/208/admin/81 dated 20 June 2018.

N.B: No gift or benefit in cash or kind shall be paid/offered to the Shareholders at the 24th AGM as per BSEC Directive No. SEC/CMRRCD/2009-193/154 dated 24.10.2013.

By order of the Board of DirectorsSd/-

Mohammed Ehsan Habib Company Secretary

464 PRIME BANK

ANNUAL REPORT 2018

ACRONYMS

AD Authorized Dealer

ALCO Asset Liability Committee

ATM Automated Teller Machine

BB Bangladesh Bank

B/L Bad/Loss

BAS Bangladesh Accounting Standards

BIBM Bangladesh Institute of Bank Management

CRR Cash Reserve Requirement

CRG Credit Risk Grading

CSR Corporate Social Responsibility

CPI Consumer Price Index

CDBL Central Depository Bangladesh Limited

CBS Core Banking Software

CRISL Credit Rating and Information Services Ltd.

DCFCL Departmental Control Function Check List

DEPZ Dhaka Export Processing Zone

DP Depository Participants

EPS Earnings Per Share

EPZ Export Processing Zone

FY Fiscal Year (July to June)

GDP Gross Domestic Product

GRI Global Reporting Initiative

HOB Head of Branch

ICAB Institute of Chartered Accountants of Bangladesh

IT Information Technology

IMF International Monetary Fund

IAS International Accounting Standards

IPO Initial Public Offering

LC Letter of Credit

MBID Merchant Banking and Investment Division

MTMF Medium Term Macro Economic Framework

SMT Senior Management Team

NII Net Interest Income

NPL Non Performing Loan

NCBs Nationalized Commercial Banks

OBU Offshore Banking Unit

PCBs Private Commercial Banks

PBL Prime Bank Limited

PECL Prime Exchange Co. Pte. Ltd.

PBIL Prime Bank Investment Ltd.

PBSL Prime Bank Securities Ltd.

POS Point of Sale

PV Present Value

RWA Risk Weighted Assets

RMG Readymade Garments

ROA Return on Assets (excluding contingent items)

ROE Return on Equity

R&D Research and Development

ROD Rights Share Offer Document

SAFA South Asian Federation of Accountants

MSME Micro, Small and Medium Enterprise

SOP Standard Operating Procedure

SLR Statutory Liquidity Ratio

I/We……………………………………………………………………………………………………………………………………………..................................................................................of (address) ……………………………………………………………………………………………………………………………….....................................................................................being the Member of Prime Bank Limited do hereby appointMr./Ms. ………………………………………………………………………………………………………………………………………....................................................................................of ………………………………………………………………………………………………………………………………………………......................................................................................or (failing him/her) Mr./ Ms. ………………………………………………………………………………………………………...................................................................................of ………………………………………………………………………………………………………………………………………………......................................................................................as my/our proxy to attend and vote on my/our behalf at the 24th Annual General Meeting of the Company to be held on Thursday, 16th May 2019 at 11.00 a.m. at the Krishibid Institution, KIB Complex, Krishi Khamar Sarak, Farmgate, Dhaka-1215 and at any adjournment thereof.

Signed this ……………………………………… day of May 2019.

Signature of the Member ……………………………………………………………………………..........................................................................................................………..

Folio/BO ID Number

Number of Shares held

Signature of the Proxy …………………………………………………………………………………………………………………................……………………………………………………….

Folio/BO ID Number

Number of Shares held

Notes:

I. Signature must be in accordance with the Specimen Signature recorded with the CDBL.II. A duly completed Proxy Form must be submitted at least 72 hours before the Meeting at the Share Department of the Company. Incomplete Proxy Form will not be entertained.

……………………………………………………………………………………………………………………………………………………………………………………...............……………..................

ATTENDANCE SLIPI/We hereby record my/our presence at the 24th Annual General Meeting of the Company to be held on Thursday, 16th May 2019 at 11.00 a.m. at the Krishibid Institution, KIB Complex, Krishi Khamar Sarak, Farmgate, Dhaka-1215.

Name of the Member (in block letters) ………………………………………………………………………………………………………………………………................………………

Folio/BO ID Number

Number of Shares held

Signature of the Member/Proxy………………………………………………………………………………………………………………………………………….................……..............

Attendance of the Members/Attorney/Proxy shall be recorded from 9:30 a.m. to 11.30 a.m. at the entrance of the Hall.N.B: No Gift or Entertainment shall be offered to the Shareholders in the 24th AGM as per BSEC Directive No.SEC/CMRRCD/2009-193/154 Dated

24.10.2013.

RevenueStamp

Registered OfficeAdamjee Court Annex Building -2

119-120 Motijheel C/A, Dhaka - 1000

PROXY FORM

Prime Bank Limited

Prime Bank Limited

Prime Ban

Prime Bank

Prime Bank

Prime Bank

Prime Bank

Prime Bank

Prime BankPrime Bank

Prime Bank

Prime Bank

Prime Bank

Prime Bank

Prime Bank

Prime Bank

Prime Bank