Notes to Financial Statements - AB Bank Limited

AB Bank LimitedAB Bank Limited Balance Sheet

As of 31 December 2007

31.12.2007 31.12.2006Taka Taka

PROPERTY AND ASSETS

3.00 4,299,269,940 3,247,071,614

Notes

Cash

3.01 671,113,391 519,829,203 3.02 3,628,156,549 2,727,242,411

4.00 1,860,735,223 1,273,352,219

4.01 718,485,962 230,470,168 4.02 1,142,249,261 1,042,882,051

5.00 574,080,317 517,150,308

Balance with other banks and financial institutions

In Bangladesh Outside Bangladesh

Money at call and on short notice

In hand (including foreign currencies)Balance with Bangladesh Bank and its agent bank(s)(including foreign currencies)

6.00 8,884,601,130 6,281,369,023

6.01 5,855,269,461 4,817,154,007 6.02 3,029,331,670 1,464,215,016

40,915,352,218 31,289,251,217

7.00 39,303,901,301 29,486,234,780 8.00 1,611,450,918 1,803,016,437

9.00 2,381,004,409 1,148,462,590 Fixed assets including premises, furniture and fixtures

Loans and advances

Loans, cash credits, overdrafts, etcBills purchased and discounted

Government Others

Investments

10.00 4,634,821,166 4,232,680,251 - -

63,549,864,403 47,989,337,222

11.00 1,872,010,028 1,297,378,229

12 00 53,375,348,391 42,076,995,417

Non-banking assets

Total Assets

Other assets

Borrowings from other banks, financial institutions and agents

LIABILITIES AND CAPITAL

Liabilities

Deposits and other accounts 12.00 53,375,348,391 42,076,995,417

4,371,717,515 4,159,604,591 2,666,304,319 2,176,159,548 1,105,058,168 538,583,214 8,493,116,434 8,179,509,291 3,396,098,545 2,620,786,358

31,131,930,491 23,363,898,951 130,325,000 140,863,710

2,080,797,920 897,589,754 Other deposits

Demand deposits

Savings bank depositsShort-term depositsFixed depositsBearer certificates of deposit

Bills payable

Deposits and other accounts

Current deposits

13.00 3,790,916,719 2,032,200,664

59,038,275,138 45,406,574,310

Total Shareholders' Equity 4,511,589,265 2,582,762,912

14.00 743,261,800 571,740,000 15.00 1,356,905,450 772,867,621 16.00 715,626,287 683,597,039 17.00 1,695,795,728 554,558,252

Other liabilities

Total Liabilities

Capital/Shareholders' Equity

Paid-up capitalStatutory reserve

Retained earningsOther reserve

17.00 1,695,795,728 554,558,252

63,549,864,403 47,989,337,222 Total Liabilities and Shareholders' Equity

Retained earnings

31.12.2007 31.12.2006Taka Taka

Off-Balance Sheet Items

Contingent liabilities 18.00 27,287,649,576 21,112,279,519

Acceptances and endorsements 3,304,001,966 2,974,762,808 Letters of guarantee 18.01 3,812,034,559 2,920,556,934 Irrevocable letters of credit 8,754,662,567 7,802,605,638

Notes

Bills for collection 2,719,761,107 2,571,462,007 Other contingent liabilities 18.02 8,697,189,377 4,842,892,133

Other commitments - - Documentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed - - Spot and forward foreign exchange contracts - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total off Balance Sheet items including contingent liabilities 27 287 649 576 21 112 279 519Total off-Balance Sheet items including contingent liabilities 27,287,649,576 21,112,279,519

The annexed notes form an integral part of the Balance Sheet

This is the Balance Sheet referred to in our report of even date.

Dhaka, ACNABINChartered Accountants10 March 2008

AB Bank LimitedAB Bank Limited

Profit and Loss AccountFor the year ended 31 December 2007

2007 2006Taka Taka

OPERATING INCOMEInterest income 20.00 5,269,904,660 3,378,338,544 Interest paid on deposits, borrowings, etc. 21.00 (3,830,623,489) (2,762,833,939)

Notes

p p , g , ( , , , ) ( , , , )Net interest income 1,439,281,171 615,504,605

Investment income 22.00 1,734,306,446 974,515,836 Commission, exchange and brokerage 23.00 1,305,338,922 740,610,379 Other income 24.00 177,654,705 319,535,254

3,217,300,074 2,034,661,469 Total operating income (a) 4,656,581,245 2,650,166,074

OPERATING EXPENSESSalary and allowances 25.00 696,776,012 563,558,879 Rent, taxes, insurance, electricity, etc. 26.00 144,255,680 111,800,004 Legal expenses 27.00 1,912,103 1,272,304 Postage, stamps, telecommunication, etc. 28.00 57,413,151 34,257,906 Stationery, printing, advertisement, etc. 29.00 44,720,259 27,218,559 Chief executive's salary and fees 5,599,996 5,119,996 Directors' fees 30.00 1,588,592 950,547 Auditors' fees 31.00 2,116,415 450,700 Charges on loan losses - - Depreciation and repairs of Bank's assets 32.00 117,971,014 85,039,847 Other expenses 33.00 258,934,177 1,109,810,983 Total operating expenses (b) 1,331,287,400 1,939,479,724 p g p ( ) , , , , , ,Profit before provision (c = a-b) 3,325,293,845 710,686,349

Provision against loans and advances 34.00 366,000,000 162,500,000 Provision for diminution in value of investments 35.00 9,400,000 16,000,000 Other provision 36.00 131,900,000 - Total provision (d) 507,300,000 178,500,000 Profit before taxation (c-d) 2,817,993,845 532,186,349 Provision for taxation 13.02 914,500,000 - Current tax 831,228,293 - Deferred tax 83,271,707 - Net profit after taxation 1 903 493 845 532 186 349Net profit after taxation 1,903,493,845 532,186,349 Appropriations 37.00Statutory reserve 563,598,769 106,437,270 General reserve - - Dividends, etc - -

563,598,769 106,437,270 Retained surplus 1,339,895,076 425,749,080

Earnings per share (EPS) 38.00 256.10 93.08

The annexed notes form an integral part of the Profit and Loss Accountg p

This is the Profit and Loss Account referred to in our report of even date.



Cash Flow StatementFor the year ended 31 December 2007

2007 2006Taka Taka

Cash Flows from Operating Activities

Interest receipts 5,269,904,660 3,378,338,544 I (3 830 623 489) (2 762 833 939)

Notes

Interest payments (3,830,623,489) (2,762,833,939) Dividend receipts 41,387,078 18,917,807 Fee and commission receipts 955,024,746 719,760,283 Recoveries on loans previously written off 11,483,420 118,875,051 Payments to employees (702,376,008) (568,678,875) Payments to suppliers (56,160,072) (55,523,928) Income taxes paid (125,277,075) (161,664,236) Receipts from other operating activities 39.00 2,209,404,829 1,177,108,328 Payments for other operating activities 40.00 (488,313,256) (1,286,497,632) Operating profit before changes in operating assets & liabilities 3 284 454 834 577 801 403Operating profit before changes in operating assets & liabilities 3,284,454,834 577,801,403

Increase/decrease in operating assets and liabilitiesLoans and advances to customers (9,626,101,001) (9,904,617,317) Other assets 41.00 (438,528,076) 207,055,139 Deposits from other banks (751,923,159) 4,741,532,365 Deposits from customers 12,050,276,133 9,974,020,898 Trading liabilities (short-term borrowings) 398,339,434 (544,687,988) Other liabilities 42.00 515,416,056 189,724,401

2,147,479,387 4,663,027,499 Net cash from/(used in) operating activities (a) 5 431 934 221 5 240 828 901Net cash from/(used in) operating activities (a) 5,431,934,221 5,240,828,901

Cash Flows from Investing ActivitiesPurchase/sale of government securities (1,039,234,154) (1,541,583,007) Purchase/sale of trading securities, shares, bonds, etc. (1,565,116,654) (678,624,074) Purchase/sale of property, plant and equipment (1,308,483,141) (780,424,321) Net cash from/(used in) investing activities (b) (3,912,833,948) (3,000,631,402)

Increase/(decrease) of long-term borrowings 176,292,365 (68,464,231) Dividend paid - - Net cash from/(used in) financing activities (c) 176 292 365 (68 464 231)Net cash from/(used in) financing activities (c) 176,292,365 (68,464,231) Net increase/(decrease) in cash (a+b+c) 1,695,392,638 2,171,733,269 Effects of exchange rate changes on cash and cash equivalents - - Cash and cash equivalents at beginning of the year 5,042,850,141 2,871,116,872 Cash and cash equivalents at end of the year (*) 6,738,242,780 5,042,850,141

(*) Cash and cash equivalents:

Cash 671,113,391 519,829,203 Prize bonds 4,157,300 5,276,000 Money at call and on short notice 574 080 317 517 150 308Money at call and on short notice 574,080,317 517,150,308 Balance with Bangladesh Bank and its agent bank(s) 3,628,156,549 2,727,242,411 Balance with other banks and financial institutions 1,860,735,223 1,273,352,219

6,738,242,780 5,042,850,141

The annexed notes form an integral part of the Cash Flow Statement.

This is the Cash Flow Statement referred to in our report of even date.

Dhaka ACNABINChartered Accountants10 March 2008

AB Bank Limited

Statement of Changes in Equity For the year ended 31 December 2007

Total

Balance at 01 January 2007 571,740,000 772,867,621 683,597,039 554,558,252 2,582,762,912 Effects of changes in accounting policy - - - - - Restated balance 571,740,000 772,867,621 683,597,039 554,558,252 2,582,762,912

- - (35,363,034) - (35,363,034)

- - 66,498,696 - 66,498,696

Currency translation differences - - - - -

- - - - -

Net profit after taxation for the year - - - 1,903,493,845 1,903,493,845

T f t t t t

Paid-upcapital

Retained earnings

Surplus/deficit on account of revaluation of investments

Other reserve

Statutory reserve

Net gains and losses not recognised in the Profit and Loss Statement

Particulars

Surplus/deficit on account of revaluation of properties

Transfer to statutory reserveIn Bangladesh - 563,598,769 - (563,598,769) - Outside Bangladesh - ABBL, Mumbai Branch - 20,439,060 - - 20,439,060

Transfer to general and other reserves - In Bangladesh - - - - - Outside Bangladesh - ABBL, Mumbai Branch - - - - -

- - 893,586 - 893,586

Issue of 30% bonus shares - 2006 171,521,800 - - (171,521,800) - Issue of share capital - - - - - Adjustment for prior year - - - (27,135,800) (27,135,800) Balance at 31 December 2007 743,261,800 1,356,905,450 715,626,287 1,695,795,728 4,511,589,265

This is the Statement of Changes in Equity referred to in our report of even date.


Addition to investment fluctuation reserve - ABBL, Mumbai Branch


Liquidity Statement (Asset and Liability Maturity Analysis)


ParticularsUp to 1 month's

maturity 1-3 months'

maturity3-12 months'

maturity1-5 years'maturity

More than 5 years'

maturity Total

Assets

Cash in hand and with banks 671,113,391 3,628,156,549 - - - 4,299,269,940

Balance with other banks and financial institutions

1,148,990,317 131,744,906 580,000,000 - - 1,860,735,223


260,138,817 73,941,500 240,000,000 - - 574,080,317

Investments 1,459,493,371 3,967,191,025 2,058,489,634 866,027,100 533,400,000 8,884,601,130

Loans and advances 4,092,012,135 5,319,125,685 22,931,045,218 8,183,043,966 390,125,215 40,915,352,218 Fi d t i l diFixed assets including premises, furniture and fixtures

14,524,127 71,430,132 166,670,309 1,444,555,375 683,824,466 2,381,004,409

Other assets 147,387,313 431,038,368 2,394,826,152 1,661,569,332 - 4,634,821,166 Non-banking assets - - - - - - Total Assets 7,793,659,471 13,622,628,165 28,371,031,313 12,155,195,773 1,607,349,681 63,549,864,403

Liabilities

Borrowings from Bangladesh g gBank, other banks, financial institutions, and agents

1,159,216,556 150,000,000 550,000,000 12,793,472 - 1,872,010,028

Deposits and other accounts 7,206,123,456 12,591,224,564 27,096,123,458 5,651,376,913 830,500,000 53,375,348,391

Provision and other liabilities 407,549,973 630,422,741 794,100,124 1,958,843,881 - 3,790,916,719 Total Liabilities 8,772,889,985 13,371,647,305 28,440,223,582 7,623,014,266 830,500,000 59,038,275,138 Net Liquidity Excess/(shortage)

(979,230,514) 250,980,860 (69,192,269) 4,532,181,507 776,849,681 4,511,589,265

This is the Liquidity Statement referred to in our report of even date.

Dhaka, ACNABIN10 March 2008 Chartered Accountants

AB Bank Limited

Notes to the Financial StatementsFor the year ended 31 December 2007

1.00 The Bank and its activities

Change of Name

New Logo of ABBL

Effective 01 January 2008, ABBL changed its Logo as well.

2.00 Significant Accounting Policies

2.01 Basis of preparation of the financial statements

2.02 Consolidation

AB Bank Limited is one of the first generation private commercial banks (PCBs), incorporated in Bangladesh on 31December 1981 as a public limited company under the Companies Act 1913, subsequently replaced by the Companies Act1994, and governed by the Banking Companies Act 1991. The Bank went for public issue of its shares on 28 December1983 and its shares are listed with Dhaka Stock Exchange and Chittagong Stock Exchange for trading. AB Bank Limited has71 branches including 1 Islami banking branch, 1 Overseas branch in Mumbai, India. The Bank has a subsidiary company,AB International Finance Ltd, incorporated in Hong Kong. The Bank carries out all kinds of commercial bankingactivities/services through its branches and has expanded its investment oriented service horizon to its customers throughits Merchant Banking Wing. The Bank obtained permission to embark upon Merchant Banking from Securities andExchange Commission vide its certificate no. MB-1.02/2001-30 dated 15 May 2001 under the Securities and ExchangeCommission Act 1993.

AB Bank Limited started Islami banking through its Dilkusha Islami Banking Branch, Dhaka from 21 December 2004 withthe permission of Bangladesh Bank (central bank) vide letter no. BRPD (P) 745 (12)/2004-2702 dated 08 July 2004.

The financial statements, namely, Balance Sheet, Profit and Loss Account, Cash Flow Statement, Statement of Changes inEquity, Liquidity Statement and relevant notes and disclosures thereto, of the Bank are prepared under the historical costconvention and in accordance with the First Schedule of Banking Companies Act 1991, Bangladesh Bank circulars,International Accounting Standards, including those that have been so far adopted by the Institute of CharteredAccountants of Bangladesh, the Companies Act 1994, the Securities and Exchange Ordinance 1969, Securities andExchange Rules 1987 and other laws and rules applicable thereto. Wherever appropriate, such principles are explained insucceeding notes.

A separate set of records for consolidating the statements of affairs and income and expenditure statements of thebranches including Mumbai Branch, India are maintained at the Head Office of the Bank in Dhaka, based on which thesefinancial statements have been prepared.

The assets and liabilities of Mumbai Branch, India have been incorporated in the accounts at yearend exchange rate.Income accrued and expenditures incurred by the Mumbai Branch are not incorporated in the accounts; instead, net profitearned has been shown as retained revenue under other liabilities. Such earnings are recognised as income of the Bank asand when remittance of profit is received from the branch and then grouped under the head "other income". The BalanceSheet of the Mumbai Branch has been shown separately in Annexure - C.

The Bank obtained permission as a Security Custodian from Securities and Exchange Commission vide its certificate no. SC-05/2007 dated 22 January 2007 under the Securities and Exchange Commission (Security Custodian Service) Rules, 2003.

AB Bank Limited started its philanthropic activities as a part of its corporate social responsibilities through Arab BangladeshBank Foundation, a company limited by guarantee, incorporated in Bangladesh on 03 November 2003 under theCompanies Act 1994 and registered with the Registrar of Joint Stock Companies. Arab Bangladesh Bank Foundation is alsoa member of Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd respectively and provides stock brokingservices to its clients.

Arab Bangladesh Bank Ltd. Changed its name to AB Bank Limited (ABBL) with effect from 14 November 2007 VideBangladesh Bank BRPD Circular Letter No-10 dated 22 November 2007. Prior to that Shareholders of the Bank approvedthe change of name in the Extra-Ordinary General Meeting held on 04 September 2007.

Merchant Banking Wing

Islami Banking Branch

2.03 Foreign currency transactions

(a)

(b)

(c)

2.04 Fixed assets and depreciation

Category of assets Rate of depreciation

BuildingFurniture and fixturesOffice appliancesElectrical appliancesMotor vehiclesLeasehold assets - vehicles

2.05 Investment

2.06 Loans and advances

a) Loans and advances are stated at gross amounts at 31 December 2007.

b)

c)

d)

20%

10%

Financial statements of Merchant Banking Wing have been audited by separately appointed independent auditors. Assets-liabilities and income-expenditures of that wing are incorporated in similar heads of account of the Bank's financialstatements.

Foreign currency transactions are converted into equivalent Taka currency at the ruling exchange rates on therespective dates of such transactions.

Assets and liabilities in foreign currencies as at 31 December 2007 have been converted into Taka currency at theaverage of the prevailing buying and selling rates of the relevant foreign currencies at that date except "balances withother banks and financial institutions" which have been converted as per directives of Bangladesh Bank vide its circularno. BRPD (R) 717/2004-959 dated 21 November 2004.

20%

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

Fixed assets are stated at cost less accumulated depreciation.

20%

20%

2.5%

Interest is not charged on classified loans and advances from the date of filing money suits against the borrowers.

Depreciation on fixed assets is charged using reducing balance method except motor vehicles, computers and photocopiersfor which straight-line method is used. The rates of depreciation are as follows:

The Bank's investment in treasury bills are stated at present value and interest on treasury bills are recognised as incomeof the bank as and when profit received from treasury bills on maturity as per BRPD Circular no. 15 dated 31 October 2005and DOS Circular Letter no. 03 dated 07 February 2007.

Value of investments in Bangladesh Government treasury bonds and prize bonds has been stated at face value whileinvestment in quoted shares has been stated at acquisition/purchase price and unquoted shares has been stated at costprice.

Interest charged on loans and advances classified by Bangladesh Bank Inspection Team and by the Bank managementas special mention account, sub-standard, doubtful and bad is kept in interest suspense account as per BangladeshBank BCD circular no. 34 of 16 November 1989, 20 of 27 December 1994 and 12 of 04 September 1995 as amendedby BRPD circular no. 16 dated 06 December 1998, 09 of 14 May 2001, BRPD circular no. 02 of 15 February 2005, BRPDcircular no. 05 dated 05 June 2006 and such interest is not accounted for as income until realised from borrowers.

Provision for loans and advances is made on the basis of yearend review by the management and of instructionscontained in Bangladesh Bank BCD circular no. 34 of 16 November 1989, 20 of 27 December 1994, 12 of 4 September1995, BRPD circular no. 16 dated 6 December 1998, 9 of 14 May 2001, 02 of 15 February 2005, 9 of August 2005 and17 of 6 December 2005 and BRPD circular no. 05 dated 05 June 2006. The adopted rate for provisions are statedbelow:

Islami banking branch has maintained separate set of books and records for its operation. All assets-liabilities and income-expenditures of this branch are incorporated in similar heads of account of the Bank's financial statements. Balance Sheetand Profit and Loss Account of the branches are shown separately in Annexure-B-1 and B-2.

General provision on unclassified loans and advancesStandard loans

1

22255

2050100

2.07 Stock of stationery

Stock of stationery has been shown under other assets and is valued at cost.

2.08 Deposits

2.09 Recognition of income and expenditures

2.10 Provident fund

2.11 Staff gratuity

2.12 Superannuation fund

2.13 Provision for taxation

2.14 Deferred Tax

2.15

2.16 Reporting period

Rate (%)

Small enterpriseHouse building loanLoan for professionalConsumer financingSpecial mention account

Other than small enterprise, house building loan, loan for professional &Consumer financing

Income and expenditures are recognised on accrual basis. Interest income is admitted only if its realisation is reasonablycertain. Investment income is accounted for on accrual basis except treasury bills.

Reconciliation of books of account

Books of account in regard to inter-bank (in Bangladesh and outside Bangladesh) and inter-branch transactions arereconciled and no material difference was found which may affect the financial statements significantly. There exist nounreconciled revenue items in Nostro accounts as of 31 December 2007.

Employees of the Bank, who served the Bank for ten years or above are entitled to get gratuity benefit at rates determinedby the Service Rules of the Bank. Provision in respect of which is made annually covering all its permanent eligibleemployees.

The Bank operates a Superannuation Fund as death-cum-retirement benefit for its employees. The fund is operated by aseparate Board of Trustees.

Sub-standard DoubtfulBad/loss

Deposits include various types like current deposits, savings deposits, short-term deposits, fixed deposits, etc.

Specific provision on classified loans and advances

The Bank's employees provident fund is administered by a board of trustees and is funded by contributions of both theBank and the employees at 10% of basic pay of each employee. These contributions are invested separately.

These financial statements cover one calendar year from 01 January 2007 to 31 December 2007.

Provision for current income tax has been made @ 45% as prescribed in the Finance Ordinance 2007 of the accountingprofit made by the Bank after considering some of the add backs of income and disallowances of expenditure as per BAS-12 " Income Taxes".

Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences arising between thecarrying values of assets, liabilities, income and expenditure and their respective tax base. Deferred tax assets andliabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the balance sheetdate. The impact on the account of changes in the deferred tax assets and liabilities has also been recognised in the profitand loss account as per BAS-12 "Income Taxes".

2.17 Set-off of assets and liabilities accounts

No accounts of assets and liabilities were set-off unless these were legally permitted.

2.18 Assets acquired under lease

2.19 Off-balance sheet items

2.20

a)

b)

Nature of transaction Amout in Taka

Purchase of Vehicles 144,785,400

2.21 Audit committee

Audit committee of the Bank constituted the following members:

Sl. #

Duration

1 Chairman With effect from12 December 2007

2 Member With effect from13 May 2006

ACIB, UK

3 MemberWith effect from14 August 2007

· comprehensive inspection report of Bangladesh Bank including status of compliance thereof;· inspection reports of branches/Head Office conducted by Bank's internal inspection team; · financial statements of the Bank;· half-yearly accounts of the Bank for the year 2007; and· status of compliance of different rules and regulations.

The committee places its report regularly to the Board of Directors of the Bank for its review.

Name of the Party

Mr. Sajedur Seraj, Vice Chairman

BA, LLB

Name and status with the Bank

Educational qualification

Mr. M. Wahidul Haque, Director

During the year 2007, the audit committee conducted five (05) meetings in which, among others, the following issueswere reviewed and discussed:

Status with the committee

Mr. Golam Sarwar, Director B.A (Hon's) in Political Science, DU

Tender

Pacific Motors Ltd.

Pacific Bangladesh Telecom Ltd.

In accordance with BRPD Circular # 08 and 10 dated 07 August 2007 and 18 September 2007 respectively generalprovision @ 0.50% has been made on the outstanding balance of letter of credit, guarantee and acceptances as of 31December 2007.

Relationship

Related party disclosures

Name of Director and Related by

Significant contrcts where Bank is a party and wherein Directors have interest

Mr. M. Wahidul Haque (CommonDirector)

Deundi Tea Company (UK) Ltd.

Pacific Motors Ltd.

Lease agreemet with AB Bank Ltd.

Name of contracts

Common Director

Related party transactions

Mr. Faisal M. Khan (CommonDirector)



Basis of procurement

Name of party

Mr. Faisal M. Khan, Mr. Golam Sarwar(Common Director)

Assets acquired under finance lease are shown as assets and depreciation is charged on those assets in consistence withthat for depreciable assets of owned assets. A corresponding liability is shown in the Balance Sheet representing leasepayments against those assets.

Off-Balance Sheet items have been disclosed under contingent liabilities and other commitments as per Bangladesh Bank'sguidelines.

2.22 Number of employees

2.23 Name of Directors and the entities in which they had interest as at 31 December 2007

Sl. #

Name Status

1. Mr. Faisal M. Khan Chairman i) Pacific Bangladesh Telecom Ltd.

ii) Pacific Technologies Ltd.iii) Pacific Motors Ltd.iv) Pacific Radio Ltd.v) Nayapara Tea Company Ltd.vi) British Motors Bangladesh Ltd.vii) German Motors Bangladesh Ltd.viii) French Motors Bangladesh Ltd.ix) Italian Motors Bangladesh Ltd.x) Asia Telecom Ltd.xi) Pacific Equities Ltd.xii) Pacific Traders Ltd.xiii) Pacific Industries Ltd.xiv) Therapeutics (BD) Ltd.

2. Mr. Sajedur Seraj Vice Chairman i) Elite Chemical Industries Ltd.

ii) Elite International Ltd.iii) Elite Garment Industries Ltd.iv) Hexagon Chemical Complex Ltd.v) Elite Iron and Steel Industries Ltd.vi) Elite Oil Refinery Ltd.vii) Octagon Fibers and Chemicals Ltd.

3. Mr. Golam Sarwar Director i) Pacific Industries Ltd.

ii) Pacific Motors Ltd.iii) Pacific Traders Ltd.iv) Pacific Logistics Ltd.

4. Mr. S. M. Salahuddin Director N/A

5. Mr. Mohd. Tipu Sultan, FCA Director Hyundai Motors Bangladesh Ltd.

6. Mr. Faheemul Huq, Barrister-at-Law Director HUQ AND COMPANY

7. Mr. Syed Afzal Hasan Uddin, Barrister-at-Law Director Syed Ishtiaq Ahmed & Associates

8. Mr. Md. Salah Uddin Director N/A

9. Mr. M. Wahidul Haque Director Deundi Tea Company (UK) Ltd.

10. Mr. Kaiser A. Chowdhury

President & Managing Director

(Ex-Officio Director)

N/A

Name of the firms/companies in which the directorhad interest as proprietor/partner/director/managing agent/guarantor, etc.

The number of employees engaged for the whole year or part thereof who received a total remuneration of Taka 36,000 orabove was 1725.

31.12.2007 31.12.2006Taka Taka

3.00 Cash

3.01 Cash in hand

In local currency 644,374,398 499,285,531 In foreign currency 26,738,993 20,543,672

671,113,391 519,829,203

3.02 Balance with Bangladesh Bank and its agent bank(s)

Balance with Bangladesh Bank

In local currency 2,301,608,775 1,814,976,297 In foreign currency 1,040,341,839 837,119,089

3,341,950,615 2,652,095,387

Sonali Bank(as an agent bank of Bangladesh Bank) - local currency 286,205,935 75,147,024

3,628,156,549 2,727,242,411 4,299,269,940 3,247,071,614

3.03 Statutory deposits

Cash reserve ratio and statutory liquidity ratio

(a) Cash reserve ratio (CRR)

Required reserve 2,431,895,350 1,776,424,000 Actual reserve maintained 2,320,867,000 1,787,538,000 Surplus (*) (111,028,350) 11,114,000

(b) Statutory liquidity reserve (SLR)

Required reserve 6,322,927,910 4,618,701,000 Actual reserve maintained 6,800,195,935 5,010,126,000 Surplus 477,268,025 391,425,000

Total required reserve 8,754,823,260 6,395,125,000 Total actual reserve held with Bangladesh Bank 9,121,062,935 6,797,664,000 Total surplus 366,239,675 402,539,000

(*)

4.00 Balance with other banks and financial institutions

In Bangladesh (note 4.01) 718,485,962 230,470,168 Outside Bangladesh (note 4.02) 1,142,249,261 1,042,882,051

1,860,735,223 1,273,352,219

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

Cash reserve ratio and statutory liquidity ratio have been calculated and maintained in accordance with section 33 of BankingCompanies Act 1991 and Bangladesh Bank BRPD's subsequent circular nos. 11 and 12 dated 25 August 2005.

BRPD Circular # 12 dated 25 August 2005 required that all scheduled Banks have to maintain CRR @ 5% daily of their totaltime and demand liabilities on bi-weekly average basis subject to the condition that the amount of CRR so maintained shouldnot be less than 4% in any day. As on 31 December 2007, though the Bank has maintained CRR @ 4.77% but CRR @ 5%was maintained for the period from 15 December 2007 to 31 December 2007 on bi-weekly average basis.

31.12.2007 31.12.2006Taka Taka

4.01 In BangladeshCurrent DepositsStandard Chartered Bank, Dhaka City Centre Branch 871,315 3,496,730 Agrani Bank, Laldighir Par Branch, Modhuban, Sylhet 320,839 313,330 Agrani Bank, Brahmanbaria Branch 4,013,555 29,668 Agrani Bank, Principal Branch 26,080 26,080 Agrani Bank, Thana Road Branch, Bogra 9,376 9,298 Islami Bank Bangladesh Ltd., Local Office 2,727 2,727 Agrani Bank, Bhairab Bazar Branch 1,579 1,579 The Trust Bank Ltd. Dilkusha Corporate Branch 1,495,297 - Agrani Bank, Shaheb Bazar Branch, Rajshahi 290 340

6,741,056 3,879,750

Short Term DepositsAgrani Bank, Rangpur Branch 4,110,000 8,739,212 Agrani Bank, Saidpur Branch 41,224 8,196,707 Agrani Bank, Jhikargachha Branch 13,289 7,214,114 Agrani Bank, Sir Iqbal Road Branch, Khulna 1,537,354 2,033,268 Agrani Bank, Chawk Bazar Branch, Barisal 193,613 138,508 Agrani Bank, Naogaon Branch 4,234,257 125,106 Islami Bank Bangladesh Ltd., Local Office 52,000 52,000 Agrani Bank, Jessore Branch 63,358 36,816 Agrani Bank, Moulvi Bazar Branch 1,427,440 30,356 Agrani Bank, Satkhira Branch 8,513 10,493 Agrani Bank, Court Road Branch, Narayanganj 3,857 3,837

11,684,906 26,580,418 Savings DepositsSocial Investment Bank Ltd. Principal Branch 50,000 -

10,000 10,000 60,000 10,000

Fixed Deposits (Mudarabaha term deposits)Islamic Finance and Investment Ltd. 200,000,000 200,000,000 Social Investment Bank Ltd. Principal Branch 500,000,000 -

700,000,000 200,000,000 718,485,962 230,470,168

Shahjalal Islami Bank Ltd., Foreign Exchange Branch

4.02 Outside Bangladesh (Nostro Accounts)

Amounts inforeign

currency

Conver-sion rate

Equivalent amounts in

Taka

Amounts inforeign

currency

Conver-sion rate


Taka

The Bank of Tokyo Mitsubishi Ltd. Tokyo YEN 8,071,248 0.6095 4,919,426 3,555,668 0.5804 2,063,710

HSBC Plc London UKP 187,526 136.7204 25,638,678 155,916 135.3296 21,100,082

Lloyds TSB Bank Plc London UKP 74,375 136.7204 10,168,611 69,893 135.3296 9,458,585

HSBC Mumbai ACUD 3,806 68.5728 260,961 97,676 69.0651 6,745,975

JP Morgan Chase Bank New York USD 2,697,849 68.5728 184,999,044 352,574 69.0651 24,350,528

Sonali Bank Kolkata ACUD 11,381 68.5728 780,425 5,793 69.0651 400,125

Myanmar Economic Bank Yangon USD 410 68.5728 28,115 410 69.0651 28,317

Citibank NA New York USD 145,790 68.5728 9,997,261 433,087 69.0651 29,911,169

Hatton National Bank Ltd. Colombo ACUD 444 68.5728 30,428 30,336 69.0651 2,095,193

Commerz Bank AG Frankfurt USD - 68.5728 - 22,906 69.0651 1,581,982

State Bank of India Kolkata ACUD 15,725 68.5728 1,078,329 15,725 69.0651 1,086,071

NIB Bank Ltd. Karachi ACUD 39,702 68.5728 2,722,491 286,739 69.0651 19,803,654

Lloyds TSB Bank Plc London USD 6,832 68.5728 468,511 7,719 69.0651 533,100

Mashreq Bank Psc New York USD 17,639 68.5728 1,209,576 40,578 69.0651 2,802,513

Arab Bangladesh Bank Ltd. Mumbai ACUD 258,909 68.5728 17,754,149 138,984 69.0651 9,598,967

Nepal Bangladesh Bank Ltd. Katmandu ACUD 12,564 68.5728 861,549 29,564 69.0651 2,041,841

Bank of Bhutan Phuentsholing ACUD 8,270 68.5728 567,114 16,820 69.0651 1,161,692

HSBC Plc London USD 5,147 68.5728 352,969 28,324 69.0651 1,956,171

BCCI London USD 6,542 68.5728 448,611 6,542 69.0651 451,831

Wachovia Bank New York USD 313,452 68.5728 21,494,269 98,113 69.0651 6,776,218

American Express Bank Ltd. New York USD 152,277 68.5728 10,442,044 127,975 69.0651 8,838,634

HSBC New York USD - 68.5728 - 769,596 69.0651 53,152,250

Habib America Bank New York USD - 68.5728 - 384,167 69.0651 26,532,525

Commerz Bank AG Frankfurt EURO 127,547 100.9117 12,871,005 237,396 91.1797 21,645,717

Hypovereins Bank Humburgh EURO 41,075 100.9117 4,144,970 46,928 91.1797 4,278,879

HSBC Karachi ACUD 141,927 68.5728 9,732,305 - - -

Reserve Bank of India Mumbai INR 9,529,908 1.7398 16,580,134 7,736,673 1.5646 12,104,799

Other commercial banks in India Mumbai INR 25,405,605 1.7398 44,200,672 26,686,168 1.5646 41,753,178

Balance with ABBL, Mumbai Branch Mumbai INR 176,393,002 1.7398 306,888,546 238,537,936 1.5646 373,216,454

AB International Finance Ltd. Hong Kong USD 6,615,000 68.5728 453,609,072 5,175,000 69.0651 357,411,894

1,142,249,261 1,042,882,051

Name of the bank

As of 31 December 2007 As of 31 December 2006Name of currency

Location

31.12.2007 31.12.2006Taka Taka

4.03

1,148,990,317 1,046,761,801 60,000 10,000

11,684,906 26,580,418 700,000,000 200,000,000

1,860,735,223 1,273,352,219

4.04 Maturity grouping of balance with other banksRepayable – on demand 1,148,990,317 746,761,801

– upto 3 months 131,744,906 246,590,418 – over 3 months but below 1 year 580,000,000 280,000,000 – over 1 year but below 5 years - - – over 5 years - -

1,860,735,223 1,273,352,219

5.00 Money at call and on short notice

With banking companiesOne Bank Ltd. 200,000,000 - Eastern Bank Ltd. - 150,000,000 Agrani Bank Ltd. 89,697 332,941 Southeast Bank Ltd. 49,120 49,267

200,138,817 150,382,208

With non-banking financial institutionsInternational Leasing and Financial Services Ltd. - 150,000,000 People's Leasing and Financial Services Ltd. 110,000,000 100,000,000 First Lease International Ltd. 80,000,000 80,000,000 National Housing Company Ltd. 60,000,000 - Bay Leasing Company Ltd. 50,000,000 -

300,000,000 330,000,000 On calls and placements -ABBL, Mumbai Branch 73,941,500 36,768,100

574,080,317 517,150,308 At short noticeAgrani Bank Ltd. Principal Branch 89,697 332,941 Southeast Bank Ltd. Principal Branch 49,120 49,267

138,817 382,208 On calls and placementsInternational Leasing and Financial Services Ltd. - 150,000,000 Eastern Bank Ltd. - 150,000,000 People's Leasing and Financial Services Ltd. 110,000,000 100,000,000 First Lease International Ltd. 80,000,000 80,000,000 ABBL, Mumbai Branch 73,941,500 36,768,100 National Housing Company Ltd. 60,000,000 - Bay Leasing Company Ltd. 50,000,000 - One Bank Ltd. 200,000,000 -

573,941,500 516,768,100 574,080,317 517,150,308

6.00 Investments

Investment securities are classified as follows:

Held for trading 366,239,000 - Held to maturity 5,484,873,160 4,811,878,007 Others 3,033,488,970 1,469,491,016

8,884,601,130 6,281,369,023

Account-wise/grouping of balance with other banks and financial institutions

Fixed deposits

Current depositsSavings depositsShort-term deposits

31.12.2007 31.12.2006Taka Taka

6.01 Government securities

91 days' treasury bills 398,336,071 2,298,797,000 364 days' treasury bills 1,466,968,654 - 5 years' treasury bills 155,312,436 2,068,786,007

2,020,617,161 4,367,583,007

Treasury bills - Reverse Repo with :Eastern Bank Ltd. 387,000,000 159,000,000 The City Bank Ltd. 655,000,000 - South East Bank Ltd. 562,000,000 - Uttara Bank Ltd. 312,000,000 - Bangladesh Bank - 200,000,000

1,916,000,000 359,000,000 Debentures-Bangladesh House Building Finance Corporation 40,000,000 45,000,000 (Maturity date: 14 March 2015, interest rate: 5.50%)

40,000,000 45,000,000 3,976,617,161 4,771,583,007

Government bondsPrize bonds 4,157,300 5,276,000 Treasury bonds (note 6.01.01) 1,874,495,000 40,295,000

1,878,652,300 45,571,000 Total Government securities 5,855,269,461 4,817,154,007

6.02 Other investmentsShares (note 6.02.01) 2,857,001,068 1,311,987,278

Investments -ABBL, Mumbai branch

Treasury bills 147,103,502 129,541,038 Debentures and bonds 25,227,100 22,686,700

172,330,602 152,227,738 Total other investments 3,029,331,670 1,464,215,016 Total investments 8,884,601,130 6,281,369,023

6.01.01 Treasury bonds

Type Rate of interest Maturity date05 years Treasury 5.00% 01 March 2008 10,295,000 10,295,000 BD Govt. Treasury 10.82% 18 July 2012 170,800,000 - BD Govt. Treasury 12.19% 04 July 2017 141,400,000 - BD Govt. Treasury 10.82% 18 July 2012 120,000,000 - BD Govt. Treasury 12.19% 04 July 2017 210,000,000 - BD Govt. Treasury 12.15% 08 August 2017 122,000,000 - BD Govt. Treasury 10.74% 19 September 2012 250,000,000 - BD Govt. Treasury 10.69% 17 October 2012 30,000,000 - BD Govt. Treasury 10.65% 21 November 2012 100,000,000 - BD Govt. Treasury 10.65% 21 November 2012 50,000,000 - BD Govt. Treasury 11.74% 05 December 2017 20,000,000 - BD Govt. Treasury 10.65% 19 December 2012 100,000,000 - T & T 7.00% 13 March 2007 - 30,000,000

1,324,495,000 40,295,000

Treasury bonds - Reverse RepoBD Govt. Treasury 8.10% 05 February 2008 200,000,000 - BD Govt. Treasury 8.10% 10 February 2008 150,000,000 - BD Govt. Treasury 8.80% 10 November 2008 200,000,000 -

550,000,000 - 1,874,495,000 40,295,000

Treasury bills:

31.12.2007 31.12.2006Taka Taka

6.02.01 Others

In shares (quoted and unquoted)

Quoted

Powergrid Company Ltd. 1,134,740,098 504,294,090 International Finance Investment and Commerce Bank Ltd. 123,351,866 373,443,726 Beximco Pharma Ltd. 40,292,685 40,292,685 Fareast Life Insurance Company Ltd. 32,916,184 38,929,365 Square Pharmaceuticals Ltd. 157,016,144 34,165,882 Southeast Bank Ltd. 69,474,785 32,457,657 Mutual Trust Bank Ltd. 3,877,090 24,564,091 Prime Bank Ltd. 25,321,099 21,806,436 Beximco Ltd. 151,175,000 21,035,000 United Commercial Bank Ltd. - 19,586,932 Uttara Bank Ltd. 12,690,807 18,673,845 Summit Power Ltd. 19,064,662 13,617,955 Heidelberg Cement Ltd. 13,026,781 11,803,221 Standard Bank Ltd. 19,757,559 11,047,158 Exim Bank Ltd. 45,535,356 10,824,950 Square Textiles Ltd. 4,932,712 10,245,608 One Bank Ltd. 5,756,929 9,822,891 Bank Asia Ltd. 5,984,202 8,811,819 Bangladesh Online Ltd. - 7,867,950 National Tubes Ltd. 2,036,407 7,859,999 United Leasing Company Ltd. 1,666,892 7,378,202 Jamuna Bank Ltd. 38,826,709 6,555,550 The City Bank Ltd. 10,805,668 6,438,110 Mercantile Bank Ltd. 1,653,618 5,936,986 Uttara Finance and Investments Ltd. 5,538,190 5,284,438 Apex Adelchi Ltd. - 4,885,660 Islami Bank Bangladesh Ltd. 14,397,770 4,631,666 Lafarge Surma Cement Ltd. 551,945,524 3,973,775 JMI Bangla Company Ltd. 3,960,000 3,960,000 Popular Life Insurance Company Ltd. 75,302 3,882,118 Meghna Life Insurance Company Ltd. - 3,184,858 National Life Insurance Company Ltd. 552,880 3,033,104 NCC Bank Ltd. 111,271,948 2,800,181 Premier Leasing Company Ltd. - 2,758,012 Eastern Bank Ltd. 24,499,807 2,632,815 Eastern Cables Ltd. - 2,448,449 Industrial Development and Leasing Company of Bangladesh Ltd. 8,157,105 2,252,996 Prime Finance and Investment Company Ltd. - 1,817,325 Islamic Finance and Investment Company Ltd. - 1,453,702 Usmania Glass Sheet Factory Ltd. 1,315,289 1,315,289 MIDAS Financing Ltd. 1,699,725 647,425 Renata Ltd. 136,136 136,136 Intech Online Ltd. - 750 Brac Bank Ltd. 45,480,028 - National Bank Ltd. 2,493,584 - Shahjalal Bank Ltd. 51,554,328 - Prime Life Insurance Company Ltd. 2,569,750 - DESCO 65,293,926 - Bextex Ltd. 98,825 3,428,471 Social Investment Bank Ltd. 17,791,549 - People's Leasing and Financial Services Ltd. 1,993,904 - LankaBangla Finance Ltd. 6,272,244 -

2,837,001,068 1,301,987,278 Unquoted

10,000,000 10,000,000

10,000,000 - 20,000,000 10,000,000

2,857,001,068 1,311,987,278

Industrial and Infrastructure Development Finance CompanyLtd.

Central Depository Bangladesh Ltd.

6 02 02 Further details of investment in shares are as under:6.02.02 Further details of investment in shares are as under:

Shares (quoted)

Number of shares

Market price per share/

Taka

Total market price/ Taka

Total cost/ Taka

Powergrid Company Ltd. 2,924,050 682.50 1,995,664,125 1,134,740,098 International Finance Investment and Commerce Bank Ltd. 135,712 2,321.00 314,987,552 123,351,866 Beximco Pharma Ltd. 868,450 58.90 51,151,705 40,292,685 Fareast Life Insurance Company Ltd. 28,564 1,886.75 53,893,127 32,916,184

Particulars

Square Pharmaceuticals Ltd. 64,962 3,682.00 239,190,084 157,016,144 Southeast Bank Ltd. 141,824 573.25 81,300,608 69,474,785 Mutual Trust Bank Ltd. 11,700 596.00 6,973,200 3,877,090 Prime Bank Ltd. 34,550 923.75 31,915,563 25,321,099 Beximco Ltd. 3,415,500 37.40 127,739,700 151,175,000 Uttara Bank Ltd. 8,705 4,854.75 42,260,599 12,690,807 Summit Power Ltd. 40,580 1,441.50 58,496,070 19,064,662 Heidelberg Cement Ltd. 12,024 1,204.75 14,485,914 13,026,781 Standard Bank Ltd. 80,175 337.75 27,079,106 19,757,559 Exim Bank Ltd. 116,475 391.00 45,541,725 45,535,356 Square Textiles Ltd. 56,645 127.40 7,216,573 4,932,712 One Bank Ltd. 23,729 572.50 13,584,853 5,756,929 Bank Asia Ltd. 22,962 521.75 11,980,424 5,984,202 National Tubes Ltd. 2,054 1,806.50 3,710,551 2,036,407 United Leasing Company Ltd. 2,880 635.25 1,829,520 1,666,892 Jamuna Bank Ltd. 136,385 388.25 52,951,476 38,826,709 The City Bank Ltd. 20,682 725.25 14,999,621 10,805,668 Mercantile Bank Ltd. 6,775 419.00 2,838,725 1,653,618 Uttara Finance and Investments Ltd. 11,020 693.50 7,642,370 5,538,190 Islami Bank Bangladesh Ltd. 3,629 6,632.00 24,067,528 14,397,770 g , , , , , ,Lafarge Surma Cement Ltd. 1,146,176 480.75 551,024,112 551,945,524 JMI Bangla Company Ltd. 39,600 100.00 3,960,000 3,960,000 Popular Life Insurance Company Ltd. 100 2,230.00 223,000 75,302 National Life Insurance Company Ltd. 590 2,545.00 1,501,550 552,880 NCC Bank Ltd. 318,033 441.50 140,411,570 111,271,948 Eastern Bank Ltd. 31,385 1,070.75 33,605,489 24,499,807 Industrial Development and Leasing Company of Bangladesh Ltd. 5,380 1,519.00 8,172,220 8,157,105 Usmania Glass Sheet Factory Ltd. 1,655 1,704.00 2,820,120 1,315,289 MIDAS Financing Ltd. 4,400 367.50 1,617,000 1,699,725 Renata Ltd. 397 7,491.25 2,974,026 136,136Renata Ltd. 397 7,491.25 2,974,026 136,136 Brac Bank Ltd. 82,950 1,612.00 133,715,400 45,480,028 National Bank Ltd. 3,080 1,494.25 4,602,290 2,493,584 Shahjalal Bank Ltd. 209,250 366.00 76,585,500 51,554,328 Prime Life Insurance Company Ltd. 5,450 841.75 4,587,538 2,569,750 DESCO 74,200 1,069.25 79,338,350 65,293,926 Bextex Ltd. 4,664 18.90 88,150 98,825 Social Investment Bank Ltd. 65,600 506.75 33,242,800 17,791,549 People's Leasing and Financial Services Ltd. 7,420 314.25 2,331,735 1,993,904 LankaBangla Finance Ltd. 131,000 100.10 13,113,100 6,272,244

4 325 414 666 2 837 001 0684,325,414,666 2,837,001,068

Shares (unquoted)

Number of shares

Face value/Taka

Book Value/Cost/Taka

Central Depository Bangladesh Ltd. 10 1,000,000 10,000,000

182,160 100 10,000,000 20 000 000

Industrial and Infrastructure Development Finance Company Ltd.

Particulars

20,000,000

31.12.2007 31.12.2006Taka Taka

6.03 Maturity grouping

Repayable – on demand 1,459,493,371 812,616,315 – upto 3 months 3,967,191,025 2,595,178,450 – over 3 months but below 1 year 2,058,489,634 2,675,798,551 – over 1 year but below 5 years 866,027,100 152,775,707 – over 5 years 533,400,000 45,000,000

8,884,601,130 6,281,369,023

7.00 Loans and advances

7.01 Maturity grouping Repayable – on demand 3,639,774,217 1,057,162,800

– upto 3 months 4,357,912,685 5,086,800,000 – over 3 months but below 1 year 22,733,045,218 12,793,463,780 – over 1 year but below 5 years 8,183,043,966 10,235,559,200 – over 5 years 390,125,215 313,249,000

39,303,901,301 29,486,234,780

7.02 Broad category-wise breakup

In Bangladesh

Loans 23,210,374,692 19,025,643,669 Overdrafts 15,780,452,000 10,129,500,000 Cash credits - -

38,990,826,692 29,155,143,669

Outside Bangladesh: ABBL, Mumbai Branch

Loans 264,038,694 299,732,728 Overdrafts 49,035,915 31,358,383 Cash credits - -

313,074,609 331,091,111 39,303,901,301 29,486,234,780

7.03 Significant concentrationAdvances to allied concerns of Directors - - Advances to Chief Executive 14,067,925 5,042,458 Advances to industries 12,510,480,506 7,885,753,981 Advances to customer groups 26,779,352,870 21,595,438,341

39,303,901,301 29,486,234,780

7.04

850,500,000 211,300,000 5,139,180,506 2,604,700,000 6,105,935,915 4,952,500,000 2,236,600,000 870,600,000

17,813,300,000 12,300,737,874 36,600,000 41,600,000

7,121,784,880 8,504,796,906 39,303,901,301 29,486,234,780

7.05 Advances to customers for more than 10% of Bank's total capital

Total capital of the Bank 4,785,078,287 2,664,171,815

Number of clients 53 71Amount of outstanding advances 12,359,400,000 10,578,700,000 Amount of classified advances - - Measures taken for recovery Not applicable Not applicable

Industry-wise loans and advances

Commercial lendingSmall and cottage industry

AgricultureLarge and medium scale industryWorking capitalExport

Others

31.12.2007 31.12.2006Taka Taka

7.06 Classification of loans and advancesUnclassifiedStandard 37,412,495,301 28,021,446,780 Special mention account 128,770,000 206,273,000 Total unclassified loans and advances 37,541,265,301 28,227,719,780

ClassifiedSubstandard 200,622,000 56,471,000 Doubtful 231,123,000 81,458,000 Bad/Loss 1,330,891,000 1,120,586,000

1,762,636,000 1,258,515,000 39,303,901,301 29,486,234,780

7.07 Particulars of loans and advances

(i)29,874,301,301 24,399,434,780

(ii)- -

(iii)9,429,600,000 5,086,800,000

(iv)- -

39,303,901,301 29,486,234,780

(v)183,856,000 149,969,000

(vi)- -

(vii)

183,856,000 149,969,000

(viii)

- -

(ix) - -

(x) - -

(a) 244,354,702 40,436,000 19,314,000 126,405,000 11,431,000 118,870,000

(b) 659,944,862 415,590,160

(c) 133,205,948 148,948,165

Maximum total amount of advances, including temporaryadvances made at any time during the year to directors ormanagers or officers of the Bank or any of them eitherseparately or jointly with any other persons [note 7.07 (b)]

Maximum total amount of advances, including temporaryadvances granted during the year to the companies or firms inwhich the directors of the Bank are interested as directors,partners or managing agents or, in the case of privatecompanies, as members

Total classified loans and advances

Loans due by directors or officers of the Bank or any of themeither separately or jointly with any other persons [note 7.07(b)]

Loans due from companies or firms in which the directors ofthe Bank are interested as directors, partners or managingagents or, in case of private companies, as members

Loans considered good in respect of which the Bank is fullysecured

Loans considered good against which the Bank holds nosecurity other than the debtors’ personal guarantee

Loans considered good and secured by the personalundertaking of one or more parties in addition to the personalguarantee of the debtors [note 7.07 (a)]

Loans adversely classified but provision not maintainedthereagainst

Due from other banking companies

Increase/decrease of provision (specific)

Amount of classified loans on which interest has not beencharged

Interest charged to interest suspense account

Amount realised against loan previously written off

Provision kept against loans classified as bad /loss on the dateof preparing the balance sheet

Amount of loan written off

31.12.2007 31.12.2006Taka Taka

(xi)

During the year 19,314,000 126,405,000

Cumulative to-date 3,737,200,000 3,737,200,000 Cumulative to-date 438,679,106 419,365,106

4,175,879,106 4,156,565,106

9,236,000 119,165,000

7.07 (a) The amount represents value of import documents released to the customers against Trust Receipts.

7.07 (b)

7.08 Geographical location-wise (division) distribution

In Bangladesh:

Urban branches (50 branches)

Dhaka 22,178,371,431 16,758,130,622 Chittagong 11,751,687,023 8,522,888,964 Khulna 1,279,436,257 1,107,981,773 Sylhet 822,347,909 786,273,068 Barisal 148,019,622 129,775,863 Rajshahi 822,633,002 782,364,331

37,002,495,244 28,087,414,621

Rural branches (20 branches)

Dhaka 1,169,917,692 630,386,639 Chittagong 383,422,145 211,886,536 Khulna 221,965,448 59,175,166 Sylhet 213,026,163 166,280,707 Barisal - - Rajshahi - -

1,988,331,448 1,067,729,048 38,990,826,692 29,155,143,669

Outside Bangladesh:

ABBL, Mumbai Branch 313,074,609 331,091,111 39,303,901,301 29,486,234,780

7.09 Securities against loans and advances

Nature of security

Collateral of movable/immovable assets 25,394,642,694 20,335,478,000 Cash collateral 2,240,315,000 1,938,884,000 Banks and financial institutions guarantee 22,772,000 216,343,000 Personal guarantee 3,761,078,000 2,099,219,000 Corporate guarantee 4,996,417,000 2,118,591,000 Other securities 2,888,676,607 2,777,719,780

39,303,901,301 29,486,234,780

8.00 Bills purchased and discounted

In Bangladesh 1,389,037,597 1,542,250,376 Outside Bangladesh - ABBL, Mumbai Branch 222,413,321 260,766,061

1,611,450,918 1,803,016,437

8.01 Maturity grouping

Repayable – within 1 month 452,237,918 498,271,642 – over 1 month but within 3 months 961,213,000 1,090,445,185 – over 3 months but within 6 months 198,000,000 214,299,610 – over 6 months - -

1,611,450,918 1,803,016,437

The amount of written off loans for which lawsuits have beenfiled for its recovery

Written off loan

The amount represents loans due only by the employees of the Bank.

(as per Bangladesh Bank guidelines)(in amicable settlement)

31.12.2007 31.12.2006Taka Taka

9.00 Fixed assets including premises, furniture and fixtures

Cost:

Land and Building 1,920,237,894 945,767,901 Furniture and fixures 163,074,709 163,585,267 Office appliances 52,489,221 46,544,722 Electrical appliances 500,377,728 305,747,798 Motor vehicles 167,659,150 31,700,076 Leasehold assets 61,000,074 165,150,074

2,864,838,776 1,658,495,838 Less: Accumulated depreciation 483,834,367 510,033,248

2,381,004,409 1,148,462,590

A schedule of Fixed Assets is given in Annexure - A

10.00 Other assets

Income generating

In Bangladesh:

Arab Bangladesh Bank Foundation 19,920,000 19,920,000

Outside Bangladesh:

AB International Finance Ltd., Hong Kong 5,203,944 5,203,944 (wholly owned subsidiary company of ABBL)

25,123,944 25,123,944

Non-income generating Inter-branch adjustment 660,164,560 1,751,654,641 Advance corporate income tax (note 10.01) 1,064,223,048 774,073,376 Accounts receivable 1,275,187,971 335,941,109 Preliminary, formation, organisational, renovation,

development, prepaid expenses and others 838,731,686 641,638,879 Exchange for clearing 441,335,765 365,709,493 Interest accrued on investment but not collected,

commission and brokerage receivable on shares and debentures, and other income receivables 176,342,077 117,430,890

Security deposits 83,656,573 79,080,241 Local drafts paid without advice 3,247,200 68,625,077 Advance rent and advertisement 45,809,285 43,703,914 Stationery, stamps, printing materials, etc 20,099,058 17,725,357 Accrued income with subsidiary company - 10,655,520 Interest on bearer certificates of deposit 900,000 1,317,810

4,609,697,222 4,207,556,307 4,634,821,166 4,232,680,251

10.01 Advance corporate income tax

In Bangladesh:

Balance at 01 January 635,818,904 440,810,128 Add: Paid during the year 125,277,075 161,664,236 Add: Tax withheld during the year 148,734,914 33,344,540

274,011,989 195,008,776 Less: Settlement during the year - - Balance at 31 December 909,830,893 635,818,904 Advance tax paid by ABBL, Mumbai Branch 154,392,155 138,254,472

1,064,223,048 774,073,376

31.12.2007 31.12.2006Taka Taka

11.00 Borrowings from other banks, financial institutions and agents

In Bangladesh (note 11.01) 1,791,746,447 1,297,378,229 Outside Bangladesh (note 11.02) 80,263,581 -

1,872,010,028 1,297,378,229

11.01 In Bangladesh

12,793,472 27,501,107 700,000,000 -

Cash assistance 18,952,975 25,877,122 731,746,447 53,378,229

Agrani Bank Ltd. 50,000,000 50,000,000 Rupali Bank Ltd. 100,000,000 500,000,000 Sonali Bank Ltd. 150,000,000 - Dutch Bangla Bank Ltd. 350,000,000 - Bangladesh Commerge Bank Ltd. 60,000,000 -

20,000,000 - Premier Bank Ltd. 50,000,000 - Bangladesh Shilpa Bank 120,000,000 - Southeast Bank Ltd. 60,000,000 - National Bank Ltd. 100,000,000 - Bank of Small Industries and Cottage Ltd. - 100,000,000 Industrial Development and Leasing Company of Bangladesh Ltd. - 85,000,000

1,060,000,000 735,000,000 Term Borrowing from

Eastern Bank Ltd. - 159,000,000 First Security Bank Ltd. - 100,000,000 Mutual Trust Bank Ltd. - 250,000,000

- 509,000,000 1,791,746,447 1,297,378,229

11.02 Outside Bangladesh

Habib American Bank 32,371,794 - HSBC 47,107,203 - Commerz Bank AG 784,583 -

80,263,581 - 1,872,010,028 1,297,378,229

11.03 Analysis by security

Secured (assets pledge as security for liabilities) - - Unsecured 1,872,010,028 1,297,378,229

1,872,010,028 1,297,378,229

11.04 Repayment pattern

Repayable on demand 1,159,216,556 760,877,122 Repayable on maturity (note 11.04.01) 712,793,472 536,501,107

1,872,010,028 1,297,378,229

11.04.01 Repayable on maturity

Bangladesh Bank refinance:ADB loan 12,793,472 27,501,107

Term borrowings:Eastern Bank Ltd. - 159,000,000 Islamic Investment Bonds 700,000,000 - Mutual Trust Bank Ltd. - 250,000,000 First Security Bank Ltd. - 100,000,000

700,000,000 509,000,000 712,793,472 536,501,107

Standard Bank Ltd.

Islamic Investment Bonds

Bangladesh Bank refinance ADB loan

Call Borrowing from

11.05 Borrowings from other banks, financial institutions and agents-outside Bangladesh

Amounts inforeign

currency

Conversion rate


Taka

Amounts inforeign

currency

Conversion rate


Taka

Habib American Bank New York USD 472,079 68.5728 32,371,794 - - -

HSBC New York USD 686,966 68.5728 47,107,203

Commerz Bank AG Frankfurt USD 11,442 68.5728 784,583 - - -

80,263,581 -

Name of the bank

As of 31 December 2007 As of 31 December 2006

CurrencyLocation

31.12.2007 31.12.2006Taka Taka

12.00 Deposit and other accounts

Inter-bank deposits (note 12.01) 4,139,916,352 4,891,839,511 Other deposits (note 12.02) 49,235,432,039 37,185,155,906

53,375,348,391 42,076,995,417

12.01 Maturity analysis of inter-bank deposits

Repayable – on demand 34,051,000 20,263,040 – within 1 month 280,897,046 501,576,471 – over 1 month but within 3 months 1,719,798,639 3,820,000,000 – over 3 months but within 1 year 2,105,169,667 550,000,000 – over 1 year but within 5 years - - – over 5 years but within 10 years - - – over 10 years - -

4,139,916,352 4,891,839,511

12.02 Maturity analysis of other deposits

Repayable – on demand 2,734,190,779 1,227,618,337 – within 1 month 4,156,984,631 1,819,239,932 – over 1 month but within 3 months 10,871,425,925 7,981,299,640 – over 3 months but within 1 year 24,990,953,791 15,965,333,184 – over 1 year but within 5 years 5,651,376,913 9,982,366,390 – over 5 years but within 10 years 830,500,000 209,298,423 – over 10 years - -

49,235,432,039 37,185,155,906 53,375,348,391 42,076,995,417

13.00 Other liabilities

Accumulated provision against loans and advances (note 13.01) 1,146,617,277 773,721,040 Accrued profit on investment - Islami banking branch 26,691,843 5,939,681 Reverse repo adjustment account 166,000,000 - Provision for corporate taxation (note 13.02) 1,410,549,926 487,759,621 Interest suspense account (note 13.03) 275,385,254 189,967,306 Retained revenue with ABBL, Mumbai Branch 76,533,483 85,809,142 Provision against other assets (note 13.04) 88,388,215 36,488,215 Exchange equalisation account 47,966,966 47,966,966 Accounts payable - Bangladesh Bank 56,460,356 61,660,356 Accrued expenses 26,696,812 20,611,776 Provision for gratuity (note 13.05) 89,575,860 29,614,872 Provision for off balance sheet items 80,000,000 - Provision against investments 25,400,000 16,000,000 Obligation under finance lease (note 13.06) 10,432,365 24,707,109 Exchange fluctuation adjustment account - ABBL, Mumbai Branch 164,608,040 99,815,120 Others (*) 99,610,322 152,139,460

3,790,916,719 2,032,200,664

(*)

13.01 Accumulated provision against loans and advances

The movement in specific provision for bad and doubtful debts

Balance at 01 January 415,590,160 374,999,999 Less : Fully provided debts written off during the year 1,441,000 1,339,839 Add : Recovery of amounts previously written off - 430,000 Add : Specific provision made for the year 245,795,702 35,000,000 Less : Transfer to general provision - 3,500,000 Add : Transfer from provision for other assets - 10,000,000 Less : Recoveries and provision no longer required - - Add : Net charge to Profit and Loss Statement - -

244,354,702 40,590,161 Balance at 31 December 659,944,862 415,590,160

- - 659,944,862 415,590,160

Others includes provision for audit fee, payroll tax, excise duty, income tax and VAT deducted at source, unclaimed dividend,accounts payable for safe keeping, earnest and security money, etc.

Provision made by ABBL, Mumbai BranchTotal provision on classified loans and advances

31.12.2007 31.12.2006Taka Taka

On unclassified loans

Balance at 01 January 356,000,000 215,000,000 Add : Transfer from specific provision - 3,500,000 Add : Transfer from provision for other assets - 10,000,000 Less : Recoveries and provision no longer required - - Add : General provision made for the year 92,050,000 127,500,000

92,050,000 141,000,000 Balance at 31 December 448,050,000 356,000,000 Provision made by MBW 28,154,298 - Provision made by ABBL, Mumbai Branch 10,468,117 2,130,880 Total provision on un-classified loans and advances 486,672,415 358,130,880 Total provision on loans and advances 1,146,617,277 773,721,040

Provision for Required Maintained Excess/(Shortage)

Un-classified loans and advances 438,500,000 486,672,415 48,172,415 Classified loans and advances 651,300,000 659,944,862 8,644,862

1,089,800,000 1,146,617,277 56,817,277

13.02 Provision for corporate taxation

Balance at 01 January 391,614,951 391,614,951 Add: Provision made during the year 914,500,000 -

Current tax 831,228,293 - Deferred tax 83,271,707 -

Less: Adjustment during the year - - Balance at 31 December 1,306,114,951 391,614,951

104,434,975 96,144,670 1,410,549,926 487,759,621

Provision made by ABBL, Mumbai Branch

13.03 Interest suspense account

Balance at 01 January 189,967,306 208,928,141 Add: Transfer during the year 133,205,948 148,948,165 Less: Recovery during the year 28,851,000 45,684,000 Less: Write off during the year 18,937,000 122,225,000 Balance at 31 December 275,385,254 189,967,306

13.04 Provision against other assets

Provision for Required Maintained Excess/(Shortage)

Prepaid legal expenses 27,032,563 49,700,000 22,667,437 17,576,729 18,033,215 456,486

448,611 455,000 6,389 Korbanigonj property - Chittagong 20,200,000 20,200,000 -

65,257,902 88,388,215 23,130,312

13.05 Provision for gratuity

Balance at 01 January 29,614,872 10,000,000 Add: Provision made during the year 60,000,000 20,000,000 Less: Adjustment during the year 39,012 385,128 Balance at 31 December 89,575,860 29,614,872

Tax assessments for the financial years 1995, 1996 and 1997 are pending and filed reference applications before the Hon'bleHigh Court. Assessment for the financial year 2004 has been disputed by the Bank in appeal. Assessment for the financial year2006 is under process.

Balance with BCCI, London

Tax provision for the year 2007 (assessment year 2008-2009) has been made by the Bank considering necessary taxable add-backs of income and inadmissible expenditures as per income tax law.

Protested bills

Provision against prepaid legal expenses and protested bills was made as per BRPD Circular # 14 dated 25 June 2001 issuedby Bangladesh Bank.

31.12.2007 31.12.2006Taka Taka

13.06 Obligation under finance lease 10,432,365 24,707,109

Lease obligation as of 31 December is repayable as follows:

Obligation toIDLC Bangladesh Ltd. Uttara Finance and Investments Ltd.

6,716,142 2,898,412

817,811 10,432,365

14.00 Share Capital 743,261,800 571,740,000

14.01 Authorised Capital

20,000,000 ordinary shares of Taka 100 each 2,000,000,000 2,000,000,000

14.02 Issued, Subscribed and Paid-up Capital

1,500,000 ordinary shares of Taka 100 each issued for cash 150,000,000 150,000,000 593,261,800 421,740,000

743,261,800 571,740,000 14.03 Percentage of shareholding

Particulars No. of shares % No. of shares %Sponsors and public 7,389,963 99.43 5,684,573 99.43 Government 42,655 0.57 32,827 0.57

7,432,618 100.00 5,717,400 100.00

14 04 Classification of shareholders by holding

200820092010

Year Total

5,932,618 ordinary shares of Taka 100 each issued as bonus shares

2,055,837 565,427

4,660,305

- 2,332,985

817,811

As of 31 December 2006As of 31 December 2007

14.04 Classification of shareholders by holding

2007 2006 2007 2006Upto 500 14,395 6,555 97.43 94.85 501 to 5,000 303 279 2.05 4.04 5,001 to 10,000 19 26 0.13 0.38 10,001 to 20,000 13 12 0.09 0.17 20,001 to 30,000 7 5 0.05 0.07 30,001 to 40,000 7 5 0.05 0.07 40,001 to 50,000 4 4 0.03 0.06 50,001 to 100,000 9 8 0.06 0.12 100,001 to 1,000,000 17 17 0.12 0.25 Over 1,000,000 - - - -

14,774 6,911 100.00 100.00

14.05 Names of the Directors and their shareholding as of 31 December 2007

ShareholdingAs of 31 Dec 2007 As of 31 Dec 2006

Mr. Faisal M Khan 14,851 11,424 Mr. Sajedur Seraj 218,704 168,236 Mr. Golam Sarwar 179 138 Mr. S. M. Salahuddin - - Mr. Mohd. Tipu Sultan, FCA 157 121 Mr. Faheemul Huq, Barrister - at -Law - - Mr. Syed Afzal Hasan Uddin, Barrister - at -Law - - Mr. Md. Salah Uddin - - Mr. M. Wahidul Haque 2,863 - Mr. Kaiser A. Chowdhury - -

DirectorDirector (Nominated)

Director

Director

Director (Nominated)Director (Nominated)

Director (Nominated)

Ex-officio

Vice-Chairman

StatusName of the Director

Chairman

% of total holdingNo. of holdersHolding

14.06 Capital adequacy ratio

31.12.2007 31.12.2006Taka Taka

14.06.01 Core capital (Tier I)

Paid-up capital 743,261,800 571,740,000 Non-repayable share premium account - 343,900 Statutory reserve 1,356,905,450 772,867,621 General and other reserve 42,199,200 41,855,300 Retained earnings 1,695,795,728 554,558,252 Non-cumulative irredeemable preference share - - Dividend equalisation account - -

3,838,162,178 1,941,365,073

14.06.02 Supplementary capital (Tier II)

General provision maintained against unclassified loansincluding off-balance sheet items 566,672,415 358,130,880 Assets revaluation reserves 332,276,728 316,708,896 All other preference shares - - Perpetual subordinated debts - - Exchange equalisation account 47,966,966 47,966,966

946,916,109 722,806,742 Total Capital 4,785,078,287 2,664,171,815

Total assets including off-Balance Sheet items 90,837,513,979 69,101,616,741 Total risk weighted assets 44 545 704 746 28 854 017 851

In terms of section 13(2) of Banking Companies Act 1991 and Bangladesh Bank BRPD Circulars no. 01, 14 and 10 dated 08January 1996, 16 November 1996 and 25 November 2002 respectively, required capital of the Bank at the close of business on31 December 2007 is Taka 4,454,570,475 as against available core capital of Taka 3,838,162,178 and supplementary capital ofTaka 946,916,109 that is, a total of Taka 4,785,078,287 thereby showing surplus capital/equity of Taka 330,507,812 at thatdate. Details are shown below:

Total risk-weighted assets 44,545,704,746 28,854,017,851 Required capital (10% for 2007 & 9% for 2006 of risk-weighted assets) 4,454,570,475 2,596,861,607

Actual capital maintained

Core capital, Tier-I (note 14.06.01) 3,838,162,178 1,941,365,073 Supplementary capital, Tier II (note 14.06.02) 946,916,109 722,806,742

4,785,078,287 2,664,171,815 Surplus 330,507,812 67,310,208 Capital adequacy ratio 10.75% 9.23%

14.07 Capital requirement

Required Holding Required HoldingCore capital 5.00% 8.62% 4.50% 6.73%Supplementary capital 5.00% 2.13% 4.50% 2.50%Total 10.00% 10.75% 9.00% 9.23%

15.00 Statutory reserve

In BangladeshOpening balance 688,222,761 581,785,491 Addition during the year (20% of pre-tax profit) 563,598,769 106,437,270 Closing balance 1,251,821,530 688,222,761

Outside Bangladesh - ABBL, Mumbai Branch Opening balance 84,644,860 68,418,120 Addition during the year 20,439,060 16,226,740 Closing balance 105,083,920 84,644,860

1,356,905,450 772,867,621

As of 31 Dec 2007 As of 31 Dec 2006

16.00 Other reserve

General reserve (note 16.01) 42,199,200 41,855,300 Assets revaluation reserve (note 16.02) 598,054,760 633,417,794 Investment fluctuation reserve (note 16.03) 75,372,327 7,980,045 Share premium account (note 16.04) - 343,900

715,626,287 683,597,039 16.01 General reserve

In BangladeshOpening balance 41,855,300 41,855,300 Add : Addition during the year - - Add : Transfer from share premium 343,900 - Closing balance 42,199,200 41,855,300

Outside BangladeshABBL, Mumbai branch - -

42,199,200 41,855,300

31.12.2007 31.12.2006Taka Taka

16.02 Assets revaluation reserve

Opening balance 633,417,794 126,439,485 Add : Addition during the year - 506,978,309 Less : Adjustment during the year 35,363,034 - Closing balance 598,054,760 633,417,794

16.03 Investment fluctuation reserve (Revaluation of Treasury Bills)

In Bangladesh

Opening balance - - Add : Addition during the year 66,498,696 - Closing balance 66 498 696Closing balance 66,498,696 -

Outside Bangladesh

ABBL, Mumbai branch 8,873,631 7,980,045 75,372,327 7,980,045

16.04 Share premium account

Opening balance 343,900 343,900 Add: Receipt during the year - - Less : Transfer to general reserve 343,900 - Closing balance - 343,900

17.00 Retained earnings

Opening balance 554,558,252 180,785,572 Add: Post-tax profit for the year 1,903,493,845 532,186,349 Less: Transfer to statutory reserve 563,598,769 106,437,270 Less: Adjustment during the year 27,135,800 - Less: Issue of bonus shares - 2006 171,521,800 51,976,400 Closing balance 1,695,795,728 554,558,252

18.00 Contingent liabilities 27,287,649,576 21,112,279,519

18.01 Claims lodged with the bank which is not recognised as loan - -

- - - - - -

3,812,034,559 2,920,556,934 3,812,034,559 2,920,556,934

18.02 Other contingent liabilities

- - 7,204,085,208 4,186,436,169

14,688,169 51,856,542 1,478,416,000 604,599,422

8,697,189,377 4,842,892,133

Share premium account was created in the year 2002 as per gazette notification SEC/CFD/2001/Admin/02-02 dated 11September 2001 issued by the Securities Exchange Commission regarding issuance of bonus shares. Subsequently, the orderwas rescinded vide notification SEC/LSD/Order/2003/01-Admin-2/07 dated 14 March 2004. For the year 2003, 5% stockdividend was approved in the AGM held on October 2004 and paid from this account.

Value of savings certificates (Sanchaya patra)

Customers' stocks of securities-Merchant Banking Wing

Money for which the Bank in contingently liable in respect of guaranteesissued favouring:

Litigation pending against the Bank

Banks and other financial institutions

Value of traveller's cheques

Others

DirectorsGovernment

2007 2006Taka Taka

19.00 Profit and loss account

Income: Interest, discount and similar income 5,523,091,251 3,573,022,512 Dividend income 41,387,078 18,917,807 Fee, commission and brokerage 955,024,746 719,760,283 Gains less losses arising from investment securities 1,439,732,777 760,914,060 Gains less losses arising from dealing in foreign currencies 350,314,176 20,850,096 Other operating income 177,654,705 319,535,254 Gains less losses arising from dealing securities - - Income from non-banking assets - - Profit less losses on interest rate changes - -

8,487,204,733 5,413,000,012 Expenses:Interest, fee and commission 3,830,623,489 2,762,833,939 Administrative expenses 978,591,760 773,034,783 Other operating expenses 258,934,177 1,109,810,983 Depreciation on banking assets 93,761,462 56,633,958 Losses on loans and advances - -

5,161,910,888 4,702,313,663 3,325,293,845 710,686,349

20.00 Interest income

Interest on loans and advances:

Loans and advances 4,753,788,148 3,130,364,403 Bills purchased and discounted 119,700,737 70,880,660

4 873 488 885 3 201 245 0634,873,488,885 3,201,245,063

Interest on:Calls and placements 200,768,940 78,855,444 Balance with foreign banks 77,650,496 35,117,056 Reverse Repo 70,933,523 32,844,811 Balance with Bangladesh Bank 47,062,815 30,276,170

396,415,775 177,093,481 Profit/(Loss) due to change in interest rate - -

5,269,904,660 3,378,338,544

21.00 Interest paid on deposits, borrowings, etc

Interest on deposits:

Fixed deposits 3,077,651,257 1,776,548,868 Savings deposits 393,407,729 361,813,691 Short-term deposits 172,319,540 120,574,842 Other deposits 131,362,080 227,230,346

3,774,740,607 2,486,167,747 Interest on borrowings: Local banks, financial institutions including Bangladesh Bank 55,781,152 276,666,192 Nostro overdrawn 101,730 -

55,882,882 276,666,192 3,830,623,489 2,762,833,939

22.00 Investment Income

Capital gain on sale of shares 1,439,732,777 760,914,061 Interest on treasury bills 200,995,618 187,034,218 Dividend on shares 41,387,078 18,917,807 Interest on debentures 2,887,500 2,887,500 Interest on treasury bonds 49,303,474 2,689,750 Interest on other bonds - 2,072,500

1,734,306,446 974,515,836

2007 2006Taka Taka

23.00 Commission, exchange and brokerage

Other fees, commission and service charges 650,458,617 458,861,041 Commission on letters of credit 236,185,522 213,629,143 Commission on letters of guarantee 68,380,608 47,270,100 Exchange gains less losses arising from dealings in foreign currencies 350,314,176 20,850,096 Brokerage - -

1,305,338,922 740,610,379

24.00 Other income

Locker rent, insurance claim and others 21,167,743 126,928,348 Recoveries on loans previously written off 11,483,420 118,875,051 Profit remitted by ABBL, Mumbai Branch 33,107,113 30,747,524 Recoveries on telex, telephone, fax, etc 13,568,533 16,177,202 Recoveries on courier, postage, stamp, etc 19,163,511 15,841,507 Finance charge from ABBF 59,382,744 - Non-operating income (*) 19,771,241 73,359 Rent from Bank's property 10,400 13,500 Dividend from AB International Finance Ltd., Hong Kong - 10,878,762

177,654,705 319,535,254

(*) Non-operating income includes sale of vehicles, old tyres, tubes, newspapers, furniture, fixtures, etc.

25.00 Salary and allowances

B i l id t f d t ib ti d ll th ll 583 196 636 489 138 973Basic salary, provident fund contribution and all other allowances 583,196,636 489,138,973 Festival and incentive bonus 113,579,376 74,419,906

696,776,012 563,558,879

26.00 Rent, taxes, insurance, lighting, etc

Rent, rates and taxes 91,084,261 72,818,289 Electricity, gas, water, etc 23,991,332 20,840,342 Insurance 29,180,088 18,141,373

144,255,680 111,800,004

27.00 Legal expenses

Legal expenses 1,912,103 1,272,304 1,912,103 1,272,304

28.00 Postage, stamp, telecommunication, etc

Telex, fax, internet, wireless link, SWIFT, etc 34,750,120 14,933,846 Telephone 15,848,859 13,919,167 Postage, stamp and shipping 6,814,172 5,404,892

57,413,151 34,257,906

29.00 Stationery, printing, advertisements, etc

Printing and stationery 35,491,861 24,268,261 Publicity, advertisement, etc 9,228,398 2,950,298

44,720,259 27,218,559

30.00 Directors' fees

Directors' fees 588,600 613,510 Meeting expenses 999,992 337,037

1,588,592 950,547

Directors' fees includes fees for attending the meeting of the Board, Executive Committee, Audit Committee andShariah Council. Each director was remunerated @ Tk.4,000 per meeting.

2007 2006Taka Taka

31.00 Auditors' fees

Statutory 313,500 261,250 Merchant Banking Wing 274,835 59,000 Others 1,528,080 130,450

2,116,415 450,700

32.00 Depreciation and repairs of Bank's assets

Depreciation:

Electrical appliances 48,523,185 24,401,812 Leasehold assets 13,186,413 19,748,928 Furniture and fixtures 9,044,226 9,389,477 Office appliances 3,504,036 2,710,229 Building 7,875,855 381,796 Motor vehicles 11,627,747 1,715

93,761,462 56,633,958 Repairs:

Motor vehicles 6,723,562 8,965,575 Electrical appliances 8,892,112 8,684,632 Office premises and others 5,636,920 5,275,997 Furniture and fixtures 814,123 3,170,725 Office appliances 2,142,836 2,308,958

24,209,552 28,405,889 117,971,014 85,039,847

33.00 Other expenses

ABBL Inter-bank Account, un-reconciled items written off - 950,742,796 Contractual service 47,655,008 35,123,590 Amortization of deferred revenue expenses 43,067,565 19,077,049 Petrol, oil and lubricant 25,672,329 17,983,851 System programme and software development 13,150,489 17,793,418 Entertainment 15,600,850 12,692,687 Travelling 24,838,216 9,836,977 Subscription, membership and sponsorship 6,459,059 4,094,333 Training, seminar and workshop 3,496,339 3,874,837 Local conveyance 3,787,654 3,436,958 Professional charges 4,728,008 2,293,860 Books, newspapers and periodicals 1,645,960 793,674 Branch opening expenses 426,920 171,975 Sundry expenses (*) 68,405,781 31,894,977

258,934,177 1,109,810,983

(*)

34.00 Provision against loans and advances

On un-classified loans 120,204,298 127,500,000 On classified loans 245,795,702 35,000,000

366,000,000 162,500,000

35.00 Provisions for diminution in value of investments

In quoted shares 9,400,000 16,000,000

Sundry expenses includes corporate expenses, business promotion, carrying and labour charges, expenses onmanagers' conferences and annual general meeting, loss on sale of assets, non-operating expenses and othermiscellaneous expenses.

2007 2006Taka Taka

36.00 Other provision

Provision for prepaid legal expenses 21,700,000 - Provision for protested bills 10,000,000 - Provision for off balance sheet items 80,000,000 - Korbanigonj property - Chittagong 20,200,000 -

131,900,000 -

37.00 Appropriations

Retained earnings - brought forward 554,558,252 180,785,572 Less: Adjustment for prior year 27,135,800 - Add: Post-tax profit for the year 1,903,493,845 532,186,349

2,430,916,297 712,971,921 Less: Bonus shares issued - 2006 171,521,800 51,976,400 Profit available for distribution 2,259,394,497 660,995,521

Transferred to

Statutory reserve 563,598,769 106,437,270 General reserve - - Proposed dividend - -

563,598,769 106,437,270

Provision for prepaid legal expenses and protested bills has been made as per Bangladesh Bank BRPD Circular # 14dated 25 June 2001.

Retained earnings 1,695,795,728 554,558,252

38.00 Earnings per share

Profit after taxation 1,903,493,845 532,186,349 Number of ordinary shares outstanding 7,432,618 5,717,400 Earnings per share 256.10 93.08

39.00 Receipts from other operating activities

Interest on treasury bills, bonds, debenture and others 1,692,919,368 955,598,029 Exchange earnings 350,314,176 20,850,096 Profit remitted by ABBL, Mumbai Branch 33,107,113 30,747,524 Recoveries on telex, telephone, fax, etc. 13,568,533 16,177,202 Recoveries on courier, postage, stamp, etc. 19,163,511 15,841,507 Dividend from AB International Finance Ltd., Hong Kong - 10,878,762 Finance charge from ABBF 59,382,744 - Non-operating income 19,771,241 73,360 Rent from Bank's property 10,400 13,500 Others 21,167,743 126,928,348

2,209,404,829 1,177,108,328

40.00 Payments for other operating activities

Other expenses 258,934,177 1,109,810,983 Rent, taxes, insurance, electricity, etc 144,255,680 111,800,004 Postage, stamps, telecommunication, etc 57,413,151 34,257,906 Repairs of Bank's assets 24,209,552 28,405,889 Legal expenses 1,912,103 1,272,304 Directors' fees 1,588,592 950,547

488,313,256 1,286,497,632

Earnings per share (EPS) has been computed by dividing the basic earnings by the number of ordinary sharesoutstanding as on 31 December 2007 in terms of Bangladesh Accounting Standard (BAS)-33.

2007 2006Taka Taka

41.00 Increase/decrease in other assets

Inter-branch adjustment 660,164,560 1,751,654,641 Arab Bangladesh Bank Foundation 19,920,000 19,920,000 Advance corporate income tax 1,064,223,048 774,073,376 Preliminary, formation, organizational, renovation,development and prepaid expenses 838,731,686 641,638,879 Exchange for clearing 441,335,765 365,709,493 Accounts receivable 1,275,187,971 335,941,109 Interest accrued on investment but not collected,commission and brokerage receivable on shares and debentures, and other income receivables 176,342,077 117,430,890 Security deposits 83,656,573 79,080,241 Local draft paid without advice 3,247,200 68,625,077 Advance rent and advertisement 45,809,285 43,703,914 Stationery, stamps, printing materials, etc 20,099,058 17,725,357 Investment in AB International Finance Ltd., Hong Kong 5,203,944 5,203,944 Interest on bearer certificates of deposit 900,000 1,317,810 Accrued income from subsidiary company - 10,655,520

4,634,821,166 4,232,680,251 Less : Payment of corporate income tax 125,277,075 161,664,236

4,509,544,091 4,071,016,015 Net Increase/(decrease) 438,528,076 (207,055,139)

42.00 Increase/decrease in other liabilities

Accumulated provision against loans and advances 1,146,617,277 773,721,040 Reverse repo adjustment account 166,000,000 - Provision for corporate taxation 1,410,549,926 487,759,621 Interest suspense account 275,385,254 189,967,306 Exchange fluctuation adjustment account -ABBL, Mumbai Branch 164,608,040 99,815,120 Retained revenue - ABBL, Mumbai Branch 76,533,483 85,809,142 Accounts payable - Bangladesh Bank 56,460,356 61,660,356 Exchange equalization account 47,966,966 47,966,966 Provision against other assets 88,388,215 36,488,215 Provision for gratuity 89,575,860 29,614,872 Obligation under finance lease 10,432,365 24,707,109 Accrued expenses 26,696,812 20,611,776 Provision against investments 25,400,000 16,000,000 Provision against off balance sheet items 80,000,000 - Accrued profit on investment - Islami banking branch 26,691,843 5,939,681 Others 99,610,322 152,139,460

3,790,916,719 2,032,200,664 Less: Adjustment for provision 1,421,800,000 178,500,000

2,369,116,719 1,853,700,664 Net Increase/(decrease) 515,416,056 189,724,401

2007 2006Taka Taka

43.00 Highlights of the overall activities of the Bank

1 Paid-up capital 743,261,800 571,740,000 2 Total capital 4,785,078,287 2,664,171,815 3 Capital surplus 330,507,812 67,310,208 4 Total assets 63,549,864,403 47,989,337,222 5 Total deposits 53,375,348,391 42,076,995,417 6 Total loans and advances 40,915,352,218 31,289,251,217 7 Total contingent liabilities and commitments 27,287,649,576 21,112,279,519 8 Credit-deposit ratio 76.66 74.36 9 Ratio of classified loans against total loans and advances 4.31 4.02 10 Profit after tax and provision 1,903,493,845 532,186,349 11 Loans classified during the year 779,104,000 205,387,000 12 Provision kept against classified loans 659,944,862 415,590,160 13 Provision surplus/ (deficit) 56,817,277 34,521,040 14 Cost of fund 10.54% 10.04%15 Interest earning assets 49,207,751,610 36,648,106,492 16 Non-interest earning assets 14,342,112,793 11,341,230,730 17 Return on investments (ROI) 22.87% 18.81%18 Return on assets (ROA) 3.41% 1.31%19 Income from investments 1,734,306,446 974,515,836 20 Earnings per share 256.10 93.08 21 Net income per share 256.10 93.08 22 Price-earnings ratio (Times) 10.00 9.59

44.00

Currency Equivalent BDT

British Pound Sterling GBP 1.00 136.7204European Currency EURO 1.00 100.9117Indian Rupee INR 1.00 1.7398Japanese Yen JPY 1.00 0.6095US Dollar USD 1.00 68.5728

45.00

46.00

47.00

48.00

Assets and liabilities at 31 December 2007 denominated in foreign currencies have been converted to local currencyBangladesh Taka (BDT) at the following exchange rates:

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

Wherever considered necessary, previous year’s figures have been rearranged for the purpose of comparison withcurrent year's presentation without creating any impact on the operating result and value of assets and liabilities asreported in the financial statements.

These notes form an integral part of the annexed financial statements and accordingly are to be read in conjunctiontherewith.

No material events have occurred after the Balance Sheet date that could affect the values reported in the financialstatements.

Abbreviation and unit

10 March 2008Dhaka,

Annexure - AAB Bank Limited

Schedule of Fixed AssetsAs of 31 December 2007

Amount in Taka

CostBalance at 01 January 2007 945,767,901 160,588,864 38,330,653 302,836,198 29,091,070 165,150,074 1,641,764,760 Addition during the year 1,009,859,467 7,267,961 3,128,109 199,343,418 144,785,400 - 1,364,384,355 Disposal during the year 35,389,474 8,201,126 485,057 5,044,741 11,715,100 104,150,000 164,985,498 At 31 December 2007 1,920,237,894 159,655,699 40,973,705 497,134,875 162,161,370 61,000,074 2,841,163,617 ABBL, Mumbai Branch - 3,419,010 11,515,516 3,242,853 5,497,780 - 23,675,159

1,920,237,894 163,074,709 52,489,221 500,377,728 167,659,150 61,000,074 2,864,838,776

Accumulated depreciationBalance at 01 January 2007 3,456,603 90,050,746 27,082,635 208,375,652 26,691,046 140,442,965 496,099,647 Charge during the year 7,875,855 8,968,764 2,923,622 48,918,341 11,651,648 13,186,413 93,524,643 Adjustments during the year - 4,668,638 325,935 3,204,604 11,715,097 103,061,669 122,975,943 At 31 December 2007 11,332,458 94,350,872 29,680,322 254,089,389 26,627,597 50,567,709 466,648,347 ABBL, Mumbai Branch - 2,516,379 10,799,418 925,788 2,944,435 - 17,186,020

11,332,458 96,867,251 40,479,740 255,015,177 29,572,032 50,567,709 483,834,367

Net book value At 31 December 2007 1,908,905,436 65,304,827 11,293,383 243,045,486 135,533,773 10,432,365 2,374,515,270 ABBL, Mumbai Branch - 902,631 716,098 2,317,065 2,553,345 - 6,489,139 Total at 31 Dec 2007 1,908,905,436 66,207,458 12,009,481 245,362,551 138,087,118 10,432,365 2,381,004,409

Total at 31 Dec 2006 942,311,298 71,556,620 11,394,990 96,017,302 2,475,272 24,707,109 1,148,462,590

TotalMotor vehiclesOffice appliancesParticulars Electrical appliances

Leasehold assetsLand and building Furniture and fixtures

Annexure-B-1AB Bank Limited

Islami Banking BranchBalance Sheet


31.12.2007 31.12.2006Taka Taka

PROPERTY AND ASSETS

1,711,828 1,609,785 1,711,828 1,609,785

- -

700,112,000 200,062,000 700,112,000 200,062,000

- -

- -

- - - -

587,118,694 217,154,311 27,273,919 6,093,867

329,013,270 136,090,444 228,681,505 74,970,000

2,150,000 -

13,537,066 2,555,197

977,563,374 693,090,884

- -

Total Assets 2,280,042,962 1,114,472,177

700,000,000 -

1,477,901,082 1,087,403,647 16,322,851 1,302,369

295,523,142 471,000,771 1,126,797 1,679,696

1,154,895,523 590,834,782 - 10,270,096

Other deposits 7,079,608 - 2,953,161 12,315,933

30,658,374 12,545,259 71,483,505 14,523,271

Total Liabilities 2,280,042,962 1,114,472,177

Contingent liabilitiesAcceptances and endorsements - - Letters of guarantee 8,269,800 7,069,800 Irrevocable letters of credit - - Bills for collection - - Other contingent liabilities - -

8,269,800 7,069,800 Other commitmentsDocumentary credits and short-term, trade-related transactions - - Forward assets purchased and forward deposits placed - - Spot and forward foreign exchange contracts - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - -

- - Total Off-Balance Sheet items including contingent liabilities 8,269,800 7,069,800

Outside BangladeshMoney at call and on short notice

In Bangladesh

CashIn hand (including foreign currencies)Balance with Bangladesh Bank and its agent bank(s)(including foreign currencies)Balance with other banks and financial institutions

Surplus - as per Profit and Loss Statement

Investments

Mudaraba term deposits

Bills payable

Profit payable

LIABILITIES AND CAPITAL

Bai-muazzal

Loans and advances / investments

Mudaraba savings depositsMudaraba short-term deposits

Other liabilities

Deposits and other accountsAl-wadia current deposits

Borrowings from other banks, financial institutions and agents

Fixed assets including premises, furniture and fixtures

Murabaha

Government

Other assets

Non-banking assets

Liabilities

Hire purchaseQuard against Mudaraba term deposits

Others

Annexure-B-2

AB Bank Limited Islami Banking BranchProfit and Loss Account

For the year ended 31 December 2007

2007 2006Taka Taka

OPERATING INCOME

Profit received from investment 290,909,954 63,590,777 Profit paid on deposits, etc (211,624,944) (44,595,654)

Net profit received 79,285,010 18,995,123

Commission, exchange, etc 4,461,122 805,522 Other income 305,410 84,049

4,766,532 889,571 Total operating income (a) 84,051,542 19,884,694

OPERATING EXPENSES

Salary and allowances 5,657,265 3,544,096 Rent, taxes, insurance, electricity, etc 436,912 199,777 Legal expenses - - Postage, stamps, telecommunication, etc 190,714 80,565 Stationery, printing, advertisement, etc 157,778 170,546 Chief executive's salary and fees - - Di t ' f 131 142 150 635Directors' fees 131,142 150,635 Auditors' fees - - Charges on loan losses - - Depreciation and repairs of Bank's assets 3,933,868 401,828 Other expenses 2,060,358 813,976 Total operating expenses (b) 12,568,037 5,361,423 Net profit during the year (a-b) 71,483,505 14,523,271

Annexure-CAB Bank Limited

Mumbai Branch, IndiaBalance Sheet


31.12.2007 31.12.2006Taka Taka

PROPERTY AND ASSETS22,717,132 15,196,461

6,136,998 3,091,662 16,580,134 12,104,799

351,089,217 414,969,632 44,200,672 41,753,178

306,888,545 373,216,454

73,941,500 36,768,100

172,330,602 152,227,738 147,103,502 129,541,038 25,227,100 22,686,700

535,487,929 591,857,172 313,074,609 331,091,111 222,413,320 260,766,061

6,489,139 2,797,478

244,605,615 223,784,501 - -

1,406,661,134 1,437,601,082

- -

456,259,820 581,712,049 339,516,753 461,906,648

715,196 6,140,878 8,650,676 11,173,525

57,098,677 - - -

50,278,518 102,490,998 - - - -

116,492,917 98,830,542 572,752,737 680,542,591

643,417,363 578,624,443 105,083,920 84,644,860

8,873,631 7,980,045 76,533,483 85,809,143

833,908,397 757,058,491 1,406,661,134 1,437,601,082

Off-Balance Sheet Items: Contingent liabilities

Acceptances and endorsements 149,340,030 269,427,214 Letters of guarantee 12,082,911 16,620,320 Irrevocable letters of credit - 57,963,099 Bills for collection 315,354,522 211,234,857 Other contingent liabilities 35,231 31,683

476,812,694 555,277,173 Other commitments

Documentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed - - Spot and forward foreign exchange contracts - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - -

- - Total Off-Balance Sheet Items including contingent liabilities 476,812,694 555,277,173

Total Liabilities and Shareholders' Equity

Paid-up capital/fund from Head OfficeStatutory reserveOther reserveRetained earningsTotal Shareholders' Equity

Borrowings from other banks, financial institutions, and agents

Total Assets

LIABILITIES AND CAPITALLiabilities

Bills purchased and discounted

Fixed assets including premises, furniture and fixtures

Other assets

Capital/ Shareholders' Equity

Savings bank depositsShort-term depositsFixed deposits

Other depositsBearer certificates of deposit

Other liabilitiesTotal Liabilities

Bills payable

Outside India


InvestmentsGovernment

Deposits and other accountsCurrent deposits

Non-banking assets

Loans and advances

Other demand deposits

CashIn hand (including foreign currencies)

(including foreign currencies)

Others

Balance with Reserve Bank of India and its agent bank(s)

Loans, cash credits, overdrafts, etc

Balance with other banks and financial institutionsIn India

Documents

Notes to Financial Statements - AB Bank Limited